Understanding our 2016 Q1 results

Our Group’s solid performance during this first quarter reflects the robustness of our diversified business model. Our net income amounted to EUR 924 million, an increase of 6.5% compared to last year.

We have a balanced business portfolio centred on our core businesses – French Retail Banking, International Retail Banking & Financial Services, Global Banking & Investor Solutions. This business model enables us to generate synergies between our different activities, and thanks to the diversification of our businesses and the regions in which we operate, maintain good results in a low – or even negative – interest rate environment.

Sound result in a sluggish environment

The first few months of the year were marked by the healthy momentum of French Retail Banking and International Retail Banking & Financial Services. These businesses helped offset the decline in market activities which enjoyed a very favourable environment in Q1 2015, whereas conditions at the beginning of 2016 were challenging.

Substantial synergies between our businesses

Our Universal Banking model enables us to offer our customers the whole range of products and services from Retail Banking to Global Banking & Investor Solutions. Today, nearly 30% of our total revenues come from cross selling between our businesses, which represented EUR 7.2 billion at the end of 2015 and illustrates the benefits of our highly integrated business model.

The diversification of our businesses and the regions in which we operate limits the impact of low or even negative interest rates in the eurozone

Societe Generale benefits from a diversified geographical presence and therefore operates in the context of different monetary policies. As a result, 86% of International Retail Banking & Financial Services’ net banking income is generated outside the eurozone. As for Global Banking & Investor Solutions, it is structurally less sensitive to low interest rates. French Retail Banking, which is more impacted by low interest rates, is developing fee-generating activities. These represent more than 40% of its revenues.

During this quarter, we also continued with our efforts to control operating expenses: they were down -0.5%(*) compared to Q1 2015. The decline reflects the success of the cost-cutting plans. Further cost saving measures are going to be implemented in Global Banking & Investor Solutions. Over the period 2012-2017, the Group will have undertaken cost savings plans totalling EUR 2 billion, helping to offset the increase in taxes, and more generally regulatory costs, but also generate the room for manoeuvre to invest in its fast-growing activities.

We are also continuing to rigorously manage our risks: at EUR 524 million in Q1 2016, the net cost of risk reached its lowest level for 8 years.

These sound results enable us to strengthen our capital: we have therefore achieved a core capital ratio (called “CET1”) of 11.1%, a 25 basis point increase this quarter, while maintaining our target of a 50% dividend payout ratio in 2016.

With a sound balance sheet and robust solvency ratios, our Group is confident about its outlook for 2016 and its ability to continue to create value for shareholders. We will continue to invest in our growth drivers, while at the same time rigorously managing our costs and risks.

Once again, I would like to thank you for your loyalty and the trust you have placed in our Group.

Frédéric Oudéa, 
Chief Executive Officer

(*) When adjusted for changes in Group structure and at constant exchange rates, excluding non-recurring items and adjusted for the effects of the IFRIC 21 accounting standard