Societe Generale Boosts Profitability in Q1 Despite Nearly Stable Revenues
Societe Generale released its first quarter 2026 results on Thursday, showing a significant improvement in profitability. The bank reported a tangible return on equity (ROTE) of 11.7%, well above its annual target of over 10%, driven by a structural reduction in management expenses that offset very contained growth.
Profitability Exceeds Expectations Despite Stagnant Revenues
Societe Generale recorded a net income attributable to the group of 1,696 million euros in Q1-26, reflecting a ROTE of 11.7% which is significantly above the 2026 target. This rebound in profitability is primarily based on strict cost control. Operating expenses decreased by 6.0% in raw data, reaching 4,330 million euros, thanks notably to divestments made as part of the group's transformation plan, worth 100 million euros, exchange rate effects (57 million euros), and a reduction in transformation charges (62 million euros). The cost-income ratio, a gauge of operational efficiency, improved markedly to 60.9% from 65.0% a year earlier. This cost dynamic contrasts with the moderation on the revenue side. Net banking income stood at 7,106 million euros, up only 0.3% compared to Q1-25, or 4.4% on a constant scope and exchange basis. This very measured growth reveals very disparate situations across divisions.
Business Units Evolving at Divergent Paces
Retail Banking in France, Private Banking and Insurance reported revenue growth of 8.9% (10.7% at constant exchange), driven particularly by a strong rebound of 12.0% in net interest margin. Private Banking's assets under management grew by 6%, while life insurance provisions increased by 8%. Conversely, Global Clients and Investor Solutions suffered. Its revenues fell by 4.9%, notably in rates, credit, and foreign exchange activities, which plummeted by 18.2% due to less dynamic commercial activity and less favorable market conditions in Europe. Equity business revenues appreciated by 5.5% to a record level, while securities services grew by 7.7%. The Mobility, Retail Banking and International Financial Services division recorded a growth of 2.9% (on a constant scope and exchange basis). BoursoBank, a digital subsidiary, contributed 92 million euros to the net income, in line with a 2026 annual target of over 300 million euros.
Solidly Sized Capital, Controlled Risk Cost
The cost of risk came out at 25 basis points, or 355 million euros, at the lower end of the 2026 target range (25-30 bp), with a gross non-performing loan ratio of 2.75%, slightly down from 2.81% at the end of December 2025. The net coverage rate for non-performing loans stands at 82%. In terms of financial solidity, the CET1 ratio came out at 13.5%, providing a cushion of about 325 basis points above the regulatory requirement, the ratio incorporating about -6 basis points related to the consolidation of Bernstein's activities in the United States. The ECB notified an increase of 25 basis points in the capital requirement under the combined buffers, of which 12.5 bp from January 2027 and 12.5 bp in January 2028. This trajectory remains compatible with the group's goal of maintaining a CET1 above 13%.
