SOCIETE GENERALE : SOCIETE GENERALE: QUARTERLY FINANCIAL INFORMATION, Q1 2013
QUARTERLY FINANCIAL INFORMATION
Paris, May 7th, 2013
Q1 2013: SOLID RESULTS IN ALL BUSINESSES, LAUNCH OF THE 2ND PHASE OF THE
*NBI^(1): EUR 6.2bn,
*Stable business revenues* vs. Q1 12
*Decline in the cost to income ratio in all businesses
*Cost of risk^(2) down -9 basis points vs. Q4 12
*Group net income^(1): EUR 852m^(1)
*Good business results: EUR +1,094m
*Disposal of the Egyptian subsidiary NSGB (EUR +377m)
*Book Group net income: EUR 364m
*Core Tier 1 ratio (Basel 3): 8.7%, ratio target of close to 9.5% at
*Core Tier 1 ratio (Basel 2.5): 10.6%
*Additional EUR 900m cost-savings plan (total of EUR 1,450m over the period
2012-2015) in order to achieve a ROE of 10% by end-2015
*EPS^(3): EUR 0.38
(1) Excluding the revaluation of own financial liabilities, legacy
assets and non-recurring items: impact on net banking income of own financial
liabilities EUR -1,045m; legacy assets EUR -10m; initial application of IFRS
13: EUR -76m; impact on operating expenses: legacy assets: EUR -18m; net gains
or losses on asset disposals: NSGB EUR +417m, TCW EUR +24m; net cost of risk:
legacy assets EUR -35m, provision for litigation issues, EUR -100m. Impact on
total Group net income of EUR -488m, of which legacy assets EUR -45m;
revaluation of own financial liabilities EUR -685m; disposals EUR +398m; IFRS
13 EUR -56m; provisions for litigation issues: EUR -100m. See methodology note
(2) Excluding litigation issues, legacy and Greek sovereign assets.
Steady decline in the cost of risk in basis points
(3) After deducting interest, net of tax effect, to be paid to holders
of deeply subordinated notes and undated subordinated notes for Q1 13
(respectively EUR 65 million and EUR 14 million). At end-March 2013, the
capital gain net of tax and accrued unpaid interest relating to buybacks of
deeply subordinated notes was nil.
* When adjusted for changes in Group structure and at constant
** Excluding non-economic items (revaluation of own financial liabilities),
legacy assets, and non-recurring items. See methodology note No. 8
The Board of Directors of Societe Generale met on May 6th, 2013 and examined
the Group's financial statements for Q1 2013. Net banking income and Group net
income amounted to respectively EUR 5,088 million and EUR 364 million. Group
net income includes the results for the Group's businesses amounting to EUR
1,094 million (+13% vs. Q1 12) and EUR +377 million of disposal proceeds for
the Egyptian subsidiary NSGB.
When restated for the non-economic effect of the revaluation of the Group's
own financial liabilities, non-economic and non-recurring items, net banking
income and Group net income amounted to respectively EUR 6,223 million and EUR
This performance illustrates the businesses' solid results, ongoing
cost-cutting efforts under way throughout the Group since 2010, and rigorous
risk management, which is reflected in the decline in the Q1 commercial cost
Against the backdrop of historically low interest rates, Retail Banking
continued to produce a good commercial performance, particularly in terms of
deposit inflow. Despite the sharp slowdown in the French economy, the French
Networks' net banking income remained close to the level in Q1 12.
International Retail Banking also posted generally stable revenues (-1.3%*)
and continued with its selective growth strategy, notably in Russia, whose
contribution increased significantly. Specialised Financial Services and
Insurance's revenues rose, driven by the growth in Insurance activities and
the continuing healthy margin in Specialised Financial Services.
With higher revenues than in Q1 12, which was marked by the disposal cost for
certain assets, Corporate and Investment Banking turned in a very satisfactory
performance. This was underpinned by its leadership positions, notably in
Equity and Fixed Income, Currencies & Commodities activities, Structured
Financing, and debt issuance. Private Banking, Global Investment Management
and Services benefited from the pick-up in Private Banking activities, despite
a still challenging environment for Brokerage activities (persistently weak
volumes and low interest rates).
Operating expenses were significantly lower (-2.5%*) in Q1 13 than in Q1 12.
Efforts made in terms of costs enabled all the businesses to post an improved
cost to income ratio vs. Q1 12. A general cost-cutting plan focused on
rationalising the organisational structure, operating efficiency measures and
optimising external costs has been launched, in line with efforts to control
operating expenses under way for several quarters. The purpose of the plan is
to put the Group in a position to achieve a ROE of 10% as from end-2015,
thanks to additional savings in terms of operating expenses of around EUR 900
million by 2015 (i.e. a total of EUR 1,450 million over the period 2012-2015).
It will include around EUR 600 million of transformation costs and investments
over the period.
The commercial cost of risk, measured in basis points^(1) amounted to 75 basis
points in Q1 13, vs. 84 basis points in Q4 12. This was generally lower,
particularly in International Retail Banking and Specialised Financial
Services. It was stable in the French Networks and remained at a low level in
Corporate and Investment Banking.
The Group's "Basel 3" Core Tier ratio stood at 8.7% at the end of Q1, without
phasing. Under"Basel 2.5"^(2), it amounted to 10.6%.
Commenting on the Group's Q1 2013 results, Frédéric Oudéa - Chairman and CEO -
"The performances of the businesses in Q1 2013 maintain Societe Generale on
its transformation path. Against a backdrop of disciplined management of
scarce resources, capital and liquidity, the Group's businesses maintained a
healthy profit level thanks to buoyant commercial activity aimed at serving
its customers, and a decline in operating expenses. The Group's solidity
therefore enabled it to achieve a "Basel 3" Core Tier 1 capital ratio of 8.7%,
in line with a target of close to 9.5% for end-2013. In addition, in order to
further boost the Group's performance over the medium-term, we will continue
to adapt the businesses and leverage cost synergies. We will also continue
with our efforts to control costs, with a plan to reduce operating expenses
and save a total of around EUR 1.5 billion over the period 2012-2015. By the
end of the Group's transformation at end-2015, the Societe Generale Group,
helped by businesses adapted to the new economic and regulatory environment in
Europe, will be in a position to generate a ROE of 10%."
1.GROUP CONSOLIDATED RESULTS
In EUR m Q1 12 Q1 13 Change
Q1 vs. Q1
Net banking income 6,311 5,088 -19.4%
On a like-for-like basis* -16.7%
Net banking income** 6,807 6,223 -8.6%
Operating expenses (4,333) (4,067) -6.1%
On a like-for-like basis* -2.5%
Gross operating income 1,978 1,021 -48.4%
On a like-for-like basis* -47.8%
Net cost of risk (902) (927) +2.8%
Operating income 1,076 94 -91.3%
On a like-for-like basis* -94.7%
Reported Group net income 732 364 -50.3%
Group net income** 1,173 852 -27.4%
Q1 12 Q1 13
Group ROTE (after tax) 7.9% 3.2%
Net banking income
The Group's net banking income totalled EUR 5,088 million in Q1 13, vs. EUR
6,311 million in Q1 12.
