SocGen posts profit rise; ups litigation provision
French lender Societe Generale reported a 7.8 percent rise in net profit on Friday, to 1.030 billion euros ($1.38 billion), while adding to its litigation provisions.
The second quarter figures for the bank - France's second-largest by market value - saw revenue slip to 5.9 billion euros, a fall of 3.7 percent. The group said that the net cost of risk - a measurement of the costs of risk management compared to the bank's sales and assets - was markedly lower. Income was buoyed by an increased stake in the brokerage firm Newedge, it added.
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The results also show a bounce back from a profit drop in its first quarter. Then, the group reported a 13.3 percent drop in first-quarter net income, as it booked a 525 million euro writedown on Rosbank, its Russian banking arm, as the crisis in Ukraine weighed on profits.
SocGen added that its core Tier 1 capital ratio under Basel III rules had risen to 10.2 percent at end of June from 10.1 percent at the end of March. It also rose its litigation provision by 200 million euros to 900 million euros.
It didn't give any reason for this increase in its latest report, but Reuters news agency noted that it was in talks with U.S. authorities over alleged dollar transfers made for clients based in countries that are subject to U.S. sanctions.
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Commenting on the results CEO and Chairman Frédéric Oudéa said that all of the group's businesses had improved their net profit.
"It's a strong performance across the board," he told CNBC. "And I must say we are absolutely in line with our strategic plan presented to our shareholders just a few weeks ago."
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Oudéa added that he expects a progressive decline in the cost of risk over the next three years and hoped that the "positive momentum" at the bank would feed through into the results for the rest of the year.
The bank remains committed to Russia, he said, and will comply with new sanctions recently announced by both the European Union and the U.S. authorities. Oudéa added that its exposure to Russia is only 3 percent of its total business.