France’s Societe Generale today posted record quarterly profit and upped its 2026 profitability target as a recovery in retail banking and tight cost controls offset a third consecutive quarter of shrinking trading revenues.
Group net income rose to a forecast-beating €1.79 billion in the second quarter, up 23% from a year earlier and reaching a record, ahead of the €1.57 billion average of 13 analyst estimates compiled by SocGen.
Revenues also came in ahead of expectations, thanks to lower-than-anticipated costs.
France’s second-biggest listed lender by market valuation now expects a full-year return on tangible equity – a key measure of profitability – of around 11%, up from a previous target of above 10%.
SocGen, which delivers its next strategy update in September, also lifted its cost-cutting goal after the bank’s cost-to-income ratio came in below a full-year target of 60%.
Analysts praised SocGen’s tight cost control in early notes to clients. Citi analysts called it “a healthy beat.”
SocGen also announced a €1.5 billion extraordinary share buyback starting August 3, alongside an interim cash dividend of €0.75 per share.
CEO Slawomir Krupa has embarked on one of Europe’s most closely watched banking turnarounds since he took the helm in May 2023.
After a rocky start, the efforts are paying off – SocGen’s share price more than tripled since he took over, outperforming the EURO STOXX Banks index as investors cheer his focus on capital, costs and execution.
But the bank, still worth only half of larger French rival BNP Paribas, faces the tougher task of proving it can generate sustained growth in a competitive landscape, with digital lenders expanding rapidly and U.S. banks continuing to gain ground in investment banking.
SocGen traders falling behind rivals
Unlike BNP, Barclays, UBS and Deutsche Bank, which all posted strong gains, SocGen’s trading arm disappointed. Sales from trading in fixed income and currencies fell 11.3%, missing expectations.
Weaker fixed-income trading reflected SocGen’s heavier exposure to European rates markets and its lack of a commodities franchise that has benefited some rivals, rather than any loss of competitiveness, Krupa said in a call with reporters.
“We continue to operate close to the highest levels of revenue generation in our history and with a very high ROE (return on equity),” he said.
SocGen’s overall investment banking unit saw revenue grow 2.7% from a year earlier.
Krupa acknowledged growing competition from Wall Street giants, but stressed that SocGen remained well positioned in businesses such as structured finance and advisory in sectors including infrastructure, telecoms and natural resources.
The weakness in trading was offset by a continued recovery in retail banking and tight cost discipline.
The bank’s retail division saw a nearly 15% jump in net interest income, the difference between what a bank earns on loans and what it pays out on deposits.
