PARIS (dpa-AFX) - French lender Societe Generale SA (SCGLF.PK, SCGLY.PK) reported Thursday a surge in third quarter profit benefited by good control of operating expenses and lower cost of risk, despite a lacklustre economic environment. Domestic peer Credit Agricole Group (CRARF.PK, CDA.L, ACA) also reported higher profit in the third quarter with lower cost of risk.
For the third quarter, Societe Generale's Group net income climbed 56.6 percent to 836 million euros from last year's 534 million euros. The results were benefited from the efforts made to control operating expenses and a contained net cost of risk, the company said.
The latest results included revaluation of own financial liabilities and Debit Value Adjustment of 2 million euros, compared to 224 million euros a year ago.
Excluding non-economic items, net income totaled 838 million euros, compared to 758 million euros a year ago.
The company's net banking income rose 4.1 percent to 5.869 billion euros from 5.636 billion euros a year ago. Net banking income, excluding non-economic items, amounted to 5.871 billion euros, 1.8 percent lower than last year amid very low growth and historically low interest rates in the eurozone.
According to the firm, commercial activity remained buoyant in retail banking networks, with significant growth in deposits in all the networks. This was against the backdrop of still weak credit demand in Europe, and the rapid development of banking activities on the African continent.
In the quarter, operating expenses increased 3.2 percent, but dropped 0.4 percent on a like-for-like basis, confirming the rigorous control of operating expenses.
The net cost of risk was significantly lower by 40.8 percent on a like-for-like basis due primarily to the decline in the commercial cost of risk, which stood at 58 basis points in this quarter, compared to 69 basis points last year.
Chairman and CEO Frédéric Oudéa said, 'The results of the asset quality review and stress tests carried out by the ECB confirm that the transformation implemented over the last three years has paid off and that Societe Generale is able to finance its growth helped by a very solid balance sheet.'
For the quarter, Credit Agricole Group, comprising Crédit Agricole S.A. and the regional banks, posted net income Group share of 1.46 billion euros, 2.1 percent higher than the prior year's 1.43 billion euros.
Crédit Agricole S.A. recorded net income group share of 758 million euros, 4.1 percent higher than last year.
The Regional Banks delivered net income of 902 million euros in the third quarter and 2,711 million euros for the first nine months, down 2.6 percent and 2 percent respectively year-on-year.
According to Chief Executive Officer Jean-Paul Chifflet, this solid performance was in line with previous quarters, and was benefited from a continued fall in the cost of risk and continued good business momentum in all business lines, despite a challenging economic, regulatory and fiscal environment.
Crédit Agricole Group's revenues were 7.55 billion euros, a 1.3 percent improvement from the prior year, and Crédit Agricole S.A.'s revenues grew 4 percent year-over-year to 4.013 billion euros.
Crédit Agricole added that the Regional Banks continued to develop their business in a persistently sluggish market affected by the gloomy economic environment and an unfavourable regulatory climate.
Crédit Agricole's cost of risk decreased by 17.1 percent during the same period, particularly marked in French retail banking and financing activities.
In Paris, Societe Generale shares were losing 2.33 percent, and trading at 37.12 euros, and Credit Agricole shares were losing 5.79 percent, and trading at 10.99 euros.
Copyright RTT News/dpa-AFX