Societe Generale S.a. Class A · EURONEXT:GLE
Societe Generale S.a. Class A — Debt Investor Presentation (September 2019)
46 slides from Societe Generale S.a. Class A's debt investor presentation, September 2019
Slide 1: SG SFH & SG SCF Societe Generale Covered Bond Programs
SEPTEMBER 2019 SG SFH & SG SCF SOCIETE GENERALE COVERED BOND PROGRAMS INVESTOR PRESENTATION
Slide 2: Contents
CONTENTS 1. SOCIÉTÉ GÉNÉRALE GROUP 2. SG SFH & SG SCF STRUCTURE OVERVIEW 3. SG SFH COVERED BOND PROGRAM 4. SG SCF COVERED BOND PROGRAM 5. APPENDICES 2
Slide 3: Société Générale Group
1 SOCIÉTÉ GÉNÉRALE GROUP Group Results
Slide 4: Q2 and H1 Key Highlights
SOCIÉTÉ GÉNÉRALE GROUP Q2 19 AND H1 19 Key Highlights WELL ON TRACK TO RESILIENT PROFITABILITY, STRONG DELIVER CAPITAL RESTRUCTURING ON RISK PROFILE TRAJECTORY TRACK EUR 1.6bn cost program on track: ca.35% of Low cost of risk (23bp) in H1 19 CET1 up at 12.0% cost savings achieved >200 bp buffer over
Slide 5: Q2 and H1 Group Performance
SOCIÉTÉ GÉNÉRALE GROUP Q2 19 AND H1 19 Group Performance INSURANCE AND INTERNATIONAL GLOBAL BANKING AND CORPORATE FRENCH RETAIL BANKING FINANCIAL RETAIL BANKING INVESTOR SOLUTIONS CENTRE SERVICES Revenues Revenues Revenues Revenues EUR +38m +2.1%, excl. PEL/CEL vs. Q2 18 +7.0%* vs. Q2 18 +2.9%* vs.
Slide 6: Low cost of risk, strong risk profile
SOCIÉTÉ GÉNÉRALE GROUP Low cost of risk, Strong risk profile _Cost of risk(1) (in bp) H1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 H1 19 29 22 21 25 23 16 14 NON-PERFORMING LOAN RATIO GROUP JUNE 15 JUNE 16 JUNE 17 JUNE 18 JUNE 19 5.7% 30 5.1% 24 25 27 23 FRENCH RETAIL BANKING 20 20 4.6% 3.9% 3.4% INTERNATION
Slide 7: Balance sheet ratios above regulatory requirements
SOCIÉTÉ GÉNÉRALE GROUP Balance sheet ratios above regulatory requirements 2019 requirements(2),(3) End-Q2 19 ratios Target 2020 CET1 9.9% 12.0% 12% Total Capital 13.4% 17.9% Leverage ratio 3.5% 4.3% 4% - 4.5% 19.5% (% RWA) 25.8% (% RWA) TLAC 6.0% (% leverage) 7.5% (% leverage) MREL(1) 8% (% TLOF) >
Slide 8: 2019 Group long term funding programme
SOCIÉTÉ GÉNÉRALE GROUP 2019 Group long term funding programme Parent company 2019 funding programme similar to 2018 _2019 Expected funding programme(1) c. EUR 17bn of vanilla debt, well balanced across the different debt formats Senior Preferred and Secured debt ~EUR 6/8 bn Annual structured notes i
Slide 9: SG SFH & SG SCF Structure Overview
2 SG SFH & SG SCF STRUCTURE OVERVIEW
Slide 10: Two issuers under a strict regulation with similar structure
SG SFH & SG SCF STRUCTURE OVERVIEW Two issuers under a strict regulation with similar structure Many points in common Legal framework Collateral strategy Organization & governance Strict monitoring Transparency • Bankruptcy remote • Independent Cover from SG Pool Monitor • Originated by SG • License
Slide 11: A very strong legal and regulatory framework for investors' protection
SG SFH & SG SCF STRUCTURE OVERVIEW A very strong legal and regulatory framework for a highest level of investors’ protection Supervision Exclusive legal purpose Direct supervision by the Business purpose limited by law to the European Central Bank sole refinancing of eligible assets Monitoring
Slide 12: A preferential regulatory treatment of covered bonds for bank investors
SG SFH & SG SCF STRUCTURE OVERVIEW A preferential regulatory treatment of covered bonds for bank investors SG SFH (Art 129.1.e) Residential loans all fully guaranteed by Crédit Logement (Aa3/AA for Moody’s/DBRS) Loan to Income (LTI) lower or equal to 33% 10% Risk Weight No mortgage liens on th
Slide 13: A comprehensive and simple structure compliant with rating agencies' criteria
