Societe Generale’s shares experienced a significant drop of over 6% on Monday following the announcement of the bank’s strategic plan by its new CEO, Slawomir Krupa. The plan revealed that the bank expects minimal to no growth in annual sales in the coming years. Krupa, who took over in May, has been tasked with revitalizing the bank, which has fallen behind its French competitor BNP Paribas and other European rivals. The bank’s challenges highlight the difficulties faced by French banks, particularly in benefiting from interest rate rises. Despite the negative market reaction, Krupa remains confident in the plan, emphasizing the importance of credibility and delivering on targets. SocGen’s new strategy includes streamlining its business portfolio, focusing on cost reduction, and maintaining strong risk management. The bank aims to achieve a return on tangible equity (ROTE) of 9-10% by 2026 and plans to distribute 40-50% of reported net income to shareholders through dividends and buybacks. However, the goals set by the bank were deemed “underwhelming” by analysts, who believe it will take time for the market to fully appreciate the cost improvements. SocGen did not provide any updates on the potential sale of non-core assets but confirmed its intention to reduce exposure to upstream oil and gas businesses by 80% by 2030. The bank’s shares currently trade at a third of its book value, similar to Deutsche Bank but lower than BNP Paribas and UniCredit.
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