Societe Generale, France's third-largest listed bank, today raised its annual profit target after a strong rebound in its French retail business lifted second quarter results above expectations.
The French lender 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, at 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 cent per share to be paid in October and a €1 billion 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 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, who took the reins in 2023, presses ahead with turnaround efforts.
Group net income jumped 31% to €1.45 billion in the second quarter, compared to the same period last year, well above the €1.19 billion estimate of 15 analysts compiled by the company.
Revenues over the period were up 1.6% to €6.79 billion, also beating analysts' average estimate.
"We remain fully focused on the precise and methodical execution of our 2026 roadmap to continue delivering sustainable and profitable growth for all our stakeholders," said Krupa, who was brought in to revive SocGen's shares after years of underperformance.
Investor perception of the bank had long been hurt by repeated missed targets, the 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 shares climb around 120% in the past year.
SocGen's valuation, however, still 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 €615m, trailing BNP Paribas's 27% jump.
Equities trading revenue fell 2.9% to €962m. SocGen's trading business benefited less from increased market volatility sparked by the wave of tariffs rolled out by US President Donald Trump than Wall Street peers and larger French rival BNP Paribas.
