Societe Generale reported first-quarter net income that beat market expectations on Friday, but the French bank highlighted two major headwinds that led to disappointing revenue numbers across different divisions.

It annonced group net profits of 850 million euros ($1 billion), slightly above last year’s performance. Net banking income stood at 6.294 billion euros for its first quarter of 2018 — a drop of 2.5 percent from a year ago. This was due to a weaker performance in domestic retail activity, as well as lower revenues in its global banking and investor solutions division.

Speaking to CNBC, Frédéric Oudéa, chief executive officer of Société Générale, explained what caused the slowdown.

“We saw … in Europe lower commercial activity, probably in this environment, where we lag a little bit in this transition towards a more normal rate policy and also probably with the implementation of Mifid which might have slowed the commercial activity,” he told CNBC’s Joumanna Bercetche.

Mifid II is a regulation that came into place at the start of the year and essentially leads to a separation of the research and the trading sides of a financial institution.

Oudéa also said that, in contrast, the bank’s activities in the U.S. were much stronger.

“In the beginning of this year, all the events happened in the U.S.. Benefits from the tax cuts, the volatility on certain tech stocks … the Vix events…probably Europe lags the U.S. for a few quarters in this normalization of volatility,” he said.

Source: cnbc
Societe Generale first-quarter results take a hit from low volatility in Europe and new regulation