SocGen shares fell 4.7 percent as analysts said the lackluster results showed it had some way to go to catch up with stronger rivals, with JP Morgan analysts describing the bank as a restructuring story.
France's second-biggest listed bank has had to trim back much of its previously-booming investment banking activities after taking bigger hits than many of its rivals from the global credit crisis.
The company on Thursday reported fourth-quarter net profit of 221 million euros ($303.4 million), up from 87 million a year earlier and ahead of a consensus forecast of 150 million euros, but below its third-quarter net profit of 426 million euros.
It cut its dividend to 0.29 euros from 1.2 euros. Shareholders can opt for a scrip dividend.
In January, SocGen said it was only expecting a slight profit for the fourth quarter after taking a new 1.4 billion euro hit on risky assets.
The group, which suffered a 4.9 billion euro rogue trading scandal in 2008, has been weighed down by its exposure to toxic assets such as collateral debt obligations (CDOs) although it expected fewer writedowns this year compared with 2009.
The bank has been shifting back toward less risky retail banking, but fourth-quarter profit at its French retail banking unit fell year on year.
2010 is likely to be marked by a sharp rebound in the group's financial results due notably to the gradual elimination of the impact of the financial crisis, SocGen said in a statement. It also expects better results at its domestic and overseas retail banking divisions.
SocGen's fourth-quarter net profit was a fraction of the 1.37 billion euros reported for the same quarter by BNP Paribas , France's biggest listed bank, on Wednesday.
It also paled in comparison to Deutsche Bank's fourth-quarter net profit of 1.3 billion euros and profits of $3.3 billion and nearly $5 billion at Wall Street banks JP Morgan and Goldman Sachs respectively.
SocGen fell as much as 5 pct in morning trade, and were trading down 4.7 percent by 1100 GMT, underperforming a 0.4 percent rise both in the DJ Stoxx European bank sector <.SX7P> and on France's benchmark CAC-40 index <.FCHI>.
Brokerage Nomura kept a buy rating on SocGen shares but described the bank's results as disappointing.
The market might conclude that it wants to see delivery of cleaner numbers before re-rating, it said in a research note.
NEW RUSSIA UNIT
The French group added it had agreed with its Russian partner Interros to combine Rosbank and SocGen's other Russian units into a new single entity which would be 81.5 percent owned by SocGen.
The new unit would employ 30,000 people and become Russia's fifth-biggest bank by the size of credit portfolio.
We want to create a bank of reference in Russia, Chief Executive Frederic Oudea told French radio BFM.
The investment banking division has been weighed down by writedowns and posted another loss during the fourth quarter.
Like many banks around the world, France's lenders have come under political pressure to make moderate bonus payments. France has also joined Britain in imposing a tax on trader bonuses.
Oudea said SocGen had set aside 250 million euros for its 2009 traders bonuses -- less than the 500 million euros set aside by BNP Paribas.
SocGen is in the midst of a potentially damaging legal battle with one of its former top fund managers.
SocGen's American fund management arm TCW fired and filed a law suit against chief investment officer Jeffrey Grundlach. He has since sought to countersue.
($1=.7283 Euro) (Additional reporting by Juliette Rouillon in Paris; Editing by Marcel Michelson and Jon Loades-Carter)