QUARTERLY FINANCIAL INFORMATION |
Paris, November 8th, 2012 |
|
Q3 2012:
FURTHER STEPS IN THE GROUP'S TRANSFORMATION
CORE TIER 1
RATIO(1) OF
10.3%
-
Disposal of Geniki and TCW
announced
-
SG CIB
loan sale programme
completed
-
Non-investment grade legacy assets' net book value reduced to EUR
3.2bn
GOOD BUSINESS PERFORMANCE: UNDERLYING
GROUP NET INCOME OF EUR 856M(2) |
Pick-up in Corporate and
Investment Banking activity, stable Retail Banking
revenues
-
Continued
decline in operating expenses:
-2.8%* vs. Q3 11
-
Cost of risk
under control, with net cost of risk
amounting to EUR -897m, -4 bp(3) vs. Q2
12
-
Book Group net income: EUR
85m, including in particular the impact of asset disposals and the
revaluation of own financial liabilities
9
MONTHS 2012: SOUND BUSINESS RESULTS,
TRANSFORMATION OF THE GROUP AND IMPROVED CAPITAL
RATIOS
-
Stable
NBI(2): EUR 19.0bn, -0.4%
vs. 9M 11
-
Operating
expenses down -3.4%* vs. 9M
11
-
Underlying
Group net income(2) of EUR
2,823m
Book Group net income of EUR
1,250m
(1)
Calculated according to EBA Basel 2.5
standards (Basel 2 standards incorporating CRD3
requirements)
(2) Excluding non-economic or non-recurring items and legacy
assets. Non-economic items: revaluation of own financial
liabilities and the Group's loan portfolio hedges. Non-recurring
items: goodwill write-down, capital gains/losses on
available-for-sale assets, impact on profit and loss of debt
buybacks, and deleveraging. Impact on Group net income of
non-economic items: EUR -396 million in Q3 12; non-recurring items:
EUR -293 million in Q3 12; legacy assets: EUR -82 million in Q3
12.
(3) Annualised, excluding litigation issues, legacy and
Greek sovereign assets, in respect of assets at the beginning of
the period
(4) After deducting interest, net of tax effect, to be paid
to holders of deeply subordinated notes and undated subordinated
notes (respectively EUR 200 million and EUR 11 million). At
end-September 2012, the capital gain net of tax and accrued unpaid
interest relating to buybacks of deeply subordinated notes amounted
to EUR 2 million.
* When adjusted for changes in Group
structure and at constant exchange rates |
The Board of Directors of Societe
Generale met on November 7th, 2012 and examined the Group's
financial statements for Q3 and the first nine months of 2012.
Third quarter Group net income was EUR 85 million and net banking
income totalled EUR 5,397 million. Group net income
totalled
EUR +1,250 million for the first nine months of the year, with net
banking income of
EUR 17,980 million.
The transformation strategy
initiated in 2010 has continued, particularly efforts to
reduce the risk profile and
optimise the Group's business asset portfolio. Corporate and Investment
Banking's loan disposal programme has achieved its objectives and
has now come to an end, with a total of EUR 16 billion of assets
sold since June 2011. Disposals and amortisation(1) have
helped reduce Corporate and Investment Banking's legacy asset
portfolio by a third since end-June 2012 and approximately
two-thirds since end-June 2011. In particular, the outstandings of
the non-investment grade legacy asset portfolio had been reduced to
EUR 3.2 billion at October 17th, 2012. At the same time, the Group
has announced the signing of agreements with a view to the disposal
of certain subsidiaries and shareholdings, including that of its
retail banking subsidiary in Greece (Geniki) and its US asset
management subsidiary (TCW).
The Group's risk-weighted assets
declined by EUR -5.4 billion over Q3 (EUR -12.2 billion for the
first nine months of the year), reflecting both this optimisation
strategy and the resource constraints imposed on the
businesses.
Thanks to this strategy and the
good business performance, the Group's Core
Tier 1 ratio reached 10.3% according to "Basel 2.5" rules
at end-September 2012, an increase of +39 basis points in the space
of one quarter and +125 basis points in the first nine months of
the year.
In a French economy which has
slowed to a crawl, the French
Networks posted solid results, underpinned by the rigorous
control of their operating expenses and the cost of risk.
International Retail Banking
provided further evidence of the resilience of its diversified
business model. Whereas countries in Central and Eastern Europe
experienced weak growth, the initial effects of the Group's
transformation started to be felt in Russia, while activity in the
Mediterranean Basin and Sub-Saharan Africa continued to grow.
Specialised Financial Services and
Insurance's results remained satisfactory, underpinned by
the strong growth in Insurance activities and the improved
profitability of Specialised Financial Services. Corporate and Investment Banking generally posted
a good performance, benefiting from a less risk-adverse market
environment after the ECB's decisions. Finally, although
Private Banking, Global Investment Management
and Services was impacted by a sluggish environment, it
successfully pursued initiatives to cut costs.
The Group's efforts to cut costs
resulted in a significant decline in operating expenses (down -2.8%* vs. Q3 11 and
-3.4%* for the first nine months of 2012).
The commercial cost of risk, measured in basis
points(2), remained
under control at 71 basis points in Q3 vs. 75 basis points in Q2
2012.
The Q3 results include
non-economic items, the impact of the Group's transformation (asset
disposals and reduction of SG CIB's loan portfolio) and Corporate
and Investment Banking's legacy asset portfolio, reducing Group net
income by respectively:
-
EUR -396 million in respect of
non-economic items (revaluation of
own financial liabilities and the Group's loan portfolio
hedges);
-
EUR -235 million corresponding to
net gains/losses on disposals of Group
subsidiaries and shareholdings, including EUR -130 million
for Geniki and EUR -92 million for TCW;
-
EUR -58 million related to
Corporate and Investment Banking's loan
disposals;
-
EUR -82 million in respect of
Corporate and Investment Banking's legacy
asset portfolio.
When restated for these items,
underlying Group net income amounted to EUR +856 million in Q3 and
EUR +2,823 million for the first nine months of the year,
reflecting the businesses' good performance, against the backdrop
of efforts to control operating expenses and the cost of risk.
Commenting on the Group's Q3
results, Frédéric Oudéa - Chairman and CEO - stated:
"In an
economic environment that remains turbulent, the Societe Generale Group has made further steps in its
transformation process, marked in particular by the success of
Corporate and Investment Banking's realignment plan and the
implementation of the business asset disposal programme. With
underlying Group net income of EUR 856 million in Q3, the Group's
businesses have once again demonstrated their resilience and
capital-generating capacity. The quality of our portfolios and the
attention we pay to managing our risks have enabled us to limit the
cost of risk in a strained economic environment.
We continue to adopt a proactive stance in
serving our customers and remain confident of our ability to meet
the challenges posed by a deteriorated economic environment in the
euro zone and by the new regulatory requirements. The solidity of
our businesses combined with efforts to reduce our risk profile and
actions to control costs demonstrate our ability to achieve our
target of a Basel 3 Core Tier 1 capital ratio of between 9% and
9.5% at end-2013."
-
GROUP
CONSOLIDATED RESULTS
|
In EUR m |
Q3 11 |
Q3 12 |
Change
Q3 vs. Q3 |
9M 11 |
9M 12 |
Change
9M vs. 9M |
Net banking income |
6,504 |
5,397 |
-17.0% |
19,626 |
17,980 |
-8.4% |
On a like-for-like basis* |
|
|
-18.3% |
|
|
-9.3% |
Operating expenses |
(4,018) |
(3,981) |
-0.9% |
(12,635) |
(12,300) |
-2.7% |
On a like-for-like basis* |
|
|
-2.8% |
|
|
-3.4% |
Gross operating income |
2,486 |
1,416 |
-43.0% |
6,991 |
5,680 |
-18.8% |
On a like-for-like basis* |
|
|
-43.6% |
|
|
-19.9% |
Net cost of risk |
(1,192) |
(897) |
-24.7% |
(3,255) |
(2,621) |
-19.5% |
Operating income |
1,294 |
519 |
-59.9% |
3,736 |
3,059 |
-18.1% |
On a like-for-like basis* |
|
|
-60.9% |
|
|
-20.6% |
Impairment losses on goodwill |
(200) |
0 |
+100.0% |
(200) |
(450) |
NM |
Group net income |
622 |
85 |
-86.3% |
2,285 |
1,250 |
-45.3% |
|
|
|
|
|
|
|
|
|
|
|
9M 11 |
9M 12 |
|
Group ROTE (after tax) |
|
|
|
8.9% |
4.0% |
|
Net banking income
The Group's net banking income
totalled EUR 5,497 million in Q3 12 and EUR 17,980 million for the
first nine months of the year.
