(Bloomberg) — Societe Generale SA said that a period of plowing excess capital into reserves is over, and investors can expect higher payouts on the back of improved profitability.
Most Read from Bloomberg
The Paris-based bank said Thursday that its targeting a return on tangible equity, a key profit metric, of 8% in 2025, ahead of analyst expectations. The stock jumped more than 9% as the lender pledged to hand half of that cash pile to shareholders, after posting fourth quarter results that also beat estimates.
SocGen’s earnings add weight to the view that French banks are turning the corner after a difficult 2024, when they mostly sat out the share-price gains that European peers, able to benefit more directly from interest-rate hikes, enjoyed. The share price is up close to 40% since early December, during the peak of France’s political turmoil.
Leopoldo Alvear, SocGen’s new Chief Financial Officer, said in a conference call that the bank’s core capital ratio, of 13.3%, was “now solid,” and the phase of strengthening capital “is now behind us.”
The lender announced a €1.7 billion ($1.8 billion) investor payout for last year, consisting of a buyback program of €872 million and an increased dividend of €1.09 per share. Net income more than doubled from a year earlier, to €1.04 billion.
French Prime Minister Francois Bayrou survived two no-confidence motions on Wednesday, assuring the adoption of a 2025 budget following months of political turmoil. While that should help restore some stability, a downside for the country’s largest companies is the implementation of a tax hike. Investors can also expect a new tax on share buybacks.
“Planned tax hikes on companies in France and tax on share-buybacks should have limited consequences for Societe Generale, as the bank is very global,” Chief Executive Officer Slawomir Krupa said on the call.
The bank targeted revenue growth of more than 3%, a decline in costs above 1% and higher profitability for the year ahead.
Revenue from the trading of equities, a key unit for SocGen, increased 10% to €831 million in the three months through December, beating the €814 million that analysts polled by Bloomberg anticipated.
Election Boost
Revenues from the equity business reached a record, “driven by favorable market conditions, particularly after the result of the presidential elections in the US,” the bank said in a statement Thursday. Still, this compares to the 30% jump posted by cross-town rival BNP Paribas SA earlier this week.
