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Credit crisis dents SocGen profits

Latest update : 2008-08-05

French top bank Société Générale's quarterly profits fell by nearly two-thirds compared to last year. Although the company was hit by a rogue trading scandal, the underperformance is mostly due to exposure to the US property crisis.

Societe Generale, one of the top three French banks, hard hit by alleged "rogue" trading at the beginning of the year and also by subprime exposure, reported a 63-percent slump in second-quarter profit on Tuesday.
Blaming the financial credit crisis for the latest setback, the bank reported net profit of 644 million euros (1.0 billion dollars) in the second quarter from 1.744 billion euros 12 months ago.
The bank made yet another asset writedown, this time of 575 million euros, for exposure to so-called subprime risks on the US home mortgage market.
However the bank, also hard hit in January by massive losses arising from alleged "rogue" trading which forced it to raise new capital, did better than analysts had expected and the price of its shares showed a gain of 2.84 percent to 61.19 euros in early trading.
Analysts had forecast overall a quarterly profit figure of about 638 million euros, although this was an average for a wide range of estimates.
In the first six months of the year, profits were 1.71 billion euros, only about half of the equivalent figure last year.
But brokers Raymond James, commenting on the second-quarter figures, noted "a net recovery of stock activity" from performance in the first quarter and "a very good performance on interest rate and foreign exchange activities."
The bank had "held up well on financing activities," the broker also said.

Date created : 2008-08-05