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Societe Generale Q3 profit more than doubles

Societe Generale SA, France's second-largest bank, saw net profit more than double in the third quarter after better financial market conditions helped earnings at its investment banking unit.
/ Source: The Associated Press

Societe Generale SA, France's second-largest bank, saw net profit more than double in the third quarter after better financial market conditions helped earnings at its investment banking unit.

SocGen said in a statement Wednesday that it made a net profit of euro426 million ($627 million) in the July to September period, compared with euro183 million a year earlier.

The results were slightly lower than the consensus forecast. Analysts surveyed by Thomson Reuters had predicted a net profit of euro457 million.

Shares rose 5.2 percent to euro45.92 in Paris midday trade after falling 4.3 percent Tuesday.

The Paris-based bank said that markets recovering from the collapse of Lehman Brothers last year had normalized further during the quarter.

SocGen recorded net profit of euro133 million at its corporate and investment bank in the quarter, compared with a net loss of euro240 million a year earlier, despite euro751 million in losses and writedowns mainly linked to the tightening of credit spreads.

The results helped offset a decline in profit at its core French retail banking business. The unit reported a 14 percent drop in net profit to euro287 million in the period.

"Societe Generale has been the latest European bank to benefit from improved earnings in its investment banking operations," said Anshuman Jaswal, an analyst at financial research firm Celent.

"However, the fall in profits in the consumer banking unit is indicative of the fact that economic recovery is still slowly taking effect."

In October, SocGen completed a euro4.8 billion capital increase in order to pay back a total of euro3.4 billion in government bailout funds. The rest of the money will strengthen SocGen's capital position and fund the acquisition of Franco-Belgan lender Dexia SA.

The bank's Tier One ratio, seen as a key measure of a bank's financial health, rose to 10.4 percent in the quarter from 8.5 percent a year earlier.

"The success of the capital increase puts Societe Generale in a strong position for the emergence from the crisis," the bank said.

Societe Generale has been slowly recovering from a trading scandal last year that saw it lose billions of euros.

SocGen caused a firestorm when it announced in January 2008 that it lost nearly euro5 billion (more than $7 billion) unwinding what it said were unauthorized positions held be a single trader, Jerome Kerviel. The affair rattled an already uneasy banking sector and prompted widespread calls for tighter internal controls at banks.

Societe Generale's big domestic rival, BNP Paribas, reports its third quarter results on Thursday. A Thomson Reuters poll of analysts forecasts net profit of euro1.01 billion, compared with euro901 million a year earlier.