Société Générale, the strongest rise in the CAC 40 at the close of Friday 2 September 2022 – – 09/02/2022 at 18:10

(AOF) –

General Company

(+ 4.69% to € 23.09)

The stock of the banking group takes the lead in the leading index of the Parisian market, supported by the recent long-term rate hike.

AOF – FIND OUT MORE

Key points

– Bank founded in 1864, one of the leading European financial services groups;

– Net banking income of 25.8 billion euros generated by retail banking in France – Société Générale, Crédit du Nord and Boursorama brands, international retail banking, financial services and insurance, then wholesale banking customers and solutions for investors;

– Business model at the forefront of positive transformations: a 100% digitized bank, open platforms and architectures, winner of the race for European leadership;

– Capital characterized by the presence of employee shareholders (6.65% and 11.9% of voting rights), with a board of directors of 16 members chaired by Lorenzo Bini Smaghi, with managing director Frédéric Oudéa;

– Strong balance sheet with € 65.1 billion of equity, a CET 1 ratio of 13.7%, a liquidity coverage ratio of 129%, a leverage ratio of 4.9%, hence a rated debt TO .

Challenges

– Vision 2025 strategy, based on the merger with Crédit du Nord, local roots, responsiveness, adaptation to customer needs and responsibility:

– Innovation strategy rooted in the group’s DNA, focused on the emergence of a data-driven bank through artificial intelligence: 200 million euros of annual value creation through data and AI / 8/10 of servers in the cloud (2025 cloud of “second generation” objectives, of which 50% in private cloud and 25% in public cloud / new business models -Shine for individual customers, Forge for digital obligations, reezocar for vehicle rental and treezor, platform payment and digital currencies;

– Environmental strategy aimed at becoming the world leader in sustainable finance with 2 axes: integration of criteria in all activities: offer of 100% responsible savings, support to customers in their energy transition and structuring of solutions around hydrogen … / commitment for sustainable transition: 10% reduction in global exposure to oil and gas extraction by 2025, complete exit from thermo-coal by 2030-40 and by 2023 from loans guaranteed by reserves, or +150 billion euros of assets energy transition;

– Continued integration of the Crédit du Nord, finalized in 2023;

– After the refocusing of activities, financial availability to refocus on mobility (purchase of LeasePlan by the subsidiary ALD and discussion on Boursorama’s offer of alternative banking services to ING’s French customers).

Challenges

– Net equity per share of 68.7 euros, to be compared with the stock market price;

– Impact of the Russia-Ukraine war: sale of the stake in Rosbank, with consequent reduction of the CET ratio to 13.5% and depreciation of net profit of approximately 2 billion euros;

– targets for 2022 of a sharp increase in the cost / income ratio between 66 and 68% and a cost of risk down by 30 basis points;

– 2021 dividend of 1.65 euros and equity program, i.e. a total distribution rate of 50%.

The negative effects of rising interest rates

Rising interest rates usually cause bank income to increase through loans. In Europe, according to a survey conducted by S&P of 85 banking institutions, the sector expects an average increase of 18% in the interest margin. However, this new inflationary environment also has undesirable effects, notably an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s activities, from loans to asset management, whose income is correlated to market valuations. Reassuring element: euro area banks are strong enough to cope with a deteriorating environment.

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