SocGen shares surge on annual profit target boost, retail banking rebound
The retail division's strong performance builds on momentum seen in the first quarter, as CEO Slawomir Krupa, who took the reins in 2023, presses on with turnaround plans.
SocGen shares rose as much as 8% in early trading in their biggest single-day gain since February and hitting their highest level since September 2008. The shares were up 6.6% at 0816 GMT.
France's third largest listed bank raised its 2025 return on tangible equity target, a key profitability measure, to around 9% from a previous goal of above 8%.
It now expects its cost-to-income ratio, a key efficiency indicator, to be below 65% this year versus a previous target of below 66%.
"In short: Beat, raise, return," Goldman Sachs wrote in an early note to clients, welcoming an interim dividend of 61 euro cents per share to be paid in October and a 1 billion euro share buyback set for August.
"We see confirmed growth in French retail including BoursoBank," Jefferies said, with reference to SocGen's fast-growing online bank.
The SocGen division that houses the French retail business doubled net earnings in the second quarter, driven by a 15% increase in net interest income. NII is the difference between what a bank earns on loans and pays on deposits.
Group net income jumped 31% to 1.45 billion euros ($1.66 billion) in the second quarter, compared with the same period last year, above a forecast of 1.19 billion euros from 15 analysts compiled by the company.
Revenues were up 1.6% to 6.79 billion euros, also beating analysts' average estimate.
Krupa, who was brought in to revive SocGen's shares after years of underperformance, said the bank was fully focused on its "2026 roadmap" to continue delivering sustainable and profitable growth.
The bank has faced a tough task to recover from a series of mishaps, including missed financial targets, fallout from a rogue trading scandal during the 2008 financial crisis and a costly exit from Russia following the country's invasion of Ukraine.
Krupa's plan, centered on reducing expenses, asset disposals, and strengthening the bank's capital, initially underwhelmed the market. But improved cost management has helped SocGen's shares climb around 120% in the past year.
SocGen's valuation, however, remains below its book value.
At the investment banking division, the bank's largest, revenue rose in line with analysts' expectations.
Sales from trading in fixed income and currencies rose 7.3% to 615 million euros, trailing BNP Paribas's 27% jump.
Equities trading revenue fell 2.9% to 962 million euros. SocGen's trading business benefited less from increased market volatility sparked by the wave of tariffs rolled out by U.S. President Donald Trump than Wall Street peers and larger French rival BNP Paribas.
($1 = 0.8709 euros)
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