May 25 (Bloomberg) -- Societe Generale SA, France's third- biggest lender, said first-quarter profit rose 41 percent, beating analysts' estimates, on higher revenue from debt and equity derivatives trading and a drop in provisions for risky loans.

Net income rose to 1.22 billion euros ($1.54 billion) from 867 million euros a year earlier, the bank said in an e-mailed statement today. Analysts expected profit to be little changed at 865 million euros, according to the median estimate of seven surveyed by Bloomberg. Loan-loss provisions fell 64 percent.

Corporate and investment banking ``recorded exceptional results in the first quarter, fully exploiting a favorable environment,'' the Paris-based bank said in the statement. The division's profit rose 57 percent to 498 million euros.

Societe Generale, led by Chairman Daniel Bouton, is benefiting from an increase in trading that helped securities firms from Deutsche Bank AG, Germany's biggest bank, to Goldman Sachs Group Inc. and Morgan Stanley beat analysts' expectations in the quarter. Societe Generale last year said it would hire 200 bankers to strengthen its capital markets and derivatives businesses.

The corporate and investment banking division, headed by Jean- Pierre Mustier, 44, accounted for 41 percent of profit in the quarter, more than the company's main consumer banking unit. Profit from corporate lending and fixed income gained 15 percent to 279 million euros, while net income from the equity and advisory business almost tripled to 219 million euros, the bank said.

Shares of Societe Generale have risen 8.7 percent since the start of the year, giving the company a market value of 35 billion euros. Shares of French rival BNP Paribas SA are up 4.1 percent, and the stock of Credit Agricole, France's biggest bank, is down 3 percent. The Bloomberg Europe Banks and Financial Services Index, which tracks 80 companies, has gained 2.7 percent in the period.

Consumer Expansion

Profit from consumer banking and financial services rose 23 percent to 438 million euros, as net income from business outside France jumped 71 percent to 94 million euros after acquisitions, including the purchase of Greek lender General Hellenic Bank SA in March 2004. Profit from Societe Generale's French branch network rose 10 percent to 240 million euros, the company said.

Bouton, 55, has been buying banks, credit card and leasing businesses to boost revenue outside France, where increasing competition threatens to erode margins. The bank, which also owns lenders in the Czech Republic, Romania and Russia, last month bought Poland's Eurobank. In 2004, it purchased equipment finance and debt-collection businesses in Norway and Germany.

Net income from global investment management and services, which includes asset management and private banking, rose 34 percent to 127 million euros.

To contact the reporter on this story: Steve Rhinds in Paris at srhinds@bloomberg.net

Last Updated: May 25, 2005 01:00 EDT