PARIS: Societe Generale (SocGen) says it has doubled fourth-quarter (4Q) profits after a recovery in its retail bank and increased equity market trading, allowing the French lender to promise shareholder payouts at the top end of expectations.
Chief executive officer (CEO) 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 US$1.08bil, beating by 28% the US$894mil average of 18 analyst estimates compiled by the company.
Sales grew 11.1% to US$7.22bil, also above the average estimate of US$7.04bil.
Revenue in SocGen’s large investment banking operations, which represent close to two thirds of group earnings, increased – although the 12% year-on-year (y-o-y) 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 seven million.
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 have said they want to see a sustained improvement in SocGen earnings before hailing Krupa’s revival plan.
But they will welcome a 36% y-o-y 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 US$2.19bil.
The NII was up 3% from 3Q.
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 US$953mil, although its dividend, at US$1.13 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. — Reuters
