SocGen jumps after CEO shakes up top team, rival BNP falters
SocGen's shares jump after management shake-up, profit beat
BNP Paribas shares slide after mixed results
SocGen reports French retail rebound, strong investment banking
Both French banks have seen shares underperform rivals in 2024
Adds analyst quote in paragraphs 9 and 10, updates shares, adds detail throughout
By Mathieu Rosemain
PARIS, Oct 31 (Reuters) -Societe Generale's SOGN.PA shares soared on Thursday after CEO Slawomir Krupa shook up his management team and the French bank beat profit forecasts, while rival BNP Paribas' BNPP.PA stock slid following mixed quarterly results.
The banks both reported better than expected investment banking sales, but differing performances in their retail businesses and on other key metrics led investors to react in opposite directions.
SocGen shares had jumped more than 11% by 1415 GMT, propelling them into positive territory for the year. BNP by contrast fell 5%, putting it on course for its biggest daily loss since May and leaving the shares down year-to-date.
For SocGen, which had struggled to convince investors of its turnaround plan since Krupa took the reins last year, the 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 replaced his finance chief Claire Dumas with Leopoldo Alvear, chief financial officer at Spanish bank Sabadell SABE.MC, and took direct supervision of French retail activities, seeking to draw a line under past setbacks in that 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.
Citi analysts said Krupa appeared more upbeat on the earnings call than previously about delivery, with the "old-drags" such as French retail mostly behind it.
"While it is a strong reaction (in the shares), this can be justified", the analysts said, pointing to the bank's low valuation as well as Krupa's efforts.
The bank's share price has risen nearly 11% since Krupa took over in late May 2023, versus a 37% rise in European banks as a whole .SX7P.
SocGen said Philippe Aymerich was stepping down as deputy CEO and relinquishing responsibility for French retail operations, with two new co-heads appointed to manage the French retail network.
Alvear will start from Jan. 7. He held the same role at Sabadell, currently the subject of a hostile takeover bid.
EXPECTING MORE
SocGen's third-quarter net income more than quadrupled from a year earlier to 1.37 billion euros ($1.5 billion), beating the 1.22 billion euro median forecast of 16 analysts compiled by the company.
Its investment bank 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 end-September, below market expectations of 12.9%.
Increased trading at BNP's investment banking division ensured the euro zone's largest lender hit its profit forecast, but that still compared unfavourably with expectation-beating results from many rivals for the three months to end-September.
BNP also signaled lower sales from its car leasing unit Arval, and disappointing net interest income from Belgian retail operations.
BNP attributed this to a "competitive market for loans and deposits".
"Frankly, we were expecting more, notably in the (investment bank division) CIB," Jefferies analysts said.
BNP, led by long-time CEO Jean-Laurent Bonnafe, has been expanding its investment banking operations to counter slower growth in retail.
The bank has also recently turned to acquisitions, including a deal for AXA's asset management arm.
BNP shares have lost 1.3% in 2024 while SocGen's are up 6.3%, both far lower than the wider industry.
SocGen still ranks lowest on one key valuation metric among large European lenders, hobbled by years of lacklustre performance, missed cost-cutting targets and a miscalculated hedging policy that cost more than 2 billion euros.
($1 = 0.9218 euros)
French banking rivals head in opposite directions https://reut.rs/4htByDi
Reporting by Mathieu Rosemain; Additional reporting by Bertrand de Meyer and Ingrid Melander; Graphic by Lawrence White; Editing by Mark Potter and David Holmes
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