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Societe General surprises with strong quarterly profit

AFP

French bank Societe Generale turned in surprisingly strong quarterly profits and said it could still do better under its three-year strategic planFrench bank Societe Generale turned in surprisingly strong quarterly profits and said it could still do better under its three-year strategic plan

French bank Societe Generale turned in surprisingly strong quarterly profits and said it could still do better under its three-year strategic planFrench bank Societe Generale turned in surprisingly strong quarterly profits and said it could still do better under its three-year strategic plan

French bank Societe Generale turned in surprisingly strong quarterly profits on Friday and said it could still do better under its three-year strategic plan.

The bank reported a 7.8-percent rise in net profit for the second quarter from the equivalent figure last year to 1.03 billion euros ($1.38 billion).

But it also increased the money put aside for legal problems in the United States, the day after rival French bank BNP Paribas announced a huge loss owing to a record US fine for breaking sanctions against Iran, Sudan and Cuba.

The net result was well ahead of the consensus view of analysts polled by Bloomberg financial news agency who had expected 852 million euros.

"The good performance of the businesses in the second quarter of 2014 illustrates the relevance of our banking model," chief executive Frederic Oudea said in a statement.

"The revenues of international retail banking and financial services and global banking and investor solutions were higher while French retail banking turned in a satisfactory retail commercial and financial performance against the backdrop of a sluggish economy and in a low interest rate environment."

He said that the results for the quarter "confirmed the group's growth potential and our ability to improve our profitability" under the three-year plan presented in May.

The group, which is aiming for a return on shareholders' funds of more than 10.0 percent in 2016, said that the end of June it had achieved 8.8 percent.

The results included a gain of 2010 million euros from its purchase of brokers Newedge completed in May.

The cost of bad loans fell by more than 20 percent in the quarter to 752 million euros despite an increase of 200 million euros in provisions for litigation, taking the total for this to 900 million euros.

Societe Generale is the target of an inquiry in the United States into whether or not some of its transactions in dollars breached US laws, similar to the probe which resulted in BNP Paribas pleading guilty and paying a fine of $8.9 billion ($6.6 billion euros).

Societe Generale said that in the second quarter its net banking income, a key measure for banks of the margin between the cost of taking in money and the price of lending it out, fell by 3.7 percent to 5.89 billion euros.

In Russia, having taken a big depreciation charge which hit profits in the first quarter, the bank said that activity was dynamic. These activities had contributed 16 million euros to the results, although this was down by 30.0 percent on a 12-month comparison.

The division handling big customers and investor solutions, which contains the financing and investment banking activities, raised net profit by 28.0 percent to 585 million euros.

The price of shares in the bank was showing a gain of 0.5 percent to 37.535 euros in initial trading on Friday. The overall French market was down 0.57 percent.

Date created : 2014-08-01