10/06/2004 SOCIETE GENERALE. Updating capital structures to minimise cost. Frédéric Oudea, CFO

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1 10/06/2004 SOCIETE GENERALE Updating capital structures to minimise cost Frédéric Oudea, CFO

2 2 Disclaimer This presentation may contain forward-looking statements with respect to our objectives and strategies. By their nature, these forward-looking statements involve numerous assumptions, uncertainties and opportunities, both general and specific. The risk exists that these statements may not be fulfilled. We caution readers of this presentation entation not to place undue reliance on these forward-looking statements as a number of factors could cause future Group results to differ materially from these targets. Forward-looking statements may be influenced in particular by factors such as fluctuations in interest rates, exchange rates and stock indices, the effects of competition in the areas in which we operate, and changes in economic, political, regulatory and technological conditions. We caution that the foregoing list is not exhaustive. When relying on forward-looking statements to make decisions, investors should carefully consider the aforementioned factors as well as other uncertainties es and events.

3 3 Leading positions in each core business Retail Banking & Financial Services: 15 million customers (x2 in 5 years) Leading non-mutual retail banking group in France, with 8.3 million individual customers at end Over 5 million customers served by 31 entities in Retail Banking outside France No.1 in Europe in vendor finance and equipment finance (7.2% market share) No.1 in Europe in multi-brand IT asset leasing and management (12% market share) No. 2 in Europe in operational vehicle leasing and fleet management (7.1% market share) Global Investment Management 4th largest euro-zone bank in asset management with over EUR 300bn under management at end-march 2004 (x2 in 5 years) Private Banking: platform bolstered in Europe and Asia Corporate & Investment Banking (NBI x1.5 in 5 years) Among the most profitable platforms in Europe Ranked in the Top 10 in the Euro capital and derivatives markets

4 4 Extracting more income per Cooke Weighted Assets Over the last 13 years: Net Banking Income: + 9% p.a. Risk Weighted Assets: + 5% p.a. 9% 8% 7% 6% Operating profit generation capacity, in % of Risk Weighted assets NBI/RWA Gross operating income/risk Weighted Assets: +70% Weighted average cost of risk: 59 bp 5% 4% 3% GOI/RWA 2% 1% Operating income / RWA Cost of risk 0% HIGHER OPERATING PROFIT GENERATION CAPACITY ACROSS THE CYCLE

5 Reshaped business mix Strong cash-flow generation Capital allocated to businesses * Selective usage of capital in CIB Corporate & Investment Banking Rise in capital allocated to Retail Banking and Investment Management: Internal growth in French and international retail banking Acquisitions: EUR 4.2bn in in Retail Banking outside France, Global Investment Management and Financial Services Global Investment Management Financial Services Retail Banking outside France French Networks * In EUR bn, on the basis of 6% of RWA + non-amortised goodwill, excl. minority interests. 10 / 06 /

6 Selective usage of balance sheet in CIB : NBI: +47% Risk Weighted Assets: -24% CIB Risk Weighted Assets (1) in EUR bn ROE after tax nm 15.5% 28.6% 17.5% 14.2% 30.1% 36.3% 2002-Q1 2004: stability of Risk Weighted assets Product focus: Euro capital markets, Derivatives, Structured Finance Geographical focus: Europe (58% of NBI in Europe for Q1-04, 25% US, 16% Asia) Dynamic credit risk management and pro-active portfolio management Commercial Banking Debt finance (incl. Structured Finance) Equity & Advisory % p.a ,3% Q Change over full period -7% p.a -14% p.a -3% p.a +1% p.a (1) Yearly averages for 1998 to / 06 /

7 7 Controlled market risk Société Générale s philosophy: 2/3 rds of revenues generated with clients Take residual market risks to support fee-based activities Daily controls and analyses of residual market risks Analyses of VaR and Stress results show: Residual market risks are welldiversified Franchise is safe from market stresses Value at Risk evolution over 5 years Quarterly average of 1-day, 1 99% Trading VaR (in EUR m) Q1-99 Q2-99 Q3-99 Q4-99 Q1-00 Q2-00 Q3-00 Q4-00 Q1-01 Q2-01 Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Q2-03 Q3-03 Q4-03 Q Trading VaR Fixed Income Equity Forex Commodities Netting Effect