If non-economic or non-recurring
items and legacy assets are stripped out, underlying revenues
amounted to EUR 6,180 million, up +8.7% vs. Q3 11. Underlying
revenues totalled EUR 19,006 million for the first nine months of
the year, stable (-0.4%) vs. the previous year.
-
The French
Networks posted revenues of EUR 2,010 million in Q3 12,
slightly lower than in Q3 11 (-0.5% excluding PEL/CEL effect). The
French Networks' 9M 12 revenues amounted to EUR 6,093 million
(stable excluding PEL/CEL effect vs. 9M 11), in a sharply slowing
economic environment;
-
International Retail Banking's net banking income
was up +1.6%* vs. Q3 11, at
EUR 1,250 million. It was +1.3%* higher in 9M 12 than in 9M 11. The
strong growth observed in the Mediterranean Basin, Africa and
Russia offset the consequences on activity of the economic crisis
in Romania;
-
There was a sharp pick-up in
Corporate and Investment Banking's
core activities, with revenues of EUR 1,733 million in Q3 12 vs. a
Q3 11 marked by the euro zone crisis (+32.6%* and +44.4% excluding
loan disposal costs), driven by a good quarter for rate
activities.
Corporate and Investment Banking's Q3 revenues included EUR -84
million of loan disposal costs, taking these costs' impact on net
banking income to EUR -469 million for the first nine months of the
year. At EUR 4,992 million, net banking income over the period was
down
-7.7%* vs. 9M 11. When restated for loan disposal costs, revenues
were up +3.3% vs. 9M 11.
Corporate and Investment Banking's
legacy assets made a negative contribution of
EUR -94 million to the division's revenues in Q3 12 and EUR -263
million for the first nine months of the year (vs. EUR -37 million
in Q3 11 and EUR +48 million in 9M 11).
Corporate and Investment Banking's
revenues totalled EUR 1,639 million in Q3 12 and
EUR 4,729 million in 9M 12.
-
Specialised
Financial Services and Insurance's revenues totalled EUR
869 million in
Q3 12 (+1.8%* vs. Q3 11), driven by dynamic Insurance activity
(+11.3%* to EUR 168 million in Q3 12). Specialised Financial
Services maintained its revenues at EUR 701 million (-0.3%* vs. Q3
11) by continuing to adopt a selective loan approval policy and by
protecting new business margins. In line with Q3 revenues, the
division's revenues for 9M 12 were stable (+0.2%*), with the strong
growth in Insurance revenues (+11.2%*) offsetting the slight
decline in Specialised Financial Services' revenues
(-2.2%*).
-
Private
Banking, Global Investment
Management and Services' net banking income experienced a
limited decline (-6.5%*) in Q3 12 vs. Q3 11 to EUR 521 million, on
the back of the decline in brokerage revenues in lacklustre
markets. The division's revenues for 9M 12 came to EUR 1,607
million (-6.3%* vs. 9M 11).
The accounting impact on net
banking income of the revaluation of the Group's own financial
liabilities was EUR -594 million in Q3 12, vs. EUR +822 million in
Q3 11. At the same time, the valuation of the bank's loan portfolio
hedges caused net banking income to fall by EUR -11 million in Q3
12
(EUR +43 million in Q3 11).
Operating expenses
At EUR -3,981 million in Q3 12,
operating expenses were down -2.8%* vs. Q3 11. They amounted to EUR
-12,300 million for the first nine months of the year, a
significant decline of -3.4%* vs. 9M 11.
The reduction in costs in Q3 12 was particularly noticeable in
Private Banking, Global Investment Management and Services (-7.4%*
vs. Q3 11), Corporate and Investment Banking (-1.9%*) and the
French Networks (-1.3%*). Operating expenses were stable* in
International Retail Banking
(-0.1%*) and Specialised Financial Services and
Insurance.
When restated for legacy assets, non-economic and non-recurring
items, there was a significant improvement in the cost to income
ratio (-6.2 points) vs. Q3 11, to 64.2%. It stood at 64.5% for 9M
12, vs. 66.0% for the same period in 2011.
Operating income
The Group's gross operating income
came to EUR 1,416 million in Q3 12. This was substantially lower
than in Q3 11 due to the accounting effect of the revaluation of
the Group's own financial liabilities
(-43.6%*). Gross operating income totalled EUR 5,680 million for 9M
12 (-19.9%*).
The Group's net cost of risk amounted to EUR -897 million in
Q3 (with EUR -83 million corresponding to an old litigation issue
concerning an Australian file within Corporate and Investment
Banking) vs. EUR -1,192 million in Q3 11, which included a EUR -333
million provision aimed at covering Greek sovereign risk.
The Group's commercial cost of
risk (expressed as a fraction of outstanding loans) amounted to
71(1) basis points for Q3 vs. 75(1) basis
points in Q2 12.
-
The French
Networks' cost of risk was stable at 46 basis points (45
basis points in Q2 12) despite a deteriorating economic
environment.
-
At 160 basis points (vs. 211 basis
points in Q2 12 which was marked by a one-off increase in Russia),
International Retail Banking's cost
of risk was generally lower, especially in Russia. Romania's
cost of risk remained high.
-
The cost of risk of Corporate and Investment Banking's core activities
was higher at
43 basis points in Q3 12 (vs. 21 basis points in Q2 12) but
remained at a low level. Legacy assets' Q3 net cost of risk
amounted to EUR -14 million (vs. EUR -38 million in Q2 12).
-
Specialised
Financial Services' cost of risk fell to 123 basis points
in Q3 12 (vs. 128 basis points in Q2 12), notably for Consumer
Finance.
At the same time, the Group's NPL
coverage ratio was 78% in Q3 12 (77% in Q2 12).
The net cost of risk amounted to
EUR -2,621 million in 9M 12 vs. EUR -3,255 million in 9M 11. The
decline can be attributed principally to a base effect related to
provisions booked in 2011 in respect of Greek sovereign risk.
The Group's operating income
totalled EUR 519 million in Q3 12 (EUR 1,294 million in Q3 11). The
figure was EUR 3,059 million in 9M 12 vs. EUR 3,736 million in
2011. These unfavourable changes are mainly attributable to the
accounting effect of the revaluation of the Group's own financial
liabilities (with a positive effect on net banking income in 2011
and negative effect in 2012).
Net
income
After taking into account tax (the
Group's effective tax rate was 24.1% at end-September 2012 vs.
29.9% at end-September 2011) and non-controlling interests, Group
net income totalled
EUR 85 million in Q3 12 (EUR 622 million in Q3 11).
This result was negatively
impacted by the legacy asset portfolio (EUR -82 million). The
impact of non-economic items(2) (EUR -396 million), non-recurring items (EUR
-293 million(3)) and the legacy asset portfolio reduced Group
net income by EUR -771 million in Q3.
When restated for these items,
underlying Group net income amounted to EUR +856 million in Q3 12
(vs. EUR +614 million in Q3 11) and EUR +2,823 million for 9M
12 (vs. EUR +2,895 million for
9M 11).
Group ROE after tax was 0.1% in Q3
12 and 3.3% for 9M 12. ROTE was 4.0% for 9M 12.
The Group's underlying ROE stood
at 7.4% for Q3 and 8.3% for the first nine months of the year. The
underlying ROTE came to 10.0% for the first nine months of the
year.
Earnings per share amounts to
EUR 1.39 for the first nine months of 2012, after deducting
interest payable to holders of deeply subordinated notes and
undated subordinated notes(4).
