Societe Generale Prioritizes Payouts as Capital Strengthens
Societe Generale SA's Chief Executive Officer Slawomir Krupa shifts focus to shareholder rewards, boosting the stock price by 11% and reaching a three-year high.
The French lender announces €1.7 billion in investor payouts for 2024, including €872 million in buybacks and an increased dividend of €1.09 per share. It aims to maintain a 50% payout ratio.
SocGen also raises its 2025 profitability target to an 8% return on tangible equity, outpacing analyst expectations. Fourth-quarter net income surges by over 100%, surpassing analyst consensus.
"Given this strong performance, we are enhancing both our 2024 distribution and distribution policy," states Krupa.
The bank expects revenue growth of 3% and cost reduction of 1% for 2025. It targets a CET1 ratio above 13% and will manage it through payouts or reinvestment if exceeded.
Krupa hints at potential future buybacks, contingent upon the EU's decision on implementing Basel regulations.
SocGen's positive earnings support the view that French banks are recovering from a challenging 2024. Reduced interest rates on French savings accounts and political stability contribute to improved funding conditions.
Despite potential headwinds from tax hikes, Krupa believes SocGen's global presence mitigates their impact.
Trading income for equities and fixed income instruments increased in the fourth quarter, aided by favorable market conditions and the US presidential election outcome.
Following job cuts and divestments, SocGen continues to explore the sale of its German consumer finance business, Hanseatic Bank.