The logo of the French bank Société Générale
PARIS (Reuters) -Société Générale reported better-than-expected third-quarter results on Thursday, driven by the rebound in retail banking and the dynamics of equity businesses, while announcing a reshuffle of its management.
France's third-largest bank by market capitalization reported third-quarter net profit more than quadrupling from a year earlier to 1.37 billion euros, beating the 1.22 billion euro average of 16 industry estimates. analysts compiled by the company.
The results were well received by investors and Société Générale shares rose 7.15% to 25.40 euros at 09:22 GMT.
The group announced a management reshuffle with the appointment of a new CFO and the resumption of direct supervision of retail banking activities by Managing Director Slawomir Krupa.
“At this key moment of change I decided that the even greater proximity that I could create between this pillar and myself was important for the company and the continuation of the roadmap”, declared Slawomir Krupa during an exchange with journalists, recalling in general that he “seeks to prove nothing to anyone”.
Leopoldo Alvear, who arrives from the Spanish bank Banco Sabadell, has been appointed financial director effective January 7, 2025.
“A TURNING POINT”
Over the three months from July to September, net banking income showed growth of 10.5% year-on-year, to 6.84 billion euros, also above analysts' expectations.
Societe Generale's investment bank also exceeded forecasts with an increase of 4.9% to 2.4 billion euros, driven by a 10.1% jump in revenues from equity businesses signing their “second best third historic quarter,” according to the bank.
Chief Executive Slawomir Krupa, who has promised to revive the bank since taking the reins last year, is expected to turn around the retail bank, which accounts for nearly a quarter of the bank's pre-provision profits, according to UBS.
The bank spooked markets at the start of the year by reducing its annual net interest margin target, or the difference between what banks earn on loans and what they pay on deposits. This decision follows a poorly calculated hedging policy which cost Société Générale more than 2 billion euros.
The French lender said the recovery was on track, with the net interest margin continuing its rebound in the third quarter with an increase of 43% year-on-year and 19% compared to the second quarter of 2024, or 169 million euros, according to the press release.
“We believe that the third quarter marks a turning point for Société Générale with the confirmation of a recovery in retail banking in France,” responded Jefferies analysts in a note.
Return on net tangible assets (ROTE) – a key measure of profitability – came in at 9.6%, up from 3.8% a year ago and forecasts of 8.2%, thanks to revenue growth and controlling management costs.
Societe Generale has an ROTE objective of between 9% and 10% for 2026.
Asked about the consequences of the revenue aspect of the finance bill for 2025, financial director Claire Dumas estimated that the impact, which still remains to be determined according to the final version, is entirely manageable at the group level.
(Written by Bertrand De Meyer, with Mathieu Rosemain, edited by Kate Etringer)
