Paris, November 3rd, 2017 |
Q3 17: SOLID
RESULTS IN RETAIL, DECLINE IN MARKETS ACTIVITIES
-
Net banking income
for the core businesses of EUR 5.9bn (-5.9% vs. Q3 16):
substantial growth in International Retail Banking & Financial
Services (+5.2%*), revenue decline in Global Banking & Investor
Solutions, in a historically low volatility environment (-14.7% vs.
Q3 16), and in French Retail Banking (-6.6%(1) vs.
Q3 16) against a backdrop of low interest rates.
-
Group book net
banking income was slightly lower (-0.9%) at EUR 5,958m (EUR
6,010m in Q3 16).
-
Stable operating
expenses: -0.4% vs. Q3 16.
-
Commercial cost of
risk(2) halved, at
17bp in Q3 17 (34bp in Q3 16) reflecting the improvement in the
Group's risk profile observed for several quarters. Additional
allocation to the provision for disputes of EUR 300m.
-
Book Group net
income of EUR 932m in Q3 17 (EUR 1,099m in Q3 16).
Group net income excluding
non-economic items of EUR 894m in Q3 17 (EUR 1,257m in Q3 16).
9M 17: INCREASE
IN UNDERLYING GROUP NET INCOME
Underlying net
banking income(3) of EUR
18.8bn (+0.4% vs. 9M 16)
Underlying operating expenses(3) under
control: +1.2% vs. 9M 16
Underlying Group net income(3) of
EUR 3,616m, up +16.9% vs. 9M 16
Underlying ROE(3) of 9.0%
(8.0% in 9M 16)
EPS**: EUR 3.12
in 9M 17 (EUR 4.19 in 9M 16). Provision for dividend of EUR
1.65/share
Presentation of the strategic plan on November
28th,
2017
The
footnotes * and ** in this document are specified below:
* When
adjusted for changes in Group structure and at constant exchange
rates.
** Excluding
non-economic items.
(1) Including
adjustment of hedging costs and excluding PEL/CEL
provision.
(2) Excluding disputes, in basis points for
outstandings at the beginning of the period, including operating
leases. Annualised calculation.
(3) See methodology note 5 for the
transition from accounting data to underlying data.
Societe Generale's Board of
Directors, which met on November 2nd, 2017 under
the chairmanship of Lorenzo Bini Smaghi, examined the results for
Q3 and the first nine months of 2017.
Book Group net
income amounted to EUR 932 million in Q3 2017 (EUR 1,099
million in Q3 2016) and EUR 2,737 million in the first nine months
of 2017 (EUR 3,484 million in the first nine months of 2016).
When corrected for the impact of
non-economic items, exceptional items and the linearisation over
the year of the IFRIC 21 charge recorded in Q1 2017, underlying Group net income totalled EUR 1,079 million
in Q3 2017 (EUR 1,168 million in Q3 2016). Underlying Group net
income was significantly higher (up +16.9%) at EUR 3,616 million in
the first nine months of 2017 (EUR 3,094 million in the first nine
months of 2016). Underlying ROE stood at 9.0%
in the first nine months of 2017 vs. 8.0% in the first nine months
of 2016.
In Q3 2017, French Retail
Banking's commercial momentum remained robust and results were
resilient against a backdrop of low interest rates and the
transformation of the business model. International Retail Banking
& Financial Services continued to enjoy strong growth in all
businesses and geographical regions. Global Banking & Investor
Solutions' revenues were lower than in Q3 16 in a market
environment characterised by historically low volatility
levels.
Book net banking
income totalled EUR 5,958 million in Q3 2017 (EUR 6,010 million
in Q3 2016) and EUR 17,631 million in the first nine months of 2017
(EUR 19,169 million in the first nine months of 2016). Underlying
net banking income amounted to EUR 5,993 million in Q3 2017 (down
-4.1% vs.
Q3 2016) and EUR 18,834 million in the first nine months (up +0.4%
vs. the first nine months of 2016).
Operating
expenses were slightly lower in Q3 2017 (-0.4%) at EUR -4,001
million (EUR -4,016 million in Q3 2016). There was a further
decline in costs in Global Banking & Investor Solutions,
whereas the Group continued with its investments in the
transformation of French Retail Banking and efforts to support the
growth in International Retail Banking & Financial Services.
Underlying operating expenses were stable at EUR -4,157 million in
Q3 2017 (EUR -4,147 million in Q3 2016). Operating expenses were
slightly higher (+1.2%) at EUR -12,657 million in the first nine
months of the year
(EUR -12,506 million in the first nine months of 2016).
The net cost of
risk (excluding the variation in the provision for disputes)
continued on the downward momentum observed in previous quarters,
against a backdrop of an improvement in the Group's risk profile.
It amounted to EUR -212 million (excluding the variation in the
provision for disputes) in
Q3 2017, substantially lower than in Q3 2016 (EUR -417
million).
The provision for disputes was the
subject of an additional allocation of EUR 300 million in the third
quarter, and now stands at EUR 2.2 billion. Societe Generale is
currently in discussions with the US authorities in order to
resolve two litigations, LIA and IBOR, and has decided to increase
the provision for disputes. The discussions could result in an
agreement in the coming weeks or months.
Moreover, as there is no certainty
that the Group will reach a resolution of these disputes before the
date initially set for the Global Employee Share Ownership Plan,
given this uncertainty and for legal reasons, it was decided, with
the Board of Directors' approval, not to proceed with this plan
which was initially scheduled in late 2017.
The Common
Equity Tier 1 (fully-loaded CET1) ratio was 11.7% at September
30th, 2017 (11.7%
at June 30th, 2017).
Earnings per share, excluding non-economic items, amounts to EUR
3.12 at end-September 2017 (EUR 4.19 at end-September 2016).
Commenting on the Group's results
for Q3 and the first nine months of 2017, Frédéric Oudéa - Chief
Executive Officer - stated:
"Despite an
unfavourable financial environment, Societe Generale generated
resilient Q3 results, driven in particular by International Retail
Banking & Financial Services. The Group continued to improve
its risk profile and pursued its investments, in order to meet the
needs of its customers and respond to changes in the methods of
using banking services. With increased underlying profitability in
the first nine months of the year, a solid capital base and the
commitment of its teams, Societe Generale is ready to embark on a
new phase of its development and will present its strategic plan on
November 28th."
-
GROUP CONSOLIDATED RESULTS
In EUR m |
Q3 17 |
Q3 16 |
Change |
9M 17 |
9M 16 |
Change |
Net banking income |
5,958 |
6,010 |
-0.9% |
17,631 |
19,169 |
-8.0% |
Net banking income(1) |
5,905 |
6,251 |
-5.5% |
17,783 |
19,476 |
-8.7% |
Operating
expenses |
(4,001) |
(4,016) |
-0.4% |
(12,814) |
(12,419) |
+3.2% |
Gross operating income |
1,957 |
1,994 |
-1.9% |
4,817 |
6,750 |
-28.6% |
Gross operating income(1) |
1,904 |
2,235 |
-14.8% |
4,969 |
7,057 |
-29.6% |
Net cost
of risk |
(512) |
(417) |
+22.8% |
(880) |
(1,605) |
-45.2% |
Operating income |
1,445 |
1,577 |
-8.4% |
3,937 |
5,145 |
-23.5% |
Operating income(1) |
1,392 |
1,818 |
-23.4% |
4,089 |
5,452 |
-25.0% |
Net profits
or losses from other assets |
72 |
62 |
+16.1% |
317 |
50 |
x 6.3 |
Income
tax |
(459) |
(450) |
+2.0% |
(1,150) |
(1,461) |
-21.3% |
Reported Group net income |
932 |
1,099 |
-15.2% |
2,737 |
3,484 |
-21.4% |
Group net income(1) |
894 |
1,257 |
-28.8% |
2,845 |
3,685 |
-22.8% |
ROE |
6.9% |
8.4% |
|
6.6% |
9.1% |
|
|
|
|
|
|
|
|
Underlying Group net income(2) |
1,079 |
1,168 |
-7.7% |
3,616 |
3,094 |
+16.9% |
Underlying ROE(2) |
8.1% |
9.0% |
|
9.0% |
8.0% |
|
-
Adjusted for revaluation of own financial
liabilities and DVA
-
Adjusted for non-economic and exceptional items
and IFRIC 21
Net banking
income
The Group's book net banking
income totalled EUR 5,958 million in Q3 17 (EUR 6,010 million
in Q3 16) and EUR 17,631 million in
9M 17 (EUR 19,169 million in 9M 16).
Underlying net banking income
amounted to EUR 5,993 million in Q3 17 (EUR 6,251 million in Q3 16)
and EUR 18,834 million in 9M 17 (EUR 18,751 million in 9M 16).
There was a slight decline in net
banking income for the businesses (EUR 5,882 million in Q3 17 vs.
EUR 6,249 million in Q3 16).
-
French Retail Banking's net banking income was
lower in Q3 17 (-5.0% and -6.6% excluding PEL/CEL provision vs. Q3
16). Net interest income fell -13.9% in Q3 17 vs. Q3 16 due to the
recording of an exceptional expense of EUR -88 million related to
the adjustment of hedging costs and the ongoing low interest rate
environment. Commissions maintained the momentum observed in
previous quarters, increasing +4% in Q3 17 vs. Q3 16.
-
International Retail Banking & Financial
Services' net banking income rose +3.8% (+5.2%*) in Q3 17, driven
by the strong commercial momentum of activities in all businesses
and geographical regions. International Retail Banking's net
banking income increased +2.7% (+6.7%*) vs. Q3 16. Net banking
income rose +14.5% (+8.2%*) for the Insurance business and +1.4%
(-1.1%*) for Financial Services to Corporates.
-
Global Banking & Investor Solutions'
revenues were down -14.7% in Q3 17 vs. Q3 16. Global Markets and
Investor Services experienced a decline of -20.7%, adversely
affected by the "wait-and-see" attitude of investors in connection
with historically low volatility levels. Financing & Advisory
revenues were stable vs. Q3 16 (-0.7%). In Asset and Wealth
Management, net banking income was down -11.7%.
The accounting impact of the
revaluation of the Group's own financial liabilities was EUR 53
million in Q3 17 (EUR -237 million in Q3 16). The DVA impact was
nil in Q3 17 (EUR -4 million in Q3 16). These two factors
constitute the restated non-economic items in the analyses of the
Group's results.
Operating
expenses
The Group's operating expenses
amounted to EUR -4,001 million in Q3 17, down -0.4% (+1.5%*)
vs. Q3 16.
Underlying operating expenses
totalled EUR -12,657 million in 9M 17 vs. EUR -12,506 million
in
9M 16, representing a limited increase of +1.2%.
The increase reflects the
investments in the transformation of French Retail Banking, efforts
to support the growth of International Retail Banking &
Financial Services, and the beneficial effects of the cost savings
plans implemented in Global Banking & Investor Solutions.
Gross operating
income
The Group's book gross operating
income totalled EUR 1,957 million in Q3 17 (EUR 1,994 million in Q3
16) and EUR 4,817 million in 9M 17 (EUR 6,750 million in 9M
16).
Underlying gross operating income
amounted to EUR 1,836 million in Q3 17 (EUR 2,104 million
in Q3 16) and EUR 6,178 million in 9M 17 (EUR
6,245 million in 9M 16).
Cost of
risk
The Group's net cost of risk,
excluding the variation in the provision for disputes, continued to
decline to EUR -212 million in Q3 17 vs. EUR -417 million in Q3 16.
The provision for disputes was the subject of an additional
allocation of EUR 300 million in Q3 17.
The commercial cost of risk
(expressed as a fraction of outstanding loans) continued to
decline, to a very low level of 17 basis points in Q3 17 (vs. 34
basis points in Q3 16):
-
In French Retail Banking, the commercial cost of
risk was low at 21 basis points in Q3 17 (36 basis points in Q3 16)
due primarily to the improvement in the economic environment and
the quality of loan origination.
-
International Retail Banking & Financial
Services' cost of risk was lower, at 33 basis points vs. 67 basis
points in Q3 16, due primarily to a net write-back in
Romania.
-
Global Banking & Investor Solutions' cost of
risk amounted to -2 basis points in Q3 17 (9 basis points in Q3
16).
The Group's commercial cost of
risk is expected to be around 25 basis points for full-year
2017.
The gross doubtful outstandings
ratio was lower, at 4.5% at end-September 2017 (vs. 5.1% at
end-September 2016). The Group's gross coverage ratio for doubtful
outstandings stood at 62% (vs. 65% at end-September 2016).
Operating
income
Book Group operating income
totalled EUR 1,445 million in Q3 17 (EUR 1,577 million in Q3 16)
and EUR 3,937 million in 9M 17 (EUR 5,145 million in 9M 16).
Underlying operating income
amounted to EUR 1,624 million in Q3 17 (EUR 1,687 million in Q3 16)
and EUR 5,498 million in 9M 17 (EUR 4,840 million in 9M 16), up
+13.6% vs. 9M 16.
Net profits or
losses from other assets
Net profits or losses from other
assets amounted to EUR 72 million in Q3 17 (EUR 62 million in Q3
16) and consist principally of the capital gain on the sale of SG
Fortune shares amounting to EUR 74 million.
Net
income
In EUR m |
Q3 17 |
Q3 16 |
9M 17 |
9M 16 |
Book Group net income |
932 |
1,099 |
2,737 |
3,484 |
Group net
income(1) |
894 |
1,257 |
2,845 |
3,685 |
Underlying
Group net income(2) |
1,079 |
1,168 |
3,616 |
3,094 |
|
Q3 17 |
Q3 16 |
9M 17 |
9M 16 |
ROE (reported) |
6.9% |
8.4% |
6.6% |
9.1% |
ROE(1) |
6.6% |
9.7% |
6.9% |
9.6% |
Underlying ROE(2) |
8.1% |
9.0% |
9.0% |
8.0% |
-
Adjusted for revaluation of own financial
liabilities and DVA
-
Adjusted for non-economic and exceptional items
and IFRIC 21
Earnings per share amounts to EUR
2.98 in 9M 17 (EUR 3.94 in 9M 16). When adjusted for non-economic
items, EPS is EUR 3.12 in 9M 17 (EUR 4.19 in 9M 16).
-
THE GROUP'S FINANCIAL STRUCTURE
Group shareholders' equity totalled EUR 60.3 billion at
September 30th, 2017 (EUR
62.0 billion at December 31st, 2016). Net
asset value per share was EUR 63.59, including EUR 1.35 of
unrealised capital gains. Tangible net asset value per share was
EUR 57.31.
The consolidated
balance sheet totalled EUR 1,339 billion at September
30th, 2017 (EUR
1,382 billion at December 31st, 2016). The
net amount of customer loan outstandings,
including lease financing, was EUR 393 billion at September
30th, 2017 (EUR
403 billion at December 31st, 2016) -
excluding assets and securities sold under repurchase agreements.
At the same time, customer deposits amounted
to EUR 383 billion, vs. EUR 397 billion at December 31st, 2016
(excluding assets and securities sold under repurchase
agreements).
At September 30th, 2017,
the parent company had issued EUR 21.7 billion of medium/long-term
debt (representing the achievement of 90% of the 2017 financing
programme of EUR 24.1 billion), having an average maturity of 4.35
years and an average spread of 19.2 basis points (vs. the 6-month
mid-swap, excluding subordinated debt). The subsidiaries had issued
EUR 3.7 billion. At September 30th, 2017, the
Group had issued a total of EUR 25.4 billion of medium/long-term
debt. The LCR (Liquidity Coverage Ratio) was well above regulatory
requirements at 116% at end-September 2017, vs. 142% at
end-December 2016.
The Group's risk-weighted assets (RWA) amounted to EUR 352.9
billion at September 30th, 2017 (vs.
EUR 355.5 billion at end-December 2016) according to CRR/CRD4
rules. Risk-weighted assets in respect of credit risk represent
82.0% of the total, at EUR 289.5 billion, down -1.6% vs. December
31st, 2016.
At September 30th, 2017,
the Group's fully-loaded Common Equity Tier 1
ratio stood at 11.7%([1])
(11.5% at end-December 2016), up +19 basis points vs. end-December
2016. The Tier 1 ratio stood at 14.3% at end-September 2017 (14.5%
at end-December 2016) and the total capital ratio amounted to
17.6%.
With a level of 21.6% of RWA and
6.4% of leveraged exposure at end-September 2017, the Group's TLAC
ratio is already above the FSB's requirements for 2019.
The leverage
ratio stood at 4.3% at September 30th, 2017 (4.2%
at end-December 2016, 4.2% at end-June 2017).
The Group is rated by the rating
agencies DBRS (long-term rating: "A (high)" with a stable outlook;
short-term rating: "R-1(middle)" and long-term Critical Obligations
Rating of "AA" and short-term Critical Obligations Rating of
"R-1(high)"), FitchRatings (long-term senior unsecured preferred
rating raised on September 28th 2017 to "A+"
with a stable outlook; short-term rating: "F1" and long-term
Derivative Counterparty Rating at "A(dcr)"), Moody's (long-term
deposit and senior unsecured ratings: "A2" with a stable outlook;
short-term rating: "P-1" and long-term Counterparty Risk Assessment
of "A1" and short-term Counterparty Risk Assessment of "P-1"),
Standard & Poor's (long-term rating: "A" with a stable outlook;
short-term rating: "A-1") and R&I (long-term rating: "A" with a
stable outlook).
-
FRENCH RETAIL BANKING
In EUR m |
Q3 17 |
Q3 16 |
Change |
9M 17 |
9M 16 |
Change |
Net banking income |
1,939 |
2,042 |
-5.0% |
6,047 |
6,226 |
-2.9% |
Net banking income excl. PEL/CEL |
1,923 |
2,059 |
-6.6% |
6,030 |
6,253 |
-3.6% |
Operating expenses |
(1,376) |
(1,346) |
+2.2% |
(4,226) |
(4,111) |
+2.8% |
Gross operating income |
563 |
696 |
-19.1% |
1,821 |
2,115 |
-13.9% |
Gross operating income excl. PEL/CEL |
547 |
713 |
-23.3% |
1,804 |
2,142 |
-15.8% |
Net cost of
risk |
(108) |
(174) |
-37.9% |
(383) |
(522) |
-26.6% |
Operating
income |
455 |
522 |
-12.8% |
1,438 |
1,593 |
-9.7% |
Reported Group net income |
310 |
353 |
-12.2% |
988 |
1,084 |
-8.9% |
RONE |
11.0% |
12.9% |
|
12.0% |
13.7% |
|
Adjusted RONE(1) |
12.1% |
12.8% |
|
12.7% |
14.1% |
|
(1) Adjusted for
IFRIC 21 implementation, PEL/CEL provision and adjustment of
hedging costs
The healthy commercial momentum
enjoyed by French Retail Banking continued in Q3 17, in line with
H1 2017. It was accompanied by solid profitability against a
backdrop of low interest rates and the transformation of the
business model.
Activity and net
banking income
French Retail Banking's three brands (Societe Generale, Crédit du
Nord and Boursorama) continued their commercial expansion,
particularly for growth drivers.
In the individual customer
segment, Boursorama maintained a robust customer acquisition
momentum in 9M 17 (28% increase vs. 9M 16) and strengthened its
position as the leading online bank in France, with nearly 1.2
million customers at end-September 2017. Overall, French Retail
Banking had 11.6 million individual customers at end-September
2017.
In the business segment, French
Retail Banking entered into relationships with more than 3,500 new
companies in the first nine months of the year (+4% vs. 9M 16)
thanks to various initiatives, in particular SG Entrepreneurs,
which aims to offer a comprehensive range of products and services
to entrepreneurs.
Finally, in the professional
customer segment, the number of new customers remains dynamic (2%
increase in 9M 17). As part of the rollout of the new "Pro
Corners" ("Espaces Pro") model nationwide,
Societe Generale opened two new "XL Pro Corners" in Nice and Lyon
in September in order to offer its professional customers greater
proximity and more expertise.
French Retail Banking's housing
loan production came to EUR 5.5 billion, up +3.3% vs. Q3 16. Home
loan outstandings increased +2.4% in Q3 17. Corporate investment
loan production enjoyed robust growth (+9.2% vs. Q3 16 at EUR 2.5
billion), while average investment outstandings rose +1.7%.
Overall, average outstanding loans grew +1.4% vs. Q3 16 to EUR
186.4 billion.
Average outstanding balance sheet
deposits came to EUR 197.4 billion at end-September 2017. They were
up +5.7%, driven by the strong growth in sight deposits (+16.2%),
particularly in the business segment. As a result, the average
loan/deposit ratio amounted to 94% at end-September 2017 (vs. 100%
on average in 2016).
French Retail Banking's growth
drivers were also healthy, with an increase in assets under
management for Private Banking in France (+6.2% vs. Q3 16) and life
insurance outstandings up +1.6% at EUR 92 billion.
Net banking income (after
neutralising the impact of PEL/CEL provisions) amounted to EUR
1,923 million, down -6.6%. In an environment of low interest rates,
increased prepayments and a significant loan renegotiation volume
in 2017, Q3 17 saw the Group carry out an operation to adjust the
hedging costs of its home loans for the years concerned by the
prepayments and renegotiations, the amount of assets hedged having
become lower than the sum of the hedging swaps. This operation,
which will generate positive impacts over several years, as from
2018, resulted in a EUR -88 million loss in net banking income in
Q3 17.
Excluding this operation, net
banking income was down -2.3% vs. Q3 16. This was due primarily to
the contraction in interest income (-6.6% excluding the adjustment
of hedging costs), which was adversely affected by mortgage
renegotiations and prepayments.
The good momentum on commissions
continued this quarter, with growth of +4.0% in Q3 17 (and +4.6% in
9M 17), reflecting the transition to a fee-generating model. Still
buoyant brokerage and life insurance activities, particularly for
unit-linked contracts, resulted in a sharp rise in financial
commissions (+22.7% in Q3 17 and +19.4% in 9M 17). The increase
also reflects the higher contribution from Antarius, after Societe
Generale acquired total control of the insurance company. Service
commissions remained robust (-0.8% in Q3 17 and +0.7% in 9M 17)
particularly for business customers.
In 9M 17, net banking income
(after neutralising the impact of PEL/CEL provisions) came
to
EUR 6,030 million, down -3.6% (including the adjustment of hedging
costs) in accordance with expectations of a decline of between
-3.0% and -3.5% in 2017.
Operating
expenses
French Retail Banking's operating expenses came to EUR -1,376
million, up +2.2% vs. Q3 16, reflecting investments in the digital
transformation process and fast-growing activities, whereas other
operating expenditure remained under control. Operating expenses
rose +2.8% in 9M 17, in line with the Group's expectations of an
increase of between +3% and +3.5% in 2017. As part of its
transformation plan, the Group notably closed 18 branches in France
in Q3 17 (and 83 in the first nine months of 2017).
Operating
income
The net cost of risk was down -38% vs. Q3 16, with the cost of risk
continuing on the downward trend of previous quarters to a low
level of 21 basis points (vs. 36 basis points in Q3 16), reflecting
the quality of the portfolio. In 9M 17, the net cost of risk
decreased by -27% compared with the previous year.
Operating income totalled EUR 455
million in Q3 17 (EUR 522 million in Q3 16) and EUR 1,438 million
in 9M 17 (EUR 1,593 million in 9M 16).
Contribution to
Group net income
French Retail Banking's contribution to Group net income amounted
to EUR 310 million in Q3 17 (EUR 353 million in Q3 16) and EUR 988
million in 9M 17 (EUR 1,084 million in 9M 16).
When restated for the adjustment
of hedging costs, the IFRIC 21 charge and the PEL/CEL provision,
the division's profitability remains robust, with a RONE of 12.1%
in Q3 17 (vs. 12.8% in Q3 16) and 12.7% in 9M 17 (14.1% in 9M
16).
4. INTERNATIONAL
RETAIL BANKING & FINANCIAL SERVICES
The division's net banking income
totalled EUR 1,988 million in Q3 17, up +3.8% vs. Q3 16, driven by
the growth in activity in all regions and businesses. Operating
expenses increased +4.0% over the period, in accordance with the
investment policy. Gross operating income totalled EUR 916 million
in Q3 17 (+3.6% vs. Q3 16). The net cost of risk continued to
improve, amounting to EUR -111 million
(-46.4% vs. Q3 16). The division's contribution to Group net income
totalled EUR 500 million in Q3 17, up +9.4% vs. Q3 16.
Revenues amounted to EUR 5,975
million in 9M 17, up +6.1% vs. 9M 16. Operating income
was
EUR 2,388 million (+31.3% vs. 9M 16) and the contribution to Group
net income came to EUR 1.5 billion (+25.8%).
