April 30, 2020 / 5:44 AM / 25 days ago

UPDATE 3-Equity trading wipeout pushes SocGen into the red

* First French bank to report quarterly results

* Big jump in provisions, two lawsuits pending

* Underperforms European banks in share trading

* Shares drop 6%

* CEO says credit profile is strong

* Additional cost savings planned (Updates with comments from executives during analyst call)

By Maya Nikolaeva

PARIS, April 30 (Reuters) - Societe Generale shares fell sharply on Thursday after the bank surprised investors with a quarterly loss, hiking provisions for bad loans and suffering a revenue wipeout at its equity trading division.

Chief Executive Frederic Oudea called the equity trading performance a big disappointment, but said that the bank has learned the lessons of the 2008 crisis and its credit profile was strong.

SocGen said that sales from trading shares slumped 99% to 9 million euros ($9.8 million), contributing to a 537 million euro loss at the French lender’s corporate and investment bank.

SocGen is one of the biggest players in dividend futures and structured products, which are derivatives linked to shares and corporate payouts - both of which have slumped amid the coronavirus crisis.

Loan losses from some hedge fund clients and the rising cost of hedging bets also hurt equity revenues.

The weak performance is in stark contrast to European banks, which on average posted a 20% gain in share trading, according to analysts at Jefferies, and is a blow for Oudea, who has focused SocGen on equities and related derivatives.

Overall, SocGen said revenues fell 16.5% in the first quarter to 5.17 billion euros, while its net loss amounted to 326 million euros versus a 686 million euros profit a year ago. Underlying net income was down 90.8% to 98 million euros.

The bank hiked its provisions against loan losses to 820 million euros in the first quarter from 264 million a year earlier as it braced for coronavirus-led defaults and two fraud cases, it said.

“I’m not surprised by credit provisions because I think consensus was too optimistic, but the investment bank was really disappointing and two fraud cases certainly do not look good,” Jerome Legras, managing partner at Axiom Alternative Investments said.

Shares in the bank slid nearly 6% by 1056 GMT.

The bank, which has been exiting less profitable businesses and has been cutting costs, said there would be an additional cost reduction of between 600 and 700 million euros in 2020. Oudea said that the bank was confident in “the robustness of our capital and risk profile”.

SocGen had originally been set to publish the results on May 6, but announced on Wednesday it was bringing them forward.

It is the first among French banks to report quarterly results. BNP Paribas, Credit Agricole and Natixis are due to report next week.

$1 = 0.9192 euros Reporting by Piotr Lipinski in Gdansk and Maya Nikolaeva in Paris; Editing by Sudip Kar-Gupta, Carmel Crimmins, Elaine Hardcastle

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