Falling short of analysts’ expectations, French banking giant, Societe Generale SA has reported a drop of 52% in its profits in the second quarter of 2009 – reported Bloomberg. Mounting asset writedowns and incresed loan-loss provsions are considered to be the main culprits.
The Paris-based bank’s Q2 net income plunged to E309 million, as compared to E644 million in the previous year. The bank’s provisions for doubtful loans increased to E1.08 billion in the second quarter, from E387 million a year earlier. The corporate and investment-banking division registered a E12 million net loss during the same period. However, revenue from the equities business increased 4.2%, and fixed income, commodities and currencies revenue rose to E821 million from a meagre E58 million.
The bank booked E1.7 billion of revenue writedowns in the second quarter, including E840 million for marking to market CDS used to hedge its corporate loan book. Earnings at the domestic consumer banking unit fell by 13% and profit from international retail banking declined 49%, mostly hit by the deterioration in the level of risky loan provisions outside of France – reported the newspaper.
In a statement Frederic Oudea, CEO of Societe Generale, said: In an environment of global recession, the group is focusing on consolidating its market share, controlling risks and restructuring the activities most severely affected by the crisis.
