Societe Generale: Second quarter 2023 earnings
*RESULTS AT 30 JUNE 2023*
*Press release*
Paris, 3 August 2023
**QUARTERLY RESULTS **
**Underlying ****revenues of EUR 6.5 ****billion***^*(***^*1***^*)****, down -****5****.****4****% vs. Q2 22**
**Underlying cost-to-income ratio, **excluding contribution to the Single Resolution Fund, at **6****5****.****8****%***^*(***^*1***^*)**
**Low cost of risk at 12 basis points in Q2 23, **with limited defaults and a level of provisions for performing loans of EUR 3.7 billion at end-June 2023
**Underlying Group net income of EUR 1.****2****bn***^*(***^*1***^*)** (EUR 900 million on a reported basis)
**Underlying profitability (ROTE) at 7.****6****%***^*(***^*1)** (5.6% on a reported basis)
**FIRST HALF 2023 RESULTS **
**Underlying Group net income of EUR 2.****7** **billion***^*(***^*1***^*) **(EUR 1.8 billion on a reported basis)
**Underlying profitability (ROTE) at ****9****.****1****%***^*(***^*1) **(5.6% on a reported basis)
**BALANCE SHEET AND LIQUIDITY PROFILE**
**CET 1 ratio of 13.****1****%***^*(***^*2)**** at end-June 2023***, *around 330 basis points above the regulatory requirement
*Liquidity Coverage Ratio at 15**2**% at end Q2 23 *and liquidity reserves at EUR 284 billion
**SHARE BUYBACK PROGRAMME**
*Launch of the 202**2 **share buyback programme*, for around EUR 440 million
**MAJOR MILESTONES ACHIEVED**
**Merger between the retail banking networks in France,** IT migration completed
*Boursorama**,* 5 million clients milestone reached early July 2023, net result of EUR 47 million in Q2 23
**Acquisition of Lease****Pl****an by ALD, **transaction closed on 22 May 2023
**International Retail Banking,** agreements in place to sell subsidiaries in Congo, Equatorial Guinea, Mauritania and Chad, and opening of strategic review on the Tunisian subsidiary
*Slawomir Krupa, the Group’s Chief Executive Officer, commented*:
“During the quarter, commercial activity was good in most businesses. Group revenues contracted due to the decline in the net interest margin in France and in market activities’ revenues against a backdrop of gradual normalisation after some particularly favourable years. Operating expenses were contained despite persistent inflationary trends. The cost of risk was very low, reflecting the quality of our origination and our loan portfolio. The Group shows a solid balance sheet with a CET 1 ratio at 13.1% and a robust liquidity profile. In addition, we pursued the execution of our ongoing strategic projects, notably the closing of the LeasePlan acquisition by ALD. The new management team has been fully operational since taking office on 24 May this year and is working to prepare the next chapter of the Group’s strategy. I will have the pleasure of presenting the new strategic and financial roadmap on 18 September at our Capital Markets Day to be held in London.”
1. *GROUP CONSOLIDATED RESULTS*
In EURm *Q2 23* Q2 22 Change *H1 23* H1 22 Change
*Net **banking* *income* *6,287* *6,901* *-8.9%* *-10.3%** *12,958* *13,944* *-7.1%* *-6.8%**
Underlying net banking income^(1) 6,527 6,901 -5.4% -6.8%* 13,198 13,944 -5.3% -5.0%*
*Operating **expenses* *(4,441)* *(4,325)* *+2.7%* *+1.1%** *(9,498)* *(9,456)* *+0.4%* *+0.7%**
Underlying operating expenses^(1) (4,461) (4,450) +0.2% -1.3%* (8,662) (8,598) +0.7% +1.0%*
*Gross operating **income* *1,846* *2,576* *-28.3%* *-29.6%** *3,460* *4,488* *-22.9%* *-22.6%**
Underlying gross operating income^(1) 2,066 2,451 -15.7% -16.8%* 4,536 5,346 -15.2% -14.7%*
*Net **cost** of **risk* *(166)* *(217)* *-23.5%* *-23.2%** *(348)* *(778)* *-55.3%* *-40.9%**
*Operating **income* *1,680* *2,359* *-28.8%* *-30.2%** *3,112* *3,710* *-16.1%* *-19.8%**
Underlying operating income^(1) 1,900 2,234 -14.9% -16.2%* 4,188 4,568 -8.3% -11.5%*
*Net profits or losses from other assets* *(81)* *(3,292)* *+97.5%* *+97.5%** *(98)* *(3,290)* *+97.0%* *+97.0%**
Underlying net profits or losses from other assets^(^1) (2) 11 n/s +0. n/s* (19) 13 n/s . n/s
Income tax (425) (327) +29.9% +29.9%* (753) (660) +14.1% +7.8%*
*Net **income* *1,181* *(1,256)* *n**/s* *n**/s* *2,273* *(236)* *n**/s* *n**/s*
O.w. non-controlling interests 281 255 +10.2% +1.9%* 505 454 +11.2% +6.9%*
*Reported** Group net **income* *900* *(1,511)* *n**/s* *n**/s* *1,768* *(690)* *n**/s* *n**/s*
*Underlying** Group net **income*^*(1)* *1,159* *1,481* *-21.7%* *-22.1%** *2,667* *3,019* *-11.7%* *-14.5%**
ROE 4.9% -12.1% 4.9% -3.5% +0.0% +0.0%*
*ROTE* *5.6%* *-13.7%* *5.6%* *-4.0%* *+0.0%* *+0.0%**
*Underlying** ROTE*^*(1)* *7.6%* *10.2%* *9.1%* *10.5%* *+0.0%* *+0.0%**
Societe Generale’s Board of Directors, which met on 2 August 2023 under the chairmanship of Lorenzo Bini Smaghi, examined the Societe Generale Group’s results for Q2 23 and for the first half of 2023.
The various restatements enabling the transition from underlying data to published data are presented in the Methodology notes in Section 9.5.
**Net banking income **
*Net banking income decreased in Q2 23 by -**8**.**9**% (-**10**.3%*) vs. Q2 22*, largely due to the decline in the net interest margin in French Retail Banking, a less conducive market environment in Global Banking and Investor Solutions activities and the booking of one-off items under Corporate Centre.
French Retail Banking revenues fell by -13.6% vs. Q2 22 owing mainly to the decrease in the net interest margin, despite solid momentum in fees, a record performance from Private Banking and a strong increase in Boursorama’s revenues.
Revenues in International Retail Banking & Financial Services grew by +6.3% (+0.9%*) vs. Q2 22, with a +3.3%* increase in revenues vs. Q2 22 in International Retail Banking, a strong performance by Financial Services that was driven by ALD revenues, up +18.7% vs. Q2 22 following the integration of LeasePlan, and by insurance revenues, which rose by +3.1%* vs. Q2 22.
