SocGen doubles Q4 profit as retail unit rebounds

Reuters

06-02-2025

Summary
Companies
Q4 French retail NII up 36%
Q4 net profit more than doubles to 1.04 bln euros
Investment bank revenue up 12%, below peers
Announces 872 mln euro buyback plan
PARIS, Feb 6 (Reuters) - Societe Generale (SOGN.PA), opens new tab said on Thursday 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 ($1.08 billion), beating by 28% the 814 million-euro average of 18 analyst estimates compiled by the company.
Sales grew 11.1% to 6.62 billion euros, also above the average estimate of 6.41 billion euros.
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 (BNPP.PA), opens new tab 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 in written comments.
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%.
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 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 say 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.
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.
($1 = 0.9603 euros)