SocGen Profit Drops, Says Markets Not Back to Normal

Societe Generale, France's second-biggest listed bank, posted an 11.5 percent fall in third-quarter net profit, bang in line with forecasts, due mainly to lower earnings in corporate and investment banking.

Net profit fell to 1.123 billion euros ($1.63 billion).

Twenty analysts polled by Reuters had given an average net profit forecast of 1.123 billion euros.

SocGen's gross operating profit fell 2.5 percent to 2.001 billion euros.

SocGen kicked off the third-quarter results season from France's top banks, with the global banking industry reeling from the impact of losses in the U.S. subprime mortgage sector.

UBS and Merrill Lynch had third-quarter losses, while the subprime problems also led to the departures of the heads of Merrill and Citigroup .

SocGen said market conditions were not yet back to normal.

"Although gradually improving, the market environment has not, at this stage, returned to normal," it said in a statement.

The problems in the credit market affected SocGen's corporate and investment banking division, which is usually one of the group's best performing units but this time the division had a 40.8 percent fall in third-quarter net profit.

SocGen said it had booked a 230 million euro writedown related to structured credit products.

However, the French bank stuck to its near-term return on equity (ROE) target.

"Unless there is a significant deterioration in the macroeconomic environment or a major worsening of the crisis, the group is expected to achieve ROE after tax of around 20 percent for 2007 as a whole and for 2008," it said.