Societe Generale S.A. Class A · EURONEXT:GLE
Societe Generale S.A. Class A — Debt Investor Presentation (September 2017)
56 slides from Societe Generale S.A. Class A's debt investor presentation, Sep 5, 2017
Slide 1: Presentation to Debt Investors, 2nd Quarter and 1st Half 2017
S O C I E T E G E N E R AL E PRESE NTAT IO N TO DEBT INVESTO R S 2 ND QUART ER AND 1 ST HALF 2017 SEPTEMB ER 20 17
Slide 2: Disclaimer
DISCLAIMER The information contained in this document (the “Information”) has been prepared by the Societe Generale Group (the “Group”) solely for informational purposes. The Information is proprietary to the Group and confidential. This presentation and its content may not be reproduced or distribu
Slide 3: Introduction
INTRODUCTION SOCIETE GENERALE BUILDING TEAM SPIRIT
Slide 4: Societe Generale at a Glance: An Integrated Banking Model
1 – INTRODUCTION SOCIETE GENERALE AT A GLANCE: AN INTEGRATED BANKING MODEL Financial Services to Corporates – Insurance International Retail Banking – Financial Services to Corporates – Insurance International Retail Banking FRENCH RETAIL BANKING INTERNATIONAL RETAIL BANKING AND GLOBAL BANKING AND I
Slide 5: Q2 17: Solid Results
1 – I NTRO DUCT I O N Q2 17: SOLID RESULTS Resilient revenues of Core Businesses Costs under control Further decrease in cost of risk 6 470 6 389 NBI(1) 38 (EUR m) +1.2% 44 Core -0.5% (Bp(2)) Businesses 15 6 426 6 392 4.1 4.2 464 -59% Corporate Centre (EUR bn) 191 (EUR m) -3 Q2 16 Q2 17 Q2 16 Q2 17
Slide 6: Group
2 GROUP PRESENTATION TO DEBT INVESTORS Feb. 2017 6
Slide 7: Leveraging the Growth Potential of a Well-Balanced Business Model
1 – I NTRO DUCT I O N LEVERAGING THE GROWTH POTENTIAL OF A WELL-BALANCED BUSINESS MODEL H1 17 figures Net Banking Income Group Net Income RONE French Retail Banking (EUR m) (EUR m) Good commercial momentum in negative rate 4,194 4,107 environment Development of fee business 738 677 13.0% Transformat
Slide 8: Low Cost of Risk in Q2 17
2 – G RO UP LOW COST OF RISK IN Q2 17 Cost of Risk(1) (in bp) French Retail Banking 33 36 39 31 29 Stable cost of risk Improving French economy Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 International Retail Banking and Financial Services 64 67 Cost of risk for Q2 17 at a historical low 53 35 14 Very few new def
Slide 9: Q2 17: Solid Results
2 – G RO UP Q2 17 : SOLID RESULTS In EUR m Q2 17 Q2 16 Change H1 17 H1 16 Change Good operating performance Net banking income 5,199 6,984 -25.6% 11,673 13,159 -11.3% Resilient NBI from Businesses Net b anking income(1) 5,426 7,195 -24.6% 11,878 13,225 -10.2% Corporate Centre impacted by exceptional
Slide 10: Capital and Liquidity
3 CAPITAL AND LIQUIDITY PRESENTATION TO DEBT INVESTORS Feb. 2017 10
Slide 11: Balance Sheet Ratios Comfortably Above Regulatory Requirements
3 – CAP I T AL AND L I Q UI DI TY BALANCE SHEET RATIOS COMFORTABLY ABOVE REGULATORY REQUIREMENTS End-Q2 17 End-Q2 17 2017 2019 Phased-in Fully-loaded requirements requirements(4) ratios(3) ratios CET1 7.8%(2) 11.9% 9.5%(2) 11.7% Total Capital 11.3% 17.9% 13.0% 17.7% Leverage ratio NA 4.2% 3.0%(4) 4.
