SocGen shares slide on management reshuffle and weak revenues

Reuters  |  PARIS 

By and Protard

The shake-up comes several weeks after the departure of a executive in charge of operations and several months after it crafted a new three year plan, aimed at boosting returns and protecting dividends.

The reshuffle, that came on Thursday evening, sees the re-appointment of for a new four-year term and the set up of a new top management team of four executives.

The new team will be under pressure to boost profitability in the face of tougher regulation and client demand for increasing investment in new technologies at a time when French decline and low volatility hurts trading activities.

"How come the replacement of the banking ends with a full re-shuffle of operating management just 6 months after the Investor day?" analysts at Jefferies said in a note.

shares were down 6.3 percent in early session trading, the worst performer in the French equities index.

reported on Friday a 14 percent rise in first-quarter net income to 850 million euros, that came above analysts' estimates of 821 million euros, according to a poll of 5 analysts.

However, SocGen's quarterly revenue came in weaker than expected, falling 2.8 percent to 6.29 billion euros, compared to 6.48 billion expected by analysts.

Its corporate and investment was a weak spot with revenue down 13.4 percent and net income falling 56.9 percent, impacted by a "strong negative forex effect".

Equity trading also declined despite a broad improvement in this area across other international banks, and in contrast to its French peer BNP Paribas, whose business is traditionally skewed to fixed income activities in

SocGen said this "this lower performance in relation to the industry can be attributed to our business mix, which is more geared towards structured products, and our geographical mix, which is more focused on Europe".

Under its new three-year plan, SocGen aims to improve the return on net equity at its to 14 percent from 10.8 percent it had in 2017, when revenues fell on the back of low market volatility.

"The results ... are generally in line with our strategic ambitions," said in a statement.

"With a renewed General Management team, the group is more confident than ever of its ability to successfully implement all the current transformation projects and meet its strategic and financial objectives," added Oudea.

The bank kept litigation provisions stable at 2.3 billion euros ($2.75 billion) and said a final agreement with relevant authorities was expected in the coming days or weeks.

($1 = 0.8358 euros)

(Reporting by and Protard; Editing by Sudip Kar-Gupta and Elaine Hardcastle)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, May 04 2018. 14:19 IST