If non-economic items, non-recurring items and legacy assets** are stripped
out, revenues amounted to EUR 6,223 million, down -8.6%* vs. Q1 12.
*The French Networks posted revenues of EUR 2,015 million in Q1 13, which
was slightly lower than in Q1 12, in an environment of historically low
interest rates which adversely affected margins. Commercial activity
remained healthy with, in particular, significantly higher deposit inflow
than in Q1 12 (+9.2%);
*At EUR 1,131 million in Q1 13, International Retail Banking's net banking
income was generally stable (-1.3%*) vs. Q1 12, impacted by a challenging
economic situation in Central and Eastern Europe, offset by revenue growth
in Russia and Sub-Saharan Africa;
*Specialised Financial Services and Insurance's revenues rose +2.9%* vs. Q1
12 to EUR 868 million in Q1 13. They benefited from the growth in the
Insurance activity (EUR 183 million or +11.5%* vs. Q1 12). Despite
resource constraints, Specialised Financial Services continued to maintain
margins at a healthy level and posted slightly higher revenues (+0.8%*
vs. Q1 12) of EUR 685 million in Q1 13.
*Corporate and Investment Banking's revenues totalled EUR 1,904 million in
Q1 13, an increase of +3.0%* vs. Q1 12. Corporate and Investment Banking's
core activities posted revenues of EUR 1,914 million in Q1 13, stable
(+0.5%*) vs. Q1 12. However, this variation does not include the cost of
disposing of Corporate and Investment Banking's loan asset portfolios in
2012 (EUR -226 million), and the effect of the initial application of the
accounting standard IFRS 13 (EUR -128 million in 2013). When restated for
these factors, revenues were -8.0% lower. Revenues for Global Markets
declined -11.8% vs. a good Q1 12, and for Financing & Advisory activities
-10.4%, due to lower volumes as a result of the disposals carried out in
2012 and generally weak activity in Europe.
The contribution to the division's revenues of Corporate and Investment
Banking's legacy assets was contained at EUR -10 million in Q1 13 (EUR -57
million in Q1 12).
*Private Banking,Global Investment Management and Services' net banking
income was -3.0%* lower than in Q1 12 at EUR 457 million. In a generally
unfavourable environment for the business due to persistently low rates
and reduced brokerage activity, the division benefited from a pick-up in
Private Banking revenues (+4.6%* vs. Q1 12).
The accounting impact on net banking income of the revaluation of the Group's
own financial liabilities was EUR -1,045 million in Q1 13. In Q1 12, the
revaluation had an impact of EUR -181 million on net banking income for the
At EUR -4,067 million in Q1 13, operating expenses were down -2.5%* vs. Q1 12,
with cost-cutting efforts in all the businesses.
The improved operating efficiency was noticeable in all the business
divisions. Accordingly, the businesses' cost to income ratio (excluding
activities that come under the scope of the Corporate Centre) amounted to
62.9%and improved by -3.5 points^(1) overall vs. Q1 12: -2.6 points in the
French Networks and International Retail Banking, -4.7 points in Specialised
Financial Services and Insurance, -3.9 points in Corporate and Investment
Banking, -1.5 points in Private Banking, Global Investment Management and
Continuing with its cost-cutting initiatives, the Group has decided to embark
on an efficiency improvement programme, with three objectives: (i) reduce
costs and reinforce competitiveness;
(ii) simplify the way the Group operates; and (iii) leverage cost synergies
between the businesses. The full effect of this programme is expected to be
felt at end-2015, with EUR 1,450 million of cost savings vs. the beginning of
2012 (including EUR 550 million already achieved in 2012). This programme
includes around EUR 600 million of transformation costs and investments and
will have no impact on business.
The Group's gross operating income came to EUR 1,021 million in Q1 13. This
was substantially lower than in Q1 12 due to the accounting effect of the
revaluation of the Group's own financial liabilities (-47.8%*). If
non-economic items, non-recurring items and the impact of legacy assets are
stripped out, the variation in gross operating income was -12.9% between Q1 12
and Q1 13.
The Group's net cost of risk amounted to EUR -927 million for Q1 13, vs. EUR
-902 million in Q1 12.
The Group posted an additional provision allocation for litigation issues
amounting to EUR -100 million in Q1 13.
The Group's commercial cost of risk (expressed as a fraction of outstanding
loans) amounted to 75^(^2) basis points in Q1 13, which was lower than in Q4
12 (84^(2) basis points).
*The French Networks' cost of risk was stable vs. Q4 12 at 65 basis points,
reflecting the deteriorated economic environment in France, notably for
business customers where the Group continued to post substantial
provisions in respect of medium-sized industrial companies. The loss rate
remained low for individual customers.
*At 154 basis points (vs. 182 basis points in Q4 12), International Retail
Banking's cost of risk was generally lower, driven by Romania (whose cost
of risk nevertheless remained high) and the subsidiaries in the
Mediterranean Basin (particularly in Algeria and Tunisia). The cost of
risk remained moderate in Russia and the Czech Republic in Q1 13.
*Specialised Financial Services' cost of risk fell to 113 basis points (vs.
127 basis points in Q4 12) in Consumer Finance and Equipment Finance.
*The cost of risk of Corporate and Investment Banking's core activities
remained low at
20 basis points (vs. 44 basis points in Q4 12), confirming the quality of
the loan portfolio. Legacy assets' net cost of risk amounted to EUR -35
million in Q1 13 (lower than the EUR
-95 million in Q4 12).
The Group's NPL coverage ratio was 77% at end-March 2013 (unchanged vs.
The Group's operating income totalled EUR 94 million in Q1 13 vs. EUR 1,076
million in Q1 12. This was substantially lower, primarily due to the impact of
the revaluation of the Group's own financial liabilities.
When corrected for non-economic items, non-recurring items and legacy assets,
operating income came to EUR 1,229 million in Q1 13, vs. EUR 1,572 million in
Group net income totalled EUR364 million for Q1 13 (EUR 732 million in Q1
12), after taking into account
*the effect of disposals of subsidiaries during the quarter (in particular
the sale of the Egyptian subsidiary NSGB, for a net impact after tax of
EUR +377 million),
*tax (the Group's effective tax rate was 22.0% in Q1 13 vs. 27.4% in Q1 12)
*and non-controlling interests.
When corrected for non-economic items, non-recurring items and legacy assets
^(1^), Group net income amounted to EUR 852 million in Q1 13, vs. EUR 1,173
million in Q1 12.
The Group's ROE, excluding non-economic items, non-recurring items and legacy
assets, stood at 7.4% (2.7% in absolute terms) in Q1 13. ROTE based on the
same structure came to 8.8% (3.2% in absolute terms).
