The banking group also owns a portfolio of 3

Like a half full glass of water, the quarterly results published yesterday by the General society proved difficult to understand for investors. As a first step, and while many of them expected the worst, they focused on the completed portion of glass which rise in the morning the course of the Bank of defence of more than 2 in a market generally declining.

"After several warnings result in previous quarters and a surprise loss of EUR 278 million in the first quarter of 2009, the publication of a quarterly net profit of 1.06 billion euros, higher than expectations, is good news," said Eric Hazart, analyst at BNP Paribas Exane. While announcing a decline of 16 of the cost of the risk, the Group also confirmed that he would be able to reach three billion euros of net profit in 2010.

In reality, all lines of business of Société Générale identified operational results in line with their objectives. The Bank financing and investment, which provides half of the results of the Bank reached a net profit of EUR 541 million, against a loss of 171 million euros a year earlier. France retail bank has done better than expected showing an increase of revenues of 6.2 over a year. For Pierre Flabbee, Kepler Capital analyst, the net opening nearly 50,000 new accounts for the period is of particularly good omen because that it confirms that "the negative effect of the Kerviel case is diminished".

Pleasant surprise

But it is mainly the lower depreciation of its portfolio of risky assets which explains the good performance of the Group of Frédéric Oudéa. While the latter announced in March that the Bank would wipe 700 million to one billion euros of losses in 2010 on this $ 35.5 billion of toxic elements, Société Générale was provisioned in the first quarter that EUR 214 million. However, it confirmed the overall range of annual losses. Volatility of the markets requires, revaluations of financial products of blankets (CDS or "credit default swaps") have also increased by 200 to 300 million euros the results of the group. Moreover, 200 million of losses related to Urbania property administrator would already have provisioned in the last quarter of 2009 ("Les Echos" from May 5).

Once the good surprise passed, these non-recurring items have doubt investors of the sustainability of the good performance of the second French banking group. As Société Générale recognizes a comprehensive exhibition of EUR 6.8 billion to the Greece, including $ 3 billion of bonds issued by the Greek State. It is much more than the 850 million euros of sovereign debt posted by farm credit. Probably because "the Bank has little product coverage, or"credit default swaps", on sovereign debt.". "These CDS also had no impact on our accounts", said Severin Cabannes, Director Delegate General of the banking group. And to explain: "our central scenario is based on the adaptation of the rescue plan of the international monetary fund and the European Union to the needs of the Greece." The hypothesis of a Greek debt restructuring seems unrealistic.

In first line

The request made by the authorities to the banks to keep their lines of credit open risk of requiring them to wear Greek bonds and to record further losses. In this case, the Bank of the defence would be in the front line.

The banking group also owns a portfolio of 3.8 billion of trade receivables through its subsidiary Geniki, which it announced that it will recapitalise this year. This amount representing 0.5 of the total assets of Société Générale, it considers sufficient provisions in the amount of EUR 148 million. Despite a rate of default of payment by strong growth at the national level, Séverin Cabannes said that the rescue plan is indeed consistent with support of the Greek economy.

This optimism did not completely satisfy investors. Confirming later in the day a comprehensive exhibition of EUR 13 billion in sovereign debt of the Portugal of the Spain of the Italy, the Ireland and the Greece, all in the sights of the agencies of ratings, Société Générale has strengthened their concerns. The title of the Bank closed down 0.84 to EUR 38.3.