SocGen lifts targets after French retail rebounds sharply
The French lender said it raised its 2025 return on tangible equity target, a key profitability measure, to around 9% from a previous goal of above 8%.
It also said it now expects its cost-to-income ratio, a key efficiency indicator, to below 65% this year versus a previous target of below 66%.
The SocGen division that houses its core French retail business doubled its net earnings in the second quarter, driven by a 15% increase in net interest income. NII is the difference between what the bank earns on loans and pays on deposits.
The rebound in the retail unit builds on momentum seen in the first quarter, as CEO Slawomir Krupa implements turnaround efforts since he took the reins in 2023.
Group net income jumped 31% to 1.45 billion euros ($1.66 billion) in second quarter, compared to the same period last year, well above the 1.19 billion euro 15 analyst estimates compiled by the company.
Revenues over the period were up 1.6% to 6.79 billion euros, also beating analysts' average estimate.
In addition, the bank announced an interim dividend of 61 euro cents per share to be paid in October and plans a 1 billion euro share buyback in August.
Krupa, who recently drew attention in France by urging staff to review remote working policies and spend at least four days a week in the office, was brought in to revive SocGen's shares after years of underperformance.
His plan, centered on reducing expenses, asset disposals, and strengthening the bank's capital, initially underwhelmed the market but improved cost management has helped shares climb around 120% in the past year.
SocGen's valuation, however, remains well below its book value.
The French lender's investment banking division, its largest, posted revenue 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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