SocGen starts long recovery

FRENCH bank Société Générale reported a full-year profit of €678m (£590m) yesterday, less than a third of the figure it recorded in 2008.

A hefty €5.8bn provision against bad loan losses weighed against the Paris-headquartered institution, with analysts warning of more to come in 2010. The bank blamed the write-downs on assets bought by its corporate and investment banking teams during the boom years.

A brighter fourth quarter offered hope amid the gloom. Profits more than doubled to €221m on the back of a resurgent performance from SocGen’s international retail and private banking arms, along with its investment management division.

All three appeared to be healing after recording net losses at the same point a year earlier.

Chief executive Frédéric Oudéa stressed the nascent upturn in SocGen’s performance. “2010 will be a rebound year in our financial results,” he said at a press conference.

However, SocGen’s fourth quarter profit paled in comparison to the €1.4bn reported by rival BNP Paribas on Wednesday and the jumbo earnings posted by Wall Street’s big players in January. Staff took home €250m in bonuses, half the figure handed out by BNP Paribas.

Pierre Flabbee, a Paris-based analyst at Kepler Capital Markets, said: “What is of significance is there was still some worsening in the French retail activity risk cost. That might be adjusted, but it still indicates the worst is not yet done.”

Kepler expects a €3.2bn full-year profit in 2010 with earnings per share at €4.73.

Shares in SocGen fell 7.2 per cent to close at €38.98.