Societe Generale to cut €500m from investment bank despite profits boost as market volatility dents performance

Societe Generale will aim to cut €500m (£437m) from its investment banking division after lowering its 2020 targets in the wake of tough market conditions.

The French bank revised down its return on tangible equity targets for 2020 to 9-10 per cent from a previous 11.5 per cent.

Read more: BNP Paribas cuts targets for 2020

But the bank’s annual net profit of €3.86bn beat estimates and was a 37 per cent increase on 2017.

Fourth quarter profits also jumped to €624m from €69m in the final three months of 2017.

Despite the profit rise, the bank said it would aim to reduce costs in its global banking and investor solutions business by €500m.

Chief executive Frederic Oudea said the economic, financial and regulatory was set to be “less favourable” in the coming years than it initially seemed.

Revenue from the SocGen’s fixed income, currencies and commodities business plunged 28.8 per cent to €366m in the fourth quarter, with the bank citing market conditions created by political tension s in Europe and the US-China trade war.

Chief executive Frederic Oudea said: “In an economic, financial and regulatory environment that looks set to be less favourable and even more complex over the next few years than anticipated a year ago, we have decided to adapt the execution of our plan and our financial trajectory.”

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He added that in the “more uncertain economic environment” SocGen would work to cut €500m in costs from its investment banking division.

SocGen's rival BNP Paribas also cut its 2020 targets earlier this week after revenue in its global markets investment banking and trading division fell 40 per cent in the fourth quarter.