SOCIETE GENERALE : SOCIETE GENERALE: ACTIVITY AND 2012 RESULTS, QUARTERLY FINANCIAL INFORMATION
SOCIETE GENERALE : SOCIETE GENERALE: ACTIVITY AND 2012 RESULTS, QUARTERLY
FINANCIAL INFORMATION
ACTIVITY AND 2012 RESULTS
REGULATED INFORMATION
Paris, February 13th, 2013
2012 TRANSFORMATION OBJECTIVES ALL ACHIEVED
* Balance sheet significantly strengthened
* Corporate and Investment Banking's loan disposal programme completed
* Business asset disposal programme implemented: sale of Geniki and TCW,
agreement for the disposal of the Egyptian subsidiary, NSGB
* Satisfactory liquidity structure
Core Tier 1 ratio^(1): 10.7%, increase of +165 bp in one year
Confirmation of the Basel 3 Core Tier 1 target at end-2013 (9%-9.5%)
* Group's profit-generating capacity maintained
* NBI^(2) stable (-0.3%) vs. 2011, at EUR 24,963m
Good business performance despite resource constraints
* Operating expenses down -4.1%*
Increase in the net cost of risk (EUR -3,935m, +11.9%^(3)), related to the
deteriorated macroeconomic situation in Europe
* Underlying Group net income: EUR 3,368m
Book Group net income: EUR 774m, including EUR -2,594m related to non-economic
and non-recurring items, and Corporate and Investment Banking's legacy asset
portfolio^(2)
* EPS^(4): EUR 0.64, proposed dividend payment of EUR 0.45 per share, with a
scrip dividend option, corresponding to a payout ratio of 26% (excluding
the revaluation of own financial liabilities)
Q4 2012: UNDERLYING GROUP NET INCOME OF EUR 537M.
CONTINUED IMPROVEMENT IN THE CORE TIER 1 RATIO^(1): +40 BP IN Q4 12
* NBI^(2) of EUR 5,910m, -1.0% vs. Q4 11
* Non-economic or non-recurring items had a significant impact on book
income: book Group net income of EUR -476m
(1) Calculated according to EBA Basel 2.5 standards (Basel 2 standards
incorporating CRD3 requirements).
(2) Excluding non-economic or non-recurring items and legacy assets.
Non-economic items: revaluation of own financial liabilities and the Group's
loan portfolio hedges. Non-recurring items: goodwill write-down, capital
gains/losses on business assets sold or available-for-sale assets, impact on
profit and loss of debt buybacks, restructuring of Greek sovereign debt.
Impact on Group net income of non-economic items:
EUR -859m in 2012, including EUR -822 million for the revaluation of own
financial liabilities; non-recurring items: EUR -1,319m in 2012; legacy
assets: EUR -416m in 2012.
(3) Excluding litigation issues, legacy and Greek sovereign assets.
Steady decline in the cost of risk in basis points.
(4) After deducting interest, net of tax effect, to be paid to holders
of deeply subordinated notes and undated subordinated notes (respectively EUR
266 million and EUR 27 million). At end-December 2012, the capital gain net of
tax and accrued unpaid interest relating to buybacks of deeply subordinated
notes amounted to EUR 2 million.
* When adjusted for changes in Group structure and at constant
exchange rates
The Board of Directors of Societe Generale met on February 12th, 2013 and
examined the Group's financial statements for 2012. Group net income came to
EUR 774 million for 2012 and net banking income totalled EUR 23,110 million.
Group net income amounted to EUR -476 million in Q4, with net banking income
of EUR 5,130 million.
Given these results, the Board of Directors will propose the distribution of a
dividend of EUR 0.45 per share, with a scrip dividend option, to the General
Meeting of Shareholders. This corresponds to a payout ratio of 26% of Group
net income, net of the effect of the revaluation of own financial liabilities.
2012 marked the achievement of key milestones in the transformation process
under way since 2010:
* completion of Corporate and Investment Banking's deleveraging programme
(disposal of EUR 16 billion of loan portfolio assets since end-June 2011)
and continuation of the legacy asset disposal programme (disposal of EUR
19 billion of legacy assets over the last 18 months).
* business refocusing and business asset portfolio optimisation, marked
mainly by the sale of the Greek subsidiary, Geniki, in International
Retail Banking, and TCW in Private Banking, Global Investment Management
and Services, the agreement to sell the Egyptian subsidiary, NSGB, as well
as by the trend in the Group's risk-weighted assets, which fell in 2012.
The asset disposal programme has thus already achieved the lower end of
its target range and considerably reduced balance sheet risks.
* very satisfactory improvement in the financing structure, with an improved
loan/deposit ratio, high medium/long-term debt issuance volumes and
extended maturities.
* implementation of efficiency measures, which resulted in a decline in
operating expenses vs. 2011.
Coupled with the solid business results, these initiatives helped boost the
Group's Core Tier 1 ratio^(1) to 10.7% at year-end, an increase of +165 basis
points in one year.
Although exposed to a sharply slowing environment, Retail Banking posted
generally satisfactory revenues. Accordingly, the French Networks enjoyed
stable net banking income. Revenues were also stable* in International Retail
Banking but concealed a more mixed situation: revenues were solid in the Czech
Republic, Russia, Mediterranean Basin and Sub-Saharan Africa, whereas other
countries in Eastern Europe experienced reduced activity due to a deteriorated
economic environment. Lastly, Specialised Financial Services and Insurance
revenues grew, especially in the Insurance activity. Corporate and Investment
Banking, whose revenues were stable vs. 2011 despite the disposal of loan
portfolios and legacy assets under way for 18 months, benefited from the
gradual normalisation of the markets in 2012, particularly in Fixed Income,
Currencies & Commodities activities. In an environment that remained sluggish
throughout the year - low rates, reduced brokerage volumes - Private Banking,
Global Investment Management and Services maintained its revenues at the same
level as the previous year.
The Group's cost-cutting efforts resulted in a significant decline in
operating expenses. These were sharply lower, down -4.1%* vs. 2011 (and -2.2%
excluding restructuring costs recorded in 2011).
The commercial cost of risk, measured in basis points^(2) amounted to 75 basis
points for 2012,
vs. 67 basis points in 2011, reflecting the deterioration in the macroeconomic
environment in Europe.
The 2012 results include EUR -2,594 million of non-economic items, the impact
of the Group's transformation (asset disposals and reduction in the loan
portfolio at SG CIB), the restructuring of Greek sovereign debt, and Corporate
and Investment Banking's legacy asset portfolio^(3).
When corrected for these items, Group net income totalled EUR 3,368 million in
2012.
Commenting on the Group's 2012 results, Frédéric Oudéa - Chairman and CEO -
stated:
"Societe Generale successfully continued with its transformation process in
2012, achieving all the objectives set at the beginning of the year. At the
same time as carrying out a proactive portfolio disposal programme and
business refocusing, the Group succeeded, in a turbulent economic environment,
in maintaining a good level of activity in order to serve its customers and
finance the economy. The bank also significantly improved its financial
solidity both in terms of capital and liquidity. On the strength of this
momentum, the Group has secured its "Basel 3" Core Tier 1 capital target of
9%-9.5% at end-2013 and is approaching this year of economic and regulatory
transition with confidence. By initiating the second phase of its
transformation plan, with an objective of increasing commercial and operating
efficiency, Societe Generale will reinforce the medium-term growth and
profitability potential of the Group and its businesses."
1. GROUP CONSOLIDATED RESULTS
In EUR m 2011 2012 Change Q4 11 Q4 12 Change
2012 vs. Q4 vs. Q4
2011
Net banking income 25,636 23,110 -9.9% 6,010 5,130 -14.6%
On a like-for-like basis* -10.3% -14.5%
Operating expenses (17,036) (16,438) -3.5% (4,401) (4,138) -6.0%
On a like-for-like basis* -4.1% -6.5%
Gross operating income 8,600 6,672 -22.4% 1,609 992 -38.3%
On a like-for-like basis* -22.4% -36.6%
Net cost of risk (4,330) (3,935) -9.1% (1,075) (1,314) +22.2%
Operating income 4,270 2,737 -35.9% 534 (322) NM
On a like-for-like basis* -42.0% NM
Impairment losses on (265) (842) NM (65) (392) NM
goodwill
Group net income 2,385 774 -67.5% 100 (476) NM
2011 2012
Group ROTE (after tax) 7.5% 1.4%
Net banking income
The Group's net banking income totalled EUR 23,110 million in 2012, with EUR
5,130 million in Q4 12.
If non-economic or non-recurring items and legacy assets are stripped out,
underlying revenues amounted to EUR 24,963 million, stable (-0.3%) vs. the
previous year. Underlying net banking income was slightly lower (-1.0%) in Q4
12 than in Q4 11.
