Shares in French bank Societe Generale (OTC:SCGLY) experienced a 7.1% drop to EUR24.60 during Monday's early trading. This decline followed the bank's release of its strategic plan for the period leading up to 2026, which showed a shift from its previous five-year plan spanning from 2021 to 2025.
Societe Generale's new strategic blueprint sets an average annual revenue growth target of between 0% and 2% up to 2026. It also aims for a return on tangible equity (ROTE) of between 9% and 10% in 2026 and a common equity Tier 1 (CET1) at 13%. These targets are a shift from the bank's previous five-year plan, where it had aimed for a minimum revenue growth of 3%, a ROTE of 10%, and a CET1 ratio of 12%.
Analysts Flora Bocahut and Theo Massing from Jefferies expressed disappointment over the bank's revenue growth target and ROTE. They also criticized the lack of detailed information in the strategic plan. The analysts pointed out that while Societe Generale is aiming for a higher CET1 ratio, it has not provided clear indications on how this goal will be attained. Moreover, although the bank plans to streamline its portfolio, there is no explicit information about which business sectors might be impacted.
Jefferies' analysts had previously anticipated better revenue growth from Societe Generale starting from 2024 compared to other sector players. However, the new targets suggest an average revenue growth rate of only 1% through to 2026, falling significantly short of these expectations.
Anke Reingen from RBC Capital Markets also commented on the matter, stating that Societe Generale's new financial objectives and proposed capital distribution appear conservative. According to Reingen, these targets do not suggest any potential upgrades to consensus estimates. She emphasized that successful delivery of the plan will be crucial to demonstrate any upside to these consensus expectations.
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