Societe Generale Q4 2021: Impressive Performance Compared With Precoronavirus Results

No-moat Societe Generale finished 2021 strongly, reporting a net profit of EUR 1.8 billion for the fourth quarter, significantly ahead of the EUR 470 million it booked a year earlier. This result brings Societe Generale to fiscal 2021 net profit of EUR 5.6 billion, which is not only an impressive recovery from the coronavirus-induced loss-making position Societe Generale found itself in 2020, but also 74% and 46% ahead of the prepandemic 2018 and 2019 fiscal years respectively. While substantially lower loan provisions played a significant role in this, revenue is also higher than prepandemic levels. At the same time, costs are lower, leading to preprovision profits improving by 18% and 12% compared with 2019 and 2018, respectively. The outlook for 2022 is going to be more challenging. Societe Generale is more reliant on income from trading securities than most of its European peers, and 2021 was a very favorable year for trading revenue. Societe Generale’s high level of operational gearing will amplify any normalization of trading revenue.