Societe Generale tumbles as it warns over profit target

Shares in Societe Generale tumbled on Thursday as the French bank reported a smaller-than-expected rise in fourth quarter net profit and warned that it might miss its profit target this year.

In the three months to the end of December, SocGen said net profit rose 19.5% from the same period a year ago to €656m, as revenue nudged down 1% to €6.05bn.

Analysts had been expecting net profit of around €814m.

The bank booked a €147m gain from the sale of its 20% stake in Amundi last year, but had litigation charges of €400m, much higher than the €106m pencilled in by analysts.

Net profit for the year, meanwhile, rose nearly 50% from the previous year to €4bn.

Chief executive officer Frédéric Oudéa said: “With group net income of €4bn in 2015, substantially higher than in 2014, the Societe Generale Group has successfully completed another stage in its transformation process.

“2015 was marked by good operating performances in all the businesses and the strengthening of synergies between the businesses.”

However, the bank cautioned that it might miss its target for a 10% return on equity this year on the back of tighter regulations and a tough economic environment.

“The group is confident of its business model’s ability to generate ROE of 10%. However, the increase in capital requirements and the economic and financial environment mean that it is not possible to confirm the ROE target of 10% as from end-2016,” SocGen said.

At 0920 GMT, SocGen shares were down 12.3% to €27.54.