SocGen's net profit down 84 percent in Q3

French bank Societe Generale said Monday that net profit fell 84 percent in the third quarter after banking collapses and plunging assets tied to the U.S. housing market contributed to 1.2 billion euros ($1.54 billion) of write-downs and other losses.

The collapse 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."

CEO Frederic Oudea said the bank has strengthened its financial position and is in a position "to continue our development and to start 2009 with a lot of confidence."

The bank said net income in the three months through September fell to 183 million euros ($235 million) from 1.12 billion euros a year earlier.

Shares were trading 0.4 percent higher at 42.35 euros ($54.03) in Paris afternoon trade. The bank, hit by a trading scandal and the financial crisis, has lost over half of its market value this year.

SocGen said its 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).

The bank 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 thanks to growth in Russia and Eastern Europe.

Societe Generale became the majority shareholder of Russia's Rosbank earlier this year. Deputy CEO Philippe Citerne hailed the Russian authorities' "rapid" and "professional" reaction to the liquidity crisis there.

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 said the number of new accounts is starting to rise again, after a freeze at the beginning of the year, when the bank revealed that trader Jerome Kerviel had amassed massive, unauthorized positions which led to a 4.9 billion ($6.25 billion) loss.

SocGen brought forward the publication of its results by three days to calm fears about its performance. 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.

Other major European banks also reported a slump in earnings on Monday.

Germany's Commerzbank AG reported a net loss of 285 million euros ($365 million) for the July-September period and said it is seeking up to 23.2 billion euros ($29.6 billion) in government help to boost its capital. British banks Lloyds and HBOS, which plan to combine to shore up their balance sheets, both reported steep declines in profit.

Governments across Europe are supporting the banking sector after major upheavals in financial markets. SocGen said the measures "are starting to pay off" with "the gradual reopening of interbank markets and a decline in money market and bond market interest rates."

In France, the government is injecting 10.5 billion euros ($14 billion) worth of capital into the country's six largest banks. The package awarded 1.7 billion euros ($2.17 billion) to SocGen, in exchange for which the bank promised to increase its outstanding loans to the French economy in 2009 by 4 percent.

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