PARIS: Societe Generale’s (SocGen) first-quarter (1Q) earnings beat expectations yesterday as cost cuts and a recovery in the French bank’s retail division more than offset a sharp contraction in sales at its fixed income trading business.
Group net income during the January-to-March period rose 5.5% from a year earlier to 1.7bil (US$1.99bil), comfortably above the 1.55bil average of 13 analyst estimates compiled by the company.
Earnings were driven by a steep fall in operating expenses, which declined at roughly twice the targeted annual pace of 3% during the period.
Stable revenues combined with lower costs lifted the bank’s return on tangible equity (ROTE), a key profitability measure, to 11.7%, well above its full-year target of more than 10% but still below that of many rivals.
SocGen’s French retail unit delivered double-digit growth in net interest income – what a bank earns on loans minus what it pays on deposits – helped by the cut in the remuneration rate on France’s flagship regulated savings account.
The recovery of the French division is a key priority for chief executive officer Slawomir Krupa who took direct oversight of the business after a miscalculated interest-rate hedging policy cost the unit more than 2bil and weighed heavily on earnings.
Since taking the reins in 2023, Krupa has pursued a strategy centred on asset disposals, cost cuts and tighter capital discipline.
Improved execution has helped turn SocGen shares into one of the best-performing European bank stocks over the past year.
By contrast, SocGen’s investment banking division – the bank’s largest – saw revenues decline by 4.9%, dragged down by an 18% slump in fixed income, currency and commodity (FICC) trading, missing expectations even as Iran war-related volatility boosted activity at rivals. The bank had cited earlier a “less favourable commercial momentum” and market “conditions in rates, particularly in Europe.”
SocGen fell far short of peers: JPMorgan’s FICC revenue rose 21% in 1Q26, while Goldman Sachs fell 10%, Deutsche Bank slipped 1%, and BNP Paribas reported broadly flat revenues.
With some of its key 2026 targets already within reach, it is widely expected that SocGen still needs to bring its cost-to-income ratio below 60%.
Investors are already looking ahead to the bank’s next mid-term strategic plan, due on Sept 21. — Reuters
