SocGen profits slide as bank lifts bad loan provisions fivefold

Société Générale reported a 35 per cent drop in fourth-quarter net income on Wednesday, as the bank increased its provisions for bad loans fivefold in expectation of customers struggling to repay their debts.

France’s third-biggest bank comfortably beat analyst expectations in the final three months of 2022, but its net income fell from €1.8bn to €1.2bn compared to a year earlier after setting aside €413mn for bad loans.

SocGen said it planned to return €1.8bn to shareholders through a cash dividend of €1.70 a share and a €440mn buyback programme after enjoying a 9 per cent increase in net banking income over the year, helped by rising interest rates.

“2022 marked a decisive stage for the group, which was able to deliver record underlying performances while adapting itself swiftly and efficiently to an uncertain and complex environment,” said chief executive Frédéric Oudéa, who is due to step down from his role at the bank’s annual meeting in May.

French banks have not benefited from rising interest rates to the same degree as their European peers due to the popularity of a Napoleonic Wars-era savings product in the country whose rates are linked to inflation and set by the government.

Even so, Paris-headquartered bank BNP Paribas said on Tuesday that it would return €5bn to shareholders in buybacks this year after producing record annual profits in 2022, despite its results disappointing in the final three months of the year.

SocGen’s shares are up 16 per cent this year, though down 20 per cent from a year earlier after its Russian subsidiary Rosbank was affected by the war in Ukraine.

SocGen took a €3bn hit when it sold the business last year.