The Frustrating Wait Goes On For Societe Generale To Be Rewarded For Its Progress

I’ve been critical, sometimes sharply so, of Société Générale (OTCPK:SCGLF) over the years, as the company stumbled from one partially successful restructuring effort to another, but despite evidence of real progress at this large French bank, the market just doesn’t care. The shares have fallen almost by half since my last write-up, despite better-than-average performance in core banking and capital markets operations.

Progress is a relative term, though, and this is still a bank that will be earning single-digit returns on tangible equity for at least a few more years, and as U.S. investors have seen with Citigroup (C), the market is not particularly eager to reward under-earning banks with material reratings. The low level of expectations built into the valuation today suggests patient shareholders could be well rewarded down the line, but “how far down the line” is a very fair question to ask, and Societe Generale may yet struggle to establish itself as more than a trailing rival in the majority of its key markets.

 

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The Frustrating Wait Goes On For Societe Generale To Be Rewarded For Its Progress