Societe Generale S.a. Class A · EURONEXT:GLE
Societe Generale S.a. Class A — Investor Day (September 2023)
75 slides from Societe Generale S.a. Class A's investor day presentation, Sep 18, 2023
Slide 1: Societe Generale Capital Markets Day
Societe Generale Capital Markets Day 18 September 2023 SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023
Slide 2: Strategy 2026: A top tier European bank
Strategy 2026 A strong bank STRENGTHS + A TOP TIER A simple business portfolio DECISIONS EUROPEAN + BANK High performance businesses CATALYSTS Sustainable performance SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 2
Slide 3: Where do we stand?
WHERE DO WE STAND? SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 3
Slide 4: A leading European Bank with strong foundations
A leading European Bank with strong foundations ~160 YEARS OF CLIENT RELATIONSHIPS Large premium client base Trusted partner to millions of loyal clients 1 DECADES-LONG ESG LEADERSHIP STRONG HUMAN CAPITAL Pioneer in energy transition 5 25m 2 Talented and committed people CLIENTS Pro-active in defini
Slide 5: A highly competitive business model to be optimized
A highly competitive business model to be optimized High gross margins(1) Peer 1 10.8% Leading TOP 3 Risk Peer 2 8.6% franchises ESG management NBI/RWA leadership Share SG 7.8% Expertise price Peer 3 7.6% Our people Peer 4 7.4% CLIENTS Peer 5 6.8% 25m Efficiency Complexity Peer 6 6.6% Entrepreneursh
Slide 6: Addressing the value gap
Addressing the value gap A Tangible Book Value increase … ……not notreflected reflectedininvaluation valuation TBV(1) vs. Share price TBV vs. share price (EUR)(2) Current Price to TBV ratio(2) (EUR) 62 61 63 62 54 56 54 56 56 55 0.8x 42 44 48 49 51 26 0.4x 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 7: How are we going to do this?
HOW ARE WE GOING TO DO THIS? SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 7
Slide 8: A focused strategy for a sustainable future
A focused strategy for a sustainable future High performance A rock-solid bank sustainable businesses 1 Enhance stewardship of capital 5 Excel at what we do 2 Streamline business portfolio A TOP TIER EUROPEAN 6 Lead in ESG 3 Improve operational efficiency BANK Foster a culture of performance and 7 a
Slide 9: Sustainable value creation
Sustainable value creation CET 1 RATIO ROTE PAYOUT RATIO 13% 9%-10% 40%-50% in 2026 in 2026 on reported net income(1) from 2023 REVENUES C/I RATIO 0%-2% <60% CAGR 2022-2026 in 2026 CONVERTING HIGH GROSS MARGIN INTO SUSTAINABLE PROFITABILITY (1) After deduction of interest on deeply subordinated note
Slide 10: A rock-solid bank: Enhance stewardship of capital
A rock-solid bank Enhance stewardship of capital SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 10
Slide 11: A strong capital buffer to increase flexibility and competitiveness
A strong capital buffer to increase flexibility and competitiveness Limited organic RWA growth based on stricter capital allocation criteria Management Additional buffer Proactive risk transfer of capital and decision development of capital partnerships + CET 1 RATIO Increased capital generation thr
Slide 12: Grow differently
Grow differently With a strict capital … our businesses discipline… will grow differently Limited organic RWA growth <1% CAGR High organic growth potential over 2024-2026 from Boursorama & ALD Selective organic capital allocation, zero Further increase in advisory and organic RWA growth excluding fe
Slide 13: A distribution for long-term value creation
A distribution for long-term value creation Distribution policy Payout based on reported net income(1) PAYOUT RATIO Balanced mix between cash dividend 40%-50% and share buybacks from 2024 onwards of reported net income(1) from 2023 Distribution of excess capital to be considered once CET 1 target is
Slide 14: A rock-solid bank: Streamline business portfolio
A rock-solid bank Streamline business portfolio SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 14
Slide 15: Shape a consistent, simplified and integrated business model
Shape a consistent, simplified and integrated business model Strict portfolio management criteria Consistent with our ESG imperative Accretive to Group profitability Material Group synergies Limited exposure to tail risks Leading franchises in attractive markets SOCIETE GENERALE CAPITAL MARKETS DAY
Slide 16: A rock-solid bank: Improve operational efficiency
A rock-solid bank Improve operational efficiency SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 16
Slide 17: Foster a culture of operational efficiency
