Shares Fall after Disappointing Societe Generale Strategic Plan

Shares of Societe Generale, the French bank, experienced a 7.1% drop in early trading on Monday following the release of its new strategic plan for 2026. The plan, which outlined the bank's targets for revenue growth, return on equity, and capital ratios, failed to impress some analysts.

According to the plan, Societe Generale aims for average annual revenue growth between 0% and 2% over the period, a return on tangible equity between 9% and 10% in 2026, and a common equity Tier 1 ratio of 13%. These targets differ from the bank's previous plan for 2021-2025, which aimed for at least 3% revenue growth, a return on tangible equity of 10%, and a common equity Tier 1 ratio of 12%.

Jefferies' analysts, Flora Bocahut and Theo Massing, expressed their disappointment with the new targets in a research note. They noted that the revenue growth target, return on tangible equity, and lack of detail in the plan were not in line with their expectations.

One of the concerns raised by the analysts is the lack of clarity on how Societe Generale intends to achieve its higher common equity Tier 1 ratio. Additionally, they highlighted that the plan did not provide information on which businesses might be affected by the bank's aim to streamline its portfolio.

The new targets suggest that Societe Generale's revenue growth will only average 1% through 2026, which is significantly below expectations. Jefferies' analysts had expected the bank to deliver "superior revenue growth" compared to the rest of the sector starting from 2024.

In a research note, Anke Reingen from RBC Capital Markets described the bank's new financial targets and planned capital distribution as conservative. She believes that these targets do not imply any upgrades to consensus estimates and emphasizes that the bank's delivery will be crucial in proving any upside to expectations.

It remains to be seen how Societe Generale will navigate its strategic plan going forward.