Societe Generale S.A. Class A · EURONEXT:GLE
Societe Generale S.A. Class A — Q3 2005 Earnings Presentation
57 slides from Societe Generale S.A. Class A's earnings presentation, Nov 17, 2005
Slide 1: Third Quarter and 9 Month 2005 Results
17 / 11 / 2005 SOCIETE GENERALE THIRD QUARTER AND 9 MONTH 2005 RESULTS
Slide 2: Disclaimer
Disclaimer The following presentation contains a number of forecasts and comments relating to Société Générale’s targets and strategy. These forecasts are based on a series of assumptions, both general and specific. As a result, there is a risk that these projections will not be met. Readers are the
Slide 3: Group results, core businesses, conclusion, supplements
Group results Results of core businesses Retail Banking & Financial Services Global Investment Management & Services Corporate & Investment Banking Conclusion Supplements 17 / 11 / 2005 THIRD QUARTER AND 9 MONTH 2005 RESULTS 3
Slide 4: Strong growth in results over first 9 months
SOCIETE GENERALE GROUP Strong growth in results over first 9 months In EUR m 9M 04 9M 05 Change 9M/9M Organic growth in NBI: Net banking income 12,077 14,080 +16.6% +15.4%* +15.4%* vs. 9M 04 Operating expenses (8,119) (8,898) +9.6% +8.6%* Impact of application of IAS 32-39 estimated at +1.6% (EUR
Slide 5: Excellent third quarter
SOCIETE GENERALE GROUP Excellent third quarter In EUR m Q3 04 Q3 05 Change Q3/Q3 Net banking income 4,078 4,876 +19.6% +17.6%* NBI: +17.6%* vs. Q3 04 Operating expenses (2,747) (3,016) +9.8% +8.5%* Impact of IAS 32-39 estimated at +3.6% +39.7% +36.1% * Gross operating income 1,331 1,860 (EUR +175m
Slide 6: Sharp rise in revenues across the board
SOCIETE GENERALE GROUP Sharp rise in revenues across the board Change NBI (in EUR m) Q3 05/Q3 04 Robust NBI growth at French Networks: +7.6% vs. Q3 04 excluding impact of IAS 4,876 +17.6%* 32-39 Corporate & IFRS NBI: +5.5% vs. Q3 04, after EUR 34m 4,078 Investment Banking allocation to PEL/CEL pro
Slide 7: Q3 05 C/I ratio exceptionally low: 61.9%
SOCIETE GENERALE GROUP Q3 05 C/I ratio exceptionally low: 61.9% Change Operating expenses (in EUR m) Q3 05/Q3 04 Firm cost control in French Networks: 3,016 +8.5%* +3.4% vs. Q3 04 2,747 Corporate & 853 Investment Banking Further gains in operating efficiency at the (+10.8%*) 768 growth drivers R
Slide 8: Risk provisioning remains low
SOCIETE GENERALE GROUP Risk provisioning remains low Low Group cost of risk Net allocation to provisions (in EUR m) 18 bp (vs. average 48 bp for period 2000-2004) 114 128 73 115 120 17 bp excluding impact of discounting of Corporate Centre provisions under IAS 32-39 (EUR +7m) and GIMS French Net
Slide 9: Group results, core businesses, conclusion, supplements
Group results Results of core businesses Retail Banking & Financial Services Global Investment Management & Services Corporate & Investment Banking Conclusion Supplements 17 / 11 / 2005 THIRD QUARTER AND 9 MONTH 2005 RESULTS 9
Slide 10: Retail Banking and Financial Services
RETAIL BANKING AND FINANCIAL SERVICES Q3 Q3 05 05 NBI: NBI: +9.2% +9.2% vs. vs. Q3 Q3 04; 04; +6.4% +6.4% like -for-like; like-for-like; +9.5% +9.5% excluding excluding IAS IAS 32-39 32-39 French Networks 31% Q3 Q3 05 05 net net income: income: ROE: 21.1% EUR EUR 481m, 481m, +15.7% +15.7% vs. vs. Q3
