SCGLF - Societe Generale: Further Upside But Pace Of Gains Should Moderate

• Q3 Group Net Income at 1.6B EUR driven by all businesses, as well as a 185M EUR gain on real estate disposal. Q3 Underlying RoTE at 10.9%.
• Capital position (CET1 at 13.4%) remains superior to BNP Paribas (CET1 at 13%). MDA (maximum distributable amount) buffer also shines, at 440 bps vs 375 bps at BNP.
• Equipment leasing subsidiary ALD is capitalizing on the chip shortage, with its group net income for the first 9 months of 2021 up 42.8% vs 2019.
• Societe Generale shares have performed strongly YTD, up 13 EUR to 30 EUR/share. However, tangible book value is only up 3 EUR to 57.8 EUR/share, hence I expect gains to moderate going forward.
• The 470M EUR buyback to be executed in Q4 is already deducted from the CET1 capital. At the current share price, it should boost tangible book value by around 0.54 EUR. Furthermore, an additional 2.03 EUR is also already deducted from the CET1 capital for distribution in 2022.

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