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Investing.com -- Moody’s Ratings has affirmed Societe Generale (OTC:SCGLY)’s A1 long-term senior unsecured debt, deposit and issuer ratings while changing the outlook from negative to stable.
The rating agency also affirmed the French bank’s baa2 Baseline Credit Assessment (BCA) and other ratings including its Prime-1 short-term deposit and commercial paper ratings.
According to Moody’s, the baa2 BCA reflects Societe Generale’s solid asset quality with a proven track record of contained cost of risk and limited concentrations. The bank maintains solid capitalization with a Common Equity Tier 1 (CET1) ratio of 13.4% as of March 31, 2025, which exceeds its 13% target level though remains lower than most peers.
The bank’s profitability has recovered and is expected to benefit from lower restructuring charges going forward. Moody’s noted better prospects for recovery in the French retail business and strong momentum in capital market and global banking activities. The bank’s Czech subsidiary is also performing well.
Mobility and leasing services are gradually benefiting from synergies following the integration of LeasePlan Corporation N.V. (renamed Ayvens Bank N.V.) within Ayvens.
Moody’s highlighted that Societe Generale maintains sound funding and liquidity with a liability structure adapted to its assets, proven access to funding markets, and ample liquid assets. These strengths help mitigate risks associated with the bank’s extensive use of short-term wholesale funding.
Following a business portfolio re-evaluation that resulted in selling several subsidiaries in non-core regions and activities, the bank’s remaining businesses are well-balanced and diversified both geographically and across different business types.
The A1 long-term ratings reflect the bank’s baa2 BCA and Adjusted BCA, a three-notch uplift from Moody’s Advanced Loss Given Failure analysis, and a one-notch government support uplift reflecting moderate likelihood of government support for senior creditors.
The stable outlook reflects improved profitability since the second half of 2024 and expectations for sustainable recovery over coming quarters. Moody’s also expects asset quality to remain resilient despite challenging operating conditions, with the bank maintaining a CET1 ratio above 13% and sound asset and liability management.
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