* The French Networks posted revenues of EUR 8,161 million in 2012 (EUR
2,068 million in Q4 12). They were stable excluding the PEL/CEL effect
year-on-year and vs. Q4 11, in a sharply slowing economic environment,
underpinned by interest margins that held up well;
* At EUR 4,943 million in 2012, International Retail Banking's net banking
income was stable (-0.1%*) vs. 2011. However, it was lower
quarter-on-quarter (-6.5%* in Q4 12 vs. Q4 11 at EUR 1,228 million).
Lacklustre economic activity in Eastern Europe was offset by increased
activity in the Czech Republic, Russia, Mediterranean Basin and
Sub-Saharan Africa;
* Corporate and Investment Banking's core activities posted 2012 revenues in
line (-2.0%*) with the figures for 2011 at EUR 6,457 million (with EUR
1,465 million in Q4 12, +22.8%* vs. Q4 11). They were driven by the
recovery in 2012 of Fixed Income, Currencies & Commodities activities,
which partially offset loan portfolio disposal costs (EUR -489 million in
2012).
Corporate and Investment Banking's legacy assets made a negative contribution
of
EUR -268 million to the division's revenues in 2012 (with EUR -5 million in Q4
12) vs.
EUR -476 million in 2011 (including EUR -524 million in Q4 11).
Corporate and Investment Banking's revenues totalled EUR 6,189 million in
2012, with EUR 1,460 million in Q4 12.
* Specialised Financial Services and Insurance's revenues totalled EUR 3,489
million in
2012 (+1.4%* vs. 2011), underpinned by growth in the Insurance activity
(+12.5%* vs. 2011 at EUR 684 million). Specialised Financial Services
generally maintained its revenues, at
EUR 2,805 million in 2012 (-1.0%*), despite considerable resource
constraints. The division's
Q4 12 revenues totalled EUR 894 million (up +5.1%* vs. Q4 11), with EUR
715 million for Specialised Financial Services (+2.4%* vs. Q4 11) and EUR
179 million for the Insurance activity (+17.8%* vs. Q4 11).
* Private Banking,Global Investment Management and Services' net banking
income was
-2.8%* lower than in 2011 at EUR 2,160 million. Q4 12 revenues totalled
EUR 553 million, up +9.0%* vs. Q4 11. This performance was achieved in a
generally unfavourable environment for the business due to persistently
low rates and reduced brokerage activity.
The accounting impact on net banking income of the revaluation of the Group's
own financial liabilities was EUR -1,255 million in 2012 (with EUR -686
million in Q4 12), reflecting tightening financing spreads in the banking
sector during the year. In 2011, the revaluation of the Group's own financial
liabilities boosted book net banking income by EUR +1,177 million (with EUR +
700 million in Q4 11), due to the widening of these spreads. At the same time,
the valuation of the bank's loan portfolio hedges caused net banking income to
fall by EUR -26 million in Q4 12, taking the full-year impact of this
valuation to EUR -56 million.
Operating expenses
At EUR -16,438 million in 2012, operating expenses were down -4.1%* (-2.2%
when restated for total restructuring provisions recorded at end-2011).
Operating expenses amounted to EUR -4,138 million in Q4 12, down -0.8%
excluding restructuring costs vs. the same period in 2011.
There were significant efforts to control operating expenses in Corporate and
Investment Banking
(-8.7% vs. 2011)^(1), Private Banking, Global Investment Management and
Services (-3.4%^(1)), Specialised Financial Services and Insurance (-1.0%^(1))
and the French Networks (-0.4%^(1)).
When restated for legacy assets, non-economic and non-recurring items, the
cost to income ratio was -1.3 points lower than in 2011, at 65.6% for 2012.
Operating income
The Group's gross operating income came to EUR 6,672 million for 2012. This
was substantially lower than in 2011 due to the accounting effect of the
revaluation of the Group's own financial liabilities (-22.4%*). Gross
operating income totalled EUR 992 million for Q4 12 (vs.
EUR +1,609 million in Q4 11). Gross operating income came to EUR 7,927
million, excluding the effect of the revaluation of the Group's own financial
liabilities, up 6.8% vs. 2011. In Q4 12, gross operating income, corrected for
the impact of the revaluation of the Group's own financial liabilities, was
EUR 1,678 million (vs. EUR 909 million in Q4 11).
The Group's net cost of risk amounted to EUR -3,935 million for 2012, vs. EUR
-4,330 million in 2011.
The Group's commercial cost of risk (expressed as a fraction of outstanding
loans) amounted to 75^(^2) basis points in 2012 vs. 67^(2) basis points in
2011.
* The French Networks' cost of risk was higher at 50 basis points (41 basis
points in 2011) reflecting the deteriorating economic environment, notably
for Corporates where the Group posted an increase in provisions in respect
of medium-sized companies in the industrial sector.
* At 183 basis points (vs. 177 basis points in 2011), International Retail
Banking's cost of risk was slightly higher. However, the trend was mixed
according to region, with a low point reached in Russia in Q4 12 but a
still high level in Romania, reflecting the deteriorated economic
situation in the country.
* The cost of risk of Corporate and Investment Banking's core activities was
contained at
31 basis points (vs. 11 basis points in 2011) and remained at a low level.
Legacy assets' net cost
of risk amounted to EUR -262 million in 2012 (considerably lower than the EUR
-425 million in 2011).
* Specialised Financial Services' cost of risk fell to 125 basis points (vs.
149 basis points in 2011), reflecting the notable improvement in Consumer
Finance.
The Group also booked a EUR -300 million provision for litigation issues in Q4
12.
The Group's NPL coverage ratio was 77% at end-2012 (76% at end-2011).
The decline in the net cost of risk (EUR -3,935 million in 2012 vs. EUR -4,330
million in 2011) can be attributed principally to a base effect related to
provisions booked in respect of Greek sovereign risk in 2011.
The Group's operating income totalled EUR 2,737 million for 2012,
substantially lower than in 2011, and EUR -322 million for Q4 12 (vs. EUR +534
million in Q4 11). The decline was primarily due to the impact of the
revaluation of the Group's own financial liabilities.
Operating income came to EUR 3,992 million, excluding the effect of the
revaluation of the Group's own financial liabilities, vs. EUR 3,093 million in
2011, an increase of more than 29%. In Q4 12, operating income, corrected for
the impact of the revaluation of the Group's own financial liabilities, was
EUR 364 million (vs. EUR -166 million in Q4 11).
Net income
After taking into account tax (the Group's effective tax rate was 15.0% in
2012 vs. 30.9% in 2011) and non-controlling interests, Group net income
totalled EUR 774 million for 2012 (EUR -476 million in
Q4 12), vs. EUR 2,385 million in 2011 (and EUR 100 million in Q4 11).
Book Group net income was EUR -476 million in Q4 (EUR 100 million in Q4 11),
primarily due to the effect of non-economic and non-recurring items at the end
of the year.
When corrected for non-economic items^(1) (EUR -859 million), non-recurring
items
(EUR -1,319 million^(2)) and the impact on the accounts of Corporate and
Investment Banking's legacy asset portfolio (EUR -416 million), Group net
income amounted to EUR 3,368 million in 2012, vs.
EUR 3,515 million in 2011.
The Group's underlying ROE stood at 4.3% in Q4 12 and 7.3% for the year. The
underlying ROTE came to 8.9% for 2012^(3).
Earnings per share amounts to EUR 0.64 for 2012, after deducting interest
payable to holders of deeply subordinated notes and undated subordinated
notes^(4).
2. THE GROUP'S FINANCIAL STRUCTURE
Group shareholders' equity totalled EUR 49.8 billion^(1) at December 31st,
2012 and tangible net asset value per share was EUR 48.59 (corresponding to
net asset value per share of
EUR 56.93, including EUR 0.89 of unrealised capital gains). The Group acquired
30.1 million Societe Generale shares during 2012 and proceeded to dispose of
31.0 million shares under the liquidity contract concluded on August 22nd,
2011.
All in all, at end-December, 2012, Societe Generale possessed 26.3 million
shares (including 9 million treasury shares), representing 3.37% of the
capital (excluding shares held for trading purposes). At this date, the Group
also held 3.1 million purchase options on its own shares to cover stock option
plans allocated to its employees.
The Group's funded balance sheet^(2), after the netting of insurance,
derivative outstandings, repurchase agreements and accruals, totalled EUR 652
billion at December 31st, 2012, up
EUR +52 billion vs. December 31st, 2011.
The balance sheet structure has been significantly strengthened since
end-2011. In particular, the Group has increased its surplus of stable sources
over long-term uses of funds. Within stable sources of funds, customer
deposits rose by EUR 16 billion, an increase of +6% in 2012 or +8% excluding
Geniki and NSGB deposits. Medium/long-term financing rose by EUR 19 billion,
due partly to the issuance of EUR 27 billion of medium/long-term debt during
the year. This amount was well above the initial programme of EUR 10 billion
to EUR 15 billion. Shareholders' equity (EUR 52 billion) was boosted by EUR +3
billion in 2012, or +5% vs. end-2011. At the same time, the Group's
deleveraging strategy led to customer loan outstandings falling by EUR 18
billion to EUR 369 billion. The Group's loan/deposit ratio^(2) declined by -13
points in 2012.
The Group also increased its liquidity reserves in 2012, from EUR 84 billion
at end-2011 to
EUR 133 billion at end-2012. They covered 101% of the Group's short-term
refinancing needs at end-2012. The latter remained stable as a proportion of
the funded balance sheet, at 20% of total financed assets. In absolute terms,
short-term sources of funds increased by EUR 16 billion in 2012 testifying to
the abundant liquidity in the system and the confidence in the Societe
Generale name.
The Group's risk-weighted assets were lower than in 2011 at EUR 324.1 billion
(EUR 349.3 billion at end-2011, or -7% in 2012).
Changes in risk-weighted assets reflect the transformation under way in the
Group with, in particular, a decline of -12% in the outstandings of Corporate
and Investment Banking's core activities and -52% in legacy assets.
Specialised Financial Services' resource constraints resulted in an overall
decline of -4% in their risk-weighted assets in 2012, whereas the outstandings
of the French Networks grew +3% over the same period reflecting the Group's
ongoing financial support to the economy and its customers. International
Retail Banking's risk-weighted assets fell -3% in 2012, primarily on the back
of Geniki's removal from the Group's structure.
The Group's Tier 1 ratio was 12.5% at December 31st, 2012 (10.7% at end-2011),
while the Core
Tier 1 ratio, which was 9.0% at December 31st, 2011 under "Basel 2.5" and
calculated according to European Banking Authority (EBA) rules, reached 10.7%
at end-December 2012, representing an increase of +165 basis points since the
beginning of the year. The increase is due mainly to income generation in 2012
(+67 basis points, net of the dividend provision), a decline in the Group's
risk-weighted assets, and actions undertaken to optimise the legacy asset
portfolio and dispose of loans in Corporate and Investment Banking's credit
portfolio (+77 basis points). The disposal of Geniki, finalised in December
2012, helped boost the Core Tier 1 ratio by +3 basis points at December 31st,
2012.
The Group is rated A2 by Moody's, A by S&P and A+ by Fitch.
3. French networks
In EUR m 2011 2012 Change Q4 11 Q4 12 Change
2012 vs. 2011 Q4 vs. Q4
Net banking income 8,165 8,161 0.0% 2,054 2,068 +0.7%
0.0%(a) 0.0%(a)
Operating expenses (5,248) (5,264) +0.3% (1,358) (1,382) +1.8%
-0.4%(b) -0.8%(b)
Gross operating 2,917 2,897 -0.7% 696 686 -1.4%
income
+0.8%(a)(b) +1.6%(a)(b)
Net cost of risk (745) (931) +25.0% (237) (300) +26.6%
Operating income 2,172 1,966 -9.5% 459 386 -15.9%
Group net income 1,428 1,291 -9.6% 302 254 -15.9%
(a) Excluding
PEL/CEL
(b) Excluding
systemic tax
In a deteriorated macroeconomic environment in France, the French Networks'
commercial activity was satisfactory in 2012 and once again demonstrated the
solidity of their customer franchises.
During 2012, the number of individual customers for the three brands (Societe
Generale, Crédit du Nord and Boursorama) exceeded 11 million (+162,000
individual custmers in 2012).
Against a backdrop of continuing fierce competition for savings inflow,
outstanding balance sheet deposits rose +5.4% vs. 2011 to EUR 141.6 billion.
By customer segment, deposit inflow was strong for individual customers
(+6.0%) and saw a gradual pick-up for business customers (+1.7%). By type of
savings vehicle, deposit growth was driven by the inflow on term deposits and
deposit certificates (+30.6%): these benefited from the success of the "CAT
Tréso +" (Treasury + term account) offering aimed at businesses. There was
also a sharp increase in regulated savings. These continued to be driven,
firstly, by the growth in livret A (passbook savings account) outstandings
(+31.4%) which benefited from the raising of the ceiling in Q4 12 and
secondly, by the success of the "CSL +" (ordinary savings account) offering
(CSL outstandings up +6.8%).
This growth was accompanied by positive net life insurance inflow of EUR +165
million in 2012, in a market that experienced a net outflow for the first time
(EUR -3.4 billion vs. the same period the previous year).
The French Networks remained fully committed to serving their customers and
continued to actively support the economy, assisting businesses and
individuals with the financing of their projects, as testified by the growth
in outstanding loans (+3.2% vs. 2011) to EUR 176.1 billion.
Outstanding loans to business customers totalled EUR 79.5 billion (+3.4%).
Outstanding operating loans rose +9.0% to EUR 12.8 billion and investment
loans +2.2% to EUR 64.1 billion.
Outstanding loans to individuals rose +2.9% over the period, still driven by
the growth in outstanding housing loans (+3.5%). In line with the market,
housing loan production was nevertheless markedly lower than in 2011 on the
back of weak demand.
The average loan/deposit ratio stood at 124% in 2012 vs. 127% in 2011, an
improvement of 3 points. The average loan/deposit ratio for Q4 12 was 121%,
down -2 points vs. the previous quarter.
The French Networks' revenues were resilient, with net banking income of EUR
8,161 million, stable excluding the PEL/CEL effect vs. 2011. Net interest
income was 1.0% higher (excluding the PEL/CEL effect) than in 2011, with the
increase in outstanding deposits offsetting the increasingly marked decline in
reinvestment rates during the year. The loan margin remained virtually stable.
Commissions declined -1.2% vs. 2011 with mixed trends. Service commissions
rose +2.1% vs. the same period, driven by buoyant transaction levels with
business customers (+8.1%), and partially offset the decline in financial
commissions (-12.4%) on the back of low financial transaction volumes
originating from individual customers.
When restated for the impact of the systemic tax (EUR -35.5 million),
operating expenses were -0.4% lower than in 2011, reflecting the effect of the
cost-saving plans implemented. These focused primarily on the control of IT
expenses and the decline in the use of external service providers.
The French Networks generated gross operating income of EUR 2,897 million, up
+0.8% (excluding PEL/CEL effect and restated for the impact of systemic taxes)
vs. 2011.
Against the backdrop of a weak French economy, the French Networks' cost of
risk amounted to
50 basis points in 2012, up 9 basis points vs. 2011.
The French Networks' contribution to Group net income totalled EUR 1,291
million in 2012, down
-9.6% vs. 2011.
The French Networks' Q4 net banking income totalled EUR 2,068 million, stable
excluding the PEL/CEL effect vs. Q4 11. Operating expenses came to EUR 1,382
million. When restated for the impact of systemic taxes, they were down -0.8%
vs. Q4 11. In a sluggish economic environment, the cost of risk was
significantly higher at 65 basis points in Q4 12. The French Networks'
contribution to Group net income totalled EUR 254 million, down -15.9% vs. Q4
11.
4. InternationaL RETAIL BANKING
In EUR m 2011 2012 Change Q4 11 Q4 12 Change
2012 vs. 2011 Q4 vs. Q4
Net banking income 5,017 4,943 -1.5% 1,339 1,228 -8.3%
On a like-for-like basis* -0.1% -6.5%
Operating expenses (2,988) (3,077) +3.0% (765) (829) +8.4%
On a like-for-like basis* +3.6% +9.4%
Gross operating income 2,029 1,866 -8.0% 574 399 -30.5%
On a like-for-like basis* -5.4% -27.0%
Net cost of risk (1,284) (1,348) +5.0% (379) (336) -11.3%
Operating income 745 518 -30.5% 195 63 -67.7%
On a like-for-like basis* -39.1% -70.7%
Impairment losses on 0 (250) NM 0 0 NM
goodwill
Group net income 325 (51) NM 75 23 -69.3%
Within International Retail Banking, 2012 was marked by three major events. In
response to a very deteriorated environment in Greece and after supporting its
subsidiary for several years, the Group endeavoured to find an alternative,
successful strategy for the future of its subsidiary, against the backdrop of
consolidation in the Greek banking sector. Accordingly, the Group sold the
entire shareholding (99.08%) in its subsidiary Geniki to Piraeus Bank in
December 2012. The pre-tax result of this deal, which was concluded on
December 14th, 2012, was recorded in the Corporate Centre, under "net
gains/losses on other assets" for a total of EUR -375 million. Geniki's
operating results continued to be included in those of International Retail
Banking until end-November 2012 (i.e. a contribution to the Group net income
of International Retail Banking of EUR -164 million in 2012).
Moreover, in August 2012, the Group received an expression of interest from
Qatar National Bank (QNB) regarding the acquisition of the majority
shareholding (77.17%) in its Egyptian subsidiary, National Société Générale
Bank (NSGB). The Group accepted QNB's offer, which values NSGB's total capital
at twice the value of its book equity as at September 30th, 2012.
Finally, the Group also proceeded with the rationalisation of its Russian
activities, and disposed of its Byelorussian subsidiary and its debt recovery
activity.