In EUR m |
Q3 17 |
Q3 16 |
Change |
9M 17 |
9M 16 |
Change |
Net banking income |
1,988 |
1,915 |
+3.8% |
+5.2%* |
5,975 |
5,631 |
+6.1% |
+5.2%* |
Operating expenses |
(1,072) |
(1,031) |
+4.0% |
+6.3%* |
(3,306) |
(3,202) |
+3.2% |
+2.3%* |
Gross operating income |
916 |
884 |
+3.6% |
+4.0%* |
2,669 |
2,429 |
+9.9% |
+8.9%* |
Net cost of
risk |
(111) |
(207) |
-46.4% |
-45.2%* |
(281) |
(610) |
-53.9% |
-58.7%* |
Operating
income |
805 |
677 |
+18.9% |
+19.1%* |
2,388 |
1,819 |
+31.3% |
+32.3%* |
Net profits
or losses from other assets |
0 |
46 |
n/s |
n/s |
33 |
59 |
-44.1% |
-48.4%* |
Reported Group net income |
500 |
457 |
+9.4% |
+16.5%* |
1,501 |
1,193 |
+25.8% |
+30.5%* |
RONE |
18.0% |
16.8% |
|
|
17.9% |
15.0% |
|
|
Adjusted RONE(1) |
17.4% |
16.2% |
|
|
18.3% |
15.2% |
|
|
(1) Adjusted for IFRIC 21
implementation
International
Retail Banking
At end-September 2017, International Retail Banking's outstanding
loans had risen +4.8% (+7.9%*) vs. Q3 16, to EUR 86.2 billion; the
increase was particularly strong in Europe, especially in the
individual customer segment. Deposit inflow remained high in
virtually all the international operations; outstanding deposits
totalled EUR 77.7 billion at end-September 2017, up +4.9% (+9.0%*)
year-on-year.
After adjustment for structure
effects (disposal of Splitska Banka in Croatia and Bank Republic in
Georgia), there was a significant increase in International Retail
Banking's financial performance, in line with previous quarters.
Revenues were 2.7% higher than in Q3 16 (+6.7%*), underpinned by
the healthy commercial momentum, while the increase in operating
expenses (+0.9%, +4.7%*) reflects investments in fast-growing
activities. Gross operating income came to EUR 564 million, up
+5.0% (+9.5%*) vs. Q3 16. International Retail Banking's
contribution to Group net income amounted to EUR 278
million in Q3 17 (+31.1% vs. Q3 16), due primarily to the decline
in the net cost of risk
(-51.5% vs. Q3 16).
International Retail Banking's net
banking income totalled EUR 3,893 million in 9M 17, up +4.2%
(+5.5%*) vs. 9M 16. The contribution to Group net income came to
EUR 749 million in 9M 17 vs.
EUR 529 million in 9M 16 (+41.6%).
In Western Europe, outstanding
loans were up +14.4%* vs. Q3 16, at EUR 17.4 billion, and resulted
in revenue growth of +8.2%. In Q3 17, the region's net banking
income totalled EUR 198 million and gross operating income EUR 105
million, up 18.0%. The contribution to Group net income came to EUR
53 million, up +35.9% vs. Q3 16.
In the Czech Republic, the
commercial momentum continued in Q3 17. Outstanding loans rose
+10.5% (+6.2%*), driven by home loans and consumer loans.
Outstanding deposits climbed +13.8% (+9.4%*) year-on-year. At EUR
258 million in Q3 17, revenues were slightly higher (+0.4%,
-3.1%*), given the persistent low interest rate environment. Over
the same period, operating expenses were up +8.1% (+4.3%*) at EUR
-134 million, due to an increase in payroll costs in a full
employment environment. The contribution to Group net income
amounted to EUR 57 million (-14.9% vs. Q3 16, when the contribution
to Group net income benefited from the capital gain on the disposal
of a payment services subsidiary).
In Romania, the franchise expanded
in a buoyant economic environment but in a highly competitive
banking sector, with outstanding loans growing +4.9% (+8.3%*) and
deposits rising +1.4% (+4.7%*). Outstanding loans totalled EUR 6.7
billion, primarily on the back of the growth in the individual
customer and large corporate segments. Deposits totalled EUR 9.3
billion. In this context, net banking income rose +5.3% (+8.0%*).
Operating expenses were up +2.5% (+5.1%*), given the investments in
the network's transformation. Concerning the net cost of risk, Q3
17 was again marked by provision write-backs, which led to a
negative net cost of risk of EUR +10 million. As a result, the BRD
group's contribution to Group net income was EUR 31 million; it was
EUR 16 million in Q3 16.
In other European countries,
outstanding loans were down -15.2% and deposits were down -19.1%
vs. Q3 16, due to the disposal of Splitska Banka and Bank Republic.
When adjusted for changes in Group structure and at constant
exchange rates, outstanding loans and outstanding deposits were up
+8.3%* and +9.5%* respectively. In Q3 17, revenues rose +3.1%* when
adjusted for changes in Group structure and at constant exchange
rates (-22.4% in absolute terms), while operating expenses were
down -1.0%* (-24.4% in absolute terms) as a result of the cost
control in all countries in the region. The contribution to Group
net income came to EUR 35 million (EUR 38 million in Q3 16), with
the decline in the net cost of risk (-36.0%) largely offsetting the
decline in gross operating income following the disposal of
Splitska Banka. Overall, the region's contribution to Group net
income was up +32.8%*, when adjusted for changes in Group structure
and at constant exchange rates.
In Russia, activity in the
individual customer segment continued to expand against the
backdrop of a stabilisation in the economic environment.
Outstanding loans were up +6.3% (+4.5%*), driven both by corporate
loans (+2.1%*) and loans to individual customers (+6.2%*).
Outstanding deposits were substantially higher (+15.8%, +15.7%*),
both for individual and business customers, contributing to the
improvement in the financing cost for the Group's entities in
Russia. Net banking income for SG Russia(1) totalled EUR
205 million in Q3 17, up +18.0% (+13.3%*). Operating expenses
remained under control at EUR -141 million, +7.0% (+2.8%*) and the
net cost of risk was substantially lower at EUR -11 million (-77.8%
vs. Q3 16). Overall, SG Russia made a positive contribution to
Group net income of EUR 38 million in Q3 17 (corresponding to a
RONE of 13%). SG Russia's contribution to Group net income was EUR
7 million in Q3 16.
In Africa and other regions where
the Group operates, outstanding loans rose +2.4% (+5.6%*
vs. Q3 16) to EUR 18.9 billion, with a
healthy commercial momentum in the majority of African operations.
Outstanding deposits were up +4.6% (+7.8%*) at EUR 19.0 billion.
Net banking income came to
EUR
377 million in Q3 17, an increase vs. Q3 16 (+6.5%, +10.3%*). Over
the same period, operating expenses rose +8.1% (+11.6%*),
accompanying the development of the businesses in the region. The
contribution to Group net income came to EUR 71 million in Q3 17,
up +29.1% vs. Q3 16.
Insurance
The life insurance savings business saw outstandings climb +16.5%
in Q3 17 vs. Q3 16, reflecting the integration of Antarius'
life insurance outstandings.
There was further growth in
Personal Protection insurance (premiums up +9.8% vs. Q3 16).
Likewise, Property/Casualty insurance continued to grow (premiums
up +10.5% vs. Q3 16), with substantial growth internationally
(+23.2% vs. Q3 16), driven by car and home insurance.
The Insurance business turned in a
good financial performance in Q3 17, with net banking income up
+14.5% vs. Q3 16 at EUR 253 million (+8.2%* when adjusted for
changes in Group structure and at constant exchange rates), and a
still low cost to income ratio (35.2% in Q3 17). The contribution
to Group net income increased +11.5% in Q3 17 to EUR 107
million.
Financial
Services to Corporates
Financial Services to Corporates maintained its commercial momentum
in Q3 2017.
Operational Vehicle Leasing and
Fleet Management experienced another substantial increase in its
vehicle fleet in Q3 17 (+9.8%).
Equipment Finance enjoyed a good
level of new business in Q3 17, with an increase of +1.4% (+2.7%*)
vs. Q3 16. Outstanding loans were up +3.2% (+4.7%*) vs. Q3 16, at
EUR 16.8 billion (excluding factoring), in a highly competitive
environment adversely affecting new business margins.
Financial Services to Corporates'
net banking income rose +1.4% to EUR 426 million in Q3 17
(-1.1%*). Operating expenses were higher over the period at EUR
-218 million (+14.1%, 12.5%*, vs. Q3 16), due to operating and
technological investments related to the development of activities.
