SOCIETE Generale (SocGen) said on Thursday (Feb 6) it had doubled fourth-quarter profits after a recovery in its retail bank and increased equity market trading, helping the French lender promise shareholder payouts at the top end of expectations.
Chief executive Slawomir Krupa has struggled to convince investors of his turnaround plan and lift SocGen’s long-struggling stock price, but his focus on controlling costs, selling assets and improving margins is starting to pay off.
Group net income for the three months ending in December more than doubled from a year earlier to 1.04 billion euros (S$1.5 billion), beating by 28 per cent the 814 million euros average of 18 analyst estimates compiled by the company.
Sales grew 11.1 per cent to 6.6 billion euros, also above the average estimate of 6.4 billion euros.
Revenue in SocGen’s large investment banking operations, which represent close to two-thirds of group earnings, increased – although the 12 per cent year-on-year rise fell short of French rival BNP Paribas and banks elsewhere.
“We say what we do, we do what we say, and we will continue to focus in 2025 on the relentless execution of our strategy, improving our performance even further,” Krupa said.
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SocGen’s cost-to-income ratio, a measure of efficiency, fell to 69.4 per cent from 78.3 per cent a year earlier, beating expectations.
That is still above peers, however, with operating expenses only down 0.3 per cent in 2024 from the previous year. Deutsche Bank disappointed investors last week when it said it was aiming for a ratio of below 65 per cent.
Retail recovers
Krupa was appointed CEO in 2023 after years of lacklustre performance and missed targets on controlling costs, which knocked investor confidence in France’s third-largest listed lender.
Profitability is improving but still way behind its rivals. SocGen said its return on tangible equity reached 6.9 per cent in 2024 from a dismal 4.2 per cent in 2023. This year it is targeting more than 8 per cent.
Analysts say they want to see a sustained improvement in SocGen earnings before hailing Krupa’s revival plan.
But they will welcome a 36 per cent year-on-year rebound in the fourth quarter of its French retail unit’s net interest income – 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 two billion euros.
After the strong end to the year, SocGen said it would pay out 50 per cent 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 euros per share, was slightly below expectations. REUTERS