However, these decisions do not reflect a shift in the Group's international
development strategy. International Retail Banking continues to focus its
activity on the following strategic areas: the creation of a leading player in
Russia and targeted expansion in high-potential countries in terms of growth
or the use of banking services.
The commercial performance remained positive in an environment marked by the
economic slowdown in Europe. At end-2012, excluding Greece and Egypt,
International Retail Banking's outstanding loans totalled EUR 62.8 billion, up
+3.2%* year-on-year, driven by the strong growth for individual customers (up
8.7%*). Over the same period, deposits were +2.1%* higher at EUR 61.9 billion,
thanks to the robust inflow in Central and Eastern European countries
(+7.5%*). Overall, the loan/deposit ratio remained close to equilibrium level
(101% at end-December 2012).
International Retail Banking revenues totalled EUR +4,943 million in 2012,
stable* vs. end-December 2011 and marked by fairly distinct trends according
to region: revenues were higher in Russia, the Czech Republic, Mediterranean
Basin and Sub-Saharan Africa, whereas Romania and the other Central and
Eastern European countries experienced a decline in revenues, hampered
primarily by the economic slowdown.
At EUR 3, 077 million in 2012, operating expenses were up +2.6%* excluding
systemic tax
(EUR -30.3 million recorded in Q4 12). This moderate increase, compared with
the level of inflation, reflects expenses under control in the Central and
Eastern European subsidiaries (decline notably in Russia and Romania) and
organic growth focused on the most dynamic regions.
The division posted gross operating income of EUR 1,866 million in 2012. The
cost to income ratio was 62.2%.
International Retail Banking's net cost of risk amounted to EUR 1,348 million
in 2012 (up +46.0%*). This was due in particular to the substantial increase
recorded in Romania mainly as a result of a very deteriorated macroeconomic
environment.
International Retail Banking's contribution to Group net income totalled EUR
-51 million in 2012, or EUR +363 million when restated for the contribution of
Greece and the goodwill write-down in respect of Russia recorded in Q2 12 (EUR
-250 million).
International Retail Banking's net banking income amounted to EUR 1,228
million in Q4 12 (down
-6.5%*), marked primarily by the economic slowdown in Europe. Over the same
period, operating expenses rose +5.3%* excluding systemic tax, reflecting
mixed trends: good control of operating expenses in Russia, Romania and the
Czech Republic but an increase in expenses to support expansion of the network
in Sub-Saharan Africa and the Mediterranean Basin. The contribution to Group
net income came to EUR 23 million.
In Russia, the transformation of the Rosbank subsidiary was stepped up in
2012. Measures to improve operating efficiency continued throughout the year:
the headcount was reduced by more than 10%, the network's structure was
streamlined (rationalisation of office space) and a number of non-strategic
activities (Byelorussia, debt recovery entity) for the Group were sold.
Against this backdrop, and despite a high inflation level of around 5%,
proactive cost management helped reduce operating expenses by -1.5%* over the
year. Lastly, the commercial strategy focused on boosting rouble-denominated
loans (+27.4%*) resulted in revenue growth for the year of +1.5%*, still
underpinned by robust lending to individuals. If the EUR -250 million goodwill
write-down is stripped out, Rosbank's contribution to Group net income was
slightly negative in 2012, with a positive contribution of EUR 39 million in
H2 2012 to the division's results.
In the Czech Republic, Komercní Banka enjoyed strong commercial activity in
2012, both for loans (+4.8%*) and deposits (+3.9%*). This resulted in revenue
growth of +1.5%* vs. 2011, while operating expenses remained stable* over the
same period.
The contribution to Group net income came to EUR 265 million in 2012 (and EUR
58 million in Q4 12), providing further evidence of the subsidiary's
profit-generating capacity despite the economic slowdown.
In Romania (BRD), in response to a durably deteriorated environment, the Group
maintained a selective loan approval policy (virtually stable* outstandings in
2012), while at the same time strengthening its deposit base (+5.1%*). The
decline in the rates charged on loans combined with an increase in the funding
cost adversely affected BRD's margins and led to a drop in 2012 revenues
(-5.9%*). Against this backdrop, the Group continued to rigorously control
costs (decline of -2.2%* in 2012 thanks partly to the reduction in the
headcount). The marked deterioration in the economic situation resulted, in
particular, in a sharp increase in the net cost of risk to EUR -437 million in
2012. This caused BRD to make a negative contribution of EUR -84 million.
In other Central and Eastern European countries,excluding Greece, the strong
deposit inflow continued throughout the year (+7.5%* vs. 2011) and loan
activity remained dynamic (+2.5%*).
In particular, there was a sharp increase in outstandings in Serbia (+17.6%*)
and Bulgaria (+9.4%*). Revenues were down -2.6%* vs. 2011, adversely affected
by margins under pressure.
In the Mediterranean Basin, the Group bolstered its network with 17 new
branches in 2012. It posted growth in outstanding loans excluding Egypt of
+2.2%*, driven by individual customers (+10.7%*). Over the same period,
outstanding deposits rose +2.9%*. Up +11.7%* in 2012, revenues grew in all the
division's entities, where Morocco and Tunisia benefited from a positive
volume effect and Algeria from strong activity related to foreign trade.
Operating expenses rose +18.4%* in line with the network's expansion. The
contribution to Group net income came to EUR 186 million in 2012. It is worth
noting that the earnings of NSGB (Egypt) will continue to be included in those
of International Retail Banking until the actual disposal of the entity (which
is expected to be finalised at the end of
Q1 13), whereas the associated assets and liabilities are isolated on specific
lines of the consolidated balance sheet at December 31st, 2012, in accordance
with current accounting standards.
In Sub-Saharan Africa, the franchise continued to enjoy strong growth, with 21
additional branches (+8.3%). Outstanding loans rose +4.5%* in 2012, with
particularly robust growth for individual customers (+22.5%*), while deposits
rose +6.6%*. In line with this momentum, revenues were up +11.3%* vs. 2011,
while the increase in operating expenses (+9.2%* over the same period)
reflects the expansion of the network. The contribution to Group net income
came to EUR 37 million in 2012.
4. CORPORATE AND INVESTMENT BANKING
In EUR m 2011 2012 Change Q4 11 Q4 12 Change
2012 vs. Q4 vs.
2011 Q4
Net banking income 5,980 6,189 +3.5% 655 1,460 x2.2
On a like-for-like +1.1% x 2,2
basis*
Financing and 2,315 1,582 -31.7% 403 436 +8.2%
Advisory
On a like-for-like -31.5% +6.3%
basis*
Global Markets (1) 4,141 4,875 +17.7% 776 1,029 +32.6%
On a like-for-like +14.0% +31.4%
basis*
Legacy assets (476) (268) +43.7% (524) (5) +99.0%
Operating expenses (4,748) (4,189) -11.8% (1,299) (957) -26.3%
On a like-for-like -13.1% -27.7%
basis*
Gross operating 1,232 2,000 +62.3% (644) 503 NM
income
On a like-for-like +54.1% NM
basis*
Net cost of risk (563) (630) +11.9% (94) (196) x2.1
O.w. Legacy assets (425) (262) -38.4% (81) (95) +17.3%
Operating income 669 1,370 x2.0 (738) 307 NM
On a like-for-like +86.6% NM
basis*
Group net income 635 1,053 +65.8% (482) 249 NM
(1) O.w. "Equities" EUR 2,085m in 2012 (EUR 2,379m in 2011) and "Fixed income,
Currencies and Commodities" EUR 2,790m in 2012 (EUR 1,762m in 2011)
After the serious euro zone crisis in H2 2011, economic conditions remained
challenging in 2012: the markets experienced successive periods where
investors adopted a "wait-and-see attitude" followed by a renewed risk
appetite. Against this backdrop, Corporate and Investment Banking continued
with its transformation towards a client-focused business model, with a risk
profile under control and limited consumption of scarce resources, while at
the same time producing solid results.
The revenues of core activities were up +4.9% year-on-year at EUR 6,946
million (excluding the net discount on loans sold which amounted to EUR -489
million).
Global Markets revenues jumped +17.7% vs. 2011 to EUR 4,875 million. At the
same time, market risk exposure remained at a low level (the average VaR in
2012 was lower than in 2011 at
EUR 31 million vs. EUR 38 million in 2011).
Equity activities posted revenues down -12.4% vs. 2011 at EUR 2,085 million in
a market characterised by low volumes throughout the year, particularly in
Europe. Given the market conditions, the Equity business line's performance
demonstrates the competitiveness and solidity of its franchise both for flow
products and structured products. In 2012, SG CIB was voted "Most Innovative
Investment Bank for Equity Derivatives" (The Banker, October 2012). It was
also named "Equity Derivatives House of the Year" (Risk awards 2013 and IFR
awards 2012). The bank has retained leading positions in the warrants (global
No. 1 with a 12.6% market share in 2012) and ETF markets (European No. 3).
