nch bank Societe Generale SA, recovering from a multibillion dollar trading scandal, said Tuesday that net profit fell 63 percent in the second quarter after the ongoing crisis in world financial markets led to a loss in its investment banking unit.


Net profit dropped to euro644 million (US$1 billion) in the second quarter from euro1.74 billion a year ago, SocGen said in a statement.

The corporate and investment banking unit posted a euro186 million ($US290 million) loss, compared with a euro721 million profit a year earlier, the bank said.

France's second-largest bank said write-downs and one-time charges subtracted euro917 million ($1.4 billion) from earnings in the quarter.

CEO Frederic Oudea, promoted from CFO in May, said the second quarter result "reflects the robustness" of the bank's portfolio of activities, despite what he calls "a crisis on an exceptional scale."

SocGen is the latest bank to report lower profits as a result of the contagion from risky U.S. mortgages which has hit financial markets.

HSBC Holdings PLC, Europe's largest bank by market value, reported Monday its steepest fall in profit since 2001, as costs for bad U.S. mortgage loans mounted.

And last month the world's biggest brokerage, Merrill Lynch & Co., reported its fourth straight quarterly loss amid write-downs linked to the credit crisis.

Besides the credit crisis, SocGen announced in January it had taken a euro4.9 billion (US$7.18 billion) hit closing what it calls unauthorized positions by former trader Jerome Kerviel. Though announced in the first quarter, the loss was included in the bank's 2007 results.

Kerviel was questioned by judges Monday as investigations into the trading scandal continue. On Friday, his 24-year-old former assistant Thomas Mougard become the second person handed preliminary charges on suspicion that he knowingly helped enter phony data into a computer system on behalf of Kerviel.

France's second-largest bank has tightened security and changed its top management this year, splitting the posts of CEO and chairman.

Shares rose 2.8 percent to euro61.19 (US$95.25) in Paris morning trade after the results were announced.

On Tuesday the bank said its retail banking and financial services units, which together account for around two thirds of revenue, both posted a profit.

French retail banking profit fell 11 percent to euro328 million (US$510 million) amid a "not particularly favorable" environment, the bank said. International retail banking posted a 42 percent rise in earnings to euro238 million (US$370 million) led by operations in the Czech Republic, Russia and Romania.

Financial services posted a 13 percent increase in profit to euro167 million (US$260 million).