(BFM Stock Exchange) – The Swiss establishment has gone to buy neutral on the title of the Defense Bank. UBS remains optimistic about the evolution of results and on the future of Société Générale, but judges that the bank has eaten the bulk of its white bread on the stock market.

Société Générale remains the big box on the stock market this year on the banks side. Its action takes 71% since January 1, only preceded on the CAC 40 by Thales (+78%). The latter benefited from the drunkenness of the market for European defense groups following the numerous expenditure announcements from the European Union countries to rearm.

Société Générale totally eclipses the other two banks on the side, namely BNP Paribas, which has taken 30.5% since the start of the year, and Crédit Agricole SA (+26.45%).

More broadly, Société Générale outperforms largely the STOXX 600 Banks pan -European index, which still has taken 25% since the start of the year.

In the first quarter, the company led by Slawomir Krupa was the only one of the three French banks to seduce the market with its results, its title still progressing by 3.8% after the publication of these accounts above expectations.

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Towards a “surplus” of the capital to redistribute

Does this good career intention to continue? UBS thinks in any case that a break is not to be excluded. The Swiss Bank lowered its opinion this Friday, May 9 to “neutral” against “buy” previously, while raising its price of course at 48 euros against 44 euros before.

Which a little bit the bank on the stock market. The title Société Générale took 0.2% at the start of the afternoon but underperform the CAC 40 which earns 0.9% at the same time.

UBS clearly specifies that his investment thesis on the file does not change. The establishment expects Société Générale to improve its results, thanks to an increase in net income of interest – the difference between what the bank earns on credits and the remuneration of deposits of retail banking in France, to the synergies identified in its automotive financing activity with the repurchase of Dutch Leaseplan, or even down the cost of customer acquisitions (400 to 500 euros UBS) of its online bank Boursobank, which is now profitable.

In addition, Société Générale could give back to its shareholders a “surplus of capital”, once which its objective of solvency ratio this 1, which brings the equity to the weighted outstanding risk, is reached and then insured, the target being set at 13% throughout the year 2025, recalls UBS. At the end of the first quarter, this ratio was 13.4% for Société Générale.

Economic uncertainty

But the rally is now likely to decelerate, considers UBS. The Swiss establishment stresses that Société Générale is quite simply the European Bank which has experienced the highest increase in the stock market since the start of the year. Previously, the low valuation of the company assured him “a margin of security” but this is no longer the case, explains UBS.

The Swiss Bank judges that Société Générale can still push analysts to raise their benefit forecasting per share from 7% to 11% if it manages to achieve its objective of an operating coefficient (basically the operating expenses reported to income) of 60% in 2026, against 69% in 2024.

The achievement of this target would be likely to further take the action of the Red and Black Bank. But UBS, more cautious, retains a rate of 62% in 2026 and 60% in 2027.

“In the short term”, UBS thinks that the market needs to see a “turning point” on net income of interest in France, to note a “vigor” of income from market activities, as well as a discipline in terms of costs. According to the Swiss bank, market optimism must also be maintained by capital return measures in the form of action buybacks.

The market must also be convinced that “the recovery measures in the euro zone (the entire entire is outside France) are sufficient to support short-term economic activity in an uncertain environment,” she adds.

A fairly long list therefore. Ultimately, in view of the current macroeconomic and political uncertainties, UBS judges the current valuation of Société Générale “Fair”, that is to say “just” in the short term.

Bank of America, for his part, had estimated last week that the title still had under the hood, reiterating his opinion to the purchase and a price target of 52 euros.

In particular due to its efforts on costs, Société Générale should be able to return its shareholders the equivalent of 35% to 45% of its market capitalization over the next three years, largely in the form of share buybacks, anticipates Bank of America.