Lyxor's expertise, especially in alternative investment and index management,
was once again recognised since its managed account platform received awards
on several occasions in 2012, notably for "Best Managed Account Platform"
(Hedgeweek, June 2012 and Hedge Funds Review, October 2012). Lyxor's assets
under management increased in 2012, from
EUR 73.6 billion to EUR 75.4 billion.
Fixed Income, Currencies & Commodities posted sharply higher revenues (up +58%
vs. 2011 at EUR 2,790 million), benefiting from a more favourable market
environment and its dynamic franchise. Accordingly, credit, rates and
structured product activities posted higher revenues than in 2011. In 2012, SG
CIB distinguished itself by being ranked 2nd most active Primary Dealer in
French government securities (Agence France Trésor, January 2013). SG CIB was
also ranked No. 1 in the "Euromoney Fixed Income Investors Survey" in the
categories "Overall Trade Ideas" and "Overall Credit Strategy".
Financing & Advisory posted revenues of EUR 1,582 million, marked by the
negative impact of the loan disposal programme (EUR 10 billion of loans sold
in 2012, for a net discount of EUR -489 million, after EUR 6 billion of loans
sold in 2011 for a net discount of EUR -163 million). Excluding the net
discount on loans sold, revenues totalled EUR 2,071 million, representing a
decline over the year of
-16.4%, in the wake notably of business refocusing. Structured financing
activities were resilient in 2012 thanks to natural resources, export and
infrastructure financing. Capital market activities posted mixed results, with
a good performance for bond issuance whereas equity issuance was hit by low
volumes. SG CIB participated in a number of emblematic transactions in 2012,
such as the project bond issue for Dolphin Energy, the financing of the
spin-off of SNAM (Società Nazionale Metanodotti) from ENI (Ente Nazionale
Idrocarburi) or the financing of a refinery in Cairo for the Egyptian Refining
Company. As in 2011, SG CIB was named "Best Export Finance Arranger" and "Best
Commodity Finance Bank" by Trade Finance Magazine in June 2012. Finally, SG
CIB has retained its position in the debt and equity markets: No. 5 in Euro
bond issuance, No. 2 in Euro corporate bond issuance and No. 2 in equity and
equity linked issuance in France (Thomson Reuters - IFR).
Lastly, the Group continued with its policy of legacy asset sales in 2012,
with a reduction in nominal of EUR -10.5 billion over the year (EUR -8.2
billion of disposals and EUR -2.4 billion of amortisation). Legacy assets' net
banking income came to EUR -268 million (vs. EUR -476 million in 2011).
Operating expenses were significantly lower in 2012, providing further
evidence of the effect of the restructuring and cost adjustment plans
introduced at end-2011. When restated for the restructuring charge recorded in
Q4 11 (EUR -215 million) and the French systemic tax allocation booked in
Q4 12 (EUR -50 million), operating expenses were down -8.7%. Core activities'
cost to income ratio stood at 59.2% in 2012, excluding the net discount on
loans sold.
The cost of risk of Corporate and Investment Banking's core activities
remained low in 2012
(31 basis points vs. 11 basis points in 2011) demonstrating the quality of its
portfolio. Legacy assets' net cost of risk was down over the period at EUR
-262 million in 2012 (EUR -425 million in 2011).
In 2012, Corporate and Investment Banking's core activities, excluding the net
discount on loans sold, made a contribution to Group net income of EUR 355
million in Q4 and EUR 1,807 million for the year (vs. respectively EUR 62
million and EUR 1,422 million in 2011).
The division's Q4 revenues amounted to EUR 1,460 million. Operating expenses
came to EUR 957 million. The contribution to Group net income totalled EUR
249 million in Q4 12 (vs. EUR -482 million in Q4 11).
The division's total contribution to Group net income amounted to EUR 1,053
million for the year
(EUR 635 million in 2011).
4. SPECIALISED FINANCIAL SERVICES AND INSURANCE
In EUR m 2011 2012 Change Q4 11 Q4 12 Change
2012 vs. 2011 Q4 vs. Q4
Net banking income 3,443 3,489 +1.3% 849 894 +5.3%
On a like-for-like basis* +1.4% +5.1%
Operating expenses (1,846) (1,844) -0.1% (470) (488) +3.8%
On a like-for-like basis* +0.3% +4.8%
Gross operating income 1,597 1,645 +3.0% 379 406 +7.1%
On a like-for-like basis* +2.6% +5.5%
Net cost of risk (829) (687) -17.1% (213) (175) -17.8%
Operating income 768 958 +24.7% 166 231 +39.2%
On a like-for-like basis* +23.8% +36.9%
Group net income 297 674 x2.3 73 165 x2.3
N.B.: 2011 Group net income includes a EUR -250m goodwill write-down
The Specialised Financial Services and Insurance division comprises:
i. Specialised Financial Services (operational vehicle leasing and fleet
management, equipment finance, consumer finance),
ii. Insurance (Life, Personal Protection, Property and Casualty).
In a constrained environment, SpecialisedFinancial Services and Insurance
posted solid results in 2012, with EUR 674 million vs. EUR 547^(2) million in
2011, while at the same time optimising its business model. These
significantly higher results were achieved against the backdrop of a decline
in the division's risk-weighted assets (-3.9%* vs. end-2011).
The division successfully carried out various external refinancing operations
throughout the year, (securitisation of car loans in France and Germany,
launch of a deposit collection activity in Germany). As a result, a total of
EUR 4.2 billion was raised in 2012.
Operational vehicle leasing and fleet management continued with the monitored
growth of its fleet in 2012, which amounted to more than 955,000 vehicles at
end-December (+4.2%^(1) vs. end-December 2011). ALD Automotive consolidated
its position as the European leader, notably via the development of
partnership agreements with car manufacturers or banking networks.
Against a backdrop of selective development, new Equipment Finance business
amounted to
EUR 7.0 billion (excluding factoring) in 2012, down -11.1%* vs. 2011. New
business margins remained at a high level. At end-December 2012, outstanding
loans totalled EUR 17.8 billion (excluding factoring), down -5.2%* vs.
end-December 2011. The business line strengthened its position in its key
markets and obtained the recognition of its peers ("European Lessor of the
Year" and "SME Champion of the Year", Leasing Life Awards), while at the same
time adapting its operating model, in particular by increasing its external
financing.
In a fragile economic environment, new Consumer Finance business amounted to
EUR 10.1 billion in 2012, down -3.7%* vs. 2011. Outstandings totalled EUR 21.9
billion, a decline of -2.7%* year-on-year. The business line continued with
its refocusing and the optimisation of its international network through the
disposal of its activities in Bulgaria, Ukraine and India. This refocusing,
combined with enhanced cost and risk control, enabled the business line to
generate a profit in 2012.
Specialised Financial Services' net banking income was slightly lower in 2012
(-1.0%* at
EUR 2,805 million). At EUR 1,585 million in 2012, operating expenses improved
by -1.0%* vs. 2011. The net cost of risk fell substantially in 2012 to EUR
-687 million (125 basis points) vs.
EUR -829 million (149 basis points). Operating income came to EUR 533 million,
up +32.3%* vs. 2011.
Specialised Financial Services' revenues amounted to EUR 715 million in Q4 12,
up +2.4%* vs.
Q4 11, whereas operating expenses totalled EUR -420 million, up +4.3%*. Q4
operating income rose +50.5%* to EUR 120 million, with a cost of risk down
-19.2%*.
Insurance activity posted good performances in 2012 despite a deteriorated
environment. Net life insurance inflow was EUR 70 million and outstandings
amounted to EUR 79.6 billion at
end-December 2012 (+4.2%* vs. end-December 2011). Personal Protection and
Property/Casualty insurance remained dynamic inside and outside France, with
continued growth in the insurance product penetration rate with retail banking
customers and the launch of new activities (additional health insurance in
France, car insurance in Russia). The premiums on these activities grew by
respectively +23.0%* and +9.3%* vs. 2011 (+22.6%* and +8.2%* respectively vs.
Q4 11).
Insurance revenues totalled EUR 684 million in 2012, up +12.5%* vs. 2011. They
amounted to
EUR 179 million in Q4 12, up +17.8%* vs. Q4 11.
4. PRIVate banking, GLOBAL INVESTMENT MANAGEMENT AND SERVICES
In EUR m 2011 2012 Change Q4 11 Q4 12 Change
2012 vs. 2011 Q4 vs. Q4
Net banking income 2,169 2,160 -0.4% 500 553 +10.6%
On a like-for-like basis* -2.8% +9.0%
Operating expenses (1,967) (1,905) -3.2% (498) (486) -2.4%
On a like-for-like basis* -5.6% -3.8%
Operating income 189 245 +29.6% 13 66 x5.1
On a like-for-like basis* +27.7% x 4,4
Impairment losses on (65) (580) NM (65) (380) NM
goodwill
Group net income 171 (293) NM (45) (308) NM
o.w. Private Banking 115 93 -19.1% 13 27 x2.1
o.w. Asset Management 99 (58) NM 18 34 +88.9%
o.w. SG SS & Brokers (43) (328) NM (76) (369) NM
Private Banking, Global Investment Management and Services consists of four
activities:
(i) Private Banking (Societe Generale Private Banking)
(ii) Asset Management (Amundi and TCW)
(iii) Societe Generale Securities Services (SGSS)
(iv) Brokers (Newedge).