Global Banking & Investor Services registered revenues down -7.3% in Q2 23 relative to Q2 22 amid a less favourable market environment. Global Markets & Investor Services recorded solid revenues but which were down in comparison to a very strong Q2 22 performance (-12.7%) owing to less conducive market conditions, notably in Fixed Income and Currencies (lower interest rate volatility and slower client activity), while Financing and Advisory continued to post revenue growth, registering an increase of +4.0% vs. Q2 22, driven by a solid performance in the securitisation, investment banking and cash management activities.
*Over the first half of 2023,* net banking income fell by -7.1% vs. H1 22 (-5.3% on an underlying basis).
**Operating expenses **
*On a reported basis, operating expenses came to EUR 4,4**41** million in Q2 23, up +**2**.**7**% vs. Q2 22.* It includes LeasePlan operating expenses for EUR 111 million following its consolidation from 22 May 2023. *On an underlying basis, they totalled EUR 4,4**61** million *(adjusted for IFRIC 21 linearisation, transformation charges and one-off expenses), i.e. stable relative to Q2 22.
One-off expenses totalled EUR 35 million and included litigation payments.
*Over the first half,* operating expenses came to EUR 9,498 million, up +0.4% vs. H1 22 (+0.7% on an underlying basis).
Excluding the Single Resolution Fund contribution, the underlying cost-to-income ratio^(^2^) came to 65.8% in Q2 23.
**Cost of risk**
*The cost of risk for Q**2** 23 **wa**s** low at 1**2** basis points,* i.e. EUR 166 million. It breaks down into a provision on non-performing loans of EUR 204 million (~14 basis points) and a reversal on performing loans for EUR -38 million (~-3 basis points).
At end-June 2023, the Group’s provisions on performing loans amounted to EUR 3,713 million, down EUR -56 million relative to 31 December 2022.
The non-performing loans ratio amounted to 2.9%^(^2^) at 30 June 2023. The gross coverage ratio on doubtful loans for the Group stood at 46%^(^3^) at 30 June 2023.
Furthermore, the disposal by ALD in April 2023 of its activities in Russia had a limited EUR -79 million impact that was allocated under net losses from other assets in Corporate Centre. The Group retained a residual exposure of around EUR 15 million in Russia relating to the integration of LeasePlan activities by ALD.
Furthermore, the Group’s Exposure at Default (EAD) on the Russian offshore portfolio was EUR 1.6 billion at 30 June 2023, i.e. a decrease of -50% since 31 December 2021. This exposure is diversified by sector and in the majority of cases secured by facilities as Pre-Export Finance facilities, facilities that are guaranteed by an Export Credit Agency or Trade Finance facilities. The maximum risk exposure on this portfolio is estimated to be less than EUR 0.5 billion before provision and total provisions stood at EUR 0.4 billion. The Group’s residual exposure to Rosbank was extremely limited at less than EUR 0.1 billion.
**Group net income **
In EURm *Q2 23* Q2 22 *H1 23* H1 22
Reported Group net income 900 (1,511) 1768 (690)
Underlying Group net income^(^1) 1,159 1,481 2,667 3,019
As a % *Q2 23* Q2 22 *H1 23* H1 22
ROTE 5.6% -13.7% 5.6% -4.0%
Underlying ROTE^(^1) 7.6% 10.2% 9.1% 10.5%
^(^2^)
Earnings per share amounted to EUR 1.73 in H1 23 (EUR -1.17 in H1 22). Underlying earnings per share amounted to EUR 2.45 over the same period (EUR 2.81 in H1 22).
1. *THE GROUP’S FINANCI**AL STRUCTURE*
Group *shareholders’ equity* totalled EUR 68.0 billion at 30 June 2023 (vs. EUR 67.0 billion at 31 December 2022). Net asset value per share was EUR 71.5 and tangible net asset value per share was EUR 61.8.
The consolidated balance sheet totalled EUR 1,578 billion at 30 June 2023 vs. EUR 1,485 billion at 31 December 2022. The total funded balance sheet (see Methodology note 11) stood at EUR 966 billion vs. EUR 930 billion at 31 December 2022. The net amount of customer loan outstandings totalled EUR 501 billion. At the same time, customer deposits amounted to EUR 612 billion, up 3.0% vs. 31 December 2022.
At 18 July 2023, the parent company had issued EUR 39.5 billion of medium/long-term debt, having an average maturity of 4.9 years and an average spread of 79 basis points (over 6-month midswaps, excluding subordinated debt). The subsidiaries had issued EUR 1.9 billion. In all, the Group has issued a total of EUR 41.4 billion in medium/long-term debt.
The Liquidity Coverage Ratio (LCR) was well above regulatory requirements at 152% at end-June 2023 (158% on average for the quarter), vs. 141% at end-December 2022. At the same time, the Net Stable Funding Ratio (NSFR) stood at 113% at end-June 2023 vs. 114% at end-December 2022.
The Group’s *risk-weighted assets* (RWA) totalled EUR 385.0 billion at 30 June 2023 following LeasePlan integration (vs. EUR 362.4 billion at end-December 2022) according to CRR2/CRD5 rules. Risk-weighted assets in respect of credit risk account for 84.3% of the total, i.e., EUR 324.6 billion, up by 7.3% vs. 31 December 2022.
At 30 June 2023, the Group’s *Common Equity Tier 1*^*(*^*3*^*)* ratio stood at 13.1%, or around 330 basis points above the regulatory requirement of 9.73%. The CET 1 ratio at 30 June 2023 includes an +6 basis-point impact from the phase-in of IFRS 9. Excluding this impact, the fully-loaded ratio amounts to 13.0%. The Tier 1 ratio stood at 15.9% at end-June 2023 (16.3% at end-December 2022), while the total capital ratio amounted to 18.7% (19.4% at end-December 2022), which is above the respective regulatory requirements of 11.63% and 14.16%.
The *leverage ratio* stood at 4.2% at 30 June 2023, which is above the regulatory requirement of 3.5%.
With an RWA level of 32.1% and leverage exposure of 8.5% at end-June 2023, the Group’s TLAC ratio is significantly above the respective Financial Stability Board requirements for 2023 of 22.0% and 6.75%. Likewise, MREL-eligible outstandings, which stood at 33.1% of RWA and 8.75% of leverage exposure at end-June 2023, are also far above the respective regulatory requirements of 25.7% and 5.91%.
The Group is rated by four rating agencies: (i) FitchRatings - long-term rating “A-”, positive outlook, senior preferred debt rating “A”, short-term rating “F1” (ii) Moody’s - long-term rating (senior preferred debt) “A1”, stable outlook, short-term rating “P-1” (iii) R&I - long-term rating (senior preferred debt) “A”, stable outlook; and (iv) S&P Global Ratings - long-term rating (senior preferred debt) “A”, stable outlook, short-term rating “A-1”.