Earnings per share amounts to EUR 0.38 for Q1 13, after deducting interest
payable to holders of deeply subordinated notes and undated subordinated
2.THE GROUP'S FINANCIAL STRUCTURE
Group shareholders' equity totalled EUR 49.9 billion ^(1) at March 31st, 2013
and tangible net asset value per share was EUR 48.27 (corresponding to net
asset value per share of EUR 56.54, including EUR 1.08 of unrealised capital
gains). The Group acquired 8.2 million Societe Generale shares during Q1 13
and proceeded to dispose of 6.1 million shares under the liquidity contract
concluded on August 22nd, 2011.
All in all, at end-March, 2013, Societe Generale possessed 24.9 million shares
(including 9 million treasury shares), representing 3.19% of the capital
(excluding shares held for trading purposes). At this date, the Group also
held 1.4 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 655
billion at March 31st, 2013, up 10.5%
(EUR +28 billion) vs. March 31st, 2012, but stable (+0.5%) vs. December 31st,
The Group continued to strengthen the balance sheet structure, with the
surplus of stable sources (shareholders' equity, customer deposits and
medium/long-term financing) over long-term uses of funds
(available-for-sale/held-to-maturity securities, customer loans and long-term
assets) increasing significantly between Q1 12 and Q1 13, from EUR 18 billion
to EUR 58 billion. It increased by EUR
+7 billion in Q1 13 alone, primarily as a result of the success of the Group's
issuance programmes. Medium/long-term financing rose by EUR 8 billion
year-on-year, including EUR 2 billion in Q1 13. Accordingly, in Q1 13, EUR
13.4 billion of medium/long-term debt (i.e. two-thirds of the scheduled
progamme in 2013) was issued, with an average maturity of 5.7 years.
Shareholders' equity (EUR 52 billion) was stable vs. end-2012 and rose EUR +1
billion vs. the end of Q1 12. Customer deposits totalled EUR 311 billion,
generally stable vs. Q1 12 (EUR +2 billion) and unchanged vs. Q4 12. At the
same time, the Group's deleveraging strategy led to customer loan outstandings
falling by EUR
-19 billion since Q1 12 (EUR -4 billion in Q1 13, to EUR 365 billion). As a
result, the loan/deposit ratio improved by +8 points year-on-year, from 125%
at end-March 2012 to 117% at end-March 2013.
The Group also increased its liquidity reserves by EUR 2 billion vs. end-2012,
to EUR 135 billion. They now cover 108% of the Group's short-term refinancing
needs as at end-March 2013 (vs. 101% at end-2012). As a reminder, the Group's
liquidity reserves amounted to EUR 104 billion in Q1 12 and covered 93% of its
short-term financing needs.
The Group's risk-weighted assets amounted to EUR 320.2 billion at end-March
(-1.2% vs. the end of Q4 12 and -8.3% year-on-year). In Q1 13, they included
the EUR 5.5 billion of outstandings relating to the Group's insurance
companies due to the end of the dispensatory regime previously applied. When
restated for this change, outstandings were down -2.9% vs. end-2012 and -9.8%
year-on-year. At the end of Q1 13, Retail Banking activities (French Networks
and International Retail Banking, Specialised Financial Services and
Insurance) represented 62.7% of the Group's risk-weighted assets, stable
excluding Insurance vs. Q4 12.
The detailed movements by division illustrate the deleveraging/rigorous risk
control strategy initiated in 2010: risk-weighted assets were substantially
lower during the quarter in International Retail Banking (-9.1%, reflecting
the disposal of the NSGB subsidiary), stable in Private Banking, Global
Investment Management and Services and in Specialised Financial Services
(excluding Insurance), as well as in the French Networks (excluding
insurance), in a sluggish economy. Corporate and Investment Banking's core
activities experienced growth of +1.4%.
In line with previous quarters, risk-weighted assets related to legacy assets
declined by -19.4% in
Q1 13 vs. Q4 12 due to disposals and amortisation. All in all, these
risk-weighted assets were limited to EUR 7.9 billion at end-March, or 2.5% of
the Group's total risk-weighted assets.
The Group's Tier 1 ratio was 12.4% at March 31st, 2013 (12.5% at end-2012),
while the Core
Tier 1 ratio, which was 10.7% at December 31st, 2012 under "Basel 2.5" and
calculated according to European Banking Authority (EBA) rules, was 10.6% at
end-March 2013, after taking account of accounting and regulatory changes that
reduced the ratio by -95 basis points during the quarter and offset the
Group's substantial capital generation in Q1 13 (+84 basis points).
In particular, the end of the dispensatory regime for Insurance subsidiaries
reduced the ratio by
-69 basis points, while the integration in shareholders' equity of
post-employment commitments following the implementation of IAS 19 had an
impact of -17 basis points on the ratio. Lastly, taking account of the value
adjustment in respect of credit risk (Credit Value Adjustment or CVA) for
derivatives, based on IFRS 13, reduced the result, with an impact in this
respect of -9 basis points.
It is important to note that the symmetrical movement to CVA concerning the
bank's derivative commitments (Debit Value Adjustment or DVA), which measures
the effect on the income statement of own financial liabilities associated
with derivatives, is neutralised for the determination of the ratio, and as
such is not included in the calculation of distributable profit.
The contribution to the ratio of Q1 results (excluding CVA effect, net of the
provision for dividends) amounted to +20 basis points, supplemented by the
effect of deleveraging (disposal of subsidiaries, disposal and amortisation of
the legacy asset portfolio), which boosted the Core Tier 1 ratio by
+58 basis points. The other cumulative effects (currency, reduction in the
businesses' risk-weighted assets, etc.) contributed +6 basis points to the
ratio in Q1.
This quarter, the Group has published its Core Tier 1 capital ratio under
"Basel 3" rules (which include CRD 4 requirements). The ratio amounted to 8.7%
at the end of Q 1 13. The Group aims to achieve a Basel 3 Core Tier 1 ratio
(excluding the benefit of temporary measures) of close to 9.5% at end-2013. A
number of scheduled measures (scrip dividends, capital increase reserved for
employees and ongoing deleveraging measures for SSG) are already expected to
result in an increase of around
20 basis points in the ratio. Further strengthening of the ratio will come
mainly from continuing solid profit generation.
The Group is rated A2 by Moody's, A by S&P and A+ by Fitch.
In EUR m Q1 12 Q1 13 Change
Q1 vs. Q1
Net banking income 2,046 2,015 -1.5%
Operating expenses (1,347) (1,310) -2.7%
Gross operating income 699 705 +0.9%
Net cost of risk (203) (301) +48.3%
Operating income 496 404 -18.5%
Group net income 326 256 -21.5%
(a) Excluding PEL/CEL
In a still deteriorated macroeconomic environment in France, the French
Networks' commercial activity was resilient in Q1 13 and once again
demonstrated the solidity of their customer franchises.
