Société Générale makes patchy progress in first quarter

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France’s Société Générale has reported a smaller than expected 22 per cent fall in net profit for the first quarter, as costs fell and weak revenues from fixed-income trading were offset by better results in its investment bank. 

France’s third-biggest listed bank is attempting a reset under chief executive Slawomir Krupa, the former investment bank boss who took over nearly a year ago, to boost its share price and profitability.

Under his tenure, SocGen has been selling off businesses, including the bulk of its Moroccan unit and an equipment finance division.

But it is still struggling with some problems in its retail banking operations in France, including poorly performing hedges against low interest rates and the high cost of some regulated savings accounts. The performance of its investment bank was also mixed.

The French bank, long haunted by a 2008 rogue trading scandal, has also had to deal with a trading incident at its Hong Kong desk after it emerged this week that two people were dismissed last year over unauthorised derivatives trading that went undetected for four months.

The latest results show that revenues in the quarter were slightly above expectations at €6.6bn but down 0.4 per cent from a year earlier.

In fixed-income and currency trading, however, revenues fell 17 per cent on a year ago, underperforming Wall Street peers and European rival Deutsche Bank.

That contrasted with a smaller 3 per cent fixed-income revenue drop for French rival Crédit Agricole, which reported record earnings at its investment bank in quarterly results on Friday, as well as a rise in net income and said it would meet its 2025 financial targets a year early.

The brighter spots at SocGen included a 3.1 per cent revenue gain in equities trading, a traditional area of strength at the bank.

Net profit was €680mn, beating analysts’ expectations thanks partly to lower than expected costs. That was despite higher provisions against bad loans.

Anke Reingen, an analyst at RBC Capital Markets, said the news on costs was encouraging but added that revenue trends had been driven by the less predictable parts of the business such as the investment bank.

“A top line beat in the more volatile and less predictable divisions provides less of a base for revenue growth,” Reingein said in a note.