SocGen to return capital to investors after first losing year in decades

Bloomberg

Societe Generale SA vowed to return capital to investors even as it ended its first losing year in more than three decades with a slump in trading.
In contrast to double-digit trading gains at Wall Street peers, SocGen saw equities trading — its traditional strength — falls 7% from a year earlier and fixed-income revenue drop 16%. Net income in the fourth quarter falls less than analysts had expected and the Paris-based firm pledged to return about $1.14 billion to investors this year if regulators let it.
Chief Executive Officer Frederic Oudea is trying to turn around SocGen after trading losses in the wake of the pandemic exacerbated the impact of rising bad loans and negative interest rates. He’s reducing risk, cutting costs and accelerating a move toward simpler products at the markets unit.
The longest-serving CEO of a major lender in the European Union, the 57-year-old has seen shares of SocGen slump by about three-quarters since he took over in 2008. The firm now has a market value of about 15 billion euros, less than Deutsche Bank, which has also suffered a long decline from its peak.
SocGen rises 3.3% at 9:30 am in Paris trading, as the bank said it would propose a dividend of 55 euro cents a share at its next annual meeting, equal to a 470 million-euro payout. It plans to return a similar amount in the form of share buybacks in the fourth quarter, provided that the European Central Bank
lifts its recommendation to cap shareholder returns.
William Kadouch-Chassaing, SocGen’s head of finance, said in an interview that he saw some improvement at the start of this year, including at the
investment bank.
“Things are definitely starting off the year positively” at the unit, he said in an interview with Annmarie Hordern on Bloomberg TV. “Across the board, in retail we still see an impact of the confinement, but it’s holding well.”
In a bid to boost profitability, Oudea is cutting hundreds of jobs at the investment-banking unit, merging the domestic retail networks to reduce the number of branches and looking to sell its 160-billion euro asset management arm Lyxor. He’s also ousted two of his top deputies.
SocGen booked 210 million euros in charges in the fourth quarter to account for restructuring measures. The costs are adding to a rising bill for souring loans in the wake of the coronavirus pandemic. SocGen set aside 689 million euros for that purpose in the quarter, bringing the total for the past year to 3.31 billion euros. Such provisions should decline this year, it said.
Rising charges and a poor trading performance resulted in a 258 million-euro loss for the year, the first in Bloomberg records going back to 1988. Kadouch-Chassaing said he couldn’t say when the 157-year-old bank last posted an annual loss.
While rivals had to contend with similar challenges, they have been able to rely on their investment banking units to make up for it. In Germany, Deutsche Bank just posted its first annual profit in six years as trading business benefited from a broad-based market rally.