Slide 12: Capital Ratios Well Above Regulatory Requirements
2 3 – G CARO P IUP TAL AND LIQUIDITY CAPITAL RATIOS WELL ABOVE REGULATORY REQUIREMENTS Change in Fully Loaded CET1(1) ratio (in bp) CET1(1) at 11.7%, up +7bp vs. Q1 17 Hybrid coupons -4bp -16bp Capital position already in line with end-2017 target -11bp +12bp -9bp +34bp [11.5%-12%] 11.7% Total Capit
Slide 13: A New TLAC Eligible Senior Debt with High Level of Protection
3 – C API TAL AND L I Q UI DI T Y A NEW TLAC ELIGIBLE SENIOR DEBT WITH HIGH LEVEL OF PROTECTION Resolution Framework LIQUIDATION PONV RESOLUTION EUR 62.0bn Covered deposits Covered deposits / Excluded liabilities (OpCo) / Deposit Deposit Guarantee Preferred Guarantee Schemes Schemes Senior Senior El
Slide 14: Diversified Access to Long Term Funding Sources
3 – CAPI T AL AND LI Q UI DI TY DIVERSIFIED ACCESS TO LONG TERM FUNDING SOURCES 2017 Long Term Funding Issuance 19.07.2017 Parent company 2017 funding programme EUR 24.1bn (Including EUR 17.1bn of structured notes) 4% Senior structured issues Completed at 75% at 19th July 2017 (EUR 18.1bn, including
Slide 15: High Level of Liquidity Reserve
3 – CAPI T AL AND LI Q UI DI TY HIGH LEVEL OF LIQUIDITY RESERVE Liquid asset buffer (in EUR bn) Liquid asset buffer of EUR 158bn at end-June 17 175 156 168 157 158 High quality of the liquidity reserve: EUR 61bn of HQLA assets at the end-June 2017 and EUR 87bn of Central bank deposits Excluding mand
Slide 16: Business Results
4 BUSINESS RESULTS SOCIETE GENERALE BUILDING TEAM SPIRIT
Slide 17: Commercial Dynamism Driven by Growth Drivers
4 – BUSI NESS RESULTS - FRENCH RETAI L BANKI NG COMMERCIAL DYNAMISM DRIVEN BY GROWTH DRIVERS Robust client acquisition Solid growth in loan production (in EUR bn) +41% vs. Q2 16 8.0 > 1,400 new business client 6.3 6.4 5.4 5.0 5.9 6.0 4.3 relationships in Q2 17 +4.4% vs. Q2 16 3.6 Q2 15 Q3 15 Q4 15 Q
Slide 18: Strong Volume Growth
4 – BUSI NESS RESULTS - I NT ERNATI O NAL RET AI L BANKI NG AND FI NANCI AL SERVI CES STRONG VOLUME GROWTH International Retail Banking Financial Services to Corporates and Insurance Loans and Deposits Personal Protection, Property Financial Services to Corporates Europe: loan growth in (in EUR bn –
Slide 19: Business Model Structurally Changed Over the Past Three Years
4 – BUSI NESS RESULTS – G LO BAL BANKI NG AND I NVESTO R SO LUTI O NS BUSINESS MODEL STRUCTURALLY CHANGED OVER THE PAST THREE YEARS Quarterly Volatility of CIB Revenues(1) (Q1 14 – Q1 17) Demonstrated less volatile and growing revenues … Increase in flow revenues enhanced by the acquisition of Socie
Slide 20: Quarterly Revenues Impacted by Contrasted Markets
4 – BUSI NESS RESULTS – G LO BAL BANKI NG AND I NVESTO R SO LUTI O NS QUARTERLY REVENUES IMPACTED BY CONTRASTED MARKETS Net Banking Income (in EUR m) Global Markets and Investor Services: NBI -3.1% vs. Q2 16 2,435 2,292 2,225 2,484 2,331 Total Financing and Advisory: NBI -11.0% vs. high Q2 16, Equit
Slide 21: Conclusion
