SOCIETE GENERALE SOCIETE GENERALE PREMIUM REVIEW Frédéric Oudéa, Chairman & CEO 5 DECEMBER 2013
DISCLAIMER 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 (International Financial Reporting Standards) 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 consequences; - to evaluate precisely the extent to which the occurrence of a risk or a combination of risks could cause actual results to differ materially from those provided in this presentation. 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. The Group s condensed consolidated accounts at 30 September 2013 thus prepared were examined by the Board of Directors on 6 November 2013. The financial information presented for the nine-month period ending 30th September 2013 has been prepared in accordance with IFRS as adopted in the European Union and applicable at this date. This financial information does not constitute a set of financial statements for an interim period as defined by IAS 34 "Interim Financial Reporting". Societe Generale s management intends to publish complete consolidated financial statements for the 2013 financial year. SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.2
INTRODUCTION GROUP BUSINESSES RESULTS CONCLUSION APPENDICES
SOCIETE GENERALE GROUP STRONG GROUP PERFORMANCE Reported Group net income EUR 1,853m in 9M 13 Solid business performance Underlying * Group net income EUR 2,934m in 9M 13 Underlying * ROE: 8.6% in 9M 13 Simplified organisation leveraging on business synergies Second phase of Group transformation Ongoing further business refocusing Exclusive negotiations to acquire full ownership of Newedge Progress on cost containment programme: cumulated savings EUR 260m end-september Balance sheet fully CRD 4 compliant Basel 3 CT1 ratio at 9.9%** LCR >100%, under current assumptions Leverage ratio** at 3.3% * Excluding legacy assets, non-economic and non-recurring items: details in appendix on p. 22 ** Proforma based on our understanding of CRR/CRD4 rules as published on 26 th June, including Danish compromise for insurance. SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.4
INTRODUCTION GROUP BUSINESSES RESULTS CONCLUSION APPENDICES
SOCIETE GENERALE GROUP A SIMPLIFIED GROUP STRUCTURE, FOCUSED ON OUR CLIENTS ACROSS GEOGRAPHIES FRENCH NETWORKS INTERNATIONAL BANKING AND FINANCIAL SERVICES GLOBAL BANKING AND INVESTOR SOLUTIONS LEADER IN INTERNET BANKING IN FRANCE 3,176 BRANCHES 11 MILLION CLIENTS 40,000 EMPLOYEES EUR 180bn CREDIT OUTSTANDINGS INTERNATIONAL RETAIL BANKING SPECIALISED FINANCIAL SERVICES AND INSURANCE JOINT PRESENCE Facts and figures (at end-2012) LEADERSHIP POSITIONS IN SPECIALISED FINANCING AND KEY EMERGING MARKETS PRESENT IN 65 COUNTRIES 25 MILLION CLIENTS 85,000 EMPLOYEES EUR 119bn CREDIT OUTSTANDINGS GLOBAL PRESENCE AND LEADERSHIP POSITIONS 20,000 EMPLOYEES EUR 193bn ASSETS UNDER MANAGEMENT (1) EUR 3,449bn ASSETS UNDER CUSTODY EUR 99bn CREDIT OUTSTANDINGS (1) Lyxor and Private Banking SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.6
SOCIETE GENERALE GROUP A UNIVERSAL BANKING MODEL IN TRANSFORMATION, DELIVERING SOLID REVENUES A balanced business model, both in terms of allocated capital and income Basel 3 capital (1) allocated to businesses (end-june 2013, in EUR bn) O/w FINANCING & ADVISORY, PRIVATE BANKING, GLOBAL INVESTMENT MANAGEMENT AND SERVICES Three client-focused pillars linked through business synergies and pooling of resources GLOBAL BANKING AND INVESTOR SOLUTIONS 13.0 8.4 FRENCH NETWORKS Resilient revenues from businesses throughout the crisis, despite significant deleveraging actions Transforming the operating model within a leaner and more efficient organisation Strict monitoring of costs Gross operating income from businesses up +6.4% vs. 9M 12, and stable vs. 9M 11 O/w GLOBAL MARKETS Gross operating income from businesses (in EUR bn) 9.8 7.0 6.6 7.0 2.1 1.7 2.2 2.7 2.7 2.6 INTERNATIONAL BANKING AND FINANCIAL SERVICES GLOBAL BANKING AND INVESTOR SOLUTIONS INTERNATIONAL BANKING AND FINANCIAL SERVICES (1) Basel 3, fully loaded proforma based on our understanding of CRR/CRD4 rules as published on 26 th June, including Danish compromise for insurance. RWA charged at 9%. 2.2 2.2 2.2 9M 11 9M 12 9M 13 FRENCH NETWORKS SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.7
