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PARIS - French bank Societe Generalereported a 20.1 percentdrop in quarterly net profit, as the cost of selling assets in aweak economy and other one-off charges offset a surprise surge inbonds, currencies and commodities revenue. Like European peers, France's second-biggest lender is slashingcosts, debt and jobs at its key investment bankingdivision to meettougher global bank rules and better resist the fallout from theeurozone's sovereign debt crisis. Although this drive to build capital hurt earnings, analystsnoted strong underlying operations such as a 39 percent jump infixed-income revenue - defying expectations of a drop-off from itsstrong performance a year ago. "The results were pretty strong, said Tom Van Kempen, analystat ING. "Operations were good and there was positive news oncapital. Fixed income came as a surprise, they might havereallocated resources to those activities." Shares in Socgen rose 4.3 pct to 18.80 euros in early trade. SocGenand larger rival BNP Paribas, which have been cuttingtheir exposure to the 17-nation eurozone while lending more athome, are still treated as proxies for the euro and their shareprices have suffered as market fears intensify over Spain'srecession-wracked economy. BNP Paribas is set to report results on Friday. Citing the rebound in financial markets between January andMarch - which was driven by the European Central Bank'sunprecedented injection of cheap funds into the banking system -SocGen Chief Executive Frederic Oudea said there had not been amarked deterioration since. "Overall, April remained pretty good, pretty decent...In creditrisk, we see no deterioration," he told CNBC. CAPITAL BUILD SocGen reported net income of 732 million euros ($963 million).Analysts had been forecasting 748.1 million, according to theThomson ReutersI/B/E/S average of seven estimates. Revenue fell 4.7 percent to 6.3 billion euros. This was betterthan the Thomson Reuters I/B/E/S average estimate of 6.2 billion. The bank sold 6.4 billion euros' worth of loan assets duringthe first quarter to cut debt, which came at a cost but nonethelesspushed up its core European Banking Authority Tier 1 capital ratio- a key metric of banks' ability to withstand losses - to 9.4percent. Although the focus on capital hit investment banking earningsthe hardest, SocGen has also started to feel the pinch at its3,250-plus retail branches in France, which saw profits fallyear-on-year for the first time since 2010. The French economy is slowing down and unemployment is at a12-year high. French banks face additional uncertainty at home as Frenchvoters head to the ballot box on Sunday, with frontrunner Socialistcandidate Francois Hollande pledging to regulate banks further andcrack down on their risky activities. BONDS, COMMODITIES SURGE SocGen's corporate and investment bank, which is shedding jobsand loan portfolios to wean itself off volatile wholesale fundingmarkets, bore the brunt of asset sales and cost-cutting. Profits at the unit fell 40.6 percent to 351 million euros,with corporate finance and advisory suffering from losses on assetsales and a drop in activity. SocGen is doing less balance-sheetlending and refocusing its client roster to preserve capital. One bright spot, however, was the division's bonds, currencyand commodities trading unit, which posted revenue growth of 39.2percent year-on-year. Although French banks are not seen as strong in this field asthey are in equity derivatives, SocGen said it had benefited fromgrowth in flow banking and rates. "The fixed-income revenues were really, really strong, but it'sdifficult to assess if it was driven more by client activity or bytrading income. There's a question of sustainability," said oneanalyst who requested anonymity. By contrast, Germany's Deutsche Bank and Britain's Barclays -which are much bigger in fixed income, currencies and commodities(FICC) than SocGen - saw this business line's revenue shrink 8percent and rise 9 percent respectively. (Editing by James Regan and Sophie Walker). I am an expert from tinplatesheet.com, while we provides the quality product, such as Printed Tinplate Manufacturer , Hot Dipped Galvanized Steel Coil, Tin Plate Sheet,and more.
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