• Societe Generale: First quarter 2022 earnings

    来源: Nasdaq GlobeNewswire / 05 5月 2022 00:26:12   America/New_York


    RESULTS AT MARCH 31ST 2022


    Press release
    Paris, May 5th 2022

    VERY GOOD FIRST QUARTER

    Strong increase in revenues of +16.6% vs. Q1 21 (+16.1%*) with a solid performance by all the businesses particularly in Global Markets, Financial Services and Financing & Advisory

    Cost to income ratio of 56.4%(1), excluding contribution to the Single Resolution Fund, with a positive jaws effect in all the businesses

    Cost of risk at 39 basis points, around 31 basis points excluding the Russian assets currently being sold

    2022 cost of risk expected between 30 and 35 basis points

    Underlying Group net income of EUR 1.57 billion(1) (EUR 0.84 billion on a reported basis), an increase of +21.3% vs. Q1 21

    Underlying profitability (ROTE) of 11.9%(1) (6.0% on a reported basis)

    CAPITAL POSITION

    CET 1 ratio of 12.9%(2) at end-March 2022, around 370 basis points above the regulatory requirement

    Residual net impact on capital at closing of around -6 basis points from the contemplated disposal of our activities in Russia(3)

    Confirmation of the distribution policy for 2021

    CET 1 ratio 200-250 basis points minimum above the regulatory requirement, including after entry into force of the regulation finalising the Basel III reform

            

    FURTHER PROGRESS IN OUR STRATEGIC INITIATIVES

    Planned acquisition of LeasePlan by ALD: signing of the framework agreement

    Partnership between Boursorama and ING: signing of the definitive agreement

    Planned merger of the retail banking networks in France: new branding of French networks and conclusion of key agreements in terms of human resources

    Sustainable finance: new target increased to EUR 300 billion for the period 2022-2025

    Fréderic Oudéa, the Group’s Chief Executive Officer, commented:

    This first quarter confirms the robustness and resilience of our business model, with a strong performance by all our businesses in a more uncertain environment, improved operating leverage and a contained cost of risk. The planned disposal, currently being finalised, of our activities in Russia, following the abrupt change in this country’s outlook, will enable the Group to withdraw in an effective and orderly manner, ensuring continuity for both its employees and its customers. With new milestones achieved this quarter, the Group is determinedly pursuing the implementation of its strategic initiatives and remains focused on its ambition of sustainable and profitable growth, combined with an attractive shareholder distribution.
    1. GROUP CONSOLIDATED RESULTS

    In EURmQ1 22Q1 21Change
    Net banking income7,2816,245+16.6%+16.1%*
    Operating expenses(5,329)(4,748)+12.2%+12.5%*
    Underlying operating expenses(1)(4,325)(4,097)+5.6%+5.8%*
    Gross operating income1,9521,497+30.4%+27.3%*
    Underlying gross operating income(1)2,9562,148+37.6%+35.3%*
    Net cost of risk(561)(276)x 2.0x 2.0*
    Operating income1,3911,221+13.9%+10.6%*
    Underlying operating income(1)2,3951,872+27.9%+25.5%*
    Net profits or losses from other assets26-66.7%-64.8%*
    Income tax(353)(283)+24.8%+24.8%*
    Net income1,040947+9.8%+5.7%*
    O.w. non-controlling interests198133+48.9%+48.2%*
    Reported Group net income842814+3.4%-0.9%*
    Underlying Group net income(1)1,5741,298+21.3%+18.1%*
    ROE5.3%5.2%+0.0%+0.0%*
    ROTE6.0%5.9%+0.0%+0.0%*
    Underlying ROTE(1)11.9%10.1%+0.0%+0.0%*

    (1)   Adjusted for exceptional items and linearisation of IFRIC 21


    Societe Generale’s Board of Directors, which met on May 4th, 2022 under the chairmanship of Lorenzo Bini Smaghi, examined the Societe Generale Group’s results for Q1 2022. The various restatements enabling the transition from underlying data to published data are presented in the methodology notes (section 10.5).

    As announced on April 11th, 2022, an agreement has been signed to sell Rosbank and its Russian insurance subsidiaries. This operation is expected to be closed in the few coming weeks.

    As a reminder the impact of the disposal of Rosbank and the Group’s Russian insurance activities on the Group's CET1 ratio is expected to be around -20 basis points(2), including around - 6 basis points of residual net impact expected at closing after reversal of rating migrations recorded in Q1 22 on the related Russian assets. This contemplated disposal would lead to the accounting in the Group’s income statement(3) of the write-off of the net book value of the divested activities (~EUR 2 billion(4) and an exceptional non-cash item with no impact on the Group’s capital ratio (~EUR 1.1 billion(4)), which corresponds to the normative reversal of the conversion reserve in the Group’s income statement.

