PARIS - Société Générale, the big French bank, said on Thursday that its third-quarter profit plunged as it booked large one-time items.
The bank, based in Paris, reported net income of just 85 million euros, or $108 million, down 86 percent from 622 million euros in the same quarter a year earlier, and well below the 139 million euros analysts surveyed by Reuters had been expecting. It also posted net revenue of 5.4 billion euros, down 17 percent.
Société Générale said its bottom line was hurt by the one-time items, which included a 389 million euro cost for revaluing its own debt, and goodwill write-downs and losses on the sale of assets in Greece and the United States. Without those one-time items, it said, its underlying net income was 856 million euros.
Frédéric Oudéa, the bank's chairman and chief executive, said in a statement that the bank's businesses “have once again demonstrated their resilience and capital-generating capacity. Th e quality of our portfolios and the attention we pay to managing our risks have enabled us to limit the cost of risk in a strained economic environment.â€
Société Générale said its corporate and investment banking unit had wrapped up a loan-disposal plan begun in June 2011, having sold or amortized 16 billion euros worth of assets, cutting the units legacy assets by about two-thirds since then, with its non-investment grade legacy assets cut to 3.2 billion euros by mid-October.
The French bank, which came under market pressure last year because of its exposure to so-called “peripheral†euro zone nations, has been scaling back in that region.
It said in September it would sell its 99 percent holding in its Greek subsidiary, Geniki Bank, to Piraeus Bank. It also announced plans to sell TCW, a U.S. asset-management business, to Carlyle Group and TCW's management. The TCW deal has been held up by a California judge, who is considering a lawsuit by EIG Global Energy Partners to block the deal.
Société Générale said those actions and its own earnings had enabled it to boost its core tier 1 ratio, a measure of a firm's ability to weather financial shocks, to 10.3 percent according to so-called Basel 2.5 capital adequacy rules at the end of September, a slight improvement from the second quarter.
It said it expected to achieve a target of a Basel II core tier 1 capital ratio “of between 9 percent and 9.5 percent†by the end of next year.
French banks, though, continue to face significant worries.
The ratings agency Standard & Poor's in October changed its ratings outlook on Société Générale to negative from stable, citing a growing level of economic risk to the country's banking system, both from the slumping euro zone economy and the likelihood of a downturn in the French housing sector. The ratings agency also cut its credit rating on the largest French bank, BNP Paribas, by one notch to A+/A-1, the same level as Société Générale.
