PARIS — Société Générale, the French bank, reported a return to profit in the fourth quarter on Wednesday, as it booked fewer one-time items than it did a year earlier and said it would raise its dividend.
The bank, based in Paris, reported net income for the three months through December of 322 million euros, or $439 million, a reversal from the €471 million loss it posted a year earlier, when it took a charge for revaluing its own debt and wrote down the value of its stake in the Newedge Group. Revenue for the quarter reached €5.8 billion, up 20 percent.
The fourth-quarter profit was more than double analysts’ average forecast of €152 million. Jon Peace, an analyst at Nomura in London, wrote in a research note that the earnings surprise appeared to have been driven by a sharply narrower loss in the bank’s “corporate center” unit, which includes its real estate and equity portfolios, as well as more favorable tax treatment.
Elsewhere, profit rose across the board, with French retail banking up nearly 11 percent in the quarter, international retail banking and financial services up nearly 14 percent, and the global banking unit, which includes investment banking, up 4 percent.
For the full year, revenue rose 4.3 percent from 2012, to €22.8 billion, while net income tripled to €2.2 billion from €790 million. Société Générale is proposing a 2013 dividend of €1 per share, up from 45 euro cents a share in 2012.
Frédéric Oudéa, the bank’s chairman and chief executive, said in a statement that the 2013 results “provided confirmation of the robustness of Société Générale’s universal banking model.” The bank will present a plan on May 13 to raise its return on equity to 10 percent by the end of 2015, he added.
Shares of Société Générale, which have gained about 40 percent over the last 12 months, rose more than 4 percent in Paris trading on Wednesday morning.
The bank’s latest results nonetheless suffered from a €445.9 millionfine imposed by the European Commission over antitrust rule violations associated with the manipulation of interest rates. Société Générale, just one of many global banks under investigation recently for manipulating market benchmark rates, said in December that the events in question took place from 2006 to 2008 and that the sole employee involved had left the bank in 2009.
The bank also said it ended the year with a common equity Tier 1 capital ratio of 10 percent under the coming Basel III regime, a measure of its financial strength. Like the rest of the “systemically important” euro zone lenders, Société Générale is this year undergoing a major review of its financial soundness by the European Central Bank.
The hope is that the scrutiny will reveal any capital shortfalls and finally end worries about the fragility of the European financial sector more than five years after the Lehman Brothers shock.
The bank said it had also improved its liquidity buffer — the assets it can draw on to fund short-term financing requirements — sufficiently to repay the European Central Bank for cheap three-year loans it received at the height of the euro zone crisis. The central bank used long-term refinancing operations to smooth the market in late 2011 and early 2012, offering banks unlimited three-year loans at rock-bottom interest rates. Société Générale did not say how much it received from the European Central Bank.
Société Générale’s announcement follows that of the Italian lender Intesa Sanpaolo, which last month said that it had fully repaid €36 billion borrowed from the European Central Bank.
The repayments are a sign of confidence that the banks have turned the corner in restoring their finances.
via:http://dealbook.nytimes.com/2014/02/12/socit-gnrale-swings-to-fourth-quarter-profit/?partner=rss&emc=rss
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