Societe Generale S.a. Class A · EURONEXT:GLE
Societe Generale S.a. Class A — Debt Investor Presentation (October 2021)
49 slides from Societe Generale S.a. Class A's debt investor presentation, October 2021
Slide 1: SG SFH & SG SCF Société Générale Covered Bond Programs Investor Presentation
OCTOBER 2021 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
SOCIÉTÉ GÉNÉRALE GROUP Group Results
Slide 4: Q2 21: Excellent performance across all businesses
Q2 21 : EXCELLENT PERFORMANCE ACROSS ALL BUSINESSES DOUBLE-DIGIT IMPROVING ATTRACTIVE EARNINGS GROWTH 2021 OUTLOOK SHAREHOLDER RETURN Revenues +18.2% (+20.5%*) Expected revenue growth Strong capital position at vs. Q2 20 across all businesses 13.4%(2) well above target thanks to sustained organic ca
Slide 5: Q2 21: Strong earnings growth
Q2 21: STRONG EARNINGS GROWTH POSITIVE JAWS GROSS OPERATING COST/INCOME ACROSS BUSINESSES INCOME RATIO _Variation of revenues and underlying costs(1) Q2 21/Q2 20 _Underlying Gross Operating Income (1) (EURm) _Underlying cost/income ratio (1) +55% 2,036 +18% 75% 1,312 67% +6% Revenues Costs Q2 20 Q2
Slide 6: Pursued cost discipline
PURSUED COST DISCIPLINE H1 21 STRONG H1 21 COSTS POSITIVE JAWS COST/INCOME _Underlying costs (EURm)(1) _Variation of revenues and underlying costs (1) _Underlying cost/income (1) H1 21/H1 20 H1 21/H1 20 +1.7% +44 -33 8,322 +126 +19.5% 78% 8,185 67% +1.7% H1 20 Net cost IFRIC 21 M&A H1 21 Revenues Co
Slide 7: Low cost of risk across all businesses
LOW COST OF RISK ACROSS ALL BUSINESSES _Cost of risk(1) (in bp) H1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 H1 21 NON-PERFORMING LOANS RATIO(2) 81 97 JUN 18 JUN 19 JUN 20 MAR 21 JUN 21 GROUP 40 54 21 16 11 3.7% 85 3.3% 68 3.2% 3.2% FRENCH RETAIL BANKING 24 50 3.1% 23 1 12 125 INTERNATIONAL RETAIL 96 102 89
Slide 8: Regulatory ratios comfortably above minimum requirements
REGULATORY RATIOS COMFORTABLY ABOVE MINIMUM REQUIREMENTS Requirements (1) End-Q2 21 ratios End-Q2 21 ratios Including IFRS9 phasing Fully-loaded CET1 9.02% (2) 13.4% 13.2% Total Capital 13.3% 19.2% 19.0% Leverage ratio 3.1% 4.6%(5) 4.5%(5) 19.5% (% RWA) (3) 30.5% (% RWA) 30.3% (% RWA) TLAC 6.0% (% l
Slide 9: Second Quarter and First Half 2021 Results
SECOND QUARTER AND FIRST HALF 2021 RESULTS 3 AUGUST 2021 9 9
Slide 10: French Retail Banking results
FRENCH RETAIL BANKING RESULTS REVENUES +8.0%(2) vs. Q2 20 Revenue growth expected in 2021 I n E URm Q2 2 1 Q2 2 0 C ha nge H1 21 H1 20 Change Net banking income 1,906 1,754 +8.7% 3,753 3,634 +3.3% Net interest margin +1.6%(2) vs. Q2 20, still Net banking income excl. PEL/CEL 1,889 1,749 +8.0% 3,748
Slide 11: International Retail Banking and Financial Services results
INTERNATIONAL RETAIL BANKING AND FINANCIAL SERVICES RESULTS REVENUES +17.0%* vs. Q2 20 I n E URm Q2 2 1 Q2 2 0 C hang e H1 21 H1 20 Change International Retail Banking revenues Net banking income 1,989 1,750 +13.7% +17.0%* 3,851 3,714 +3.7% +8.2%* +7.9%* vs. Q2 20 Operating expenses (1,011) (979) +3
Slide 12: Global Banking and Investor Solutions results
GLOBAL BANKING AND INVESTOR SOLUTIONS RESULTS I n EURm Q2 2 1 Q2 2 0 Change H 1 21 H1 20 C hang e Net banking income 2,340 1,880 +24.5% +27.7%* 4,849 3,507 +38.3% +42.8%* REVENUES UP +28%* vs. Q2 20, driven by Operating expenses (1,648) (1,570) +5.0% +6.9%* (3,699) (3,547) +4.3% +6.3%* good momentum
Slide 13: SG SFH & SG SCF Structure Overview
SG SFH & SG SCF STRUCTURE OVERVIEW
Slide 14: 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 15: A very strong legal and regulatory framework for investor 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 16: 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 17: Structure overview and governance
STRUCTURE OVERVIEW AND GOVERNANCE Structure Overview 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 and loans interest Société Générale Collection Loss Reserve
Slide 18: Risks and structural mitigants
STRUCTURE OVERVIEW AND GOVERNANCE Risks and Structural Mitigants RISKS FACTORS STRUCTURAL MITIGANTS DUAL RECOURSE COUNTERPARTY RISK MINIMUM RATING REQUIREMENTS OVER-COLLATERALIZATION INTEREST RESERVE * INTEREST RATE RISK HEDGING STRATEGY (ASSET & LIABILITY SWAPS) ** ALL RISKS SOFT BULLET LIQUIDITY R