    Net banking income
    Net banking income was substantially higher in Q1 22, up +16.6% (+16.1%*) vs. Q1 21, driven by a very good momentum in all the businesses.

    French Retail Banking’s performance was substantially higher, with net banking income (excluding PEL/CEL provision) up +6.4% vs. Q1 21, reflecting an upward momentum on net interest income as well as financial and service commissions.

    International Retail Banking & Financial Services enjoyed strong revenue growth (+19.3%* vs.
    Q1 21). Financial Services (+43.6%* vs. Q1 21) and Insurance (+6.0%* vs. Q1 21) enjoyed an excellent momentum. International Retail Banking also benefited from a strong rebound in its activities (+13.1%* vs. Q1 21).

    Global Banking & Investor Solutions delivered an excellent performance, with revenues up +18.1% (+16.9%*) vs. Q1 21. Financing & Advisory enjoyed a very good momentum, with revenues up +24.4% (+20.9%*) vs. Q1 21, while the revenues of Global Markets & Investor Services were substantially higher (+19.1%, +15.4%*) than in Q1 21.

    Operating expenses 
    In Q1 22, operating expenses totalled EUR 5,329 million on a reported basis and EUR 4,325 million on an underlying basis (restated for transformation costs and the linearisation of IFRIC 21), an increase of +5.6% vs. Q1 21. This increase can be explained primarily by the rise in variable costs linked to the growth in revenues (EUR +93 million), the increase in the contribution to the Single Resolution Fund (EUR +69 million), currency effects and the increase in other expenses (EUR +31 million).

    Driven by a very positive jaws effect, underlying gross operating income grew substantially (+38%) to EUR 2,956 million and the underlying cost to income ratio, excluding the Single Resolution Fund, improved by nearly 7 points (56.4% vs. 63.3% in Q1 21).

    Cost of risk

    In Q1 22, the cost of risk stood at 39 basis points, an increase vs. Q1 21 (21 basis points) due primarily to the consequences of the crisis in Ukraine on Russian exposure, or EUR 561 million (vs. EUR 276 million in Q1 21). It breaks down into a provision on non-performing loans of EUR 313 million and a provision on performing loans of EUR 248 million.

    Excluding Russian activities which are currently being sold, the cost of risk remains limited at 31 basis points and breaks down into a provision on non-performing loans of EUR 277 million and a provision on performing loans of EUR 148 million.

    Moreover, the Societe Generale Group has offshore international exposure (exposure at default) to Russian counterparties amounting to EUR 2.8 billion at March 31st, 2022. Exposure at risk on this portfolio is estimated at less than EUR 1 billion. The associated cost of risk was EUR 218 million in
    Q1 2022.

    There is only negligible market exposure to Russian external counterparties.

    The Group’s provisions on performing loans amounted to EUR 3,614 million at end-March, an increase of EUR 259 million vs. Q4 21.

    The non-performing loans ratio amounted to 2.9%(3) at March 31st 2022, stable vs. end-December 2021 (2.9%). The Group’s gross coverage ratio for doubtful outstandings stood at 49%(4) at March 31st 2022.

    The cost of risk is expected to be between 30 and 35 basis points in 2022.

    Group net income

    In EURmQ1 22Q1 21
    Reported Group net income842814
    Underlying Group net income(1)1,5741,298


    In EURmQ1 22Q1 21
    ROTE6.0%5.9%
    Underlying ROTE(1)11.9%10.1%

    (1)   Adjusted for exceptional items and linearisation of IFRIC 21

    Earnings per share amounts to EUR 0.87 in Q1 22 (EUR 0.79 in Q1 21). Underlying earnings per share amounts to EUR 1 over the same period (EUR 0.83 in Q1 21).

    1. THE GROUP’S FINANCIAL STRUCTURE

    Group shareholders’ equity totalled EUR 65.9 billion at March 31st, 2022 (EUR 65.1 billion at December 31st, 2021). Net asset value per share was EUR 69.23 and tangible net asset value per share was
    EUR 61.53.

    The consolidated balance sheet totalled EUR 1,609 billion at March 31st, 2022 (EUR 1,464 billion at December 31st, 2021). The net amount of customer loan outstandings at March 31st, 2022, including lease financing, was EUR 495 billion (EUR 488 billion at December 31st, 2021) – excluding assets and securities purchased under resale agreements. At the same time, customer deposits amounted to
    EUR 523 billion, vs. EUR 502 billion at December 31st, 2021 (excluding assets and securities sold under repurchase agreements).

    At April 26th, 2022, the parent company had issued EUR 19.7 billion of medium/long-term debt, having an average maturity of 5.9 years and an average spread of 43 basis points (vs. the 6-month midswap, excluding subordinated debt). The subsidiaries had issued EUR 0.7 billion. In total, the Group had issued EUR 20.4 billion of medium/long-term debt.

