PARIS – French bank Societe Generale said Monday that net profit fell 84 percent in the third quarter after the collapse of Lehman Brothers and the slump in assets tied to the U.S. housing market contributed to 1.2 billion euros ($1.54 billion) of write-downs and other losses.
The bankruptcy of U.S. investment bank Lehman Brothers in September resulted in 447 million euros ($574 million) of write-downs alone, SocGen said in a statement.
But the French bank said it has increased provisions and reduced its risk exposure and is financially strong enough "to weather a potential deterioration in the economic environment of 2009."
The bank, which became infamous earlier this year after a multibillion dollar trading scandal, said net income in the three months through September fell to 183 million euros ($235 million) from 1.12 billion euros a year earlier.
The investment banking and asset management divisions both reported a loss.
The corporate and investment banking division lost 244 million euros ($311 million) in the third quarter, compared to a 310 million euro gain a year earlier, while the asset management business lost 6 million euros ($7.65 million).
Societe Generale said its international retail banking franchise performed well during the quarter, reporting a 48 percent rise in net profit to 255 million euros ($325 million) from 172 million euros ($219 million) a year earlier. French retail banking also held up despite the economic downturn in Europe, with net profit slipping just 5.2 percent to 345 million euros ($440 million).
SocGen brought forward the publication of its results by three days to calm fears about its performance. Last month, the bank issued several verbal and written reassurances to the market after rumors about potential losses brought the share price down.
The third quarter results are in line with Oct. 13 guidance that net income before one-off items would be around 1 billion euros ($1.28 billion), SocGen spokeswoman Stephanie Carson-Parker said.