By Mathieu Rosemain PARIS, Feb 6 (Reuters) - Societe Generale sailed past fourth-quarter profit forecasts on Friday after cost cuts and stronger retail sales offset a notable drop in revenue at its
SocGen's Declining Trading Revenue Clouds Strong Q4 Earnings
SocGen's Financial Performance Overview
By Mathieu Rosemain
Investment Banking Revenue Decline
PARIS, Feb 6 (Reuters) - Societe Generale reported a sharp drop in investment banking trading revenue that underperformed rivals and overshadowed an overall forecast-beating fourth quarter, hitting its shares on Friday.
Cost Management and Profit Growth
SocGen's investment banking division, its largest, saw sales decline - in contrast to gains at European and U.S. peers - by 2.3% to 2.41 billion euros, missing expectations. Fixed income, currencies and commodities (FICC) trading revenue dropped 13.3%.
Future Strategic Plans
The bank's shares opened about 3.3% lower, having risen about 140% over the past year, more than double the gain in the STOXX Europe 600 Banks index.
Rival BNP Paribas said its fourth-quarter FICC revenue rose 0.8%, while Deutsche Bank posted 7% growth.
CEO Slawomir Krupa told reporters on a call that the underperformance of the bank's markets division was largely because of accounting effects and differences in business mix and adverse foreign-exchange moves, rather than a deterioration in underlying performance.
BEATING PROFIT FORECAST
Overall, SocGen benefited from cost cuts and stronger retail sales to boost fourth-quarter net income 36% from a year earlier to 1.42 billion euros ($1.68 billion), 21% higher than the average estimate of 12 analysts compiled by the company.
Revenue over the period rose 1.6% to 6.73 billion euros, above expectations. Operating expenses came in slightly lower than projected, it said.
Results were “mixed”, with “good cost control” and improving performance in French retail banking, Royal Bank of Canada said in an early note, while Citi said the group had delivered “on balance a solid set of results.”
Krupa has sought to reverse years of underperformance through cost cuts and stronger capital.
The approach has helped revive confidence as foreign investors grow more selective about French lenders amid political instability and tax increases.
In a sign of confidence, the bank's board unanimously decided to renew Krupa's mandate as CEO for another four years beginning in 2027.
THE NEXT STRATEGIC PLAN
The bank lifted its 2026 target for return on tangible equity - a key profitability measure - to more than 10%, versus a previous range of 9% to 10%. The target is still lower than at rivals, including BNP's near 13%.
SocGen said it expected revenue growth of more than 2% in 2026 and a cost reduction of around 3%.
SocGen ended 2025 with a CET1 ratio - a key measure of financial strength - of 13.5%, above its self-set 13% target for 2026, giving it capital headroom that Krupa said will partly be used to support the bank's organic growth this year, according to an interview with Les Echos.
A rebound in net interest margin in the French retail division, along with strong results in insurance and asset management, helped drive the profit beat.
Investors and analysts are already looking ahead to the next strategic plan, which Krupa has said will include a pillar focused on "cost efficiency".
SocGen will host its next investor day on September 21.
The bank also announced a 1.46 billion euro share buyback and said it would propose a 1.61 euro per-share dividend in 2026.
($1 = 0.8477 euros)
(Reporting by Mathieu Rosemain; Editing by Tommy Reggiori Wilkes, Elaine Hardcastle)
