Phew! SocGen profits only slump 63%
It doesn’t seem much to cheer about but Societe Generale investors breathed a sigh of relief when second-quarter net profit only fell 63 percent.
The investment banking unit may have taken a 1.2 billion euro hit but higher profits from its international retail banking and consumer credit businesses offset the damage and kept the group in the black.
In today’s doom-laden markets that was something to celebrate – and the shares jumped more than 6 percent.
It has been the year from hell for the venerable French bank, still in the shadow of the world’s worst rogue trader scandal and struggling – like its peers – with the global credit crunch.
In January, it revealed 4.9 billion euros of losses following rogue deals by junior trade Jerome Kerviel, forcing a 5.5 billion euros rights issue and making SocGen a takeover target in the eyes of many.
Magistrates are still studying what went wrong and who knew what about the Kerviel
affair. But SocGen may be back from the brink.
And echoing comments from HSBC this week, he argued the universal banking model remains viable and will emerge as the “winner” from the current credit crisis.
Attention turns next to BNP Paribas, France’s biggest listed bank, which reports second-quarter earnings on Aug. 6.