-
THE GROUP'S
FINANCIAL STRUCTURE
|
Group shareholders' equity totalled EUR 49.1
billion(1) at September 30th, 2012 and tangible net asset
value per share was EUR 48.00 (i.e. net asset value per share of
EUR 57.39, including
EUR 0.47 of unrealised capital gains). The Group acquired 4.1
million Societe Generale shares in Q3 12 under the liquidity
contract concluded on August 22nd, 2011. Over this period, Societe
Generale also proceeded to dispose of 6.2 million shares under the
same liquidity contract. For the first nine months of 2012, the
Group acquired 24.6 million Societe Generale shares and disposed of
25.1 million shares under this contract.
All in all, at end-September,
2012, Societe Generale possessed 27 million shares (including 9
million treasury shares), representing 3.46% of the capital
(excluding shares held for trading purposes). At this date, the
Group also held 3.1 million purchase options on its own shares to
cover stock option plans allocated to its employees.
The Group's funded balance sheet, after the netting of
insurance, derivatives, repurchase agreements and accruals,
totalled EUR 688 billion at September 30th, 2012, up EUR +52
billion vs. December 31st, 2011.
On the asset side, the increase stems from the growth in central
bank sight deposits (EUR +35 billion) and sight deposits with
credit institutions (around EUR +12 billion), with the pick-up in
Corporate and Investment Banking activity boosting the outstandings
of client-related trading assets by EUR +22 billion.
On the liability side, customer
deposits were up EUR +11 billion (+3.3% vs. end-2011, at
EUR 347 billion). The Group's refinancing progressed by EUR +14
billion for long-term refinancing and
EUR +23 billion for short-term issuance. The Group's
medium/long-term debt issuance for 2012 totalled EUR 20 billion at
October 29th, 2012, with the Group having completed its refinancing
programme for 2012 (between EUR 10 billion and EUR 15 billion)
during the summer. The average maturity of debt issued since
January 1st, 2012 was 6.6 years. The Group intends to continue to
issue debt in 2012, depending on market opportunities. The Group's
balance sheet structure continued to strengthen, with the surplus
of stable sources over long-term uses of funds increasing
from
EUR +22 billion at end-2011 to EUR +67 billion at end-September
2012. The increase in short-term refinancing, which was
particularly marked in Q3, testifies to the abundant liquidity in
the system and the confidence in the Societe Generale name. The
average maturity of the Group's short-term refinancing lengthened
significantly during Q3 12. The liquid asset buffer(2) now amounts
to 100% of the Group's short-term debt. This ratio was 73% at
December 31st, 2011.
At the same time, shareholders'
equity (EUR 53 billion) grew by EUR +2 billion in 9M 12, or +4% vs.
end-2011.
At 113%, the loan/deposit ratio improved by 1 point vs.
end-June 2012 and by 8 points vs. end-2011.
The Group's risk-weighted assets were lower than in the
previous quarter, and more generally for the first nine months of
the year, at EUR 337.1 billion (EUR 349.3 billion at end-2011, or
-3.5% in
9M 12 and -1.6% in Q3).
Changes in risk-weighted assets
excluding legacy assets (EUR -7.5
billion in 9M 12) reflect the transformation under way in the Group
with, in particular, a -9.0% decline in the outstandings of
Corporate and Investment Banking's core activities in 9M 12
(parallel decline in Financing & Advisory and market activities
due to a still moderate risk appetite in the Global Markets
activity). The decline amounted to EUR -2.4 billion in Q3 12,
including EUR -1.6 billion for Financing & Advisory (-3.8% in
Q3). Specialised Financial Services' resource constraints resulted
in an overall decline of -2.8% in their risk-weighted assets since
the beginning of the year, whereas the outstandings of the French
Networks and International Retail Banking grew slightly over the
same period (+2.0%), reflecting the Group's ongoing financing
initiatives despite a challenging economic environment.
In accordance with the strategy adopted for several quarters, the
risk-weighted assets of Corporate and Investment Banking's
legacy asset portfolio continued to
decline significantly (-22.8% for the first nine months of the
year, or EUR -4.6 billion, including EUR -2.7 billion in Q3
12).
The Group's Tier 1 ratio was 12.0%
at September 30th, 2012 (10.7% at end-2011), while the
Core
Tier 1 ratio, which was 9.0% at
December 31st, 2011 under "Basel 2.5" and calculated according to
European Banking Authority (EBA) rules, reached 10.3% at
end-September 2012, representing an increase of +39 basis points in
Q3 and +125 basis points since the beginning of the year. The
increase is mainly due to income generation in 9M 12 (+52 basis
points, net of the dividend provision) and actions undertaken to
optimise the legacy asset portfolio and dispose of loans in
Corporate and Investment Banking's credit portfolio (+43 basis
points), while the resource constraints imposed on the businesses
reduced their capital consumption and contributed +16 basis points
to the growth in the ratio at end-September 2012.
The Group is rated A2 by Moody's,
A by S&P and A+ by Fitch.
In EUR m |
Q3 11 |
Q3 12 |
Change
Q3 vs. Q3 |
9M 11 |
9M 12 |
Change
9M vs. 9M |
Net banking income |
2,035 |
2,010 |
-1.2% |
6,111 |
6,093 |
-0.3% |
|
|
|
-0.5%(a) |
|
|
0.0%(a) |
Operating expenses |
(1,273) |
(1,258) |
-1.2% |
(3,890) |
(3,882) |
-0.2% |
Gross operating income |
762 |
752 |
-1.3% |
2,221 |
2,211 |
-0.5% |
|
|
|
+0.7%(a) |
|
|
+0.5%(a) |
Net cost of risk |
(169) |
(216) |
+27.8% |
(508) |
(631) |
+24.2% |
Operating income |
593 |
536 |
-9.6% |
1,713 |
1,580 |
-7.8% |
Group net income |
390 |
351 |
-10.0% |
1,126 |
1,037 |
-7.9% |
(a) Excluding PEL/CEL |
|
|
|
|
|
|
In a still deteriorated
macroeconomic environment in France in Q3, the French Networks' commercial activity remained
steady.
Against a backdrop of continuing
fierce competition for deposit inflows, outstanding balance sheet
deposits rose +5.6% vs. Q3 11 to EUR 143.1 billion. By customer
segment, deposit inflow remained strong for individual customers
(+5.9%) and picked up for business customers (+2.1%). By type of
savings vehicle, deposit growth continued to be driven by the
inflow on term deposits and deposit certificates (+38.4%): these
benefited from the success of the "CAT Tréso +" (Treasury + term
account) offering. There was also a sharp increase in regulated
savings, which continued to be driven, firstly, by livret A
(passbook savings account) outstandings (+29.2%) and secondly, by
the success of the "CSL +" (ordinary savings account) offering
(CSL outstandings up +6.5%).
The growth in outstanding balance
sheet deposits was accompanied by positive net inflow for life
insurance in Q3 12. This took 2012 net inflow to EUR +179 million,
in a market that experienced an outflow of EUR -5.1 billion for the
first nine months of the year.
The French Networks remained fully
committed to serving their customers and continued to actively
support the economy, assisting businesses and individuals with the
financing of their projects as testified by the growth in
outstanding loans (+3.2% vs. Q3 11) to EUR 176.6 billion.
Outstanding loans to business customers totalled EUR 79.9 billion
(+3.8%). Outstanding operating loans rose +9.6% to EUR 13.0 billion
and investment loans +2.4% to EUR 64.5 billion.
Outstanding loans to individuals rose +2.4% over the period, driven
by housing loans (+3.0%) which saw loan production stabilise in Q3
after the decline recorded in H1.
The loan/deposit ratio stood at
123% in Q3 12 vs. 125% in Q2 12, an improvement of 2 points.
The French Networks'
revenues were resilient, with net
banking income of EUR 2,010 million, slightly lower (-0.5%
excluding the PEL/CEL effect), than in Q3 11. The interest margin
was stable vs. Q3 11 (excluding the PEL/CEL effect), with a
favourable volume effect offsetting the decline in deposit
reinvestment rates. The loan margin remained virtually stable.
The fall in commissions slowed in
Q3 and was limited to -1.3% vs. Q3 11. Service commissions rose
+2.8% over the same period, driven by buoyant transaction levels
with business customers (+6.0%), and partially offset the decline
in financial commissions (-15.5%) on the back of low financial
transaction volumes originating from individual customers.
Despite the impact of the increase
in social security contributions applicable to employee savings and
supplementary pension schemes, operating expenses were down -1.2%
vs. Q3 11, reflecting the effect of the cost-saving plans
implemented. These focused primarily on the control of IT expenses
and the decline in the use of external service providers.