Against a backdrop of continuing fierce competition for savings inflow,
outstanding balance sheet deposits rose +9.2% vs. Q1 12 to EUR 149.2 billion.
By customer segment, deposit inflow remained very strong for individual
customers (+8.1%) and saw a substantial pick-up for business customers
(+10.4%). By type of savings vehicle, deposit growth was driven by the inflow
on term deposits and deposit certificates (+37.2%) which continued to benefit
from the success of the "CAT Croissance" (Growth term account) and "CAT Tréso
+" (Treasury + term account) offerings aimed at large corporates and SMEs.
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 (+32.2%) and Sustainable Development Passbook Savings Account
outstandings (+25.0%), which benefited from the raising of their ceiling, and
secondly, by the growth of Passbook Savings Accounts (+7.1%). Sight deposits
remained stable (+0.5%) vs. Q1 12.
This growth was accompanied by positive net life insurance inflow of EUR +822
million in Q1 13, in a market whose net inflow became positive again (EUR +6.7
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. However, in an environment
of economic uncertainty, the demand for financing remained low, as testified
by the limited growth in outstanding loans (+0.7% vs. Q1 12 to EUR 176.3
Outstanding loans to business customers totalled EUR 79.5 billion (+0.6%).
Outstanding operating loans rose +7.3% to EUR 13.2 billion. Conversely,
outstanding investment loans fell -1.0% to EUR 63.3 billion.
Outstanding loans to individuals rose +1.1% vs. Q1 12 to EUR 95.5 billion,
still driven by the growth in outstanding housing loans (+1.4%). Housing loan
production was nevertheless markedly lower than in Q1 12 on the back of weak
The average loan/deposit ratio stood at 118% in Q1 13 vs. 128% for the same
period the previous year, an improvement of 10 points.
The French Networks' revenues were resilient, with net banking income of EUR
2,015 million, slightly lower (-1.4%) excluding the PEL/CEL effect than in Q1
12. The interest margin was +0.2% higher (excluding the PEL/CEL effect) than
in Q1 12, with the effects of the decline in reinvestment rates being offset
by the growth in outstanding deposits and the increase in the loan margin (+10
basis points vs. the same period the previous year).
Commissions declined -3.4% vs. Q1 12. Service commissions fell -2.6% vs. the
same period. Financial commissions declined -6.4% on the back of still low
financial transaction volumes originating from individual customers.
Operating expenses were -2.7% lower than in Q1 12, reflecting the effect of
the cost-savings plans implemented. These focused primarily on efficiency
gains, the control of IT expenses and the decline in the use of external
The French Networks generated gross operating income of EUR 705 million, up
+1.3% (excluding PEL/CEL effect) vs. Q1 12.
Against the backdrop of a weak French economy, the French Networks' cost of
risk amounted to
65 basis points in Q1 13. This was stable vs. the figure for the previous
The French Networks' contribution to Group net income totalled EUR 256
-21.5% vs. Q1 12.
4.international retail banking
In EUR m Q1 12 Q1 13 Change
Q1 vs. Q1
Net banking income 1,226 1,131 -7.7%
On a like-for-like basis* -1.3%
Operating expenses (758) (698) -7.9%
On a like-for-like basis* +0.5%
Gross operating income 468 433 -7.5%
On a like-for-like basis* -4.1%
Net cost of risk (350) (273) -22.0%
Operating income 118 160 +35.6%
On a like-for-like basis* -21.3%
Group net income 45 79 +75.6%
Within International Retail Banking, Q1 2013 was marked by healthy commercial
activity achieved against a backdrop of low interest rates and an economic
slowdown. At end-March 2013, International Retail Banking's outstanding loans
(excluding Egypt^(^1)) amounted to EUR 62.6 billion, up +3.7%* vs. Q1 12,
driven by the growth for individual customers (up +8.9%*). Over the same
period, deposits (excluding Egypt) were substantially higher (+7.1%*) at EUR
64.1 billion, on the back of robust inflow in Russia (+13.5%*), Central and
Eastern European countries (+13.4%*) and Sub-Saharan Africa (+12.4%*).
Consequently, the loan/deposit ratio improved by 3 points vs. end-December
2012, to 98%.
This positive volume effect was largely erased by the low interest rate
environment in the main European countries where the division operates.
International Retail Banking revenues were down -1.3%* vs. end-March 2012 at
EUR 1,131 million. This trend reflects fairly distinct performances according
to region: revenues were higher in Russia, theMediterranean Basin and
Sub-Saharan Africa, whereas Romania, the Czech Republic and the other Central
and Eastern European countries experienced a decline in revenues.
Over the same period, costs experienced a limited increase of +0.5%* (to EUR
698 million), reflecting good control of operating expenses, with marked
declines in Russia, Romania, the Czech Republic, and the other Central and
Eastern European countries. In Sub-Saharan Africa and theMediterranean Basin,
operating expenses increased to support the expansion of the network, which
saw the addition of 29 branches in the space of a year.
The division posted gross operating income of EUR 433 million at end-March
2013 (-4.1%*). The cost to income ratio was 61.7%, a slight improvement
compared to the previous year.
International Retail Banking's contribution to Group net income totalled EUR
In Russia (structure including Rosbank, Delta Crédit and their consolidated
subsidiaries in International Retail Banking, and 25% of Rusfinance), there
was further confirmation of the improvement observed in previous quarters. Net
banking income rose +13.9%*^(2). Measures to improve operating efficiency
introduced in 2012 (branch rationalisation and workforce cuts) helped to
significantly reduce the cost base (-4.4%* vs. Q1 12) despite high inflation.
The contribution to Group net income came to EUR 19 million (vs. a EUR -20
million loss in Q1 12).
Overall, the rebalancing of the customer portfolio and the success of Rosbank
(RUB 31 billion raised in 2013 or EUR 775 million) helped strengthen the
balance sheet structure.
For individual customers, outstanding loans grew substantially (+21.5%* vs. Q1
12), with particularly strong growth for rouble-denominated loans (+28%* for
Rosbank), which was accompanied by equally robust deposit inflow over the same
period (+7.3%* including +11%* in respect of rouble-denominated deposits for
For business customers, outstanding loans stabilised vs. Q1 12, wiping out the
decline recorded in 2012. This trend reversal reflects strong new business,
focused primarily on rouble-denominated loans (outstandings up +21%*). At the
same time, deposits rose +17.7%* over the same period.
Refocusing and the rollout of new commercial initiatives since 2010 have been
accompanied by the development of synergies between the different Russian
entities and the Group's business lines, especially with Corporate and
Investment Banking. During Q1, the Group acted as Mandated Lead Arranger and
bookrunner in the financing of Rosneft's acquisition of TNK-BP, a major deal
in the oil sector (the acquisition totalled USD 56 billion). At the same time,
during the first four months of 2013, Societe Generale managed 17 bond
issuance mandates for a total of EUR 7.5 billion. It is ranked 3^rd in Russia
for currency bond issues (source: Dealogic). All in all, the SG Russia^(1)
entity made a
EUR 39 million contribution to Q1 Group net income.