Slide 11: Robust business levels
FRENCH NETWORKS Robust business levels Individual customers Individual customers Strong rise in number of personal current accounts: Steady franchise growth +164,000 vs. Q3 04 (+2.9%) o.w. +66,000 in Q3 05 Housing loan issuance: Change since 2000 EUR 4.8bn (+27.3% vs. Q3 04) Consumer loan issuance
Slide 12: Significant rise in revenues
FRENCH NETWORKS Significant rise in revenues NBI: +7.6% vs. Q3 04 excl. IAS 32-39; +5.5% vs. Q3 04 incl. IAS 32-39 1,452 1,516 1,520 1,486 1,532 NBI in EUR m Allocation to PEL/CEL provisions of EUR 34m in Q3 05 Financial 186 176 175 165 commissions 136 Fee & commission income: +13.0% vs. Q3 04 4
Slide 13: Solid financial performances
FRENCH NETWORKS Solid financial performances Q3 05 Operating expenses: +3.4% vs. Q3 04 ª Rise in GOI: +16.9% excl. IAS 32-39 Change In EUR m Q3 04 Q3 05 Change 9M 05 9M/9M Cost of risk: 24 bp vs. 31 bp in Q3 04 Net banking income 1,452 1,532 +5.5% 4,538 +4.2% Operating expenses (1,001) (1,035) +3.
Slide 14: Dynamic business momentum
RETAIL BANKING OUTSIDE FRANCE Dynamic business momentum Rapid expansion of franchise Geographical breakdown of NBI (in EUR m) +611,000 individual customers vs. Q3 04 (+12.2%) at constant structure CAGR: +16% • o.w. Europe (EU and pre-EU): +324,000 vs. Q3 04 (+10.0%) 576 Growth in deposit and loan
Slide 15: Steady upward trend in contribution
RETAIL BANKING OUTSIDE FRANCE Steady upward trend in contribution Change In EUR m Q3 04 Q3 05 Change 9M 05 NBI: +8.2%* vs. Q3 04 9M/9M Net banking income 510 576 +12.9% +8.2%* 1,689 +12.0%* Operating expenses (312) (349) (1,017) Ongoing investments +11.9% +9.5%* +10.0%* Gross operating income 19
Slide 16: Marked growth in new business
FINANCIAL SERVICES Marked growth in new business Consumer credit** NBI for Specialised Financial Services**** New lending: EUR 1.8bn (+11.0% vs. Q3 04 (in EUR m) in France, +16.4%* vs. Q3 04 abroad) 1,423 Outstanding: EUR 11.6bn (+10.6% vs. Q3 04 1,289 in France, +23.7%* vs. Q3 04 abroad) 325 1,21
Slide 17: Sharp jump in contribution
FINANCIAL SERVICES Sharp jump in contribution Specialised financing Change In EUR m Q3 04 Q3 05 Change 9M 05 NBI: +22.7% vs. Q3 04 9M/9M • Organic growth: Net banking income 450 525 +16.7% +6.9%* 1,530 +6.5%* NBI +11.0%* vs. Q3 04 o.w. specialised financing 348 427 +22.7% +11.0%* 1,219 +7.9%* • In
Slide 18: Global Investment Management and Services
GLOBAL INVESTMENT MANAGEMENT AND SERVICES Q3 Q3 05 05 NBI: NBI: +18.3% +18.3% vs. vs. Q3 Q3 04; 04; +17.4% +17.4% like -for-like like-for-like Q3 Q3 05 05 net net income: income: EUR EUR 126m 126m (+54.3% (+54.3% vs. vs. Q3 Q3 04 04 like -for- like-for- like) like) Q3 Q3 05 05 net net inflows: inflo
Slide 19: Growth in all business lines
GLOBAL INVESTMENT MANAGEMENT AND SERVICES Growth in all business lines Asset Management Assets under management (EUR bn) Strong asset gathering in Continental Europe 370 298 315 Sustained growth in India and South Korea 269 284 313 Asset Private Banking Management 267 Continued expansion of all
