UPDATE 1-SocGen underperforms French rivals in equities trading in Q2

* Q2 group profits and revenues fall

* Weaker equities trading results than its French peers (Updates with details, quotes)

By Maya Nikolaeva

PARIS, Aug 2 (Reuters) – Societe Generale underperformed its French banking rivals in equities trading in the second quarter, as it posted lower revenues in that area which compared with a sharp rise at BNP Paribas and Natixis.

Overall, it reported on Wednesday a 28 percent fall in its group second-quarter net profit after it had set aside 300 million euros ($354.12 million) to pay for potential legal costs as the bank seeks to turn the page following a series of legal disputes and scandals.

SocGen, more focused on equities than its rivals, has shaken up its management and has invested more in fixed income and prime services – which often deals with hedge fund clients – over the past few years to make its investment banking revenue less volatile.

French banks are also looking to cut operational costs and digitise more functions to compete better with European rivals such as Credit Suisse and Deutsche Bank as they slash jobs and exit businesses.

BNP Paribas reported last week a 25.7 percent rise in equities trading and prime services, while Natixis posted a 33 percent rise in equity trading.

However, SocGen fared comparatively better in fixed income trading, where it reported a 6.8 percent decrease in sales versus a 16 percent drop at BNP Paribas.

“While global markets ended the quarter higher, Q2 was marked primarily by the widespread ‘wait-and-see’ attitude of investors, in conjunction with ever lower volatility and a weaker dollar,” SocGen said in a statement.

SocGen said that the quarterly volatility of its corporate and investment banking revenue since the beginning of 2014 has been lower than that of French, European or U.S. peers.

The French bank continued to cut costs in the unit in the second quarter, which helped offset lower revenue from trading and financing and advisory to bring net profit up 11 percent to 499 million euros.

SocGen’s second-quarter group net income fell to 1.06 billion euros from 1.46 billion euros a year earlier, in line with the average of five analyst estimates in a Reuters poll.

Group revenues fell 26 percent to 5.20 billion euros, below 5.39 billion euros expected by the analysts, as pressure on margins in French retail banking from low interest rates, and a decrease in trading sales weighed on turnover.

($1 = 0.8472 euros)

Reporting by Maya Nikolaeva; Editing by Sudip Kar-Gupta

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