1. *FRENCH** RETAIL **BANKING*
In EURm *Q2 23* Q2 22 Change *H1 23* H1 22 Change
Net banking income 1,924 2,228 -13.6% 3,850 4,393 -12.4%
Net banking income excl. PEL/CEL 1,920 2,157 -11.0% 3,856 4,299 -10.3%
Operating expenses (1,443) (1,490) -3.2% (3,101) (3,182) -2.5%
Underlying operating expenses^(^1) (1,548) (1,548) +0.0% (3,078) (3,069) +0.3%
*Gross operating income* *481* *738* *-34.8%* *749* *1,211* *-38.2%*
Underlying gross operating income^(^1) 376 680 -44.8% 772 1,324 -41.6%
Net cost of risk (109) (21) x 5.2 (198) (68) x 2.9
*Operating income* *372* *717* *-48.1%* *551* *1,143* *-51.8%*
Net profits or losses from other assets (2) 3 n/s 3 3 +0.0%
*Reported Group net income* *277* *534* *-48.1%* *415* *851* *-51.2%*
Underlying Group net income^(^1) 200 491 -59.4% 433 934 -53.7%
*RONE* *9.0%* *17.4%* *6.7%* *14.1%*
* Underlying **RONE*^*(*^*1)* *6.5%* *16.0%* *7.0%* *15.5%*
^(^2^)
*SG networks *
Average loan outstandings contracted by -2% vs. Q2 22 to EUR 207 billion. Outstanding loans to corporate and professional customers (excluding government-guaranteed PGE loans) were +4.1% higher vs. Q2 22. Home loans decreased by -2.8% vs. Q2 22, in line with the Group’s selective origination policy.
Average outstanding deposits, which include all deposits from corporates and professionals clients of the SG network, declined by -2.9% vs. Q2 22 to EUR 239 billion (increase in retail client deposits and decrease in corporate deposits).
The average loan to average deposit ratio stood at 87% in Q2 23.
Life insurance assets under management totalled EUR 111 billion at end-June 2023, which is a +1% improvement over the year (with the unit-linked share accounting for 33%). Gross life insurance inflows amounted to EUR 2.1 billion at Q2 23.
Property & Casualty insurance premiums were up +9% vs. Q2 22, while Personal protection insurance premiums increased +2% vs. Q2 22.
*Boursorama** *
With 129,000 new clients during the quarter, Boursorama strengthened its position as the leading online bank in France, and reached nearly 5 million clients at end-June 2023.
Average loan outstandings were stable on the Q2 22 level at EUR 15 billion, which is consistent with the Group’s selective loan production. Home loan outstandings were stable relative to Q2 22, while consumer loan outstandings were down -6% vs. Q2 22.
Average outstanding savings including deposits and financial savings were +39% higher vs. Q2 22 at EUR 53 billion. Deposits stand at EUR 31 billion, a strong rise of +36% vs. Q2 22, notably with continued dynamic collection during the quarter (EUR +1.3 billion). Life insurance outstandings increased by +70% vs. Q2 22 (including ING outstandings), with the unit-linked share accounting for 42%.
Boursorama reinforced its day-to-day banking operations, registering growth in volumes of +37% vs. Q2 22.
In Q2 23, Boursorama posted positive net income of EUR 47 million, recording solid profitability of 66%.
*Private Banking*
Private Banking activities cover Private Banking activities in and outside of France. Assets under management totalled EUR 143 billion at Q2 23, excluding activities formerly managed by Lyxor. Private Banking’s net asset inflows amounted to EUR 2.9 billion at Q2 23. Net banking income stood at EUR 381 million during the quarter, a historical high, representing a +6.7% increase vs. Q2 22. Net banking income for the first half of the year totalled EUR 747 million, up +4.5% vs. H1 22.
**Net banking income**
*Revenues for the quarter* totalled EUR 1,920 million, down -11.0% vs. Q2 22, excluding PEL/CEL. Net interest income excluding PEL/CEL was down by -17.4% vs. Q2 22 impacted by higher interest rates on regulated savings schemes, the consequences of the usury rate and the end of the benefit of the TLTRO. Fee income was up by +2.4% relative to Q2 22.
*Revenues for the first half of the year* totalled EUR 3,856 million, down -10.3% vs. H1 22, restated for the PEL/CEL provision. The net interest margin excluding PEL/CEL was down by -17.9% vs. H1 22. Fee income was up by +1.4% relative to H1 22.
**Operating expenses**
*Over the quarter*, operating expenses were EUR 1,443 million (-3.2% vs. Q2 22) and EUR 1,548 million on an underlying basis (flat compared to Q2 22). Reported operating expenses include a EUR 60 million one-off provision reversal. The cost-to-income ratio stood at 75% at Q2 23.
*Over the first half*, operating expenses totalled EUR 3,101 million (-2.5% vs. H1 22). The cost-to-income ratio stood at 80.5%.
**Cost of risk **
*Over the quarter,* the cost of risk amounted to EUR 109 million or 18 basis points, which was slightly higher than in Q1 23 (14 basis points).
*Over the first half of the year,* the cost of risk totalled EUR 198 million or 16 basis points, which was higher than in H1 22 (6 basis points).
**Group net income**
*For the quarter,* the contribution to the Group net income was EUR 277 million in Q2 23, down -48% vs. Q2 22. RONE stood at 9.0% in Q2 23 (6.5% in underlying).
*Over the first half of the year,* the contribution to Group net income was EUR 415 million in Q2 23, down -51% vs. H1 22. RONE stood at 6.7% in H1 23.
1. *INTERNATIONAL RETAIL BANKING & FINANCIAL SERVICES*
In EURm *Q2 23* Q2 22 Change *H1 23* H1 22 Change
Net banking income 2,363 2,222 +6.3% +0.9%* 4,575 4,298 +6.4% +7.7%*
Operating expenses (1,167) (976) +19.6% +11.3%* (2,281) (2,065) +10.5% +11.7%*
Underlying operating expenses^(1) (1,190) (1,000) +19.0% +10.9%* (2,235) (2,017) +10.8% +12.2%*
*Gross operating **income* *1,196* *1,246* *-4.0%* *-7.1%** *2,294* *2,233* *+2.7%* *+4.1%**
Underlying gross operating income^(1) 1,173 1,222 -4.0% -7.1%* 2,340 2,281 +2.6% +3.9%*
Net cost of risk (83) (97) -14.4% -13.2%* (174) (422) -58.8% -24.3%*
*Operating **income* *1,113* *1,149* *-3.1%* *-6.6%** *2,120* *1,811* *+17.1%* *+7.4%**
Net profits or losses from other assets 8 n/s n/s (1) 10 n/s n/s
*Reported** Group net **income* *587* *687* *-14.6%* *-15.4%** *1,151* *1,047* *+9.9%* *-0.6%**
Underlying Group net income^(1) 575 674 -14.7% -15.6%* 1,175 1,073 +9.5% -0.7%*
RONE *22.8%* *26.0%* *20.0%* *19.4%*
*Underlying** RONE*^*(1)* *22.3%* *25.5%* *20.4%* *19.9%*
*International Retail Banking*’s outstanding loans posted growth of +6.5% vs. Q2 22 to EUR 90.6 billion. Outstanding deposits also advanced, and grew by +3.6% vs. Q2 22 to EUR 83.0 billion. ^4
In Europe, outstanding loans rose by +6.6% compared with end-June 2022 to EUR 65.5 billion, driven by strong momentum in all regions, and particularly in the Czech Republic (+8.2% vs. Q2 22) and Romania (+7.4% vs. Q2 22). Outstanding deposits rose by +2.8% vs. Q2 22 to EUR 55.7 billion, driven by Romania (+7.9% vs. Q2 22) and stabilized over the quarter in the Czech Republic vs. Q2 22.