Slide 20: High volume of net inflows
GLOBAL INVESTMENT MANAGEMENT AND SERVICES High volume of net inflows Net new Value FX Asset Management money effect effect Q3 05 net inflows: EUR 5.8bn In EUR bn 353.2 +7.5 +9.6 +0.0 370.3 9M 05 net inflows: EUR 21.4bn i.e. 11% of AuM on annualised basis +5.8 +8.8 +0.1 • o.w. 42% invested in struc
Slide 21: Very good results
GLOBAL INVESTMENT MANAGEMENT AND SERVICES Very good results Q3 05 NBI: +17.4%* vs. Q3 04 In EUR m Q3 04 Q3 05 Change 9M 05 Change 9M/9M Asset Management 541 640 1,850 Net banking income +18.3% +17.4%* +13.7%* • Strong contribution from Alternative o.w. Asset Management 253 286 +13.0% +13.0%* 814 +
Slide 22: Corporate and Investment Banking
CORPORATE AND INVESTMENT BANKING 31% Corporate of Group NBI Q3 Q3 05 05 NBI: NBI: Banking & Fixed Income +23.8% +23.8% vs. vs. Q3 Q3 04; 04; +23.5% +23.5% like -for-like like-for-like 17% Q3 Q3 0505 net net income: income: Equity & Advisory EUR EUR 498m, 498m, +35.0% +35.0% vs. vs. Q3 Q3 04 04 like
Slide 23: Exceptional revenue levels
CORPORATE AND INVESTMENT BANKING Exceptional revenue levels Corporate Banking & Fixed Quarterly NBI (in EUR m) Income Excellent performance in all Fixed % of CIB NBI in Q3 05 Income markets, both in client-driven activities and proprietary trading Good results in structured finance Client-related
Slide 24: Profitable growth in client-driven activity in Corporate Banking & Fixed Income
CORPORATE AND INVESTMENT BANKING Profitable growth in client-driven activity in Corporate Banking & Fixed Income Client-driven revenues/NBI* 74% 69% Accompanying target clients in our key 64% 63% areas of expertise… Average RWA in Corporate Banking & Fixed Income: +15% over 9M 05 vs. 9M 04 …whil
Slide 25: Very strong financial performances
CORPORATE AND INVESTMENT BANKING Very strong financial performances NBI: +23.5%* vs. Q3 04 Change Negligible impact of IAS 32-39 In EUR m Q3 04 Q3 05 Change 9M 05 9M/9M (EUR +1m) Net banking income 1,208 1,496 +23.8% +23.5%* 4,279 +23.4%* o.w. Equity & Advisory 560 694 +23.9% +23.9%* 2,077 +38.3%*
Slide 26: Group results, core businesses, conclusion, supplements
Group results Results of core businesses Retail Banking & Financial Services Global Investment Management & Services Corporate & Investment Banking Conclusion Supplements 17 / 11 / 2005 THIRD QUARTER AND 9 MONTH 2005 RESULTS 26
Slide 27: A profitable and dynamic business mix
SOCIETE GENERALE GROUP A profitable and dynamic business mix Net income (in EUR m) Very strong growth in business ROE activity +33.4% 3,315 after tax Robust organic growth in all core businesses ROE Successful integration of new entities after tax Corporate & 2,484 1,342 45% Investment Good cont
Slide 28: Supplementary Data
17 / 11 / 2005 SUPPLEMENTARY DATA
Slide 29: Quarterly income statement by core business
SUPPLEMENT - SOCIETE GENERALE GROUP Quarterly income statement by core business Global Investment Corporate & In EUR m Retail Banking & Management & Investment Corporate Centre Group Financial Services Services Banking Q3 05 Q3 04 Q3 05 Q3 04 Q3 05 Q3 04 Q3 05 Q3 04 Q3 05 Q3 04 Net banking income 2,
Slide 30: 9-month income statement by core business
