Societe Generale’s CEO has signalled the bank may have difficulty reaching its profitability target this year due to “headwinds” that include record-low interest rates and volatile financial markets.

Frederic Oudea, chief executive of France’s second largest lender, warned the firm could fall short of its target for a 10% return on equity in 2016 due to tighter regulations and a difficult economic environment.

The earnings alarm came as SocGen missed analyst estimates with its fourth-quarter profit figures, as earnings at its investment bank fell and it set aside provisions for potential legal costs.

Net profit rose to $742m (€656m) in Q4 from $620m a year ago, below forecasts. Revenue dipped 1% to $6.8bn.

A $452m litigation charge offset a gain from the sale of a stake in asset manager Amundi SA.

Total provisions for litigation now stand at $1.9bn.

Across its global markets and investor services business - which includes equities, fixed income, prime services and securities services – revenues were down 8.5% in the fourth quarter at $1.45bn.

SocGen's equities desks experienced the worst performance due to investor risk aversion, notably for structured products. The performance in fixed income, currencies and emerging markets helped mitigate the decline.

In securities services alone, revenues were down 3.5% quarter-on-quarter at $185m but stable on a year-on-year basis.

Prime services posted a 37% rise in revenues in Q4, boosted by the integration of Newedge and Jefferies Bache.

The bank’s asset and wealth management business posted a 9.8% rise in revenue in October- December quarter.

Shares in the bank were 13% lower during mid-morning trade. 

European banks have lost about a quarter of their market value since the start of the year amid concerns of weaker global growth levels.