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SocGen achieves 12% CET1 ratio target despite YOY fall in Q2 net income

Société Générale SA reported second-quarter consolidated group net income of €1.05 billion, down from €1.22 billion a year earlier.

Group net banking income declined year over year to €6.28 billion from €6.45 billion.

French retail banking contributed €356 million to group net income, down from €365 million in the second quarter of 2018. The international retail banking and financial services division recorded group net income of €515 million, down from the year-ago €541 million.

Group net income from the global banking and investor solutions segment fell year over year to €274 million from €507 million. The corporate center division booked a net loss of €91 million, compared to a year-ago net loss of €189 million.

The French banking group's net cost of risk amounted to €314 million, up from the year ago €170 million, while operating expenses declined year over year to €4.27 billion from €4.40 billion. Operating expenses included a €227 million restructuring provision in the global banking and investor solutions segment as well as integration costs.

Net losses from other assets totaled €80 million, compared to losses of €42 million in the second quarter of 2018.

For the first half, SocGen's group net income fell on a yearly basis to €1.74 billion from €2.13 billion. EPS for the period amounted to €1.69, compared to the year-ago €2.22.

Return on equity stood at 6.9% at the end of June, compared to 8.6% a year earlier.

As of June 30, the group's common equity Tier 1 ratio stood at 12.0%, up 52 basis points compared to the end of March. The group has a target of 12% CET1 ratio by 2020.

The bank's leverage ratio stood at 4.3% at June 30, stable compared to the end of 2018.

SocGen said the adaptation of the operational setup in global banking and investor solutions announced in May has entered the execution phase. The new organizational structures in the businesses and their support functions have been in place since July 1.

The refocusing of the group continued, with the finalization of the disposal of Polish unit Euro Bank SA, which had a positive impact in its CET1 ratio in the second quarter. Overall, the expected cumulative impact of the disposals announced to date is around 47 basis points.

"Société Générale has provided further evidence of the successful execution of its strategic plan with two priority financial objectives: Increasing its level of capital; and improving profitability," CEO Fréderic Oudéa said. "In particular, we achieved our core equity Tier 1 target of 12% in [the first half]."

The group's cost-saving program is also "well underway," with an achievement rate of nearly 35% to date.