8 Shift in geographical mix More efficient use and allocation of economic capital Reduced volatility of earnings Greater diversification of portfolio and smaller concentration of risk Increased focus on core clients We have achieved our capital reduction target and improved our financial ratios: without damaging our commercial profitability whilst freeing up additional capital for businesses or clients offering good return on capital Shift in geographical mix of assets , in percentage points of assets +8 pts +5 pts Cent. & East French Europe retail: + Medit & Afr. individuals +2 pts Western Europe ex- France +0 pt French retail, businesses (1) +0 pt CIBD France CIBD, Asia, Japan, Australia -6 pts (1) In decreasing order: SMEs, self-employed professionals, local authorities, corporates, Non Profit Organisations CIBD North America -9 pts 10 / 06 /

9 9 Sound geographic diversification in Retail Banking outside France Over 5 million customers (individuals and businesses) spread across 31 entities 67% of revenues realised in EU and pre-eu countries (63% of outstanding loans) Revenue mix by geographic region Q1 04 net banking income = EUR 418m Mediterranean Basin Africa 19% Other excl. EU 12% Other EU 2% 2% 10% French overseas departments & territories 39% Romania, Bulgaria 16% EU and pre-eu countries Czech Republic, Slovenia

10 10 Steady and selective growth in Cooke Weighted Assets : Strong restructuring of SG CIB Significant amount related to acquisitions Evolution of Cooke Weighted Assets 183 Organic CIB Acquisitions Currency effect : Strong organic growth despite a relatively depressed economic environment worldwide Regular flow of selective acquisitions Negative currency impact 162 Organic ex-cib Organic CIB Acquisitions Currency effect Organic ex-cib Dec-98 Dec-01 Dec-03

11 11 Capital generation and usage Since end-98: Net profit before goodwill: EUR 11.6bn Organic growth: EUR 1bn* while SG CIB had a RWAs constraint Increase in Tier-1 capital ratio (from 6.3% end-98 to 8.7% end-03) Share buybacks Dec-98 to Dec-03 in EUR bn Hybrid capital 1.3 Others Capital increase EUR 3.9bn* absorbed by external growth Dividends 4.2 Pay-out ratio raised to 41% in 2003 (31% in 2000) 11.6 Group net income before goodwill amortization Share buyback External growth* 3.9 Capital increase for ESOP Organic growth ex-cib* 1.7 * Calculation using Tier-1 ratio of 7.5% Organic growth CIB* -0.7 Use of funds Available funds

12 12 Capital structure Sound capital ratios (as end of March-04) Tier 1 EUR 17.4bn Ratio: 8.6% Of which core tier 1: 6.6% (1) Total risk-based capital (2) EUR 24.5bn Ratio: 12.1% Long term Ratings Moody s: Aa3 (since 1997) (positive outlook) S&P: AA- (since 1995) (stable outlook) Fitch: AA- (since May 2003) (stable outlook) 12.5% 10.0% 7.5% 5.0% 2.5% 10.8% 6.3% 4.5% 0.4% 0.4% 5.5% Capital base structure over % 7.6% 4.3% 0.7% 0.5% 6.4% 12.5% 8.9% 3.6% 0.9% 0.8% 7.2% 11.5% 8.4% 3.1% 11.1% 8.1% 3.0% 1.0% 1.0% 1.0% 0.9% 11.7% 8.7% 3.0% 1.0% 1.1% 6.3% 6.2% 6.6% Solvency ratio Tier 1 ratio Tier 2 minus deductions Hybrid capital Minority interest "Core" Tier 1 Tier 1 (1) Core Tier-1: Tier-1 excl. Hybrid capital and minority interests (2) Tier-1 + Tier-2 + other deductions

13 13 Significant competitive advantages to fuel sustainable profitable growth Proven capacity to deliver profitable growth over the business cycle Through organic growth: customer acquisition and business development plans that have produced average annual revenue growth of 4.4% since 1999 in the Group s historical businesses Through successful acquisitions: EUR 4.2bn invested since 1998 in target businesses, with significant contribution to development: Solid fundamentals A well-balanced and robust business mix: 2/3 of capital allocated to Retail Banking & Financial Services and Global Investment Management, 1/3 to profitable and robust Corporate & Investment Banking platform Strong operating cash flow to finance organic growth, external growth and dividend (pay-out ratio raised from 31% in 2000 to 41% in 2003) Growth drivers in all businesses Revenue growth potential with 1.3 million new customers attracted in France and 4 million in international retail banking network over past 5 years Expected growth in European specialised business finance market Promising positions built up in Global Investment Management in Asia Development capacity of the 3 core-competency businesses in Corporate & Investment Banking

14 10/06/2004 Investor Relations Didier VALET, Valérie BOMPARD, Sayuri AOKI, Julien VANNIER Tel: +33 (0) Internet: