SocGen reports €1.5 billion loss on leaving Russia but higher-than-expected revenue

French bank Société Générale lost €1.5 billion in the second quarter after selling out of Russia, but reported higher-than-expected revenue across its business and set targets new growth.

France’s third-largest listed bank said on Wednesday that there is no €3.3 billion USD From the sale of the Rosbank business in May, underlying net profit for the period will increase 11.5% from a year ago to 1.5 billion euros.

Its revenue rose 12.8% to 7.06 billion euros, above the 6.6 billion euro average expected in a poll of Refinitiv analysts, thanks to efficiency strong operations across all lines of business, from stock trading to French retail banking.

It recorded particularly strong income from its bond business, up 50% from a year earlier, while its investment banking revenue grew 18.3%.

Analysts had predicted SocGen would drop to a larger quarterly loss of nearly 2 billion euros.

The bank also set a target of increasing revenue by an average of 3% a year through 2025 and achieving a return on tangible equity (ROTE), a key profitability measure, of 10%. That compares to the consensus ROTE forecast of 8.9%, said analysts at RBC Capital Markets.

Its shares were up 3.7% in morning trading.

SocGen has undergone a series of restructurings in recent years under outgoing chief executive Frédéric Oudéa, including shrinking its investment bank after a loss in 2020. For now, SocGen hopes to take advantage of the potential to earn additional profits from rising interest rates.

Before exiting this year, it was one of the most exposed international banks to Russia.

Oudéa, one of the longest-serving European banking executives after 14 years at the helm, unexpectedly announced in May that he would not renewing his term in 2023. SocGen has since launched a search to replace him, and is considering candidates outside the bank as well as internally, according to people familiar with the details.

Oudéa told reporters on Wednesday that a decision on his replacement would come in the fall.

He said the bank was in “caution but not disaster” mode as economies across Europe faced a tougher outlook due to high inflation and chaos in energy markets due to the war on energy. Russia in Ukraine.

“There is a lot of uncertainty. But today we don’t see anything from our risk-cost point of view,” Oudéa said, when asked about the possibility of an increase in defaults.

SocGen is in the process of consolidating two large French branch networks and closing some offices, while expanding its car rental business with the €4.9 billion acquisition of LeasePlan.

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