GLE Societe Generale SA

   By Pietro Lombardi 
 

Societe Generale SA's (GLE.FR) third-quarter net profit and revenue fell due to investment banking weakness but the bank strengthened its capital for the third quarter in a row this year.

The results come after French peer BNP Paribas SA (BNP.FR) reported last week a smaller-than-expected drop in quarterly profit helped by a strong performance in investment banking and as SocGen executes a restructuring that includes cutting nearly 1,600 jobs globally and slashing costs.

France's third-largest listed bank by assets reported Wednesday a 35% decline in net profit for the period to 854 million euros ($948.1 million).

Net banking income, the bank's top-line revenue figure, fell 8.4% to EUR5.98 billion.

The results are "very much in line with our objectives and priorities," Chief Executive Frederic Oudea said.

Analysts highlighted the capital improvement, with the core Tier 1 ratio, a key measure of capital strength, rising to 12.5% in September from 12% at the end of June.

The bank "continues to deliver strong on capital," Jefferies said.

SocGen shares trade 3.5% higher at 0827 GMT.

In April, the lender presented a plan to cut nearly 1,600 jobs globally after a slump in investment-banking revenue in the fourth quarter. The plan followed a cut to its 2020 profitability target. The global markets and investor services--which includes fixed income and equity trading and securities services--will bear the brunt of the job cuts.

The performance of the bank's global banking and investor-solutions business, which includes investment banking and asset management, weighed on the results. Earnings at the unit declined almost 27% on year, with revenue down 7.6%. The business faced "an unfavorable environment," the CEO said.

It was a challenging environment for global markets and investment banking, the bank said. Fixed-income revenue rose 1% while equities revenue declined 20% "against a backdrop of lower volumes and adverse market conditions, particularly in August," it said.

The bank said it has already reached its target of cutting EUR10 billion in risk-weighted assets at the division by 2020.

"We expect the market to have an initial positive initial reaction to the results driven by continuing improvement of in capital [...], but this could be mitigated by the CIB revenues trends, which are showing pressure," Citi analysts said.

Earnings fell 2.8% at the bank's French retail banking operations while they were down 3.6% at the international retail banking and financial services division.

Write to Pietro Lombardi at pietro.lombardi@dowjones.com

(END) Dow Jones Newswires

November 06, 2019 04:12 ET (09:12 GMT)

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