Socit Gnrale SA, France’s second- largest bank by market value, reported a 23% decline in first-quarter profit on increased provisions for risky loans and writedowns tied to the US subprime mortgage market collapse, Bloomberg reports.
Net income fell to EUR1.1 billion ($1.71 billion), or EUR2.06 a share, from EUR1.43 billion, or EUR3.26, a year earlier, the Paris-based bank said in a statement today. Loan-loss provisions tripled to EUR598 million.
Socit Gnrale’s board backed Frederic Oudea to succeed Daniel Bouton as chief executive officer, after unauthorized trading by Jerome Kerviel led to EUR4.9 billion in losses. The bank announced the trading loss in January and booked it in the fourth quarter of last year, when the company also had EUR2.05 billion of subprime-related writedowns and provisions. Markdowns in the first quarter amounted to EUR1.45 billion.
“The new writedowns are nothing to get scared about,” says Pascal Decque, a Paris-based analyst with Natixis Securities who has a “reinforce” recommendation on the stock. “All banks announced very high writedowns.”
Socit Gnrale dropped EUR1.09, or 1.5%, to EUR70.41 by 11:14 a.m. in Paris trading. The stock fell 24% this year, compared with a 9.2% decline at BNP Paribas SA, its larger French competitor, and a 15% slump in Credit Agricole SA, the country’s No. 3 bank by market value.