SocGen says will take a hit from tough market conditions

By Sudip Kar-Gupta

PARIS (Reuters) - French bank Societe Generale said its fourth-quarter results would be affected by tough market conditions and the impact of some asset sales, as lenders around the world grapple with financial market volatility.

Shares in SocGen fell sharply, hitting the stock prices of French rivals such as BNP Paribas and Credit Agricole, as analysts said SocGen's warning augured badly for European banks which have lagged their Wall Street peers.

SocGen, whose traditional strength is in stocks and equity derivatives, said it expected a drop in revenues of around 20 percent compared to last year in its global markets and investor services division.

Analysts said that while difficulties in bond trading could have been expected, given similar warnings this week from top U.S. banks, SocGen's issues in equities was harder to explain.

"We would not have expected this kind of setback in equities, an area in which the U.S. banks have held up relatively well," wrote CIC Securities in a note.

SocGen's warning comes in the same week that larger U.S. rival JP Morgan missed market estimates with its fourth-quarter results, as the lender pointed to choppy markets in December for bond trading losses.

Trading desks at Wall Street banks have been shaken by concerns over the global economy and a lingering trade dispute between the United States and China.

However, JP Morgan this week still managed to post higher equities trading revenue, while Goldman Sachs also reported higher equities trading revenues.

"I have a preference for the U.S. banks. SocGen shows how tough things are for European banks," said Jerome Schupp, fund manager at Geneva-based investment firm Prime Parnters.

SocGen added it would book a one-off charge of 240 million euros ($273 million) as a result of some disposals carried out, such as the sale of SocGen Serbia and its stake in La Banque Postale Financement.

In December, SocGen's smaller French rival Natixis also reported 260 million euros of losses and provisions on poorly performing Asian derivatives.

SocGen said its 2018 dividend would be stable compared with last year's 2.20 euros per share, and it expected the core tier one-capital ratio to be between 11.4 percent and 11.6 percent.

($1 = 0.8781 euros)

(Reporting by Sudip Kar-Gupta; Editing by Sherry Jacob-Phillips and Elaine Hardcastle)