SocGen lifts profit target as retail bank offsets trading drop

Core Viewpoint - Societe Generale has raised its profitability target for 2026 following a strong fourth-quarter performance driven by cost cuts and improved retail banking sales, despite a decline in investment banking revenue [1]. Financial Performance - The bank's fourth-quarter net income increased by 36% year-over-year to 1.42 billion euros ($1.68 billion), exceeding analyst expectations by 21% [1]. - Revenue for the quarter rose by 1.6% to 6.73 billion euros, also above forecasts [1]. - Operating expenses were slightly lower than projected, contributing to the overall positive results [1]. Strategic Developments - Societe Generale has set a new target for return on tangible equity for 2026 at over 10%, up from a previous range of 9% to 10% [1]. - The bank anticipates revenue growth of more than 2% in 2026 and aims for a cost reduction of around 3% [1]. - The CET1 ratio at the end of 2025 was 13.5%, surpassing the self-imposed target of 13% for 2026, providing capital headroom for organic growth [1]. Investment Banking Performance - The investment banking division experienced a 2.3% decline in sales to 2.41 billion euros, falling short of expectations [1]. - FICC trading revenue dropped by 13.3%, contrasting with gains reported by competitors like BNP Paribas and Deutsche Bank [1]. Shareholder Returns - The bank announced a share buyback program worth 1.46 billion euros and plans to propose a dividend of 1.61 euros per share for 2026 [1].