Societe Generale ((SCGLY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call from Société Générale presented an overall positive sentiment, emphasizing the robust financial performance of the bank. The company exceeded its financial targets, achieving increased profitability across various segments. Despite some challenges in International and French Retail sectors and concerns related to the cost of risk, the successes and positive outcomes significantly overshadowed these issues.
Exceeded Financial Targets
Société Générale surpassed all its financial targets for the fiscal year 2024, with revenue growth reaching 7%, exceeding the initial 5% target. The bank improved its cost-to-income ratio by nearly 5 points to 69%, and increased its return on tangible equity (ROTE) by 2.7 percentage points to 6.9%.
Strong Capital Position
The bank strengthened its capital position with a CET1 ratio increase of 20 basis points to 13.3%, surpassing the planned figures. Its liquidity profile remains robust, with an LCR ratio of 156% and an NSFR ratio at 117%.
Record Payout Distribution
A record payout distribution was proposed by the board, totaling €1.7 billion, a 75% increase compared to 2023. This includes a dividend of €1.09 per share and a share buyback program amounting to €872 million.
BoursoBank Growth
BoursoBank, a digital banking subsidiary, acquired 1.3 million new clients and achieved profitability for the second consecutive year. It also managed to reduce costs per client by 17%.
GBIS Exceptional Performance
The Global Banking and Investor Solutions (GBIS) division reported an exceptional performance, generating over €10 billion in net banking income with a return on net equity (RONE) of 18.4%, driven by strong results in Global Markets and Transaction Banking.
Reduced RONE in International Retail
The International Retail segment experienced a decrease in RONE to 12% from 17% last year, mainly due to increased costs associated with lease plan integration.
Challenging Market in French Retail
French Retail faced a challenging market environment, with loans outstanding decreasing by 4% compared to the previous year. However, corporate loans showed growth in contrast to the third quarter of 2024.
Cost of Risk Concerns
Although the cost of risk decreased to 23 basis points in Q4 2024 from 27 basis points in Q3, there are still concerns, particularly with Stage 2 provisions representing 4.5% of loans.
Forward-Looking Guidance
For the year 2025, Société Générale aims for net banking income growth above 3%, a net cost decrease of more than 1%, and a cost-to-income ratio below 66%. The bank anticipates a ROTE surpassing 8%, indicating a positive outlook on its future profitability and operational efficiency.
In conclusion, Société Générale’s earnings call underscores a strong financial performance, with significant achievements in revenue growth and capital position. Despite some areas of concern, the bank’s strategic initiatives and forward-looking guidance provide a promising outlook, ensuring continued success in the upcoming year.