The contribution to Group net income was EUR 130 million, down
-17.2% vs. Q3 16, following the disposal of 20.18% of ALD's capital
as part of its stock market floatation.
In 9M 17, Financial Services to
Corporates' net banking income came to EUR 1,334 million (+9.1%,
+3.9%*, vs. 9M 16) and the contribution to Group net income was EUR
459 million (+6.0% vs. 9M 16).
-
GLOBAL BANKING & INVESTOR SOLUTIONS
In EUR m |
Q3 17 |
Q3 16 |
Change |
9M 17 |
9M 16 |
Change |
Net banking income |
1,955 |
2,292 |
-14.7% |
-12.2%* |
6,770 |
7,084 |
-4.4% |
-3.4%* |
Operating expenses |
(1,567) |
(1,666) |
-5.9% |
-3.2%* |
(5,216) |
(5,136) |
+1.6% |
+2.6%* |
Gross operating income |
388 |
626 |
-38.0% |
-36.2%* |
1,554 |
1,948 |
-20.2% |
-18.9%* |
Net cost of
risk |
8 |
(36) |
n/s |
n/s |
(16) |
(282) |
-94.3% |
-94.3%* |
Operating
income |
396 |
590 |
-32.9% |
-30.9%* |
1,538 |
1,666 |
-7.7% |
-6.0%* |
Reported Group net income |
316 |
469 |
-32.6% |
-30.7%* |
1,198 |
1,371 |
-12.6% |
-11.1%* |
RONE |
8.7% |
12.4% |
|
|
11.0% |
11.9% |
|
|
Adjusted RONE(1) |
7.0% |
11.2% |
|
|
11.5% |
10.4% |
|
|
(1) Adjusted for IFRIC 21
implementation
With net banking income of EUR
1,955 million in Q3 17, Global Banking & Investor Solutions saw
its revenues decline -14.7% in Q3 17 vs. Q3 16 (EUR 2,292 million),
which benefited from a good level of activity.
The division's net banking income
totalled EUR 6,770 million in 9M 17, down -4.4% vs. 9M 16.
Global Markets
& Investor Services
Global Markets & Investor Services' net
banking income amounted to EUR 1,160 million in Q3 17, down -20.7%
vs. Q3 16 and -4.9% vs. 9M 16 at EUR 4,334 million. The first signs
of a slowdown observed in Q2 intensified, with sluggish trading
activity in August and a late rebound at the end of the quarter.
While world markets continued on their upward trend, Q3 was marked
primarily by the "wait-and-see" attitude of investors, in
conjunction with historically low volatility.
At EUR 496 million in Q3 17 (EUR
1,859 million in 9M 17), the net banking income of Fixed Income, Currencies &
Commodities declined -27.8% vs. Q3 16 and -7.3% vs. 9M 16, in a
lacklustre market, characterised by a low volatility environment
and reduced investor activity. In this context, structured products
turned in a good performance, confirming the successful expansion
of our cross-asset structured products franchise. In contrast, flow
product revenues were lower on all underlyings, particularly on
Rates, impacted by low volatility, and on Credit, hit by very tight
spreads.
The net banking income of
Equities and Prime Services was down -19.3%
vs. Q3 16 and -5% vs. 9M 16.
Equities' net
banking income was EUR 359 million in Q3 17 (down -25.5% vs. Q3
16), and
EUR 1,470 million in 9M 17 (-7.5% vs. 9M 16). Impacted by
historically low volatility, structured product revenues plummeted
in Q3 17, despite resilient commercial activity. In this context,
flow products also experienced limited activity, particularly on
flow derivatives. However, the Group retained its leadership
position in this segment (No. 2 globally based on Euronext Global
volumes).
Prime
Services' net banking income totalled EUR 139 million in Q3 17
(up +3.0% vs. Q3 16) and EUR 491 million in 9M 17 (+4.0% vs. 9M
16). The business continued with the proactive development of its
franchises.
Securities
Services' assets under custody amounted to EUR 3,955 billion at
end-September 2017, down -2.0% year-on-year. Over the same period,
assets under administration were up +9.9% at
EUR 654 billion. Securities Services' revenues were up +4.4% in Q3
17 vs. Q3 16 at EUR 166 million (and +5.1% vs. 9M 16). The business
saw an increase in commissions, particularly on custody and
settlement/delivery activity, and benefited from a less
unfavourable rate environment.
Financing &
Advisory
Financing & Advisory's net banking income
came to EUR 569 million, stable vs. Q3 16 (-0.7%), and
EUR 1,693 million in 9M 17 (-5.0% vs. 9M 16). Revenues were higher
for the Asset Financing division, which benefited from good
commercial activity with an increase in volumes, and the Capital
Markets division, which maintained the healthy momentum of previous
quarters, bolstered primarily by the excellent performance of the
securitisation and leveraged finance businesses. Despite a good
commercial momentum, reflected in higher origination volumes than
last year, the Natural Resources division continued to suffer from
a particularly lacklustre commodities market.
Asset and Wealth
Management
The net banking income of the Asset and Wealth
Management business line totalled EUR 226 million in Q3 17,
down -11.7% vs. Q3 16. Net banking income was stable at EUR 743
million in 9M 17 (-0.4% vs. 9M 16).
Private
Banking's assets under management amounted to EUR 119 billion
at end-September 2017. Driven by positive inflow in Q3 17, assets
under management were 2.6% higher than at end-December 2016. Net
banking income was down -14.9% vs. Q3 16, at EUR 177 million, and
-3.1% vs. 9M 16, at EUR 589 million.
Lyxor's
assets under management came to EUR 110 billion (+3.8% vs.
end-December 2016), underpinned by healthy inflow. Lyxor retained
its No. 2 ETF ranking in Europe, with a market share of 10.3%
(source ETFGI). Net banking income amounted to EUR 45 million in Q3
17 (+7.1% vs. Q3 16) and EUR 140 million (+19.7% vs. 9M 16), driven
by an excellent commercial momentum on ETFs.
Operating
expenses
Global Banking & Investor Solutions' operating expenses were
down -5.9% in Q3 17 vs. Q3 16. They were up +1.6% in 9M 17 due to a
base effect related to the partial refund of the Euribor
fine(2)
in
Q1 16. When restated for this effect, operating expenses were down
-2.6% vs. 9M 16, reflecting cost control efforts implemented via
the 2015-2017 transformation plan. They more than offset the
increase in regulatory constraints. The cost to income ratio stood
at 77.0% in 9M 17.
Operating
income
Gross operating income came to EUR 388 million (down -38% vs. Q3
16), and EUR 1,554 million (down -20.2% vs. 9M 16).
The net cost of risk remained at a
very low level for the fourth consecutive quarter, with a net
write-back of EUR +8 million in Q3 17, an improvement compared with
EUR -36 million in Q3 16. The net cost of risk was EUR -16 million
in 9M 17 (EUR -282 million in 9M 16).
The division's operating income
totalled EUR 396 million in Q3 17 (down -32.9% vs. Q3 16)
and
EUR 1,538 million in 9M 17 (down -7.7% vs. 9M 16).
Net
income
The division's contribution to Group net income came to EUR 316
million in Q3 17 (-32.6% vs. Q3 16) and EUR 1,198 million in 9M 17.
When restated for the effect of IFRIC 21, the division's RONE
amounted to 11.5% in 9M 17 (11.0% in absolute terms).
-
CORPORATE CENTRE
In EUR m |
Q3 17 |
Q3 16 |
9M 17 |
9M 16 |
Net banking income |
76 |
(239) |
(1,161) |
228 |
Net banking income(1) |
23 |
(2) |
(1,015) |
532 |
Operating expenses |
14 |
27 |
(66) |
30 |
Gross
operating income |
90 |
(212) |
(1,227) |
258 |
Gross operating income(1) |
37 |
25 |
(1,081) |
562 |
Net cost of
risk |
(301) |
0 |
(200) |
(191) |
Net profits
or losses from other assets |
72 |
(15) |
279 |
(26) |
Reported Group net income |
(194) |
(180) |
(950) |
(164) |
Group net income(1) |
(232) |
(25) |
(846) |
35 |
-
Adjusted for revaluation of own financial
liabilities
The Corporate Centre includes:
-
the property management of the Group's head
office,
-
the Group's equity portfolio,
-
the Treasury function for the Group,
-
certain costs related to cross-functional
projects and certain costs incurred by the Group and not
re-invoiced to the businesses.
