Profits slump 42% at France's Societe Generale
2012-08-02 17:43:47
French banking giant Societe Generale on Wednesday posted net profits down 42 percent in the second quarter, hit by writedowns on its TCW investment fund and Russian subsidiary Rosbank.
The bank also said it was sifting through hundreds of thousands of records as part of an internal probe into possible involvement in the Libor interest-rate rigging scandal, but stressed no formal complaint had been made.
The profit figure of 433 million euros ($532 million) was far lower than analysts polled by Dow Jones Newswires forecast, with their predictions averaging 764 million euros.
Societe Generale said it took a 250 million euro charge on its Rosbank acquisition "given the slower than expected momentum of the Russian operating infrastructure."
At TCW, the group was prompted to write down 200 million euros "to take account of the situation in the asset management market in the current economic environment," the bank said.
The bank said operating profit in the April-June period rose 35.9 percent to 1.46 billion euros despite a 3.6 percent fall in net banking income, which totalled 6.27 billion euros in the period, slightly better than analyst forecasts.
For the first six months of 2012, banking income hit 12.6 billion euros, a four percent fall from a year ago as operating income rose four percent to 2.54 billion euros.
"Despite a challenging environment, the Societe Generale Group has progressed, quarter after quarter, with its transformation strategy, in line with its objectives," Frederic Oudea, Societe Generale Chairman and chief executive, said in a statement.
The banks said its core Tier 1 capital ratio - a key measure of financial health - was on target to reach between nine and 9.5 percent by end 2013 as part of the international Basel III agreement to shore up the global financial sector.
Oudea told journalists that the bank was probing any eventual impropriety in the Libor (London Interbank Offered Rate) rate-fixing scandal that has already seen British bank Barclays fined $452 million.
"We launched an internal enquiry following revelations in the media. And we will look at hundreds of thousands of documents and telephone conversations in order to take stock," Oudea said.
"We have received requests from a certain number of regulators... To date, we haven't received notification of a formal complaint by these regulators," he added.
Major banks are under investigation in the United States, Britain, Canada, Japan, the European Union and elsewhere for having allegedly rigged the setting of Libor and other essential interbank lending rate averages.
Bank of France governor Christian Noyer said last month that French banks had been questioned by the competent authorities but that "no one has said nor expressed the idea that they (French banks) participated."