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SocGen: We’ll double profits

City A.M. Reporter
SOCIETE Generale set a net profit goal of €6bn (£5bn) for 2012 yesterday, double its target for this year, as it seeks to restore investor confidence in a tough business environment.

SocGen executives pitched the target as part of its five-year strategic plan at an event for investors, which came as the trial of the bank’s former trader Jerome Kerviel ran into its second week.

Speaking at the investor event, SocGen chief executive Frederic Oudea said the bank would make “selective” acquisitions but would not seek a capital increase and would finance deals by selling off chunks of its asset portfolio as part of a broader five-year plan.

”We need to remain selective, and all banks are going to have to be selective, let’s be realistic, in the environment we are entering,” Oudea told investors and analysts.

Oudea earlier told reporters that Allied Irish Bank’s stake in Polish bank Zachodni, which SocGen has been linked to, was “too expensive” relative to growth potential.

Deputy chief executive Severin Cabannes also said SocGen’s Securities Services unit would participate in consolidation, but not in the short term.

The 2012 target is above current consensus analyst estimates for earnings of €5.4bn.

“Societe Generale’s 2012 targets are solid even if unspectacular,” Citigroup analyst Kimon Kalamboussis said. He said French bank stocks including SocGen may have been “relatively oversold” despite a tough market environment.

French banks like SocGen rival Credit Agricole have been penalised for exposure to euro sovereign debt as well as toxic asset writedowns and market volatility.

SocGen warned that a volatile market had led to a mixed second quarter so far for its investment bank’s equities division.