The Corporate Centre's net banking
income totalled EUR 76 million in Q3 17 (EUR -239 million
in
Q3 16), and EUR 23 million excluding the revaluation of the Group's
own financial liabilities (EUR -2 million in Q3 16).
Gross operating income was EUR 90
million in Q3 17 vs. EUR -212 million in Q3 16. When restated for
the revaluation of own financial liabilities, gross operating
income amounted to EUR 37 million in Q3 17 (vs. EUR 25 million in
Q3 16). When restated for these non-economic items and exceptional
items of previous quarters in 2017 and 2016, gross operating income
came to EUR -118 million in
9M 17 vs. EUR -163 million in 9M 16. The Corporate Centre's gross
operating income, excluding non-economic and exceptional items, is
expected to be above EUR -500 million for full-year 2017.
The net cost of risk amounted to
EUR -301 million and includes an additional allocation to the
provision for disputes of EUR 300 million.
The item "net profits or losses
from other assets" amounted to EUR 72 million in Q3 17 and consists
mainly of the capital gain on the disposal of SG Fortune for EUR 74
million before inclusion of the tax effect.
The Corporate Centre's
contribution to Group net income was EUR -194 million in Q3 17 (EUR
-950 million in 9M 17), vs. EUR -180 million in Q3 16 (EUR -164
million in 9M 16). When restated for the impact of the revaluation
of own financial liabilities, the Corporate Centre's contribution
to Group net income was EUR -232 million in Q3 17 (EUR -846 million
in 9M 17) vs. EUR -25 million in Q3 16
(EUR 35 million in 9M 16).
-
CONCLUSION
Societe Generale generated Group
net income, excluding non-economic items, of EUR 894 million in Q3
2017. Underlying Group net income increased by 16.9% to EUR 3,616
million in the first nine months of the year.
These results reflect the good
performance of International Retail Banking & Financial
Services whose commercial momentum continued in all the businesses.
French Retail Banking delivered a solid performance, despite the
adjustment of hedging costs, and confirmed its revenue and cost
guidance for 2017. In a historically low volatility environment,
Global Banking & Investor Solutions was affected by the decline
in Global Markets.
Moreover, the significant decline
in the net cost of risk (excluding provision for disputes)
illustrates the Group's intention to maintain a rigorous risk
management policy.
Societe Generale will present its
strategic plan on November 28th.
8. 2017-2018
FINANCIAL CALENDAR
2017-2018 financial communication
calendar
November 28th,
2017 Presentation of the
strategic plan - Investor Day
February 8th,
2018
Fourth quarter and FY 2017 results
May 4th,
2018
First quarter 2018 results
August 2nd,
2018
Second quarter and first half 2018 results
November 8th,
2018 Third quarter
2018 results
The
Alternative Performance Measures, notably the notions of net
banking income for the pillars, operating expenses, IFRIC 21
adjustment, (commercial) cost of risk in basis points, ROE, RONE,
net assets, tangible net assets, EPS excluding non-economic items,
and the amounts serving as a basis for the different restatements
carried out (in particular the transition from accounting data to
underlying data) are presented in the methodology notes, as are the
principles for the presentation of prudential ratios.
This document contains forward-looking statements relating to the
targets and strategies of the Societe Generale 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 in accordance with
IFRS (International Financial Reporting Standards) as adopted in
the European Union, as well as the application of existing
prudential regulations.
These forward-looking statements have also been developed from
scenarios based on a number of economic assumptions in the context
of a given competitive and regulatory environment. The Group may be
unable to:
- anticipate all the risks, uncertainties or other factors likely
to affect its business and to appraise their potential
consequences;
- evaluate the extent to which the occurrence of a risk or a
combination of risks could cause actual results to differ
materially from those provided in this document and the related
presentation.
Therefore, although Societe Generale believes that these statements
are based on reasonable assumptions, these forward-looking
statements are subject to numerous risks and uncertainties,
including matters not yet known to it or its management or not
currently considered material, and there can be no assurance that
anticipated events will occur or that the objectives set out will
actually be achieved. Important factors that could cause actual
results to differ materially from the results anticipated in the
forward-looking statements include, among others, overall trends in
general economic activity and in Societe Generale's markets in
particular, regulatory and prudential changes, and the success of
Societe Generale's strategic, operating and financial
initiatives.
More detailed information on the potential risks that could affect
Societe Generale's financial results can be found in the
Registration Document filed with the French Autorité des Marchés
Financiers.
Investors are advised to take into account factors of uncertainty
and risk likely to impact the operations of the Group when
considering the information contained in such forward-looking
statements. Other than as required by applicable law, Societe
Generale does not undertake any obligation to update or revise any
forward-looking information or statements. Unless otherwise
specified, the sources for the business rankings and market
positions are internal.
|
-
APPENDIX 1: FINANCIAL DATA
CONSOLIDATED
INCOME STATEMENT
|
9M 17 |
9M 16 |
Change |
|
Q3 17 |
Q3 16 |
Change |
|
In M EUR |
|
|
|
|
|
|
|
|
Net banking income |
17,631 |
19,169 |
-8.0% |
-8.2%* |
5,958 |
6,010 |
-0.9% |
+0.5%* |
Operating expenses |
(12,814) |
(12,419) |
+3.2% |
+3.4%* |
(4,001) |
(4,016) |
-0.4% |
+1.5%* |
Gross operating income |
4,817 |
6,750 |
-28.6% |
-29.5%* |
1,957 |
1,994 |
-1.9% |
-1.4%* |
Net cost of risk |
(880) |
(1,605) |
-45.2% |
-47.0%* |
(512) |
(417) |
+22.8% |
+24.6%* |
Operating income |
3,937 |
5,145 |
-23.5% |
-24.0%* |
1,445 |
1,577 |
-8.4% |
-8.3%* |
Net profits or losses from other assets |
317 |
50 |
x 6.3 |
x 6.2 |
72 |
62 |
+16.1% |
+16.5%* |
Net income from companies accounted for by the equity
method |
86 |
101 |
-14.9% |
+17.0%* |
36 |
33 |
+9.1% |
+77.2%* |
Impairment losses on goodwill |
1 |
0 |
n/s |
n/s |
0 |
0 |
n/s |
n/s |
Income tax |
(1,150) |
(1,461) |
-21.3% |
-22.0%* |
(459) |
(450) |
+2.0% |
+2.2%* |
Net income |
3,191 |
3,835 |
-16.8% |
-16.5%* |
1,094 |
1,222 |
-10.5% |
-9.5%* |
O.w. non-controlling interests |
454 |
351 |
+29.3% |
+20.5%* |
162 |
123 |
+31.7% |
+10.0%* |
Group net income |
2,737 |
3,484 |
-21.4% |
-20.3%* |
932 |
1,099 |
-15.2% |
-11.7%* |
Tier 1 ratio at the end of period |
14.3% |
14.3% |
|
|
14.3% |
14.3% |
|
|
* When adjusted
for changes in Group structure and at constant exchange
rates
GROUP NET INCOME
AFTER TAX BY CORE BUSINESS
|
|
|
|
|
|
|
In M
EUR |
9M 17 |
9M 16 |
Change |
Q3 17 |
Q3 16 |
Change |
French Retail Banking |
988 |
1,084 |
-8.9% |
310 |
353 |
-12.2% |
International Retail Banking and Financial
Services |
1,501 |
1,193 |
+25.8% |
500 |
457 |
+9.4% |
Global Banking and Investor Solutions |
1,198 |
1,371 |
-12.6% |
316 |
469 |
-32.6% |
Core Businesses |
3,687 |
3,648 |
+1.1% |
1,126 |
1,279 |
-12.0% |
Corporate Centre |
(950) |
(164) |
n/s |
(194) |
(180) |
-7.8% |
Group |
2,737 |
3,484 |
-21.4% |
932 |
1,099 |
-15.2% |
|
|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEET
Assets - in EUR
bn |
30.09.2017 |
31.12.2016 |
Cash, due from central
banks |
96.6 |
96.2 |
Financial assets measured at
fair value through profit and loss |
490.1 |
514.7 |
Hedging derivatives |
14.5 |
18.1 |
Available-for-sale financial
assets |
141.6 |
139.4 |
Due from banks |
67.2 |
59.5 |
Customer loans |
412.2 |
426.5 |
Revaluation differences on
portfolios hedged against interest rate risk |
0.7 |
1.1 |
Held-to-maturity financial
assets |
3.5 |
3.9 |
Tax assets |
6.2 |
6.4 |
Other assets |
77.2 |
84.8 |
Non-current assets held for
sale |
0.0 |
4.3 |
Investments in subsidiaries
and affiliates accounted for by equity method |
0.8 |
1.1 |
Tangible and intangible fixed
assets |
23.2 |
21.8 |
Goodwill |
4.9 |
4.5 |
Total |
1,338.7 |
1,382.2 |
Liabilities - in EUR
bn |
30.09.2017 |
31.12.2016 |
Due to central banks |
10.9 |
5.2 |
Financial liabilities measured
at fair value through profit and loss |
427.6 |
455.6 |
Hedging derivatives |
7.0 |
9.6 |
Due to banks |
87.6 |
82.6 |
Customer deposits |
396.7 |
421.0 |
Securitised debt payables |
99.0 |
102.2 |
Revaluation differences on
portfolios hedged against interest rate risk |
6.5 |
8.5 |
Tax liabilities |
1.7 |
1.4 |
Other liabilities |
87.1 |
94.2 |
Non-current liabilities held
for sale |
0.0 |
3.6 |
Underwriting reserves of
insurance companies |
130.4 |
112.8 |
Provisions |
5.5 |
5.7 |
Subordinated debt |
13.8 |
14.1 |
Shareholders' equity |
60.3 |
62.0 |
Non-controlling interests |
4.5 |
3.8 |
Total |
1,338.7 |
1,382.2 |
NB. Customer
loans include lease financing.