NEW PILLAR: INTERNATIONAL BANKING AND FINANCIAL SERVICES DELIVER GROWTH AND SYNERGIES Universal Bank: capture growth potential in each market within a balanced model Between Corporate and Retail client portfolios Between mature and emerging markets MATURE MARKETS Allocated capital (1) (Basel 3) Specialised Businesses dedicated to corporate clients: strong franchises with leading positions ALD Automotive: maintain profitable growth Equipment Finance: leverage on recognised positions Insurance: expand the bankinsurance model Create more value from our franchises and increase synergies within the Group Exploit similar customer bases and optimise distribution of an enlarged range of products Reduce costs by mutualising support functions CAR RENTING AND FLEET MANAGEMENT INSURANCE EQUIPMENT FINANCE AFRICA & OTHER CONSUMER FINANCE WESTERN EUROPE RUSSIA CZECH REPUBLIC ROMANIA EMERGING MARKETS OTHER EASTERN EUROPE (1) Figures are at end-june 2013, Basel 3 fully loaded proforma based on our understanding of CRR/CRD4 rules as published on 26 th June, including Danish compromise for insurance. RWA charged at 9%. SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.8
NEW PILLAR: GLOBAL BANKING AND INVESTOR SOLUTIONS PROMOTING NEW SYNERGIES AND GAINING ADDITIONAL MARKET SHARE Bringing together Corporate and Investment Banking, Private Banking, Asset Management, Investor Services Client-centric approach, low risk profile, resilient profitability Supporting the economy through direct lending and through providing market access for issuers Offering comprehensive wealth management solutions Net banking income (EUR 6.6bn in 9M 13) PRIVATE BANKING AND ASSET MANAGEMENT Focused business mix Leading franchises in Structured finance, Equity derivatives, and Euro credit and rates SECURITIES SERVICES AND BROKERAGE 11% 10% 28% FIXED INCOME, CURRENCIES, COMMODITIES Strong footprint with European clients: potential to increase wallet share Opportunities to foster cross-selling and cost synergies Acquisition of Newedge underpinned by strong industrial rationale FINANCING AND ADVISORY 20% 31% EQUITIES Regulatory push towards central clearing and futurisation of OTC products Provide an integrated client offering from execution to post trade services SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.9
SOCIETE GENERALE GROUP COST REDUCTION PROGRAMME ON TRACK Stabilise 2015 cost base at 2012 level by delivering EUR 900m of recurring cost savings by 2015 900 EUR 260m already secured in 9M 13 EUR 600m transformation costs, spread over three years EUR 170m booked in 9M 13 325 600 60 2015 Examples of achievements: Transfer of GBIS listed products back office to Accenture platform completed on October 14 275 190 2014 2013 Head office optimisation plan almost completed Migration of Crédit du Nord to the cards management platform of Societe Generale completed in October 300 260 350 170 Optimisation of IT suppliers costs underway TARGET SECURED 9M 13 TARGET BOOKED 9M 13 RECURRING COST SAVINGS (in EUR m) ONE OFF TRANSFORMATION COSTS (in EUR m) SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.10
