BNP Paribas, SocGen tumble after missing rebound in trading

Bloomberg

BNP Paribas SA and Societe Generale SA missed out on the trading gains that boosted earnings at some of their US and European rivals in the first quarter, sending their shares tumbling.
Trading income at BNP Paribas, the largest French lender, fell 15 percent as a drop in sales from fixed-income, currencies and commodities outweighed a gain in equities, the Paris-based bank said. At Societe Generale, stock and bond trading both dropped.
BNP Paribas Chief Executive Officer Jean-Laurent Bonnafe, who’s counting on growth at the corporate and investment bank to meet goals for revenue and profitability, blamed lackluster client activity in Europe for the debt-trading slump.
Societe Generale’s results suffered as it worked to restructure top management after the surprise exit of investment-banking head Didier Valet. A stronger euro also weighed on earnings.
“It was a complicated quarter,” said Alex Koagne, an analyst at Natixis who has buy ratings on both stocks. “The dollar effect was negative, BNP and SocGen are strong in structured activities, which didn’t perform well.”

STEP BACKWARD
BNP Paribas is pushing to become one of the top three European investment banks, partly by growing in Germany, the US and Asia as competitors retrench. It took a step backward in the first quarter. Debt trading fell by almost a third, even as a pickup in volatility drove demand for equity derivatives, lifting stock trading by 19 percent.
At Societe Generale, a global leader in derivatives on stocks, revenue from equities and prime services unexpectedly fell 11 percent, while debt trading plunged by
almost a third.
Societe Generale’s first-quarter trading performance was the worst among global banks that have reported results, data compiled by Bloomberg show. BNP’s was the third-worst behind Deutsche Bank AG.
The banks’ trading performance also lagged behind US peers. A 32 percent jump in equities revenue propelled growth in the quarter at the top five Wall Street firms including JPMorgan Chase & Co. and Goldman Sachs Group Inc., while fixed-income trading at the largest US banks was little changed.