Societe Generale Encounters Profit Decline Amid Banking Challenges, Initiates Share Buyback

Societe Generale, the eminent French bank, has disclosed a significant downturn in its fourth-quarter net profit, primarily driven by a dip in net banking income. Despite this setback, the bank has embarked on a new 280 million euro ($302 million) share buyback initiative, signalling a proactive approach to bolster shareholder value.

In the final quarter, the bank’s net income plummeted to 430 million euros, marginally surpassing the analyst consensus of 404 million euros as per LSEG data yet substantially trailing the previous year’s 1.07 billion euros. This decline mirrors the challenges faced in the latter part of the year, contrasting with a more stable third quarter where the bank’s income stood at 295 million euros, buoyed by its investment banking sector amidst a downturn in its French retail operations.

The yearly outcome revealed a net profit of 2.49 billion euros for Societe Generale, slightly ahead of analysts’ anticipated 2.15 billion euros. However, the bank was not immune to the industry-wide pressures, witnessing a 9.9% year-on-year reduction in quarterly net banking revenue to 5.96 billion euros. This decline was attributed to lower net interest income across its French retail and private banking sectors, compounded by adverse effects from hedge unwinding.

In response to these financial dynamics, Societe Generale has announced a proposed dividend of 90 cents per share coupled with a share buyback program valued at 280 million euros. Despite the challenging financial landscape, this initiative underscores the bank’s commitment to returning value to its shareholders.

Group CEO Slawomir Krupa reflected on the past year as a pivotal period of transition and transformation for Societe Generale. He expressed optimism for the future, highlighting the bank’s strategic focus on revenue growth exceeding 5% in 2024. Krupa praised the robust performance across various divisions, including the remarkable growth of its online banking subsidiary, BoursoBank, which achieved a record quarter in new client acquisitions, culminating in a total clientele of 5.9 million by year-end.

Krupa acknowledged the hurdles faced in 2023, particularly the decline in net interest income within French Retail Banking and the integration costs of LeasePlan. Yet, he emphasized the disciplined approach towards managing costs, risks, and capital, positioning Societe Generale for a resilient and transformative future.

Societe Generale’s latest financial disclosures paint a picture of a banking institution grappling with industry-wide challenges but steadfast in its pursuit of growth and transformation. The launch of a substantial share buyback program, coupled with strategic initiatives across its diverse banking divisions, reflects a forward-looking stance to navigate the complex banking environment and deliver value to its stakeholders.