Investing.com -- Societe Generale SA (EPA:SOGN) (OTC:SCGLY) reported a sharp rise in first-quarter earnings on Wednesday, supported by a rebound in retail banking and strong performance in equities trading amid market volatility.
The French lender posted net income of €1.61 billion ($1.84 billion) for the quarter, more than double its result from a year earlier and around €400 million above the average estimate from 14 analysts polled by the company. Roughly half of the beat was attributed to gains from asset disposals.
Revenue rose 6.6% year-on-year to €7.1 billion, ahead of the €6.9 billion consensus, as the bank benefited from improved momentum in its core businesses.
Costs of €4.60 billion beat consensus estimates by 1%, leading to a pre-provision profit (PPP) that topped expectations by 10%.
Return on tangible equity (ROTE) reached 11% in the quarter, exceeding the bank’s full-year target of 8% and marking a notable improvement on a metric where SocGen has traditionally lagged peers.
Societe Generale shares jumped over 4% in Paris.
"While the beat is not totally unexpected due to peer performance, a reported Q1 ROTE of 11% (benefitting from loan losses even below guidance) is positive with the shares trading on 0.6x latest TBV," RBC Capital Markets analysts said in a note.
Jefferies analysts also praised the lender’s performance.
"Q1 25 ticks the right boxes, in our view, with an earnings beat driven by all units with French retail a standout on costs," it said in a note to clients.
The domestic retail banking division delivered a 28% year-on-year increase in net interest income, helped by a surge in mortgage loan activity. In investment banking, equity trading revenues climbed 22%, matching the performance of major U.S. banks but falling short of the pace at BNP Paribas (OTC:BNPQY).
Fixed income and currency trading slipped 2.4% in the quarter, though overall investment banking revenues grew 10%, beating market expectations.
Societe Generale’s cost-to-income ratio stood at 65%, ahead of its full-year goal to keep the figure below 66%, reflecting improved operational efficiency.