Today’s need-to-know storiesSocGen beats Q4 forecasts on cost cuts and retail performance
Société Générale has reported stronger than expected fourth-quarter earnings, helped by cost reductions and a strong performance in retail banking that outweighed weaker investment banking revenue.
Group net income rose 36 per cent from a year earlier to €1.42bn, exceeding analyst expectations by 21 per cent. Revenue increased 1.6 per cent to €6.73bn, slightly ahead of forecasts.
Off the back of the results, the bank upgraded its return on tangible equity target to more than 10 per cent for 2026, up from 9 per cent in the previous year, and launched a €1.46bn share buyback programme.
However, the lender’s trading operations lagged expectations, with equity and fixed income businesses both missing forecasts.
Revenue from fixed income, currencies and commodities trading fell 13 per cent year on year, while equities trading slipped 5.3 per cent.
MUFG to hire bankers to tap $3tn AI data centre boom
Mitsubishi UFJ Financial Group plans to hire additional investment bankers to capture the growing demand for financing linked to data centres, as Japan’s largest lender positions itself to benefit from the rapid adoption of AI technology.
“Some say it’s a bubble, but demand for digital infrastructure remains very strong,” said Fumitaka Nakahama, head of investment banking, in an interview with Bloomberg. “AI investment is an irreversible trend,” he added.
MUFG’s expansion into the sector comes amid heightened volatility in equity markets, where shares in software and financial services groups have fallen this week on fears that AI could disrupt established business models.
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“I expect there will be some correction in the stock market given the steep rise so far,” Nakahama said. “We have to carefully monitor the impact on fundraising.”
Moody’s Ratings forecasts that around $3tn will be invested globally in data centre-related assets over the next five years, with banks expected to play a central role in financing.
BNP Paribas lifts 2028 targets after Q4 profit beat
BNP Paribas beat analyst expectations on its fourth-quarter earnings on Thursday, with solid group performance prompting the lender to marginally raise its medium-term profitability targets.
France’s largest bank reported a net income of €2.97bn for the three months to December, up 28 per cent from a year earlier and ahead of the €2.84bn average analyst forecast.
The bank raised its 2028 return on tangible equity target to more than 13 per cent, from a previous goal of 13 per cent. It also pledged to reduce its cost-to-income ratio to below 56 per cent by 2028, compared with an earlier target of around 58 per cent.
Investment banking revenues rose 1 per cent year on year to a record €4.58bn in the quarter. However, performance within the division was mixed, with trading revenue in fixed income, currencies and commodities increasing just 0.8 per cent.
Separately, BNP Paribas said it will appeal an October ruling by a New York jury that found the bank had enabled Sudan’s former government to fund atrocities against civilians by providing banking services in breach of US sanctions. The lender said it expects to file the appeal by February 9.
Bank of England holds rates at 3.75% after narrow vote split
The Bank of England kept interest rates unchanged at 3.75 per cent on Thursday but signalled that further cuts are likely later this year, as inflation is now expected to return to target sooner than previously forecast.
In a closely split decision, five members of the Monetary Policy Committee voted to hold rates at the level set in December, with governor Andrew Bailey casting the deciding vote. Four members argued for a further 0.25 percentage point cut to 3.5 per cent.
“We now think that inflation will fall back to around 2 per cent by the spring,” Bailey said. “That’s good news. We need to make sure that inflation stays there, so we’ve held rates unchanged at 3.75 per cent today. All going well, there should be scope for some further reduction in the bank rate this year.”