Societe Generale: First quarter 2021 earnings
RESULTS AT MARCH 31ST
2021 |
|
|
|
|
|
Press releaseParis, May 6th 2021 |
|
SHARP REBOUND IN
EARNINGS
Revenues up +21% vs. Q1 20 at
EUR 6.2bn (+25%*), with a good performance in all
the businesses particularly in Global Markets, Financial Services
and Financing & Advisory
Continued discipline on
costs, with underlying operating expenses down
-2.2%1(1) vs. Q1 20 despite the increase in the contribution to the
Single Resolution Fund and variable charges in conjunction with the
increase in revenues, leading to a very strong positive jaws
effect
Doubling of
underlying gross
operating income vs. Q1 20 to EUR
2.1bn(1)
Underlying Group net income of
EUR
1.3bn(1),
reported Group net income of EUR 814 million
Profitability
(ROTE)
at
10.1%(1)
CONFIRMATION OF THE QUALITY OF
THE BALANCE SHEET AND THE GROUP’S FINANCIAL
SOLIDITY
Low cost of risk at 21 basis
points in Q1 21, with provisions on performing
loans stable at a high level
2021 cost of risk expected
between 30 and 35 basis points
CET 1 ratio level at
13.5%2(2)
at end-March 2021, around 450
basis points above the regulatory requirement
Efficient capital allocation
between businesses
2021 PRIORITIES: SUPPORTING
CUSTOMERS AND EXECUTION OF STRATEGIC INITIATIVES
TOWARDS SUSTAINABLE GROWTH
Objective of supporting our
customers in emerging from the crisis and their
energy and digital transition
Merger of the networks in
France
Expansion of growth
drivers (record client onboarding at Boursorama
and acquisition of the activities of Banco Sabadell by ALD)
Definition of a new
roadmap for Global Banking & Investor
Solutions aimed at delivering sustainable growth
Finalisation of the Group’s
refocusing programme following the announcement
of exclusive discussions being entered into with Amundi with a view
to the disposal of Lyxor’s asset management activities
Frédéric
Oudéa, the Group’s Chief Executive
Officer, commented:
“This excellent start to the year confirms, in
particular, the relevance of the decisions taken in recent quarters
and their successful execution. It is a major milestone for the
Group and enables us to approach 2021 with confidence and
determination, confirming our ability to achieve our financial
targets. In line with 2020, and in a still uncertain environment on
the health and economic front, our teams have maintained their
exceptional commitment to supporting our customers and economies.
From a commercial and financial viewpoint, the sharp rebound in our
revenues, in keeping with the two previous quarters, our continued
cost discipline and good risk management have enabled a very
significant recovery in our earnings and profitability. We have
also provided further confirmation of the quality of our balance
sheet and loan portfolio. Consequently, over the next few quarters,
priority will be given firstly to supporting our customers in
gradually emerging from the crisis, relaunching their activity and
adjusting their business models to digital and CSR challenges and
secondly, to the effective implementation of our growth, innovation
and operational efficiency initiatives which are strong value
creators.”
-
GROUP CONSOLIDATED RESULTS
In EURm |
Q1 21 |
Q1 20 |
Change |
Net banking
income |
6,245 |
5,170 |
+20.8% |
+25.2%* |
Operating expenses |
(4,748) |
(4,678) |
+1.5% |
+3.7%* |
Underlying operating expenses(1) |
(4,097) |
(4,188) |
-2.2% |
+0.2%* |
Gross operating income |
1,497 |
492 |
x 3.0 |
x 3.7* |
Underlying gross operating income(1) |
2,148 |
982 |
x 2.2 |
x 2.4* |
Net cost of
risk |
(276) |
(820) |
-66.3% |
-65.1%* |
Underlying net cost of risk(1) |
(276) |
(820) |
-66.3% |
-65.1%* |
Operating income |
1,221 |
(328) |
n/s |
n/s |
Underlying operating income(1) |
1,872 |
(162) |
x 11.6 |
x 17.5* |
Net profits or losses from other assets |
6 |
80 |
-92.5% |
-92.5%* |
Underlying net profits or losses from other assets(1) |
6 |
157 |
-96.2% |
-96.2%* |
Net income from companies accounted for by the equity
method |
3 |
4 |
-25.0% |
-25.0%* |
Underlying net income from companies accounted for by the equity
method(1) |
3 |
4 |
-25.0% |
-25.0%* |
Impairment losses on
goodwill |
0 |
0 |
n/s |
n/s |
Income tax |
(283) |
46 |
n/s |
n/s |
Reported Group net
income |
814 |
(326) |
n/s |
n/s |
Underlying Group net
income(1) |
1,298 |
98 |
x 13.2 |
x 22.5* |
ROE |
5.2% |
-3.6% |
|
|
ROTE |
5.9% |
-4.2% |
|
|
Underlying
ROTE(1) |
10.1% |
-0.5% |
|
|
(1) Adjusted for exceptional
items and linearisation of IFRIC 21
Societe Generale’s Board of Directors, which met
on May 5th, 2021, under the chairmanship of Lorenzo Bini Smaghi,
examined the Societe Generale Group’s results for Q1 2021.
The various restatements enabling the transition
from underlying data to published data are presented in the
methodology notes (section 10.5).
Net banking
incomeThe Group’s net banking income was up
+20.8% (+25.2%*) in Q1 21 vs. Q1 20, confirming the rebound
observed in H2 2020.
There was a further improvement in French Retail
Banking’s performance in Q1 21 despite the extension of the health
restrictions. Net banking income (excluding PEL/CEL provision) was
therefore lower than in Q1 20 (-2.4%), which had still been little
impacted by the crisis.