Commercial performances continued to be steady in Africa, Mediterranean Basin and French Overseas Territories, where loan outstandings rose by +6.4% vs. in Q2 22 to EUR 25 billion. Deposits increased by +5.3% vs. Q2 22 to EUR 27.2 billion. Corporate segment was particularly dynamic with a growth in loans of +6.9% vs. Q2 22 and deposits of +7.3% vs. Q2 22.
*In the Insurance activity*, life insurance outstandings rose by +1.8% on the Q2 22 level to EUR 133.3 billion. The share of unit-linked products was 38%, up +2.8 points over the same period. Net inflows in life insurance remained positive over the first half of the year at EUR 0.6 billion. Protection insurance saw a +5.3% increase vs. Q2 22, with the activity continuing to be driven by a +11.7% rise in P&C insurance over the same period.
*Financial Services *also posted very robust growth. The acquisition of LeasePlan by ALD, the long-term vehicle leasing and fleet management activity, closed on 22 May 2023. The new combined entity now has a fleet of around 3.4 million vehicles. The fleet posted annualised growth of +3.0% vs. end-June 2022 (at constant perimeter and excluding entities held for sale).
Equipment Finance outstanding loans grew by +2.8% relative to end-June 2022 to EUR 14.9 billion.
**Net banking income **
*Over the quarter,* net banking income amounted to EUR 2,363 million, up by +6.3% vs. Q2 22.
*Over the first half of the year,* revenues climbed by +6.4% vs. H1 22 to EUR 4,575 million.
*International Retail Banking’s* net banking income stood at EUR 1,268 million in Q2 23 and was stable vs. Q2 22. Over H1 23, net banking income amounted to EUR 2,530 million, down -2.8% vs. H1 22 and up by +4.9%* at constant scope and exchange rate vs. H1 22.
Revenues in Europe were stable over the second quarter of 2023 vs. Q2 22. The rise in fee income offset mixed trends for the net interest margin during the quarter amid a context of high interest rates.
Revenues increased in all regions across Africa, Mediterranean Basin and French Overseas Territories by +10.1% vs. Q2 22, driven by a strong increase in net interest margin of +16% vs. Q2 22.
The *Insurance business *registered net banking income growth of +2.9% to EUR 175 million vs. Q2 22 under IFRS 17. In H1 23, net banking income grew strongly by +18.4% vs. H1 22 to EUR 328 million.
*Financial Services*’ net banking income was significantly higher (+17.3%) vs. Q2 22 at EUR 920 million. This includes LeasePlan revenues which have been integrated since end of May 2023, i.e. around EUR 200 million. At constant perimeter, ALD reported a slight decrease in net banking income, with an unfavourable base effect due to hyperinflation in Turkey in Q2 22. At ALD, income from used-car sales stood at an average EUR 2,614 per vehicle this quarter (excluding the depreciation curve adjustment). In H1 23, Financial Services to Corporates recorded net banking income of EUR 1,717 million, up by +21.1% vs. H1 22.
**Operating expenses **
*Over the quarter,* operating expenses amounted to EUR 1,167 million, up by +19.6% vs. Q2 22 (+19.0% in underlying), impacted by LeasePlan operating expenses of EUR 111 million following its consolidation since 22 May 2023 and expenses related to its integration of around EUR 60 million.
*Over the first half,* operating expenses came to EUR 2,281 million, up +10.5% vs. H1 22.
At *International Retail Banking*, the cost increase remained under control over the quarter at +1.0% vs. Q2 22 despite an inflationary context.
In the *Insurance* business, operating expenses increased by +14.8% vs. Q2 22.
At *Financial Services*, operating expenses increased by +63.8% vs. Q2 22, including LeasePlan costs and expenses related to the integration of LeasePlan. At constant rate and perimeter, they increased by +21.1%* on an underlying basis vs. Q2 22.
**Cost of risk**
*Over the quarter*, the cost of risk decreased to 24 basis points (or EUR 83 million) vs. 28 basis points in Q2 22.
*Over the first half* *of the year*, the cost of risk stood at 26 basis points vs. 60 basis points in H1 22.
**Reported Group net income **
*Over the quarter,* the contribution to Group net income was EUR 587 million in Q2 23, down -14.6% vs. Q2 22. RONE stood at 22.8% in Q2 23 (22.3% in underlying). RONE was 19.1% in International Retail Banking and 27.2% in Financial Services and Insurance at Q2 23.
*Over the first half of the year,* the contribution to Group net income was EUR 1,151 million, up +9.9% vs. H1 22. RONE stood at 20% vs. 19.4% in H1 22. RONE was 17.5% in International Retail Banking and 22.4% in Financial Services and Insurance in H1 23.
1. *GLOBAL BANKING & INVESTOR SOLUTIONS*
In EUR m *Q2 23* Q2 22 Variation *H1 23* H1 22 Variation
Net banking income 2,375 2,563 -7.3% -6.2%* 5,133 5,318 -3.5% -3.2%*
Operating expenses (1,605) (1,565) +2.6% +3.8%* (3,648) (3,737) -2.4% -2.1%*
Underlying operating expenses^(1) (1,668) (1,755) -4.9% -3.9%* (3,271) (3,366) -2.8% -2.5%*
*Gross operating **income* *770* *998* *-22.8%* *-21.9%** *1,485* *1,581* *-6.1%* *-5.8%**
Underlying gross operating income^(1) 707 808 -12.5% -11.2%* 1,862 1,952 -4.6% -4.4%*
Net cost of risk 27 (69) n/s n/s 22 (263) n/s n/s
*Operating **income* *797* *929* *-14.2%* *-13.1%** *1,507* *1,318* *+14.3%* *+14.8%**
*Reported** Group net **income* *638* *742* *-14.0%* *-12.9%** *1,203* *1,044* *+15.2%* *+15.6%**
Underlying Group net income^(1) 590 596 -1.0% +0.6%* 1,489 1,329 +12.0% +12.3%*
*RONE* *18.1%* *20.3%* *+0.0%* *+0.0%** *16.8%* *14.5%* *+0.0%* *+0.0%**
*Underlying** RONE*^*(1)* *16.7%* *16.3%* +0.0% +0.0%* *20.8%* *18.5%* +0.0% +0.0%*
**Net banking income **
*Global Banking & Investor Solutions* notched up a solid performance in the second quarter, posting revenues of EUR 2,375 million, down -7.3% with respect to a very high Q2 22. ^5
*Over the first half*, revenues dipped slightly by -3.5% vs. H1 22 (EUR 5,133 million vs. EUR 5,318 million).
