UPDATE 3-Societe Generale profit more than doubles, trading surges
* Earnings and revenue beat analyst forecasts
* Fixed income, equities trading performance beats peers
* Says capital adequacy measures ahead of schedule
* Sticks to goals, international retail arm turns a profit
* Books third litigation provision in as many quarters
(Adds analyst comments, share-price reaction)
PARIS, Aug 1 (Reuters) - Societe Generale, France's No. 2 listed bank, said second-quarter earnings more than doubled after a surge in securities trading and a swing to profit at its foreign retail operations defied Europe's economic slump.
The figures helped offset concerns over SocGen lagging sector peers including Barclays and Deutsche Bank in strengthening its capital adequacy ratios with measures such as raising equity or pruning its business.
Quarterly net income soared to 955 million euros ($1.27 billion) from 436 million in the year-ago period, while revenue slipped 0.6 percent to 6.23 billion, SocGen said on Thursday.
Both figures were ahead of analysts' estimates, according to analysts polled by Thomson Reuters I/B/E/S, with the average forecast for net profit at 703 million euros and 5.88 billion for revenue.
SocGen shares jumped nearly 6 percent to be the top performer in Europe's blue-chip FTSEurofirst index, with several analysts lauding the numbers.
"Corporate and investment banking ... was over 20 percent above consensus, with stronger-than-expected equities revenues," Citigroup analyst Kinner Lakhani wrote in a note to clients.
"Although leverage concerns are unlikely to have been fully addressed... We reiterate our Buy rating."
The results also support the likelihood of a higher dividend payout, Natixis analyst Alex Koagne said, citing an expected payout ratio of 30 percent versus guidance of 25 percent.
Like larger domestic rival BNP Paribas - which also beat results forecasts on Wednesday, though with a weaker investment-banking performance - SocGen is in the early stages of a multi-year cost-cutting programme intended to fight the euro zone's economic woes without a more radical restructuring.
The French bank stuck to its 2015 return-on-equity target of 10 percent and said its Basel III core capital ratio had risen to 9.4 percent - almost six months ahead of schedule.
SocGen's Basel III leverage ratio - which lags the sector - will exceed by year-end the 3 percent required by regulators by 2018, it said. Regulators are increasing scrutiny of leverage ratios, which compare a bank's shareholder equity to its total assets without using a bank's own risk weightings.
"We are ticking the boxes (on Basel III)," SocGen Chief Executive Frederic Oudea told CNBC.
SocGen's fixed-income unit saw 17.2 percent growth year-on-year, outperforming U.S. heavyweights such as Goldman Sachs and Morgan Stanley - up 11 percent and 16 percent respectively - while larger European banks such as Germany's Deutsche and BNP saw declines in fixed income.
In equities, SocGen grew sales by 38.3 percent year-on-year, again better than European peers including BNP, Credit Suisse and Barclays, though slightly short of the 40-50 percent gains posted by several Wall Street firms.
Investment-banking profits almost tripled to 374 million euros, helped also by SocGen's sale of a chunk of bad debt.
GAINS ABROAD, DECLINES AT HOME
SocGen's bottom line was also buoyed by cost savings and a turnaround at its foreign retail operations, heavily skewed towards Russia and Eastern Europe, which swung to profit due to falling loan losses and restructuring measures.
The division reported profit of 59 million euros versus a 231 million-euro loss in the year-ago period.
Russian unit Rosbank - which was rocked by the arrest of its chief executive on bribery charges in May - has a new CEO and will try to boost profits, SocGen said, in a fragmented, state-dominated market that for years has failed to deliver meaningful profits for SocGen and that has chased out many rivals.
However, SocGen's domestic retail operations, once a reliable profit driver thanks to French households' low debt levels, saw profits fall 11.4 percent as the weak economy pushed up loan-loss provisions and ate into an uptick in revenues.
SocGen also booked its third litigation provision in as many quarters, setting aside 100 million euros for unspecified "dispute" risks.
SocGen shares have gained 6.6 percent year-to-date, outperforming the European sector but lagging domestic rivals such as Credit Agricole and Natixis, giving it a market value of 24.1 billion euros. ($1 = 0.7531 euros)
(Editing by Louise Ireland and James Regan)