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Société Générale’s chief executive Slawomir Krupa has said he will move on from “a year of transition” blighted by weakness at its French retail business, as the French bank set out plans to accelerate revenue growth this year.
Krupa has embarked on a reset of France’s third-biggest lender, which received a cool reception from investors last September when he cut profitability targets and presented what he said was a realistic reboot for a bank dogged by years of restructurings.
In its fourth-quarter results on Thursday, SocGen pointed to some signs of improvement, including a slight recovery in earnings from loans in its domestic business — echoing its French rival Crédit Agricole, which also signalled improving net interest income at home.
French banks did not benefit as quickly as European rivals when interest rates rose rapidly last year, as local consumer protections delayed the pace at which they could be passed on.
SocGen’s fourth-quarter earnings beat analysts’ forecasts, helped by a strong performance in its equities trading business. But net profit still slumped 60 per cent in the period from a year earlier to €430mn, while revenue fell 9.9 per cent. It was also hit in 2023 by hedges against low interest rates that backfired.
“2023 was a year of transition and transformation,” Krupa said, adding that this year would be “decisive” for the group’s reboot.
SocGen said its return on equity, a measure of profitability, would exceed 6 per cent in 2024 after ending 2023 at 4.3 per cent, below that of many peers. For 2023 as a whole net profit grew 37 per cent to €2.5bn but revenues were down 7.6 per cent to €25.1bn.
Krupa has flagged an extra €1.7bn of savings by 2026 to help reboot the bank and earlier this week SocGen announced 900 job cuts at its headquarters as part of that. Those voluntary departures equate to about 5 per cent of head office staff.
Shares in the bank were flat by mid-morning on Thursday. But Crédit Agricole, which also reported earnings on Thursday, fell 6 per cent after it flagged a worse than expected decline in insurance revenue.
Crédit Agricole posted a 25 per cent drop in net income to €1.33bn, though it set aside less money than expected against soured loans.
France’s second-biggest bank by market value said its investment bank had its best quarter, and it performed particularly well compared to rivals, including on Wall Street, in fixed income trading.
But revenue in Crédit Agricole’s insurance business was down 47 per cent year on year in the period, due to what it said were high weather-related claims.
