UPDATE 5-SocGen eyes better 2010 after discouraging Q4 result

* Q4 net profit 221 mln eur vs 150 mln eur Reuters forecast

* Shares end down 7.2 percent

* Expects results to recover in 2010

* Dividend cut to 0.29 eur vs 1.2 eur year ago

* 250 mln euros set aside for 2009 trader bonuses

(Releads; adds closing share price, comments on Greece)

By Sudip Kar-Gupta

PARIS, Feb 18 (BestGrowthStock) – Societe Generale (SOGN.PA: ) expects
results to recover in 2010 after posting weak fourth-quarter
earnings that caused a new slump in its shares, only a month
after the bank issued a profit warning.

SocGen shares closed down 7.2 percent at 38.975 euros on
Thursday. Analysts said the lacklustre results showed it had
some way to go to catch up with stronger rivals, with JP Morgan
analysts describing the bank as a “restructuring story”.

France’s second-biggest listed bank has had to trim back
much of its previously-booming investment banking activities
after a trading loss scandal, and has booked writedowns worse
than many of its peers in the wake of the financial crisis.

SocGen said on Thursday it might also have to inject capital
into its loss-making Greek arm Geniki (GHBr.AT: ) due to Greece’s
current deficit problems. [ID:nLDE61H0BT]

The group reported fourth-quarter net profit of 221 million
euros ($299.6 million). This was up from 87 million last year
and ahead of a consensus forecast of 150 million, but below its
third-quarter net profit of 426 million euros.

It also cut its dividend to 0.29 euros from 1.2 euros.

In January, SocGen said it was only expecting a “slight
profit” for the fourth quarter after taking a new 1.4 billion
euro hit on risky assets. [ID:nLDE60C01P]

The bank, which suffered a 4.9 billion euro rogue trading
scandal in 2008, has been weighed down by its exposure to toxic
assets such as collateral debt obligations (CDOs).

It has also been shifting back towards its historic retail
banking roots. Fourth-quarter profit (Read more your timing to make a profit.) at its French retail bank
fell, but SocGen said fewer writedowns this year and a gradual
recovery from the crisis would help its overall earnings.

“2010 is likely to be marked by a sharp rebound in the
group’s financial results due notably to the gradual elimination
of the impact of the financial crisis,” SocGen said in a
statement. It also expected better results at its domestic and
overseas retail banking divisions.

SocGen’s fourth-quarter net profit was a fraction of the
1.37 billion euros reported for the same quarter by BNP Paribas
(BNPP.PA: ), France’s biggest listed bank, on Wednesday.

It also paled in comparison to Deutsche Bank’s (DBKGn.DE: )
fourth-quarter net profit of 1.3 billion euros [ID:nLDE6132EB]
and profits of $3.3 billion and nearly $5 billion at Wall Street
banks JP Morgan (JPM.N: ) and Goldman Sachs (GS.N: ) respectively.

SocGen shares were the worst performing stock on France’s
benchmark CAC-40 index (.FCHI: ) on Thursday. The CAC-40 closed up
0.6 percent and SocGen also underperformed the DJ Stoxx European
index (.FCHI: ), which ended up 0.1 percent.

Brokerage Nomura said SocGen’s results were “disappointing.”

“The market might conclude that it wants to see delivery of
cleaner numbers before re-rating,” it said in a research note.


Graphic on net profit, price performance

The French group added it had agreed with its Russian
partner Interros to combine Rosbank (ROSB.MM: ) and SocGen’s other
Russian units into a new single entity which would be 81.5
percent owned by SocGen.

The new unit would employ 30,000 people and become Russia’s
fifth-biggest bank by the size of credit portfolio.

“We want to create a bank of reference in Russia,” Chief
Executive Frederic Oudea told French radio BFM.

The investment banking division has been weighed down by
writedowns and it posted another loss during the fourth quarter.

Like many banks around the world, France’s lenders have come
under political pressure to make moderate bonus payments. France
has also joined Britain in imposing a tax on trader bonuses.

Oudea said SocGen had set aside 250 million euros for its
2009 traders bonuses — less than the 500 million euros set
aside by BNP Paribas.

SocGen is also in the midst of a potentially damaging legal
battle with one of its former top fund managers.

Its American fund management arm TCW fired its former chief
investment officer Jeffrey Gundlach and filed a law suit against
him but Gundlach has since sought to countersue. [ID:nN10177500]
($1=.7377 Euro)

Stock Market Today

(Additional reporting by Juliette Rouillon in Paris; Editing by
Marcel Michelson, Jon Loades-Carter and Karen Foster)

UPDATE 5-SocGen eyes better 2010 after discouraging Q4 result