Benefiting from a positive jaws
effect, the French Networks' gross operating income increased
slightly (+0.7% excluding PEL/CEL effect) to EUR 752 million. The
French Networks generated gross operating income of EUR 2,211
million for the first nine months of the year, up +0.5% (excluding
PEL/CEL effect) vs. the same period in 2011.
At 46 basis points in Q3 12, the
French Networks' cost of risk was virtually stable vs. Q2
12
(45 basis points).
Against the backdrop of a weak
French economy, the French Networks' contribution to Group net
income totalled EUR 351 million in Q3 12, down -10.0% vs. Q3 11.
The figure for the first nine months of the year was EUR 1,037
million, down -7.9% vs. the same period in 2011.
-
InternationaL RETAIL
BANKING
|
In EUR m |
Q3 11 |
Q3 12 |
Change
Q3 vs. Q3 |
9M 11 |
9M 12 |
Change
9M vs. 9M |
Net banking income |
1,229 |
1,250 |
+1.7% |
3,678 |
3,715 |
+1.0% |
On a like-for-like basis* |
|
|
+1.6% |
|
|
+1.3% |
Operating expenses |
(731) |
(732) |
+0.1% |
(2,223) |
(2,248) |
+1.1% |
On a like-for-like basis* |
|
|
-0.1% |
|
|
+1.1% |
Gross operating income |
498 |
518 |
+4.0% |
1,455 |
1,467 |
+0.8% |
On a like-for-like basis* |
|
|
+4.2% |
|
|
+1.5% |
Net cost of risk |
(314) |
(302) |
-3.8% |
(905) |
(1,012) |
+11.8% |
Operating income |
184 |
216 |
+17.4% |
550 |
455 |
-17.3% |
On a like-for-like basis* |
|
|
+16.3% |
|
|
-16.7% |
Impairment losses on goodwill |
0 |
0 |
NM |
0 |
(250) |
NM |
Group net income |
90 |
112 |
+24.4% |
250 |
(74) |
NM |
Despite the economic slowdown in
Central and Eastern Europe, International
Retail Banking's 2012 results provide further evidence of
the resilience of its business model.
Commercial performances were
sound, with outstandings growing in the main regions. Outstanding
loans were up +5.5%* vs. Q3 11 at EUR 67.6 billion (excluding
Greece), driven primarily by robust growth in loans to individuals
(+10%*).
Over the same period, outstanding deposits (excluding Greece) rose
+1.0%* to EUR 66.9 billion, particularly in Central and Eastern
Europe (+5.2%*).
The loan/deposit ratio remained at
equilibrium level (101%) at end-September 2012.
International Retail Banking
revenues totalled EUR 1,250 million in Q3 12, up +1.6%* vs. Q3 11.
They were underpinned by the performances in Russia, the
Mediterranean Basin and Sub-Saharan Africa.
Operating expenses were stable (-0.1%*) vs. Q3 11 and down vs. Q2
12 (-3.4%*), due to structural optimisation efforts in Russia and
Romania. Accordingly, the cost to income ratio improved by nearly
one point to 58.6% vs. Q3 11.
International Retail Banking's cost of risk amounted to 160 basis
points in Q3 12. This was lower than in Q2 12 (211 basis points),
which incurred a one-off write-down in Russia.
The division's contribution to Group net income came to EUR 112
million in Q3 12 (up +22.2%* vs.
Q3 11).
International Retail Banking's net
banking income totalled EUR 3,715 million for the first nine months
of the year, up +1.3%* vs. 9M 11. Over the same period, operating
expenses were contained (+1.1%*) and the contribution to Group net
income came to EUR 176 million, when restated for the goodwill
write-down recorded in Q2 12 on Russia.
In
Russia, the results achieved during
Q3 were encouraging, while the entity's transformation plan
progressed.
Growth in outstanding loans remained healthy (+7.8%* vs.
end-September 2011), particularly in local currency and in the
individual customer and SME segment.
The increase in activity resulted in net banking income growing
+8.2%* vs. Q3 11. At the same time, the Group continued to
proactively manage costs, which led to a decline in operating
expenses
(-1.0%* vs. Q3 11) despite high inflation. The workforce was
reduced by more than 10% over the last twelve months (i.e. 2,512
FTE positions, including approximately 700 in Q3). The simultaneous
rationalisation of office premises made it possible to simplify the
network's structure while at the same time maintaining a commercial
infrastructure of 678 branches at end-September 2012.
Moreover, the net cost of risk fell to EUR -37 million after a
one-off increase in Q2 12 related to a review of the corporate real
estate portfolio. Russia's contribution to Group net income
totalled
EUR 10 million in Q3 12.
In the Czech
Republic, Komercní Banca
maintained a good level of commercial activity: outstanding loans
grew +8.8%* vs. end-September 2011 and deposits rose +3.1%*. The
loan/deposit ratio stood at 79% at end-September 2012. Despite
these positive volume effects, revenues fell -3.5%*, penalised by a
further decline in the reinvestment rate which weighed on the
intermediation margin.
However, Komercní Banca continued to make a solid contribution to
Group net income
(EUR 63 million in Q3 12).
In
Romania, despite a still
deteriorated economic environment, outstanding loans picked up,
with more marked growth (+4.3%* vs. end-September 2011) and an
increase for both individual and business customers. Over the same
period, outstanding deposits remained healthy (+5.4%*). Revenues
declined -3.3%* vs. Q3 11, still hampered by the deterioration in
the interest margin, albeit to a lesser extent than in previous
quarters. Against this backdrop, the cost-saving measures
introduced several quarters ago continued, causing operating
expenses to shrink -7.1%* year-on-year. The net cost of risk
remained high at EUR -100 million in Q3 12.
In other
Central and Eastern European countries excluding Greece,
the strong deposit inflow continued (+12.7%* vs. end-September
2011), consolidating the improvement in the loan/deposit ratio (-10
points to 128%). SGS also received an award from the European Bank
for Reconstruction and Development (EBRD) for the support given to
energy-efficient companies in Serbia under the Western Balkans
Sustainable Energy Financing Facility.
On October 19th, 2012, the Group
announced the signing of an agreement for the disposal of its Greek
subsidiary Geniki to Piraeus Bank. The result of this deal, which
is expected to be concluded at end-2012, was recorded in Q3 12 in
the Corporate Centre, under "net gains/losses on other assets".
Geniki Bank's earnings continue to be included in those of
International Retail Banking until its actual disposal, whereas its
associated assets and liabilities are isolated on specific lines of
the consolidated balance sheet at September 30th, 2012, in
accordance with current accounting standards.
In the Mediterranean Basin, the franchise continued to enjoy dynamic growth,
with 71 additional branches year-on-year (including +21 in
Morocco), helping to bolster the network by approximately 10%.
Commercial activity remained buoyant, with outstanding loans up
+4.1%* and individual customer deposits up +9.7%* vs. end-September
2011. Over the same period, Egypt experienced strong commercial
growth, with outstanding loans rising +5.1%*, driven by a sharp
increase in loans to individual customers (+20%*). Net banking
income in the region benefited from this momentum and grew +16.8%*
vs. Q3 11, with an increase in all entities. This growth was
accompanied by a controlled rise in operating expenses
(+3.1%*).
In
Sub-Saharan Africa, the growth in outstanding loans
remained robust at end-September 2012 (+10.3%*), driven by a sharp
increase in loans to individual customers (+22.6%*). Over the same
period, outstanding deposits rose +4.2%* and the network expanded,
with the opening of 27 new branches (+11%), including 7 in
Q3.
In line with this momentum, net banking income rose +15.2%* vs. Q3
11, while operating expenses remained under control (+11.7%*)
despite development costs and inflation.
