Societe Generale profit hit by Greek debt, shares slump
French banking giant Societe Generale said on Wednesday its second-quarter net profit slumped 31 percent as it took a charge for its exposure to Greek debt and warned of a difficult 2012.
The warning on its 2012 outlook sparked a sharp drop in the share price, with Societe Generale stock slumping nearly 7.0 percent at the opening in Paris where the wider market was down 1.16 percent.
The bank said its three months to June net profit came to 747 million euros ($1.07 billion) after it set aside 395 million euros for losses on its holdings of Greek government bond.
If the Greek provision is excluded, the results were roughly in line with analyst forecasts from Dow Jones Newswires for a net profit of 933 million euros.
Societe Generale also downgraded its outlook, saying that its forecast for a 2012 net profit of 6.0 billion euros "looks difficult to achieve."
Societe Generale said that despite concerns over the 2012 outlook, it remained confident of achieving a 9.0 percent core capital level by 2013.
The new Basel III accords on banking sector reserves fixes a core capital requirement of 7.0 percent but some banks may have to set aside up to 2.5 percentage points more depending on their size and influence in the financial system.
Societe Generale said most units posted an improved performance, with its investment banking division contribution to the results up 9.0 percent on the back of a sharp increase of 72 percent in stocks trading activity.
Net banking income, however slipped 2.6 percent to 6.5 billion euros.
© 2011 AFP