By Mathieu Rosemain
PARIS (Reuters) -Societe Generale doubled its fourth-quarter profit thanks to a retail bank rebound and strong equity trading, allowing the French lender to announce shareholder payouts at the high end of expectations.
Chief Executive Slawomir Krupa has so far struggled to convince investors of his turnaround plan. But his focus on cost control, asset sales, and margin improvement is starting to pay off, bringing a key 2026 profitability target within reach.
Group net income for the three months ending in December more than doubled from a year earlier to 1.04 billion euros ($1.08 billion), beating the 814 million-euro average of 18 analyst estimates compiled by the company, it said on Thursday.
Sales grew 11.1% to 6.62 billion euros, also above the average estimate of 6.41 billion euros.
“SG delivered a good set of results,” Royal Bank of Canada said in a note to clients.
“More progress in 2025 supported by cost control (-1% underlying) should provide more confidence that 2026 is in reach,” RBC added, with reference to the bank’s strategic plan.
Revenue in SocGen’s large investment banking operations, which represent close to two thirds of group earnings, increased – although the 12% year-on-year rise fell short of French rival BNP Paribas and banks elsewhere.
SocGen’s cost-to-income ratio, a measure of efficiency, fell to 69.4% from 78.3% a year earlier, beating expectations.
That is still above peers, however, with operating expenses only down 0.3% in 2024 from the previous year. Deutsche Bank disappointed investors last week when it said it was aiming for a ratio of below 65%.
SocGen also said it beat its client acquisition target for BoursoBank, France’s leading online bank, which now boasts 7.2 million customers at end of December 2024, above a self-set goal of 7 million.
RETAIL RECOVERS
Krupa was appointed CEO in 2023 after years of lacklustre performance and missed targets on controlling costs, which had knocked investor confidence in France’s third-largest listed lender.
Since taking over, he has sold over 2.7 billion euros in assets, notably by partially exiting Africa, and pledged 1.7 billion euros in cost cuts.
These measures aim to lift the group’s return on tangible equity to 9-10% in 2026.
Profitability is improving but still way behind rivals. SocGen said its return on tangible equity reached 6.9% in 2024 from a dismal 4.2% in 2023. This year, it is targeting more than 8%.
Analysts have said they want to see a sustained improvement in SocGen earnings before hailing Krupa’s revival plan.
But they will welcome a 36% year-on-year rebound in fourth quarter of its French retail unit’s net interest income (NII) – the difference between what banks earn on loans and what they pay on deposits – after an earlier miscalculated hedging policy on interest rates cost SocGen more than 2 billion euros.
The NII was up 3% from the third quarter.
After the strong end to the year, SocGen said it would pay out 50% of its net income to shareholders, the top of a range the bank had set.
It plans a higher-than-expected share buyback programme of 872 million euros, although its dividend, at 1.09 euro per share, was slightly below expectations.
The bank’s share price has risen 27% since Krupa took over in late May 2023, versus a nearly 53% rise in European banks as a whole. It has outperformed bigger rival BNP Paribas, up 16% over the period.
($1 = 0.9603 euros)
(Reporting by Mathieu RosemainEditing by Tommy Reggiori Wilkes, Ingrid Melander)
