Societe Generale net profit rises five-fold in first quarter

[PARIS] French bank Societe Generale on Wednesday reported a five-fold increase in first quarter net profit to 868 million euros (S$1.3 billion), despite a continued slump at its Russian affiliate.

The net profit boost for the first three months of 2015 dwarfed the 169 million euros Societe Generale announced for the same period last year, and outpaced the 837 million euro average forecast of analysts polled by research company Factset.

Net banking income reflecting Societe Generale's revenue for the quarter ending in March was 6.35 billion euros, a year-on-year rise of 12 per cent.

Core business activity was lifted by an improving economic outlook in Europe, lower risk provisions and economies in operating costs.

That helped offset continuing losses in the bank's Russian unit, which posted first quarter net losses of 91 million euros amid economic upheaval created by the impact of Western sanctions over conflict in Ukraine, falling oil prices and the plunge in the rouble's value.

Nevertheless, the bank said losses of its Russian activities were "under control," and maintained overall group financial targets set for full-year 2015.

"Societe Generale enjoyed a good first quarter, marked by strong growth in commercial revenues and Group net income, testifying to our business model's potential for profitable growth, in line with our strategic objectives," said bank chairman Frederic Oudea in a statement.

Oudea noted retail banking in France was benefitting from "a mixed environment of low interest rates where credit demand is starting to pick up" - something that could bode well for the wider French economy if it builds.

During midday trading on the Paris Bourse, however, Societe Generale stock was down 3.02 per cent at 43.40 euros.

According to analysts at Deutsche Bank, though Societe Generale's Q1 results "weren't bad" they were insufficient to quell lingering investor concern about future performance, especially with uncertainty about improvement in Russia looming large.

In February, Societe Generale said it would cut 1,500 jobs at its Rosbank subsidiary, after eliminating the same number of posts in 2014.

AFP