*Global Markets & Investor Services* recorded revenues of EUR 1,521 million in Q2 23, down by -12.7% in comparison to a very high reference point in Q2 22. Over H1 23, revenues totalled EUR 3,452 million, which was -6.9% vs. H1 22.
Global Markets recorded a good performance, with revenues of EUR 1,342 million, down -11.5% vs. Q2 22 in a slower market. Over H1 23, revenues decreased by -7.0% vs. H1 22 to EUR 3, 063 million.
The Equities business recorded an overall good level of activity, posting Q2 23 revenues of EUR 785 million, down -5.8% vs. Q2 22. Market conditions were less favourable due to lower volumes and weaker volatility. Over H1 23, revenues were down -12.3% vs. H1 22 to EUR 1,616 million.
Amid less conducive market conditions due to weaker interest rate and currency volatility, FIC activities recorded a -18.4% decrease in revenues in Q2 23 vs. Q2 22, to EUR 557 million. Continued strong dynamics in Financing activities despite lower client activity. Over H1 23, revenues remained stable vs. H1 22 to EUR 1,447 million.
Securities Services’ revenues contracted by -20.8% over the quarter to EUR 179 million. Excluding the impact of several participations notably in Euroclear in Q2 22, business activity advanced by +12.2% compared with Q2 22. Over H1 23, revenues declined by -6.0% vs. H1 22 and rose by +6.2% excluding participations. Assets under Custody and Assets under Administration totalled EUR 4,702 billion and EUR 587 billion, respectively.
*Financing & Advisory activities* registered a solid performance with Q2 revenues of EUR 854 million, up +4.0% vs. Q2 22. Over H1 23, revenues totalled EUR 1,681 million, a +4.3% increase vs. H1 22.
The Global Banking & Advisory business turned in a solid performance, with revenue decreasing slightly by -4.6% vs. a very high Q2 22 reference point. The activity reaped the benefit of robust momentum in Asset Backed Products and Investment Banking, thanks notably to debt capital market activities and telecommunications, media and technology (TMT) sector financing. Asset Finance platform showed robust performance and Natural Resources activities demonstrated sound resilience. Over H1 23, revenues are down -4.8% vs. H1 22.
Global Transaction and Payment Services once again posted an excellent performance, with revenue growth of +42.4% vs. Q2 22 that took advantage of positive interest rates and sound commercial performances. In H1 23, revenues advanced strongly by +46.5% relative to H1 22.
**Operating expenses **
*Operating expenses came to EUR 1,60**5** million over the quarter*, up slightly by +2.6% vs. Q2 22, mainly due to one-off items for a total amount of EUR 95 million. On an underlying basis, excluding the contribution to the Single Resolution Fund (SRF), they contracted by -3.2%. This brought the underlying cost-to-income ratio, excluding the SRF contribution, to 65.2% in Q2 23.
*Over the first half of 2023*, operating expenses fell by -2.4% vs. H1 22 and decreased by -0.8% on an underlying basis excluding SRF, resulting in an underlying cost-to-income ratio, excluding the SRF contribution, of 59.0% in H1 23.
**Cost of risk**
*Over the quarter,* the cost of risk improved sharply to -7 basis points (or a reversal EUR -27 million) vs. 1* *basis point in Q1 23, notably due to reversals on provisions.
*Over the first half* *of the year*, the cost of risk stood at -3 basis points vs. 30 basis points in H1 22.
**Group net income **
The contribution to Group net income was EUR 638 million on a reported basis and EUR 590 million on an underlying basis, respectively down by -14.0% and -1.0% vs. Q2 22.
The contribution was EUR 1,203 million on a reported basis and EUR 1,489 million on an underlying basis for the first half of the year.
Global Banking & Investor Solutions posted strong profitability with a reported RONE of 18.1% and 16.7% on an underlying basis for the quarter (19.3% on an underlying basis, restated for the impact of the SRF contribution).
*Over the first half*, reported RONE stood at 16.8% and 20.8% on an underlying basis (23.3% on an underlying basis excluding SRF).
1. *CORPORATE CENTRE*
In EURm *Q2 23* Q2 22 *H1 23* H1 22
Net banking income (375) (112) (600) (65)
Underlying net banking income^(1) (135) (112) (360) (65)
Operating expenses (226) (294) (468) (472)
Underlying operating expenses^(1) (55) (148) (78) (145)
*Gross operating **income* *(601)* *(406)* *(1 068)* *(537)*
*Underlying* *gross** operating **income*^*(1)* *(190)* *(260)* *(438)* *(210)*
Net cost of risk (1) (30) 2 (25)
Net profits or losses from other assets (79) (3,303) (100) (3,303)
Underlying profits or losses from other assets^(^1) - - (21) -
Income tax 103 317 216 336
*Reported** Group net **income* *(602)* *(3**,**474)* *(1**,**001)* *(3**,**632)*
*Underlying** Group net **income*^*(1)* *(205)* *(280)* *(430)* *(317)*
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, as well as several costs incurred by the Group that are not re-invoiced to the businesses. ^6
*The Corporate Centre’s net banking income totalled EUR -3**75** million* in Q2 23 vs. EUR -112 million in Q2 22. It notably included the negative impact from the unwinding of hedges taken out against the TLTRO scheme for around EUR -0.1 billion at Q2 23 (approximately EUR -0.3 billion in 2023) and the negative impact of one-off items for around EUR -240 million. The underlying net banking income stood at EUR -135 million in Q2 23 vs. EUR -112 million in Q2 22.
*Operating expenses totalled EUR -2**26** million* in Q2 23 vs. EUR -294 million in Q2 22. In particular, they included the Group’s transformation costs for a total amount of EUR -184 million relating to French Retail Banking activities (EUR -122 million), Global Banking & Investor Solutions (EUR -8 million) and the Corporate Centre (EUR -54 million). Underlying costs came to EUR -55 million in Q2 23 vs. EUR -148 million in Q2 22.
*Gross operating income totalled EUR -601 million* in Q2 23 vs. EUR -406 million in Q2 22. Underlying gross operating income totalled EUR -190 million in Q2 23 vs. EUR -260 million in Q2 22.
*The Corporate Centre’s contribution to Group net income totalled EUR -**602** million in Q2 23 *vs.* *
EUR -3,474 million in Q2 22. It includes the negative impact from the disposal of ALD’s activities in Russia for EUR -79 million, which was recorded under Net profits or losses from other assets. The Corporate Centre’s contribution to Group underlying net income totalled EUR -205 million in Q2 23 vs. EUR -280 million in Q2 22.
1. *2023 and 2024 **FINANCIAL CALENDAR *
2023 and 2024 financial communications calendar
18 September 2023 Capital Markets Day (London)
3 November 2023 Third quarter and nine-month 2023 results
8 February 2024 Fourth quarter and full year 2023 results
3 May 2024 First quarter 2024 results
*The Alternative Performance Measures, notably the notions of net banking income for the pillars, operating expenses, IFRIC 21 adjustment, cost of risk in basis points, ROE, ROTE, RONE, net assets, tangible net assets, and the amounts serving as a basis for the different restatements carried out (in particular the transition from published 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 section “Risk Factors” in our Universal Registration Document filed with the French Autorité des Marchés Financiers (which is available on https://investors.societegenerale.com/en).
