Societe Generale has just completed its exceptional share buyback programme, cancelling close to 20 million shares.
Analysis
A buyback is a mechanical support for the share price: its end removes a regular buyer from the market. The European backdrop of inflation, yield tension and French fiscal stress weighs on banks at the same time.
Opportunity
The opportunity is the continued simplification of the group and a generous capital policy if ratios allow. The risk is the cost of risk in a slowdown and sensitivity to sovereign spreads.
Investor outlook
Neutral to cautious outlook. The sector benefits from high yields on net interest margin, but the French political environment limits re-rating.
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