French bank Societe Generale said Thursday its earnings dropped sharply in the first quarter as it continued with its efforts to meet new international banking capital requirements.
The bank that gained notoriety as the victim of convicted fraudster Jerome Kerviel says profit from corporate and investment banking, its largest division, slumped 40.6 percent in the quarter as the bank took losses disposing of (EURO)4.9 billion ($6.43 billion) in collatoralized debt obligations and other risky, capital-intensive assets.
Societe Generale said the steep drop in investment banking left its overall net profit down 20 percent to (EURO)732 million in the first quarter.
The bank's revenue also slid in the first quarter, falling 4.7 percent to (EURO)6.3 billion. Stability in the bank's core French retail banking arm offset declines in investment banking during the quarter.
Societe Generale has been strengthening its capital base in line with new international requirements on the cushion banks must keep against the risk of investments going sour. The bank says it is on track to achieve a targeted capital ratio of over 9 percent, under new rules coming into force next year, by the end of 2013.
The bank said it will be able to build this cushion through deleveraging and asset sales, and pledged it would not need to raise funds through a capital increase.