    The LCR (Liquidity Coverage Ratio) was well above regulatory requirements at 140% at end-March 2022 (137% on average in Q1), vs. 129% at end-December 2021. At the same time, the NSFR (Net Stable Funding Ratio) was at a level of 112% at end-March 2022.

    The Group’s risk-weighted assets (RWA) amounted to EUR 376.6 billion at March 31st, 2022 (vs.
    EUR 363.4 billion at end-December 2021) according to CRR2/CRD5 rules. Risk-weighted assets in respect of credit risk represent 84.1% of the total, at EUR 316.8 billion, up 3.9% vs. December 31st, 2021.

    At March 31st, 2022, the Group’s Common Equity Tier 1 ratio stood at 12.9%, or around 370 basis points above the regulatory requirement. The CET1 ratio at March 31st, 2022 includes an effect of +12 basis points for phasing of the IFRS 9 impact. Excluding this effect, the fully-loaded ratio amounts to 12.8%. The Tier 1 ratio stood at 15.1% at end-March 2022 (15.9% at end-December 2021) and the total capital ratio amounted to 17.9% (18.8% at end-December 2021).

    The Group is aiming for a CET 1 ratio between 200-250 basis points above the regulatory requirement including after the entry into force of the regulation finalising the Basel III reform.

    The leverage ratio stood at 4.3% at March 31st, 2022 (4.9% at end-December 2021).

    With a level of 30.5% of RWA and 8.7% of leverage exposure at end-March 2022, the Group’s TLAC ratio is above the Financial Stability Board’s requirements for 2022. At March 31st, 2022, the Group was also above its 2022 MREL requirements of 25.2% of RWA and 5.91% of leverage exposure.

    The Group is rated by four rating agencies: (i) Fitch Ratings - long-term rating “A-”, stable rating, 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 EURmQ1 22Q1 21Change
    Net banking income2,1882,023+8.2%
    Net banking income excl. PEL/CEL2,1652,035+6.4%
    Operating expenses(1,720)(1,611)+6.8%
    Underlying operating expenses(1)(1,550)(1,483)+4.5%
    Gross operating income468412+13.6%
    Underlying gross operating income(1)615552+11.4%
    Net cost of risk(47)(129)-63.6%
    Operating income421283+48.8%
    Net profits or losses from other assets03-100.0%
    Reported Group net income313212+47.6%
    Underlying Group net income(1)422312+35.2%
    RONE10.6%6.9% 
         Underlying RONE(1)14.3%10.2% 

    (1)   Adjusted for the linearisation of IFRIC 21 and PEL/CEL provision


    Note: including Private Banking activities following the restatement in Q1 22 (France and International operations). Including activities transferred after the disposal of Lyxor

    Societe Generale and Crédit du Nord networks

    Average loan outstandings were 1% higher than in Q1 21 at EUR 211 billion. Loan production grew +36% vs. Q1 21, with home loans rising +39% vs. Q1 21 and medium/long-term loans to corporate and professional customers (excluding State Guaranteed Loans) climbing +68% vs. Q1 21.

    Average outstanding balance sheet deposits including BMTN (negotiable medium-term notes) continued to rise (+5% vs. Q1 21) to EUR 241 billion.

    As a result, the average loan/deposit ratio stood at 88% in Q1 22 vs. 92% in Q1 21.

    Insurance assets under management totalled EUR 91 billion at end-March 2022, up +2% year-on-year. Gross life insurance inflow amounted to EUR 2.7 billion in Q1 22, with the unit-linked share accounting for 39%.

    Property/casualty insurance premiums and personal protection insurance premiums were up +2% vs. Q1 21.

    Boursorama 

    The bank consolidated its position as the leading online bank in France, with more than 3.7 million clients at end-March 2022, thanks to the onboarding of 388,000 new clients in Q1 22 (+90% vs.
    Q1 21). Boursorama is aiming to have between 4 million and 4.5 million clients at end-2022, one year ahead of schedule relative to its plan.

    Average outstanding loans rose +29% vs. Q1 21 to EUR 14 billion. Home loan outstandings were up +30% vs. Q1 21.

    Average outstanding savings including deposits and financial savings were 19% higher than in Q1 21 at EUR 37 billion, while outstanding deposits were up +24% vs. Q1 21. Life insurance outstandings were 7% higher than in Q1 21, with the unit-linked share accounting for 45%. Brokerage recorded more than 2 million transactions in Q1 22.

    Private Banking

    Private Banking activities were transferred to French Retail Banking in Q1 2022. The scope includes France and international operations as well as the activities transferred at the time of the disposal of Lyxor. The business enjoyed strong commercial activity in all the regions. Assets under management totalled EUR 150 billion, up +8% vs. Q1 21. Net inflow was buoyant at EUR 2.7 billion in Q1 22, despite the volatility of the financial markets. Net banking income totalled EUR 322 million in Q1 22, up +21.2% vs. Q1 21.

