The private banking arm of Paris-listed Societe Generale increased its contribution to group net income to €43 million ($56.3 million) in the first three months of this year, up from €36 million in the same quarter of last year.

The private banking arm of Paris-listed Societe Generale increased its contribution to group net income to €43 million ($56.3 million) in the first three months of this year, up from €36 million in the same quarter of last year.

Separately, the French banking giant said it planned a further €900 million of cost savings in the period to 2015.

Assets under management at the private banking arm reached a total of €87.9 billion at the end of March, a rise of 2 per cent from the end of December last year. This increase was driven by an inflow of €300 million, and a market effect of €3.7 billion, while there was a negative foreign exchange impact of -€2.2 billion, Societe Generale said.

Private banking expenses stood at €155 million in Q1, an 8 per cent year-on-year rise.

“Benefitting primarily from clients’ improved perception of the macroeconomic environment, the business line’s revenues continued to recover and were up by 4.6 per cent at €206 million vs Q1 12, particularly commissions and the commercial interest margin,” the bank said today in a statement.

The private bank’s gross margin amounted to 95 basis points, which was 2 basis points higher than the level of the fourth quarter of last year. At €155 million, operating expenses rose by 7.6 per cent vs the same quarter of 2012.

The private banking, global investment management and services division’s total net banking income fell 3.0 per cent from a year before, to €457 million.

“In a generally unfavourable environment for the business due to persistently low rates and reduced brokerage activity, the division benefitted from a pick-up in private banking revenues (+4.6 per cent vs Q1 12),” the bank said.

Overall results

Across the whole of SocGen’s business lines, the firm logged a fall in group net banking income of €5.088 billion in the first three months of 2013, down from €6.311 billion a year before, or decline of 19.4 per cent over that period. It reported a group net income of €852 million, a 27.4 per cent fall.

“The performances of the businesses in Q1 2013 maintain Societe Generale on its transformation path. Against a backdrop of disciplined management of scarce resources, capital and liquidity, the group’s businesses maintained a healthy profit level thanks to buoyant commercial activity aimed at serving its customers, and a decline in operating expenses,” Frédéric Oudéa, chief executive and chairman, said.

The French bank said it had, according to the Basel 3 international bank capital standards, a Core Tier 1 ratio of 8.7 per cent; the target of being near 9.5 per cent at the end of 2013 was confirmed.

Societe General said an additional €900 million of cost savings – bringing a total of €1.450 billion from 2012 to 2015 – will be made to achieve a return on equity of 10 per cent by the end of 2015.