Societe Generale and BNP Paribas, two of Europe's largest banks, both reported better-than-expected first-quarter earnings on Thursday, yet their share prices fell as investors focused on specific weaknesses within their business lines.
Societe Generale posted a net profit of €1.70 billion, beating the €1.55 billion analyst consensus by about 9%. The strong result was driven by a 6% year-on-year decline in operating expenses, double the bank's own annual target, and a stellar performance from its French retail division, where net income surged 48.4% to €625 million. However, the bank's FICC trading revenue dropped 18.2% to €571 million, citing weak commercial momentum and unfavorable conditions in European rates markets. This performance lagged behind major peers such as JPMorgan, which saw a 21% rise in FICC revenue. CEO Slawomir Krupa has taken direct oversight of the French retail unit after a previous interest-rate hedging policy cost the division over €2 billion.
BNP Paribas also reported a record first quarter, with net profit climbing 9% year-on-year to €3.22 billion, beating the consensus estimate of €2.93 billion. Group revenues rose 8.5% to €14.06 billion, ahead of the €13.82 billion forecast. A major highlight was the consolidation of AXA Investment Managers, which drove a 32.8% surge in Investment and Protection Services revenues to €1.98 billion. Global Markets revenues rose 2.5%, with Equity and Prime Services up 9.3%. However, the bank's Arval and Leasing Solutions unit missed expectations, with revenues falling 11.7% as used-car prices dropped sharply in March. BNP also took a €219 million provision for UK Motor Finance risks following the Financial Conduct Authority’s consumer compensation scheme. Despite the record profit, BNP's stock fell over 4%.
Both banks confirmed their medium-term targets. SocGen reported a CET1 ratio of 13.5%, while BNP confirmed its 2028 targets, including a return on tangible equity above 13%.