SG SFH & SG SCF STRUCTURE OVERVIEW A comprehensive and simple structure compliant with rating agencies’ criteria Servicers Servicer Société Générale (Borrower) Cover Pool SG SFH Cover Pool SG SCF (French Home loans (Public sector loans) including Positive Impact home loans) Principal Collateralised
Slide 14: Risks are rigorously managed and strongly mitigated
SG SFH & SG SCF STRUCTURE OVERVIEW Risks are rigorously managed and strongly mitigated RISKS FACTORS STRUCTURAL MITIGANTS DUAL RECOURSE COUNTERPARTY RISK MINIMUM RATING REQUIREMENTS OVER-COLLATERALIZATION COMMINGLING RISK COLLECTION LOSS RESERVE ALL RISKS INTEREST RESERVE * INTEREST RATE RISK HEDGIN
Slide 15: A dedicated governance with a strong control environment
SG SFH & SG SCF STRUCTURE OVERVIEW A dedicated governance with a strong control environment CHIEF EXECUTIVE OFFICER & BOARD OF DIRECTORS CHIEF FINANCIAL OFFICER DEPUTY CHIEF EXECUTIVE OFFICER NOMINATION COMMITTEE AUDIT COMMITTEE RISK COMMITTEE • Proposals for Directors’ • Overall risk monitoring app
Slide 16: SG SFH Covered Bond Program
5 SG SFH COVERED BOND PROGRAM SOCIETE GENERALE
Slide 17: A collateral investment policy in line with SG Group business strategy
SG SFH COVERED BOND PROGRAM A collateral investment policy in line with SG Group business strategy • SG SFH is the main refinancing entity for the French Home Loan business originated by the SG Group French Strategic integration Retail Network in the Group • Provides lower cost of funding to increas
Slide 18: Positive Impact Covered Bond Framework & Issuance
SG SFH COVERED BOND PROGRAM Integrating SG Group environmental strategy : Positive Impact Covered Bond Framework & Issuance POSITIVE IMPACT COVERED BOND FRAMEWORK USE OF PROCEEDS & TARGET IMPACT SELECTION OF POSITIVE IMPACT MORTGAGES Use of proceeds: to refinance mortgages on residential Criteri
Slide 19: First Covered Bond issuance on a Public Blockchain
SG SFH COVERED BOND PROGRAM First Covered Bond issuance on a Public Blockchain On 18th of April the Financial Direction of Groupe Société Générale, using Société Générale FORGE plateform, issued a real bond solely registered on a public blockchain. Client : Financial Direction of Groupe Société Géné
Slide 20: Strategic integration in SG Group: diversified home loans origination
SG SFH COVERED BOND PROGRAM Strategic integration in SG Group : diversified home loans origination & sources of collateral THREE STRONG AND COMPLEMENTARY BRANDS REFINANCED THROUGH SG SFH A solid universal bank at the 8 regional banks N°1 online bank in France service of the economy Leading player of
Slide 21: The French home loan market: attractive and resilient (1/2)
SG SFH COVERED BOND PROGRAM The French home loan market : an attractive and resilient market (1/2) MARKET CONTEXT French home loan market • 64% ownership rate (among the lowest in EU) • 31.4% of French households bearing residential loans in 2018 • Resilient Home prices (very limited impact during f
Slide 22: The French home loan market: attractive and resilient (2/2)
SG SFH COVERED BOND PROGRAM The French home loan market : an attractive and resilient market (2/2) HOME LOANS MAIN CHARACTERISTICS A PRIME HOME LOAN MARKET • Loan amounts are based on borrower’s capacity to repay • Loan purpose : a stable distribution between new & old properties • Security type : g
Slide 23: Concentration on core competencies: French home loan business
SG SFH COVERED BOND PROGRAM Concentration on core competencies : Société Générale French home loan business SG French retail outstanding loans breakdown SG French home loans business Breakdown as of end of 2018 Loan Purpose Type Annual SG French retail home loans origination – Breakdown by type of s
Slide 24: Benefits of Crédit Logement's guarantee (1/2)
