Societe Generale said it was hit by the economic slowdown
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Societe Generale has reported a slump in profits of more than a half as it was forced to write off bad debts and investments in risky assets. The bank made 309m euros ($445m; £263m) between April and June, down 52% on the 644m euros it made in the same period a year earlier. The fall was not, however, as big as analysts had forecast. The bank said it had proved "highly resilient" and said there were signs that the economy could stabilise. 'Mixed picture' The corporate and investment banking division reported a loss of 12m euros. In the same period in 2008, the division made a loss of 180m euros.
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There appear to be some signs that economic activity could stabilise at end-2009
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Profits at the international retail banking arm fell 50%, to 122m euros. But the biggest factor in the slump in group profits was losses on bad loans and investments. Total provisions for bad debt were 1.1bn euros. "SocGen's results are a mixed picture. The bad debt charge remains a cause for concern," said Arnaud Scarpaci at Agilis Gestion. However, the provision for bad loans was smaller than analysts had expected and SocGen shares had closed 6% higher on the Paris stock market. Economic stability "Societe Generale's retail banking activities proved highly resilient in the second quarter while corporate and investment banking posted an excellent performance," said Frederic Oudea, the bank's boss. For the year to date, the SocGen made a profit of 31m euros. The bank also gave a cautious outlook for the remainder of the year. "Despite a still challenging economic environment in the second quarter, there appear to be some signs that economic activity could stabilise at end-2009," a statement said. Earlier this week, France's biggest bank, BNP Paribas, reported an increase in profits, while Swiss bank UBS reported a loss. Major banks in the UK have also reported mixed results this week, with Barclays and HSBC posting bumper profits and Northern Rock and Lloyds Banking Group announcing big losses. Banks in the US have had similarly mixed fortunes, with Goldman Sachs and JP Morgan in the money and Morgan Stanley posting losses. The banks winning out are generally those with successful trading divisions, many of which have made huge profits on rising stock markets and other investments. More traditional banks that have been forced to write off bad loans to companies, as well as individuals through mortgages, have found making profits much harder.
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