By Mathieu Rosemain
PARIS (Reuters) -Societe Generale’s shares soared on Thursday after CEO Slawomir Krupa shook up his management team and the French bank beat profit forecasts, while rival BNP Paribas’ stock slid following mixed quarterly results.
The banks both reported better than expected investment banking sales, but differing performances in retail activities and other key metrics led investors to react in opposite directions.
SocGen’s shares were up about 7% at 0930 GMT after rising as much as 10.5%, while BNP’s stock was down more than 6%, set for its worst day since May.
SocGen’s third-quarter beat was driven by a rebound in its French retail business, prompting several analysts to say the division had reached a long-awaited turning point.
That is seen as key to boosting investors’ confidence as the division accounts for close to a quarter of SocGen’s pre-provision profits, according to UBS.
Krupa also appointed a new finance chief, hiring Sabadell CFO Leopoldo Alvear to replace Claire Dumas, and took direct supervision of French retail activities, seeking to draw a line under past setbacks in that part of the business.
“I’m not trying to prove anything to anyone,” he told reporters in a call, when asked about the management reshuffle.
“In retail banking, things are in the process of turning around, but it was necessary to change the team,” he added.
SocGen said Philippe Aymerich was stepping down as deputy CEO as well as relinquishing responsibility for French retail operations, with two new co-heads appointed to manage the retail network in France.
The group said Alvear would start as its new chief financial officer from Jan. 7. Alvear has held the same role at Spain’s Sabadell, currently the subject of a hostile takeover bid.
CAPITAL BUFFERS
SocGen’s third-quarter net income more than quadrupled from a year earlier to 1.37 billion euros ($1.49 billion), beating the 1.22 billion euro median forecast of 16 analysts compiled by the company.
Its investment bank also beat forecasts thanks to a 10% jump in equities trading from a year earlier. The bank’s CET1 ratio – a measure of financial strength – came at 13.2%, above its 2026 target.
In contrast, BNP’s CET1 ratio was 12.7% at the end of September, below market expectations of 12.9%, prompting scrutiny from several analysts.
While meeting expectations for group revenues and earnings, the euro zone’s biggest bank also signalled lower sales from its car leasing unit, Arval, and disappointing net interest income (NII) from retail operations in Belgium.
BNP attributed this to a “competitive market for loans and deposits”.
“Frankly, we were expecting more, notably in the (investment bank division) CIB,” Jefferies said in a note.
To be sure, SocGen still 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 annual target for NII, or earnings on loans minus deposit costs. That followed a miscalculated hedging policy that cost SocGen more than 2 billion euros.
($1 = 0.9218 euros)
(Reporting by Mathieu Rosemain; Additional reporting by Bertrand de Meyer and Ingrid Melander; Graphic by Lawrence White; Editing by Tommy Reggiori Wilkes, Kirsten Donovan and Mark Potter)
