Société Générale said it expects the war in Ukraine to cause costs to rise as more customers default on loans and it exits the Russian market.
The French bank on Thursday also reported a 3.4 percent increase in net profit to 842 million euros for the first quarter year-on-year and a 16.6 percent increase in revenue as it benefited from market volatility and higher interest rates.
“The planned divestiture of our operations in Russia, which is currently being completed, following the abrupt change in that country’s outlook, will allow the group to exit effectively and in an orderly manner, ensuring continuity for both its employees and its customers,” said Chief Executive Frederic Oudea.
SocGen increased its risk costs for the year to between 30 and 35 basis points, or up to €1.9 billion, after previously announcing they would be below 30 basis points.
France’s third-largest bank said its Common Equity Tier 1 ratio – a key measure of its financial strength – would fall 20 basis points from 12.9 percent as a result of the planned Russian divestment.
SocGen announced last month that it was selling its entire 99.98 percent stake in Rosbank, as well as its Russian insurance business, to an investment company founded by Russian billionaire Vladimir Potanin.
The French bank said it would take a 3.1 billion euro loss after selling it to Potanin’s Interros Capital after coming under scrutiny for its large exposure to the country following Russia’s invasion of Ukraine.
Alongside Austria’s Raiffeisen and Italy’s UniCredit, SocGen was one of the three Western financial institutions with the largest exposure to Russia. The other two have said they are exploring exit strategies.
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