Understanding our 2015 Q1 results
Frédéric Oudéa's editorial
Societe Generale enjoyed a good first quarter in 2015. Our results testify to our ability to develop a profitable growth model adapted to the needs of our customers and the new regulatory constraints. Our revenues were underpinned by the commercial dynamism of all our businesses. In an environment that remains uncertain, the Group is therefore continuing with the determined and disciplined implementation of its strategic plan.
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Societe Generale enjoyed a good first quarter in 2015. Our results testify to our ability to develop a profitable growth model adapted to the needs of our customers and the new regulatory constraints. Our revenues were underpinned by the commercial dynamism of all our businesses. In an environment that remains uncertain, the Group is therefore continuing with the determined and disciplined implementation of its strategic plan.
The Group generated higher revenues of EUR 6.4 billion during the first quarter. The increase was underpinned by the development of synergies within the Group and the commercial dynamism of all our businesses which were able to capitalise on the initial signs of economic recovery in Europe.
French Retail Banking activities were once again dynamic at the beginning of 2015 in a convalescing economic environment and against a backdrop of very low interest rates. Accordingly, the French retail banking networks opened more than 100,000 accounts during the quarter, while Boursorama now has nearly 650,000 customers in France. Meanwhile home loan and business loan production was substantially higher. Revenues therefore increased 4.3% year-on-year.
International Retail Banking & Financial Services’ revenues rose 2.5% in the first quarter, driven by the good performances in Insurance and Financial Services to Corporates. International Retail Banking’s revenues were underpinned by the good performance in Europe (+2.9%) and in Sub-Saharan Africa (+17.5%) offsetting the decline in Russia. In Africa, where Societe Generale is one of the top three international banks, the Group continues to expand, opening 50 to 70 branches per year and setting up new subsidiaries to support its customers. In Russia, in a market environment under pressure, the Group continued to strengthen its balance sheet through proactive asset/liability management and enjoyed robust capital and liquidity ratios.
Global Banking & Investor Solutions was buoyed by a favourable environment: market easing, increased volatility, rise in the number of stock market listings, etc. Accordingly, revenues rose by nearly 8%. Equity activities, in particular, posted an excellent performance (+32.5%). In Financing & Advisory, the quarter was characterised by the strong commercial dynamism of capital markets activities and natural resources financing.
At the same time, Societe Generale continued to rigorously manage its costs and risks. The first quarter increase in operating expenses remained contained due to continued operating efficiency efforts, excluding the impact of new regulatory and accounting charges. As a result, 86% of the EUR 900 million cost savings plan has already been secured. As for the cost of risk, it continued to decline, with a net cost of risk down 5%.
Group net income totalled EUR 868 million, a fivefold increase compared with Q1 2014 which was impacted notably by the total write-down of the goodwill on our Russian entity.
Societe Generale enjoyed a robust balance sheet in the first quarter, with solvency ratios already in line with or close to the targets set out in its medium-term strategic plan. The Common Equity Tier 1 ratio and Total Capital ratio amounted to respectively 10.1% and 14.7%. The Group continued to generate capital, enabling it to develop its businesses while at the same time maintaining its dividend commitments.
Over the next few months, we will continue to draw on our dynamic teams, the quality of our franchises and our loan portfolios and finally our solid capital position in order to continue to roll out our strategic plan aimed at serving our customers.
I would like to thank you for your loyalty and the trust you have placed in our Group.
Frédéric Oudéa,
Chairman and Chief Executive Officer
Results by business
A good first quarter
French Retail Banking
International Retail Banking & Financial Services
Global Banking & Investor Solutions
Interview with Frédéric Oudéa
Chairman & CEO Frédéric Oudéa commented on the Group’s 2015 Q1 results in an interview he gave to EuroBusinessMedia (CEO-Direct).
Strategy
Societe Generale strengthens its leadership in Africa and accelerates its growth
Our strategy in Africa aims to speed up the Group’s growth on the continent. The development plan draws on the region's strong potential for growth and for banking penetration, and on major commercial and operational synergies between the Group's core businesses.
Innovation
Check out the new Societe Generale app!
It's been completely overhauled for and with customers. The new version of the app is more complete, faster, easier and just as secure as always. Watch the video for a sneak peak of the new version.
- The new Societe Generale app (in french)
Citizenship
Strengthening our commitment to assist young people entering the job market
Societe Generale is combining its civic and patronage commitments to promote the integration of young people through sport and cultural activities.
Glossary
APPLICATION OF THE NEW ACCOUNTING STANDARD AND NEW REGULATORY
TLAC: The TLAC “Total Loss Absorbency Capacity” is a ratio which contents will definitely be known in November 2015 at the latest, once the final rules are released by the Financial Stability Board. It will frame the minimum amount of regulatory capital and eligible debts to the ratio (long term debts mostly including strong subordination features) that each Global Systematically Important Bank will have to hold, thus making possible the exercise of the bail-in powers to recapitalize the firm in case of a possible entry into resolution.
IFRIC 21: Under IFRIC 21, which took effect on 1 January 2015, all taxes due must be recorded once the obligating event has occurred, whereas previously they could be spread out over the entire year.
Single Resolution Fund (SRF): The regulation governing the single resolution system for the euro zone calls for the establishment of a single resolution fund in the amount of 1% of all euro zone covered deposits within 9 years, for an estimated total of EUR55 billion. Societe Generale's contribution was pro-rated for the share of the bank's balance sheet (excluding shareholders' equity and covered deposits) relative to the total for all equivalent euro zone balance sheets.