LONDON â€" The French bank Société Générale on Thursday reported a large jump in its second quarter earnings, buoyed by a strong performance from its investment and corporate banking division.
Société Générale, France’s second largest bank behind BNP Paribas, said that its net income for the three months through June 30 more than doubled, to 955 million euros, or $1.26 billion, compared to the same period last year. The firm’s revenue fell slightly, to 6.2 billion euros, over the same period.
The French bank’s strong second-quarter earnings, which beat analysts’ estimates, follow the announcement of a major restructuring drive that will lead to 900 million euros of cost savings by 2015. Société Générale said on Thursday that it already had achieved 170 million euros of these cost savings by the end of the second quarter.
The plans, which included a separate 550 million euros of cost savings last year, may lead to hundreds of job losses in France as the country’s banks and its European rivals struggle to cope with the Continent’s economic problems. Société Générale also has sold a number of its businesses, including those in Greece and Egypt, in a bid to boost profitability.
“We are going to continue our efforts,†the French bank’s chief executive, Frédéric Oudéa, said in a statement. “The second stage of the group’s transformation is well under way.â€
Unlike some of its European rivals, Société Générale reported a surge in profits from its trading and other investment banking activity during the second quarter. The unit generated income of 374 million euros in the three months through June 30, compared to 131 million euros in the same period last year.
The firm attributed the jump in profits, in part, to increased equities trading activity, particularly in the Asia Pacific region. The earnings contrast with those from its local rival, BNP Paribas, which reported a 39 percent fall, to 497 million euros, in its investment banking unit’s income on Wednesday.
The surge in trading activity helped to offset Société Générale’s lackluster performance in its domestic market, where further provisions related to delinquent loans hurt the firm’s retail banking operations. The unit reported an 11 percent fall in income, to 319 million euros, compared to the same period in 2012, though the figure beat analysts’ expectations.
The French bank’s other retail operations, which are spread across Western and Eastern Europe, as well as Sub-Saharan Africa, reported a 59 million euro profit in the second quarter, compared to a 231 million loss in the same period last year.
Like other European banks, Société Générale is being forced by local regulators to hold more capital in reserve to protect against future financial shocks.
The bank said on Thursday that its common tier 1 equity ratio, a measure of firm’s ability to weather financial difficulty, , rose almost 1 percentage point, to 9.4 percent, under the accounting rules known as Basel III.