SUPPLEMENT - SOCIETE GENERALE GROUP 9-month income statement by core business Global Investment Corporate & In EUR m Retail Banking & Management & Investment Corporate Centre Group Financial Services Services Banking 9M 05 9M 04 9M 05 9M 04 9M 05 9M 04 9M 05 9M 04 9M 05 9M 04 Net banking income 7,75
Slide 31: Quarterly income statement
SUPPLEMENT – RETAIL BANKING AND FINANCIAL SERVICES Quarterly income statement In EUR m Retail Banking outside Total Retail Banking and French Networks Financial Services France Financial Services Q3 05 Q3 04 Change Q3 05 Q3 04 Change Q3 05 Q3 04 Change Q3 05 Q3 04 Change Net banking income 1,532 1,4
Slide 32: 9-month income statement
SUPPLEMENT – RETAIL BANKING AND FINANCIAL SERVICES 9-month income statement In EUR m Retail Banking outside Total Retail Banking and French Networks Financial Services France Financial Services 9M 05 9M 04 Change 9M 05 9M 04 Change 9M 05 9M 04 Change 9M 05 9M 04 Change Net banking income 4,538 4,354
Slide 33: Change in risk-weighted assets
SUPPLEMENT – RETAIL BANKING AND FINANCIAL SERVICES Change in risk-weighted assets Average credit risk equivalent in EUR bn 143.8 135.4 139.2 130.1 133.3 125.7 24.5 Retail Banking 119.2 120.6 121.7 23.4 21.9 22.3 outside France 21.2 16.9 19.1 16.7 16.9 29.3 30.5 Financial Services 25.6 27.0 27.9 23.8
Slide 34: Customer deposits and savings
SUPPLEMENT – FRENCH NETWORKS Customer deposits and savings Average outstanding Change In EUR bn Q3 05/Q3 04 165.8 167.8 173.4 177.4 180.6 +8.8% 48.8 50.6 +14.0% LIFE INSURANCE * 47.4 44.4 45.8 Managed savings SHARE ACCOUNTS +10.4% MUTUAL FUNDS 45.2 45.4 +7.2% 42.3 42.3 44.1 OTHER 2.5 2.4 -2.3% 2.4 2
Slide 35: Customer loans
SUPPLEMENT – FRENCH NETWORKS Customer loans Change Average outstanding Q3 05/Q3 04 In EUR bn 95.6 97.7 99.6 101.9 104.4 +9.2% INDIVIDUALS o.w. 46.3 +15.9% 42.7 44.3 - Housing 40.0 41.4 - Consumer credit 9.1 +5.8% 8.6 8.7 8.8 9.2 & overdrafts BUSINESS 46.3 +5.6% CUSTOMERS* 43.9 44.7 45.5 45.9 BANKS 3
Slide 36: Productivity of the French Networks
SUPPLEMENT – FRENCH NETWORKS Productivity of the French Networks Change since 1997 155 +53% Bank cards (No.) 150 +46% Savings accounts (No.) 145 140 135 130 125 +24% Individual customer current a/c (No.) 120 115 110 105 1997 = 100 100 0% Global headcount* 95 90 85 -16% Administrative staff 80 1997 1
Slide 37: Interest margin of the French networks
SUPPLEMENT – FRENCH NETWORKS Interest margin of the French networks The interest margin is an aggregate indicator dependent on 5 elements: Overall level of customer deposits % Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Interest earned on customer loans Interest paid on customer deposits
Slide 38: A productive organisation
SUPPLEMENT - SOCIETE GENERALE NETWORK A productive organisation B BN N R y 2000: 136 branch groups RE E A A TT y 09/05: 42 branch groups + N NWW 65 Sales Departments (DEC) C COO H R H R y Start 2007: 90 DEC KK NN SS y 2000: 136 local back-office structures E U E U y 09/05: 57 local structures Commer
Slide 39: Specialised Financing: a major European player
