By Mathieu Rosemain
PARIS (Reuters) -Societe Generale CEO Slawomir Krupa shook up the bank’s top management on Thursday, appointing a new finance chief and taking direct supervision of French retail activities as he seeks to win over investors after past setbacks at the division.
SocGen’s governance reshuffle followed better-than-expected third-quarter results, driven by a rebound in the French retail business and higher sales in equities trading.
The bank’s shares rose sharply in early trading, up by as much as 10.5% before paring gains to stand nearly 8% higher at 0823 GMT.
“Our view is that Q3 24 marks a turning point for SocGen’s investment case with confirmation of a turn in French retail revenue,” Jefferies analysts said in a note.
Krupa, who took the reins of France’s third-biggest listed bank last year, has vowed to revive the company’s shares by bolstering capital reserves and cutting costs, but had so far struggled to convince markets.
Philippe Aymerich is stepping down as deputy CEO on Thursday, SocGen said, relinquishing responsibility for the bank’s French retail operations, while two new co-heads are appointed to manage the retail network in France.
The group is also hiring Leopoldo Alvear to become its new chief financial officer from Jan. 7. Alvear has held the same role at Spanish rival Banco Sabadell and will replace Claire Dumas.
Alvear is set to leave Spain’s fourth largest bank by market value as it is trying to fend off a hostile takeover bid by larger rival BBVA.
TURNAROUND
SocGen said net income more than quadrupled in the third quarter from a year earlier to 1.37 billion euros ($1.49 billion), beating the 1.22 billion-euro median average of 16 analyst estimates compiled by the company.
Revenue was up by 10.5% to 6.84 billion euros over the period, about 200 million euros above the median analyst estimate, while SocGen’s investment bank also beat forecasts thanks to a 10% jump in equities trading from a year earlier.
A turnaround in SocGen’s French retail unit, which accounts for close to a quarter of the bank’s pre-provision profits according to UBS, is key to regaining investors’ trust and lifting its shares.
SocGen ranks lowest on one key valuation metric among large European lenders, hobbled by years of lacklustre performance and missed cost-cutting targets.
The bank spooked markets earlier this year by cutting its yearly target for net interest income (NII) — the difference between what banks earn on loans and what they pay out for deposits.
That followed a miscalculated hedging policy that cost SocGen more than 2 billion euros.
The French lender said a recovery was on track, as NII grew by 169 million euros in the third quarter from the previous three months and came in 43% higher than a year earlier.
The return on tangible equity (ROTE) – a profitability measure – came at 9.6%, above the 8.2% average expected by analysts and in-line with the bank’s 2026 target of between 9 and 10%.
French banks take longer than their Italian or Spanish peers to benefit from rises in interest rates as more than 90% of mortgages are on a fixed rate, and local rules that impose caps on lending rates limit their margins.
($1 = 0.9218 euros)
(Reporting by Mathieu RosemainAdditional reporting by Bertrand de Meyer, Ingrid MelanderEditing by Tommy Reggiori Wilkes, Ingrid Melander, Kirsten Donovan)