-
APPENDIX 2: METHODOLOGY
1 - The Group's
consolidated results as at September 30th, 2017 were
approved by the Board of Directors on November 2nd,
2017.
The financial information
presented in respect of Q3 and first nine months of the year ending
September 30th, 2017 has
been prepared in accordance with IFRS as adopted in the European
Union and applicable at that date, and has not been audited.
2 - Net banking income
The pillars' net banking income is
defined on page 44 of Societe Generale's 2017 Registration
Document. The terms "Revenues" or "Net Banking Income" are used
interchangeably. They provide a normalised measure of each pillar's
net banking income taking into account the normative capital
mobilised for its activity.
3 - Operating
expenses
Operating
expenses correspond to the "Operating Expenses" as presented in
notes 5 and 8.2 to the Group's consolidated financial statements as
at December 31st, 2016 (pages
381 et seq. and page 401 of Societe Generale's 2017 Registration
Document). The term "costs" is also used to refer to Operating
Expenses.
The Cost/Income
Ratio is defined on page 44 of Societe Generale's 2017
Registration Document.
4 - IFRIC 21
adjustment
The IFRIC 21
adjustment corrects the result of the charges recognised in the
accounts in their entirety when they are due (generating event) so
as to recognise only the portion relating to the current quarter,
i.e. a quarter of the total. It consists in smoothing the charge
recognised accordingly over the financial year in order to provide
a more economic idea of the costs actually attributable to the
activity over the period analysed.
The corrections made in this
respect to operating expenses for the different business divisions
and the Group for the first nine months of 2017 are reiterated
below:
|
|
French Retail
Banking |
International Retail
Banking and Financial Services |
Global Banking and
Investor Solutions |
Corporate
Centre |
Group |
|
|
|
|
|
|
|
|
|
|
|
|
In EUR m |
|
9M 17 |
9M 16 |
9M 17 |
9M 16 |
9M 17 |
9M 16 |
9M 17 |
9M 16 |
9M 17 |
9M 16 |
|
|
|
|
|
|
|
|
|
|
|
|
Total IFRIC 21 Impact -
costs |
|
(103) |
(85) |
(136) |
(126) |
(349) |
(261) |
(39) |
(49) |
(626) |
(523) |
o/w Resolution Funds |
|
(55) |
(34) |
(52) |
(34) |
(263) |
(160) |
10 |
(5) |
(360) |
(232) |
5 - Restatements
and other significant items for the period - Transition from
accounting data to underlying data
Non-economic
items correspond to the revaluation of the Group's own
financial liabilities and the debt value adjustment on derivative
instruments (DVA). These two factors constitute the restated
non-economic items in the analyses of the Group's results. They
lead to the recognition of self-generated earnings reflecting the
market's evaluation of the counterparty risk related to the Group.
They are also restated in respect of the Group's earnings for
prudential ratio calculations.
Moreover, the Group restates the
revenues and earnings of the French Retail Banking pillar for
PEL/CEL provision allocations or write-backs.
This adjustment makes it easier to identify the revenues and
earnings relating to the pillar's activity, by excluding the
volatile component related to commitments specific to regulated
savings.
Details of these items, as well as
the other items that are the subject of a one-off or recurring
restatement (exceptional items), are provided below, given that, in
the table below, the items marked with one asterisk (*) are the
non-economic items and the items marked with two asterisks (**) are
the exceptional items.
The reconciliation enabling the
transfer from accounting data to underlying data is set out
below.
In EUR m |
Q3 17 |
Q3 16 |
Change |
9M 17 |
9M 16 |
Change |
Net Banking Income |
5,958 |
6,010 |
-0.9% |
17,631 |
19,169 |
-8.0% |
Reevaluation of own financial
liabilities* |
53 |
(237) |
|
(146) |
(304) |
|
DVA* |
(0) |
(4) |
|
(6) |
(3) |
|
Visa transaction** |
|
|
|
|
725 |
|
LIA settlement** |
|
|
|
(963) |
|
|
Adjustment of hedging costs** |
(88) |
|
|
(88) |
|
|
|
|
|
|
|
|
|
Underlying Net Banking Income |
5,993 |
6,251 |
-4.1% |
18,834 |
18,751 |
+0.4% |
|
|
|
|
|
|
|
Operating expenses |
(4,001) |
(4,016) |
-0.4% |
(12,814) |
(12,419) |
+3.2% |
IFRIC 21 |
(157) |
(131) |
|
157 |
131 |
|
Euribor fine refund** |
|
|
|
|
218 |
|
Underlying Operating expenses |
(4,158) |
(4,147) |
+0.3% |
(12,657) |
(12,506) |
+1.2% |
|
|
|
|
|
|
|
Net cost of risk |
(512) |
(417) |
+22.8% |
(880) |
(1,605) |
-45.2% |
Provision for disputes** |
(300) |
|
|
(600) |
(200) |
|
LIA settlement** |
|
|
|
400 |
|
|
Underlying Net cost of risk |
(212) |
(417) |
-49.2% |
(680) |
(1,405) |
-51.6% |
|
|
|
|
|
|
|
Net profit or losses from other
assets |
72 |
62 |
+16.1% |
317 |
50 |
n/s |
Change in consolidation method of
Antarius** |
|
|
|
203 |
|
|
SG Fortune disposal** |
74 |
|
|
74 |
|
|
Underlying Net profits or losses from
other assets |
(2) |
62 |
n/s |
40 |
50 |
n/s |
|
|
|
|
|
|
|
Group net income |
932 |
1,099 |
-15.2% |
2,737 |
3,484 |
-21.4% |
Effect in Group net income of
non-economic and exceptional items and IFRIC 21 |
(147) |
(69) |
|
(879) |
390 |
|
Underlying Group net income |
1,079 |
1,168 |
-7.7% |
3,616 |
3,094 |
+16.9% |
|
|
|
|
|
|
|
* Non-economic items |
|
|
|
|
|
|
** Exceptional items |
|
|
|
|
|
|
6 - Cost of risk
in basis points, coverage ratio for doubtful outstandings
The cost of risk or commercial
cost of risk is defined on pages 46 and 528 of Societe Generale's
2017 Registration Document. This indicator makes it possible to
assess the level of risk of each of the pillars as a percentage of
balance sheet loan commitments, including operating leases.
|
(In EUR M) |
Q3 17 |
Q3 16 |
9M 17 |
9M 16 |
French Retail Banking |
Net
Cost of Risk |
104 |
172 |
389 |
495 |
Gross
loan outstandings |
195,243 |
189,232 |
191,061 |
188,244 |
Cost of Risk in bp |
21 |
36 |
27 |
35 |
International Retail Banking and Financial
Services |
Net
Cost of Risk |
105 |
201 |
257 |
602 |
Gross
loan outstandings |
125,914 |
120,348 |
125,259 |
117,656 |
Cost of Risk in bp |
33 |
67 |
27 |
68 |
Global Banking and Investor
Solutions |
Net
Cost of Risk |
(7) |
36 |
16 |
280 |
Gross
loan outstandings |
137,907 |
156,888 |
148,650 |
146,276 |
Cost of Risk in bp |
(2) |
9 |
1 |
26 |
Societe Generale Group |
Net
Cost of Risk |
201 |
409 |
662 |
1,367 |
Gross
loan outstandings |
467,995 |
479,068 |
472,862 |
464,323 |
Cost of Risk in bp |
17 |
34 |
19 |
39 |
The gross
coverage ratio for doubtful outstandings is calculated as the
ratio of provisions recognised in respect of the credit risk to
gross outstandings identified as in default within the meaning of
the regulations, without taking account of any guarantees provided.
