French bank Societe Generale yesterday warned the economic recovery was still fragile, with moderate growth prospects in Europe, after it beat forecasts with over a three-fold leap in second-quarter net profit.
The bank, which last month easily passed a Europe-wide stress test with a Tier 1 capital ratio of 10 per cent, said it was confident of hitting long-term targets under its “Ambition 2015” strategic plan that include a 2012 net profit of €6bn (£4.97bn).
SocGen is battling to restore investor confidence after the financial crisis with a new management team under chief executive Frederic Oudea. Its shares have underperformed the sector this year in part due to investment banking concerns, worries over wholesale funding and its exposure to toxic assets.
“(The outlook) is SocGen saying ‘don’t get your expectations up’... Last year they didn’t highlight issues properly, now what they’ve shown in this quarter is that they’ve learned from that and are under-promising to over-deliver,” a London-based analyst said.
Analysts said SocGen showed more positive signs than BNP Paribas, with retail banking revenue up more than forecast in France and abroad and a smaller-than-expected hit from volatile markets on investment banking. Its second-quarter net profit was €1.08bn, up from €309m a year ago when heavier provisions and asset writedowns weighed. This beat the average forecast of €732m.
City A.M. Reporter