(3 November 2016 – France) Société Générale (SG) reported better-than-expected profits in the third quarter, driven by higher revenue from investment banking and international retail operations.
The French lender benefited from a 42 percent jump in net profits in its investor solution business, which includes investment banking, security services and asset management, to €469 million (A$678 million) in the quarter.
SG’s results follow positive reporting from other European banks including BNP Paribas, Deutsche Bank and Barclays.
SG also recorded a 31 percent rise in profits at its international retail banking and financial services division to €457 million.
Société Générale’s chief executive, Frédéric Oudéa, SocGen emphasised “good commercial and financial performance” as the bank continued to adapt to a “difficult and uncertain environment”.
However, the bank faced continued weakness in its French retail bank, with low interest rates tightening net interest margins. Net profit in this division was down 15 percent to €353 million and revenue fell 6 percent to €2.04 billion.
Over the third quarter, SG reported 2.4 percent fall in net profit from a year earlier, due to an €237 million accounting charge related to its debt. Excluding this charge, it was up 3.2 percent, ahead of analysts’ expectations.
To tackle the weakness in French retail banking, SG said last year it would cut the number of branches by a fifth by 2020. This came as part of an €850 million cost reduction plan across the group, with hundreds of job losses in France.
The bank said that equity-trading income in the third quarter benefited from an increase in demand for structured products, especially in Asia. Revenue from trading bonds, foreign exchange and commodities jumped 42 percent to €687 million.
The bank’s common equity Tier 1 ratio, a measure of financial strength, rose to 11.4 percent at the end of September from 11.1 percent in June.