Bank of America reaffirms its 'buy' recommendation and €36 price target on Societe Generale, one of its '25 stocks for 2025', and adds it to its 'Europe 1' preferred stock list.
After an inflexion in profitability in the French retail bank and changes in management, the broker considers the share 'ready for the next stage in its history, which will probably entail a significant revaluation'.
We believe that SocGen should become one of the most attractive European stocks in terms of return on capital by 2025, with 40-55% of market capitalization over the next three years', continues BofA.
In addition, it sees a faster improvement in profitability and potential for higher payouts thanks to cost and capital efficiency measures, and 'all this at 2026 P/E ratios of 4x, P/TBV of 0.4x and a ROTE of 10%'.
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Société Générale is one of the largest French banking groups. Net interest income breaks down by activity as follows:
- financing and investment banking (37.2%): specialized financing (for acquisitions, projects, etc.), activity on the stock, interest rate, currency exchange, and raw material markets, brokerage operations, merger-acquisition consulting, commercial banking activities, etc.;
- retail banking in France (31.8%; SG). The group also develops asset management and private banking activities (EUR 154 billion in assets under management in 2024), and provides insurance services, online banking and online brokerage services (Boursorama Banque) as well as an economic and financial information Website (boursorama.com);
- provision of specialized financial and insurance services (15.8%): consumer loan, leasing, management of car fleets, professional equipment financing and insurance;
- international retail banking (15.2%).
At the end of 2024, Société Générale managed EUR 525 billion in current deposits and EUR 454.6 billion in current credits.
Net interest income is distributed geographically as follows: France (41.5%), Europe (36%), Americas (9.4%), Africa (7.5%) and Asia and Oceania (5.6%).