Societe Generale and Credit Agricole point to European recovery

Two of France's largest banks have highlighted signs of economic recovery this year in Europe as Societe Generale and Credit Agricole both reported upbeat results in the first quarter.

SocGen said it had capitalised on "initial signs of recovery in Europe" to report net income of €868m, ahead of analysts' estimates of €770m and well ahead of the €169m net income in the first quarter of 2014.

Frederic Oudea, the chief executive of SocGen, said the results were ahead of expectation "on the back of an [economic] situation that is improving, particularly in Europe."

"For example in France we see an increase in new loan production . . . probably an improvement that should carry on in the coming quarters," he said.

Credit Agricole hailed "strong business momentum" with a sharp reduction in the cost of risk - or, provisioning for bad loans - in France while in Italy, where the group owns Cariparma, net profit rose by 70 per cent to €39m.

This follows healthy results last week from Paris-based BNP Paribas, reporting an 88 per cent rise in profits to €1.3bn, with chief executive Jean-Laurent Bonnafe pointing to "green shoots" of recovery helping loan demand.

In the first quarter, SocGen and Credit Agricole also joined other European and US banks in seeing trading profits lifted by volatile markets following the European Central Bank's launch of its bond-buying programme.

Net income at SocGen's global banking and investor solutions division, which includes investment banking, security services and asset management, jumped by 21.4 per cent to €522m.

Credit Agricole's corporate and investment banking divisions posted a 22 per cent jump in net profit in the quarter to €320m, boosted by its fixed income business.

SocGen's Russia operations continued to drag on the group, reporting a €91m loss in the first quarter as the economy remains weakened by western sanctions and the sharp drop in the price of oil.

The French bank is the second-most exposed foreign bank to Russia after Austria's Raiffeisen. SocGen's Rosbank subsidiary, which has 620 branches and 5m clients, accounts for about 5 per cent of its total revenues.

The French bank last year took a €525m writedown in the value of its Russian business.

At Credit Agricole net income in the first quarter grew 2.6 per cent year-on-year to €784m in the first quarter, roughly in line with analysts' estimates of €759m. Revenues grew 7.5 per cent to just under €4.4bn.

Results were weighed on by a €182m payment into the European Union's resolution fund. The €55bn fund is designed to give a common framework for dealing with failing banks.

Credit Agricole said that economic growth was still "sluggish" in much of France where it's regional banks are strong. Later this month Philippe Brassac will replace Jean-Paul Chifflet as chief executive of the group

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation