PARIS (Reuters) – French Societe Generale saw its fourth quarter equity and rate trading income drop, the bank said on Wednesday, out of step with many competitors who took advantage of volatility during the COVID pandemic. 19.
The French lender is in the process of reorganizing its markets activity and exiting certain areas, after losses on structured products wiped out the profits of its equities business in the first half of 2020.
SocGen has consistently beaten earnings guidance overall for the fourth quarter as charges related to the COVID-19 pandemic have been lower than expected, helping it offset the trade lag.
But it also recorded a full-year loss of 258 million euros for 2020 as restructuring charges related to its attempts to overhaul its investment banking business weighed in.
SocGen’s income from fixed income and currency trading fell 16% while in equity trading, income fell 7% year-on-year, although it improved from the previous year. in the previous quarter.
At BNP Paribas, revenues jumped 22% in interest rate, currency and commodities trading while equity income fell 4.5%.
SocGen’s poor performance in the fixed income sector will put additional pressure on Managing Director Frédéric Oudea to show signs that his market recovery plan may bear fruit.
The lender will unveil a report on its corporate and investment banking operations on May 10.
SocGen has abandoned or reduced certain corporate and investment banking activities, such as commodity trading. The bank also announced last year that it would gradually stop selling certain structured products that were particularly responsive to market fluctuations during the crisis.
FALLING LOADS
SocGen’s net profit fell 28% to 470 million euros ($ 569.31 million) in the fourth quarter while revenue fell 6%. Its cost of risk, which reflects bad debt charges, rose 85.7% over one year to 689 million euros over the period, but this is less than expected by analysts.
Lenders around the world have tried to combat the effects of the health crisis, including setting aside funds to deal with loans that could turn sour in the event of a downturn, although this pressure has started to ease these last months.
Economies are expected to gradually recover this year from the worst of the COVID-19 pandemic, and like French rival BNP Paribas, SocGen has said bad debt provisions are expected to decline.
SocGen said it plans to pay a dividend of 0.55 euros per share in cash in May, in line with recommendations from the European Central Bank to preserve capital amid the coronavirus crisis.
The lender also announced that it will launch a share buyback plan in the fourth quarter of 2021 for around € 470 million.
($ 1 = 0.8256 euros)
Report by Matthieu Protard and Marc Angrand: Editing by Sarah White and Carmel Crimmins