Société Générale announced that its first-quarter net income decreased 20% from the same quarter a year earlier. The French bank said that its first-quarter net income fell due to unloaded assets and booking a charge on the cost of its debt. Société Générale’s stock has declined by about 60% in the last year.
Net income dropped to 732 million euros ($963 million) in the first three months of the year. Revenue decreased 4.7%, to 6.3 billion euros. Without the charge for the revaluation of its debt, net income would have been 851 million euros. Analysts expected net income of 600 million euros to 750 million euros.
The bank’s chief executive, Frédéric Oudéa, said that first-quarter earnings were healthy, adding: “We maintain the priority given to rigorous risk management, controlling operating expenses, reducing our liquidity needs and strengthening our capital.” Société Générale has been taking steps to reduce risk, particularly in dollar-financed activities.
The corporate and investment banking unit of Société Générale posted revenue of 1.9 billion euros. This was about 18% less than the first quarter of 2011, the drop attributed to a decline in the financing and advisory business. Strong fixed income, currencies, and commodities trading helped the unit by contributing 993 million euros to the unit’s net income, up from 713 million euros in the same quarter a year earlier. Société Générale has announced that it will be cutting nearly 1,600 jobs in its corporate and investment banking division.
The bank’s core Tier 1 capital ratio rose to 9.4% from the fourth quarter of 2011, meeting the European Banking Authority’s requirement that banks have a 9% core Tier 1 ratio by June 30. Société Générale said it would be able to meet 2013 targets for new Basel III Tier 1 capital of 9% to 9.5% without having to seek new financing from investors.