Foster a culture of operational efficiency Structurally improve operating leverage No core business attrition Clear cost targets designed per business and support function with responsible incentive mechanisms C/I RATIO Permanent tracking of organization process and cost inefficiencies to structural
Slide 18: Achieve significant savings throughout the Group
Achieve significant savings throughout the Group Targeting additional cost savings Actions across the whole Group Breakdown of gross savings 2022-2026 OTHERS GLOBAL BANKING AND (Consulting, legal, INVESTOR SOLUTIONS travel, real estate) GROSS SAVINGS FRENCH IT EUR 1.7bn RETAIL BANKING 2026 vs. 2022
Slide 19: Tangible levers already identified
Tangible levers already identified Deliver across Improve Shape a leaner businesses IT efficiency organisation French networks merger: timely delivery A platform-based strategy supporting IT Simplification and streamlining of the with full benefit expected in 2025 efficiency throughout the Group Gro
Slide 20: A platform-based strategy supporting IT efficiency
A platform-based strategy supporting IT efficiency Platform model addressing Resiliency and operational IT fragmentation efficiency drivers Convergence of Information Systems Maintain strong cybersecurity investment towards a coherent Group Infrastructure (>EUR 1bn over 2023-2026) Systematic mutuali
Slide 21: A rock-solid bank: Maintain best-in-class risk management
A rock-solid bank Maintain best-in-class risk management SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 21
Slide 22: A risk profile already significantly improved
A risk profile already significantly improved Credit risk Market risk Steady decrease since 2010 Market risk significantly lowered since 2020 Net Cost of Risk for the Group (in bp) 140 Global market Stress test (rebased on 100 in January 2020) 120 S3 cost of risk 83 75 75 100 67 61 52 64 80 37 60 21
Slide 23: Maintain best-in-class risk management within a stable risk appetite
Maintain best-in-class risk management within a stable risk appetite Clear and consistent credit risk A holistic approach to management principles risk management Prudent origination policy Continuous strengthening of compliance and risk culture Firm-wide governance on E&S risk with focus on conduct
Slide 24: High performance, sustainable businesses: Excel at what we do
High performance, sustainable businesses Excel at what we do SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 24
Slide 25: Capture client value in a world of change
Capture client value in a world of change A world of transformational Our business response changes and opportunities Energy transition acceleration Capture megatrends for long-term growth through solutions-driven expert advisory Global investment needs Demographics, social and GROWING AND CHANGING
Slide 26: Positioned to capture megatrends-induced long-term growth
Positioned to capture megatrends-induced long-term growth ESG Infrastructure Demographics Digital & Technology ‒ Energy transition ‒ Growing needs for infrastructure ‒ Growing savings & protection needs ‒ Growing adoption of online banking ‒ Higher ESG focus and standards ‒ Modernisation of develope
Slide 27: A simplified, integrated and synergetic model
A simplified, integrated and synergetic model French Retail Global Banking & International Retail, Banking Investor Solutions Mobility & Leasing Services Leading retail bank and insurance franchise Top tier European wholesale bank LEADING #1 global player in Mobility solutions Strong Private banking
Slide 28: Scale-up the value proposition for all our clients through partnerships
Scale-up the value proposition for all our clients through partnerships BESPOKE SCALE CAPITAL OPEN ARCHITECTURE Partner in origination Leverage an open retail and private and asset management to banking platform which delivers the maximize value creation across 4 1 best solutions, tailored to our cr
Slide 29: Business focus: French Retail Banking
Business focus French Retail Banking SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 29
Slide 30: Two leading banks in France
FRENCH RETAIL BANKING Two leading banks in France VALUE & GROWTH A distinctive positioning A highly efficient and scalable geared towards high value segments business model #1 IN CLIENT SUPERIOR VALUE FRENCH ACQUISITION PROPOSITION RETAIL 40 PRODUCTS AND Financial NETWORKS Wholesale EUR 49bn OF AUA
Slide 31: Benefit from the cross-convergence of our strengths
FRENCH RETAIL BANKING Benefit from the cross-convergence of our strengths VALUE GROWTH A bank for corporate, professionals Leader in online banking, the most & retail with high value by client efficient operating model HIGHER EFFICIENCY HIGHER CONTRIBUTION Increase efficiency Increase the NBI per cl