-
CORPORATE
AND INVESTMENT BANKING
|
In EUR m |
Q3 11 |
Q3 12 |
Change
Q3 vs. Q3 |
9M 11 |
9M 12 |
Change
9M vs. 9M |
Net banking income |
1,210 |
1,639 |
+35.5% |
5,325 |
4,729 |
-11.2% |
On a like-for-like basis* |
|
|
+29.3% |
|
|
-13.7% |
Financing and Advisory |
616 |
481 |
-21.9% |
1,912 |
1,146 |
-40.1% |
On a like-for-like basis* |
|
|
-24.8% |
|
|
-39.8% |
Global Markets (1) |
631 |
1,252 |
+98.4% |
3,365 |
3,846 |
+14.3% |
On a like-for-like basis* |
|
|
+87.7% |
|
|
+9.8% |
Legacy assets |
(37) |
(94) |
NM |
48 |
(263) |
NM |
Operating expenses |
(971) |
(1,007) |
+3.7% |
(3,449) |
(3,232) |
-6.3% |
On a like-for-like basis* |
|
|
-1.9% |
|
|
-7.7% |
Gross operating income |
239 |
632 |
x2.6 |
1,876 |
1,497 |
-20.2% |
On a like-for-like basis* |
|
|
x 2,6 |
|
|
-24.3% |
Net cost of risk |
(188) |
(197) |
+4.8% |
(469) |
(434) |
-7.5% |
O.w. Legacy assets |
(118) |
(14) |
-88.1% |
(344) |
(167) |
-51.5% |
Operating income |
51 |
435 |
x8.5 |
1,407 |
1,063 |
-24.4% |
On a like-for-like basis* |
|
|
x 8,5 |
|
|
-29.4% |
Group net income |
77 |
322 |
x4.2 |
1,117 |
804 |
-28.0% |
|
|
|
|
|
|
|
(1) O.w. "Equities" EUR 575m in
Q3 12 (EUR 472m in Q3 11) and "Fixed income, Currencies and
Commodities" EUR 678m in Q3 12 (EUR 159m in Q3 11) |
After a relatively quiet start to
the quarter, characterised by risk-adverse markets, the
announcements by the ECB and US Federal Reserve during the summer
restored investor confidence and led to a substantial improvement
in both market conditions and credit, interest rate and equity
business volumes. Against this backdrop, Corporate and Investment Banking posted revenues
of
EUR 1,639 million in Q3 12 (including EUR -94 million in respect of
legacy assets and EUR -84 million in respect of the net discount on
loans sold). This was significantly higher (+35.5%) than in Q3 11,
which was marked by the liquidity crisis in summer 2011. The
revenues of SG CIB's core activities, excluding the net discount on
loans sold, amounted to EUR 1,817 million (+44.4% vs. Q3 11).
Corporate and Investment Banking continued with its realignment
towards a client-focused business model, with a risk profile under
control and limited consumption of scarce resources. Market risk,
measured on the basis of net VaR, also remained at a low level in
Q3.
At EUR 1,252 million,
Global Markets turned in a robust
commercial performance. Revenues were sharply higher,
doubling(2) vs. Q3 11,
which was impacted by a turbulent market environment.
Equity activities posted revenues of EUR 575
million, up +21.8%(2) vs. Q3 11
and +22.9%(2)
vs.
Q2 12. Despite ongoing weak market volumes, Q3 was marked by
healthy commercial activity, particularly for retail structured
products, and renewed investor appetite for equity markets in
September. In recognition of its expertise, SG CIB was named "Most
Innovative Investment Bank for Equity Derivatives" (The Banker, 2012). In addition, Lyxor's assets under
management increased to EUR 74.8 billion in Q3 from EUR 72.9
billion at end of Q2.
Fixed
Income, Currencies & Commodities' revenues totalled EUR 678 million in Q3 12 (a
fourfold increase(2) vs. Q3 11
and an increase of +37.5%(2) vs. Q2 12)
in a more favourable market environment than in Q3 11. This
performance was driven by rates and credit activities, which
benefited from the increase in issuance volumes and strong
client-driven activity.
At EUR 481 million,
Financing & Advisory revenues
were lower than in Q3 11 (-22.5%(2)). When
restated for the net discount on loans sold (EUR -84 million in Q3
12 vs. EUR -11 million in Q3 11), revenues fell -10.6%(2). Structured
financing, especially natural resources and infrastructure
financing, turned in a solid performance. Meanwhile, capital market
activities posted mixed results, with an excellent performance for
bond issuance despite an unfavourable seasonal effect, whereas
equity issuance was hit by continuing weak volumes. Against this
backdrop, SG CIB has maintained its No. 3 ranking in "all corporate
bonds in Euro", consolidated its No. 1 ranking in "equity and
equity linked issuance in France" and improved its position by
ranking No. 8 in "EMEA equity and equity linked issuance"
(Thomson Financial). Finally, the business
line played a leading role in several deals in
Q3 12. In particular, SG CIB was joint-dealer manager in one
of the largest liability management deals for Royal Bank of
Scotland. SG CIB was also involved as a financial advisor and
arranger for Sabine Pass Liquefaction (subsidiary of Cheniere
Energy Partners) with regard to the financing for the construction
of two gas liquefaction plants in the United States. More
generally, SG CIB continued with the implementation of an
"Originate to Distribute" model through the distribution of credit
to a new investor base.
Legacy
assets' contribution to revenues was EUR -94 million in Q3
12. The policy to reduce this portfolio continued, with a EUR -2.4
billion reduction in outstandings in nominal terms during
Q3. Disposals continued in October, with an additional EUR -3
billion sale, taking the total amount of the reduction to EUR -5.4
billion from July to October 2012 (EUR -5.0 billion of disposals
and
EUR -0.4 billion of amortisation). Revenues came to EUR -263
million for the first nine months of the year vs. EUR +48 million
in 9M 11.
Corporate and Investment Banking's
operating expenses totalled EUR -1,007 million in Q3 12,
down
-1.9%* (+3.7% in absolute terms) vs. Q3 11. Excluding
performance-linked compensation, costs decreased -13% vs. Q3 11, as
a result of restructuring and cost adjustment plans introduced at
end-2011. Operating expenses declined -7.7%* to EUR -3,232 million
in the first nine months of the year
(EUR -3,449 million in 9M 11).
The Q3 net
cost of risk of core activities remained limited at EUR
-183 million vs. EUR -70 million in Q3 11. The majority of the
increase was due to an additional provision (EUR -83 million) in
respect of an old litigation issue in Australia. Legacy assets' net
cost of risk was EUR -14 million in Q3 12.
Corporate and Investment Banking's
contribution to Group net income totalled EUR 322 million
in
Q3 12. When restated for the net discount on loans sold, the
contribution of core activities amounted to EUR 462 million, a
significant improvement vs. Q3 11 (EUR 201 million).
The total contribution to Group
net income came to EUR 804 million for the first nine months of the
year. When restated for the net discount on loans sold, core
activities' contribution to Group net income amounted to EUR 1,452
million.
-
SPECIALISED
FINANCIAL SERVICES AND INSURANCE
|
In EUR m |
Q3 11 |
Q3 12 |
Change
Q3 vs. Q3 |
9M 11 |
9M 12 |
Change
9M vs. 9M |
Net banking income |
850 |
869 |
+2.2% |
2,594 |
2,595 |
0.0% |
On a like-for-like basis* |
|
|
+1.8% |
|
|
+0.2% |
Operating expenses |
(448) |
(448) |
0.0% |
(1,376) |
(1,356) |
-1.5% |
On a like-for-like basis* |
|
|
0.0% |
|
|
-1.2% |
Gross operating income |
402 |
421 |
+4.7% |
1,218 |
1,239 |
+1.7% |
On a like-for-like basis* |
|
|
+3.7% |
|
|
+1.7% |
Net cost of risk |
(189) |
(178) |
-5.8% |
(616) |
(512) |
-16.9% |
Operating income |
213 |
243 |
+14.1% |
602 |
727 |
+20.8% |
On a like-for-like basis* |
|
|
+11.0% |
|
|
+19.8% |
Group net income |
(53) |
179 |
NM |
224 |
509 |
x2.3 |
The Specialised Financial Services and Insurance
division comprises:
-
Specialised
Financial Services (operational vehicle leasing and fleet
management, equipment finance, consumer finance).
-
Insurance (Life, Personal Protection, Property and
Casualty.
In a constrained environment,
Specialised Financial Services and Insurance posted solid
results, with a record contribution to Group net income of EUR 179
million, up +21.8%(1) vs. Q3
11.
Specialised Financial Services
continued to expand its external funding activity, which had
raised
EUR 3.5 billion at end-September, primarily on the back of the
success of deposit collection in Germany.
