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Societe Generale trims targets as market downturn takes toll

Reuters  |  PARIS 

By Landauro and Protard

PARIS (Reuters) - has cut its profitability target after the French was hit by a fourth-quarter market downturn, joining other European banks battling a tough environment.

The country's third largest listed expects its return on tangible equity to be between 9 and 10 percent in 2020, down from a previous target of 11.5 percent.

also said it would not meet its 3 percent revenue annual growth target after revenue fell 6.3 percent in the fourth quarter to 5.93 billion euros ($6.7 billion), in line with forecasts collected by Data.

Profits at SocGen's corporate and business fell by more than half during the quarter and the now plans to cut 500 million euros in costs at this business.

"In a rough environment, most notably at the end of last year, the performance of our market activities was disappointing," SocGen's said.

SocGen's rival this week also cut its financial targets after reporting its first loss on market activities since the financial crisis in 2008. also plans to cut costs.

had issued a profit warning three weeks ago, hitting its shares. The stock was down 3.7 percent in early afternoon trading on Thursday.


Big European banks have found it tough to boost profitability after years of low interest rates have limited returns in retail banking, while corporate and had a difficult fourth quarter due to volatile markets.

also posted a bigger-than-expected quarterly loss at its last week, while Swiss bank also reported significant revenue declines from its equity business..

December's stock market selloff hit European and French banks hard as they are strong on equity derivatives and not on the cash market, like U.S. banks, David Hendler, at consultancy Viola Risk, said.

will also sell or close down some businesses and has already closed its proprietary trading desk in Hong Kong.

The bank also replaced Frank Drouet, the activities with

SocGen's Oudea also said the macroeconomic outlook had become more challenging for the bank in the past quarter with geopolitical uncertainties, an economic slowdown in the eurozone and lower expected interest rates all having an impact.

The bank will step up its plan to dispose assets. will now target selling businesses handling a total of 6 percent to 7 percent of its total assets, up from 5 percent until now.

SocGen has sold banks in Belgium, Bulgaria, Serbia, and over the past few months. The bank still aims to sell divisions that lack critical size.

The bank has said that asset sales would partly finance acquisitions in areas where it is strong, but Oudea said on Thursday SocGen would mainly focus on its own profitability.

As for Germany, Oudea said: "We are rather in a logic of organic growth."

($1 = 0.8799 euros)

(Reporting by Landauro and Protard; Editing by Alexander Smith/Sudip Kar-Gupta/Jane Merriman)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, February 07 2019. 19:15 IST