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Societe Generale SA’s fixed-income trading unit outperformed most peers in a volatile first quarter, as clients reacting to interest-rate hikes spurred revenue in an otherwise tough trading period.
Income from debt and currencies trading jumped 16% from a year earlier, compared with a 9% gain at rival BNP Paribas, according to a statement. Revenue at the equities-trading unit fell 18% from the record first quarter of 2022. While that was better than many rivals in Europe, it was a bigger drop than Wall Street’s average 14% decline.
Lower provisions helped the bottom line, with the Paris-based lender seeing net income gain 5.7% to €868 million ($948 million). SocGen, which also revised its cost of risk guidance for 2023 downwards, posted an underlying cost-to income ratio, a key efficiency metric, below its own targeted range.
Chief Executive Officer Frederic Oudea is set to step down later this month after a 15-year tenure that spanned the global financial crisis and Covid-19. His successor, Slawomir Krupa, is expected to lay out his broader strategic plans later this year, with an explicit mandate from Chairman Lorenzo Bini Smaghi to improve the bank’s valuation.
At 26%, SocGen’s price-to-book ratio is lowest in European banking, according to data compiled by Bloomberg Intelligence.
The lender’s French retail operations saw revenue decline 11% to €1.93 billion, in a sign that France’s challenging environment for retail banking persists. French mortgage loan generation fell by more than a third in the first three months of the year, according to preliminary Bank of France data, as rising rates lead borrowers to pause their projects and lenders to turn down loan applications.
SocGen restated earnings for 2022 after adapting new accounting standards, making a comparison with analysts’ estimates difficult. The bank said higher rates on regulated savings schemes and the phasing out of ECB’s favourable long-term loan program known as TLTROs had impacted revenue in France.