So­ci­ete Gen­erale to cut costs de­spite ris­ing prof­its

The Pak Banker - - COMPANIES/BOSS -

French bank So­ci­ete Gen­erale un­veiled a new cost cut­ting plan of 850 mil­lion eu­ros ($925 mil­lion) to com­pen­sate for higher reg­u­la­tory costs, de­spite a jump in prof­its.

Net profit at the bank jumped by 25 per­cent for the April through June pe­riod from the same quar­ter last year to 1.35 bil­lion eu­ros, con­sid­er­ably higher than the av­er­age of 856 mil­lion ex­pected by an­a­lysts sur­veyed by the fi­nan­cial news ser­vice Fac­tSet.

The re­sult in­cludes a new pro­vi­sion of 200 mil­lion eu­ros for lit­i­ga­tion, tak­ing the to­tal to 1.3 bil­lion eu­ros.

So­ci­ete Gen­erale did not spec­ify what the pro­vi­sion was for, but its French ri­val Credit Agri­cole saw its shares plum­met 10 per­cent on Tues­day af­ter in­creas­ing its pro­vi­sions by 350 mil­lion eu­ros as it was in ad­vanced talks with US author­i­ties for vi­o­lat­ing rules for dol­lar trans­ac­tions with coun­tries un­der US em­bar­goes. So­ci­ete Gen­erale has also been caught up in that US probe, which cost another of its French ri­vals, BNP Paribas, $8.9 bil­lion last year to set­tle.

While the bank's sec­ond quar­ter earn­ings were boosted to the tune of 312 mil­lion eu­ros due to a reval­u­a­tion of its fi­nan­cial li­a­bil­i­ties, it also saw im­proved per­for­mance in sec­tors in­clud­ing French re­tail bank­ing and in­vest­ment bank­ing.

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