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PARIS: French lender Societe Generale beat first-quarter earnings expectations on Thursday but booked higher provisions for bad loans as its customers feel the economic impact resulting from the war in Ukraine.

France’s third-biggest listed bank said net income rose by 3.4% to 842 million euros ($892 million) on revenue up 16.6% as its domestic retail arm prospered and trading improved.

SocGen added that it was setting aside higher provisions for soured loans because of the Russia-Ukraine conflict.

The bank said it now expects this year’s cost of risk, reflecting bad loan provisions, to reach 30 to 35 basis points, or between 1.7 billion and 1.9 billion euros. That compares with a previous forecast of less than 30 basis points.

Those costs come on top of earlier writedowns. The bank recently said it would quit Russia and is now selling its Rosbank business in the country, writing off roughly 3.1 billion euros.

Strong trading helped to compensate for that. Equity trading revenue was up almost 20% at more than 1 billion euros. Fixed income and currency trading revenue was up 21.7%.

French rival BNP Paribas had reported a 60.9% jump in equity trading revenue during the quarter and 47.9% rise in fixed income, currency and commodities.

Analysts at Jefferies said that SocGen had published a “strong set” of earnings with all divisions above expectations, from French retail banking activities to corporate and investment banking.

The exit from Russia has nonetheless reduced the bank’s capital cushion. Its common equity tier one ratio, a key yardstick of capital strength, was down to 12.9% at end of March.

“Capital is a slight miss,” Jefferies said.

SocGen this month became the first major Western bank to announce its exit from Russia, with a plan to sell its Rosbank unit to Interros Capital, a company linked to Russian oligarch Vladimir Potanin.

The financial hit of 3.1 billion euros comprises 2 billion euros on Rosbank’s book value with the rest linked to the reversal of rouble conversion reserves.

Moscow calls its actions in Ukraine a “special military operation.

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