* SocGen reports 60% drop in Q4 net income

* Says a recovery in net interest income has started in France

* Sees sales grow by at least 5% in 2024

* Proposes 40% dividend payout ratio, 280 mln-euro share buyback

PARIS, Feb 8 (Reuters) - French bank Societe Generale reported a sharp drop in fourth-quarter net income on Thursday, although the lender beat analyst expectations thanks to signs of recovery in its domestic retail business and stable investment bank trading revenue.

France's third-biggest listed bank said group net income in the final three months of 2023 tumbled nearly 60% from a year earlier to 430 million euros ($463 million), beating the 333 million-euro median average of 13 analyst estimates compiled by the company.

Group revenue in the quarter dropped by almost 10% to about 6 billion euros, above the 5.86 billion-euro estimate of the company-compiled consensus.

Sales from trading in SocGen's investment bank slipped by 0.8%, the bank said, as a strong showing for equities offset a 22% decline in fixed income and currencies.

SocGen has struggled recently, with its shares lagging rivals and analysts questioning its low profitability and reliance on volatile investment bank earnings.

Chief Executive Slawomir Krupa in September unveiled a strategic plan to revive its fortunes that promised little in the way of revenue growth but pledges to slash costs and sell non-performing assets.

The bank has some way to hit its targets: return on tangible equity (ROTE), a measure of profitability, stood at 1.7% at end-2023, against Krupa's target for 2026 of between 9% and 10%.

In 2024, the French lender targets a yearly growth in sales of at least 5% and a ROTE of more than 6%.

Thursday's results capped a challenging "year of transition", SocGen said in a statement, marked by the costly acquisition of LeasePlan, a hedging policy against low rates at the retail unit that backfired when rates jumped, and the badly-received strategic plan.

French banks have not benefited as much as euro zone peers from soaring rates because they tend to pay more interest to depositors, but SocGen said the fourth quarter marked the "beginning of the rebound in net interest income".

SocGen also announced a proposed dividend of 0.90 euro per share, reflecting a payout ratio of 40%, the bottom end of its range, and said it would buy back 280 million euros worth of shares.

This year would see "the meticulous execution of our strategic plan", notably through "improved operational efficiency", Krupa said on Thursday.

Krupa has promised to generate 1.7 billion euros worth of cost savings. The bank earlier this week announced 900 job cuts in France. ($1 = 0.9284 euros) (Reporting by Mathieu Rosemain Editing by Tommy Reggiori Wilkes)