SOCIETE GENERALE GROUP STRONG CAPITAL RATIOS AND ENHANCED GROUP FUNDING STRUCTURE Fully loaded Basel 3 Core Tier 1 ratio: 9.9% (1) at end-september well above regulatory minimum CRD4 Leverage ratio (1) : 3.3% at end- September Basel 3 Core Tier 1 ratio as of September 2013 9.9% 8.0% 1.0% 2.5% G-SII BUFFER CAPITAL CONSERVATION BUFFER On-going optimisation of Group funding structure Loan to deposit ratio: 110%, down -9 pts vs. 9M 12 thanks to dynamic deposit growth EUR 26.6bn of LT funding raised year to date (2) SOCIETE GENERALE 4.5% REGULATORY MINIMUM Loan to deposit ratio MINIMUM CT1 RATIO LCR >100% under current assumptions 119% 118% 117% 111% 110% (1) Fully loaded proforma based on our understanding of CRR/CRD4 rules as published on 26 th June, including Danish compromise for insurance. (2) As of 25/11/2013 SEPT. 12 DEC. 12 MAR. 13 JUNE 13 SEPT. 13 SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.11
SOCIETE GENERALE GROUP IMPROVED RISK PROFILE Strict loan origination standards and strong discipline on credit quality Cost of risk under control and doubtful loan coverage ratio at 79% (2) Strong decrease in market risk since 2007 Refocused trading activities and reduced risk appetite Liquidity of positions: an important criteria for risk limits calibration Proactive legacy asset deleveraging Non investment grade assets down to EUR 1bn at end-september 13 110 68 Group commercial cost of risk (1) and doubtful loans coverage ratio (2) Q4 09 Q4 10 Q4 11 Q4 12 Q3 13 Legacy assets: non investment grade assets (Net book value in EUR bn) 79 69 COVERAGE RATIO (in %) COST OF RISK (in bp) (1) Overall provisions / provisionable commitments. Excluding CIB legacy assets, the cost of risk on Greek government bonds and provisions for disputes (2) Customer loans, deposits at banks and loans due from banks and leasing. Excluding legacy assets 8.0 4.9 3.1 1.0 DEC.10 DEC.11 DEC.12 SEPT.13 SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.12
SOCIETE GENERALE GROUP CONSOLIDATED RESULTS Net banking income (1) : EUR 18,274m in 9M 13 Revenues up in all businesses +4.8%* overall vs. 9M 12 Impact of revaluation of own financial liabilities: EUR -1,215m in 9M 13 C/I ratio stable (1) vs. 9M 12 despite transformation costs Group net income (1) : EUR 2,934m in 9M 13, up +4.3% vs. 9M 12 Reported 9M 13 Group net income: EUR 1,853m ROE (1) : 8.6% in 9M 13 Group results (in EUR m) In EUR m 9M 12 9M 13 Change Net banking income 17,980 17,049-5.2% -0.3%* Net banking income (1) 18,976 18,274-3.7% - Operating expenses (12,287) (11,914) -3.0% +1.7%* Gross operating income 5,693 5,135-9.8% -4.7%* Net cost of risk (2,621) (3,007) +14.7% +27.0%* Operating income 3,072 2,128-30.7% -29.8%* Net profits or losses from other assets (488) 441 NM x 49,0* Reported Group net income 1,261 1,853 +46.9% -8.4%* Group net income (1) 2,814 2,934 +4.3% - C/I ratio (1) 64.5% 64.9% * When adjusted for changes in Group structure and at constant exchange rates (1) Excluding impact of legacy assets, non recurring and non economic items: details in appendix on p. 22 SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.13
INTRODUCTION GROUP BUSINESSES RESULTS CONCLUSION APPENDICES
FRENCH NETWORKS ROBUST PERFORMANCE IN A SLOW ECONOMY Good business activity Continued significant growth in individual and corporate deposits (+9.6% vs. Q3 12), weak credit demand from corporates 60 50 Societe Generale Online Access Number of connections per month (millions) 50 L/D ratio at 111% in Q3 13, downward trend 40 39 MOBILE Leader in Internet and Mobile banking in France 30 20 27 Societe Generale: around 1.2 million individual mobile users per month Boursorama: on track to reach end-2013 target of 500,000 customers 10 0 SEPT.11 SEPT.12 SEPT.13 INTERNET Growing revenues: +1.2% (1) vs. 9M 12 French Networks results In EUR m 9M 12 9M 13 Change Resilient Gross operating income: +2.5% (1) vs. 9M 12 Contribution to Group net income: EUR 883m Net banking income 6,093 6,120 +0.4% +1.2% (1) Operating expenses (3,882) (3,901) +0.5% Gross operating income 2,211 2,219 +0.4% +2.5% (1) Net cost of risk (631) (838) +32.8% Operating income 1,580 1,381-12.6% Group net income 1,037 883-14.9% (1) Excluding PEL/CEL SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.15