Operational vehicle leasing and fleet management
continued to enjoy monitored growth in its fleet, which amounted to
approximately 936,000 vehicles at end-September 2012
(+4.1%(2) vs.
end-September 2011).
In a sluggish economic
environment, new Equipment Finance
business was down -11.5%* vs. Q3 11 at EUR 1.7 billion (excluding
factoring). However, new business margins remained at a
satisfactory level. At end-September 2012, outstanding loans
totalled EUR 18.0 billion (excluding factoring), down -3.2%* vs.
end-September 2011.
In Consumer
Finance, new business was slightly lower (-2.4%* vs. Q3
11) at EUR 2.4 billion. Car financing continued to experience a
strong momentum (+8.8%* over the same period), driven by the
Russian market and manufacturer partnerships. Outstandings totalled
EUR 22.4 billion at end-September 2012, virtually stable
year-on-year (-0.5%*).
Specialised
Financial Services' net banking income was stable vs. Q3
11 at EUR 701 million. The cost to income ratio improved over the
period to 54.9% (-1.0 point), testifying to the efforts made to
control costs (-1.3%* vs. Q3 11). Moreover, the cost of risk
continued to decline in Q3 to
EUR -178 million (123 basis points), vs. EUR -189 million in Q3 11
(137 basis points). Operating income came to EUR 138 million, up
+9.6%* vs. Q3 11.
Net banking income totalled EUR 2,090 million for the first nine
months of the year (-2.2%* vs. 9M 11) and operating expenses EUR
-1,165 million (-3.0%* vs. 9M 11). With a cost of risk down -15.9%*
vs. 9M 11, operating income was sharply higher (+27.3%*) over the
period, at EUR 413 million.
The good performance of the
Insurance activity continued. Net
life insurance inflow was positive in Q3 at EUR 0.3 billion.
Outstandings amounted to EUR 78.1 billion at end-September (+2.4%*
vs. end-September 2011). Personal Protection and Property/Casualty
insurance provided further confirmation of their dynamic growth:
personal protection premiums rose +31.3%* vs. Q3 11, helped by
international expansion, while property/casualty premiums increased
+11.2%* vs. Q3 11.
Insurance revenues totalled EUR 168 million in Q3, up +11.3%* vs.
Q3 11 and EUR 505 million for the first nine months of the year, up
+11.2%* vs. 9M 11.
Specialised
Financial Services and Insurance's contribution to Group
net income amounted to EUR 179 million in Q3 12 vs. EUR 147 million
in Q3 11 (excluding goodwill write-down).
The contribution to Group net
income was EUR 509 million for the first nine months of the year
(+20.0%(1) vs. 9M
11).
-
PRIVate
banking, GLOBAL INVESTMENT MANAGEMENT AND
SERVICES
|
In EUR m |
Q3 11 |
Q3 12 |
Change
Q3 vs. Q3 |
9M 11 |
9M 12 |
Change
9M vs. 9M |
Net banking income |
542 |
521 |
-3.9% |
1,669 |
1,607 |
-3.7% |
On a like-for-like basis* |
|
|
-6.5% |
|
|
-6.3% |
Operating expenses |
(486) |
(463) |
-4.7% |
(1,469) |
(1,419) |
-3.4% |
On a like-for-like basis* |
|
|
-7.4% |
|
|
-6.1% |
Operating income |
56 |
56 |
0.0% |
176 |
179 |
+1.7% |
On a like-for-like basis* |
|
|
-1.8% |
|
|
+0.6% |
Impairment losses on goodwill |
0 |
0 |
NM |
0 |
(200) |
NM |
Group net income |
60 |
63 |
+5.0% |
216 |
15 |
-93.1% |
o.w. Private Banking |
28 |
16 |
-42.9% |
102 |
66 |
-35.3% |
o.w. Asset Management |
16 |
39 |
x2.4 |
81 |
(92) |
NM |
o.w. SG SS & Brokers |
16 |
8 |
-50.0% |
33 |
41 |
+24.2% |
Private
Banking, Global Investment Management and Services
consists of four activities:
(i) Private Banking (Societe Generale
Private Banking)
(ii) Asset
Management (Amundi and TCW, whose disposal is currently
under way)
(iii) Societe Generale
Securities Services (SGSS)
(iv) Brokers (Newedge).
Private
Banking, Global Investment
Management and Services posted increased earnings
for
Q3 2012 vs. Q3 11, in an unfavourable market environment. This was
mainly due to its efforts to control costs.
At EUR 521 million in Q3, the
division's revenues were down -6.5%* vs. Q3 11, while operating
expenses fell -7.4%* over the same period. Gross operating income
amounted to EUR 58 million, up +1.8%* vs. Q3 11. The division's Q3
contribution to Group net income came to EUR 63 million, vs. EUR 60
million in Q3 11.
Net banking income totalled EUR
1,607 million for the first nine months of the year, down -6.3%*
vs. the previous year. Operating expenses were -6.1%* lower. The
contribution to Group net income came to EUR 15 million. When
restated for the goodwill write-down in respect of TCW recorded
in
Q2 12, the division's contribution to Group net income was EUR 215
million in 9M 12, in line with the figure for 9M 11.
Private Banking
The business line recorded a
positive inflow of EUR +0.3 billion in Q3 12. Assets under
management amounted to EUR 88 billion at end-September 2012, up
+3.9% vs. end-December 2011. This increase can be explained by a
"market" effect of EUR +2.8 billion, a cumulative inflow of EUR
+0.4 billion, a "currency" impact of EUR +0.3 billion and a
"structure" effect of EUR -0.3 billion.
Private Banking revenues totalled
EUR 181 million in Q3 12, a figure similar to Q2 12. At
EUR -157 million, operating expenses were -2.5%* lower
year-on-year. Gross operating income amounted to EUR 24 million in
Q3 12 (vs. EUR 32 million in Q3 11). The business line's
contribution to Group net income came to EUR 16 million (vs. EUR 28
million in Q3 11).
Net banking income totalled EUR
555 million for the first nine months of the year, down -9.9%*
year-on-year. Operating expenses were -4.0%* lower at EUR -462
million. The contribution to Group net income was EUR 66 million
vs. a total of EUR 102 million at end-September 2011.
Asset
Management
TCW's disposal to Carlyle Group
and TCW's management was announced in August 2012. The impact of
the disposal was recorded, in line with IFRS 5 requirements, in the
Corporate Centre's results for Q3 12, under net gains/losses on
other assets.
TCW recorded a EUR +2.1 billion
inflow in Q3. At EUR 104.7 billion, TCW's assets under management
increased by EUR +13.7 billion since the beginning of the year.
This included an inflow of EUR +4.0 billion, a "market" effect of
EUR +7.9 billion, a "currency" impact of EUR +0.3 billion and a
"structure" effect of EUR +1.4 billion.
At EUR 91 million, the business
line's revenues rose +11.0%* vs. Q3 11, benefiting from the good
level of performance commissions at TCW. Gross operating income
came to EUR +22 million in Q3 12 vs. EUR -5 million in Q3 11. The
business line's contribution to Group net income was
EUR +39 million in Q3 (vs. EUR +16 million in Q3 11), including a
EUR +26 million contribution from Amundi.
The business line's contribution
to Group net income came to EUR -92 million for the first nine
months of the year. If goodwill write-down is stripped out, the
business line's contribution amounted to
EUR 108 million in 9M 12.
Societe
Generale Securities Services (SGSS) and Brokers
(Newedge)
Securities
Services' assets under administration rose +8.5% to EUR
448 billion and assets under custody increased +1% to EUR 3,350
billion vs. end-December 2011. In a durably challenging market
environment lacking volatility, the Broker activity consolidated its market share at
12% in Q3 12.
At EUR 249 million, Securities
Services and Brokers posted lower revenues (-12.2%*) than in Q3 11.
While SGSS' revenues were stable year-on-year, Newedge's revenues
were hampered by weak volumes compared with a very active Q3 11.
The businesses continued with their efficiency measures, which
enabled operating expenses to decline -6.4%* vs. Q3 11 to EUR -237
million. Operating income totalled EUR 12 million vs. EUR 27
million in Q3 11. The contribution to Group net income amounted to
EUR 8 million vs. EUR 16 million a year earlier.
