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Following the 50% price increase over the past two months and the BNP results announced on Monday, which placed the bar rather high, the market was expecting SocGen to publish strong results. The net profit came in 50% ahead of expectations at €1.1 billion and was of very good quality. The business dynamic is surprisingly strong, with revenues up 13% year on year while the quality of the assets is no longer a burden on the group which already achieved 70% of its 2010 annual profit target in H1.
During Investor Day held on 15th June, the management reassured the market over its exposure to risk y assets (including Greece) and confirmed the group’s robust growth relays. The €3 billion net profit for 2010 has been validated with reassuring ease and the advanced targets for 2012 were described in great detail, showing Société Générale’s confidence in its ability to achieve them. PLUS code confirmed on a share whose price discount is overdone.
SocGen’s Q1 2010 results are once more in line with the quality of the bank’s activity. The management has reported a net result of just over €1 billion, 73% above expectations. Even allowing for the positive exceptional items, the quality of the results is reassuring. The investment banking arm performed well and the more traditional retail banking activities proved particularly robust. The 25% discount on the share price against the background of the Greek crisis is overdone. PLUS code confirmed.
SocGen’s Q4 2009 results were disappointing, especially after those announced by BNP Paribas yesterday. But, by the management’s own admission, 2009 was a transitional year which paved the way for recovery in 2010. The bank’s restructuring story has real potential. But focusing on that aspect alone would be to disregard the bank’s strong assets in its key divisions. Priced at 0.74x shareholders’ equity, the market is still focusing on the group’s negative points for the time being. PLUS code confirmed.
SocGen is going from strength to strength. Restructuring is continuing with costs well under control, a €1 billion cost-cutting target for 2010 and a balance sheet on which the risk is progressively and surely diminishing. The group’s franchise is therefore strengthening on a restructured base. It is able to report market share gains in its main business areas. PLUS code easily confirmed.
SocGen reported very convincing 3rd quarter figures. The Group has proved its ability to deliver on the main undertakings which it gave at the outbreak of the crisis. Restructuring is continuing with spending well under control and balance sheet risk diminishing steadily and substantially. The Group’s commercial business is therefore being strengthened on a restructured base with market share gains in the Group’s main activity areas. PLUS code strongly confirmed.
The management had pre-announced a small profit in Q2, which saw €1.3 billion in writedowns and a stable risk cost compared to Q1. The net profit in fact amounted to €309 million, despite €1.7 billion in writedowns, thanks to an improving risk cost. In other words, the results published by SocGen today are much better than expected. What is more, recurring revenues are 15% higher year on year, pointing to a strong commercial dynamic for the coming quarters. PLUS code easily confirmed.
The arrival of the new management at SocGen will enable the market to focus on the group’s fundamentals, which are favourable in the current market configuration. The very strong underlying result of the investment banking business in Q1 was an opportunity to further clean up the balance sheet. The group has a very strong position in equities and will benefit greatly from this asset. We are introducing this share with a PLUS code.
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