Net Income Drops At Societe Generale's Private Bank

Tom Burroughes

9 November 2012

Net income at the private banking arm of Societe Generale fell to €16 million ($20.4 million) in the third quarter of 2012, a 42.9 per cent drop from the same period a year ago, while the €66 million figure for the nine months to end-September represented a 35.3 per cent drop, year-on-year.

Net banking income at global investment and services, and private banking, when measured as one group, fell 6.5 per cent in the third quarter of this year from the same period a year ago to stand at €521 million, hit by falling brokerage revenues in lacklustre markets, the Paris-listed bank said today.

Giving more details on the private banking business, Societe Generale said this business line reported a positive inflow of €0.3 billion in the latest quarter; assets under management amounted to €88 billion at end-September, up by 3.9 per cent from the end of December last year. Rising markets accounted for €2.8 billion of this rise.

The results statement made no reference to Japan’s recent banning of the French private bank of soliciting client money between 23 October to 22 November. The period falls outside the Q3 reporting period, however. The Japanese financial regulator temporarily suspended the firm’s private banking operations due to “serious violations of laws and regulations”.

Disposals

The French bank, reporting a day after its rival, BNP Paribas, issued Q3 results, was at pains to point out its corporate and investment banking loan disposal programme, which has “achieved its objectives and has now come to an end”. The bank has sold €16 billion of assets since June last year, reducing its risk exposures and disposing of its Geniki retail banking business in Greece, along with a US asset manager firm (TCW).

The banking group’s core Tier 1 ratio reached 10.3 per cent according to “Basel 2.5” rules at end-September 2012, an increase of 39 basis points in the space of one quarter and 125 bps in the first nine months of the year.

At the end of September, SocGen reported net banking income of €5.397 billion, an 18.3 per cent drop on a like-for-like basis. Group net income slumped by 86.3 per cent to €85 million. “This result was negatively impacted by the legacy asset portfolio (-€82 million). The impact of non-economic items (-€396 million), non-recurring items (-€293 million and the legacy asset portfolio reduced Group net income by -€771 million in Q3),” the bank said.