    Net banking income excluding PEL/CEL

    Revenues (excluding PEL/CEL) totalled EUR 2,165 million, up +6.4% vs. Q1 21. Net interest income (excluding PEL/CEL) was up +2.8% vs. Q1 21, driven by loans to corporate customers and Private Banking but partially impacted by the effect of the higher rate on the Livret A passbook savings account. Commissions increased by +6.9% vs. Q1 21, driven by the good performance of financial commissions and the rebound in service commissions.

    Operating expenses

    Operating expenses amounted to EUR 1,720 million (+6.8% vs. Q1 21) and EUR 1,550 million on an underlying basis (+4.5% vs. Q1 21). The cost to income ratio (after linearisation of the IFRIC 21 charge and restated for the PEL/CEL provision) stood at 71.6%, an improvement of 1.3 points vs. Q1 21, representing a positive jaws effect.

    Cost of risk

    The cost of risk amounted to EUR 47 million or 8 basis points in Q1 22, a substantial decline compared to Q1 21 (22 basis points). In Q4 21, the cost of risk represented a write-back of 3 basis points.

    Contribution to Group net income

    The contribution to Group net income was EUR 313 million in Q1 22 vs. EUR 212 million in Q1 21. RONE (after linearisation of the IFRIC 21 charge and restated for the PEL/CEL provision) stood at 14.3% in Q1 22 (16.1% excluding Boursorama).

    1. INTERNATIONAL RETAIL BANKING & FINANCIAL SERVICES

    In EURmQ1 22Q1 21Change
    Net banking income2,2231,862+19.4%+19.3%*
    Operating expenses(1,183)(1,089)+8.6%+8.3%*
    Underlying operating expenses(1)(1,091)(1,017)+7.3%+7.0%*
    Gross operating income1,040773+34.5%+35.0%*
    Underlying gross operating income(1)1,132845+34.0%+34.4%*
    Net cost of risk(325)(142)x 2.3x 2.3*
    Operating income715631+13.3%+13.8%*
    Net profits or losses from other assets22+0.0%+11.0%*
    Reported Group net income400392+2.0%+2.6%*
    Underlying Group net income(1)453434+4.4%+5.0%*
    RONE14.5%15.7%  
    Underlying RONE(1)16.5%17.4%  

    (1)   Adjusted for the linearisation of IFRIC 21


    International Retail Banking’s outstanding loans totalled EUR 92.7 billion, up +5.4%* vs. Q1 21. Outstanding deposits increased by +6.5%* vs. Q1 21, to EUR 92.4 billion.

    For the Europe scope, outstanding loans were up +6.0%* vs. end-March 2021 at EUR 60.6 billion, driven by a positive momentum in all the regions: +8.3%* in the Czech Republic, +9.1%* in Romania, and +2.3%* in Western Europe. Outstanding deposits rose +3.1%* to EUR 54.3 billion.

    In Africa, Mediterranean Basin and French Overseas Territories, outstanding loans increased by +1.6%* when adjusted for changes in Group structure and at constant exchange rates. Outstanding deposits continued to enjoy a healthy momentum, up +6.2%*.

    In the Insurance business, the life insurance savings business continued to benefit from a good momentum, with outstandings up +4%* at end-March 2022 vs. end-March 2021 at EUR 134 billion. The share of unit-linked products in outstandings was 36%, an increase of +2 points vs. March 2021. Gross life insurance savings inflow was 7%* higher in Q1 22 than in Q1 21, with the share of unit-linked products remaining at a high level of 43%, up 3 points vs. March 2021. Protection insurance saw an increase of +7%* vs. Q1 21, bolstered by property/casualty premiums up +12%*.

    Financial Services also enjoyed a very healthy momentum. Operational Vehicle Leasing and Fleet Management posted record net banking income, up +53%*, due to the business’ good performance and continued very strong demand for used cars. The fleet consisted of 1.7 million contracts, including 1.4 million financed vehicles, an increase of +4.8% vs. end-March 2021. Equipment Finance continued to grow, with new leasing business up +3.1%* vs. Q1 21. Outstanding loans rose +1.4% vs. end-March 2021, to EUR 14.5 billion (excluding factoring).

    Net banking income

    Net banking income amounted to EUR 2,223 million in Q1 22, up +19.3%* vs. Q1 21.

    International Retail Banking’s net banking income totalled EUR 1,343 million in Q1 22, an increase of +13.1%*.

    Revenues in Europe climbed +15.6%* vs. Q1 21, due primarily to substantial growth in net interest income as a result of the rise in rates (+17%* vs. Q1 21), particularly in the Czech Republic (+34%* vs. Q1 21).

    The Africa, Mediterranean Basin and French Overseas Territories scope posted revenues up +7.2%* vs. Q1 21 at EUR 466 million, with activity that remained buoyant in Sub-Saharan Africa (+9%* vs.
    Q1 21).

    The Insurance business posted net banking income up +6.0%* vs. Q1 21, at EUR 250 million.

    Financial Services net banking income was substantially higher (+43.6%*) than in
    Q1 21, at EUR 630 million. This performance benefited primarily from the activities of ALD which continued to post strong growth in the used car sale result (EUR 3,101 per vehicle in Q1 22).

    Operating expenses

    Operating expenses rose by only +8.3%* on a reported basis (+7.0%* on an underlying basis) vs.
    Q1 21 to EUR 1,183 million, resulting in a positive jaws effect. The underlying cost to income ratio stood at 49.1% in Q1 22, lower than in Q1 21 (54.6%).

    In International Retail Banking, operating expenses were 7.4%* higher than in Q1 21.

    In the Insurance business, operating expenses rose +7.4%* vs. Q1 21, with a cost to income ratio of 47.2% (39.3% on an underlying basis).

    In Financial Services, operating expenses increased by +11.4%* vs. Q1 21, generating a very positive jaws effect.

    Cost of risk

    In Q1 22, the cost of risk amounted to 92 basis points (EUR 325 million), vs. 44 basis points in Q1 21. Excluding Russian activities which are currently being sold, the increase in the cost of risk remained limited with a level of 59 basis points.

    Contribution to Group net income

    The contribution to Group net income totalled EUR 400 million in Q1 22, an increase of +2.6%* vs.
    Q1 21.

    Underlying RONE stood at 16.5% in Q1 22 (vs. 17.4% in Q1 21) and around 23% excluding Russian activities which are currently being sold. In International Retail Banking, underlying RONE was 7.3% (around 18% excluding Russian activities which are currently being sold) and 28.0% in Financial Services and Insurance.

    1. GLOBAL BANKING & INVESTOR SOLUTIONS

    In EURmQ1 22Q1 21Variation
    Net banking income2,7552,333+18.1%+16.9%*
    Operating expenses(2,172)(1,893)+14.7%+15.7%*
    Underlying operating expenses(1)(1,611)(1,526)+5.6%+6.7%*
    Gross operating income583440+32.5%+21.7%*
    Underlying gross operating income(1)1,144807+41.7%+35.2%*
    Net cost of risk(194)(3)x 64.7x 76.7*
    Operating income389437-11.0%-18.4%*
    Reported Group net income302347-13.0%-19.9%*
    Underlying Group net income(1)734629+16.6%+11.3%*
    RONE8.6%10.4%0+0.0%*
    Underlying RONE(1)20.8%18.8%0+0.0%*

    (1)   Adjusted for the linearisation of IFRIC 21


    Note: excluding Private Banking activities following the restatement in Q1 22 (France and International operations). Including activities transferred after the disposal of Lyxor

    Net banking income

    Global Banking & Investor Solutions delivered a remarkable performance in Q1 driven by all the businesses, with revenues of EUR 2,755 million, significantly higher (+18.1%) than the already high level in Q1 21. The sharp increase in Q1 22 illustrates the relevance of the strategy presented in May 2021 and the quality of its execution.

    In Global Markets & Investor Services, net banking income totalled EUR 1,965 million in Q1 22 (+19.1% vs. Q1 21), in a volatile environment, driven by good client activity and the rise in rates.

    Global Markets turned in an excellent performance in Q1 22 (EUR 1,777 million), up +20.5% vs.
    Q1 21, benefiting from a strong commercial momentum in all segments. This very good result can be seen in all the businesses (Equities, Fixed Income, Currency), products (Flow&Hedging, Investment Solutions and financing) and geographical regions.

    The Equity activity enjoyed an excellent quarter (EUR 1,010 million, +19.5% vs. Q1 21), driven by strong client activity in all the businesses, particularly in listed products and prime services. The structured products portfolio remained stable, with good risk management.

    Fixed Income & Currency activities posted substantially higher revenues (+21.7% vs. Q1 21) at
    EUR 767 million in a favourable market environment. Very buoyant client activity benefited all the businesses, and particularly Fixed Income activities.

    There was a significant increase in Securities Services’ revenues in Q1, up +7.4% vs.
    Q1 21, at EUR 188 million, reflecting the increase in rates as well as a higher level of commissions. Securities Services’ assets under custody and assets under administration amounted to EUR 4,375 billion and EUR 676 billion respectively.

    Financing & Advisory posted revenues of EUR 790 million, up +24.4% vs. Q1 21.

    The Global Banking & Advisory business, up +24.1% vs. Q1 21, capitalised on the good market momentum, particularly in activities related to Natural Resources, Trade Commodity Finance and Infrastructure as well as in property financing.

