Retail banking rebound boosts Societe Generale profits

A sharp rebound in retail banking activity has boosted French lender Societe Generale’s profits, it announced today.

Profits in the final three months of last year came in at €1.79bn (£1.51bn), up substantially from the €470m booked in the same period in 2020.

An uptick in loan demand driven by consumer confidence recovering as the global economic recovery from the Covid-19 crisis ploughed ahead last year boosted Societe Generale’s retail banking arm.

Net banking income at the French bank climbed over 13 per cent over the last year to €6.6bn (£5.56bn), up from €5.8bn (£4.89bn).

Stronger demand among borrowers led net interest income higher, while commissions generated by originating loans lifted Societe Generale’s retail banking revenues in France.

Profits for the whole of 2021 came in at €5.6bn (£4.72bn), the bank’s best ever annual haul.

“2021 marks a milestone for the Societe Generale Group, which achieved the best financial results in its history, enabling it to generate a good level of profitability and offer its shareholders an attractive return,” Frederic Oudea, chief executive of Societe Generale, said.

The bank’s return on tangible equity, a measure of a bank’s profitability, came in at 10.2 per cent for 2021 as a whole.

The cost of dealing with loan defaults pushed Societe Generale’s risk costs sharply lower.

Paying for non-performing loans, among other risks, fell to €700m (£590m) in 2021, down from €3.3bn (£2.78bn) in 2020 at the height of the pandemic.

The world’s top banks set aside billions of pounds in reserves to deal with an expected wave of defaults triggered by the Covid-19 crisis damaging the global economy.

However, many lenders released these reserves over the course of last year, boosting revenues and profits in the process.