France's Societe Generale Posts More Than 100% Profit Increase

France's second-largest bank Societe Generale has reported an increase of more than 100% in its second-quarter profit, driven by a surge in its investment banking business and profit from its global retail network.

Paris-based lender SocGen increased quarterly net income to €955m ($1.27bn, £833m) up from €436m year-on-year, although revenue fell 0.6% to €6.23bn. SocGen was trading 7.43% higher at 10.28am BST in Paris.

The bank's chief executive officer Frederic Oudea has been selling assets and has cut hundreds of jobs in investment banking, in line with rigid capital rules designed to ensure the financial breakdown of 2008 does not happen again.

In May the bank announced €900m of cost-cutting reductions over the next two years in order to regain profitability.

Oudea, 50, said he and his colleagues "are going to continue with our efforts" to strengthen finances, adding that SocGen has "positive commercial and financial momentum."

Overall Growth

The net banking income earned from SocGen's International Retail Banking division was 1.6% higher due to its dynamic commercial activity in Russia and Sub-Saharan Africa, offsetting the challenging economic situation in Central and Eastern Europe.

SocGen's performance in the second quarter exceeded analysts' predictions. In a poll compiled by Thomson Reuters Eikon, the average forecast was €703m for net profit and €5.88bn for revenue.

Net profit for the bank's French retail business was predicted to fall by 11% to €319m, after it announced it was setting aside €274 against bad loans.

The bank's core tier one ratio, an important measure of its financial health, climbed to 9.4% at the end of June, up from the 8.7% growth it reported for the previous quarter in March.

Oudea said that SocGen now has a leverage ratio, a measure that compares capital to total assets, of around 3% - the threshold which all banks must hit by 2018. He claimed the bank will exceed this benchmark by the end of the year, saying "we are there."

The French lender earned net income of €84m in the second quarter from its private banking and investment management services, against a loss of €120m in the previous year.