Societe Generale (EPA: GLE) (OTCMKTS: SCGLY) on Thursday posted second-quarter earnings that missed analysts’ expectations, hurt by the bank’s 3.3 billion euro hit on its Russian unit Rosbank and weakness in the markets division. SocGen said it would exit its Russia business, following Western sanctions against Moscow due to the Ukraine crisis, after further writedowns on its Rosbank stake and other assets in the country, of which it had previously expected to book a 1 billion euro loss. The results were released after European markets closed. SocGen Posts Second-Quarter Loss After Taking 3.3 Billion Euro Hit on Russia Exit

Societe Generale Reported Stronger-than-expected Earnings Wednesday

Societe Generale Reported Stronger-than-expected Earnings Wednesday
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The company reported better earnings than expected even after exiting its Russian operations resulting in a loss of 3.3 billion euros ($3.36 billion). The French lender saw every unit grow in the second quarter, which helped to counteract the impact of its departure from Russia following Moscow’s invasion of Ukraine.

So according to a survey of analysts, a net loss of 2.85 billion euros was forecast for the quarter, but the bank experienced a net loss of 1.48 billion euros. With both strong growth in revenues and significant profitability above 10% for the first half of 2022, we were able to manage our departure from Russia without adversely affecting the business, Fréderic Oudéa, chief executive officer of the company, said in a statement.

Oudéa Told CNBC That Leaving Russia Was “Very Sad,” but Necessary

Oudéa Told CNBC That Leaving Russia Was "Very Sad," but Necessary
Image Source: CNBC

Oudéa told CNBC that leaving Russia was “very sad,” but necessary.”When you invest for many years successfully, it’s sad, but it’s so difficult to manage, so risky going forward, with no clear outcome, so it was obvious that it was the right decision,” he told Charlotte Reed on CNBC. Highlights of the quarter include:

In the third quarter, revenues reached 7 billion euros.

Operating expenses reached 4.5 billion euros.

CET 1 ratio, which measures the financial stability of banks, was 12.9% at the end of June. France’s retail bank reported a net profit increase of 18.7% over the previous quarter. International retail banking also rose 33%. The Global Banking division saw an increase of more than 50% in its net income from the previous quarter.

The French bank plans to achieve a return on tangible equity, a measure of profitability, of 10%, and a CET 1 ratio of 12% in 2025. They also want an average annual revenue growth of over 3% before that time. This stock is 28% lower on the year to date.