In 2012, Private Banking, Global Investment Management and Services
strengthened its commercial positions and saw its contribution to Group net
income increase significantly by +21.6% vs. 2011 (excluding the goodwill
write-down on TCW and Newedge) to EUR 287 million.
The macroeconomic environment remained durably marked by weak markets and low
interest rates as well as the cautious stance of both private and
institutional investors. At EUR 2,160 million, revenues experienced a limited
decline of -2.8%* year-on-year (stable in absolute terms). As for operating
expenses, at EUR 1,905 million, they continued to benefit from operating
efficiency efforts and fell -5.6%*. As a result, gross operating income was
24.5%* higher than in 2011 at
EUR 255 million in 2012.
In Q4 12, the division posted revenues up +9.0%* vs. Q4 11 at EUR 553 million,
whereas operating expenses were down -3.8%* at EUR 486 million. As a result,
gross operating income rebounded from EUR 2 million in Q4 11 to EUR 67 million
in Q4 12. If goodwill write-down is stripped out, the division's contribution
to Group net income amounted to EUR 72 million vs. EUR 20 million in Q4 11.
Private Banking
In 2012, Private Banking consolidated its franchise despite market uncertainty
and the cautious stance of investors. Assets under management totalled EUR
86.1 billion at end-December 2012, up +1.5% year-on-year. This includes an
inflow of EUR +1.0 billion, a "market" effect of EUR +2.6 billion, a
"currency" impact of EUR -0.4 billion and a "structure" effect of EUR -2.0
billion.
Against a backdrop of deleveraging, partially offset by margins holding up
well, the business line's revenues fell -2.4%* vs. 2011 to EUR 757 million.
Operating expenses declined by -1.3%* to EUR 624 million on the back of
cost-saving measures.
Gross operating income totalled EUR 133 million in 2012 (vs. EUR 143 million
in 2011). The business line's contribution to Group net income amounted to EUR
93 million vs. EUR 115 million in 2011.
Q4 revenues came to EUR 202 million, up +26.7%* vs. Q4 11. At EUR 162 million,
operating expenses were 6.7%* higher due to transformation costs and the
reallocation of the systemic tax to the businesses. Gross operating income
amounted to EUR 40 million and the contribution to Group net income was EUR 27
million.
The magazine Euromoney awarded Societe Generale the titles, for 2012, of "Best
Private Bank" in France (for the second time in three years), "Best Private
Bank in Monaco", as well as "Best Private Bank in Western Europe for its offer
in structured products" for the ninth year running. These awards supplement
those obtained as "Best Private Bank in Luxembourg" and in the "Middle East"
(respectively by PWM/The Banker and by The Banker Middle East, for 2012).
Asset Management
TCW posted a significant inflow of EUR 3.5 billion in 2012, up +52.2% vs.
2011. After taking into account a "market" effect of EUR +9.4 billion, a
"currency" impact of EUR -0.1 billion and a "structure" effect of EUR +2.7
billion, assets under management totalled EUR 106.6 billion at end-December
2012 (vs. EUR 91 billion at end-December 2011).
Revenues and operating expenses fell in 2012 by respectively -8.6%* to EUR 338
million and by
-21.0%* to EUR 289 million due to a change in accounting method with no effect
on operating income. Operating expenses were also impacted by the settlement
of a commercial litigation issue in 2011.
Gross operating income was sharply higher at EUR 49 million in 2012 vs. EUR 2
million in 2011.
Amundi's contribution was EUR 115 million in 2012, vs. EUR 98 million in 2011.
Q4 revenues came to EUR 88 million, down -16.2%* vs. Q4 11. Operating expenses
fell -27.5%* to EUR 74 million. As a result, gross operating income totalled
EUR 14 million (EUR 3 million in Q4 11). The contribution to Group net income
was EUR 34 million (vs. EUR 18 million in Q4 11), including a Q4 contribution
from Amundi of EUR 28 million based on the equity method.
Societe Generale Securities Services (SGSS) and Brokers (Newedge)
In 2012, Securities Services demonstrated a healthy commercial momentum with
the signing, at the end of the year, of new mandates with Swiss Life AM,
Allianz GIF and Aberdeen AM. Assets under custody and assets under
administration rose by respectively +3.6% to EUR 3,449 billion and +10.4% to
EUR 456 billion.
Despite overall market volume declining, Newedge increased its market share to
11.8% in 2012
(vs. 11.5% at end-2011).
Securities Services and Brokers posted slightly lower revenues in 2012 (-1.1%*
at EUR 1,065 million). These businesses saw their operating expenses decline
by a further -2.7%* in 2012 vs. 2011 to
EUR 992 million, due to ongoing operating efficiency measures. Gross operating
income was higher at EUR 73 million (vs. EUR 57 million in 2011) and the
business line's contribution to Group net income rose to EUR 52 million
(excluding goodwill write-down) vs. EUR 22 million in 2011.
Q4 revenues came to EUR 263 million, up +8.3%*. At EUR 250 million, operating
expenses were close to their level in Q4 11. Gross operating income totalled
EUR 13 million and the contribution to Group net income was EUR 11 million
(excluding goodwill write-down).
4. CORPORATE CENTRE
The Corporate Centre's revenues totalled EUR -1,832 million in 2012 (vs. EUR
862 million in 2011). Revenues amounted to EUR -1,073 million in Q4 12 vs. EUR
613 million in Q4 11. They include, in particular:
* the revaluation of the Group's own financial liabilities, amounting to EUR
-1,255 million, including EUR -686 million in Q4 12 (vs. a total impact of
EUR +1,177 million in 2011, including EUR +700 million in Q4);
* the revaluation of credit derivative instruments used to hedge corporate
loan portfolios, amounting to EUR -56 million in 2012 (EUR +66 million in
2011), including EUR -26 million in Q4 12 (EUR +28 million in Q4 11);
In Q4 12, the total amount for 2012 of the so-called "systemic" French banking
tax was allocated to the businesses. This restatement had a positive impact on
the Corporate Centre's operating expenses of EUR +103 million in Q4. Operating
expenses totalled EUR -159 million in 2012, vs. EUR -239 million in 2011,
virtually stable when restated for the French systemic tax recorded in the
Corporate Centre in 2011 amounting to EUR -67 million.
The 2012 net cost of risk includes a EUR -300 million provision for litigation
issues and an additional expense in respect of Greek sovereign risk (EUR -22
million vs. EUR -890 million in 2011).
Lastly, the Corporate Centre incurred EUR -509 million of net gains or losses
on other assets, including EUR -375 million for Geniki and EUR -86 million for
TCW.
4. CONCLUSION
The Group's transformation is reflected in substantial structural changes
(review of the Group's financing model, refocusing of businesses, asset
disposals), as well as measures to control costs and rigorously manage scarce
resources and risks. These initiatives enable Societe Generale to continue to
develop its business as a universal bank, committed to its customers and
capitalising on its leadership positions.
With underlying Group net income of EUR 3.4 billion and an increase in the
Core Tier 1 ratio (calculated according to "Basel 2.5" rules) of +165 basis
points in one year, to 10.7%, Societe Generale has once again significantly
strengthened the structure of its balance sheet.
The Group is confident of its ability to meet future regulatory liquidity
requirements and its target of a Core Tier 1 capital ratio, calculated
according to "Basel 3" rules, of 9%-9.5% at
end-2013.
2013 will see Societe Generale embark on the second stage of the Ambition SG
2015 Plan. This second stage consists in a project to simplify and refocus the
organisational structure around the core businesses in order to increase
revenue and cost synergies.
This organisational structure would be based on three divisions:
* The French Networks
* A second division combining International Retail Banking and Specialised
Financial Services and Insurance
* A third encompassing Corporate and Investment Banking and Private Banking,
Global Investment Management and Services.
The details of this new organisational structure will be defined in the near
future and will include the simplification of central functions in order to
increase the Group's operating efficiency.
2013 financial communication calendar
May 7th, 2013 Publication of first quarter 2013 results
May 22nd, 2013 Annual General Meeting
August 1st, 2013 Publication of second quarter 2013 results
November 7th, 2013 Publication of third quarter 2013 results
This document may contain a number of forecasts and comments relating to the
targets and strategies of the Societe Generale Group. These forecasts are
based on a series of assumptions, both general and specific (notably - unless
specified otherwise - the application of accounting principles and methods in
accordance with IFRS as adopted in the European Union as well as the
application of existing prudential regulations).
