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Wednesday November 4, 12:20 PM
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SocGen Q3 profit trails forecast, hikes provision
By Sudip Kar-Gupta
PARIS (Reuters) - Societe Generale missed forecasts despite doubling its third-quarter net profit from a year ago, and the French bank said the economic environment remained uncertain.
Like other banks that have reported earnings in the past few weeks, such as Credit Suisse and Deutsche Bank, investment banking results powered the profit line while SocGen added to debt provisions as many financial institutions expect bad loans to rise further in 2010.
Net profit rose to 426 million euros ($623 million) euros from 183 million a year earlier, mainly due to the fact that SocGen's investment banking arm swung to a profit from a year-earlier loss.
A Reuters poll of 10 analysts had produced an average net profit forecast of 481 million euros.
LINGERING BID SPECULATION
SocGen's results kicked off the third-quarter earnings season for France's banks, with larger rival BNP Paribas also expected to post higher earnings on Thursday.
Though many of the world's top banks have posted higher profits over the last month, doubts remain over provisions in the sector and the lingering effects of the financial crisis.
On Tuesday, UBS reported a third-quarter loss and the British government injected yet more taxpayers' money to help part-nationalised banks Royal Bank of Scotland and Lloyds Banking Group.
SocGen has been steadily recovering since a 4.9 billion euro trading loss in January 2008, which it blamed on unauthorised deals carried out by Jerome Kerviel, a former junior trader at the bank.
However, SocGen remains the subject of constant bid speculation in France.
Last week, France's biggest domestic bank Credit Agricole denied a report in Le Monde that it was considering a merger with SocGen and insurer Groupama, and on Wednesday La Tribune newspaper said BNP was still looking at SocGen.
According to La Tribune, BNP Paribas denied the report, though the newspaper quoted sources close to the bank as saying BNP was studying a SocGen tie-up scenario internally.
SocGen narrowly escaped a takeover bid from BNP in 1999 and it has long defended its independence.
SocGen shares closed down 4.3 percent at 43.65 euros on Tuesday, giving the bank a market capitalisation of around 32 billion euros.
The stock has risen around 30 percent so far this year, less than a 45 percent gain in the DJ Stoxx European banking index.
By comparison, BNP Paribas has a market capitalisation of around 60 billion euros and BNP's shares have risen around 73 percent so far this year.
(Editing by Marcel Michelson/Will Waterman)
(For more news on Reuters Money visit http://www.reutersmoney.in)