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.
1. *APPENDIX 1: **FINAN**C**I**AL DATA*
**GROUP NET INCOME BY CORE BUSINESS**
In EUR m *Q2 23* Q2 22 Variation *H1 23* H1 22 Variation
French Retail Banking 277 534 -48.1% 415 851 -51.2%
International Retail Banking and Financial Services 587 687 -14.6% 1,151 1,047 +9.9%
Global Banking and Investor Solutions 638 742 -14.0% 1,203 1,044 +15.2%
*Core Businesses* *1,502* *1,963* *-23.5%* *2,769* *2,942* *-5.9%*
Corporate Centre (602) (3,474) +82.7% (1,001) (3,632) +72.4%
*Group* *900* *(1,511)* *n/s* *1,768* *(690)* *n/s*
**CONSOLIDATED BALANCE SHEET**
In EUR m *30.06.2023* *31.12.2022*
Cash, due from central banks 215,376 207,013
Financial assets at fair value through profit or loss 496,362 427,151
Hedging derivatives 31,126 32,971
Financial assets at fair value through other comprehensive income 90,556 92,960
Securities at amortised cost 27,595 26,143
Due from banks at amortised cost 83,269 68,171
Customer loans at amortised cost 490,421 506,635
Revaluation of differences on portfolios hedged against interest rate risk (1,925) (2,262)
Investments of insurance companies 616 353
Tax assets 4,385 4,484
Other assets 73,792 82,315
Non-current assets held for sale 3,590 1,081
Investments accounted for using the equity method 209 146
Tangible and intangible fixed assets 57,535 33,958
Goodwill 5,523 3,781
*Total* *1,578,430* *1,484,900*
In EUR m *30.06.2023* *31.12.2022*
Due to central banks 9,468 8,361
Financial liabilities at fair value through profit or loss 380,821 304,175
Hedging derivatives 44,156 46,164
Debt securities issued 151,320 133,176
Due to banks 119,923 133,011
Customer deposits 546,655 530,764
Revaluation of differences on portfolios hedged against interest rate risk (8,367) (9,659)
Tax liabilities 2,356 1,645
Other liabilities 93,421 107,315
Non-current liabilities held for sale 2,212 220
Insurance contract-related liabilities 138,746 135,875
Provisions 4,577 4,579
Subordinated debt 15,158 15,948
*Total liabilities* *1,500,446* *1,411,574*
*Shareholders’ equity* *-* -
*Shareholders’ equity, Group share* *-* -
Issued common stocks and capital reserves 21,267 21,248
Other equity instruments 10,136 9,136
Retained earnings 34,485 34,479
Net income 1,768 1,825
*Sub-total* *67,656* *66,688*
Unrealised or deferred capital gains and losses 351 282
*Sub-total equity, Group share* *68,007* *66,970*
Non-controlling interests 9,977 6,356
*Total equity* *77,984* *73,326*
*Total* *1,578,430* *1,484,900*
9. *APPENDIX** 2**:* *METHODOLOGY*
*1 - The financial information presented **for the **second** quarter **and first half **2023* *was examined by the Board of Directors on **2 **August**,** 202**3* and has been prepared in accordance with IFRS as adopted in the European Union and applicable at that date. The limited review procedures on the condensed interim financial statements at 30 June 2023 carried by the Statutory Auditors are currently underway.
*2 - Net banking income*
The pillars’ net banking income is defined on page 41 of Societe Generale’s 2023 Universal 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 31^st, 2022. The term “costs” is also used to refer to Operating Expenses. The Cost/Income Ratio is defined on page 41 of Societe Generale’s 2023 Universal 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 contributions to *Single Resolution Fund (**“**SRF**”**)* are part of IFRIC 21 adjusted charges, they include contributions to national resolution funds within the EU.
*5 – Exceptional items – Transition from accounting data to underlying data*
It may be necessary for the Group to present underlying indicators in order to facilitate the understanding of its actual performance. The transition from published data to underlying data is obtained by restating published data for exceptional items and the IFRIC 21 adjustment.
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.
The reconciliation enabling the transition from published accounting data to underlying data is set out in the table below:
in EURm Q2 23 Q2 22 H1 23 H1 22
*Exceptional Net banking income (+)* *240* ** *240* **
One-off items^(^1) 240 240
*Exceptional operating expenses (-)* *(20)* *(125)* *836* *859*
IFRIC linearisation (239) (284) 435 557
Transformation costs^(^1) 184 159 366 302
Of which related to French Retail Banking 122 97 262 201
Of which related to Global Banking & Investor Solutions 8 25 19 39
Of which related to Corporate Centre 54 37 85 62
One-off items 35 35
*Exceptional Net profit or losses from other assets (+/-)* *79* *3,303* *79* *3,303*
Net losses from the disposal of Russian activities^(^1) 3,303 3,303
Net losses from the disposal of ALD Russia^(^1) 79 79
*Total exceptional items (pre-tax)* *299* *3,178* *1,155* *4,162*
*Total exceptional items (post-tax)* *259* *2,992* *89**9* *3,709*
Reported Net income - Group Share 900 (1,511) 1,768 (690)
*Total exceptional items - Group share (post-tax)* *259* *2,992* *89**9* *3,709*
Underlying Net income - Group Share 1,159 1,481 2,667 3,019
^7
*6 - **Cost of risk in basis points, coverage ratio for doubtful **outstandings*
The cost of risk is defined on pages 42 and 691 of Societe Generale’s 2023 Universal 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 EURm *Q2 23* Q2 22 *H1 23* H1 22
*French Retail Banking*
Net Cost Of Risk 109 21 198 68
Gross loan Outstandings 249,843 245,710 251,266 244,177
*Cost of Risk in bp* *18 * *3 * *16 * *6 *
*International Retail Banking and Financial Services*
Net Cost Of Risk 83 97 174 422
Gross loan Outstandings 137,819 141,075 136,404 140,811
*Cost of Risk in bp* *24 * *28 * *26 * *60 *
*Global Banking and Investor Solutions*
Net Cost Of Risk (27) 69 (22) 263
Gross loan Outstandings 165,847 176,934 171,719 173,842
*Cost of Risk in bp* *(7)* *16 * *(3)* *30 *
*Corporate Centre*
Net Cost Of Risk 1 30 (2) 25
Gross loan Outstandings 18,873 14,943 17,705 14,678
*Cost of Risk in bp* *2 * *79 * *(2)* *34 *
*Societe** Generale Group*
Net Cost Of Risk 166 217 348 778
Gross loan Outstandings 572,382 578,662 577,093 573,508
*Cost of Risk in bp* *12 * *15 * *12 * *27 *
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, ROTE, RONE*
The notions of ROE (Return on Equity) and ROTE (Return on Tangible Equity), as well as their calculation methodology, are specified on page 43 of Societe Generale’s 2023 Universal Registration Document. This measure makes it possible to assess Societe Generale’s return on equity and return on tangible 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 43 of Societe Generale’s 2023 Universal Registration Document.
