GO
Loading...

SocGen's earnings triple in 2013 but miss estimates

Wednesday, 12 Feb 2014 | 3:51 AM ET
Why 2014 will be 'transition year' for the economy
Wednesday, 12 Feb 2014 | 1:40 AM ET
The global economy will improve but 2014 will be a "transition year" says Severin Cabannes, deputy CEO at Société Générale, saying the bank has a positive but "prudent" outlook for the year.

French banking group Societe Generale reported full-year earnings on Wednesday which failed to meet market expectations but came in three times higher than the previous year.

Net profit for 2013 came in at 2.17 billion euros ($2.96 billion), compared to a consensus estimate in a Reuters poll of 2.25 billion euros. This compared to profits for 2012 which came in at 790 million euros. Speaking to CNBC, Severin Cabannes, the deputy CEO at Societe Generale called the results "solid" and was pleased that all the core parts of the business had contributed to the performance.

A good performance in French retail banking, improved revenues of its Russian activities and "buoyant" results it its financial services for corporations business were the three main pillars of its success, according to Wednesday's press release.

Jean-Claude Coutausse | Bloomberg via Getty Images

"We are well positioned today to meet new challenges and opportunities," he said. "We have deeply strengthened our balance sheet."

(Read more: Investors lose patience with Barclays as profits fall short)

One area of investment banking that failed to match the growth of previous years was its fixed-income unit. 2012 saw increased revenues due to the ultra-easy monetary policies of central banks across the globe. However, investors fell out of love with fixed income in 2013 with the unraveling of quantitative easing programs and yields ticking higher throughout the year. Societe Generale said that adjusted revenues for its fixed-income, currencies and commodities unit were down 18.9 percent year-on-year, but called the results "resilient" after a strong performance in 2012.

Revenues for its investment bank as a whole rose, up 14 percent compared to 2012. This was helped by a strong performance in its equity activities. For the whole group, revenue came in at 22.8 billion euros, which failed to meet analysts' forecasts of 23.07 billion euros, but showed a rise of 4.3 percent compared to 2012.

Stress tests have 'no impact' on Societe Generale: Deputy CEO
Severin Cabannes, deputy CEO at Société Générale, says the ECB stress tests are a "key process" to restore credibility and stop the "fragmentation" of the region's banking sector.

The French bank also announced a return on equity of 8.4 percent for the year and said that its common equity tier 1 ratio (Basel III) - how much money the bank holds compared to its assets - stood at 10 percent. It added that it would look to pay a dividend of 1 euro per share back to shareholders and is targeting a dividend payout ratio of 40 percent for 2014, up 27 percent from the year before.

Reuters cited CEO Frederic Oudea as saying that the group's bonus pool for employees had been reduced, in stark contrast to U.K. bank Barclays which announced a 10 percent rise in its compensation costs for 2013.

(Read more: Guess who were the unlikely bank earnings' winners)

Cabannes also told CNBC that he was looking forward to the European Central Bank's banking stress tests which began in November. The ECB will publish health tests of Europe's biggest banks before it takes on the task of supervising them. To take the burden of rescuing banks off the shoulders of governments, European leaders agreed to create a system that would move supervision of the financial sector to a European level, and the bank stress tests are seen as an important step towards this "banking union".

Cabannes said the exercise would have no major impact on SocGen and would give more transparency and more trust in the European banking union.

"It will harmonize and standardize the different ways that regulation is implemented in each country. So for us it's a very positive process which would stop the fragmentation process of the European banking market which is a key element for Europe," he said.

Follow us on Twitter: @CNBCWorld

  Price   Change %Change
BARC
---

Featured

Contact Europe News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Europe Video

  • Jan Dunning, CEO of St Petersburg-headquartered hypermarket chain Lenta, says the situation in Ukraine has had no impact on the group, as consumer confidence remains unaffected in Russia.

  • Vincent Deluard, European strategist at Ned Davis Research Group, says the strong euro is a problem for the region's companies, especially for the large exporters.

  • European shares closed higher on Thursday as investors brushed aside concerns regarding Ukraine and focused instead on Wall Street earnings and the latest U.S. jobs data.