Societe Generale to cut costs despite rising profits
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.