Societe Generale SA said Wednesday its net profit slumped sharply in the second quarter as the French bank continued its efforts to meet new international banking capital requirements.
Societe Generale's net profit fell to (EURO)433 million ($532 million) in the three months to June, down 42 percent from (EURO)747 million a year earlier.
The bank, which gained notoriety as the victim of convicted fraudster Jerome Kerviel, says profit from corporate and investment banking plummeted more than 70 percent in the second quarter as the bank took losses disposing of (EURO)2.2 billion in collatoralized debt obligations and other risky, capital-intensive assets.
In its statement Wednesday the bank warned that it expects business conditions to "remain uncertain and challenging over the next few quarters."
Earnings were also slammed by writedowns in some of the group's international activities. It took a (EURO)200 million writedown against TCW, a California-based asset management firm Societe Generale acquired in 2001.
The bank also took a (EURO)250 million writedown against its Russian retail bank unit Rosbank.
The bank's revenue slid in the second quarter, falling 3.6 percent to (EURO)6.3 billion. Stability in the bank's core French retail banking arm offset declines in investment banking during the quarter.
Societe Generale has been strengthening its capital base in line with new international requirements on the cushion banks must keep against the risk of investments going sour. The bank says it is on track to achieve a targeted capital ratio of over 9 percent, under new rules coming into force next year, by the end of 2013.
The bank said it will be able to build this cushion through deleveraging and asset sales, and has pledged it would not need to raise funds through a capital increase.