SUPPLEMENT – FINANCIAL SERVICES Specialised Financing1: a major European player with diversified and growing businesses Breakdown of Q3 05 NBI(1) by Breakdown of Q3 05 NBI(1) by activity geographical region Business Finance & Services Europe 60% (excl. France) Operational Vehicle Leasing & Fleet Man
Slide 40: Reclassification of the capitalisation reserve of Sogecap
SUPPLEMENT – FINANCIAL SERVICES Reclassification of the capitalisation reserve of Sogecap, the life insurance subsidiary In the accounts for the period ending September 30th 2005, the Group noted that the model previously used to determine the provisions for deferred profit-sharing in insurance ac
Slide 41: Change in risk-weighted assets
SUPPLEMENT – FINANCIAL SERVICES Change in risk-weighted assets Average credit risk equivalent in EUR bn 29.7 28.5 27.0 25.8 5.0 Operational Vehicle Leasing & 24.3 4.8 4.7 Fleet Management 4.5 4.4 10.8 11.4 Consumer Credit 9.0 9.8 8.7 12.1 12.3 12.6 13.0 Equipment Finance 11.1 IT Asset Leasing & Mana
Slide 42: Quarterly income statement
SUPPLEMENT – GLOBAL INVESTMENT MANAGEMENT & SERVICES Quarterly income statement In EUR m Asset Management Private Banking GSSI + Boursorama TOTAL GIMS Q3 05 Q3 04 Change Q3 05 Q3 04 Change Q3 05 Q3 04 Change Q3 05 Q3 04 Change Net banking income 286 253 +13%* 135 109 +24%* 219 179 +20%* 640 541 +18%
Slide 43: 9-month income statement
SUPPLEMENT – GLOBAL INVESTMENT MANAGEMENT & SERVICES 9-month income statement In EUR m Asset Management Private Banking GSSI + Boursorama TOTAL GIMS 9M 05 9M 04 Change 9M 05 9M 04 Change 9M 05 9M 04 Change 9M 05 9M 04 Change Net banking income 814 722 +14%* 391 345 +14%* 645 570 +13%* 1,850 1,637 +1
Slide 44: Breakdown of assets under management by type of product
SUPPLEMENT – ASSET MANAGEMENT Breakdown of assets under management by type of product Assets under management at 30/09/05: EUR 312.8bn Sept 05 Sept 04 264.4 266.8 275.1 298.1 312.8 Alternative 41.7 13% Investment 13% 39.2 Alternative 33.0 (1) 34.6 33.8 48.1 Investment 46.4 Diversified (2) 46.2 45.6
Slide 45: Breakdown of assets under management by client segment
SUPPLEMENT – ASSET MANAGEMENT Breakdown of assets under management by client segment Assets under management at 30/09/05: EUR 312.8bn 264.4 266.8 275.1 298.1 312.8 15% 15% Third-party 14% distribution 14% 15% Retail 17% 18% 49% French 18% 18% 17% Networks 16% 16% Life 17% 17% 17% Insurance 4% 4% Asi
Slide 46: Quarterly income statement
SUPPLEMENT – CORPORATE & INVESTMENT BANKING Quarterly income statement In EUR m Corporate Banking & Total Corporate & Investment Equity & Advisory Fixed Income Banking Q3 05 Q3 04 Change Q3 05 Q3 04 Change Q3 05 Q3 04 Change Net banking income 694 560 +24% +24%* 802 648 +24% +23%* 1,496 1,208 +24% +
Slide 47: 9-month income statement
SUPPLEMENT – CORPORATE & INVESTMENT BANKING 9-month income statement In EUR m Corporate Banking & Total Corporate & Investment Equity & Advisory Fixed Income Banking 9M 05 9M 04 Change 9M 05 9M 04 Change 9M 05 9M 04 Change Net banking income 2,077 1,517 +37% +38%* 2,202 1,979 +11% +12%* 4,279 3,496
Slide 48: Change in risk-weighted assets