In the Czech Republic, in a deteriorated economic environment, Komercni Banka
(KB) enjoyed strong commercial activity in Q1 13: outstanding loans grew
+5.3%* vs. Q1 12, underpinned by business customers. Over the same period,
deposits rose +6.4%*. Despite this positive volume effect, revenues were lower
than in Q1 12 (-6.5%*), due to successive declines in deposit margins and a
non-recurring capital gain recorded in Q1 12. That said, KB once again
demonstrated its ability to control costs (-1.6%*). The contribution to Group
net income came to EUR 51 million in Q1 13, reflecting the subsidiary's
resilience in an economic slowdown.
In Romania (BRD), in a challenging economic environment, the Group experienced
a decline in outstanding loans (-2.6%*). Growth in the individual customer
segment, particularly for housing loans, was unable to offset the decline in
the business segment. At the same time, the Group strengthened its deposit
base (+2.9%*). Revenues were lower in Q1 (-4.5%*) due to the combination of
weak volumes and continuing pressure on the interest margin. However, the
rationalisation of BRD's operating infrastructure (reduction in the headcount
and number of branches) resulted in costs declining -2.5%* vs. Q1 12 despite a
sharp increase in inflation over the period. The cost of risk remained high,
but was lower than in Q4 12 due to measures aimed at rigorously controlling
risk-taking. Overall, BRD's contribution to Group net income came to EUR -5
million in Q1 13
(EUR -3 million in Q1 12).
In the other Central and Eastern European countries, deposit inflow remained
buoyant (+13.4%* vs. Q1 12) particularly for business customers, whereas loan
activity was stable over the same period (+0.4%*). Overall, revenues fell
-3.8%*, hampered by a decline in loan remuneration, against the backdrop of a
decrease in the Euribor rate and an increase in the cost of deposits. Costs
were stable (-0.1%*) over the period. The region's gross operating income came
to EUR 36 million.
In the Mediterranean Basin, at end-March 2013, the Group posted an increase in
deposits of +4.8%* vs. Q1 12, which was particularly strong in Algeria
(+24%*). In contrast, outstanding loans experienced weak growth (+0.7%*) vs.
Q1 12. Revenues were up +2.5%* vs. Q1 12, with all the entities seeing an
increase. Operating expenses grew faster than NBI (+12.7%*), accompanying the
growth of the network (6 new branches in the space of one year)and due to high
inflation locally. The contribution to Group net income came to EUR 41 million
in Q1 13.
In Sub-Saharan Africa, the Group bolstered its network with 23 new branches
vs. Q1 12. The beginning of 2013 saw strong commercial activity: outstanding
loans grew +6.3%* vs. Q1 12, with a particularly sharp increase in the
individual customer segment (+24.3%*). At the same time, deposits enjoyed
robust growth of +12.4%*. In line with this momentum, revenues rose +11.9%*
vs. Q1 12 and operating expenses +10.1%* over the same period.
5.SPECIALISED FINANCIAL SERVICES AND INSURANCE
In EUR m Q1 12 Q1 13 Change
Q1 vs. Q1
Net banking income 849 868 +2.2%
On a like-for-like basis* +2.9%
Operating expenses (455) (442) -2.9%
On a like-for-like basis* -1.1%
Gross operating income 394 426 +8.1%
On a like-for-like basis* +7.5%
Net cost of risk (166) (155) -6.6%
Operating income 228 271 +18.9%
On a like-for-like basis* +15.9%
Group net income 163 192 +17.8%
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).
Specialised Financial Services and Insurance again posted solid results up
+17.8%* vs. Q1 12, at EUR 192 million, while continuing to adapt its business
model to resource constraints.
Despite a challenging market environment for the auto sector, Operational
Vehicle Leasing and Fleet Management experienced a healthy commercial
momentum, with a fleet of more than 962,000 vehicles (+4.4%^(1) vs. end-March
2012) and benefited from the proactive management of its residual values since
Against a backdrop of selective development, new Equipment Finance business
was down -6.6%* vs. Q1 12 at EUR 1.5 billion (excluding factoring). New
business margins remained at a high level. At end-March 2013, outstanding
loans totalled EUR 17.4 billion (excluding factoring), down -4.3%* vs.
end-March 2012. The business line maintained solid positions in its key
markets, while continuing to adapt its operating model, particularly by
increasing its external financing (EUR 0.5 billion debt securitisation
operation in Germany in February 2013).
Consumer Finance provided further evidence of its recovery, benefiting from
the efforts under way since 2011 to refocus the international network and
reallocate its resources to activities improving the risk and profitability
profile. New business was stable over the period at EUR 2.4 billion.
Outstanding loans totalled EUR 21.8 billion, down -2.7%* vs. end-March 2012.
The division carried out various external refinancing operations representing
an additional EUR 1.1 billion during Q1 13. A total of EUR 4.2 billion had
been raised in 2012.
Specialised Financial Services' Q1 net banking income remained stable vs. Q1
12, at EUR 685 million. Operating expenses improved by -1.8%*, to EUR 375
million. The net cost of risk fell to EUR -155 million (113 basis points) vs.
EUR -166 million (121 basis points) in Q1 12. Operating income came to EUR 155
million, up +15.1%* vs. Q1 12.
Insurance produced good Q1 performances both in France and internationally.
Net life insurance inflow was EUR 1.3 billion and outstandings amounted to EUR
81.3 billion at end-March 2013, up +5.9%* vs. Q1 12. Personal Protection and
Property/Casualty insurance premiums grew by respectively +38.9%* and +21.9%*
vs. Q1 12.
The Insurance activity's net banking income totalled EUR 183 million, up
+11.5%* vs. Q1 12, whereas the growth in operating expenses was limited at
3.0%*. Operating income came to EUR 116 million, up +17.0%* vs. Q1 12.
6.CORPORATE AND INVESTMENT BANKING
In EUR m Q1 12 Q1 13 Change
Q1 vs. Q1
Net banking income 1,867 1,904 +2.0%
On a like-for-like basis* +3.0%
Financing and Advisory 276 475 +72.1%
On a like-for-like basis* +73.4%
Global Markets (1) 1,648 1,439 -12.7%
On a like-for-like basis* -11.8%
Legacy assets (57) (10) +82.5%
Operating expenses (1,220) (1,161) -4.8%
On a like-for-like basis* -4.0%
Gross operating income 647 743 +14.8%
On a like-for-like basis* +16.3%
Net cost of risk (153) (74) -51.6%
O.w. Legacy assets (115) (35) -69.6%
Operating income 494 669 +35.4%
On a like-for-like basis* +37.7%
Group net income 351 494 +40.7%
(1) O.w. "Equities" EUR 685m in Q1 13 (EUR 655m in Q1 12) and "Fixed income,
Currencies and Commodities" EUR 754m in Q1 13 (EUR 993m in Q1 12)
Continuing in the same vein as at the end of 2012, the beginning of Q1 was
marked by a lull in the euro zone financial crisis, and by a rally in the
markets. The environment subsequently deteriorated in the wake of the Italian
elections and the crisis in Cyprus in March, which led to a decline in
investors' risk appetite.
