Societe Generale misses forecasts

City A.M. Reporter
Societe Generale, France's second-biggest listed bank, posted lower than expected first-quarter results after turmoil in the Arab world offset a strong performance in investment banking.

SocGen is among the most exposed in Europe to Egypt and North Africa, where political upheavals hit business activity and led to a 61 per cent slide in international retail earnings.

"We had an impact of the turmoil in Ivory Coast, in Egypt and in Tunisia," chief executive Frederic Oudea told CNBC. Banks that had been closed were now open again, he said.

Oudea has promised to boost earnings and meet tougher regulation without striking a big merger, part of a turnaround plan to rebuild investor confidence after SocGen lost nearly €5bn in a 2008 rogue trading scandal.

SocGen is sticking to its 2012 net profit target of €6bn, CNBC said.

Net profit for the quarter fell 13.8 per cent to 916 million euros ($1.28bn). The average estimate given in a Reuters poll of analysts was 1.06 billion.

Revenue ticked up slightly to €6.62bn but was also below expectations of €6.73bn.

Stripping out the impact of tightening spreads on the value of its own debt, which the bank pegged at 239 million euros after tax, revenue rose 7.7 percent and earnings were up 9.8 percent.

"It's a really mixed bag ... There were good results in French retail and corporate and investment banking but that could not offset the weakness in international retail banking, which was more pronounced than expected," WestLB analyst Christoph Bossmann said.

Larger local rival BNP Paribas (BNPP.PA) beat first-quarter forecasts on Wednesday with a net profit of €2.62bn, or almost three times SocGen's earnings for the same period.

At end-March, SocGen's core Tier 1 capital ratio was 8.8 per cent, up from 8.5 per cent a year ago but some way behind BNP's ratio of 9.5.