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Société Générale said an "exceptional" performance in corporate and investment banking helped it beat analyst expectations with a 41 per cent jump in first-quarter profits.

Jean-Pierre Mustier, head of SocGen’s corporate and investment banking unit, said on Wednesday that the bank was "reaping the fruit of our medium-term, steady investments over the past seven years.

Revenues rose 19.6 per cent year-on-year to €4.7bn. Net income jumped from €867m to €1.22bn ($1.53bn). The bank said it enjoyed "sustained growth across all business lines, with an exceptional performance by the corporate and investment banking division".

SocGen’s results, which bettered good results from its main rival BNP Paribas two weeks ago, also reflected an improvement from the previous quarter, when it saw net income of €836m on revenues of €4.32bn.

Shares in SocGen rose 1 per cent to €81.55 in early trading on Wednesday. Analysts said the bank was heavily emphasising the "exceptional" nature of the first-quarter results and investors did not expect them to be repeated over the whole year.

Mr Mustier said: "The outlook for the rest of the year is that we will have a more normalised environment. But, for us, normal is already very good."

Return on equity at the corporate and investment bank was 54 per cent in the first quarter, up from 36 per cent a year ago. But he said this was likely to drop during the year towards the "average of the past eight quarters of above 30 per cent".

A booming market for equity derivatives, a speciality of the French bank, accounted for the lion’s share of its profits growth, contributing to a 31.6 per cent jump in revenues and 57.1 per cent rise in profits at its corporate investment banking division.

The bank credited "rising markets, strong merger and acquisitions activity and excellent performance in index arbitrage business" for the trebling of equity and advisory profits to €219m. Corporate banking and fixed income profits rose 15 per cent to €279m.

Mr Mustier dismissed fears that SocGen’s speciality in equity derivatives could expose it to risks of heavy losses amid jitters in bond and derivatives markets following last week’s credit downgrade of Ford and General Motors by rating agencies.

"We have done very heavy stress test scenarios and these show we would suffer very limited losses from hedge fund investments," he said.

Analysts said the second quarter could be an "acid test" for French investment banks, to see how much they are affected by the recent turbulence in derivative markets.

While admitting there could be "slightly less interest from investors in the short term in the hedge fund asset class," Mr Mustier forecast there would continue to be "healthy growth of new money in the medium or long term".

Copyright 2005 Financial Times