Against this backdrop, Corporate and Investment Banking revenues totalled EUR
1,904 million in Q1,up +2.0% vs. Q1 12. When restated for the CVA/DVA impact
(EUR -64 million in Q1 13) and the net discount on loans sold (EUR -226
million in Q1 12), revenues were down -6.0%.
Global Markets posted resilient revenues of EUR 1,514 million, excluding
(EUR -75 million in Q1 13). This represented a decline of -7.2%^(1) vs. an
excellent Q1 12, which benefited from favourable market conditions. Revenues
were mainly driven by the excellent commercial performance of structured
products in all regions. During the quarter, market risk exposure was
maintained at a low level.
Equity activities saw their revenues increase +11.9%^(1) vs. Q1 12 to EUR 735
million, excluding CVA/DVA impact (EUR -50 million in Q1 13). Revenues were
driven by higher volumes in Asia, notably for structured products, as well as
the performance of flow activities, particularly equity finance. SG CIB was
voted"Equity Derivatives House of the Year" (Risk awards 2013) and maintained
its leadership position in equity derivatives with, in particular, a market
share of 14.5% for warrants. In addition, the level of Lyxor's assets under
management amounted to EUR 75.3 billion as of end of
Q1 13, stable vs. 2012 year-end. Lyxor's managed account platform again
received an award and was named "Leading Managed Account Platform" by the
Hedge Fund Journal awards 2013.
Fixed Income, Currencies & Commodities posted revenues of EUR 779 million,
excluding CVA/DVA impact (EUR -25 million in Q1 13), down -20.1%^(1) vs. an
excellent Q1 12 which benefited from the effects of the normalisation of the
market. During the quarter, client-driven activity proved resilient,
especially for structured products. Rates and credit activities produced a
solid performance, whereas Forex and Commodities lagged behind. SG CIB again
saw its expertise recognised by its Asian clients, coming top in the "Asia
Risk interdealer rankings 2013" and ranking No. 1 in the "interest rate
Financing & Advisory posted revenues of EUR 464 million, excluding CVA/DVA
impact (EUR +11 million in Q1 13). This was substantially higher than in Q1
12, which was marked by the negative impact of the loan disposal programme.
Excluding the CVA/DVA impact and net discount on loans sold (EUR -226 million
in Q1 12), revenues were down -10.4%^(1), reflecting notably the loss of
recurring revenues following business refocusing in 2012. Structured financing
activities turned in a good commercial performance, underpinned by solid
franchises (natural resources, export and infrastructure financing). Capital
markets benefited from buoyant activity in bond issuance and leveraged
financing, whereas equity issuance and M&A suffered from low volumes in
Europe. SG CIB participated in a number of landmark transactions in Q1 13,
such as the financing of the fourth Airbus A380 for Thai Airways as part of
the development of the "Originate-to-Distribute" model. The deal was financed
entirely by an external investor. SG CIB was also mandated by Veolia
Environnement to be a global co-ordinator and co-manage a hybrid issue in two
tranches of respectively EUR 1 billion and GBP 400 million. During February
2013, SG CIB was voted "Best Arranger of Project Finance Loans" by Euroweek.
Finally, its position in the debt and equity capital markets has improved
since SG CIB is ranked No. 2 in Euro bond issuance, No. 2 in Euro bond
issuance for both financial institutions and sovereigns and No. 1 in equity
and equity linked issuance in France (Thomson Reuters - IFR, rankings as of
Legacy assets had little impact on net banking income during the quarter (EUR
-10 million in Q1 13 vs. EUR -57 million in Q1 12).
Operating expenses were down -4.0%* year-on-year, providing further evidence
of the effect of the restructuring and cost adjustment plans initiated at
end-2011 and taking the decline to -12% vs.
Q1 11. The cost to income ratio amounted to 61.0% for the quarter, down -4
points vs. Q1 12.
The cost of risk of Corporate and Investment Banking's core activities
remained low in Q1 13
(20 basis points vs. 44 basis points in Q4 12) demonstrating the quality of
its portfolio. Legacy assets' net cost of risk remained contained over the
period at EUR -35 million vs. EUR -115 million in Q1 12.
Corporate and Investment Banking's contribution to Group net income totalled
EUR 494 million in Q1 13 vs. EUR 351 million in Q1 12, up +40.7%. When
restated for the CVA/DVA impact in Q1 13 and excluding the net discount on
loans sold in Q1 12, the contribution was up +6.7% year-on-year.
7.PRIVATE BANKING, GLOBAL INVESTMENT MANAGEMENT AND services
In EUR m Q1 12 Q1 13 Change
Q1 vs. Q1
Net banking income 553 457 -17.4%
On a like-for-like basis* -3.0%
Operating expenses (484) (397) -18.0%
On a like-for-like basis* -2.0%
Operating income 61 62 +1.6%
On a like-for-like basis* +6.8%
Group net income 81 73 -9.9%
o.w. Private Banking 36 43 +19.4%
o.w. Asset Management 37 26 -29.7%
o.w. SG SS & Brokers 8 4 -50.0%
Private Banking, Global Investment Management and Services consists of four
(i) Private Banking (Societe Generale Private Banking)
(ii) Asset Management (Amundi and TCW^(1))
(iii) Societe Generale Securities Services (SGSS)
(iv) Brokers (Newedge).
In Q1 2013, Private Banking, Global Investment Management and Services
finalised the disposal of TCW, recorded positive signs on the commercial front
and made a contribution to Group net income of EUR 73 million, which was
higher than in Q4 12 but lower (-8.8%*) than in Q1 12.
At EUR 457 million, revenues were -3.0%* lower. Operating expenses fell -2.0%*
to EUR 397 million. They continued to benefit from operating efficiency
efforts implemented. At EUR 60 million, gross operating income was -9.0%*
lower than in Q1 12.
Private Banking provided further evidence of the recovery in its activity.
Assets under management totalled EUR 87.9 billion at end-March 2013, up +2.2%
vs. December 2012. This includes an inflow of EUR +0.3 billion, a "market"
effect of EUR +3.7 billion and a "currency" impact of EUR -2.2 billion.
Benefiting primarily from clients' improved perception of the macroeconomic
environment, the business line's revenues continued to recover and wereup
+4.6%* at EUR 206 million vs. Q1 12, particularly commissions and the
commercial interest margin. The business line's gross margin amounted to 95
basis points, which was 2 basis points higher than in Q4 12. At EUR 155
million, operating expenses were up +7.6%* vs. Q1 12.
