SocGen seals rebound in Q4 with record year in boost for Oudea

Bloomberg

Societe Generale SA rebounded with a record annual profit from its first losing year in decades, as all main businesses at the French lender beat analysts’ estimates in the fourth quarter.
A resurgent equities trading unit and record earnings from financing and advisory were among the highlights as revenue jumped 13% in the final months of last year and net income almost quadrupled. The Paris-based bank said half of last year’s underlying profit, or 2.75 euros a share, will be returned to investors through dividend payments and a share buyback.
The results complete a show of strength by Chief Executive Officer Frederic Oudea, who has kept a tight grip on the bank after losses at the onset of the pandemic. He has reshuffled management, is merging the bank’s domestic retail networks, bulking up the car-leasing business with the 4.9 billion-euro acquisition of LeasePlan and strengthening SocGen’s digital banking arm Boursorama by taking over ING Groep NV’s French retail clients.
SocGen rises 3.7% at 9:18 am in Paris trading. The shares have more than tripled from a low reached in September 2020, making it one of the best-performing bank stocks in Europe.
Revenue increased by more than 10% in all main business units. In the investment bank, equities trading surged 23% from a year earlier, beating the 0.5% average gain among the biggest Wall Street banks and the 17% increase at cross-town rival BNP Paribas SA. Fixed-income trading declined 9%, worse than analysts had expected but better than at peers including BNP.
To reward employees for that performance, SocGen is increasing its bonus pool “massively” from last year, when its investment bankers saw a 20% cut, Slawomir Krupa, who oversees that business, said in an interview with Bloomberg TV.
He declined to say how much exactly variable compensation will rise.
BNP earlier this week pledged to return 60% of profit to shareholders as it joined European peers dangling bigger dividends. Across the continent, rising interest rates promise to lift income from lending after years of negative rates weighed on earnings.
SocGen maintained its payout ratio of 50% of underlying profit. Oudea has said that the ratio could be considered a rule for the next three years. For last year, investors will get 1.65 euros per share in dividends and the rest — equivalent to 1.10 euros a share — through a buyback program for around 915 million euros.
Profit in the final months of last year was fueled in part by lower-than-expected provisions for bad loans, as SocGen joined European peers in taking an optimistic view of the impact from the pandemic as well as from higher interest rates.