By Noemie Bisserbe 

PARIS--French bank Société Générale SA on Wednesday reported an increase in first-quarter net profit, as a debt valuation adjustment and a strong retail banking performance helped offset lower trading revenue from choppy markets.

The Paris-based lender, France's third-largest listed bank by assets, said net profit rose 6% to EUR924 million ($1.06 billion) in the three months through March, from EUR868 million a year earlier. Revenue was down 3% at EUR6.18 billion.

The bank booked a EUR145 million gain in the first quarter because of an accounting rule that permits lenders to post paper profit when the value of their own credit declines.

Société Générale also said Wednesday it would cut costs by another EUR220 million at its investment bank by 2017, in addition to ongoing restructuring efforts. The bank had already announced cost cuts worth EUR323 million by 2017.

Société Générale's first-quarter earnings highlight the progressive recovery of the European economy, as investment picks up and loan defaults decline. As with French rival BNP Paribas SA, higher retail banking revenue helped make up for a weak investment banking business, hurt by sharp declines in securities trading amid concerns about low energy prices and interest rates.

Its retail bank in France posted a net profit of EUR328 million, up 18% from the same quarter last year, while net profit for its international retail banking and financial services division more than doubled to EUR300 million. In Russia, where Société Générale owns one of the country's largest private lenders, Rosbank, it posted an EUR18 million first-quarter loss compared with a EUR89 million loss a year ago.

However, its global banking and investor solution business--which includes investment banking, security services and asset management--posted a 15% drop in net profit to EUR454 million in the first quarter from EUR532 million a year ago.

Overall profit growth this quarter enabled Société Générale to continue to stockpile additional capital to meet strict new banking regulation in Europe.

The bank said its core tier one ratio, which compares top quality capital such as equity and retained earnings with risk-weighted assets, stood at 11.1% in March, up from 10.9% in December.

Société Générale has said it targeted a core tier one ratio of 11.5% to 12% by 2019.

The bank's leverage ratio, which measures capital held by the bank against its total assets, was stable at 4% at the end of March.

BNP Paribas, France's largest listed bank by assets, said Tuesday first-quarter net profit rose 10% to EUR1.81 billion from EUR1.65 billion a year ago. Crédit Agricole SA reports earnings on May 12.

Write to Noemie Bisserbe at noemie.bisserbe@wsj.com

(END) Dow Jones Newswires

May 04, 2016 01:01 ET (05:01 GMT)