    The Asset-Backed Products platform continued to grow, with a positive return from initiatives carried out on the Financial Sponsors client segment.

    Investment Banking enjoyed a good quarter, despite a sharp slowdown in primary market activity since end-February.

    Global Transaction and Payment Services continued to experience strong growth, up +26.2% vs.
    Q1 21, primarily on the back of the increase in rates and volumes.

    Operating expenses

    Operating expenses totalled EUR 2,172 million in Q1 22, an increase of +14.7% vs. Q1 21 on a reported basis, and +5.6% on an underlying basis. This increase can be explained by the rise in variable costs, related to the increase in earnings, and IFRIC 21 charges (the contribution to the Single Resolution Fund amounted to EUR 622 million in Q1 22 vs. EUR 411 million in Q1 21 for Global Banking & Investor Solutions). There was a significant improvement in the cost to income ratio of 7 points (58.5% vs. 65.4% in Q1 21 on an underlying basis), with a positive jaws effect.

    Cost of risk

    The cost of risk amounted to 45 basis points (or EUR 194 million) in Q1 22, including EUR 152 million related to offshore exposure to Russia.

    Contribution to Group net income

    The contribution to Group net income was EUR 302 million on a reported basis and EUR 734 million on an underlying basis (+16.6% vs. Q1 21).

    Global Banking & Investor Solutions posted a significant underlying RONE of 20.8% in Q1 22 (24.1% when restated for the impact of the contribution to the Single Resolution Fund), an improvement compared to RONE of 18.8% in Q1 21.

    1. CORPORATE CENTRE

    In EURmQ1 22Q1 21
    Net banking income11527
    Operating expenses(254)(155)
    Underlying operating expenses(1)(73)(71)
    Gross operating income(139)(128)
    Underlying gross operating income(1)42(44)
    Net cost of risk5(2)
    Net profits or losses from other assets-1
    Income tax1236
    Reported Group net income(173)(137)
    Underlying Group net income(1)(52)(69)

    (1)   Adjusted for the linearisation of IFRIC 21


    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 certain costs incurred by the Group not re-invoiced to the businesses.

    The Corporate Centre’s net banking income totalled EUR 115 million in Q1 22 vs. EUR 27 million in
    Q1 21. It includes in particular the positive value changes of financial instruments corresponding to the economic hedging of the Group’s equity securities.

    Operating expenses totalled EUR 254 million in Q1 22 vs. EUR 155 million in Q1 21. They include the Group’s transformation costs for a total amount of EUR 143 million relating to the activities of French Retail Banking (EUR 104 million), Global Banking & Investor Solutions (EUR 14 million) and the Corporate Centre (EUR 25 million). Underlying costs came to EUR 73 million in Q1 22 compared to EUR 71 million in Q1 21.

    Gross operating income totalled EUR -139 million in Q1 22 vs. EUR -128 million in Q1 21. Underlying gross operating income came to EUR +42 million in Q1 22 vs. EUR -44 million in Q1 21.

    The Corporate Centre’s contribution to Group net income was EUR -173 million in Q1 22 vs. EUR
    -137 million in Q1 21. The Corporate Centre’s contribution to Group net income on an underlying basis was EUR -52 million.

    7.   2022 FINANCIAL CALENDAR

    2022 and 2023 Financial communication calendar

    May 17th, 2022 2022 General Meeting
    May 25th, 2022 Dividend detachment
    May 27th, 2022 Dividend payment
    August 3rd, 2022 Second quarter and first half 2022 results
    November 4th, 2022 Third quarter and nine-month 2022 results
    February 8th, 2023 Fourth quarter and FY 2022 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.

    8.   APPENDIX 1: FINANCIAL DATA

    GROUP NET INCOME BY CORE BUSINESS

    In EURmQ1 22Q1 21Variation
    French Retail Banking313212+47.6%
    International Retail Banking and Financial Services400392+2.0%
    Global Banking and Investor Solutions302347-13.0%
    Core Businesses1,015951+6.7%
    Corporate Centre(173)(137)-26.3%
    Group842814+3.4%

    NB: Amounts restated in Q1 22 to take into account the transfer of Private Banking activities (French and international) to the French Retail Banking. Includes activities transferred after the disposal of Lyxor

    CONSOLIDATED BALANCE SHEET

    In EURm31.03.202231.12.2021
    Cash, due from central banks230,086179,969
    Financial assets at fair value through profit or loss419,946342,714
    Hedging derivatives13,68313,239
    Financial assets at fair value through other comprehensive income40,34243,450
    Securities at amortised cost19,74819,371
    Due from banks at amortised cost74,49055,972
    Customer loans at amortised cost501,542497,164
    Revaluation differences on portfolios hedged against interest rate risk172131
    Investments of insurance companies172,741178,898
    Tax assets4,6474,812
    Other assets95,79692,898
    Non-current assets held for sale1627
    Investments accounted for using the equity method11595
    Tangible and intangible fixed assets32,13931,968
    Goodwill3,7393,741
    Total 1,609,2021,464,449