This coverage ratio measures the maximum residual risk associated
with outstandings in default ("doubtful").
7 - ROE,
RONE
The notion of ROE, as well as the
methodology for calculating it, are specified on page 47 of Societe
Generale's 2017 Registration Document. This measure makes it
possible to assess Societe Generale's return on equity.
RONE (Return on
Normative Equity) determines the return on average normative
equity allocated to the Group's businesses, according to the
principles presented on page 47 of Societe Generale's Registration
Document.
Calculation of
the Group's ROE (Return on Equity)
Details of the corrections made to
book equity in order to calculate ROE for the period are given in
the table below:
Symmetrically, Group net income
used for the ratio numerator is book Group net income adjusted for
"interest, net of tax payable to holders of deeply subordinated
notes and undated subordinated notes, interest paid to holders of
deeply subordinated notes and undated subordinated notes, issue
premium amortisations" and "unrealised gains/losses booked under
shareholders' equity, excluding conversion reserves" (see
methodology note No. 9).
End of period |
9M 17 |
2016 |
9M 16 |
Shareholders' equity Group share |
60,254 |
61,953 |
60,886 |
Deeply
subordinated notes |
(9,082) |
(10,663) |
(10,232) |
Undated
subordinated notes |
(272) |
(297) |
(372) |
Interest net of tax payable to holders of deeply
subordinated notes & undated subordinated notes, interest paid
to holders of deeply subordinated notes & undated subordinated
notes, issue premium amortisations |
(154) |
(171) |
(178) |
Unrealised gains/losses booked under shareholders' equity,
excluding conversion reserves |
(1,082) |
(1,273) |
(1,493) |
Dividend
provision |
(1,321) |
(1,759) |
(1,675) |
ROE equity |
48,342 |
47,790 |
46,936 |
Average ROE equity |
48,132 |
46,531 |
46,253 |
RONE calculation:
Average capital allocated to Core Businesses (in EURm)
|
Q3 17 |
Q3 16 |
9M 17 |
9M 16 |
French Retail Banking |
11,227 |
10,915 |
11,020 |
10,542 |
International Retail Banking and Financial
Services |
11,099 |
10,887 |
11,200 |
10,625 |
Global Banking and Investor Solutions |
14,479 |
15,082 |
14,584 |
15,342 |
8 - Net assets
and tangible net assets are defined in the methodology, page 49
of the Group's 2017 Registration Document ("Net Assets"). The items
used to calculate them are presented below.
End of period |
9M 17 |
2016 |
9M 16 |
Shareholders' equity Group share |
60,254 |
61,953 |
60,886 |
Deeply
subordinated notes |
(9,082) |
(10,663) |
(10,232) |
Undated
subordinated notes |
(272) |
(297) |
(372) |
Interest
net of tax payable to holders of deeply subordinated notes &
undated subordinated notes, interest paid to holders of deeply
subordinated notes & undated subordinated notes, issue premium
amortisations |
(154) |
(171) |
(178) |
Book value
of own shares in trading portfolio |
181 |
75 |
47 |
Net Asset Value |
50,926 |
50,897 |
50,151 |
Goodwill |
5,028 |
4,709 |
4,798 |
Net Tangible Asset Value |
45,899 |
46,188 |
45,353 |
|
|
|
|
Number of shares used to calculate NAPS** |
800,848 |
799,462 |
799,217 |
|
|
|
|
NAPS** (in EUR) |
63.6 |
63.7 |
62.8 |
Net Tangible Asset Value per share (EUR) |
57.3 |
57.8 |
56.7 |
** The number of
shares considered is the number of ordinary shares outstanding as
at September 30th, 2017, excluding treasury
shares and buybacks, but including the trading shares held by the
Group.
In accordance with IAS 33, historical data per
share prior to the date of detachment of a preferential
subscription right are restated by the adjustment coefficient for
the transaction.
9 - Calculation
of Earnings Per Share (EPS)
The EPS published by Societe
Generale is calculated according to the rules defined by the IAS 33
standard (see page 48 of Societe Generale's 2017 Registration
Document). The corrections made to Group net income in order to
calculate EPS correspond to the restatements carried out for the
calculation of ROE. As specified on page 48 of Societe Generale's
2017 Registration Document, the Group also publishes EPS adjusted
for the impact of non-economic items presented in methodology note
No. 5.
The number of shares used for the
calculation is as follows:
Average number of shares (thousands) |
9M 17 |
2016 |
9M 16 |
Existing shares |
807,714 |
807,293 |
807,188 |
Deductions |
|
|
|
Shares
allocated to cover stock option plans and free shares awarded to
staff |
4,892 |
4,294 |
4,116 |
Other own
shares and treasury shares |
2,343 |
4,232 |
4,478 |
Number of shares used to calculate EPS |
800,478 |
798,768 |
798,594 |
Group net income |
2,737 |
3,874 |
3,484 |
Interest,
net of tax on deeply subordinated notes and undated subordinated
notes |
(349) |
(472) |
(337) |
Capital
gain net of tax on partial buybacks |
0 |
0 |
0 |
Adjusted Group net income |
2,388 |
3,402 |
3,147 |
EPS (in EUR) |
2.98 |
4.26 |
3.94 |
EPS* (in EUR) |
3.12 |
4.55 |
4.19 |
* Adjusted for
revaluation of own financial liabilities and DVA
10 - The Societe Generale Group's Common
Equity Tier 1 capital is calculated in accordance with
applicable CRR/CRD4 rules. The fully-loaded solvency ratios are presented pro forma for current
earnings, net of dividends, for the current financial year, unless
specified otherwise. When there is reference to phased-in ratios,
these do not include the earnings for the current financial year,
unless specified otherwise. The leverage ratio is calculated
according to applicable CRR/CRD4 rules including the provisions of
the delegated act of October 2014.
NB (1) The
sum of values contained in the tables and analyses may differ
slightly from the total reported due to rounding rules.
(2) All the
information on the results for the period (notably: press release,
downloadable data, presentation slides and supplement) is available
on Societe Generale's website www.societegenerale.com in the
"Investor" section.
Societe
Generale
Societe Generale is one of the
largest European financial services groups. Based on a diversified
universal banking model, the Group combines financial solidity with
a strategy of sustainable growth, and aims to be the reference for
relationship banking, recognised on its markets, close to clients,
chosen for the quality and commitment of its teams.
Societe Generale has been playing
a vital role in the economy for 150 years. With more than 145,000
employees, based in 66 countries, we serve on a daily basis 31
million clients throughout the world. Societe Generale's teams
offer advice and services to individual, corporate and
institutional customers in three core businesses:
-
Retail banking in France
with the Societe Generale branch network, Crédit du Nord and
Boursorama, offering a comprehensive range of multi-channel
financial services at the leading edge of digital innovation;
-
International retail banking,
insurance and financial services to corporates with a presence
in developing economies and leading specialised businesses;
-
Corporate and investment
banking, private banking, asset management and securities
services, with recognised expertise, top international rankings
and integrated solutions.
Societe Generale is currently
included in the main sustainability indices: DJSI (World and
Europe), FTSE4Good (Global and Europe), Euronext Vigeo (World,
Europe and Eurozone), Ethibel Sustainability Index (ESI) Excellence
Europe, 4 of the STOXX ESG Leaders indices, MSCI Low Carbon Leaders
Index.
For more
information, you can follow us on twitter @societegenerale or visit our
website www.societegenerale.com
([1]) The phased-in ratio, excluding the
earnings of the current financial year, stood at 11.7% at
end-September 2017 vs. 11.8% at end-December 2016.
-
SG Russia encompasses
the entities Rosbank, Delta Credit Bank, Rusfinance Bank,
Societe Generale Insurance, ALD Automotive and their
consolidated subsidiaries
(2 ) Partial refund of the Euribor fine of EUR 218m in Q1
16
Societe Generale : 2017 third
quarter results
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Société Générale via Globenewswire
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