SocGen 1Q down 23%; EUR1.18 Billion in New Write-downs
Societe Generale SA (SCGLY) Tuesday posted a 23% drop in first-quarter
net profit, as its asset management and cor****ate and investment bank
units were hurt by the impact of the credit turmoil.
The Paris-based bank, which suffered a EUR4.9 billion trading loss in
January because of an alleged rogue trader, Tuesday disclosed a total
of EUR1.18 billion in further write-downs related to the credit
crisis.
SocGen's first-quarter net profit declined to EUR1.1 billion from
EUR1.43 billion in the same period a year ago. That result exceeded
analyst expectations of EUR1.04 billion.
SocGen said that during the first quarter it managed the consequences
of the historic trade loss discovered in January, but that it
maintained its customer franchise and resumed its development.
"Overall and faced with an exceptionally serious event, the group
demonstrated its resilience and ability to bounce back during this
quarter," the bank said.
Landsbanki Kepler analyst Pierre Flabbee said the results were
disappointing, despite the forecast-busting bottom line. "The mark-to-
market effect and capital gains were better than I expected, but
beyond that the figures looked weak across all the bank's businesses,"
he said.
Since the trade scandal erupted, the bank has carried out a EUR5.5
billion capital increase to replenish its balance sheet.
It also unveiled a raft of management changes, which culminated in the
splitting of the functions of chief executive and chairman, which were
until recently both held by Daniel Bouton. SocGen's chief financial
officer, Frederic Oudea, in April was then promoted to become the new
CEO.
Net profit at the group's cor****ate and investment bank tumbled 79% to
EUR139 million as a result of the credit crisis.
The bank's asset management business was hit by further withdrawals
from dynamic money market funds, an unfavorable market and the
exchange-rate effect, SocGen said.
The bank's write-downs were offset by a EUR1.27 billion gain at the
investment bank, related to the mark-to-market valuation of credit
default swaps purchased to protect its loan ****tfolio.
Total group revenue dipped 6.1% to EUR5.68 billion from EUR6.05
billion in the year-ago quarter.
SocGen is the first of France's main listed banks to publish first-
quarter earnings this year. BNP Paribas (BNPQY), France's largest bank
by market value, re****ts Wednesday. Credit Agricole (4507.FR), owner
of the country's largest retail bank network, re****ts Thursday.
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