SocGen reports Q3 profit rise of 24% as investment bank rebounds

Societe Generale Q3 Profit Rises 24% on Strong Equities Trading and Retail Gains

Societe Generale Outperforms Expectations in Q3 2024

By Mateusz Rabiega

Oct 29 (Reuters) - French bank Societe Generale reported higher-than-expected third-quarter net profit on Thursday, as soaring equities trading offset a sharp decline in fixed income and its retail bank benefited from higher lending income.

Financial Performance Highlights

Group net income rose to €1.89 billion ($2.10 billion), up 24% from a year earlier, ahead of the €1.65 billion median of analysts estimates polled by the bank.

Revenues came in beyond expectations, growing 8% on the year to €7.17 billion.

Investment Banking and Trading Revenues

After three consecutive quarters of disappointing trading revenues, SocGen's investment bank saw sales rise 13% in the three months to end-September - a welcome boost for CEO Slawomir Krupa as he seeks to extend one of Europe's most closely watched bids to turn around a lender dogged for years by high costs and weak profitability.

Strategic Initiatives and Expense Management

France's second-biggest listed bank last month lifted its key medium-term financial targets and vowed further expense cutting, in the second of Krupa's three-year strategy reviews since taking over in 2023.

SocGen is the latest of a flurry of European banks including rival BNP Paribas to report this week, with most lenders beating forecasts and helping ease investor concerns that a years-long profit boom for the region's banks is losing steam.

SocGen said costs in the most recent quarter edged up slightly to €4.1 billion, roughly €100 million more than forecast, mainly due to bonuses at its investment banking unit.

Equities Trading and Retail Banking Performance

Equity Trading Offsets Fixed Income Slump

SocGen's trading arm enjoyed record-high equity sales, which soared 46%, close to BNP's 50%.

By contrast, fixed income revenue plummeted 21% year-on-year, worse than a 3% decline at Deutsche Bank and a 5% drop at Wall Street rivals.

Retail Banking Revenue Growth

SocGen's retail business reported an 11% rise in revenue as net interest income increased.

Market Context and Share Performance

European banking shares have fallen sharply in the past month as soaring euro zone sovereign yields - especially in France - raise worries about lenders' exposure to a bond market selloff.

SocGen shares, one of the industry's best performers in recent years, are down 10% year to date and have fallen 26% since August, when they hit near 19-year highs.

($1 = 0.8993 euros)

(Reporting by Mateusz Rabiega in Gdansk; Editing by Tommy Reggiori Wilkes)