SUPPLEMENT – CORPORATE & INVESTMENT BANKING Change in risk-weighted assets Credit risk equivalent in EUR bn Change over Change over 12 12 months months at constant exchange rates 75.3 +22.3% +20.2% 70.3 63.8 61.0 60.4 60.4 61.6 62.4 59.5 60.0 57.0 59.0 60.7 +36.1% Commercial Banking +21.9% Corporate
Slide 49: League table rankings
SUPPLEMENT – CORPORATE & INVESTMENT BANKING League table rankings Euro capital markets All markets No.5 in Best Overall Capital raising poll (Euromoney – October 2005) Bonds No.6 bookrunner of euro bond issues No.4 bookrunner of financial institutions euro bond issues No.6 bookrunner of corporate eu
Slide 50: League table rankings
SUPPLEMENT – CORPORATE & INVESTMENT BANKING League table rankings Derivatives Equity derivatives Equity Derivatives House of the Year (Risk Magazine, The Banker, IFR - 2004) Equity Derivatives House of the year - Europe (The Banker – 2005) Equity Derivatives House of the year - Americas (The Banker
Slide 51: Corporate Centre
SUPPLEMENT - SOCIETE GENERALE GROUP Corporate Centre* GOI Q3 05 Q3 04 Positive impact of IAS 32-39, including Gross operating income 70 (84) EUR +125m in Q3 05 from the equity Net income from other portfolio assets (1) 1 At September 30th 2005 Impairment of goodwill 0 4 IFRS net book value of in
Slide 52: Trading VaR
SUPPLEMENT – RISK MANAGEMENT Trading VaR Quarterly average of 1-day, 99% Trading VaR (in EUR m) 27.2 26 23.6 24.4 Trading VaR 21.4 19.8 17.6 34.6 28.6 Fixed Income 29.8 30.9 24.9 24.6 23.9 Equity 13.6 11.8 13 12.8 15.9 16.1 10.5 Forex 0 Commodities -19.6 -20.6 -16.6 -20 -26.9 -23.7 -26.5 Netting eff
Slide 53: Provisioning of doubtful loans
SUPPLEMENT – RISK MANAGEMENT Provisioning of doubtful loans IFRS incl. IAS 32-39 & IFRS 4 31/12/2004 French standards 31/03/2005 30/06/2005 30/09/2005 Customer loans (in EUR bn) 205 214 223 232 Doubtful loans (in EUR bn) 10.3 10.3 10.4 10.5 Doubtful loans/customer loans 5.0% 4.8% 4.7% 4.5% Provision
Slide 54: Balance sheet
SUPPLEMENT - SOCIETE GENERALE GROUP Balance sheet at 01/01/2005 at 30/09/2005 ASSETS In EUR bn Cash, due from central banks 5.2 7.4 Financial assets at fair value through P&L 283.5 419.0 Hedging derivatives 2.8 3.6 Available-for-sale financial assets 67.6 70.0 Due from banks 53.4 49.1 Customer loans
Slide 55: Determination of number of shares used to calculate EPS and book value per share
TECHNICAL SUPPLEMENT Determination of number of shares used to calculate EPS and book value per share Average number of shares (thousands) 2003 2004 9M 05 Existing shares 434,823 441,157 438,723 Deductions Treasury shares and share buybacks 16,360 20,155 16,500 Shares allocated to cover stock option
Slide 56: Economic and market environment
TECHNICAL SUPPLEMENT Economic and market environment Q3 04 Q2 05 Q3 05 Interest rates (quarterly average) (%) 10-year French government bond 4.17 3.37 3.21 3-month Euribor 2.12 2.12 2.13 Indices (end of period) CAC 40 3,641 4,229 4,600 Euro Stoxx 50 2,726 3,182 3,429 Nasdaq 1,897 2,057 2,152 Currenc
Slide 57: Investor Relations
Investor Relations Didier VALET, Sayuri AOKI, Pascale MASSOUD-AYOUB, Julien VANNIER Tel.: +33 (0) 1 42 14 47 72 E-mail: investor.relations@socgen.com - Internet: www.ir.socgen.com 17 / 11 / 2005 THIRD QUARTER AND 9 MONTH 2005 RESULTS 57