Slide 32: A strategic path to a more efficient banking model
FRENCH RETAIL BANKING A strategic path to a more efficient banking model 2026 targets Long term strategic goals 1 I Be the #1 partner for corporates, wealthy & affluent clients and digital customers and a responsible provider for mass-market clients 2 I Further strengthen the value proposition for c
Slide 33: Boursorama: Further invest in client acquisition to boost long-term value
BOURSORAMA Further invest in client acquisition to boost long-term value Strategic investment to Increase in equipment High operating Substantial accelerate client acquisition and monetisation leverage earnings potential Total number of clients (m) Outstandings evolution per Operating cost per clien
Slide 34: Extract further value from a more integrated model
SG NETWORK, INSURANCE AND PRIVATE BANKING Extract further value from a more integrated model Further strengthen Be more efficient the value proposition Timely delivery of the new relationship and operating models Extend and strengthen our core client base (Vision 2025) Anchor our leading position wi
Slide 35: Business focus: Global Banking and Investor Solutions
Business focus Global Banking and Investor Solutions SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 35
Slide 36: Strong foundations to build on
GLOBAL BANKING AND INVESTOR SOLUTIONS Strong foundations to build on A strong At the heart of the With a strong wholesale franchise Group’s synergies track-record Global Markets NBI EUR 5.4bn average 21-22 FINANCIAL INSTITUTIONS ~7,250 CORPORATES CLIENTS FRB(1) Financial & Advisory NBI 14% CAGR 20-2
Slide 37: Anchor performance at a high and sustainable level
GLOBAL BANKING AND INVESTOR SOLUTIONS Anchor performance at a high and sustainable level 2026 targets Long-term strategic goals 1 I Keep improving operating leverage 2 I Decrease RWA intensity and increase advisory and fees GM(1) NBI F&A(2) NBI C/I RATIO 3 I Further strengthen our integrated leading
Slide 38: Develop a more asset-light and advisory-driven model
GLOBAL BANKING AND INVESTOR SOLUTIONS Develop a more asset-light and advisory-driven model Accelerate Increase fee-driven distribution businesses Optimize distribution platform leveraging Further develop advisory and fees on FIC expertise in structured finance Develop long-term partnerships with Inc
Slide 39: Extract further value from our integrated leading franchises
GLOBAL BANKING AND INVESTOR SOLUTIONS Extract further value from our integrated leading franchises Consolidate leadership in Deepen value proposition Sustained investments in Equity & FIC performance for Corporates transaction banking Be a premier research & cash equity Accelerate on high potential
Slide 40: Business focus: International Retail Banking
Business focus International Retail, Mobility & Leasing Services International Retail Banking SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 40
Slide 41: A portfolio of international retail banks
INTERNATIONAL RETAIL BANKING A portfolio of international retail banks 2022 financials(1) Client mix(1) Geographical footprint Two universal banks in Eastern Europe KOMERCNI BANKA BRD #3 in Czech Republic CORPORATE RETAIL 48% 16% #3 in Romania 50% 50% Net Income Loans EUR 0.7bn EUR 64bn A combinatio
Slide 42: Focus on return sustainability
INTERNATIONAL RETAIL BANKING Focus on return sustainability 2026 targets Long-term strategic goals 1 I Build a more compact and efficient set-up C/I RATIO ROE 2 I Maintain a best-in-class client experience thanks to the <55% >COE combination of expertise and digital capabilities in 2026 run rate 3 I
Slide 43: Business focus: Mobility & Leasing Services
Business focus International Retail, Mobility & Leasing Services Mobility & Leasing Services SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 43
Slide 44: A leader in mobility & leasing services
MOBILITY AND LEASING SERVICES A leader in mobility & leasing services ALD Consumer Finance Equipment Finance #1 Global sustainable mobility #3 largest car finance specialist(1) A leading European actor player in Europe with worldwide footprint MEDICAL/GREEN FRANCE ITALY OTHERS TECHNOLOGY EASTERN UK
Slide 45: A profitable and sustainable growth powerhouse
MOBILITY AND LEASING SERVICES A profitable and sustainable growth powerhouse 2026 target Long-term strategic goals 1 I Provide an integrated offer from car finance to insurance MLS 2 I Be a key player in the decarbonisation with financing and C/I RATIO leasing services <55% in 2026 3 I Be a ground-b
Slide 46: ALD LeasePlan, a global leader in sustainable mobility
