Thank you, investment bankers. Société Générale was nearly sunk  by them two years ago, yet without their renaissance, overall third-quarter earnings at the French bank would not have more than doubled to €426m. Even so, the fixed income frenzy that has been the leitmotif of the year showed signs of abating for SocGen. Margins fell, depressing revenue from that source by almost a third quarter on quarter. Never mind. SocGen’s equities income – helped by equity derivatives, its strong suit – took up the slack. But the warning is clear: although the investment bank is carrying the franchise for now, SocGen needs to diversify earnings.

Here, last month’s €4.8bn rights issue helps. In spite of anticipating higher capital requirements and repaying French government support, SocGen has kept cash for acquisitions. Its purchase of Dexia’s 20 per cent stake in Crédit du Nord, giving it 100 per cent, heralds a deeper foray into less risky banking. French retail banking has held up well in the recession, with bad debt provisions stabilising. SocGen likes to think the same is true of its far higher provisions against lending to Russian and central European borrowers. But by more than doubling overall provisions to €1.5bn – admittedly mostly on reclassified toxic credit assets – it signalled it is not yet out of the woods.

Investors marked up SocGen’s shares by 4.6 per cent. Even so, in spite of its beefed up pro-forma core tier one capital ratio of 8.6 per cent, its shares trade at only 0.7 times tangible book value. That is a harsh 24 per cent discount to fellow eastern Europe adventurer UniCredit, even though SocGen has so far weathered the regional meltdown. SocGen can beat investors’ earnings expectations; their fears about international retail banking and legacy investment banking issues remain.

E-mail the Lex team confidentially

The Lex column is on Twitter