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SocGen expects €240M charge in Q4'18 due to divestments, market conditions

Société Générale SA warned that its 2018 fourth-quarter results will take a blow from difficult market conditions and the impact of some divestments.

The Paris banking group expects to incur an approximately €240 million exceptional charge in the fourth quarter due to the implementation of the IFRS 5 accounting of disposals, including the sale of its Serbian unit to OTP Bank Nyrt. and the divestment of its stake in La Banque Postale Financement SA.

The group also foresees a roughly 20% year-over-year decline in fourth-quarter revenue from its global markets and investor services business, owing to a challenging global capital markets environment. For the full year 2018, revenues from the business are also expected to fall by about 10% on a yearly basis.

However, the bank noted that its international retail banking and financial services and its financing and advisory businesses had a solid performance in the fourth quarter, while its French retail banking operations is expected to have performed in line with guidance.

Its pro forma group common equity Tier 1 ratio is expected to come in at between 11.4% and 11.6% as of the fourth quarter, in line with its 2020 CET1 ratio target of 12%. Group cost of risk for 2018 is expected to be between 20 basis points and 25 basis points, in line with guidance.

SocGen's board will recommend a stable dividend in respect of 2018 at €2.20 per share, and will propose the option for the dividend to be paid in shares.

The bank's fourth-quarter and full-year 2018 results will be released Feb. 7.