5 CONCLUSION PRESENTATION TO DEBT INVESTORS Feb. 2017 21
Slide 22: Q2 17: Confirmed Capacity to Deliver Quarterly Performance
4 5 – CO C O NCLUSI NCLUSION Q2 17: CONFIRMED CAPACITY TO DELIVER QUARTERLY PERFORMANCE SOLID OPERATING PERFORMANCE International Retail Banking and Financial Services, the main contributor TRANSFORMATION ON TRACK Ongoing transformation of French Retail Banking Business model structurally changed in
Slide 23: Supplement
6 SUPPLEMENT PRESENTATION TO DEBT INVESTORS Feb. 2017 23
Slide 24: Credit Ratings Overview
4 6 – RAT S U PIPNG L ESM E N T – R A T I N G S CREDIT RATINGS OVERVIEW Key strengths reflected in Societe Generale’s ratings are its solid DBRS franchises, sound capital and liquidity and improving profitability. Long-term/Short-term counterparty AA/R-1(high) Senior Long-term debt A (high) (Stable)
Slide 25: Key Figures
5 6 – KEY S U P PFI LG URES EM ENT – SOCIETE GENERALE GROUP KEY FIGURES Change H1 17 vs. H1 Q2 17 Change Q2 vs. Q1 Change Q2 vs. Q2 H1 17 In EUR m 16 Net banking income 5,199 -19.7% -25.6% 11,673 -11.3% Operating expenses (4,169) -10.2% +1.2% (8,813) +4.9% Net cost of risk 259 n/s n/s (368) n/s Repo
Slide 26: Non Economic and Exceptional Items
6 – SUPPLEMENT - SO CI ETE G ENERALE G RO UP NON ECONOMIC AND EXCEPTIONAL ITEMS The table below presents the transition from accounting data to underlying data. It includes non-economic items, exceptional items and the effect of the IFRIC 21 adjustment. In EUR m Q2 17 Q2 16 Change H1 17 H1 16 Change
Slide 27: Quarterly Income Statement by Core Business
6 – SUPPLEMENT - SO CI ETE G ENERALE G RO UP QUARTERLY INCOME STATEMENT BY CORE BUSINESS International Retail Banking and Global Banking and Investor French Retail Banking Corporate Centre Group Financial Services Solutions In EUR m Q2 17 Q2 16 Q2 17 Q2 16 Q2 17 Q2 16 Q2 17 Q2 16 Q2 17 Q2 16 Net ban
Slide 28: Half Year Income Statement by Core Business
6 – SUPPLEMENT - SO CI ETE G ENERALE G RO UP HALF YEAR INCOME STATEMENT BY CORE BUSINESS International Retail Banking and Global Banking and Investor French Retail Banking Corporate Centre Group Financial Services Solutions In EUR m H1 17 H1 16 H1 17 H1 16 H1 17 H1 16 H1 17 H1 16 H1 17 H1 16 Net ban
Slide 29: CRR/CRD4 Prudential Capital Ratios
6 – SUPPLEMENT - SO CI ETE G ENERALE G RO UP CRR/CRD4 PRUDENTIAL CAPITAL RATIOS Fully loaded common Equity Tier 1, Tier 1 and Total Capital In EUR bn 30/06/2017 31/12/2016 Shareholder equity Group share 60.1 62.0 Deeply subordinated notes* (9.3) (10.7) Undated subordinated notes* (0.3) (0.3) Dividen
Slide 30: CRR Leverage Ratio
6 – SUPPLEMENT - SO CI ETE G ENERALE G RO UP CRR LEVERAGE RATIO CRR fully loaded leverage ratio(1) In EUR bn 30/06/2017 31/12/2016 Tier 1 Capital 50.5 51.5 Total prudential balance sheet (2) 1,217 1,270 Adjustement related to derivative exposures (88) (112) Adjustement related to securities financin
Slide 31: Pillar 2 Latest Development Strengthening Already Large Capital Buffers
3 6 – CAPI S U P PTLAL E MAND E N T LI –Q S UI O CDI I ETY TE GENERALE GROUP PILLAR 2 LATEST DEVELOPMENT STRENGHTENING ALREADY LARGE CAPITAL BUFFERS Phased-in CET1 11.9% Fully-loaded CET1 11.7% Pillar 2 MDA Guidance 0.02% Countercyclical buffer: ~9.59%(1) 0.09% Buffer ca. -400bp Pillar 2 1.00% G-SIB
Slide 32: Long Term Funding Programme
6 – SUPPLEMENT S U P P L E M E N T -– CAPI S O C ITAL E T EAND G E NLI ER QAUI LEDI G TYROUP LONG TERM FUNDING PROGRAMME Q2 17 Landmark Issuance AUD 500M 10Y Bullet Tier 2 EUR 1bn 7Y FRN Dual tranche JPY 37.6bn 5Y & JPY 42.4bn 10Y EUR 750M 8Y Bullet & AUD 150M TAP Senior Non-Preferred Senior Non-Pre
Slide 33: Risk-Weighted Assets (CRR/CRD 4, in EUR bn)
6 – SUPPLEMENT - RI SK MANAG EMENT RISK-WEIGHTED ASSETS* (CRR/CRD 4, IN EUR BN) 97.8 97.2 98.0 108.6 113.8 112.5 133.3 128.9 126.9 355.1 353.8 351.0 Total 28.4 Operational 29.3 7.0 32.1 44.1 44.4 Market 7.6 48.7 7.6 0.0 0.0 Credit 0.1 17.4 17.8 17.2 4.8 4.8 5.4 16.7 0.1 0.0 0.0 17.5 16.9 106.8 104.8
Slide 34: Breakdown of SG Group Commitments by Sector at 30.06.2017
6 – SUP P L EMENT - RI SK MANA G E MENT BREAKDOWN OF SG GROUP COMMITMENTS BY SECTOR AT 30.06. 2017 EAD Corporate: Hotels & Catering Automobiles Machinery and equipment Construction 2% 2% 4% EUR 25bn* 4% Media 1% Transport equip. manuf. 2% Metals, minerals 4% Wholesale trade 8% Oil and gas 6% Retail
Slide 35: Geographic Breakdown of SG Group Commitments at 30.06.2017
6 – SUP P L EMENT - RI SK MANA G E MENT GEOGRAPHIC BREAKDOWN OF SG GROUP COMMITMENTS AT 30.06.2017 On-and off-balance sheet EAD* On-balance sheet EAD* All customers included: EUR 858bn All customers included: EUR 642bn Africa and Latin Africa and Asia-Pacific Middle East Latin Middle East America an
Slide 36: Change in Gross Book Outstandings
6 – SUP PL E MENT - RI S K MANA G E ME NT CHANGE IN GROSS BOOK OUTSTANDINGS* End of period in EUR bn 462.4 3 461.2 461.4 467.4 486.4 477.6 477.5 479.1 483.1 475.5 Total Global Banking and Investor Solutions 156.9 154.1 154.0 152.2 155.8 137.9 142.7 142.6 141.7 138.0 143.9 127.7 133.5 International R
Slide 37: Non Performing Loans
6 – SUP PL E MENT - RI S K MANA G E ME NT NON PERFORMING LOANS In EUR bn 30/06/2017 31/03/2017 30/06/2016 Gross book outstandings* 475.6 483.1 486.5 Doubtful loans* 22.0 23.3 24.7 Group Gross non performing loans ratio* 4.6% 4.8% 5.1% Specific provisions* 12.1 13.5 14.3 Portfolio-based provisions* 1
Slide 38: Change in Trading VaR and Stressed VaR
6 – SUP PL E MENT - RI S K MANA G E ME NT CHANGE IN TRADING VAR* AND STRESSED VAR Quarterly average of 1-day, 99% Trading VaR* (in EUR m) 23 30 32 Trading VaR* 19 20 20 21 21 22 8 6 Credit 8 8 12 11 8 7 8 18 Interest Rates 24 16 15 15 16 16 17 14 Equity 13 19 19 14 14 12 14 12 16 Forex 6 4 3 4 5 5 C
Slide 39: Diversified Exposure to Russia
