Societe Generale now expects revenue to grow in all its businesses this year, including in French retail banking where it had previously anticipated growth of between minus 1% and 1%.
France’s third-largest listed lender, after BNP Paribas (OTC:BNPQY) and Credit Agricole (OTC:CRARY) SA, said its cost of risk, which reflects provisions against bad loans, would be lower than expected in 2021 at 20 to 25 basis points, down from a previous forecast of 30 to 35 basis points.
SocGen said its cost of risk was down 88.9% in the second quarter, mirroring that of rivals, including Spain’s BBVA (MC:BBVA) and BNP Paribas, which slashed provisions for unpaid loans as the global economy was gradually recovering from the worst of the COVID-19 crisis.
“Q2 was marked by the strong revenue momentum, continued cost discipline and a very low cost of risk resulting from very few loan defaults,” SocGen Chief Executive Frederic Oudea said in a statement.
The lender posted second-quarter net income of 1.44 billion euros ($1.71 billion), compared with a loss of 1.26 billion euros a year earlier. Revenue rose 18.2% to 6.26 billion euros.
In France, where the government ended a third nationwide lockdown in mid-May, retail banking revenue rose 8.7%.
Revenue was up 24.5% in its corporate and investment banking businesses, which SocGen began revamping two months ago by shifting resources into dealmaking and reducing its trading arm’s exposure to market swings.
Equity trading revenue was five times higher than a year ago, while fixed income and currency trading was down 33%.