French bank SocGen second quarter net profit falls 63 pct
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Societe Generale posted a 63 percent fall in second-quarter net profit, hit by losses at its corporate and investment banking unit in the credit crunch, Frances' second-biggest bank by market value said on Tuesday.
The bank, still in the shadow of the world's worst rogue trader scandal as magistrates examine what went wrong and who knew what, said net profit fell to 644 million euros ($1 billion). Last year the bank made a second-quarter net profit of 1.74 billion.
Eighteen analysts polled by Reuters gave an average net profit forecast of 518 million euros. Forecasts had ranged widely, with some expecting an overall group loss, while others had forecast a net profit of around a billion euros.
Gross operating profit fell 42 percent to 1.627 billion euros, ahead of an average forecast of 1.333 billion.
SocGen is the latest big bank to post lower profits as a result of the global credit crunch, with its investment banking unit taking a 1.2 billion euro hit in the second quarter.
On Monday, Europe's biggest bank HSBC revealed a 28 percent fall in first-half pretax profit, while U.S. banks Merrill Lynch and Citigroup posted huge second-quarter losses last month.
SocGen had higher profits at its international retail banking and consumer credit businesses, which helped counter the investment banking loss.
"Overall, I would say it is a satisfying performance, given the environment," West LB analyst Christoph Bossmann said. He kept a "hold" rating on SocGen shares.
BNP Paribas, France's biggest listed bank, reports second-quarter earnings on Wednesday.
KERVIEL AFFAIR
SocGen is also trying to battle back from the effect of the rogue trading scandal. In January, the bank unveiled 4.9 billion euros of losses it said were caused by rogue deals carried out by Jerome Kerviel, a 31-year old junior trader at the bank.
Kerviel was freed from prison in March after an appeal against his detention but he remains under formal investigation for breach of trust, computer abuse and falsification.
On Monday, the Paris prosecutor's office said it had placed Kerviel's former assistant under investigation for complicity in the affair. A legal source briefed on the matter said the assistant was 24-year old Thomas Mougard.
The losses from the Kerviel affair forced SocGen to raise 5.5 billion euros through a rights issue and led many analysts to regard the bank as a takeover target, although SocGen has consistently said it aims to remain independent.
BNP Paribas considered bidding for SocGen this year but ultimately ruled it out. BNP had tried to buy SocGen in 1999.
The rogue trading scandal led to widespread criticism of the SocGen management team, with French President Nicolas Sarkozy questioning SocGen Chairman Daniel Bouton's position.
In April, Bouton decided to hand over as chief executive to Frederic Oudea, SocGen's former finance director. Bouton remains chairman. The company also ousted Jean-Pierre Mustier from the head of its investment banking division.
Oudea said on Tuesday that SocGen would pursue its strategy.
"Societe Generale will take advantage of the quality of its customer franchises, its solid capital position and the commitment of all its employees to pursue its strategy despite an environment that is likely to remain difficult," he said in a statement.
SocGen shares closed down 0.9 percent at 59.50 euros on Monday. The stock has fallen around 36 percent since the start of 2008, compared with a 32 percent decline in the DJ Stoxx European bank sector .