    In EURm
    31.03.202231.12.2021
    Due to central banks12,6185,152
    Financial liabilities at fair value through profit or loss391,805307,563
    Hedging derivatives17,83910,425
    Debt securities issued135,384135,324
    Due to banks157,560139,177
    Customer deposits528,620509,133
    Revaluation differences on portfolios hedged against interest rate risk(1,631)2,832
    Tax liabilities1,6831,577
    Other liabilities122,461106,305
    Non-current liabilities held for sale-1
    Insurance contracts related liabilities150,098155,288
    Provisions5,0474,850
    Subordinated debts16,10115,959
    Total liabilities1,537,5851,393,586
    Shareholder's equity--
    Shareholders' equity, Group share--
    Issued common stocks and capital reserves21,83621,913
    Other equity instruments7,5347,534
    Retained earnings36,27030,631
    Net income8425,641
    Sub-total66,48265,719
    Unrealised or deferred capital gains and losses(630)(652)
    Sub-total equity, Group share 65,85265,067
    Non-controlling interests5,7655,796
    Total equity71,61770,863
    Total 1,609,2021,464,449
    1. APPENDIX 2: METHODOLOGY

    1 –The financial information presented for the quarter ending 31 March 2022 was examined by the Board of Directors on May 4th, 2022 and has been prepared in accordance with IFRS as adopted in the European Union and applicable at that date. This information has not been audited.

    2 - Net banking income

    The pillars’ net banking income is defined on page 41 of Societe Generale’s 2022 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 note 8.1 to the Group’s consolidated financial statements as at December 31st, 2021 (pages 482 et seq. of Societe Generale’s 2022 Universal Registration Document). The term “costs” is also used to refer to Operating Expenses. The Cost/Income Ratio is defined on page 41 of Societe Generale’s 2022 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 IFRIC21 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:

    Q1 22 (In EURm)Operating

    Expenses
    Cost of riskNet profit or

    losses from

    other assets
    Income

    tax
    Group net

    income
    Business  
    Reported(5,329)(561)2(353)842   
    (+) IFRIC 21 linearisation860  (218)626   
    (+) Transformation charges*143  (37)106Corporate Center(1)  
    Underlying(4,325)(561)2(608)1,574   
            
    Q1 21 (In EURm)Operating

    Expenses
    Cost of riskNet profit or

    losses from

    other assets
    Income

    tax
    Group net

    income
    Business  
    Reported(4,748)(276)6(283)814   
    (+) IFRIC 21 linearisation601  (141)448   
    (+) Transformation charges*50  (14)36Corporate Center(2)  
    Underlying (4,097)(276)6(438)1,298   

    (*) Exceptional item
    (1) Q1 22 transformation charges related to French Retail Banking (EUR 104m), Global Banking & Investor Solutions (EUR 14m) and Corporate Centre (EUR 25m)
    (2) Q1 21 transformation charges related to French Retail Banking (EUR 38m), Global Banking and Investor Solutions (EUR 1m) and Corporate Center (EUR 11m)

    6 - Cost of risk in basis points, coverage ratio for doubtful outstandings

    The cost of risk is defined on pages 43 and 663 of Societe Generale’s 2022 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 Q1 22Q1 21
    French Retail Banking



    Net Cost Of Risk47129
    Gross loan Outstandings242,645233,953
    Cost of Risk in bp8 22
    International Retail Banking and Financial Services



    Net Cost Of Risk325142
    Gross loan Outstandings140,547130,196
    Cost of Risk in bp92 44
    Global Banking and Investor Solutions



    Net Cost Of Risk1943
    Gross loan Outstandings170,749138,305
    Cost of Risk in bp45 1
    Corporate Centre



    Net Cost Of Risk(5)2
    Gross loan Outstandings14,41312,963
    Cost of Risk in bp(12)4
    Societe Generale Group



    Net Cost Of Risk561276
    Gross loan Outstandings568,354515,416
    Cost of Risk in bp39 21

    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 and 44 of Societe Generale’s 2022 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 44 of Societe Generale’s 2022 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)Q1 22Q1 21
    Shareholders' equity Group share65,85262,920
    Deeply subordinated notes(8,178)(9,179)
    Undated subordinated notes-(273)
    Interest of deeeply & undated subodinated notes, issue premium amortisations(1)(65)(51)
    OCI excluding conversion reserves120(723)
    Dividend provision(2)(415)(353)
    ROE equity end-of-period55,02952,340
    Average ROE equity54,66951,771
    Average Goodwill(3,624)(3,928)
    Average Intangible Assets(2,753)(2,506)
    Average ROTE equity48,29245,337
       
