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(Sharecast News) - Shares in Socit Gnrale fell sharply on Friday after the French lender reported record full-year results but disappointed investors with a weak performance in its trading business, overshadowing an earnings beat and an upgraded profitability outlook.
The bank posted record revenues of 27.3bn in 2025, up 6.8% from the previous year excluding asset disposals, alongside record group net income of 6bn, a 43% increase.
Costs fell 2% over the year, helping to push the cost-to-income ratio down to 63.6%, while return on tangible equity reached 10.2%, or 9.6% excluding asset gains, above the bank's target.
SocGen ended the year with a CET1 capital ratio of 13.5%, around 320 basis points above regulatory requirements.
For the fourth quarter, net profit rose to 1.42bn from 1.04bn a year earlier, comfortably ahead of analysts' expectations, with revenue up 1.6% at 6.73bn and costs slightly below forecasts.
However, revenue from fixed income, currencies and commodities trading fell 13%, while equities trading dropped about 5%, missing estimates and lagging peers.
Chief executive Slawomir Krupa said the group had made "a decisive step in the transformation of our group" in 2025.
"We achieved both record revenues and net income for the group, combining robust growth across all businesses with strict cost and risk management."
On the earnings call, he acknowledged the markets underperformance, but said "we still have a lot of work to do. We will do everything we can to ensure that this positive momentum continues."
Strength in French retail banking helped offset the weaker investment bank showing, supported by loan repricing, rising volumes and improving net interest margins, while insurance and asset management also contributed to the profit beat.
Investment banking revenues still rose overall when excluding asset sales, despite softer trading conditions and adverse currency effects.
Alongside the results, SocGen raised its 2026 profitability target, now aiming for a return on tangible equity of more than 10%, up from a previous range of 9% to 10%.
It forecast revenue growth of more than 2% and a cost reduction of around 3% this year, which would take the cost-to-income ratio below 60%.
The bank also confirmed a proposed ordinary shareholder distribution of 2.68bn for 2025, including a 1.46bn share buyback due to start next week and a total dividend of 1.61 per share, on top of two 1bn extraordinary buybacks launched last year.
The board also unanimously renewed Krupa's mandate as chief executive for a further four years from 2027.
Chairman Lorenzo Bini Smaghi said the decision reflected "remarkable achievements in terms of revenue growth and cost reduction" delivered under his leadership.
At 1023 CET (0923 GMT), shares in Socit Gnrale were down 3.26% in Paris at 71.80.
Reporting by Josh White for Sharecast.com.