MOBILITY AND LEASING SERVICES ALD LeasePlan, a global leader in sustainable mobility A global leader in a very Leveraging on SG businesses attractive industry to maximize synergies FULL SERVICE LEASING CAR FINANCE (ALD) (CGI, BDK, FIDITALIA) Delivering superior profitability ~52% C/I ratio (excl. UC
Slide 47: Financials
Financials SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 47
Slide 48: 2026 Group's financial targets
2026 Group’s financial targets CET 1 RATIO ROTE PAYOUT RATIO 13% 9%-10% 40%-50% in 2026 in 2026 on reported net income(1) from 2023 REVENUES C/I RATIO COST OF RISK 0%-2% <60% 25-30bps CAGR 2022-2026 in 2026 2024-2026 (1) After deduction of interest on deeply subordinated notes and undated subordinat
Slide 49: 2023-2026 economic assumptions
2023-2026 economic assumptions GDP Growth (% YoY) Inflation rate (% YoY) 6.8 8.4 5.7 8.0 5.7 5.4 3.5 4.7 5.9 5.4 2.7 2.5 2.6 1.7 1.8 2.6 4.3 2.5 0.5 0.8 2.1 0.7 1.1 2.1 2.4 2.2 2.1 1.0 0.6 2021 2022 2023e 2024e 2025e 2026e 2021 2022 2023e 2024e 2025e 2026e Eurozone France U.S Eurozone France U.S 10
Slide 50: Simplified and clear performance reporting
Simplified and clear performance reporting FROM TO Cost to achieve reported in TRANSFORMATION COSTS Cost to achieve borne by businesses Corporate Centre NORMATIVE CAPITAL ALLOCATION 11% of normative allocation 12% of normative allocation REPORTED VS. UNDERLYING Underlying as a norm Reported as a nor
Slide 51: A clear path towards our CET1 target
A clear path towards our CET 1 target Building blocks to reach our CET 1 target Phased-in CET 1 trajectory 13.1% ~13% ≥13% Group net >12% income(1) Distribution MDA Organic 9.73% RWA growth Basel IV Remaining ~-85bps(2) 2023 regulatory 13.1% ~-50bps Other(3) ≥13% H1-23 Q1 2025 End 2025 End 2026 H1 2
Slide 52: Improved C/I with prudent revenue assumptions
Improved C/I with prudent revenue assumptions French Retail Global Banking International Retail, Mobility Banking & Investor Solutions & Leasing Services Net interest margin recovery, Global Markets revenues: International Retail: Fee generation EUR 4.9-5.5bn range Volume growth and spread effect Fi
Slide 53: Net interest margin of French Retail Banking
Net interest margin of French Retail Banking 2022-2026 Net interest margin outlook Hedging Policy Commercial interest margin(1) ALM P&L(2) Balance Sheet / long-term hedging Other interest margin Total interest margin - Hedging strategy aims to align the asset and liability durations, protecting the
Slide 54: Improved operating leverage
Improved operating leverage Building blocks to reach our Cost/Income target ~EUR 1.7bn GROSS SAVINGS ~-600bps 66.3% +450bps ~-300bps +500bps <60% -200bps -250bps 2022 French Retail ALD LeasePlan Other and new End of SRF(1) Reduction of Inflation & 2026 synergies synergies savings transformation Othe
Slide 55: A tangible roadmap to reach a sustainable ROTE
A tangible roadmap to reach a sustainable ROTE Building blocks to reach ROTE target Main drivers ≥+150bps ~-85bps Strengthened financial profile with a 9%-10% +640bps 8.9% significant capital build-up Improved operational efficiency 2.5% Prudent revenue projection Normalized cost of risk assumption
Slide 56: 2026 capital and balance sheet targets
2026 capital and balance sheet targets Capital steering levels Balance sheet steering levels LEVERAGE LCR NSFR CET 1 RATIO RATIO 13% ≥130% ≥112% 4%-4.5% through through in 2026 through the cycle the cycle the cycle MREL(1) NPL RATIO ≥30% 2.5%-3% through in 2026 the cycle (1) In % of RWA SOCIETE GENE
Slide 57: High performance, sustainable businesses: Lead in ESG
High performance, sustainable businesses Lead in ESG SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 57
Slide 58: Strongly committed to a more sustainable world
Strongly committed to a more sustainable world Increase our E&S Invest for a Lead by Partner to catalyse commitments sustainable future example ESG development Accelerate decarbonisation of Shift our business mandates, Develop partnership with IFC to design innovative solutions for Be a responsible
Slide 59: New targets to accelerate the decarbonisation of our businesses
New targets to accelerate the decarbonisation of our businesses NZBA alignment Additional voluntary targets(1) reduction of O&G exposure(2) Focused on fossil fuel financing reduction Focused on the most emissive sectors: - Main contributor to global carbon footprint - After tackling thermal coal, we
Slide 60: Significant business opportunities matching our ESG leading franchises
