SOCIÉTÉ GÉNÉRALE, France's third-largest bank, says profits have fallen 84 per cent in the third quarter as credit-related writedowns caused losses at the investment-banking and asset-management units.
Net income fell to €183 million from €1.12 billion a year earlier.
Société Générale recorded markdowns of about €1.4 billion in the quarter, including €447 million related to the bankruptcy of Lehman Brothers and €453 million tied to US bond insurers.
Chief executive Frederic Oudea decided not to use new accounting rules that are less stringent on markdowns, which helped Deutsche Bank to show an unexpected third-quarter profit. "We've decided to be prudent," said Mr Oudea. "This profit isn't artificially enhanced."
"The market is relieved to see that there was no major accident," said François Chaulet, a fund manager with Montsegur Finance in Paris. "That was the quarter where all the dangers lay for trading rooms, for derivatives and options."
Société Générale rose 0.4 per cent in Paris trading, leaving the stock down 54 per cent this year, compared with a 25 per cent decline in BNP Paribas, its larger rival.
Eastern European countries and Russia would continue to grow faster than western Europe and the US, the bank said. To limit loan losses, Société Générale will be "more selective" in making loans in Romania.
The corporate and investment bank had a net loss of €244 million in the third quarter, while Société Générale Asset Management had a loss of €6 million. Profit declined 5 per cent at the French consumer-banking unit and rose 48 per cent at international retail operations.
