French bank SocGen expects 2008 profit

French bank Societe Generale yesterday said in a statement that it still expects to make a profit for 2008, although it warned of more trading losses.

"They are still managing to make a profit, which is not bad in this environment. It implies they're not in urgent need of new capital," said Reyl France Fund Manager Dorothee Marty.

SocGen said it expected a full-year net profit of about €2 billion (Dh9.5bn), nearly a fifth below the average market forecast. Reuters Estimates showed the average net profit forecast from 19 analysts was for about €2.4bn.

Marty said she had looked at SocGen's shares this morning, but decided against buying them because of worries over the state of the global banking industry. SocGen issued its unscheduled trading update nearly a year after it unveiled a €4.9bn rogue trading scandal at the bank.

SocGen said those losses were caused by Jerome Kerviel, a former junior trader at the bank.

Since then, SocGen has been battling to recover, ending 2008 in better shape than many other banks, several of which failed as the global financial crisis unfolded. SocGen said while its retail banking operations had been "resilient", it had been impacted by the devaluation in the Ukrainian currency and by write-downs and the trading losses.

"At the same time, the trading activities posted losses that were nevertheless limited by Societe Generale Group's risk reduction policy of recent quarters and the cautious attitude of market operators in reaction to the exceptional dislocation of the financial markets during Q4 2008," it said in a statement.

They also outperformed a 8.9 per cent fall in the shares of BNP Paribas, France's biggest bank by market cap, which is seen as a possible bidder for SocGen.

For the first nine months of the year, SocGen made a net profit of €1.9bn, implying it will make a net profit of just €100 million for the fourth quarter. In the third quarter, SocGen made a net profit of €183m.

It said it had a Tier 1 ratio of about 8.5 per cent at end-December, noting this should rise to about nine per cent because of the planned €21bn French Government financing package for the French banks in which it planned to participate.

SocGen's full results are due on February 18.

"I remain very wary over the whole banking sector. There is too much bad news, and the write-downs don't stop," said a share dealer in Paris.

Along with falling out of favour with investors, banks have also come under attack from politicians.

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