Société Générale stands by risk controls following unauthorized trading incident

Société Générale, a French bank, recently faced an incident involving unauthorized derivatives trading in Hong Kong last year. Despite this, the bank reported a smaller than expected profit drop in the first quarter, thanks to a strong performance in equities trading.

Slawomir Krupa, SocGen’s CEO, reassured reporters that the unauthorized trading in Hong Kong was detected by the bank’s risk control systems and did not result in any losses for the group or its clients. The incident involved the dismissal of two individuals after unapproved options were placed on Indian stock indices, which went undetected for four months.

The bank’s shares rose over 5% following the announcement of a 22% fall in net profit for the first quarter, lower than anticipated. SocGen has been focusing on selling off businesses under Krupa’s leadership, including parts of its Moroccan unit and an equipment finance division.

While revenues slightly exceeded expectations at €6.6bn, fixed-income and currency trading revenues fell by 17% compared to the previous year. In contrast, French rival Crédit Agricole reported record earnings at its investment bank and a rise in net income.

Despite the challenges in its retail banking operations in France, SocGen saw a 3.1% increase in equity trading revenues, a positive sign for the bank. Analysts noted that while cost reductions were promising, revenue growth was largely driven by the more volatile parts of the business.

Overall, Société Générale’s performance in the first quarter showcased resilience in the face of challenges, with a focus on improving profitability and strengthening its position in the market.