GLE Societe Generale SA

   By Pietro Lombardi 
 

Societe Generale SA (GLE.FR) reported first-quarter results Friday, sending its shares down 6.3% at 1146 GMT. Here's what you need to know:

PROFIT FORECAST: France's third-largest listed bank by assets reported a 14% increase in first-quarter net profit to 850 million euros ($1.02 billion). Analysts had expected Societe Generale's net profit to stand at 811.5 million euros, according to a consensus forecast provided by FactSet.

NET BANKING INCOME: Net banking income, the bank's top-line revenue figure, fell to EUR6.29 billion compared with EUR6.47 billion a year earlier. This undershot expectations, with analysts expecting roughly flat net banking income at EUR6.47 billion, according to FactSet.

WHAT WE WATCHED

LITIGATION: Societe Generale said a final agreement on two pending disputes in the U.S., related to benchmark interest rates and transactions involving Libyan counterparties, "is expected to be reached within the coming days or weeks," with "monetary penalties ... expected to be in line with the provision allocated to these two cases," it said. Analysts at Jefferies mention the lack of finalization as one of the factors weighing on the stock.

The bank's provision for litigation was stable at EUR2.3 billion, of which about EUR1 billion was allocated for these litigations, SocGen said.

FRENCH RETAIL AND INTERNATIONAL OPERATIONS: The bank said the low interest rate environment weighed on French retail banking revenue, which fell 0.7% on year. However, SocGen expects a stabilization in 2018. Revenue was up 2.5% in the bank's international retail banking and financial services business.

INVESTMENT BANKING BUSINESS: The performance of the CIB business is one of the factors affecting the stock, according to Jefferies. The global banking and investor-solution business, which includes investment banking and asset management, reported a 13% fall in revenue, hurt by a decline in global markets. The results come "against the backdrop of a weaker dollar and in relation to a high comparison base on rate products in Q1 2017," the bank said. Revenues of fixed income, currencies and commodities, or FICC, were down 31% on year. Equities and prime services revenues fell 11%.

Write to Pietro Lombardi at pietro.lombardi@dowjones.com

(END) Dow Jones Newswires

May 04, 2018 08:05 ET (12:05 GMT)

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