SocGen’s new boss Krupa pledges to cut costs to boost profits by 2026 By Reuters

By Mathieu Rosemain

LONDON (Reuters) -Societe Generale’s new CEO Slawomir Krupa pledged on Monday to cut costs to boost profits by 2026 amid stagnating sales, in his first strategic plan for France’s third-biggest listed bank.

Krupa, who took the reins of the bank in May, said he ambitioned to make SocGen a “rock solid” bank after years of lackluster performance, as he sought to set achievable goals in a challenging environment marked by slowing economic growth.

SocGen said it would target a 9 to 10% return on tangible equity ratio (ROTE) in 2026, up from a reported 5.6% ROTE at the end of June.

The French lender also said it expected to reduce its cost-to-income ratio, a key a measure of a bank’s efficiency, to less than 60% in 2026 from 75% in the second quarter.

“We will strengthen the group by shaping a simplified business portfolio, while taking the right actions to build-up capital and increase flexibility, structurally improve our operating leverage and maintain our best-in-class risk management”, Krupa said in a statement.

The lender also targets a CET1 ratio – a key measure of financial strength – of 13% in 2026, almost on par with the 13.1% reported at end of June, but including the expected additional requirements under global bank capital rules laid out by the Basel Committee of banking regulators.

The bank also said that it would reduce its exposure to upstream oil and gas businesses by 80% by 2030 when compared to 2019.

SocGen said its new targets were based on annual revenue growth expectations between 0 and 2% by 2026.

SocGen didn’t give any update on potential sale of non-core assets, after Krupa said last month he intended to run a “tight ship” in terms of portfolio of assets.

It said it would sell four African units and review a fifth one on the continent. SocGen is also open to a sale of its equipment finance unit, sources have told Reuters.

The bank said its new strategy would lead to booking write-downs for the remaining part of its African, Mediterranean and Overseas activities, as well as its Equipment Finance division for a total of about 340 million euros.

Once competing on par with BNP Paribas (OTC:) in the early 2000s, SocGen has gone through a tumultuous period over the last 15 years, marked by heavy losses from a rogue trader on the eve of the 2008 financial crisis and a costly exit from Russia in the wake of the invasion of Ukraine last year.