French bank Societe Generale recorded a rise in fourth-quarter net profit which nonetheless fell short of analyst forecasts, as its CEO sought to reassure nervous investors who have grown worried about the banking sector.
Net profit for the fourth quarter came in at 656 million euros ($740 million), above the 549 million euros recorded in the same period last year but below the 663 million euros forecast in a Reuters poll of analysts. Investors sent the stock lower in early deals; it was down over 12 percent after almost an hour of trade.
Some analysts told Reuters that the fact that the bank did not confirm its return on equity (ROE) target for 2016, combined with the new provisions for litigation had hit the stock.
The group raised its provisions for litigation by 400 million euros, but did not offer an explanation for the increase. Reuters reported that the group has been conducting an internal investigation into dollar transfers made on behalf of entities based in countries subject to U.S. sanctions, linked to talks with the U.S. Office of Foreign Assets Control.
Chief executive Frederic Oudea said strength in the first half of the year offset recent market volatility. The jitters in the market, which have led to sharp falls, were overdone he said.
European banks have lost about a quarter of their market value since the start of the year and are looking badly bruised. Chief executives have been trying hard to reassure investors that there is nothing to fear.
"There is too much nervousness compared with reality," Oudea told CNBC in an interview, adding the financial system was "much more robust".
"The quality of the banking sector is much better than in 2008," he said.
Corporate clients were feeling "pretty positive", according to Oudea. "We know that 2016 can be a bit bumpy but fundamentally I remain positive for the euro zone outlook in 2016."
The group plans to pay out a dividend of 2 euros per share for 2015, up from 1.20 euros for 2014.