Key Highlights
- First-quarter net profit reached €1.70 billion, surpassing the €1.55 billion analyst forecast by approximately 9%
- Operational costs declined 6% compared to last year, exceeding the bank’s 3% yearly reduction goal
- French retail business net earnings soared 48.4% on an annual basis
- Fixed income trading revenues tumbled 18%, underperforming competitors like JPMorgan which posted a 21% gain
- Common Equity Tier 1 ratio reached 13.5%, sitting approximately 325 basis points over regulatory requirements
Societe Generale delivered better-than-expected first-quarter earnings on Thursday, propelled by aggressive expense management and robust performance in its domestic retail operations. However, these gains were partially offset by a significant decline in fixed income trading that positioned the bank behind most major competitors.
The bank reported group net earnings of €1.70 billion for the quarter ending March 31, representing a 5.5% year-over-year increase and approximately 9% above the analyst consensus projection of €1.55 billion.
Operational expenditures decreased 6% annually to €4.33 billion. This reduction is roughly twice the magnitude of the bank’s stated annual expense reduction objective of 3%, while also coming in beneath the analyst estimate of €4.40 billion.
The cost-to-income metric improved to 60.9% compared to 65% in the prior-year period. When measured on an IFRIC 21 linearised framework, the ratio stood at 57.6%, comfortably below the institution’s full-year objective of staying under 60%.
Return on tangible equity reached 11.7%, exceeding both the analyst consensus of 10.4% and the bank’s annual target of surpassing 10%. The adjusted ROTE figure climbed to 12.7%.
Net banking income registered a modest 0.3% increase to €7.11 billion, marginally under the €7.15 billion consensus projection. Adjusting for constant scope and currency effects, revenues advanced 4.4%.
Domestic Retail Operations Shine
The French Retail, Private Banking and Insurance segment delivered net earnings of €625 million, marking a 48.4% year-over-year surge. The division’s return on normative equity climbed to 13.7% from 9.5% recorded in Q1 2025.
Revitalizing the French retail business has been a priority for CEO Slawomir Krupa. The division previously suffered losses exceeding €2 billion due to an ill-conceived interest-rate hedging strategy. Following his appointment as chief executive in 2023, Krupa assumed direct control of this segment.
The division’s performance benefited from a reduction in the Livret A savings rate, improved deposit composition, and enhanced lending activity, all contributing to stronger net interest margins.
Investment Banking Hit by FICC Weakness
The investment banking arm presented a contrasting picture. Net income for Global Banking and Investor Solutions declined 9.7% to €773 million.
Fixed income trading revenues plunged 18.2% to €571 million. Management attributed the shortfall to sluggish commercial activity and challenging conditions in European interest rate markets.
This result marked a sharp divergence from industry peers. JPMorgan reported a 21% jump in FICC revenues during the same period. Goldman Sachs experienced a 10% decline, [[LINK_START_0]]Deutsche Bank[[LINK_END_0]] saw a modest 1% decrease, and BNP Paribas maintained relatively stable performance — all outperforming SocGen’s steep drop.
Equities trading provided a positive offset, achieving record revenues of €1.12 billion, up 5.5%.
The net cost of risk totaled €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 forecast of €396 million.
The Common Equity Tier 1 capital ratio measured 13.5% at the end of March, maintaining a buffer of roughly 325 basis points above minimum regulatory thresholds.
Digital banking subsidiary BoursoBank contributed €92 million in quarterly profit and has established a full-year target exceeding €300 million.
Analysts at Jefferies observed that BoursoBank scaled back promotional spending during the first quarter, interpreting this as evidence of progress toward sustainable profitability.
Market attention has already shifted to the bank’s upcoming medium-term strategic plan, scheduled for presentation on September 21.