INTERNATIONAL BANKING AND FINANCIAL SERVICES RESILIENT INTERNATIONAL RETAIL, SOLID PERFORMANCE IN FINANCIAL SERVICES International Retail Banking: profitability impacted by weak economic environment Strong growth in deposits (+9.2%*) and increase in loans to individual customers (+7.9%*) in 9M 13 Europe: 9M 13 net income contribution resilient in the Czech Republic, slightly negative in Romania On going adaptation of SG Russia (1) : EUR 97m contribution to Group net income in 9M 13 Specialised Financial Services and Insurance: record performance ALD Automotive: profitable growth and efficient management of residual values Equipment finance: stable contribution Consumer Finance: upturn confirmed, geographical refocusing close to completion Insurance: continued high contribution to net income Contribution to Group net income: EUR 816m * When adjusted for changes in Group structure and at constant exchange rates (1) Contribution of Rosbank, Delta Credit Bank, Rusfinance Bank, Société Générale Insurance, ALD Automotive, and their consolidated subsidiaries to Group businesses results In EUR m International Retail Banking Outstandings (In EUR bn Change vs. 9M 12 in %* ) +0.8%* -2.2%* -3.7%* +10.2%* +0.7%* -10.1%* +3.2%* 61.6 64.3 8.2 7.9 12.3 8.4 6.7 17.9 LOANS 9M 13 23.8 International Banking and Financial Services 9M 12 9M 13 Change Net banking income 6,310 5,962-5.5% +1.7%* Operating expenses (3,604) (3,357) -6.9% +1.4%* Gross operating income 2,706 2,605-3.7% +2.0%* Net cost of risk (1,524) (1,272) -16.5% -1.5%* Operating income 1,182 1,333 +12.8% +5.8%* Group net income 435 816 +87.6% +63.0%* 8.9 7.8 8.7 7.5 7.6 DEPOSITS 9M 13 +9.2%* +6.7%* +3.0%* +20.0%* +14.7%* +6.7%* +7.8%* SUB.-SAH. AFRICA.FRENCH OVERSEAS, OTHER MED.BASIN RUSSIA OTHER CEE ROMANIA CZECH REPUBLIC SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.16
GLOBAL BANKING AND INVESTORS SOLUTIONS STRONG NET INCOME CONTRIBUTION Corporate and Investment Banking: Solid performance of core businesses Revenues: EUR 5,288m, up +14.7%* vs. 9M 12: strong in Equities, resilient in Fixed Income Currencies & Commodities and in Financing & Advisory Cost income ratio maintained at a low level: 62% in 9M 13 Net income contribution: EUR 1,173m in 9M 13 Basel 3 Core CIB ROE 17% (1) in 9M 13 Private Banking, Global Investment Management and Services Revenues: EUR 1,417m, up +4.8%* vs. 9M 12 Positive Private Banking inflows mostly in France and Asia Group net income contribution: EUR 218m in 9M 13 Contribution to Group net income: EUR 1,391m * When adjusted for changes in Group structure and at constant exchange rate (1) Based on 10% normative capital allocation Core CIB Net banking income (in EUR bn) 5.0 5.2 2.1 1.8 1.7 2.0 1.6 1.3 0.00-0.47 9M 12 9M 13 Global Banking and Investor Solutions In EUR m 9M 12 9M 13 TOTAL FIXED INCOME, CURRENCIES, COMMODITIES Change EQUITIES FINANCING AND ADVISORY NET DISCOUNT ON LOAN SALES Net banking income 6,336 6,705 +5.8% +12.5%* Operating expenses (4,651) (4,506) -3.1% +3.0%* Gross operating income 1,685 2,199 +30.5% +38.4%* Net cost of risk (443) (487) +9.9% +10.9%* Operating income 1,242 1,712 +37.8% +48.9%* Group net income 819 1,391 +69.8% +44.8%* SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.17
INTRODUCTION GROUP BUSINESSES RESULTS CONCLUSION APPENDICES 5 DECEMBER 2013
