Société Générale, France's third-biggest listed bank, has posted better-than-expected quarterly earnings as turmoil in bond and currency markets boosted its trading business.
The trading windfall cushioned a slump in SocGen's French retail division, where earnings were curbed by stricter rules on mortgage rate fixing.
The results come less than two weeks before incoming CEO Slawomir Krupa takes the helm.
Group net income rose 5.7% from a year earlier to €868m for the three months ending in March, almost double the average of four analyst estimates compiled by Refinitiv.
High volatility in interest rates and currencies fueled client demand for hedging in the first quarter, boosting revenue from trading in fixed income and currency by 16%, the bank said.
Those gains surpassed competitors at Deutsche Bank, Goldman Sachs and BNP Paribas, but fell short of Credit Agricole.
SocGen's listed car leasing company ALD also bolstered the results as it earned more from selling more expensive used vehicles. The bank is set to close its €4.9 billion acquisition of European rival LeasePlan later this month.
By contrast, sales at SocGen's French retail business plummeted 11% in the first quarter. Group revenue was down 5.3% to about €6.7 billion.
The unit's earnings have been curtailed by France's cap on interest rates on new mortgages and consumer loans.
The government also recently raised the savings rates paid to 3% on the most popular savings accounts offered by French banks, called Livret A, further curbing income from the division.
The phasing out of a cheap long-term loan programme by the European Central Bank also weighed on the results.
SocGen is unlikely to reap the benefits of rising interest rates in its French retail activity before 2024, the company said.
SocGen said it would set aside less money for soured loans than it had initially planned this year. It now sees the so-called "cost of risk" to be below 30 basis points this year, down from a previous guidance of between 30 and 35 points.
The French bank maintained its 2025 financial targets, which include a cost to income ratio below 62% and an expected return on tangible equity of 10%.