6 – SUP P L EMENT - RI SK MANA G E MENT DIVERSIFIED EXPOSURE TO RUSSIA EAD as of Q2 17: EUR 14.9bn(1) Other ONSHORE Financial Institutions Corporates Corporates Tier 1(2) Sovereign 4% 3% 13% 28% Car loans 23% 36% Mortgages 50% Retail 23% 16% Consumer loans 4% OFFSHORE Other (1) EAD net of provisions
Slide 40: Change in Net Banking Income
6 – SUP PL E MENT - FRE NCH RE TA I L BA NKI NG CHANGE IN NET BANKING INCOME 2,100 2,042 2,043 2,177 2,056 2,052 NBI in EUR m 180 Financial Fees 177 174 210 223 Commissions: +5.0% vs. Q2 16 681 Service Commissions 671 672 690 667 123 Other 100 71 46 100 Business Customer 499 494 505 Interest Margin
Slide 41: Loans Outstanding
6 – SUP PL E MENT - FRE NCH RE TA I L BA NKI NG LOANS OUTSTANDING Average outstanding, net of provisions Change in EUR bn Q2 17 vs. Q2 16 183.0 183.8 184.0 184.2 185.1 +1.2% Individual Customers o.w.: 92.2 92.9 93.6 93.9 94.2 +2.3% Housing 10.9 10.9 11.1 Consumer credit 11.1 11.0 +1.4% and overdraft
Slide 42: International Retail Banking and Financial Services – Half Year Results
6 – SUP P L EMENT - I NTE RNA TI O NA L RE TA I L B ANK I NG A ND FI NANCI AL SE RVI CES INTERNATIONAL RETAIL BANKING AND FINANCIAL SERVICES – HALF YEAR RESULTS Financial Services to International Retail Banking Insurance Other Total Corporates In EUR m H1 17 H1 16 Change H1 17 H1 16 Change H1 17 H1
Slide 43: Half Year Results of International Retail Banking: Breakdown by Region
6 – SUP PL E MENT - I NT ERNA TI O NA L RE TAI L B ANK I NG A ND FI NA NCI A L S E RVI CE S HALF YEAR RESULTS OF INTERNATIONAL RETAIL BANKING: BREAKDOWN BY REGION Total International Western Europe Czech Republic Romania Other Europe Russia (1) Africa and others retail Banking In M EUR H1 17 H1 16 H
Slide 44: Loan and Deposit Outstandings Breakdown
6 – SUP PL E MENT - I NT ERNA TI O NA L RE TAI L B ANK I NG A ND FI NA NCI A L S E RVI CE S LOAN AND DEPOSIT OUTSTANDINGS BREAKDOWN Loan outstandings breakdown Deposit outstandings breakdown (in EUR bn) (in EUR bn) Change Change June 17 vs. June 16 June 17 vs. June 16 o.w. Equipment 1.0 Finance(1) -
Slide 45: Insurance Key Figures
6 – SUP PL E MENT - I NT ERNA TI O NA L RE TAI L B ANK I NG A ND FI NA NCI A L S E RVI CE S INSURANCE KEY FIGURES Life insurance outstandings Personal protection insurance premiums and unit linked breakdown (in EUR bn) (in EUR m) Change Q2 17 vs. Q2 16 95.8 97.0 98.3 98.8 112.1 +3.9%* 21% 22% 23% 25
Slide 46: SG Russia
6 – SUP PL E MENT - I NT ERNA TI O NA L RE TAI L B ANK I NG A ND FI NA NCI A L S E RVI CE S SG RUSSIA(1) SG Russia results In EUR m Q2 17 Q2 16 Change H1 17 H1 16 Change Net banking income 209 169 +4.7%* 403 326 -1.0%* Operating expenses (156) (128) +3.3%* (318) (250) +1.9%* Gross operating income 5
Slide 47: Presence in Central and Eastern Europe
6 – SUP P L EMENT - I NTE RNA TI O NA L RE TA I L B ANK I NG A ND FI NANCI AL SE RVI CES PRESENCE IN CENTRAL AND EASTERN EUROPE Clients NBI Net income C/I RWA 7.3m EUR 1.1bn EUR 235m 62.1% EUR 31.2bn H1 17 NBI RWA Credits Deposits L/D ratio Ranking (In EUR m) (In EUR m) (In EUR m) (In EUR m) Czech R
