Societe Generale bank reports profit halved in Q1

French bank Societe Generale reported on Tuesday a halving of first-quarter net profit to 364 million euros ($476 million) and announced a programme to save 900 million euros by 2015.

The cost cuts are in addition to cuts of 550 million euros effected last year.

The price of shares in the banking group rose by 4.0 percent in initial trading, with analysts welcoming the cost-cutting strategy.

The bank did not provide information on the impact of these new cuts on the bank and on employment.

In the first three months of the year, net profit fell by half from the equivalent figure last year, owing to exceptional cost factors totalling 488 million euros.

And the outcome fell short of the net result broadly expected by analysts polled by Dow Jones Newswires who had foreseen about 370 million euros.

However, net banking income, a key measure of performance by a bank regarding the margin between the cost of taking in deposits and the price of lending them out, fell by 19.4 percent to 5.1 billion euros. This exceeded the expectations of analysts who had forecast 4.94 billion euros.

The bank said in a statement that it had decided to apply a programme to improve efficiency with three objectives: "Reduce costs and strengthen competitiveness, simplify the way the group functions and to strengthen synergy between the resources used by the different activities of the bank."

The full effect of the programme would be achieved at the end of 2015 when total savings of 1.45 billion euros would have been made compared with figures at the beginning of 2012, the statement said.

This programme would involve restructuring and investment costs of 600 million euros.

This would enable the bank to achieve a return on capital employed of 10.0 percent, chief executive Frederic Oudea said.


Societe Generale