SOCIETE GENERALE GROUP SECOND PHASE OF GROUP TRANSFORMATION TO DELIVER GROWTH AND PROFITABILITY We have refocused and simplified the Group's organisation around three pillars To generate additional client and operational synergies between businesses To optimise allocation of capital on core markets, initiate new business developments Our businesses are working to meet their specific development and transformation challenges French Networks: continuing to transform this pillar of resilience and to innovate International Banking and Financial Services: realising its growth and profitability potential Global Banking and Investor Solutions: taking advantage of a business model well suited to our client needs and the new regulatory framework We are committed to delivering on our cost reduction programme We will maintain strict discipline with regard to the Group's balance sheet and risk management Our transformation efforts underpin the Group's capacity to reach 10% ROE by end-2015 Rendez-vous on May 13, 2014 for our Investor Day SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.19
INTRODUCTION GROUP BUSINESSES RESULTS CONCLUSION APPENDICES 5 DECEMBER 2013
APPENDIX KEY FIGURES In EUR m 9M 13 Chg vs. 9M 12 Financial results Performance per share Capital generation Scarce resources Net banking income 17,049-5.2% Operating expenses (11,914) -3.0% Net cost of risk (3,007) +14.7% Group net income 1,853 +46.9% ROE 5.2% ROE ** 8.6% ROTE 6.1% ROTE** 10.1% Earnings per share EUR 2.12 Net Tangible Asset value per Share EUR 48.83 Net Asset value per Share EUR 56.73 Core Tier 1 ratio (Basel 2.5) 11.6% Tier 1 ratio (Basel 2.5) 13.5% Core Tier 1 ratio (Basel 3) 9.9% L / D ratio* 110% RWA (Basel 2.5) EUR 310.4bn RWA (Basel 3) EUR 348.5bn * Refer to methodology section of the 3rd quarter and first 9 months 2013 Group results presentation ** Excluding impact of legacy assets, non recurring and non economic items: details in appendix on p. 22 SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.21
APPENDIX LEGACY ASSETS, NON ECONOMIC AND NON RECURRING ITEMS 9M 13 Net banking income Operating expenses Others Cost of risk Group net income Legacy assets 135 (52) (320) (169) Corporate & Investment Banking Revaluation of own financial liabilities (1,215) (797) Corporate Centre Capital gain on NSGB disposal 417 377 Corporate Centre Adjustment on TCW disposal 24 21 Corporate Centre Provision for disputes (400) (400) Corporate Centre Accounting impact of CVA / DVA (178) (126) Corporate & Investment Banking Capital gain on Piraeus stake disposal 33 21 Corporate Centre Impairment & capital losses (8) (8) Corporate Centre TOTAL (1,225) (1,081) Group 9M 12 Net banking income Operating expenses Others Cost of risk Group net income Legacy assets (263) (39) (167) (324) Corporate & Investment Banking SG CIB core deleveraging (469) (324) Corporate & Investment Banking Revaluation of own financial liabilities (569) (373) Corporate Centre Greek sovereign exposure (23) (16) Corporate Centre Buy Back Tier 2 debt 305 195 Corporate Centre Impairment & capital losses (511) (261) Corporate Centre Impairment & capital losses (200) (200) Private Banking, Global Investment Management and Services Impairment & capital losses (250) (250) International retail banking TOTAL (996) (1,553) Group SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.22
APPENDIX CORPORATE CENTRE (1) Corporate Centre results (in EUR m) 9M 12 9M 13 Net banking income (2) (759) (1,738) Operating expenses (150) (150) Gross operating income (909) (1,888) Net cost of risk (23) (410) Net profits or losses from other assets (499) 435 Group net income (1,030) (1,237) (1) The Corporate Centre includes: - the Group s real estate portfolio, office and other premises, - industrial and bank equity portfolios, - Group treasury functions, some of the costs of cross-business projects and certain corporate costs not reinvoiced. (2) Including revaluation of own financial liabilities (EUR-569m in 9M 12 and EUR -1,215m in 9M 13) and buy back of Tier 2 debt (EUR +305m in 9M 12) SOCIETE GENERALE PREMIUM REVIEW 5 DECEMBER 2013 P.23
INVESTOR RELATIONS TEAM HANS VAN BEECK, STÉPHANE DEMON, MARION GENAIS, AURELIA GOMEZ, KIMON KALAMBOUSSIS, MURIEL KHAWAM, LUDOVIC WEITZ +33 (0) 1 42 14 47 72 investor.relations@socgen.com www.investor.socgen.com