SocGen shares climb on smaller-than-expected quarterly profit dip

Investing.com -- Shares in Societe Generale (EPA:SOGN) rose on Friday after the French bank posted a smaller-than-anticipated decline in profit in the first quarter.

Net income in the opening three months of 2024 slipped by 22% from the year-ago period to 680 million euros, although this topped company-compiled analyst estimates of 463 million euros. Sales of 6.65 billion euros were also ahead of projections.

In a note to clients, analysts at Jefferies credited strength at SocGen's corporate and investment bank with underpinning the revenue surprise and offsetting weakness at its retail banking unit and fixed income trading.

SocGen becomes the latest European lender to deliver higher-than-expected quarterly returns, reflecting a boost provided by persistently elevated interest rates in the euro zone. Increased costs of deposit in France, however, have dented earnings at banks in the country.

The Jefferies analysts also noted that 41% jump in cost of risk to 247 million euros due to unidentified specific cases presented a "rub" in the results.

But SocGen backed its existing targets for its 2024 and 2026 financial years, guiding for a statuatory return on tangible equity of above 6% this year and 9% to 10% in 2026.

"[W]e see a recovery in French retail revenues as the key profit growth driver for SocGen," analysts at UBS said in a note to clients. "The focus today is on understanding the trajectory for the earnings mix, especially around the domestic business, in what remains of 2024."