Net banking income totalled EUR
802 million for the first nine months of the year (-3.9%*
year-on-year). Operating expenses fell -3.3%* to EUR -742 million.
The business line's contribution to Group net income came to EUR 41
million vs. EUR 33 million the previous year.
The Corporate Centre's gross operating income totalled
EUR -965 million in Q3 12
(EUR +529 million in Q3 11).
It includes, in particular:
-
the revaluation of the Group's own
financial liabilities, amounting to EUR -594 million
(EUR +822 million in Q3 11);
-
the revaluation of credit
derivative instruments used to hedge corporate loan portfolios,
amounting to EUR -11 million in Q3 12 (EUR +43 million in Q3
11);
-
so-called "systemic risk" taxes
applicable to banks in France and the UK, amounting to
EUR -66 million (vs. EUR -28 million in Q3 11).
The contribution to Group net
income was EUR -942 million in Q3, including
- EUR
-235 million of goodwill write-down and net gains/losses on
available-for-sale assets (including EUR -92 million for TCW
and EUR -130 million for Geniki).
- EUR -389 million in
respect of the revaluation of the Group's own financial
liabilities.
Gross operating income totalled
EUR -922 million for the first nine months of the year
vs.
EUR +21 million in 9M 11. The difference is mainly due to book
income from the revaluation of the Group's own financial
liabilities, which was positive in 2011. Accordingly, the
contribution to Group net income was EUR -1,041 million in 9M 12
vs. EUR -648 million in 9M 11, which included the provisions to
cover Greek sovereign risk (EUR -728 million).
In Q3 2012, Societe Generale
maintained its transformation momentum. With underlying Group net
income of EUR 856 million in the third quarter, the Group's
businesses have once again demonstrated their resilience and
capacity to durably generate capital. Efforts to reduce operating
expenses have produced tangible results and the Group has announced
major asset disposals. The cost of risk remains under control,
despite significant economic tensions in Europe, testifying to the
attention paid to the quality of the customer portfolio.
Against this backdrop, the Group
continues to adopt a proactive stance in serving its customers and
financing the economy. Retail Banking activities continue to
invest, while at the same time rigorously managing their costs.
Corporate and Investment Banking has successfully realigned its
business model and maintained a good commercial and financial
performance.
The Group faces complex and
demanding challenges in 2013. However, the Group's transformation
and limited exposure to extreme risk scenarios in the euro zone
place it in a strong position to deal with these challenges and
achieve its target of a Basel 3 Core Tier 1 capital ratio of
between 9% and 9.5% at end-2013.
2012/2013 financial
communication calendar
February 13th, 2013 Publication of fourth quarter and FY
2012 results
May 7th, 2013 Publication of first
quarter 2013 results
May 22nd, 2013 Annual General Meeting
August 1st, 2013 Publication of second quarter 2013
results
November 7th, 2013 Publication of third quarter 2013
results
This document
may contain a number of forecasts and comments relating to the
targets and strategies of the Societe Generale Group. These
forecasts are based on a series of assumptions, both general and
specific (notably - unless specified otherwise - the application of
accounting principles and methods in accordance with IFRS as
adopted in the European Union as well as the application of
existing prudential regulations).
This information was developed from scenarios based on a number of
economic assumptions for 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 impact on
its operations;
- precisely evaluate the extent to which the occurrence of a risk
or combination of risks could cause actual results to differ
materially from those contemplated in this press release.
There is a risk that these projections will not be met. Investors
are advised to take into account factors of uncertainty and risk
likely to impact the operations of the Group when basing their
investment decisions on information provided in this
document.
Unless otherwise specified, the sources for the rankings are
internal. |
APPENDIX 1: STATISTICAL
DATA |
CONSOLIDATED INCOME STATEMENT
(in EUR millions) |
3rd
quarter |
9 months |
|
|
Q3 11 |
Q3 12 |
Change
Q3 vs. Q3 |
9M 11 |
9M 12 |
Change
9M vs. 9M |
Net banking income |
|
6,504 |
5,397 |
-17.0% |
-18.3%* |
19,626 |
17,980 |
-8.4% |
-9.3%* |
Operating expenses |
|
(4,018) |
(3,981) |
-0.9% |
-2.8%* |
(12,635) |
(12,300) |
-2.7% |
-3.4%* |
Gross operating income |
|
2,486 |
1,416 |
-43.0% |
-43.6%* |
6,991 |
5,680 |
-18.8% |
-19.9%* |
Net cost of risk |
|
(1,192) |
(897) |
-24.7% |
-24.4%* |
(3,255) |
(2,621) |
-19.5% |
-19.2%* |
Operating income |
|
1,294 |
519 |
-59.9% |
-60.9%* |
3,736 |
3,059 |
-18.1% |
-20.6%* |
Net profits or losses from other assets |
|
20 |
(484) |
NM |
|
84 |
(491) |
NM |
|
Net income from companies
accounted for by the equity method |
32 |
43 |
+34.4% |
|
110 |
104 |
-5.5% |
|
Impairment losses on goodwill |
|
(200) |
0 |
+100.0% |
|
(200) |
(450) |
NM |
|
Income tax |
|
(455) |
121 |
NM |
|
(1,142) |
(618) |
-45.9% |
|
Net income |
|
691 |
199 |
-71.2% |
|
2,588 |
1,604 |
-38.0% |
|
O.w. non controlling interests |
|
69 |
114 |
+65.2% |
|
303 |
354 |
+16.8% |
|
Group net income |
|
622 |
85 |
-86.3% |
-87.6%* |
2,285 |
1,250 |
-45.3% |
-45.6%* |
Group ROTE (after tax) |
|
|
|
|
|
8.9% |
4.0% |
|
|
Tier 1 ratio at end of period |
|
11.6% |
10.3%** |
|
|
11.6% |
10.3%** |
|
|
* When adjusted for changes in
Group structure and at constant exchange rates |
|
|
** Incorporating CRD3
requirements |
|
|
|
|
|
|
|
|
|
NET INCOME AFTER TAX BY CORE
BUSINESS
(in EUR millions) |
3rd
quarter |
9
months |
|
Q3 11 |
Q3 12 |
Change
Q3 vs. Q3 |
9M 11 |
9M 12 |
Change
9M vs. 9M |
|
|
|
|
|
|
|
French Networks |
390 |
351 |
-10.0% |
1,126 |
1,037 |
-7.9% |
International Retail
Banking |
90 |
112 |
+24.4% |
250 |
(74) |
NM |
Corporate & Investment
Banking |
77 |
322 |
x4.2 |
1,117 |
804 |
-28.0% |
Specialised Financial Services &
Insurance |
(53) |
179 |
NM |
224 |
509 |
x2.3 |
Private Banking, Global Investment
Management and Services |
60 |
63 |
+5.0% |
216 |
15 |
-93.1% |
o.w. Private Banking |
28 |
16 |
-42.9% |
102 |
66 |
-35.3% |
o.w. Asset Management |
16 |
39 |
x2.4 |
81 |
(92) |
NM |
o.w. SG SS & Brokers |
16 |
8 |
-50.0% |
33 |
41 |
+24.2% |
CORE BUSINESSES |
564 |
1,027 |
+82.1% |
2,933 |
2,291 |
-21.9% |
Corporate Centre |
58 |
(942) |
NM |
(648) |
(1,041) |
-60.6% |
GROUP |
622 |
85 |
-86.3% |
2,285 |
1,250 |
-45.3% |
CONSOLIDated balance
sheet
Assets (in billions
of euros) |
September 30, 2012 |
December 31, 2011 |
% change |
Cash, due from central banks |
81.2 |
44.0 |
+85% |
Financial assets measured at fair value through profit and
loss |
477.8 |
422.5 |
+13% |
Hedging derivatives |
15.4 |
12.6 |
+22% |
Available-for-sale financial assets |
127.8 |
124.7 |
+2% |
Due from banks |
91.4 |
86.5 |
+6% |
Customer loans |
360.4 |
367.5 |
-2% |
Lease financing and similar agreements |
29.3 |
29.3 |
-0% |
Revaluation differences on portfolios hedged against interest
rate risk |
4.3 |
3.4 |
+27% |
Held-to-maturity financial assets |
1.2 |
1.5 |
-16% |
Tax assets and other assets |
64.2 |
61.0 |
+5% |
Non-current assets held for sale |
3.2 |
0.4 |
x 7,4 |
Deferred profit-sharing |
0.0 |
2.2 |
-100% |
Tangible, intangible fixed assets and other |
25.3 |
25.8 |
-2% |
Total |
1,281.5 |
1,181.4 |
+8% |
Liabilities (in
billions of euros) |
September 30, 2012 |
December 31, 2011 |
% change |
Due to central banks |
2.8 |
1.0 |
x 2,9 |
Financial liabilities measured at fair value through profit
and loss |
427.1 |
395.2 |
+8% |
Hedging derivatives |
14.4 |
12.9 |
+11% |
Due to banks |
131.9 |
111.3 |
+19% |
Customer deposits |
346.1 |
340.2 |
+2% |
Securitised debt payables |
135.9 |
108.6 |
+25% |
Revaluation differences on portfolios hedged against interest
rate risk |
6.0 |
4.1 |
+45% |
Tax liabilities and other liabilities |
63.8 |
60.7 |
+5% |
Non-current liabilities held for sale |
2.8 |
0.3 |
NM |
Underwriting reserves of insurance companies |
87.9 |
83.0 |
+6% |
Provisions |
2.3 |
2.5 |
-7% |
Subordinated debt |
7.1 |
10.5 |
-32% |
Shareholders' equity |
49.1 |
47.1 |
+4% |
Non controlling Interests |
4.3 |
4.0 |
+7% |
Total |
1,281.5 |
1,181.4 |
+8% |
1- The
Group's Q3 consolidated results as at September 30th, 2012 were
examined by the Board of Directors on November 7th,
2012.
