SocGen surprises with a more than doubling in profits amid cost-cutting

French bank Societe Generale has reported a second quarter net income more than double what it was a year ago following growth in fixed income and equities and a return to growth in foreign retail operations.

SocGen saids its quarterly net income grew to €955m (£838m) from €436m in the same period one year ago. However, revenues fell slightly to €6.23bn. Both figures were above analyst expectations of €703m net profit and €5.88bn revenue.

The bank is in the midst of a rigorous cost-cutting programme, and said €170m of savings had been secured since the plan was introduced in May this year out of a total planned €900m by 2015.

The bank kept its 2015 return on equity target of ten per cent and said its Basel III core capital ratio had risen to 9.4 per cent, nearly six months ahead of schedule. It expects its Basel III capital ratio will be above three per cent by the end of this year.

Year-on-year, the bank’s corporate and investment banking unit increased revenues by 23.3 per cent to €1.604bn. Fixed income revenues grew by 17.2 per cent – ahead of US rivals like Goldman Sachs (up 11 per cent) and Morgan Stanley (16 per cent). Equity sales were up 38.8 per cent.

French networks reported a three per cent growth in revenues to €2.069bn thanks to strong deposit inflow offsetting a significant drop in credit demand. Meanwhile, international retail banking's net income rose 1.6 per cent to €1.100bn.

In an interview with CNBC, chief executive Frédéric Oudéa said there is “a series of projects that are delivering results and it's not just from this quarter, it goes back two years. We are fundamentally adapting our business and I think we're getting results.”

I'm very happy with business performance on the French retail, strong growth of revenues plus 3 percent. Good monitoring of costs and a strong improvement of gross operating income...so that's very positive.