Group net income used for the ratio numerator is book Group net income adjusted for “interest net of tax payable on 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). For ROTE, income is also restated for goodwill impairment.
Details of the corrections made to book equity in order to calculate ROE and ROTE for the period are given in the table below:
*ROTE calculation: calculation methodology*
End of period (in EURm) Q2 23 Q2 22 H1 23 H1 22
*Shareholders' equity Group share* *68,007* *65,023* *68,007* *65,023*
Deeply subordinated and undated subordinated notes (10,815) (8,683) (10,815) (8,683)
Interest payable to holders of deeply & undated subordinated notes, issue premium amortisation^(^1) (28) (8) (28) (8)
OCI excluding conversion reserves 688 577 688 577
Distribution provision^(^2) (982) (1,193) (982) (1,193)
Distribution N-1 to be paid (441) (914) (441) (914)
*ROE equity end-of-period* *56,430* *54,801* *56,430* *54,801*
*Average ROE equity* *56,334* *55,009* *56,203* *54,887*
Average Goodwill (4,041) (3,646) (3,847) (3,636)
Average Intangible Assets (3,117) (2,710) (2,997) (2,729)
*Average ROTE equity* *49,176* *48,653* *49,359* *48,522*
*Group net Income* *900* *(1,511)* *1,768* *(690)*
Interest paid and payable to holders of deeply subordinated notes and undated subordinated notes, issue premium amortisation (216) (159) (379) (278)
Cancellation of goodwill impairment - - - 2
*Ajusted** Group net Income* *684* *(1,670)* *1,3**90* *(966)*
Average ROTE equity 49,176 48,653 49,359 48,522
*ROTE* *5.6%* *-13.7%* *5.6%* *-4.0%*
*Underlying Group net income* *1,159* *1,481* *2,667* *3,019*
Interest paid and payable to holders of deeply subordinated notes and undated subordinated notes, issue premium amortisation (216) (159) (379) (278)
Cancellation of goodwill impairment - - - 2
*Ajusted** Underlying Group **net** Income* *943* *1,322* *2,288* *2,743*
Average ROTE equity (underlying) 49,435 51,645 50,257 52,231
*Underlying ROTE * *7.6%* *10.2%* *9.1%* *10.5%*
*RONE calculation: Average capital allocated to Core Businesses (in EURm)*
In EURm *Q2 23* Q2 22 Change *H1 23* H1 22 Change
French Retail Banking 12,338 12,296 +0.3% 12,365 12,058 +2.5%
International Retail Banking and Financial Services 10,310 10,565 -2.4% 11,510 10,795 +6.6%
Global Banking and Investor Solutions 14,132 14,644 -3.5% 14,347 14,385 -0.3%
*Core Businesses* *36,780* *37,505* *-1.9%* *38,222* *37,238* *+2.6%*
Corporate Center 19,554 17,504 +11.7% 17,981 17,649 +1.9%
*Group* *56,334* *55,009* +2.4% *56,203* *54,887* +2.4%
^8
*8 - **Net assets and tangible net assets*
Net assets and tangible net assets are defined in the methodology, page 45 of the Group’s 2023 Universal Registration Document. The items used to calculate them are presented below:
End of period (in EURm) H1 23 Q1 23 2022
*Shareholders' equity Group share* *68,007* *68,747* *66,970*
Deeply subordinated and undated subordinated notes (10,815) (10,823) (10,017)
Interest of deeply & undated subordinated notes, issue premium amortisation^(^1) (28) (102) (24)
Book value of own shares in trading portfolio 134 130 67
*Net Asset Value* *57,298* *57,952* *56,996*
Goodwill (4,429) (3,652) (3,652)
Intangible Assets (3,356) (2,878) (2,875)
*Net Tangible Asset Value* *49,513* *51,423* *50,469*
*Number of shares used to calculate **NAPS*^*(*^*2)* *801,471* *801,471* *801,147*
*Net Asset Value per Share* *71.5* *72.3* *71.1*
*Net Tangible Asset Value per Share* *61.8* *64.2* *63.0*
^9
*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 44 of Societe Generale’s 2023 Universal 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 and ROTE. As specified on page 45 of Societe Generale’s 2023 Universal Registration Document, the Group also publishes EPS adjusted for the impact of non-economic and exceptional items presented in methodology note No. 5 (underlying EPS).
The calculation of Earnings Per Share is described in the following table:
Average number of shares (thousands) H1 23 Q1 23 2022
*Existing shares* *822,101* *829,046* *845,478*
*Deductions*
Shares allocated to cover stock option plans and free shares awarded to staff 6,845 6,899 6,252
Other own shares and treasury shares 13,892 20,838 16,788
*Number of shares used to calculate **EPS*^*(*^*1)* *801,363* *801,309* *822,437*
*Group net Income** (in EUR m)* *1,768* *868* *1,825*
Interest on deeply subordinated notes and undated subordinated notes (in EUR m) (379) (163) (596)
*Adjusted Group net income (in EUR m)* *1,390* *705* *1,230*
*EPS (in EUR)* *1.73* *0.88* *1.50*
*Underlying EPS (in EUR)* *2.45* *1.05* *5.87*
*10 - The **Societe** Generale Group’s Common Equity Tier 1 capital *is calculated in accordance with applicable CRR2/CRD5 rules. The phased-in and fully loaded solvency ratios are presented pro forma for current earnings, net of dividends, for the current financial year, unless specified otherwise. The leverage ratio is also calculated according to applicable CRR2/CRD5 rules including the phased-in following the same rationale as solvency ratios.
^10*11 – Funded balance sheet, loan to deposit ratio*
The *funded balance sheet *is based on the Group financial statements. It is obtained in two steps:
· A first step aiming at reclassifying the items of the financial statements into aggregates allowing for a more economic reading of the balance sheet. Main reclassifications:
Insurance: grouping of the accounting items related to insurance within a single aggregate in both assets and liabilities.
Customer loans: include outstanding loans with customers (net of provisions and write-downs, including net lease financing outstanding and transactions at fair value through profit and loss); excludes financial assets reclassified under loans and receivables in accordance with the conditions stipulated by IFRS 9 (these positions have been reclassified in their original lines).
Wholesale funding:
Includes interbank liabilities and debt securities issued.
Financing transactions have been allocated to medium/long-term resources and short-term resources based on the maturity of outstanding, more or less than one year.
Reclassification under customer deposits of the share of issues placed by French Retail Banking networks (recorded in medium/long-term financing), and certain transactions carried out with counterparties equivalent to customer deposits (previously included in short term financing).
Deduction from customer deposits and reintegration into short-term financing of certain transactions equivalent to market resources.
· A second step aiming at excluding the contribution of insurance subsidiaries, and netting derivatives, repurchase agreements, securities borrowing/lending, accruals and “due to central banks”.