SG SFH COVERED BOND PROGRAM The French home loan market : Benefits of Credit Logement’s guarantee(1/2) CREDIT LOGEMENT PERFORMANCE •“Guaranteed loans” market share in home loan market : in 2018, guaranteed loans represented 60,1%(*) of the overall residential loans granted in France, an increase of
Slide 25: Benefits of Crédit Logement's guarantee (2/2)
SG SFH COVERED BOND PROGRAM The French home loan market : Benefits of Credit Logement’s guarantee(2/2) OTHER CREDIT LOGEMENT CREDENTIALS • Crédit Logement is backed by all larger French banks: - Long term rating : Aa3 (stable outlook) by Moody’s & Aa low (stable outlook) by DBRS - Shareholders are f
Slide 26: A high quality and well diversified cover pool (1/3)
SG SFH COVERED BOND PROGRAM A high quality and well diversified cover pool (1/3) Geographical distribution As at 30 June 2019 100% prime French residential loans guaranteed Collateral by Crédit Logement Île-de- Pool Size € 39.3bn France 37.1% Number of borrowers 328,986 Number of loans 390,107 Avera
Slide 27: A high quality and well diversified cover pool (2/3)
SG SFH COVERED BOND PROGRAM A high quality and well diversified cover pool (2/3) Indexed LTV Distribution Loan purpose 20% 1% 1% 6% 15% Purchase Renovation 10% Construction Unknown 5% 92% 0% Seasoning Occupancy type 30% 25% Owner Occupied 17% 20% 4% Second home 15% 10% 79% Buy-to-let/Non 5% owner oc
Slide 28: A high quality and well diversified cover pool (3/3)
SG SFH COVERED BOND PROGRAM A high quality and well diversified cover pool (3/3) 100% Loan Purpose Rhône-Alpes Provence-Alpes-Côte-d'Azur Main regional Distribution 80% Poitou-Charentes SG Picardie 60% Crédit du Nord Pays-de-la-Loire DOM-ROM 40% BFCOI Nord-Pas-de-Calais Boursorama Midi-Pyrénées 20%
Slide 29: A dynamic, projective and cautious ALM monitoring
SG SFH COVERED BOND PROGRAM A dynamic, projective and cautious ALM monitoring • Covered bonds fully backed up to their final maturities • The structure has been set up to take into account best ALM practice - Tight projective monitoring of ALM metrics - Definition and strict monitoring of a coverage
Slide 30: Funding strategy: balanced mix between Group funding needs and issuance capacity
SG SFH COVERED BOND PROGRAM Funding strategy : well balanced mix between Group funding needs and issuance capacity • Last issuance in July 2019 : Green Bond of EUR 1,000M 10 years maturity in soft bullet format • The SG group funding strategy allocated around EUR 2.5bn to both SG covered bonds progr
Slide 31: SG SCF Covered Bond Program
4, SG SCF COVERED BOND PROGRAM SOCIETE GENERALE
Slide 32: A collateral investment policy in line with SG Group business strategy
SG SCF COVERED BOND PROGRAM A collateral investment policy in line with SG Group business strategy • SG SCF is the main refinancing entity for the Public Sector financing originated by the SG Group French Retail Strategic integration Network and the Investment Bank in the Group • Provides lower cost
Slide 33: Financing new innovative projects supporting economic growth
SG SCF COVERED BOND PROGRAM Financing new innovative projects supporting economic growth and developement CULTURE NICE STADIUM GRENOBLE UNIVERSITY SPORT MUCEM - MARSEILLE HYBRID BUS – DIJON INFRASTRUCTURES PHILHARMONIE DE PARIS VELODROME – SAINT QUENTIN EN Y. 33
Slide 34: Contributing to financing the French public economy sector
SG SCF COVERED BOND PROGRAM Contributing to financing the French public economy sector LOCAL GOVERNEMENTS SUPPORTING INVESTMENTS IN TRANSPORTATION, ENERGY AND RESOURCES SECTOR LOCAL PUBLIC ENTITIES CONTRIBUTING TO CONSTRUCTION PROJECTS FOR ALL CITIZENS SOCIAL HOUSING COMMITTED FOR THE DEVELOPMENT AN
Slide 35: Contributing to developing export finance transactions
