Quick Summary
- First-quarter net profit reached €1.70 billion, surpassing the €1.55 billion analyst forecast by approximately 9%
- Year-over-year operating costs decreased 6%, exceeding the bank’s 3% annual reduction goal
- The French retail segment saw net income surge 48.4% compared to last year
- Fixed income trading revenues declined 18%, underperforming competitors like JPMorgan which grew 21%
- Common Equity Tier 1 ratio registered at 13.5%, approximately 325 basis points over regulatory requirements
Societe Generale delivered better-than-expected earnings for the first quarter on Thursday, powered by aggressive expense management and a notable turnaround in its domestic retail operations. However, these gains were overshadowed by a substantial decline in fixed income trading that positioned the lender behind most major competitors.
The banking group reported net income of €1.70 billion for the quarter ending March 31, representing a 5.5% increase from the prior year period and approximately 9% higher than the €1.55 billion analyst consensus projection.
Year-over-year operating costs declined 6% to €4.33 billion. This reduction is roughly twice the institution’s stated annual cost-cutting objective of 3%, and came in under the consensus forecast of €4.40 billion.
The cost-to-income metric improved to 60.9% compared to 65% in the same quarter last year. When calculated on an IFRIC 21 linearised basis, the ratio stood at 57.6%, comfortably beneath the bank’s full-year guidance of below 60%.
Return on tangible equity reached 11.7%, exceeding both the consensus estimate of 10.4% and the bank’s full-year objective of above 10%. The adjusted ROTE figure climbed to 12.7%.
Net banking income increased modestly by just 0.3% to €7.11 billion, marginally short of the €7.15 billion consensus projection. When adjusted for constant scope and currency effects, revenue growth registered at 4.4%.
Domestic Retail Operations Drive Performance
The French Retail, Private Banking and Insurance segment delivered net income of €625 million, representing a 48.4% year-over-year increase. The division’s return on normative equity climbed to 13.7% from 9.5% in the first quarter of 2025.
Revitalizing the French retail business has been a key priority for Chief Executive Slawomir Krupa. The division previously suffered losses exceeding €2 billion due to an ill-conceived interest-rate hedging strategy. Following his appointment as CEO in 2023, Krupa assumed direct responsibility for overseeing this unit.
The segment’s improvement stemmed from a reduction in the Livret A savings account rate, improved deposit composition, and increased loan volumes, all contributing to enhanced net interest income.
Investment Banking Hampered by FICC Weakness
The investment banking arm painted a contrasting picture. Net income for the Global Banking and Investor Solutions division decreased 9.7% to €773 million.
Revenue from FICC trading plummeted 18.2% to €571 million. Management attributed this to subdued commercial activity and challenging conditions within European interest rate markets.
This underperformance was stark when measured against industry peers. JPMorgan reported a 21% rise in FICC revenue during the same period. Goldman Sachs experienced a 10% decline, Deutsche Bank saw a 1% dip, and BNP Paribas remained essentially unchanged — all outperforming SocGen’s substantial drop.
Equities trading provided some relief, achieving record revenue of €1.12 billion, up 5.5%.
The net cost of risk registered at €355 million, equivalent to 25 basis points — positioned at the lower boundary of the bank’s 2026 guidance range of 25 to 30 basis points and significantly below the consensus expectation of €396 million.
The CET1 ratio measured 13.5% at the conclusion of March, providing a buffer of roughly 325 basis points above minimum regulatory requirements.
Online banking subsidiary BoursoBank contributed €92 million in profit during the first quarter and is projecting a full-year contribution exceeding €300 million.
Analysts at Jefferies observed that BoursoBank reduced promotional spending in the first quarter, interpreting this as evidence of a more viable trajectory toward lasting profitability.
Market attention is now shifting toward the bank’s upcoming medium-term strategic roadmap, scheduled for release on September 21.
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