February 12, 2015 / 6:11 AM / 3 years ago

SocGen cuts Russian exposure as Q4 profit jumps

PARIS, Feb 12 (Reuters) - French bank Societe Generale said on Thursday it would cut its exposure to Russia in the face of mounting loan loss provisions as it posted a nearly three-fold increase in fourth-quarter net profit.

France’s second-largest bank said it would keep reducing funding for its Russian units, leaving them increasingly dependent on rouble bond issues for financing.

The group also said it had raised its litigation risk provisions in the second half of the year by a further 200 million euros ($226 million) to 1.1 billion euros amid an internal audit for possible U.S. sanctions breaches.

SocGen posted fourth-quarter net income of 511 million euros, up from 191 million a year earlier, while revenues rose 7.5 percent to 6.123 billion euros.

For the full year 2014, the group reported a 31.7 percent increase in net income to 2.692 billion euros as loan loss provisions fell sharply and revenues rose 5 percent to 23.561 billion euros.

The result improved even though the bank booked a 525 million euro writedown on the value of its Russian unit Rosbank and took a 200 million euro hit to exit consumer finance operations in Brazil.

The bank said it expected loan loss provisions in Russia to double as the country’s commodities-focused economy struggles with a sharp fall in oil prices and western sanctions imposed after Moscow annexed Crimea from Ukraine last March.

SocGen said it cut senior intragroup loans to its Russian activities last year by 600 million euros and expected to keep reducing this year.

While Russia weighed on its international retail banking business, SocGen saw revenues from its French retail network rise nearly 2 percent despite a sluggish economy.

Investment banking income rose 4.1 percent last year, boosted in large part by a 12.4 percent increase in financing and advisory activities with natural resources financing seeing a strong year despite a fall in commodities prices.

That helped offset a 5.5 percent drop in revenues from equity activities and a 4.6 percent fall in fixed income, currencies and commodities revenues.

The bank proposed a 2014 dividend of 1.2 euros per share, up from 1 euro the previous year, leaving its pay out ratio unchanged at 40 percent. However, it said it aimed to lift the ratio to 50 percent this year.

$1 = 0.8851 euros Reporting by Leigh Thomas and Matthias Blamont; Editing by Andrew Callus

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