French lender Société Générale capped a strong recovery in 2010, with net profit soaring nearly six-fold to €3.92 billion as bad loan provisions fell and it cut costs.

The results were in line with analyst forecasts. The group, whose reputation was dented badly by a massive 2008 rogue trader scandal, posted profits of some €3 billion over the three quarters to September.

It said retail banking earnings rose 17 per cent for the year while the investment and finance arm jumped 160 per cent as Société Générale reduced the bad loans on its books.

Total net banking income (gross earnings) rose 21 per cent to €26.4 billion.

Société Générale said its core capital adequacy ratio rose to 8.5 per cent from 8.4 per cent under current regulatory standards which require eight per cent.

It announced late last year that it would increase its top-ranked capital to the equivalent of 7.5 per cent of the risk assets on its books at the beginning of 2013 so as to meet new and much tougher Basel III bank capital standards.

These standards were introduced in response to the near failure of the US and European banking sectors in the global crisis and require that the most readily available form of capital held by banks must amount to seven per cent of the risk assets on their books.

Société Générale said that to reinforce its reserves it would pay out only 35 per cent of 2010 earnings as dividends for shareholders, keeping the rest.

The payment, however, at €1.75 per share, will still be much higher than the €0.25 paid in 2009.