SG plots credible path out of mediocrity

Societe Generale SA

21/09/2026 13:20

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.
By Neil Unmack
LONDON, Sept 21 (Reuters Breakingviews) - What a difference three years make. On Slawomir Krupa’s first capital markets day as CEO of Société Générale SOGN.PA in 2023 the French bank's shares fell nearly 10%, as his diet of cost cuts and low growth disappointed. Since then, the stock has returned over 240%, beating peers and trouncing domestic rival BNP Paribas BNPP.PA, as the lender has moved closer to earning a return that exceeds its cost of capital. Krupa's latest blueprint, unveiled on Monday, aims higher. While it still foresees Société Générale trailing many European peers, the risks also look low.
The €56 billion bank has come a long way. A policy of cutting costs and selling assets has strengthened its capital base while lifting its return on tangible equity (ROTE) to an expected 11% this year. That’s more than double the 4.2% that SocGen managed in 2023, and comfortably above the 9%-10% that Krupa originally envisaged back then. Still, the rest of the industry has also made progress. The average European bank will earn a return of around 16% this year, on Jefferies forecasts, buoyed by fat lending margins in countries like Spain and Italy.
Krupa’s latest plan should help close the gap a bit. Cutting more costs will lower expenses to less than 55% of revenue by 2029. Projected revenue growth of a modest 3% per year will lift ROTE to between 13% and 14% by 2029, and over 15% after that. Savings from the use of AI will account for nearly a third of the gross reduction in expenses.
A key part of Krupa's new plan is BoursoBank, a digital lender that, while still small, has expanded its customer base by about 50% since 2023. SocGen expects it to sustain that growth rate and crank out a 45% return on equity over the next three years. A standalone upstart boasting such growth and profitability could aspire to a rich valuation on a par with fintech star Revolut. For now, though, it is lumped together with less fashionable or more cyclical businesses such as auto leasing and investment banking.
Investors gave Krupa’s plan a restrained thumbs up, pushing the shares up by about 3% on Monday morning. Still, there’s scope for more upside. At just under 75 euros, Société Générale is trading marginally below its tangible book value, on Visible Alpha numbers. That's in line with French peers, but far behind the European average of 1.9 times, as measured by Jefferies. If Krupa can lift ROTE to 13-14% by 2029 the shares might warrant a valuation around 1.2 times book value, assuming an 11.5% cost of equity, Breakingviews calculates.
SocGen is also less vulnerable than peers to swings in interest rates: net interest income will make up less than half of revenue this year, per Visible Alpha. That all implies the bank can continue to climb its way out of mediocrity.    
     
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CONTEXT NEWS
Société Générale on September 12 announced targets for 2029, pledging a higher return on equity. 
The bank run by Slawomir Krupa now expects a return on tangible equity of 13-14% by 2029, and over 15% by 2030. It expects to achieve that thanks to revenue growth of around 3% per year, and cutting costs to less than 55% of revenues in 2029.
Société Générale shares were up some 2.7% at 74.58 euros as of 1042 GMT on September 12.

(Editing by Peter Thal Larsen; Production by Streisand Neto)
((For previous columns by the author, Reuters customers can click on UNMACK/neil.unmack@thomsonreuters.com))