SocGen hikes profitability target in new strategic plan ​

• SocGen targets return on tangible equity of 13-14% by 2029, rising to 15% in 2030 and beyond, up from approximately 11% in 2024
• The bank plans to cut overall costs to below 16.3 billion euros by 2029 through AI productivity gains, reduced IT and procurement spending, and natural staff attrition
• Cost-to-income ratio target lowered to below 55% by 2029 from current 60% target, with revenues forecast to grow around 3% annually

Summary: SocGen Hikes Profitability Target in New Strategic Plan

Key Developments:

Societe Generale unveiled a new strategic plan through 2029 on September 21, significantly raising profitability targets as CEO Slawomir Krupa accelerates his turnaround efforts at France's second-largest listed bank.

Financial Targets:

• Return on tangible equity (ROTE) target: 13-14% by 2029, up from approximately 11% currently, reaching 15% in 2030 and beyond
• Cost-to-income ratio: Below 55% by 2029, versus current target of 60%
• Cost reduction: Total costs to fall below €16.3 billion by 2029, representing a 2% decrease from 2026 levels
• Revenue growth: Average annual increase of approximately 3%

Cost-Cutting Strategy:

SocGen plans to reduce expenses through procurement and IT savings, AI-driven productivity improvements, and workforce reduction via natural attrition. The bank has historically struggled with high costs and weak profitability relative to peers.

Market Context:

The bank's performance has rebounded over the past two years, benefiting from higher interest rates across Europe and ongoing cost-cutting initiatives. However, SocGen remains valued at less than half of French rival BNP Paribas and faces competitive pressures from digital lenders in its core French retail market and U.S. investment banks. Recent performance at its investment banking division—the largest unit—has disappointed.

Management Commentary:

CEO Krupa, who assumed leadership in 2023, stated the plan represents "a new phase" with clear ambition to "accelerate profitable growth and maintain rigorous risk and cost discipline." The strategic plan follows a September 2023 predecessor that received mixed reception.