Hhuge charge against second-quarter profits for out-of-court settlement
Libya lawsuit hammers Société Générale's earnings
The French bank Société Générale on Wednesday said its net profit tumbled by over a quarter in the second quarter of this year due to the cost of settling a lawsuit with Libya's sovereign wealth fund.
While it had already set aside some funds, Société Générale had to book a huge charge against second-quarter profits for the out-of-court settlement with the Libyan Investment Authority (LIA) in May.
The LIA sued the bank in 2014 for US$1.5 billion for allegedly channelling bribes to allies of Moamer Kadhafi's son. The case had been about to go to court in Britain.
The charge pushed net profit down to €1.05bn (Dh4.56bn), but that still beat the average forecast of €940 million of analysts surveyed by financial data firm Factset.
"In a mixed economic and financial environment,Société Générale posted sound second-quarter results, confirming the good commercial and operating performances achieved by the businesses at the beginning of the year," said the chief executive Frederic Oudea.
Stripped of exceptional items - including a capital gain of over €725m in the second quarter last year from the sale of its stake in Visa Europe, the bank's profit rose by 11 per cent to €1.16bn.
Operating expenses rose by 1.2 per cent as Société Générale stepped up investments into modernising its French retail bank operations and support growth in its international retail banking operations.
While the profitability of operations at home continued to suffer from the effects of the ultra-low interest rates in the eurozone, retail banking and financial services abroad enjoyed growth and net profit jumped 30 per cent to €568m.
Mr Oudea said the bank would present a new strategic development plan in November.
The bank's shares dropped more than three percent in early trading on the Paris stock exchange, while the CAC 40 index slid 0.2 per cent.