(Bloomberg) -- Societe Generale SA, France’s No. 2 bank, posted profit that missed estimates in the fourth quarter as revenue in its core consumer markets fell while its capital buffer shrank.
Net income rose to 511 million euros ($578 million) in the three months through December from 191 million euros a year earlier, the Paris-based bank said in a statement Thursday. That compares with the 557 million-euro average of eight analyst estimates compiled by Bloomberg News.
Economic stagnation in France, Societe Generale’s biggest market, and a slowdown in Russia, where it has one of the largest retail branch networks of a foreign lender, have weighed on profit. Profit from French retail networks fell 16 percent to 241 million euros in the
fourth quarter, the lowest in at least two years, company data shows.
“The bank is feeling the impact of French slowdown, Russian crisis and the pressure of litigation,” said Jean-Pierre Lambert, an analyst at Keefe Bruyette & Woods Inc. in London. “Dividend is below what was expected, capital dropped and the cost basis is higher than expected too.”

Capital Eroded

Shares fell as much as 2.9 percent and were 1.5 percent lower at 9:25 a.m. in Paris. Shares have dropped 23 percent in the past year, while the 49-member STOXX 600 Banks Index fell about 6 percent over the same period.
“The group intends to pursue its 2016 strategic plan in a determined and disciplined manner,” Chief Executive Officer Frederic Oudea, 51, said in the statement.
Common equity Tier 1, a measure of financial strength, fell to 10.1 percent at the end of December, a drop of 26 basis points from three months earlier.
The capital buffer fell because of an accounting adjustment, the impact of Brazilian disposals and the revaluation of some retirement benefits, the bank said on its website.
The Russian situation had a “limited” impact on the group’s capital position as the bank has hedges to protect against variations in the ruble and other currencies against the euro, Deputy CEO Severin Cabannes said in a Bloomberg TV interview.

Equities Trading

Net income from global-markets activities was 215 million euros in the fourth quarter. That compares with a 182 million-euro loss a year ago, when the bank reported a Euribor fine as an expense for the unit. Revenue from equities trading rose 6.7 percent in the period, while sales from trading fixed-income products gained about 4 percent, according to the bank’s statement.
Societe Generale’s Russian business posted a 11 million-euro loss in the fourth quarter, during which that country’s economy suffered a collapse in oil prices and a plunge in the ruble.
The bank said it remains committed to increasing the dividend payout to 50 percent of profit, up from 40 percent for 2014. The bank is paying 1.20 euros a share for last year.