French bank Societe Generale SA (GLE.FR) Wednesday reported stronger-than-expected second-quarter net profit, despite being hit by EUR1.7 billion in charges and write-downs, and said it remains able to soak up the effects of the financial crisis, helping to send the shares sharply higher.

Net profit for the quarter ended June 30 decreased 52% to EUR309 million from EUR644 million a year earlier, but came in above an average EUR114 million forecast from eight analysts polled by Dow Jones Newswires. The profit contrasts with the EUR278 million loss the group posted in the first quarter of 2009.

SocGen, France's second-largest bank by market value, had already warned in July that losses on credit default swaps and the reversal of gains on its own debt amounting to EUR1.3 billion meant it would turn only a slight profit for the second quarter. SocGen's statement Wednesday added to that total a further EUR397 million in write-downs and losses on risky assets, mainly related to exotic credit derivatives.

Despite those elements, revenue rose 2.4% year-on-year to EUR5.72 billion, above the average EUR5.53 billion forecast by analysts.

Growth was particularly strong in the group's operating performance for its corporate and investment bank unit, where revenue almost doubled year-on-year to EUR1.29 billion.

The unit's activity stayed on a similar trend in July, Chief Executive Frederic Oudea said Wednesday, but he cautioned that risks of further market volatility remained.

"The key areas where Societe Generale is strong (such as equity derivatives) are making money," JPMorgan analysts said in a note to investors. The analysts kept their overweight rating on the stock.

At 1252 GMT, SocGen shares were up EUR2.79, or 6%, to EUR49.10, outperforming a 1.8% rise in the Stoxx 600 European bank index. Prior to Wednesday, the stock had gained 29% from the start of the year, underperforming the Stoxx 600 bank index, as concerns still linger about some of the bank's riskier assets.

The group's bumper investment bank performance follows on the heels of impressive showings this week from European peers such as Barclays PLC (BCS) and SocGen's cross-town rival BNP Paribas SA (BNP.FR), which Tuesday reported a 6.6% rise in net profit to EUR1.6 billion.

SocGen's provisions for credit risk more than tripled to EUR1.08 billion year-on-year, reflecting the pressure the economic downturn is exerting on borrowers' finances. But provisions dipped somewhat compared with the first quarter due to "the absence of a deterioration" in the credit portfolio. Chief Financial Officer Didier Valet urged against "drawing too many conclusions" from the sequential decline.

SocGen said that its "portfolio of activities and its high solvency level mean that the group is able to absorb the effects of the crisis" and capitalize on the withdrawal of some competitors, allowing it to take market share.

The group's Tier 1 ratio increased to 9.5% at the end of June from 9.2% at the end of March. The end-of-March figure takes into account the EUR1.7 billion in non-voting shares that SocGen subsequently issued to the French government as part of the support plan for lending in the country's economy.

Company Web site: www.socgen.com

-By Jethro Mullen, Dow Jones Newswires; 33 1 4017 1738; jethro.mullen@dowjones.com