SocGen's strategy to shift to growth, higher returns after phase of stability

Société Générale SA is expected to prioritize accelerating growth across its businesses and boosting shareholder returns when it presents its new strategy on Sept. 21.

The French banking giant has cut costs and reinforced its capital position in recent years, aiming to regain investor confidence under the leadership of CEO Slawomir Krupa, who took charge in 2023.

The current strategy followed a period of turbulence that included a forced sale of its business in Russia after the country invaded Ukraine in 2022 and significant losses in its trading business during the COVID-19 pandemic.

"After a period of playing defense, I would expect a little more playing offense," Sonja Forster, vice president, financial institutions at credit rating agency Morningstar, said in an interview.

Digital future

SocGen's digital lender BoursoBank could be the centerpiece of the strategy's growth plans. The platform, which had assets under management of around €84 billion and around 9 million customers at June-end, recorded a €176 million profit in the first half of 2026 after years of losses as SocGen invested in its growth.

SocGen is targeting as many as 16 million more customers for BoursoBank in the coming years, Krupa said during the bank's first-quarter earnings call in April, without specifying a timeline.

"That is the obvious growth lever that's available to them," Johann Scholtz, bank equity analyst, Morningstar DBRS, said in an interview. "It's the one area where they also seem to be ahead of a lot of their arrivals in France."

The recent entry of UK-based fintech Revolut Ltd. to the French market means the lead is likely to shrink more quickly than SocGen might have hoped. Revolut, which has around 70 million customers globally and is opening its Western Europe headquarters in Paris in 2027, plans to invest more than €1 billion in France and hire 200 people there by 2030, having secured a full French banking license in August.

"Given that SocGen invested so much in BoursoBank and that it has grown so much, I would be interested in how they see that competition with Revolut developing," said Forster.

BoursoBank's growth will support the recovery of SocGen's loan book after three consecutive years of contraction, Visible Alpha estimates data shows. Analysts expect loans, which fell around 10% to €454.5 billion in 2025 from the year of Krupa's appointment in 2022, to increase by 3.5% in 2026.

Over the course of the upcoming three-year plan, analysts forecast a further 5.1% increase in lending to more than €494 billion by the end of 2029. The larger balance sheet is predicted to support revenue growth of around 10.6%, which will help drive a rise in group profit of more than a quarter to €9.17 billion over the period, the data shows.

Further progress on cost reduction should also drive profit growth. SocGen cut operating expenses by 6.4% to €17.34 billion in the two years to the end of 2025, Visible Alpha data shows, contributing to an improvement in the bank's cost-to-income ratio — a key measure of efficiency — of more than 10 percentage points to 63.6% during the same period. Disposals of noncore businesses and an overhaul of its technology infrastructure have driven the improvement.

Lowering operating expenses "is a feature of what we're trying to do and we believe there's no reason to change that," Krupa said during the bank's second-quarter earnings call in July when asked about what the market can expect from the new strategy.

"There is unfinished business on costs — management's restructuring efforts are only beginning to emerge in reported numbers," Joseph Dickerson, managing director, European bank research at Jefferies, said in a Sept. 10 note. "Consulting expenses are falling, and we see control functions and French retail as sources of structural reduction."

The strategy's focus on costs and profitable growth should be an "imminent catalyst" for SocGen's share price, Giulia Miotto, bank equity analyst at Morgan Stanley, said in a Sept. 4 note.

SocGen's stock has outperformed the wider European banking sector in the three years since its last strategy announcement. Its share price has increased almost 230% in the period, compared to 186% for the S&P Europe BMI Banks Index, 68% for BNP Paribas SA and 57% for Crédit Agricole SA.

Still, a recent sharp sell-off in the bank's stock means a positive reaction to the new strategy would be particularly welcome. Concerns about the bank's relatively larger reliance on the French market than that of its listed domestic peers and its exposure to French sovereign debt have caused the bank's stock to drop 10% in the last month, Market Intelligence data shows.

A global sell-off in sovereign bonds, driven by inflation fears linked to rising energy prices and mounting government debt piles, has hit French sovereign debt particularly hard. The yield on 10-year French government bonds stands at around 4.5%, the highest since the 2008 global financial crisis.

Shareholders are hoping that SocGen can weather any negative impacts from the bond market turbulence to deliver much improved returns in the coming years, Filippo Alloatti, head of financials, credit at Federated Hermes, said in an interview.

Total payouts to shareholders from dividends and share buybacks have gradually improved under Krupa's leadership from a particularly low base in 2023, Visible Alpha data shows. Shareholder distributions are expected to reach €3.75 billion, more than triple 2023's payout. Further annual increases in the coming years are forecast to drive returns to €5.12 billion by 2029.

"I expect this strategy to have a bit more of a capital return to shareholder focus," Alloatti said. "For shareholders, that's the kind of message they want from SocGen."