    Group net Income (a)842814
    Underlying Group net income (b)1,5741,298
    Interest on deeply subordinated notes and undated subordinated notes (c)(119)(144)
    Cancellation of goodwill impairment (d)2-
    Ajusted Group net Income (e) = (a)+ (c)+(d)725670
    Ajusted Underlying Group net Income (f)=(b)+(c)1,4571,154
       
    Average ROTE equity (g)48,29245,337
    ROTE [quarter: (4*e/g)]6.0%5.9%
       
    Average ROTE equity (underlying) (h)49,02445,821
    Underlying ROTE [quarter: (4*f/h)]11.9%10.1%

    (1) Interest net of tax, payable or paid to holders of deeply subordinated notes & undated subordinated notes, issue premium amortisations
    (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

    RONE calculation: Average capital allocated to Core Businesses

    In EURmQ1 22Q1 21Change
    French Retail Banking11,82212,208-3.2%
    International Retail Banking and Financial Services11,0189,963+10.6%
    Global Banking and Investor Solutions14,12813,404+5.4%
    Core Businesses36,96835,576+3.9%
    Corporate Center17,70115,975+10.8%
    Group54,66951,550+6.1%

    NB: Amounts restated in Q1 22 to take into account the transfer of Private Banking activities (French and international) to the French Retail Banking. Includes activities transferred after the disposal of Lyxor

    8 - Net assets and tangible net assets

    Net assets and tangible net assets are defined in the methodology, page 46 of the Group’s 2022 Universal Registration Document. The items used to calculate them are presented below:

    End of period (in EURm)Q1 2220212020
    Shareholders' equity Group share*65,85265,06761,710
    Deeply subordinated notes(8,178)(8,003)(8,830)
    Undated subordinated notes--(264)
    Interest of deeeply & undated subodinated notes, issue premium amortisations(1)(65)2019
    Bookvalue of own shares in trading portfolio(78)37301
    Net Asset Value*57,53157,12152,936
    Goodwill(3,624)(3,624)(3,928)
    Intangible Assets(2,773)(2,733)(2,484)
    Net Tangible Asset Value*51,13450,76446,524
        
    Number of shares used to calculate NAPS**831,044831,162848,859
    Net Asset Value per Share69.268.762.4
    Net Tangible Asset Value per Share61.561.154.8

    (*) Amounts restated compared with the financial statements published in 2020 (See Note1.7 of the 2021 financial statements)
    (* *) 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. In accordance with IAS 33, historical data per share prior to the date of detachment of a preferential subscription right are restated by the adjustment coefficient for the transaction
    (1) Interest net of tax, payable or paid to holders of deeply subordinated notes & undated subordinated notes, issue premium amortisations

    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 45 of Societe Generale’s 2022 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 2022 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)Q1 2220212020
    Existing shares845,248853,371853,371
    Deductions   
    Shares allocated to cover stock option plans and free shares awarded to staff6,0213,8612,987
    Other own shares and treasury shares8,1243,249-
    Number of shares used to calculate EPS*831,103846,261850,385
    Group net Income8425,641(258)
    Interest on deeply subordinated notes and undated subordinated notes(119)(590)(611)
    Capital gain net of tax on partial buybacks---
    Adjusted Group net income7235,051(869)
    EPS (in EUR)0.87 5.97 (1.02)
    Underlying EPS** (in EUR)1.00 5.52 0.97

    (*) 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
    (**) Calculated on the basis of underlying Group net income (excluding linearisation of IFRIC 21)

    10 - The Societe Generale Group’s Common Equity Tier 1 capital

    It is calculated in accordance with applicable CRR2/CRD5 rules. The fully loaded solvency ratios are presented pro forma for current earnings, net of dividends, for the current financial year, unless specified otherwise. When there is reference to phased-in ratios, these do not include the earnings for the current financial year, unless specified otherwise. The leverage ratio is also calculated according to applicable CRR2/CRD5 rules including the phased-in following the same rationale as solvency ratios.

    NB (1) The sum of values contained in the tables and analyses may differ slightly from the total reported due to rounding rules.

    (2) All the information on the results for the period (notably: press release, downloadable data, presentation slides and supplement) is available on Societe Generale’s website www.societegenerale.com in the “Investor” section.

    Societe Generale

    Societe Generale is one of the 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 131,000 members of staff in 66 countries and supports on a daily basis 26 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, which encompasses the Societe Generale, Credit du Nord and Boursorama brands. 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, Russia, 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 www.societegenerale.com.


    (1) Underlying data (see methodology note No. 5 for the transition from accounting data to underlying data)    
    (2) Phased-in ratio (fully-loaded ratio of 12.8%)
    (3)   NPL ratio calculated according to the EBA methodology published on July 16th, 2019
    (4) Ratio between the amount of provisions on doubtful outstandings and the amount of these same outstandings

    Attachment


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