Slide 19: 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 20: SG SFH Covered Bond Program
3 SG SFH COVERED BOND PROGRAM SOCIETE GENERALE
Slide 21: Collateral investment policy in line with SG Group 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 22: 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 23: Diversified home loans origination & sources of collateral
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 24: The French home loan market (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 • 65% ownership rate (5% below EU average) allowing further growth of the market 300 Housing loans origination (France, EUR Billions) House price index (France, b
Slide 25: The French home loan market (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 26: Société Générale French home loan business
SG SFH COVERED BOND PROGRAM Concentration on core competencies : Société Générale French home loan business SG loans customer base : over-representation of public sector SG loans structure : breakdown by loan purpose 63% Public sector 24% 61% 15% Private executive - master's degree 32% 38% Employees
Slide 27: 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 2020, guaranteed loans represented 63,8%(*) of the overall residential loans granted in France, an increase of
Slide 28: 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 29: 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) Main regional distribution As at 30 June 2021 100% prime French residential loans guaranteed by Collateral Crédit Logement Pool Size € 43,1 bn 36,9% Number of borrowers 314,325 Number of loans 350,976 Average loan balan
Slide 30: 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) 30
Slide 31: 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) 31
Slide 32: 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 33: Funding strategy
SG SFH COVERED BOND PROGRAM Funding strategy : well balanced mix between Group funding needs and issuance capacity • Last public benchmark issuances in February 2021 : 750 M€, 10 years maturity in soft bullet format • Strong issuance capacity of EUR 26,3bn as of 30 of September 2021 As of 30/09/2021
Slide 34: SG SCF Covered Bond Program
4, SG SCF COVERED BOND PROGRAM SOCIETE GENERALE
Slide 35: Collateral investment policy in line with SG Group 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 36: Financing new innovative projects supporting economic growth
SG SCF COVERED BOND PROGRAM Financing new innovative projects supporting economic growth and developement CULTURE LORRAINE UNIVERSITY GRENOBLE UNIVERSITY SPORT MUCEM - MARSEILLE HYBRID BUS – DIJON INFRASTRUCTURES PHILHARMONIE DE PARIS VELODROME – SAINT QUENTIN EN Y. 36
Slide 37: 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 38: Contributing to promoting Export & Development finance
SG SCF COVERED BOND PROGRAM Contributing to promoting Export & Development finance Australia (EFIC) Austria (OeKB) * SG CIB is a global leader in delivering export and import financial solutions together with Belgium (ONDD) * Mobility development financing Canada (EDC) China (SINOSURE) Czech Republi
Slide 39: 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) Main regional distribution in France As at 30 June 2021 Exposures to / or guaranteed by eligible public Collateral entities Pool Size € 14.6 bn Number of borrowers 1,438 15.8% Number of loans 4,043 Origination by SG Fre
Slide 40: 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) 40
Slide 41: 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 42: Funding strategy
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 8.85 bn as of 30 of September 2021 As of 30/09/2021 42
Slide 43: Appendices
5 APPENDICES SOCIETE GENERALE
Slide 44: 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 45: 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 46: 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 47: 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 48: 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 49: 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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