PARIS — Société Générale and Crédit Agricole, two of France’s largest banks, reported third-quarter profits on Thursday that exceeded market expectations despite weak domestic retail businesses.
Société Générale reported net income of 836 million euros, or about $1 billion, for the July to September period, up nearly 57 percent from the period a year earlier.
Net banking income at Société Générale’s domestic retail business fell 3.2 percent from the third quarter of 2013 amid the sluggish environment in France. That was partly offset by a 1.9 percent gain at its global banking and investor solutions business.
The bank’s bottom line was also helped by a 41 percent reduction in the amount of money it set aside to cover possible losses. It had reserved €200 million for litigation expenses in the third quarter of 2013, a charge that was not repeated.
Frédéric Oudéa, the chairman and chief executive of Société Générale, said in the earnings release that the results showed “the transformation implemented over the last three years has paid off and that Société Générale is able to finance its growth helped by a very solid balance sheet.”
Crédit Agricole said net profit rose 4.1 percent, to €758 million.
Net income in Crédit Agricole’s domestic retail banking declined 7.1 percent, but the results were helped by improvement in the bank’s international retail, asset management and insurance businesses.
“This growth, in a persistently mediocre economic environment, was due to resilience of business lines’ revenues, stable operating expenses and a continued reduction in the business lines’ cost of risk,” Crédit Agricole said in a statement.
Results at both Société Générale and Crédit Agricole, which are based in Paris, were better than analysts had expected, although the banks’ shares declined in early trading.
Jon Peace, an analyst at Nomura International in London, said the results were generally favorable, showing a low level of provisions after the European Central Bank‘s stress tests and further improvement in capital ratios.
Their stocks fell, though, “mainly due to weak revenues in France,” he said. “We will be looking for any greater optimism around the dividend outlook to help support the shares.”
Both banks bemoaned the economic stagnation in France, and more broadly in Europe, that has weighed on consumers and stifled investment. The economy of the eurozone stagnated in the second quarter, and most economists expect that figures will show a similar or worse performance for the third quarter.
The banks boasted about their strong showings in the yearlong reviews of health by European regulators. The asset quality review and stress tests by the E.C.B., which assumed its new role this week as the main banking supervisor for the eurozone, were intended to force banks to ensure that their accounts accurately reflect the market value of their loans, to cover any capital shortfalls, and to restore market confidence in Europe’s fragile financial system.
BNP Paribas, the largest French bank, reported last week that third-quarter net income rose nearly 11 percent, to €1.5 billion.
Shares of Société Générale, which had fallen more than 4 percent in the last 12 months, were down about 2.4 percent in early trading in Paris.
Crédit Agricole, which gained about 32 percent over the last 12 months, was down about 4.1 percent in morning trading in Paris.