Slide 48: Presence in Africa
6 – SUP P L EMENT - I NTE RNA TI O NA L RE TA I L B ANK I NG A ND FI NANCI AL SE RVI CES PRESENCE IN AFRICA Clients NBI Net income C/I RWA 4m EUR 0.6bn EUR 104m 56.9% EUR 19.1bn H1 17 NBI RWA Credits Deposits L/D ratio Ranking (In EUR m) (In EUR m) (In EUR m) (In EUR m) Morocco 204 6,289 6,769 5,660
Slide 49: Global Banking and Investor Solutions – Half Year Results
6 – SUP P L EMENT - G L O B AL B A NKI NG A ND I NVE S TO R SO L UTI O NS GLOBAL BANKING AND INVESTOR SOLUTIONS – HALF YEAR RESULTS Global Markets and Investor Services Financing and Advisory Asset and Wealth Management Total Global Banking and Investor Solutions H1 17 H1 16 Change H1 17 H1 16 Chang
Slide 50: Risk-Weighted Assets in EUR bn
6 – SUP PL E MENT - G L O B AL B A NK I NG A ND I NV E ST O R S O L UT I O NS RISK-WEIGHTED ASSETS IN EUR BN Global Markets and Investor Services Global Markets Investor Services 59.2 57.9 57.4 12.1 11.7 12.5 3.2 4.1 19.6 19.5 3.7 21.1 0.0 0.0 0.0 15.7 16.0 15.6 8.9 8.4 7.9 23.9 22.4 20.7 Q2 16 Q1 1
Slide 51: Asset and Wealth Management
6 – SUP PL E MENT – G L O B AL BA NKI NG A ND I NVE ST O R S O L UT I O NS ASSET AND WEALTH MANAGEMENT Assets under Management(1) (in EUR bn) Private Banking: Good commercial activity with positive net inflows in +5.5 -2.8 France +8.9 +1.6 Lyxor: 226 Revenues up in line with higher ETF AuM base 213
Slide 52: Net Asset Value, Tangible Net Asset Value
6 – SUP PL E MENT - S HARE NET ASSET VALUE, TANGIBLE NET ASSET VALUE End of period H1 17 Q1 17 2016 H1 16 Shareholders' equity Group share 60,111 62,222 61,953 58,475 Deeply subordinated notes (10,059) (10,556) (10,663) (8,944) Undated subordinated notes (279) (294) (297) (373) Interest net of tax p
Slide 53: Methodology (1/3)
6 – TE CHNI CAL S UPP L EME NT METHODOLOGY (1/3) 1 – The Group’s consolidated results as at June 30th, 2017 were approved by the Board of Directors on November 2nd, 2017. The limited examination procedures carried out by the Statutory Auditors are in progress on the summarised interim consolidated f
Slide 54: Methodology (2/3)
6 – TE CHNI CAL SUP P L EMENT METHODOLOGY (2/3) (In EUR M) Q2 17 Q2 16 H1 17 H1 16 Net Cost of Risk 136 157 285 323 French Retail Gross loan outstandings 187,580 187,263 188,970 187,750 Banking Cost of Risk in bp 29 33 30 34 Net Cost of Risk 43 185 153 401 International Retail Gross loan outstanding
Slide 55: Methodology (3/3)
6 – TE CHNI CAL S UPP L EME NT METHODOLOGY (3/3) 11 - The liquid asset buffer or liquidity reserve includes 1/ central bank cash and deposits recognised for the calculation of the liquidity buffer for the LCR ratio, 2/ liquid assets rapidly tradable in the market (High Quality Liquid Assets or HQLA)
Slide 56: Investor Relations Team
INVESTOR RELATIONS TEAM +33 (0)1 42 14 47 72 investor.relations@socgen.com www.societegenerale.com/en/investors
Societe Generale — Debt Investor Presentation (September 2017) on 6ix