Societe Generale SA, France’s third-largest bank, reported a surprise first-quarter loss on writedowns linked to US bond insurers and higher provisions for risky loans.
The net loss of 278 million euros (US$370 million) compares with a 1.1 billion euro profit a year earlier, the Paris-based bank said in an e-mailed statement yesterday. Analysts surveyed by Bloomberg estimated Societe Generale would post a profit of 332 million euros.
The French bank, which named chief executive officer Frederic Oudea chairman yesterday, reported 1.5 billion euros of markdowns and a doubling in loan-loss provisions amid the worst financial crisis since World War II. By contrast, BNP Paribas SA, France’s largest bank, posted earnings yesterday that beat analysts’ estimates as a rebound at the investment bank cushioned a surge in bad loans.
“Acute tensions remain in the financial markets,” Societe Generale said in the statement. “However, the effects of the various government stimulus plans should help mitigate the consequences of the crisis in 2009 and allow a gradual resumption of growth, albeit at a very moderate rate.”
Societe Generale rose 22 percent this year in Paris trading, lagging behind BNP Paribas, which climbed 50 percent, and Credit Agricole SA, which advanced 46 percent.
Daniel Bouton, 59, announced his resignation as chairman of Societe Generale last week after complaining of “repeated attacks” following a 4.9 billion euro trading loss in January last year.
The investment bank had a first-quarter loss of 414 million euros, compared with a 141 million euro profit a year earlier. Markdowns included 866 million euros on debt backed by bond insurers, 364 million euros on holdings of exotic credit derivatives, 166 million euros on asset-backed securities and 116 million euros on collateralized debt obligations.
While the first quarter was favorable for financing and fixed income, declining stock markets weighed on the equities business, the company said. The situation remained difficult for “high-risk exposures” tied to the US residential and commercial real-estate markets, Societe Generale said.
BNP Paribas, Credit Suisse Group AG of Zurich, Frankfurt-based Deutsche Bank AG, and Goldman Sachs Group Inc and JPMorgan Chase & Co, based in New York, all announced first-quarter results that beat analysts’ forecasts, buoyed by a thaw in credit markets that spurred debt sales.
The world’s biggest financial companies have booked more than US$1.37 trillion in writedowns and credit-related losses since the beginning of the US subprime mortgage crisis in 2007, forcing them to raise US$1.12 trillion euros in capital from government and investors, Bloomberg data showed.
Societe Generale raised 5.5 billion euros from investors last year to replenish reserves following trading losses the bank blamed on former employee Jerome Kerviel.
The company said yesterday it agreed to issue preferred shares to the government to raise 1.7 billion euros in a second round of state aid. The bank bolstered funds last year by selling 1.7 billion euros in subordinated debt to the government.
The bank’s Tier 1 capital ratio, a key indicator of financial health, was 9.2 percent at the end of March, when the second round of government assistance is included.
Earnings at Societe Generale’s French consumer banking network dropped 29 percent to 216 million euros in the quarter. Profit from international retail banking slumped 40 percent to 118 million euros, hurt by a “significant” increase of loan-loss provisions in Russia.
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