MILAN, Aug 3 (Reuters Breakingviews) - Société Générale (SOGN.PA) boss Frédéric Oudéa’s turnaround is off to a good start. Revenue at the French lender’s investment arm rose 24.5% year-on-year to 2.3 billion euros in the three months to June, driven by a rebound at its equities division. With costs ticking up just 5%, net profit leapt to 522 million euros from a loss a year earlier.
With the unit’s costs at 70% of income and returns on normative equity of 11.7%, Oudéa has already hit the targets he laid out in May’s revamp. His plan, which involved 450 million euros of cuts, envisaged 10%-plus returns and expenses between 70% and 73% of income by 2023. SocGen shares jumped 5%. Oudéa, however, could have aimed higher. BNP Paribas (BNPP.PA), which trades at 60% of tangible book value against less than 40% for SocGen, reported costs equal to 55% of income at its corporate banking arm. Without loftier targets, SocGen’s valuation looks likely to undershoot its cross-town rival. (By Lisa Jucca)
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