Significant business opportunities matching our ESG leading franchises A holistic ESG offer underpinning A differentiated approach to our clients’ evolving needs operate our businesses Trends Our offer Additional investment needs for the ESG Advisory, structured finance for energy transition: USD 10
Slide 61: Foster a culture of performance and accountability
High performance, sustainable businesses Foster a culture of performance and accountability SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 61
Slide 62: A responsible employer of choice
A responsible employer of choice Focus on people Foster ownership development mindset through yearly share program(1) Increase Engagement score OUR PEOPLE ~EUR 100m Reward Further promote performance & ARE diversity and To reduce gender pay gap efficiency inclusion OUR STRENGTH ≥35% Women in senior
Slide 63: A new management team, accountable for the successful delivery of the strategy
A new management team, accountable for the successful delivery of the strategy The right governance With the mindset to with the right team ensure efficient delivery SHIFT TO A TIGHTLY-KNIT EMPOWERED TEAM SIMPLIFICATION COOPERATION Constantly seeking Sharing best practices, to simplify successes and
Slide 64: Accountability applied
Accountability applied Focus on Management Performance reported income accountability management Data based incentives with higher Normative return based on A fair representation of performance weight of costs and profitability a 12% capital allocation targets Increased allocation of Corporate Distr
Slide 65: Conclusion
Conclusion SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 65
Slide 66: Our investment case
Our investment case PROVEN STRENGTHS DRIVING HIGH GROSS MARGIN Long-standing client relationships Leading and innovative franchises with promising prospects A SOUND AND SIMPLER A ROCK-SOLID FINANCIAL PROFILE BUSINESS PORTFOLIO Progressively increased capital flexibility Strict and selective capital
Slide 67: Strategy 2026: A top tier European bank
Strategy 2026 A strong bank STRENGTHS + A TOP TIER A simple business portfolio DECISIONS EUROPEAN + BANK High performance businesses CATALYSTS Sustainable performance SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 67
Slide 68: Appendices
APPENDICES SOCIETE GENERALE CAPITAL MARKETS DAY I 18 September 2023 68
Slide 69: Strive for digital leadership and drive a data-first model
Strive for digital leadership and drive a data-first model Leverage our Maximize our Accelerate our digital footprint digital efficiency Data and AI strategy Boursorama as #1 digital bank in France Push self-care mode on Keep high standards with 5m clients banking services and advisory in client dat
Slide 70: Societe Generale + Brookfield
SOCIETE GENERALE + BROOKFIELD Key characteristics SG initial transfer of assets: EUR 2.5bn Increase scale of origination & distribution Global partnership leveraging on: - SG origination expertise - Brookfield distribution capacity Strategic asset management partnership Origination of high-quality d
Slide 71: Launch of EUR 1bn transition investment fund
Launch of EUR 1bn transition investment fund Main terms Investment Focus EUR 1bn SG commitment Energy transition (low carbon solutions, renewables, carbon capture and storage, hydrogen…) EUR 0.7bn equity component Nature-based solutions with positive contributions to the protection EUR 0.3bn debt co
Slide 72: Delivering NZBA roadmap
Delivering NZBA(1) roadmap Active leadership across range of sectors NZBA objectives GHG EMISSIONS BY SECTOR SG a founding member of NZBA in 2021 Aligning financing portfolios with TARGETS FY 23 H1 24 1.5°C trajectory COMMUNICATED Setting alignment targets by 2024, OIL AND GAS focusing on the 12 mos
Slide 73: NZBA portfolio alignment targets
NZBA portfolio alignment targets Striving to meet or exceed the relevant 1.5°C scenario Oil&Gas(1) Cement(2) Automotive Power generation Absolute emissions (index base 100) in kgCO2e/t cement in gCO2e/v-km in gCO2/kWh IEA SG scenario IEA IEA 100 671 184 IEA 221 SG SG SG 535 66 target 463 <106 90 138
Slide 74: ALD LeasePlan roadmap
MOBILITY AND LEASING SERVICES ALD LeasePlan roadmap FROM 2020 2023-2026 2026 AND BEYOND ACHIEVE LEADERSHIP ACHIEVE EXCELLENCE SHAPE THE FUTURE OF POSITION MOBILITY New brand Become a fully integrated Address fast-growing markets sustainable mobility provider Successfully integrate LeasePlan from a l
Slide 75: Disclaimer
Disclaimer This presentation and the attached appendices and assurance that anticipated events will occur or that the markets and our competitive positions therein. Such press release (together the “Documentation”) which are objectives set out will actually be achieved. information is based on marke