This information was developed from scenarios based on a number of economic
assumptions for a given competitive and regulatory environment. The Group may
be unable to:
- anticipate all the risks, uncertainties or other factors likely to affect
its business and to appraise their potential impact on its operations;
- precisely evaluate the extent to which the occurrence of a risk or
combination of risks could cause actual results to differ materially from
those contemplated in this press release.
There is a risk that these projections will not be met. Investors are advised
to take into account factors of uncertainty and risk likely to impact the
operations of the Group when basing their investment decisions on information
provided in this document.
Unless otherwise specified, the sources for the rankings are internal.
APPENDIX 1: STATISTICAL DATA
CONSOLIDATED INCOME STATEMENT
(in EUR millions)
2011 2012 Change Q4 11 Q4 12 Change
2012 vs. 2011 Q4 vs. Q4
Net banking 25,636 23,110 -9.9% -10.3%* 6,010 5,130 -14.6% -14.5%*
income
Operating (17,036) (16,438) -3.5% -4.1%* (4,401) (4,138) -6.0% -6.5%*
expenses
Gross 8,600 6,672 -22.4% -22.4%* 1,609 992 -38.3% -36.6%*
operating
income
Net cost of (4,330) (3,935) -9.1% +5.6%* (1,075) (1,314) +22.2% +44.0%*
risk
Operating 4,270 2,737 -35.9% -42.0%* 534 (322) NM NM*
income
Net profits 12 (507) NM (72) (16) +77.8%
or losses
from other
assets
Net income 94 154 +63.8% (16) 50 NM
from companies
accounted for
by the equity
method
Impairment (265) (842) NM (65) (392) NM
losses on
goodwill
Income tax (1,323) (334) -74.8% (181) 284 NM
Net income 2,788 1,208 -56.7% 200 (396) NM
O.w. non 403 434 +7.7% 100 80 -20.0%
controlling
interests
Group net 2,385 774 -67.5% -68.8%* 100 (476) NM NM*
income
Group ROTE 7.5% 1.4%
(after tax)
Tier 1 ratio 10.7% 12.5% 10.7% 12.5%
at end of
period
* When adjusted for changes in Group
structure and at constant exchange
rates
NET INCOME AFTER TAX BY CORE BUSINESS
(in EUR millions)
2011 2012 Change Q4 11 Q4 12 Change
2012 vs. 2011 Q4 vs. Q4
French Networks 1,428 1,291 -9.6% 302 254 -15.9%
International Retail Banking 325 (51) NM 75 23 -69.3%
Corporate & Investment 635 1,053 +65.8% (482) 249 NM
Banking
Specialised Financial 297 674 x2.3 73 165 x2.3
Services & Insurance
Private Banking, Global 171 (293) NM (45) (308) NM
Investment Management and
Services
o.w. Private Banking 115 93 -19.1% 13 27 x2.1
o.w. Asset Management 99 (58) NM 18 34 +88.9%
o.w. SG SS & Brokers (43) (328) NM (76) (369) NM
CORE BUSINESSES 2,856 2,674 -6.4% (77) 383 NM
Corporate Centre (471) (1,900) NM 177 (859) NM
GROUP 2,385 774 -67.5% 100 (476) NM
CONSOLIDated balance sheet
Assets (in billions of euros) December 31, December 31, % change
2012 2011
Cash, due from central banks 67.6 44.0 +54%
Financial assets measured at fair value 484.0 422.5 +15%
through profit and loss
Hedging derivatives 15.9 12.6 +26%
Available-for-sale financial assets 127.7 124.7 +2%
Due from banks 77.2 86.5 -11%
Customer loans 350.2 367.5 -5%
Lease financing and similar agreements 28.7 29.3 -2%
Revaluation differences on portfolios 4.4 3.4 +29%
hedged against interest rate risk
Held-to-maturity financial assets 1.2 1.5 -20%
Tax assets and other assets 59.7 61.0 -2%
Non-current assets held for sale 9.4 0.4 x 23,5
Deferred profit-sharing 0.0 2.2 -100%
Tangible, intangible fixed assets and other 24.7 25.8 -4%
Total 1,250.7 1,181.4 +6%
Liabilities (in billions of December 31, 2012 December 31, 2011 % change
euros)
Due to central banks 2.4 1.0 x 2.4
Financial liabilities measured at 411.4 395.2 +4%
fair value through profit and
loss
Hedging derivatives 14.0 12.9 +9%
Due to banks 122.0 111.3 +10%
Customer deposits 337.2 340.2 -1%
Securitised debt payables 135.7 108.6 +25%
Revaluation differences on 6.5 4.1 +59%
portfolios hedged against
interest rate risk
Tax liabilities and other 59.4 60.7 -2%
liabilities
Non-current liabilities held for 7.3 0.3 x 24.3
sale
Underwriting reserves of 90.8 83.0 +9%
insurance companies
Provisions 2.8 2.5 +12%
Subordinated debt 7.1 10.5 -32%
Shareholders' equity 49.8 47.1 +6%
Non controlling Interests 4.3 4.0 +8%
Total 1,250.7 1,181.4 +6%
APPENDIX 2: méthodologY
1- The Group's consolidated results as at December 31st, 2012 were examined by
the Board of Directors on February 12th, 2013.
The financial information presented for the financial year ended December
31st, 2012 has been prepared in accordance with IFRS as adopted in the
European Union and applicable at that date. The audit procedures carried out
on the consolidated financial statements by the Statutory Auditors are
currently in progress.
2- Group ROE is calculated on the basis of average Group shareholders' equity
under IFRS excluding
(i) unrealised or deferred capital gains or losses booked directly under
shareholders' equity excluding conversion reserves, (ii) deeply subordinated
notes, (iii) undated subordinated notes recognised as shareholders' equity
("restated"), and deducting (iv) interest payable to holders of deeply
subordinated notes and of the restated, undated subordinated notes. The net
income used to calculate ROE is based on Group net income excluding interest,
net of tax impact, to be paid to holders of deeply subordinated notes for the
period and, since 2006, holders of deeply subordinated notes and restated,
undated subordinated notes (EUR 293 million at end-December 2012), and the
capital gain net of tax and accrued unpaid interest relating to buybacks of
deeply subordinated notes amounting to EUR
2 million at end-December 2012.
As from January 1st, 2012, the allocation of capital to the different
businesses is based on 9% of risk-weighted assets at the beginning of the
period, vs. 7% previously. The published quarterly data related to allocated
capital have been adjusted accordingly. At the same time, the normative
capital remuneration rate has been adjusted for a neutral combined effect on
the businesses' historic revenues
3- For the calculation of earnings per share, "Group net income for the
period" is corrected (reduced in the case of a profit and increased in the
case of a loss) for interest, net of tax impact, to be paid to holders of:
(i) deeply subordinated notes (EUR 266 million at end-December 2012),
(ii) undated subordinated notes recognised as shareholders' equity
(EUR 27 million at end-December 2012).
Earnings per share is therefore calculated as the ratio of corrected Group net
income for the period to the average number of ordinary shares outstanding,
excluding own shares and treasury shares but including (a) trading shares held
by the Group and (b) shares held under the liquidity contract
4- Net assets are comprised of Group shareholders' equity, excluding (i)
deeply subordinated notes
(EUR 5.3 billion), undated subordinated notes previously recognised as debt
(EUR 1.6 billion) and (ii) interest payable to holders of deeply subordinated
notes and undated subordinated notes, but reinstating the book value of
trading shares held by the Group and shares held under the liquidity contract.
Tangible net assets are corrected for net goodwill in the assets and goodwill
under the equity method. In order to calculate Net Asset Value Per Share or
Tangible Net Asset Value Per Share, the number of shares used to calculate
book value per share is the number of shares issued at December 31st, 2012,
excluding own shares and treasury shares but including (a) trading shares held
by the Group and (b) shares held under the liquidity contract.
5- The Societe Generale Group's Core Tier 1 capital is defined as Tier 1
capital minus the outstandings of hybrid instruments eligible for Tier 1 and a
share of Basel 2 deductions. This share corresponds to the ratio between core
Tier 1 capital excluding hybrid instruments eligible for Tier 1 capital and
Core Tier 1 capital.
As from December 31st, 2011, Core Tier 1 capital is defined as Basel 2 Tier 1
capital minus Tier 1 eligible hybrid capital and after application of the Tier
1 deductions provided for by the Regulations.
6-The Group's ROTE is calculated on the basis of tangible capital, i.e.
excluding cumulative average book capital (Group share), average net goodwill
in the assets and underlying average goodwill relating to shareholdings in
companies accounted for by the equity method. The net income used to calculate
ROTE is based on Group net income excluding interest, interest net of tax on
deeply subordinated notes for the period (including issuance fees paid, for
the period, to external parties and the discount charge related to the issue
premium for deeply subordinated notes and the redemption premium for
government deeply subordinated notes), interest net of tax on undated
subordinated notes recognised as shareholders' equity for the current period
(including issuance fees paid, for the period, to external parties and the
discount charge related to the issue premium for undated subordinated notes)
and the capital gain net of tax and accrued unpaid interest relating to
buybacks of deeply subordinated notes amounting to EUR 2 million at
end-December 2012.
