SocGen earnings Q2 2022

The French bank Societe Generale’s headquarters in Paris.

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Societe Generale reported better-than-expected earnings on Wednesday despite taking a 3.3 billion euro ($3.36 billion) hit from exiting its Russian operations.

The French lender saw each unit grow in the second quarter, helping to offset the impact of the departure from Russia in the wake of Moscow̵[ads1]7;s Ukraine invasion.

Analysts had estimated a net loss of 2.85 billion euros for the quarter, according to Refinitiv, but the bank posted a net loss of 1.48 billion euros.

“We combined, in the first half of 2022, strong growth in revenue and underlying profitability above 10% (ROTE), and we were able to manage our exit from the Russian activities without significant capital impact and without hampering the group’s strategic development,” Fréderic Oudéa, the group’s chief executive, said in a statement.

Speaking to CNBC, Oudéa said the decision to leave Russia was “very sad” but a necessary one.

“When you invest for many years of success, it’s very sad, but when you look at the situation, it’s just so difficult to manage, so risky going forward, with no clear outcome of all this, so it was clear that it was the best decision,” he told CNBC’s Charlotte Reed.

Other highlights for the quarter:

  • Revenues were 7 billion euros in the quarter.
  • Operating costs reached 4.5 billion euros.
  • The CET 1 ratio, a measure of the banks’ solvency, was 12.9% at the end of June.

The French retail bank posted a net profit 18.7% higher than the previous quarter. International retail banking also rose 33% from the previous three-month period. The Global Banking unit also had a nearly 50% jump in net income from the previous quarter.

Going forward, the French bank said it aims to achieve a return on tangible equity, a measure of profitability, of 10% and a CET 1 ratio of 12% by 2025. It also wants average annual revenue growth of over or equal to 3 % until then.

The stock is 28% lower so far this year.

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