SocGen shares drop after new strategy flags little growth By Reuters
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© Reuters. FILE PHOTO: People walk past a logo of French bank Societe Generale in front of the company’s skyscraper at the financial and business district of La Defense near Paris, France September 14, 2023. REUTERS/Gonzalo Fuentes/File Photo
By Mathieu Rosemain
LONDON (Reuters) -Societe Generale’s shares dropped more than 6% in early Monday trade after France’s third-biggest bank said it expected little if any growth in annual sales over the coming years in a keenly-awaited strategic plan from its new CEO.
Slawomir Krupa took over in May, charged with reviving a bank that has slipped behind French leader BNP Paribas (OTC:) and some other European rivals amid a costly exit from Russia last year and concerns it is too reliant on volatile investment banking.
“We are negatively surprised by lack of revenue growth, increased capital target, payout & ROTE cut, and by the lack of details,” Jefferies analysts said in a note.
SocGen said it would target a 9-10% return on tangible equity ratio (ROTE) in 2026. It will also pay out 40-50% of reported net income to shareholders in dividends and buybacks from 2024 onwards.
Both targets are slightly below previous pledges that saw ROTE reaching about 10% in 2025 and a payout ratio of 50%.
It also said its new targets were based on annual revenue growth expectations between zero and 2% between 2022 and 2026, but that it would aim to improve its cost-to-income ratio.
A SocGen veteran and former head of its investment bank, Krupa said he would streamline the bank’s activities but didn’t elaborate.
“We will strengthen the group by shaping a simplified business portfolio, while taking the right actions to build-up capital and increase flexibility, structurally improve our operating leverage and maintain our best-in-class risk management”, Krupa said in a statement.
The share price decline put SocGen on course for the biggest one-day drop since March.
JP Morgan analysts also said in a note that the new targets were below consensus in terms of revenue expectations.
“It will take time for the shares to discount the cost improvement given SG’s mixed track record,” they said. “The new CEO will have to earn investor goodwill through delivery.”
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© Reuters. FILE PHOTO: People walk past a logo of French bank Societe Generale in front of the company’s skyscraper at the financial and business district of La Defense near Paris, France September 14, 2023. REUTERS/Gonzalo Fuentes/File Photo
By Mathieu Rosemain
LONDON (Reuters) -Societe Generale’s shares dropped more than 6% in early Monday trade after France’s third-biggest bank said it expected little if any growth in annual sales over the coming years in a keenly-awaited strategic plan from its new CEO.
Slawomir Krupa took over in May, charged with reviving a bank that has slipped behind French leader BNP Paribas (OTC:) and some other European rivals amid a costly exit from Russia last year and concerns it is too reliant on volatile investment banking.
“We are negatively surprised by lack of revenue growth, increased capital target, payout & ROTE cut, and by the lack of details,” Jefferies analysts said in a note.
SocGen said it would target a 9-10% return on tangible equity ratio (ROTE) in 2026. It will also pay out 40-50% of reported net income to shareholders in dividends and buybacks from 2024 onwards.
Both targets are slightly below previous pledges that saw ROTE reaching about 10% in 2025 and a payout ratio of 50%.
It also said its new targets were based on annual revenue growth expectations between zero and 2% between 2022 and 2026, but that it would aim to improve its cost-to-income ratio.
A SocGen veteran and former head of its investment bank, Krupa said he would streamline the bank’s activities but didn’t elaborate.
“We will strengthen the group by shaping a simplified business portfolio, while taking the right actions to build-up capital and increase flexibility, structurally improve our operating leverage and maintain our best-in-class risk management”, Krupa said in a statement.
The share price decline put SocGen on course for the biggest one-day drop since March.
JP Morgan analysts also said in a note that the new targets were below consensus in terms of revenue expectations.
“It will take time for the shares to discount the cost improvement given SG’s mixed track record,” they said. “The new CEO will have to earn investor goodwill through delivery.”
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