2023-05-23 15:59:00
(AOF) –
Societe Generale
(+3.90% to 24.27 euros)
Societe Generale finished at the top of the CAC 40 following announcing yesterday the acquisition of 100% of the capital of LeasePlan (a Dutch multinational specializing in the management of vehicle fleets) via its subsidiary ALD Automotive. The operation was finalized with a consortium led by TDR Capital. The combination of the activities of ALD and LeasePlan aims to create the world leader in sustainable mobility solutions. On the stock market, ALD gained 1.40% to 11.59 euros.
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Key points
– Bank born in 1864, one of the leading European financial services groups;
– Net banking income of €28.1 billion generated by retail banking in France – Societe Generale and Boursorama brands, international retail banking, financial services, mobility financing and insurance, then personal banking major customers and investor solutions;
– Business model claiming the vanguard of positive transformations: a 100% digitized bank, open platforms and architectures, a winner in the race for European leadership;
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Capital characterized by the presence of employee shareholders (7.93% and 13.2% of voting rights), with a board of 18 directors chaired by Lorenzo Bini Smaghi, the general management being ensured by Frédéric Oudéa until May 23, 2023 then by Slawomir Krupa;
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Strong balance sheet with €66.5bn in equity, 13.5% CET 1 ratio, 141% liquidity coverage ratio, 4.4% leverage ratio, hence A-rated debt .
Challenges
– Strategy being revised for the 3rd quarter:
– 3 priorities including the execution of ongoing projects: creation of the new SG retail bank in France, development of Boursorama, planned acquisition of LeasePlan by ALD, joint venture project with AllianceBernstein and deployment of the ESG strategy,
– Innovation strategy rooted in the group’s DNA, focused on the emergence of a data-driven bank via artificial intelligence:
– 200 M€ of annual value creation via data and AI,
– 8/10ths of servers in the cloud (2025 “second generation” cloud objectives, including 50% in private cloud and 25% in public cloud,
– new business models – Shine for individual customers, Forge for digital bonds, reezocar for vehicle rental, Treezor, payment platform and digital currencies, Arquant for cryptocurrencies, etc.;
– P&T BAX start-up accelerator;
– 2025 environmental strategy aiming to become the world leader in sustainable finance with 2 axes:
– “ESG by Design” project to integrate criteria into all business lines,
– commitment to sustainable transition: financing increased to €300m 20% reduction in overall exposure to oil & gas extraction vs 2019, complete phase-out of thermal coal by 2030-40;
– Strategic progress: launch of the new retail bank in France resulting from the merger of the Societe Generale networks, strong growth of Boursorama (4.7 million customers), global positions in mobility (purchase of LeasePlan by ALD and, in the shares, joint venture with Bernstein.
Challenges
– Net assets per share of €62.3, to be compared with the market price;
– Impact of the Russia-Ukraine war: disposal of the stake in Rosbank resulting in an impact of €3.6 billion on net income (€5.6 billion underlying);
– Expectations for 2023: a year of transition with a sharp increase in the cost/income ratio between 66 and 68% and a cost of risk of 30 to 35 basis points;
– 2022 dividend of €1.7 and action program of €44O million.
The negative effects of rising interest rates
The rise in interest rates normally causes an increase in bank income through the loans granted. In Europe, according to a survey conducted by S&P among 85 banking establishments, the sector expects an average increase of 18% in its net interest income. However, this new inflationary context also has undesirable effects, in particular an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s businesses, ranging from loans to asset management, whose income is correlated to market valuations. Reassuring element: the banks of the euro zone are sufficiently solid to face a deterioration of their environment.
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