Societe Generale SA, Frances second-largest bank, said third-quarter profit fell by 31 per cent, hurt by a write-down on Greek sovereign debt and lower trading revenue.The company would not pay a dividend for 2011. Bloomberg news reported on Tuesday that net income dropped to $855m, from 896 million euros a year earlier, the Paris-based lender said in a statement. The shares rose after the company accelerated the reduction of its balance sheet and decreased United States dollar financing needs. "The results are mixed bags," a credit analyst at RBC Capital Markets, Mr. Carlo Mareels, said in a note to investors. "There was good progress on the balance-sheet targets" while the corporate- and investment-banking business was "quite disappointing," he said. Societe Generale took a 333 million-euro pretax write-down in the quarter on its Greek sovereign bond holdings, following larger rival BNP Paribas SA in increasing its markdown on the countrys government debt to 60 per cent. The two banks are trimming assets to comply with new capital rules after their stock plunged and United States money-market funds became reluctant to lend to them in dollars. Societe Generale rose by 1.34 euros, or 7.7 per cent, to 18.84 euros at 11:07 a.m. in Paris trading. That pares the decline to 53 per cent this year and gives the company a market value of 14.6bn euros. BNP Paribas has fallen by 34 per cent. BNP Paribas said last week that third-quarter profit dropped by 72 per cent because of a 2.26 billion-euro write-down on Greek debt and losses from selling European government bonds. Shares of Lloyds Banking Group Plc, the UKs largest mortgage provider, surged on Tuesday after the bank reported smaller-than-expected provisions for bad loans in the third quarter even as profit declined by 21 per cent. "Both Lloyds and SocGens shares have been severely depressed recently so its not strange that theyre both rebounding today after two relatively good reports," a London-based analyst at Espirito Santo Investment Bank, Mr. Andrew Lim, said.Lloyds soared by 8.2 per cent to 29.95 pounds at 10:07am in London trading. While Societe Generales Greek sovereign holdings are less than those of BNP Paribas, French banks as a whole held more of Greeces public and private debt than lenders from any other country at the end of June, according to Bank for International Settlements data. The two companies announced in September steps leading to trim a combined 300 billion euros of assets by 2013. Societe Generale reduced the liquidity needs of its Corporate and Investment Banking unit by 40 billion euros at the end of September. The bank said it accelerated the disposal of subprime-era so-called legacy assets since July and that the firm achieved most of its target of reducing US dollar refinancing needs by $50bn by 2013. "The priority in these times of uncertainty is to enter 2012 with the maximum of force and muscles," Chief Executive Officer, Mr. Frederic Oudea, 48, told reporters on a conference call. Societe Generales capital-markets revenue fell by 51 per cent to 631 million euros in the quarter. The company follows BNP Paribas, Deutsche Bank AG and Barclays Plc in recording lower investment-banking revenue as concern that Greece may default crimps income from trading and underwriting stocks and bonds in Europe.
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