The financial information
presented for the nine-month period ended September 30th, 2012 has
been prepared in accordance with IFRS as adopted in the European
Union and applicable at that date. This financial information does
not constitute a set of financial statements for an interim period
as defined by IAS 34 "Interim Financial Reporting". Societe
Generale's management intends to publish full consolidated
financial statements in respect of the 2012 financial year.
2- Group
ROE is calculated on the basis of average Group
shareholders' equity under IFRS excluding
(i) unrealised or deferred capital gains or losses booked directly
under shareholders' equity excluding conversion reserves, (ii)
deeply subordinated notes, (iii) undated subordinated notes
recognised as shareholders' equity ("restated"), and deducting (iv)
interest payable to holders of deeply subordinated notes and of the
restated, undated subordinated notes. The net income used to
calculate ROE is based on Group net income excluding interest, net
of tax impact, to be paid to holders of deeply subordinated notes
for the period and, since 2006, holders of deeply subordinated
notes and restated, undated subordinated notes (EUR 211 million at
end-September 2012), and the capital gain net of tax and accrued
unpaid interest relating to buybacks of deeply subordinated notes
amounting to
EUR 2 million at end-September 2012.
As from January 1st, 2012, the allocation of capital to the
different businesses is based on 9% of risk-weighted assets at the
beginning of the period, vs. 7% previously. The published quarterly
data related to allocated capital have been adjusted accordingly.
At the same time, the normative capital remuneration rate has been
adjusted for a neutral combined effect on the businesses' historic
revenues
3-
For the calculation of earnings per
share, "Group net income for the period" is corrected
(reduced in the case of a profit and increased in the case of a
loss) for interest, net of tax impact, to be paid to holders
of:
(i) deeply subordinated notes (EUR 200 million at
end-September 2012),
(ii) undated subordinated notes recognised as shareholders'
equity (EUR 11 million at end-September 2012).
Earnings per share is therefore
calculated as the ratio of corrected Group net income for the
period to the average number of ordinary shares outstanding,
excluding own shares and treasury shares but including (a) trading
shares held by the Group and (b) shares held under the liquidity
contract
4- Net
assets are comprised of Group shareholders' equity,
excluding (i) deeply subordinated notes
(EUR 5.3 billion), undated subordinated notes previously recognised
as debt (EUR 0.5 billion) and
(ii) interest payable to holders of deeply subordinated notes and
undated subordinated notes, but reinstating the book value of
trading shares held by the Group and shares held under the
liquidity contract. Tangible net
assets are corrected for net goodwill in the assets and
goodwill under the equity method. In order to calculate Net Asset
Value Per Share or Tangible Net Asset Value Per Share, the number
of shares used to calculate book value per share is the number of
shares issued at September 30th, 2012, excluding own shares and
treasury shares but including (a) trading shares held by the Group
and (b) shares held under the liquidity contract.
5- The Societe
Generale Group's Core Tier 1 capital
is defined as Tier 1 capital minus the outstandings of hybrid
instruments eligible for Tier 1 and a share of Basel 2 deductions.
This share corresponds to the ratio between core Tier 1 capital
excluding hybrid instruments eligible for Tier 1 capital and Core
Tier 1 capital.
As from December 31st, 2011, Core Tier 1 capital is defined as
Basel 2 Tier 1 capital minus Tier 1 eligible hybrid capital and
after application of the Tier 1 deductions provided for by the
Regulations.
6-The Group's
ROTE is calculated on the basis of
tangible capital, i.e. excluding cumulative average book capital
(Group share), average net goodwill in the assets and underlying
average goodwill relating to shareholdings in companies accounted
for by the equity method. The net income used to calculate ROTE is
based on Group net income excluding interest, interest net of tax
on deeply subordinated notes for the period (including issuance
fees paid, for the period, to external parties and the discount
charge related to the issue premium for deeply subordinated notes
and the redemption premium for government deeply subordinated
notes), interest net of tax on undated subordinated notes
recognised as shareholders' equity for the current period
(including issuance fees paid, for the period, to external parties
and the discount charge related to the issue premium for undated
subordinated notes) and the capital gain net of tax and accrued
unpaid interest relating to buybacks of deeply subordinated notes
amounting to EUR 2 million at end-September 2012.
All the information on the 2012
financial year results (notably: press release, downloadable data,
presentation slides and appendices) 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.
Around 160,000 employees, based in
77 countries, accompany more than 33 million clients throughout the
world on a daily basis. 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, Credit du Nord and Boursorama
- International Retail Banking, with a presence in Central &
Eastern Europe and Russia, in the Mediterranean Basin, in
Sub-Saharan Africa, in Asia and in the French Overseas
Territories
- Corporate and Investment Banking with a global expertise in
investment banking, financing and global markets.
Societe Generale is also a
significant player in Specialised Financial Services, Insurance,
Private Banking, Asset Management and Securities Services.
Societe Generale is included in
the socially-responsible investment indices FTSE4Good and ASPI.
For more information, you can
follow us on twitter @societegenerale or visit our website
www.societegenerale.com.
(1) At October 17th, 2012
(2) Annualised, excluding litigation issues, legacy and Greek
sovereign assets, in respect of assets at the beginning of the
period
(1) Annualised calculation, in respect of outstandings at the
beginning of the period, excluding litigation issues, legacy assets
and Greek sovereign debt write-down
(2)
Revaluation of the Group's own financial liabilities amounting to
EUR -389 million and book income in respect of the Group's
loan portfolio hedges amounting to EUR -7 million
(3)
i.e. : cost of Corporate and Investment Banking asset
disposals (EUR -58 million), goodwill write-down and net
gains/losses on available-for-sale assets (EUR -235 million,
including TCW for EUR -92 million and Geniki for EUR -130
million)
(4) The
interest, net of tax effect, payable to holders of deeply
subordinated notes and undated subordinated notes at
end-September 2012 amounts to respectively EUR 200 million and EUR
11 million. At end-September 2012, the capital gain net of tax and
accrued unpaid interest relating to buybacks of deeply subordinated
notes amounted to EUR 2 million.
(1) This figure includes notably (i) EUR 5.3 billion of deeply
subordinated notes, EUR 0.5 billion of undated subordinated
notes and (ii) EUR 0.4 billion of net unrealised capital
gains.
(2) Central bank deposits and central bank eligible
assets
(2) At constant structure
(2) At constant structure
(1) Excluding goodwill write-down
(2) At constant structure
Societe Generale_ PR Q3
2012
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: SOCIETE GENERALE via Thomson Reuters ONE
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