By Mathieu Rosemain

PARIS (Reuters) -France's Societe Generale doubled its profit in the fourth quarter thanks to a rebound in retail banking and strong equity trading, its results showed on Thursday, with shareholder payouts at the high end of expectations lifting its shares.

SocGen CEO Slawomir Krupa has so far struggled to convince investors of his turnaround plan. But his focus on cost control, asset sales, and margin improvement is starting to pay off, bringing a key 2026 profitability target within reach.

"SG delivered a good set of results," Royal Bank of Canada said in a note, adding: "More progress in 2025 supported by cost control (-1% underlying) should provide more confidence that 2026 is in reach", with reference to the bank's strategic plan.

SocGen shares were up by 10% in early trading, their highest level since February 2022, after it posted quarterly net income of 1.04 billion euros ($1.08 billion), exceeding the 814 million-euro average of 18 analyst estimates compiled by bank.

Total revenue rose by 11.1% to 6.62 billion euros, slightly above an average estimate of 6.41 billion euros, the bank said.

Meanwhile, revenue in SocGen's large investment banking operations, which represent close to two thirds of group earnings, increased - although the 12% year-on-year rise fell short of French rival BNP Paribas and banks elsewhere.

SocGen's cost-to-income ratio, a measure of efficiency, also beat expectations, although it is still above peers.

SocGen also said it beat its client acquisition target for BoursoBank, France's leading online bank. 

RETAIL RECOVERS   

Krupa was appointed CEO in 2023 after years of lacklustre performance and missed targets on controlling costs, which had knocked investor confidence in France's third-largest listed lender. 

He aims to lift the group's return on tangible equity to 9%-10% in 2026.

Profitability is improving, but still way behind rivals.

SocGen said its return on tangible equity reached 6.9% in 2024 from 4.2% in 2023. This year, it is targeting more than 8%.

Analysts have said they want to see a sustained improvement in earnings before hailing Krupa's revival plan.

But they will welcome a 36% year-on-year rebound in fourth quarter of its French retail unit's net interest income (NII) - the difference between what banks earn on loans and what they pay on deposits - after an earlier miscalculated hedging policy on interest rates cost SocGen more than 2 billion euros.

SocGen said it would pay out 50% of its net income to shareholders, at the top of a range it had set.

It plans a higher-than-expected share buyback programme of 872 million euros, although its dividend, at 1.09 euro per share, was slightly below expectations. 

($1 = 0.9603 euros)

(Reporting by Mathieu Rosemain, additional reporting by Bertrand De Meyer; Editing by Tommy Reggiori Wilkes, Ingrid Melander and Alexander Smith)