7- Underlying data
Information concerning underlying data corresponds to accounting data restated
for the following items:
* in 2011:
2011 Net Operating Others Cost of Group net income
banking expenses risk
income
Revaluation of 1,177 772 Corporate Centre
own financial
liabilities
CDS MtM 66 43 Corporate Centre
Greek sovereign exposure (890) (622) Corporate Centre
Restructuring (11) (230) (12) (176) Corporate &
Investment Banking
& International
Retail Banking
Impairment & capital (362) (360) Specialised
losses Financial Services
& Insurance,
Global Investment
Management and
Services and
Corporate Centre
Deleveraging (163)* (124)* Corporate &
SGCIB except Investment Banking
Legacy assets
Legacy assets (476) (60) (425) (663) Corporate &
Investment Banking
TOTAL (1,130) Group
* Management information
* in 2012:
2012 Net Operating Others Cost Group net income
banking expenses of
income risk
Legacy assets (268) (74) (262) (416) Corporate &
Investment Banking
SG CIB core (489)* (338)* Corporate &
deleveraging Investment Banking
Revaluation (1,255) (822) Corporate Centre
of own
financial
liabilities
CDS MtM (56) (37) Corporate Centre
Greek (22) (16) Corporate Centre
sovereign
exposure
Buy Back Tier 305 195 Corporate Centre
2 debt
Provision for (300) (300) Corporate Centre
disputes
Impairment & (580) (580) Private Banking,
capital Global Investment
losses Management and
Services
Impairment & (90) (250) (309) International retail
capital banking
losses
Impairment & (502) 29 Corporate Centre
capital
losses
TOTAL (2,594) Group
* Management information
The amounts for 2012 have been adjusted to take account of disposals and
revaluations that occurred during the year.
Changes are communicated at current structure and exchange rates, unless
specified otherwise.
8- Funded balance sheet and loan/deposit ratio
The funded balance sheet gives a representation of the Group's balance sheet
excluding the contribution of insurance subsidiaries and after netting
derivatives, repurchase agreements and accruals. It was restated in Q4 12 to
include: a) the reclassification under "repurchase agreements and securities
lending/borrowing" of securities and assets delivered under repurchase
agreements to clients, previously classified under "customer deposits"
(excluding outstandings with the counterparty SG Euro CT amounting to EUR 11
billion in 2011 and EUR 7 billion in 2012); b) a line by line restatement, in
the funded balance sheet, of the assets and liabilities of our insurance
subsidiaries; c) the reintegration in their original lines of financial assets
reclassified under loans and receivables in 2008 in accordance with the
conditions stipulated by the amendments to IAS 39; d) the reintegration within
"long-term assets" of the operating lease fixed assets of specialised
financing companies, previously classified under "customer loans".
The funded balance sheet before and after reclassifications is presented below
for 2011 and 2012.
Before restatement for insurance subsidiaries and reclassifications (billions
of euros)
Dec-11 Dec-12 Dec-12 Dec-11
Net central bank
deposits 43 65 66 46 Short-term issuance
Interbank short-term
Interbank loans 39 44 65 69 deposits
Client-related trading
assets 59 101 2 4 Other
Securities 72 64 149 130 Medium/long-term funding
Customer loans 405 384 337 336 Customer deposits
Long-term assets 18 16 54 51 Equity
Total assets 636 674 674 636 Total liabilities
After restatement for insurance subsidiaries and reclassifications (billions
of euros)
Dec-11 Dec-12 Dec-12 Dec-11
Net central bank
deposits 43 65 66 46 Short-term issuance
Interbank short-term
Interbank loans 31 36 65 69 deposits
Client-related trading
assets 37 88 8 11 Other
Securities 68 60 149 130 Medium/long-term funding
Customer loans 387 369 311 295 Customer deposits
Long-term assets 34 34 52 50 Equity
Total assets 601 652 652 601 Total liabilities
The series of funded balance sheets presented during 2012 would therefore have
been as follows:
In EUR bn ASSETS LIABILITIES
31 31 30 30 31 31 30 30 31 31
Dec. Mar. June Sept. Dec. Dec. Sept. June Mar. Dec.
11 12 12 12 12 12 12 12 12 11
Net Central 43 50 55 78 65 66 69 56 54 46 Short term
bank deposits issuance
Interbank 31 38 45 44 36 65 72 58 58 69 Interbank
loans short term
deposit
Client 37 52 47 69 88 8 9 11 10 11 Other
related
trading
assets
Securities 68 64 64 62 60 149 143 137 143 130 Medium/Long
term
funding
Customer 387 386 383 378 369 311 319 314 309 295 Customer
loans deposits
Long term 34 34 34 33 34 52 52 51 51 50 Equity
assets
Total assets 601 624 628 665 652 652 665 628 624 601 Total
liabilities
The reclassified outstandings of SG Euro CT amounted to respectively EUR 8.3
billion in Q1 12; EUR 8.3 billion in Q2 12; EUR 7.3 billion in Q3 12; EUR
6.9 billion in Q4 12.
The Group's loan/deposit ratio is calculated as the ratio between customer
loans and customer deposits defined accordingly. It is 114% before restatement
and reclassifications and 118% after as at December 31st, 2012.
All the information on the 2012 financial year results (notably: press
release, downloadable data, presentation slides and appendices) is available
on Societe Generale's website www.societegenerale.com in the "Investor"
section.
Société Générale
Societe Generale is one of the largest European financial services groups.
Based on a diversified universal banking model, the Group combines financial
solidity with a strategy of sustainable growth, and aims to be the reference
for relationship banking, recognised on its markets, close to customers,
chosen for the quality and commitment of its teams.
Around 160,000 employees, based in 77 countries, accompany 33 million
customers throughout the world on a daily basis. Societe Generale's teams
offer advice and services to individual, corporate and institutional customers
in three core businesses:
- Retail Banking in France with the Societe Generale branch network, Crédit du
Nord and Boursorama
- International Retail Banking, with a presence in Central & Eastern Europe
and Russia, the Mediterranean Basin, Sub-Saharan Africa, Asia and French
Overseas Territories
- Corporate and Investment Banking with a global expertise in investment
banking, financing and global markets.
Societe Generale is also a significant player in Specialised Financial
Services, Insurance, Private Banking, Asset Management and Securities
Services.
Societe Generale is included in the socially-responsible investment indices:
FTSE4Good and ASPI.
For more information, you can follow us on twitter @societegenerale or visit
our website www.societegenerale.com.
(1) Calculated according to EBA Basel 2.5 standards (Basel 2 standards
incorporating CRD3 requirements)
(2) Annualised, excluding litigation issues, legacy and Greek sovereign
assets, in respect of assets at the beginning of the period
(3) Impact on Group net income of non-economic items: EUR -859m in 2012,
including EUR -822 million for the revaluation of own financial liabilities;
non-recurring items: EUR -1,319m in 2012; legacy assets: EUR -416m in 2012
(1) Change excluding restructuring costs recorded in 2011 and systemic tax
allocated to the businesses in 2012
(2) Annualised, excluding litigation issues, legacy and Greek sovereign
assets, in respect of assets at the beginning of the period
(1^) Revaluation of the Group's own financial liabilities amounting to EUR
-822 million and book income in respect of the Group's loan portfolio hedges
amounting to EUR -37 million in 2012
(2) Cost of Corporate and Investment Banking asset disposals (EUR -338
million), goodwill write-down
(EUR -842 million), Greek sovereign risk (EUR -16 million), net gains/losses
on business assets sold or available-for-sale assets (EUR -18 million), debt
buybacks (EUR +195 million) and a provision for litigation issues (EUR -300
million)
(3) Group ROE after tax was -5.31% in Q4 12 and 1.1% for the year. ROTE was
1.4% in 2012
(4) The interest, net of tax effect, payable to holders of deeply subordinated
notes and undated subordinated notes at end-December 2012 amounts to
respectively EUR 266 million and EUR 27 million. At end-December 2012, the
capital gain net of tax and accrued unpaid interest relating to buybacks of
deeply subordinated notes amounted to EUR 2 million.
(1) This figure includes notably (i) EUR 5.2 billion of deeply subordinated
notes, EUR 1.6 billion of undated subordinated notes and (ii) EUR 0.4 billion
of net unrealised capital gains.
(^2 Funded balance sheet/Group loan to deposit ratio: scope and definitions
modified at end-2012. Detailed information in methodology note No. 8.
1. At constant structure
2. Excluding goodwill write-down
PR_ Q4 2012
------------------------------------------------------------------------------
This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
the
information contained therein.
Source: SOCIETE GENERALE via Thomson Reuters ONE
HUG#1677662
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement
Rate this Page