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Societe Generale and Credit Agricole report first quarter rises

Article By: ,  Financial Analyst
May 7, 2015 10:26 AM

Two of the largest French banks, Societe Generale and Credit Agricole, have reported rises in their first quarter results. 

Societe Generale said that the bank had capitalised on the early signs of economic recovery in Europe. The company's net income of €868 million  (£643.5) beat the forecast of €770 million  and was more than five times the income reported for the same period last year.

Chief executive Frederic Oudea said that the results were ahead of expectations and indicate that the economic situation is improving on the continent.

"For example, in France we see an increase in new loan production [...] probably an improvement that should carry on in the coming quarters," he said.

In addition, net income for the bank's global banking and investor solutions division rose by 21.4 per cent to €522 million. This includes investment banking security services and asset management.

However, the bank is still showing difficulties in its Russian operations. The group saw a €91 million loss in the first quarter in the region, where the economy remains weak due to western sanctions and a drop in oil prices.

Societe Generale is one of the most exposed foreign bank to Russia – it's Rosbank subsidiary has 620 branches and five million clients, accounting for around five per cent of total revenue. Last year, the bank took a €525 million write-down in the value of its Russian business.

At Credit Agricole, they reported "strong business momentum." The bank said that there had been a sharp reduction in the cost of risk in France. The company also owns Cariparma in Italy – its net profit rose by 70 per cent to €39 million.

A number of French banks have shown similarly good results, reports the Financial Times. Last week, BNP Paribas reported an 88 per cent rise in profits to €1.3 billion. Chief executive Jean-Laurent Bonnafe said that early signs of economic recovery were helping to boost loan demand.​

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