Libya settlement cuts into Societe Generale profit
French bank Societe Generale 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, Societe Generale had to book a charge of nearly billion euros against second-quarter profits for the out-of-court settlement with the Libyan Investment Authority in May.
The LIA sued the bank in 2014 for $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 1.05 billion euros ($1.24 billion), but that still beat the average forecast of 940 million euros of analysts surveyed by financial data firm Factset.
"In a mixed economic and financial environment, Societe Generale posted sound second-quarter results, confirming the good commercial and operating performances achieved by the businesses at the beginning of the year," chief executive Frederic Oudea said in a statement.
Stripped of exceptional items -- including a capital gain of over 725 million in the second quarter last year from the sale of its stake in Visa Europe, the bank's profit rose by 11 percent to 1.16 billion euros.
Operating expenses rose by 1.2 percent as Societe Generale 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 percent to 568 million euros.
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 percent.