Société Générale has today posted a lower than expected rise in fourth-quarter net income after it set aside an additional €400m to cover litigation costs.
France's second-biggest listed bank is cutting costs at its retail networks and restructuring loss-making operations in Russia in a bid to improve profitability.
As it published its highest annual revenue since 2010, SocGen said it now owned the right set of business lines after disposing of €8 billion of assets over the last six years.
While many rivals are reducing their balance sheets in corporate and investment banking, SocGen said it has already focused on the most attractive activities in the new regulatory environment.
Its investment bank is traditionally weighted more towards equities trading than fixed income.
However, along with other banks, SocGen is struggling to keep up with its profitability targets as litigation and regulatory costs rise.
Société Générale has been conducting an internal investigation into dollar transfers made on behalf of entities based in countries subject to US sanctions, linked to talks with the US Office of Foreign Assets Control.
The French bank said total litigation provisions stood at €1.7 billion by the end of 2015, but did not offer a precise explanation for the increase.
Credit Agricole, France's third-biggest listed bank, agreed last year to pay $787m for moving millions of dollars through the US financial system in violation of sanctions against Iran, Sudan, and other countries.
In 2014, BNP Paribas paid a record $8.9 billion in penalties and pleaded guilty to criminal charges over sanctions-busting.
SocGen said its net profit rose to €656m in the fourth quarter from €549m a year ago, below the average forecast in a Reuters poll of €663m.
Net profit for 2015 rose 50% to €4 billion.
French retail banking had a strong quarter thanks to rising loan demand and deposit growth, while sluggish international retail and lower fixed-income trading pushed overall revenues down 1.2% to €6.05 billion.
Analysts had expected a decline of more than 5%.
The bank's net cost of risk rose about 30% to €1.1 billion as it put aside more €230m in the fourth quarter to cover for anticipated losses in corporate and investment banking, up from €28m the same time a year ago.
It said it had made "conservative provisioning on a European player" and had "cautious provisioning on oil and gas".
Société Générale has proposed a dividend of €2 per share, up from €1.2 per share paid for 2014.
