PARIS Aug 1 Societe Generale on
Friday reported second-quarter net profit of 1.03 billion euros
($1.38 billion), up 7.8 percent from a year ago helped by lower
expenses and a reduced cost of risk.
France's No. 2 listed bank, whose future in its core growth
market of Russia is overshadowed by the prospect of deeper
western sanctions against the country in response to the Ukraine
crisis, said revenue fell to 5.893 billion euros from 6.120
billion a year earlier.
But its operating expenses were down 1.3 percent and its
loan loss provisions also fell. The result also included a 210
million euro gain related to the acquisition of the 50 percent
of brokerage Newedge it did not already own.
SocGen also said it was increasing its litigation provision
by 200 million euros to 900 million as of the end of June 2014.
It gave no further details on the provision, but in its
annual report this year, it said it was in talks with the U.S.
Office of Foreign Assets Control in relation to U.S. dollar
transfers it made on behalf of entities based in countries
subject to U.S. sanctions.
The annual report also said it has been named in U.S. rate
fixing class action suits.
SocGen, like rivals across Europe, has been selling assets
to bolster its balance sheet and improve profitability in an
environment of slow growth in Western Europe.
It is targeting a return on equity of more than 10 percent
In the quarterly results, it said its core Tier 1 capital
ratio under Basel III rules, a key measure of bank strength used
by regulators since the 2008 financial crisis, was 10.2 percent
at end-June versus 10.1 percent at end-March.
Russia accounted for 7 percent of SocGen 2013 revenue.
SocGen said "commercial momentum remained healthy" there with
outstanding loans up 5.3 percent.
SocGen has so far kept faith with its Russian investments
despite the political tensions, aiming to maintain its exposure
at a moderate level of 3 percent of outstanding loans.
The lender already took a 525 million euro writedown on its
main investment, Rosbank, in the first quarter.
It blamed heightened uncertainty as well as the decline in
the Russian rouble.
(1 US dollar = 0.7469 euro)
(Reporting by Andrew Callus; Editing by James Regan)