Gross operating income totalled EUR 51 million (vs. EUR 52 million in Q1 12).
There was a recovery in the business line's contribution to Group net income
(EUR 43 million vs. EUR 36 million in Q1 12).
The business line again received the award for "Best Wealth Planning Team at a
European based private bank" (WealthBriefing awards 2013, May 2nd, 2013).
Societe Generale Securities Services (SGSS) and Brokers (Newedge)
Securities Services experienced a healthy commercial momentum in Q1 13, with
an increase both in assets under custody and assets under administration of
respectively +4% and +12% vs. Q1 12 to EUR 3,493 billion and EUR 479 billion
at end-March 2013.
The business line was ranked No. 1 in Russia, the Czech Republic, Croatia and
Poland by the magazine Global Investor/ISF in its 2013 Sub-Custody Survey.
Newedge maintained a high market share of 11.8% in Q1 13, against the backdrop
of a slight pick-up in overall market volume.
Securities Services' revenues were slightly lower in Q1 13 (-1.3%* vs. Q1 12),
while those of Newedge, where a realignment plan is under way, declined
significantly. The business line posted revenues of EUR 243 million. Operating
expenses fell by respectively -4.1%* and -10.7%*, representing a total of EUR
234 million vs. EUR 252 million in Q1 12, due to ongoing operating efficiency
measures. Gross operating income came to EUR 9 million (vs. EUR 16 million in
Q1 12) and the business line's contribution to Group net income amounted to
EUR 4 million vs. EUR 8 million in Q1 12, due to the decline in Newedge's
The disposal of TCW was finalised during Q1 13. Asset Management generated
neutral gross operating income consisting primarily of revenues and costs
associated with employee savings activities.
Amundi's contribution came to EUR 26 million in Q1 13, vs. EUR 37 million in
In EUR m Q1 12 Q1 13 Change
Q1 vs. Q1
Net banking income (230) (1,287) NM
On a like-for-like basis* NM
Operating expenses (69) (59) -14.5%
On a like-for-like basis* -14.5%
Gross operating income (299) (1,346) NM
On a like-for-like basis* NM
Net cost of risk (22) (126) x5.7
Operating income (321) (1,472) NM
On a like-for-like basis* NM
Group net income (234) (730) NM
The Corporate Centre includes:
- the Group's property portfolio, offices and other premises
- the banking and industrial equity portfolio
- the Treasury function for the Group, certain costs related to
cross-functional projects and certain costs incurred by the Group and not
The Corporate Centre's net banking income includes notably the revaluation of
the Group's own financial liabilities amounting to EUR -1,045 million in Q1
13 (EUR -181 million in Q1 12).
Q1 operating expenses amounted to EUR -59 million vs. EUR -69 million in 2012.
The net cost of risk, which includes an additional provision allocation for
litigation issues amounting to EUR -100 million, came to EUR -126 million vs.
EUR -22 million in 2012.
Lastly, in Q1 13, the Corporate Centre also incurred the gain related to the
disposal of NSGB, which amounted to EUR +417 million before tax and EUR +377
million after tax.
The net result for the Corporate Centre was a loss of EUR -730 million in Q1
13, vs. EUR -234 million in Q1 12. When restated for non-economic and
non-recurring items**, the Corporate Centre's contribution to Group net income
was EUR -343 million in Q1 13.
With Group net income of EUR 852 million** in Q1 2013, Societe Generale has
once again demonstrated its ability to adapt. Its businesses can count on
strong commercial positions in all their markets, a sound client portfolio and
rigorous risk control to underpin solid recurring revenues. In order to
further improve its medium-term profitability, the Group has embarked on the
second phase of its transformation plan (since 2012), with a savings plan
aimed at generating EUR 1,450 million of cost savings over the period
2012-2015. This it expects to achieve through the simplification of
organisational structures, the optimisation of operating expenses and the
exploitation of synergies between the divisions. With a solid, balanced
balance sheet, and already complying with "Basel 3" requirements, Societe
Generale has demonstrated its ability to achieve its Basel 3 Core Tier 1
capital target of close to 9.5% at end-2013, while at the same time deploying
its benchmark Relationship Banking model in order to serve its customers.
The Group's transformation should enable it to achieve a ROE of 10% at
end-2015, helped by businesses adapted to the new economic and regulatory
2013 financial communication calendar
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)
Q1 12 Q1 13 Change
Q1 vs. Q1
Net banking income 6,311 5,088 -19.4% -16.7%*
Operating expenses (4,333) (4,067) -6.1% -2.5%*
Gross operating income 1,978 1,021 -48.4% -47.8%*
Net cost of risk (902) (927) +2.8% +17.5%*
Operating income 1,076 94 -91.3% -94.7%*
Net profits or losses from other assets 15 448 x29.9
Net income from companies accounted for by the 47 39 -17.0%
Impairment losses on goodwill 0 0 NM
Income tax (299) (119) -60.2%
Net income 839 462 -44.9%
O.w. non controlling interests 107 98 -8.4%
Group net income 732 364 -50.3% -56.3%*
Group ROTE (after tax) 7.9% 3.2%
Tier 1 ratio at end of period 11.1% 12.4%
* When adjusted for changes in Group structure and at constant exchange rates
NET INCOME AFTER TAX BY CORE BUSINESS
(in EUR millions)
Q1 12 Q1 13 Change
Q1 vs. Q1
French Networks 326 256 -21.5%
International Retail Banking 45 79 +75.6%
Corporate & Investment Banking 351 494 +40.7%
Specialised Financial Services & Insurance 163 192 +17.8%
Private Banking, Global Investment Management and 81 73 -9.9%
o.w. Private Banking 36 43 +19.4%
o.w. Asset Management 37 26 -29.7%
o.w. SG SS & Brokers 8 4 -50.0%
CORE BUSINESSES 966 1,094 +13.3%
Corporate Centre (234) (730) NM
GROUP 732 364 -50.3%
CONSOLIDated balance sheet
Assets (in billions of euros) March 31, 2013 December 31, % change
Cash, due from central banks 53.2 67.6 -21%
Financial assets measured at fair value 479.3 484.0 -1%
through profit and loss
Hedging derivatives 14.9 15.9 -6%
Available-for-sale financial assets 128.9 127.7 +1%
Due from banks 101.6 77.2 +32%
Customer loans 349.6 350.2 0%
Lease financing and similar agreements 28.4 28.7 -1%
Revaluation differences on portfolios 4.1 4.4 -7%
hedged against interest rate risk
Held-to-maturity financial assets 1.1 1.2 -7%
Tax assets and other assets 60.5 59.7 +1%
Non-current assets held for sale 0.0 9.4 -100%
Deferred profit-sharing 0.0 0.0 NM
Tangible, intangible fixed assets and 24.7 24.7 0%
Total 1,246.3 1,250.7 0%
Liabilities (in billions of euros) March 31, 2013 December 31, 2012 % change
Due to central banks 2.9 2.4 +20%
Financial liabilities measured at 411.5 411.4
fair value through profit and loss 0%
Hedging derivatives 12.9 14.0 -8%
Due to banks 120.3 122.0 -1%
Customer deposits 336.4 337.2 0%
Securitised debt payables 136.0 135.7 0%
Revaluation differences on
portfolios hedged against interest 6.0 6.5
rate risk -8%
Tax liabilities and other 62.5 59.4
Non-current liabilities held for 0.0 7.3
Underwriting reserves of insurance 93.3 90.8
Provisions 3.6 2.8 +29%
Subordinated debt 7.0 7.1 -1%
Shareholders' equity 49.9 49.8 0%
Non controlling Interests 4.0 4.3 -6%
Total 1,246.3 1,250.7 0%
APPENDIX 2: méthodologY
1- The Group's consolidated results as at March 31st, 2013 were examined by
the Board of Directors on May 6th, 2013.
