Societe Generale SA, France’s second-largest bank, said third-quarter profit fell 31 percent, hurt by a writedown on Greek sovereign debt and lower trading revenue. The company won’t pay a dividend for 2011.
Net income dropped to 622 million euros ($855 million) from 896 million euros a year earlier, the Paris-based lender said in a statement on Tuesday. That missed the 764 million-euro average estimate of 13 analysts surveyed by Bloomberg. The lender took a 333 million-euro pretax writedown on its Greek sovereign debt holdings.
Societe Generale, which said in August it may miss a 6 billion-euro profit target for 2012, follows larger rival BNP Paribas SA in increasing its writedown of Greek debt to 60 percent. The two banks are trimming assets to comply with new capital rules after their stock plunged and U.S. money-market funds became reluctant to lend to them in dollars.
The firm has started to reduce the balance sheet by ?disposing of a significant amount of our legacy assets at a low cost? and ?halving our sovereign debt exposure? to Greece, Ireland, Italy, Spain and Portugal since the beginning of the year, Chief Executive Officer Frederic Oudea, 48, said in the statement.
Societe Generale has declined 57 percent this year in Paris trading, giving it a market value of 13.6 billion euros. BNP Paribas has fallen 35 percent.
While Societe Generale’s Greek sovereign holdings are less than those of BNP Paribas, French banks as a whole held more of Greece’s public and private debt than lenders from any other country at the end of June, according to Bank for International Settlements data.
The two companies announced in September steps leading to trim a combined 300 billion euros of assets by 2013. Societe Generale said on Tuesday that at the end of September it reduced the liquidity needs of its corporate- and investment-banking unit by 40 billion euros.
Societe Generale’s capital-markets revenue fell 51 percent to 631 million euros in the quarter. The company follows BNP Paribas, Deutsche Bank AG and Barclays Plc in recording lower investment-banking revenue as concern that Greece may default crimps income from trading and underwriting stocks and bonds in Europe.
Earnings at Societe Generale’s corporate- and investment- banking business dropped 84 percent to 77 million euros in the quarter.
Societe Generale’s total provisions rose to 1.19 billion euros in the third quarter from 918 million euros a year earlier, hurt by the Greek sovereign-debt writedown, the bank said. [Bloomberg]