French bank SocGen's second quarter profits lifted by overseas businesses

French bank SocGen's second quarter profits lifted by overseas businesses
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Denis Balibouse(Reuters)
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By Inti Landauro and Matthieu Protard

PARIS (Reuters) - French bank Societe Generale <SOGN.PA> posted higher second quarter profits that were in line with market expectations, as earnings from its overseas businesses offset a slight contraction on its domestic market.

Net profit rose 9.3 percent to 1.16 billion euros (£1.03 billion). Four analysts polled by Inquiry Financial consultancy on behalf of Reuters had expected profit of 1.15 billion euros.

The net profits included a 200 million euro provision set aside by the bank to pay a potential settlement with U.S. authorities over possible sanctions violations.

Group revenues rose 24 percent to 6.45 billion euros. The year-on-year increase also reflected the fact that second quarter results in 2017 were impacted by a 963 million euros settlement of a dispute with Libya's sovereign wealth fund.

SocGen's revenue from its banks and other businesses abroad rose 5.4 percent to 2.08 billion, while revenue from its domestic retail bank shrunk 1.7 percent to 1.99 billion.

SocGen's results mirrored those of its larger French rival BNP Paribas <BNPP.PA>, which also reported this week that its overseas businesses had helped offset a sharp fall in fixed income trading and weakness at its French unit.

SocGen expected revenues at its French retail bank to fall further in the second half of the year. It expects a contraction of 1-2 percent in that division for the 2018 full year.

However, revenues from corporate and investment banking (CIB) rose 0.5 percent, beating forecasts, after the CIB arm had suffered a 13 percent decline in revenue in the first quarter.

"The results demonstrate our choices of diversified and value-creating businesses let the group enter a dynamic of profitable and sustainable growth," SocGen's Chief Executive Frederic Oudea said in a statement.

Analysts at brokerage Jefferies said SocGen's results were starting to show positive results from the company's general strategy plan, although weakness at its French retail banking division could weigh on SocGen's shares.

The bank's strategy includes the sale of businesses that lack critical size and potential for synergies within the group, while it is also looking to buy businesses that will strengthen its operations where it is competitive.

The bank announced this week the sale of its Albanian and Bulgarian banks to Hungarian rival OTP <OTPB.BU>, and the sale of its private banking unit in Belgium to Dutch bank ABN AMRO <ABNd.AS>.

The proceeds of those sales will in turn help finance acquisitions made by SocGen, such as the market activities of Germany's Commerzbank <CBKG.DE> it took over last month.

The second-quarter net profits included a new 200 million euro provision set aside by the bank to pay a potential settlement with the U.S. authorities over possible sanctions violations. The bank's total provisions for dispute settlements are now worth 1.43 billion euros.

(Reporting by Inti Landauro; Editing by Sudip Kar-Gupta)

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