Société Générale has pledged further cost cuts this year as it seeks to reassure investors that its diversified business could withstand a weak start to the year in investment banking.
France's second biggest listed bank today announced additional cost cuts of €220m at its global banking and investor solutions division.
This comes in the face of market volatility in the beginning of the year. The new cuts take the total planned cost savings to more than €500m by next year.
As part of the plan, it aims at exiting or restructuring a few non-profitable activities, such as UK government bonds primary dealership, mortgage-backed securities sales and trading desk.
Société Générale said its net income rose 6.5% in the first three months of the year to £924m.
When adjusted for exceptional items, such as the revaluation of the bank's own debt, net income was down 0.5% to €829m.
Analysts in a Reuters poll had predicted a 7.7% decline in net income to €801m on average.
"In 2016, the strength of the diversified business model, additional efforts on costs and solid asset quality should sustain both commercial and financial performances," the bank said.
In early February, the French lender warned it may not hit a 10% return on equity target this year, which knocked nearly 13% off its shares.
SocGen said it plans to stabilise its overall cost base this year, while sticking to the recently announced investment plans for its French retail network, where it acquired over 1,000 new corporate customers and more than 61,000 clients for online bank Boursorama in the first quarter.
The bank said that provisions for bad loans fell in all business lines on a year-on-year basis, except for its investment bank, where it set aside €140m for possible losses in the oil and gas sector compared to the €50m it had a year ago.
Lower loan loss provisions helped drive income higher in French retail and other markets.
SocGen also reported a two-fold rise in net earnings at its international retail and financial services division, which includes operations in Eastern Europe and Africa, on the back of stronger demand for loans.
