Societe Generale posts sharp uptick in fourth-quarter profit

(Sharecast News) - French banking giant Société Générale reported a sharp increase in fourth-quarter profit on Thursday, driven by a rebound in its domestic retail banking unit and a strong trading performance. The company posted net income of €1.04bn for the three months through December, more than double the €429m recorded a year earlier and exceeding analyst expectations of €820m.

Revenue climbed 11% to €6.62bn, also beating estimates.

The results provided a boost to chief executive Slawomir Krupa's turnaround strategy, which was focussed on cost control, asset sales, and margin improvements.

Since taking over in 2023, Krupa had overseen €1.7bn in cost cuts and sold €2.7bn in assets, including partial exits from Africa.

His plan was designed to lift the bank's return on tangible equity to 9% to 10% by 2026, up from 6.9% in 2024 and 4.2% in 2023.

The bank was now targeting a return exceeding 8% this year.

A key driver of its improved performance was a 36% year-on-year rebound in net interest income from its French retail division, following an earlier hedging miscalculation that cost the bank more than €2bn.

Revenue from the unit rose 15.5% to €2.3bn.

Meanwhile, the investment banking division, which accounts for most of the group's earnings, posted a 12% revenue increase to €2.5bn, benefiting from favourable market conditions.

Société Générale also announced an €872m share buyback, approved by the European Central Bank, alongside a dividend of 109 euro cents per share, up from 90 cents last year.

The total shareholder payout for 2024 stood at €1.7bn - a 75% increase from the prior year.

Despite the strong results, the bank's cost-to-income ratio remained elevated at 69.4%, though it had improved from 78.3% a year earlier.

Société Générale's shares had gained 27% since Krupa took over in May 2023, lagging the broader European banking sector but outperforming domestic rival BNP Paribas.

The bank said it expected revenue growth of more than 3% in 2025 while continuing to reduce costs.

"In 2024, our performance improves materially; all our targets are exceeded and ahead of plan," said CEO Slawomir Krupa.

"Strong capital build-up, strong and sustainable business growth, strong cost control and risk management, and a material progress in our integration projects led to the doubling of the earnings per share.

"Against this strong backdrop, we are improving both the 2024 distribution and our distribution policy."

"We will continue to focus in 2025 on the relentless execution of our strategy, improving our performance even further."

At 0941 CET (0841 GMT), shares in Societe Generale were up 8.52% in Paris at €33.51.

Reporting by Josh White for Sharecast.com.