The financial information presented for Q1 2013 has been prepared in
accordance with IFRS as adopted in the European Union and applicable at that
date. This financial information does not constitute a set of financial
statements for an interim period as defined by IAS 34 "Interim Financial
Reporting" and has not been audited. Societe Generale's management intends to
publish summarised interim consolidated financial statements for the six-month
period ended June 30th, 2013.
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 79 million at end-March 2013).
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 65 million in respect of Q1 13),
(ii) undated subordinated notes recognised as shareholders' equity
(EUR 14 million in respect of Q1 13).
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 March 31st, 2013,
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) and 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).
7- Funded balance sheet, loan/deposit ratio, liquidity reserve
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 has been restated 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 3.9
billion in Q1 13); b) a line by line restatement, in the funded balance sheet,
of the assets and liabilities of 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 toIAS 39; d) the reintegration within "long-term assets" of the
operating lease fixed assets of specialised financing companies, previously
classified under "customer loans".
The Group's loan/deposit ratio is calculated as the ratio between customer
loans and customer deposits defined accordingly.
The liquid asset buffer or liquidity reserve amounted to EUR 135 billion at
the end of Q1 13. It consisted of EUR 64 billion of central bank net deposits
and EUR 71 billion of central bank eligible assets (available, net of
discount), made up primarily of so-called"HQLA"assets (High Quality Liquid
Assets) eligible for the liquidity coverage ratio (LCR). All in all, these
assets represented 108% of short-term outstandings (unsecured short-term debt
and interbank liabilities). At March 31st,^2012, the total liquid asset buffer
was EUR 104 billion (EUR 133 billion at December 31st, 2012), representing EUR
35 billion of central bank deposits (EUR 65 billion at December 31st, 2012)
and EUR 69 billion of eligible assets, net of discount (EUR 68 billion at
December 31st, 2012). All in all, these assets represented 89% of short-term
outstandings (and 101% at December 31st, 2012).
The Group also possessed EUR 25 billion of rapidly tradable assets (vs. EUR 14
billion at March 31st, 2012, and EUR 25 billion at December 31st, 2012).
8- Non-economic and non-recurring items and legacy assets
Non-economic items correspond to the revaluation of own financial liabilities.
Details of these items, and other items that are restated, are given below for
Q1 12 and Q1 13.
Q1 13 Net Operating Others Cost Group net income
banking expenses of
Legacy assets (10) (18) (35) (45) Corporate &
Revaluation of own (1,045) (685) Corporate
Capital gain on NSGB 417 377 Corporate
Adjustment on TCW 24 21 Corporate
Accounting impact of (64) (45) Corporate &
CVA / DVA Investment
Accounting impact of (14) (9) French
CVA / DVA networks
Accounting impact of (2) (2) International
CVA / DVA retail banking
Provision for (100) (100) Corporate
TOTAL (1,135) (488) Group
Q1 12 Net Operating Others Cost Group
banking expenses of net
income risk income
Legacy assets (57) (14) (115) (128) Corporate &
SG CIB core (226) (156) Corporate &
Revaluation of own (181) (119) Corporate
CDS MtM (32) (22) Corporate
Greek sovereign (22) (16) Corporate
TOTAL (496) (441) Group
All the information on the results for the financial year (notably: press
release, downloadable data, presentation slides and appendices) is available
on Societe Generale's website www.societegenerale.com in the "Investor"
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.
More than 154,000 employees, based in 76 countries, accompany 32 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,
Russia, the Mediterranean Basin, Sub-Saharan Africa, Asia and French
*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
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) Annualised, excluding litigation issues and legacy assets, in respect of
assets at the beginning of the period
(2) Calculated according to EBA Basel 2.5 standards (Basel 2 standards
incorporating CRD3 requirements)
(1) Changes calculated in absolute terms by incorporating, in 2012 operating
expenses, 25% of the systemic tax invoiced to the businesses at end-2012 and,
in Corporate and Investment Banking revenues, loan portfolio disposal costs
amounting to EUR -226 million in Q1 12 .
(^2) Annualised, excluding litigation issues, legacy and Greek sovereign
assets, in respect of assets at the beginning of the period.
(1) Impact on total Group net income of EUR -488m, of which legacy assets EUR
-45m; revaluation of own financial liabilities EUR -685m; disposals EUR +398m;
IFRS 13 EUR -56m; provisions for litigation issues: EUR -100m.
(^2) The interest, net of tax effect, payable to holders of deeply
subordinated notes and undated subordinated notes at end-March 2013 amounts to
respectively EUR 65 million and EUR 14 million for Q1 13.
(1) This figure includes notably (i) EUR 5.3 billion of deeply subordinated
notes and (ii) EUR 0.5 billion of undated subordinated notes .
(^2) Funded balance sheet/Group loan to deposit ratio/liquidity reserves: see
(1) The Group sold its Egyptian subsidiary NSGB to QNB on March 26th, 2013.
NSGB's results are included in those of International Retail Banking (two
months of results in 2013), outstandings have been reclassified for accounting
purposes under "assets held for sale" since end-2012. NSGB's disposal proceeds
are recorded in the Corporate Centre's results.
(^2) At end-2012, the entities BelRosbank (Byelorussia) and AVD, Rosbank's
debt recovery subsidiary, were sold as part of the Group's refocusing.
(1) SG Russia's result: contribution of Rosbank, Delta Credit Bank, Rusfinance
Bank, Societe Generale Insurance, ALD automotive and their consolidated
subsidiaries to the businesses' results
1.At constant structure
(1) At constant structure
(1) At constant structure
(1) The disposal of TCW, announced in Q3 12, was finalised in Q1 13
Societe Generale_ PR Q1 2013
This announcement is distributed by Thomson Reuters on behalf of Thomson
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(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
information contained therein.
Source: SOCIETE GENERALE via Thomson Reuters ONE
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