The Group *loan/deposit ratio *is determined as the division of the customer loans by customer deposits as presented in the funded balance sheet.
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.
10. *A**PPENDIX **3 :** PUBLICATION OF NEW QUARTERLY SERIES*
*Societe Generale is releasing restated quarterly statements reflecting the impacts from the merger of Societe Generale and Credit du Nord in France to create a unique brand name, SG. *
Following the completion of the merger of French networks in France, the Group proceeded to some non-material adjustments in its organization with the transfer of Societe des Banques de Monaco and the premium client base from Credit du Nord to private banking operations in France and the transfer of employee savings’ activities operated by Services Epargne Entreprises^(^11^) (“S2E”) from French networks in France to insurance activities within International retail banking and financial services in order to reinforce already existing synergies with financial savings.
The historical quarterly financial reporting has been restated in compliance with the following changes in governance.
This organisational change comprises some immaterial adjustments to the cost sharing of some activities of Global Markets and Investor Services and Global Banking and Advisory.
All of the above items have no impact on the performance of the Group nor on the Corporate Centre.
The series of 2022 and Q1 23 quarterly results have been adjusted consequently and are available on the Societe Generale website. (The figures included in this press release are unaudited.)
*Financial impact **in FY 20**2**2 **on French Retail Banking, International Retail Banking and Financial Services and Global Banking & Investor Solutions*
In EURm *Group* *French Retail Banking* Reported
12/05/2023 Reported
03/08/2023 Gap Reported
12/05/2023 Reported
03/08/2023 Gap
*Net Banking Income* *27,155* *27,155* *-* *8,706* *8,684* *-22*
Operating expenses -17,994 -17,994 - -6,403 -6,380 23
Gross operating income 9,161 9,161 - 2,303 2,304 1
*Group net income* *1,825* *1,825* *-* *1,399* *1,400* *1* *International Retail Banking & Financial Services * *Global Banking & Investor Solutions* *Corporate Centre * Reported
12/05/2023 Reported
03/08/2023 Gap Reported
12/05/2023 Reported
03/08/2023 Gap Reported
12/05/2023 Reported
03/08/2023 Gap
*Net Banking Income* *8,595* *8,617* *22* *10,082* *10,082* *-* *-228* *-228* *-*
Operating expenses -4,009 -4,032 -23 -6,634 -6,634 - -948 -948 *-*
Gross operating income 4,586 4,585 -1 3,448 3,448 - -1,176 -1,176 *-*
*Group net income* *2,226* *2,225* *-1* *2,427* *2,427* *-* *-4,227* *-**4,227* *-* *Global Markets & Investor Services * *Financing & Advisory * *Global Banking & Investor Solutions* Reported
12/05/2023 Reported
03/08/2023 Gap Reported
12/05/2023 Reported
03/08/2023 Gap Reported
12/05/2023 Reported
03/08/2023 Gap
*Net Banking Income* *6,708* *6,708* *-* *3,374* *3,374* *-* *10,082* *10,082* *-*
Operating expenses -4,705 -4,708 -3 -1,929 -1,926 3 -6,634 -6,634 -
Gross operating income 2,003 2,000 -3 1,445 1,448 3 3,448 3,448 -
*Group net income* *1,524* *1,522* *-2* *903* *905* *2* 2,427 *2,427* *-*
*Societe** Generale*
Societe Generale is one of the leading European financial services groups. Based on a diversified and integrated banking model, the Group combines financial strength and proven expertise in innovation with a strategy of sustainable growth. Committed to the positive transformations of the world’s societies and economies, Societe Generale and its teams seek to build, day after day, together with its clients, a better and sustainable future through responsible and innovative financial solutions.
Active in the real economy for over 150 years, with a solid position in Europe and connected to the rest of the world, Societe Generale has over 117,000 members of staff in 66 countries and supports on a daily basis 25 million individual clients, businesses and institutional investors around the world by offering a wide range of advisory services and tailored financial solutions. The Group is built on three complementary core businesses:
· *French Retail Banking* with the SG bank, resulting from the merger of the two Societe Generale and Crédit du Nord networks, and Boursorama. Each offers a full range of financial services with omnichannel products at the cutting edge of digital innovation;
· *International Retail Banking, Insurance and Financial Services,* with networks in Africa, Central and Eastern Europe and specialised businesses that are leaders in their markets;
· *Global Banking and Investor Solutions,* which offers recognised expertise, key international locations and integrated solutions.
Societe Generale is included in the principal socially responsible investment indices: DJSI (Europe), FTSE4Good (Global and Europe), Bloomberg Gender-Equality Index, Refinitiv Diversity and Inclusion Index, Euronext Vigeo (Europe and Eurozone), STOXX Global ESG Leaders indexes, and the MSCI Low Carbon Leaders Index (World and Europe).
In case of doubt regarding the authenticity of this press release, please go to the end of Societe Generale’s newsroom page where official Press Releases sent by Societe Generale can be certified using blockchain technology. A link will allow you to check the document’s legitimacy directly on the web page.
For more information, you can follow us on Twitter @societegenerale or visit our website societegenerale.com.
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(1) Underlying data (see Methodology note No. 5 for the transition from accounting data to underlying data), (2) Including IFRS 9 phasing, or 13.% fully-loaded
Asterisks* in the document refer to data at constant scope and exchange rates
NB: 2022 data in this document was restated, in compliance with IFRS 17 and IFRS 9 for insurance entities
(1) Underlying data (see Methodology note No. 5 for the transition from accounting data to underlying data)
(2) Ratio calculated according to EBA methodology published on 16 July 2019
(3) Ratio of S3 provisions on the gross carrying amount of the loans before offsetting guarantees and collateral
(1) Underlying data (see Methodology note No. 5 for the transition from accounting data to underlying data)
(3) Pro-forma estimation, subject to ECB notification
(1) Underlying data (see Methodology note No. 5 for the transition from accounting data to underlying data)
(4) Underlying data (see Methodology note No. 5 for the transition from accounting data to underlying data)
(5) Underlying data (see Methodology note No. 5 for the transition from accounting data to underlying data)
(6) Underlying data (see Methodology note No. 5 for the transition from accounting data to underlying data)
(1) Allocated to Corporate Centre
(1) Interest net of tax
(2) The dividend to be paid is calculated based on a pay-out ratio of 50% of the underlying Group net income, after deduction of deeply subordinated notes and on undated subordinated notes
(1) Interest net of tax
(2) The number of shares considered is the number of ordinary shares outstanding as at end of period, excluding treasury shares and buybacks, but including the trading shares held by the Group.
(1) The number of shares considered is the average number of ordinary shares outstanding during the period, excluding treasury shares and buybacks, but including the trading shares held by the Group
(1) S2E manages all middle and back office administrative processing of employee savings accounts on behalf of its four custodial account holder clients (Societe Generale, BNP Paribas, HSBC and AXA). Societe Generale holds a 39.92% stake in the capital of S2E.
*Attachment*
· Societe-Generale_Q2-2023-Press-release_EN