SocGen Q2 beats forecasts, says recovery fragile

PARIS (Reuters) - French bank Societe Generale beat forecasts with an almost fourfold leap in second-quarter net profit as lighter loan-loss provisions and toxic assets helped offset weaker investment banking revenue.

But the bank, which last month easily passed a Europe-wide stress test, stayed cautious despite the results, warning on Wednesday that the growing economic recovery was still "fragile" and that growth prospects in Europe "remain moderate".

SocGen is battling to restore investor confidence after the financial crisis with new leadership and a strategic plan dubbed "Ambition 2015". The bank said it was confident of hitting long-term targets that include a 2012 profit of 6 billion euros ($7.8 billion).

The group reported second-quarter net profit of 1.08 billion euros, up from 309 million a year ago when heavier provisions and asset write-downs weighed on the bottom line.

This comfortably beat the average forecast in a Reuters poll of 11 analysts of 732 million euros.

Revenue also beat forecasts, up 16.8 percent, as did provisions, echoing better-than-expected results at bigger rivals BNP Paribas and HSBC earlier this week that also saw solid retail banking operations help offset slower investment banking revenue.

SocGen is whittling down its portfolio of toxic assets, which had a second-quarter impact of 27 million euros on net profit, much lighter than the year-ago hit of 130 million.

The overall 2010 impact of these assets is now expected at the bottom end of previous guidance of between 700 million and 1 billion euros before tax, SocGen said on Wednesday.

($1=.7650 Euro)

(Reporting by Lionel Laurent; Editing by James Regan)

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