SocGen warns on 2012 profit as Greece exposure bites

French bank Societe Generale showed the scars of its share of a Greek bailout in its second quarter results, helping to push its 2012 profit goal out of reach.

France's second-biggest bank said its aim of 6bn euros (£5.4bn) in net profit in 2012, reiterated as recently as May this year, would now be "difficult to achieve" because of a tougher economic and financial backdrop.

"The company finally admitted that it would not meet targets set out in its 2015 plan," a Paris-based trader said. "Analysts didn't believe they would meet the target, but the fact that they were flatly dropped without being revised or tweaked is clearly negative."

The volte-face comes as economic concerns in the eurozone and the United States worsen, rattling global markets.

Chief executive Frederic Oudea defended the bank's performance as "solid," given the uncertain economic and financial environment, and said he remained "confident regarding the continuing growth of our results."

Revenues and profits fell short of analysts' expectations due to a weak performance in asset management and a tougher quarter than expected in some of its core investment banking activities, including equities trading.

The bank took a 395m euro pre-tax hit on its exposure to Greece because of its contribution to a bailout plan, causing loan loss provisions to grow by 17.3 per cent from a year ago to 1.185 billion euros.

Private sector investors have agreed to take a 21 per cent loss on their Greek sovereign bonds.

The provision has proved hard for Societe Generale to absorb, and its second-quarter net income fell 31 percent from a year ago to 747m euros, well below the 1.15bn euro average forecast from analysts.

"The results are below consensus, even without the Greek provision," said Alex Koagne, financial analyst at Natixis.

In addition to its sovereign bond holdings, Societe Generale is also exposed to Greece via its Geniki bank unit.

Rival Credit Agricole last week warned its Greek unit, Emporiki, would make a loss and said it would take an 850m euro hit from Greece in the second quarter