Société Générale reported strong Q4 2024 results, with net income soaring to €1.27 billion, significantly exceeding expectations. The bank’s shares rose nearly 10%, buoyed by robust performance in financing, investment banking, and retail sectors. Annual net income climbed 69% to €4.2 billion. Plans for 2024 include a €2.18 per share dividend and a focus on maintaining a payout ratio of 40-50%. Looking ahead, the bank targets over 3% revenue growth and aims to enhance shareholder returns in 2025.
Strong Performance of Société Générale in Q4 2024
The close of 2024 has been a promising period for French banking institutions. Following the impressive results from BNP Paribas and Crédit Agricole, Société Générale disclosed its quarterly results, exceeding market expectations. The bank’s shares surged by 9.86%, reaching €33.93, making a significant impact on the CAC40 index. Similar to its industry peers, Société Générale enjoyed the benefits of robust activity in its financing and investment banking divisions, alongside positive surprises in its retail banking sector in France and shareholder returns.
Financial Highlights and Future Outlook
In the final quarter, Société Générale’s net income skyrocketed by 2.1 times, totaling €1.27 billion, which translated to a return on tangible equity (ROTE) of 6.6%. This was a substantial leap from the market’s expectation of €814 million. Over the entire year, the group’s net income witnessed a remarkable 69% increase, culminating in €4.2 billion, with a ROTE of 6.9%.
The quarterly net banking income saw an 11.1% rise, amounting to €6.6 billion, surpassing market forecasts of €6.41 billion. The Retail Bank in France, along with Private Banking and Insurance services, reported a 15.5% revenue growth to €2.3 billion, with net interest margins improving by 36% from the preceding quarter.
Market activities also outperformed expectations, with revenue climbing 9.5% to €1.33 billion, and equity businesses achieving a remarkable 10% growth to €831 million, marking record figures for both the fourth quarter and the full year of 2024.
Additionally, Société Générale’s hard capital ratio improved by 20 basis points throughout the year, reaching 13.3%. For the fiscal year of 2024, the bank plans to distribute a generous €2.18 per share, equivalent to €1.74 billion, including €872 million in share buybacks. This represents a significant 75% increase from 2023 and aligns with a payout ratio of 50% of net income. Société Générale aims to maintain a payout ratio between 40% and 50%, as noted by Jefferies.
With a solid CET1 ratio that surpasses capital expectations, the bank intends to enhance its shareholder return strategy in 2025, targeting an overall payout ratio of 50% of net income, ensuring a balanced approach between cash dividends and share buybacks.
Looking ahead, Société Générale aims for revenue growth exceeding 3%, a reduction in management fees of over 1%, and a CET1 ratio of 13% for the year, following Basel 4 regulations. The anticipated cost of risk is projected to be between 25 and 30 basis points.
Moreover, BoursoBank is expected to surpass 8 million clients by year-end, contributing positively to the group’s net income for the second consecutive year, as it approaches nearly 7.2 million clients by the close of 2024.