Societe Generale missed third-quarter income forecasts on Friday and raised reserves for litigation costs by 300 million euros ($350 million), knocking the French bank's shares. Investors are concerned that pending legal disputes, for which SocGen has set aside 2.2 billion euros, could hurt its dividend payouts. The bank said it should resolve two legal disputes with US authorities within the coming months.
The French bank, which is seeking to reassure the market before its medium-term strategy presentation on November 28, reported a 15 percent fall in third-quarter net income to 932 million euros, below analysts' estimates of 1 billion euros, according to a Reuters poll. "De facto, we are capable of preserving a good level of dividend, regardless of litigation," the bank's chief executive Frederic Oudea told journalists on a call. Oudea added that its target for the investor day was to present a plan that would deliver a level of profitability that covers the cost of capital.
Like other European banks, the quarterly result was weighed down by a slump in fixed income and equities trading. SocGen shares were down 3.5 percent to 46.15 euros at 0851 GMT, underperforming both France's benchmark CAC-40 index and the STOXX Europe 600 Banking index. The bank said it was in talks with US authorities over two investigations, the first concerning the Libyan Investment Authority (LIA) and the other over interest rate benchmarks. In May, SocGen reached an 11th-hour settlement over LIA allegations that trades were secured as part of a "fraudulent and corrupt scheme" involving the payment of $58.5 million by SocGen to a Panamanian-registered company.
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