Societe Generale in profit slump

Societe Generale has suffered in the wake of the credit crisis

French bank Societe Generale has reported a 63% fall in second quarter profits after the credit crunch hit its investment banking arm.

Net profits fell to 644m euros ($1bn; £510m) from 1.744bn euros last year.

On top of suffering from the credit crisis, Societe Generale was hit by a rogue trader scandal last year that it said had cost it 4.9bn euros.

Despite the profit fall, the bank's shares rose more than 9% as the latest figures beat forecasts.

Societe Generale has blamed trader Jerome Kerviel for the 4.9bn-euro loss as an "isolated" incident, but there have been criticisms over a lack of internal oversight at the bank.

On Monday, Thomas Mougard, the former assistant to Mr Kerviel, was placed under formal investigation for his role in the case.

Mr Kerviel has been freed from bail since March but remains under investigation for breach of trust, computer abuse and falsification.

Financial markets

Societe Generale said its corporate and investment banking arm made a 186m-euro loss in the quarter, down from a profit of 721m euros in the same period a year earlier.

And the firm wrote down 575m euros in assets linked to the US sub-prime sector during the quarter.

Many banks have seen profits hit hard as financial markets have deteriorated and defaults have risen.

The profit fall at Societe Generale comes a day after HSBC, Europe's largest bank, reported a 28% fall in half-year profits and warned that financial conditions were at their most difficult "for several decades".