Breaking MinuteBy Tommy Reggiori Wilkes and Elizabeth Howcroft LONDON/PARIS, Sept 21 (Reuters) - Societe Generale lifted a key performance target to 2029 and pledged more cost cuts to achieve it under a new strategic plan announced on Monday, marking the next phase of CEO Slawomir Krupa's effort to turn around the French lender. France's second-biggest listed bank is now aiming for a return on tangible equity of 13% to 14% in 2029, up from around 11% this year - which is below most peers - before reaching 15% in 2030 and beyond. SocGen's high cost base and weak returns have weighed on performance for years, with Krupa vowing to change that after taking over in 2023 and launching an initial three-year plan that is beginning to deliver results.
"Lowering costs has been and will remain at the heart of our strategy," Krupa said, while presenting the bank's new plan to investors in London. Shares in the bank rose more than 3%, against a 1.5% gain for the wider European banking index, a far better response than Krupa's last strategic plan in September 2023 drew when the stock sold off sharply. Analysts said the new targets were slightly ahead of expectations, particularly on costs, although Jefferies described a target for average annual revenue growth of 3% as "somewhat low ball".
"The beauty of today's plan is that management clearly have visibility on the cost trajectory and have outlined a series of highly idiosyncratic actions on the cost base," Jefferies said. AI TO AID SAVINGS SocGen's fortunes have improved over the past two years as higher interest rates boosted profits across European bank coffers. After years of lagging other lenders, its shares have almost tripled since early 2025, outpacing the STOXX Europe 600 banks index.
SocGen said it would make gross savings of €1.9 billion by 2029 and bring overall costs to below €16.3 billion ($18.7 billion), down 2% from 2026 levels, by spending less on procurement and IT, due to AI-related productivity gains and from reduced staff numbers. That should bring the cost-to-income ratio below 55% by 2029, against a current target of 60%, it said. The bank is still worth less than half of French rival BNP Paribas and faces pressure to deliver sustained growth as digital lenders - including Revolut - expand in French retail banking and US banks gain market share in investment banking.
RETAIL, NOT INVESTMENT BANKING, TO DRIVE UP REVENUE Performance at SocGen's investment bank, its largest division, has disappointed in recent quarters, and Jefferies analysts said Monday's plan was not driven by further revenue growth in the unit on the 2026 base. In global markets, SocGen is forecasting €6 billion to €6.5 billion in revenue by 2029, little changed from €6 billion last year. JPMorgan analysts, however, said the projections showed SocGen was "more bullish", with financing and advisory sales guidance higher than previously.
Krupa said the bank wanted to generate more revenue from hedge funds, prime brokerage and from advising financial sponsors. SocGen also announced plans to grow its digital BoursoBank with a target of 14 million customers by 2029 from 9 million today. BoursoBank and the traditional French retail bank would be integrated under a single management structure, with BoursoBank focused on all levels of customer wealth and the branch-heavy retail unit on the "mass affluent".
The bank's policy on payouts to shareholders via dividends and buybacks remains unchanged. If it meets its goals, SocGen could distribute €21 billion over a four-year period to 2029. ($1 = 0.8716 euros) (Reporting by Tommy Reggiori Wilkes and Elizabeth HowcroftEditing by Nick Zieminski and Louise Heavens)
Source: Euronext Markets: Real-time Stock Market Data | live