SG SCF COVERED BOND PROGRAM Contributing to developing export finance transactions Australia (EFIC) Austria (OeKB) * Belgium (Ducroire) * Transport Canada (EDC) China (SINOSURE) Czech Republic (EGAP) ** Denmark (EKF) * Cruise 75 staff members Finland (Finnvera Oyj) * France (BpiFrance AE) * Germany
Slide 36: A high quality and well diversified cover pool (1/2)
SG SCF COVERED BOND PROGRAM A high quality and well diversified cover pool (1/2) As at 30 June 2019 Geographic distribution in France Exposures to / or guaranteed by eligible public (85% of the cover pool) Collateral entities Pool Size € 11.8bn Hauts-de- France 8.7% Number of borrowers 1,507 Île-de-
Slide 37: A high quality and well diversified cover pool (2/2)
SG SCF COVERED BOND PROGRAM A high quality and well diversified cover pool (2/2) Exposure Type Exposure Ratings (SG internal rating in rating agencies equivalent) Export Credit Agencies Type Geographic Exposure 37
Slide 38: A dynamic, projective and cautious ALM monitoring
SG SCF COVERED BOND PROGRAM A dynamic, projective and cautious ALM monitoring • Covered bonds fully backed up to their final maturities • The structure has been set up to take into account best ALM practice - Tight projective monitoring of ALM metrics - Definition and strict monitoring of a coverage
Slide 39: Funding strategy: balanced mix between Group funding needs and issuance capacity
SG SCF COVERED BOND PROGRAM Funding strategy : well balanced mix between Group funding needs and issuance capacity • Last Club Deal issuance in August 2015 : EUR 500M 18 years maturity in soft bullet format • Issuance capacity of EUR 2.4bn as of 31st August 2019 39
Slide 40: Appendices
5 APPENDICES SOCIETE GENERALE
Slide 41: SG SFH Cover Pool: Eligibility Criteria
SG SFH COVER POOL : ELIGIBILITY CRITERIA • Loans granted in Euros • Loans governed by French law • The financed property is a residential property, located in France • Loans are secured by a guarantee granted by Crédit Logement • At the date on which the loan is selected to enter into the pool: SG S
Slide 42: SG SCF Cover Pool: Eligibility Criteria
SG SCF COVER POOL : ELIGIBILITY CRITERIA • Loans to or guaranteed by public entities : - Central or local governments - Central banks - Public sector entities - Supranational institutions • Minimum exposure rating : - BBB-/Baa3 and/or internal rating equivalent (within European Union) SG SCF main -
Slide 43: Crédit Logement Mechanisms (1/2)
CREDIT LOGEMENT MECHANISMS (1/2) BUSINESS MODEL • Crédit Logement provides guarantees of home loans in case of non repayment by borrowers, as an alternative to the traditional registration of a mortgage : - Each home loan granted by SG and guaranteed by Crédit Logement has to satisfy both Crédit Log
Slide 44: Crédit Logement Mechanisms (2/2)
CREDIT LOGEMENT MECHANISMS (2/2) MUTUAL GUARANTEE FUND PROCESSES • The guarantee provided by Crédit Logement GRANTING PROCESS is based on the contribution of each borrower to the Mutual Guarantee Fund (MGF) which is a • When receiving a guarantee request, in mostly cases through electronic transmiss
Slide 45: Publications and Contacts
PUBLICATIONS AND CONTACTS PUBLICATIONS Link to the SOCIETE GENERALE’s website : https://www.societegenerale.com/en/measuring-our-performance/investors/debt-investors Link to the SOCIETE GENERALE prospectus’ website : http://prospectus.socgen.com/ Link to the Covered Bond Label’s website : https://ww
Slide 46: Disclaimer
DISCLAIMER This presentation contains forward-looking statements relating to the targets and strategies of the Société Générale Group. These forward-looking statements are based on a series of assumptions, both general and specific, in particular the application of accounting principles and methods
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