French bank SocGen's Q3 profits rise faster than market expected

By Inti Landauro and Matthieu Protard

PARIS (Reuters) - French bank Societe Generale said its third quarter profits had beaten expectations with a 32 percent jump in earnings buoyed by a capital gain and higher overall revenues.

Net profits rose to 1.23 billion euros ($1.41 billion), beating an average profit forecast of 917 million euros in a poll of analysts by Inquiry Financial on behalf of Reuters.

Societe Generale said it made a capital gain of 271 million euros as it updated the valuation of its stake in Euroclear. The bank said it has more than doubled the valuation of the stake, which is higher than 5 percent, in its books.

 

Revenues during the quarter rose 9.6 percent to 6.53 billion euros, above the 6 billion euros expected by the analysts.

SocGen's French retail bank also performed better than the previous quarter with a 1.8 percent revenue increase, while revenue from its fixed-income, currency and commodity trading division was stable.

SocGen's stable performance at its fixed-income, currency and commodity trading arms contrasted with its French rivals BNP Paribas and Credit Agricole, which both said they had lost money on market trading even though they posted higher overall Q3 profits.

"Societe Generale published solid results in the third quarter 2018 with a good level of profitability," the bank's Chief Executive Frederic Oudea said in a statement.

Large European banks such as SocGen are struggling to boost profits as low interest rates hurt their traditional lending business, while new technologies and consumer habits are forcing them to spend heavily on overhauling their processes.

SocGen also booked a 136 million euro provision to pay potential settlements with U.S. authorities, mainly over possible sanctions violations.

SocGen had already set aside an amount of 1.1 billion euros to cover a possible settlement on this case. Oudea said in a statement that the provisions at the current level "put an end to the financial impact" of the dispute.

Societe Generale, which has been dogged for more than a year by a series of costly legal disputes, has regularly raised the provisions set aside to cover potential losses related to the settling of those disputes.

The last case that remains to be settled relates to dollar transfers made on behalf of entities based in countries subject to U.S. economic sanctions.

In June, it agreed to pay $1.3 billion to authorities in the U.S. and France to end the disputes over transactions made with Libya and over the suspected rigging of Libor, a key interest rate used in contracts worth trillions of dollars globally.

As part of the process to settle the Libor case, Didier Valet, its deputy CEO in charge of investment banking activities, had left in March.

SocGen already paid 963 million euros in mid-2017 to settle another dispute with the Libyan Investment Authority.

($1 = 0.8736 euros)

(Reporting by Inti Landauro and Matthieu Protard; Editing by Sudip Kar-Gupta)