International Retail Banking & Financial
Services posted a slight increase in revenues (+0.1%*), driven by
strong growth in the revenues of Financial Services whose net
banking income rose +7.9%*. International Retail Banking delivered
a resilient performance, with revenues down -3.8%* and a mixed
momentum according to the region.
Global Banking & Investor Solutions turned
in an excellent performance, with revenues up +60.4%* vs. Q1
20.
Operating
expensesUnderlying operating expenses totalled
EUR -4,097 million, down -2.2% and stable when adjusted for changes
in Group structure and at constant exchange rates (+0.2%*) vs. Q1
20. The strict discipline observed in all the businesses offset the
increase in the IFRIC 21 charge and variable costs in conjunction
with the growth in revenues.
The Group therefore generated a strong positive
jaws effect, with an underlying cost to income ratio of 66%.
Cost of
riskThe commercial cost of risk stood at a low
level of EUR 276 million, or 21 basis points, significantly lower
than in Q1 20 (65 basis points). It corresponds to an increase in
the provision on non-performing loans of EUR 300 million and a
decline in the provision on performing loans of EUR -24
million.
The Group’s provisions on performing loans
currently amount to EUR 3,578 million. They were EUR 3,622 million
at December 31st 2020, after an increase of +59% during last
year.
As part of the support provided to its customers
during the crisis, the Group granted repayment moratoriums and
State Guaranteed Loans. At March 31st 2021, the total amount of
repayment moratoriums in force represented around EUR 2 billion and
State Guaranteed Loans, around EUR 19 billion. Net exposure to
State Guaranteed Loans in France (“PGE”) is around EUR 2
billion.
The gross doubtful outstandings ratio amounted
to 3.3% at March 31st 2021 (stable vs. December 31st 2020). It was
3% on repayment moratoriums and 3% on State Guaranteed Loans. The
Group’s gross coverage ratio for doubtful outstandings stood at
51%3(2) at March 31st 2021, vs. 52% at December 31st 2020.
The Group anticipates a cost of risk of between
30 and 35 basis points in 2021.
Net profits or losses from other
assets Net profits or losses from other assets
totalled EUR +6 million in Q1 21 vs. EUR +80 million in Q1 20,
including EUR -77 million corresponding to the effect of the
application of IFRS 5 as part of the implementation of the Group’s
refocusing plan and EUR +130 million in respect of the Group’s
property disposal programme.
Group net
income
In EURm |
Q1 21 |
Q1 20 |
Reported Group net income |
814 |
(326) |
Underlying Group net income(1) |
1,298 |
98 |
|
|
|
|
|
|
In % |
Q1 21 |
Q1 20 |
ROTE (reported) |
5.9% |
-4.2% |
Underlying ROTE1 |
10.1% |
-0.5% |
Earnings per share amounts to EUR 0.79 in Q1 21
(vs. EUR -0.57 in Q1 20).Underlying4(3) earnings per share amounts
to EUR 0.83 in Q1 21 (vs. EUR -0.48 in Q1 20).
-
THE GROUP’S FINANCIAL STRUCTURE
Group shareholders’ equity
totalled EUR 62.9 billion at March 31st, 2021 (EUR 61.7 billion at
December 31st, 2020). Net asset value per share was EUR 62.8 and
tangible net asset value per share was EUR 55.2.
The consolidated balance sheet
totalled EUR 1,503 billion at March 31st, 2021 (EUR 1,462 billion
at December 31st, 2020). The net amount of customer loan
outstandings at March 31st, 2021, including lease financing, was
EUR 447 billion (EUR 440 billion at December 31st, 2020) –
excluding assets and securities purchased under resale agreements.
At the same time, customer deposits amounted to EUR 462 billion,
vs. EUR 451 billion at December 31st, 2020 (excluding assets and
securities sold under repurchase agreements).
At April 16th, 2021, the parent company had
issued EUR 18.3 billion of medium/long-term debt, having an average
maturity of 5.8 years and an average spread of 39 basis points (vs.
the 6-month midswap, excluding subordinated debt). The subsidiaries
had issued EUR 1.0 billion. At April 16th, 2021, the Group had
issued a total of EUR 19.3 billion of medium/long-term debt.
Excluding structured issuances, the parent company had achieved 65%
of its annual programme at April 16th, 2021.
The LCR (Liquidity Coverage Ratio) was well
above regulatory requirements at 143% at end-March 2021, vs. 149%
at end-December 2020, and 141% on average in Q1 2021 vs. 144% on
average in Q1 2020. At the same time, the NSFR (Net Stable Funding
Ratio) was over 100% at end-March 2021.
The Group’s phased-in risk-weighted
assets (RWA) amounted to EUR 353.1 billion at March 31st,
2021 (vs. EUR 351.9 billion at end-December 2020) according to
CRR/CRD4 rules. Risk-weighted assets in respect of credit risk
represent 81.8% of the total, at EUR 288.6 billion, up 0.5% vs.
December 31st, 2020.
At March 31st, 2021, the Group’s Common
Equity Tier 1 ratio stood at 13.5%, or average 450 basis
points above the regulatory requirement. The CET1 ratio at March
31st, 2021 includes an effect of +25 basis points for phasing of
the IFRS 9 impact. Excluding this effect, the fully-loaded ratio
amounts to 13.2%. The Tier 1 ratio stood at 15.8% at end-March 2021
(16% at end-December 2020) and the total capital ratio amounted to
19.1% (19.2% at end-December 2020).
The phased-in leverage ratio
stood at 4.5% at March 31st, 2021 (4.8% at end-December 2020).
With a level of 31.0% of RWA and 8.8% of
leveraged exposure at end-March 2021, the Group’s TLAC ratio is
above the FSB’s requirements for 2021. At March 31st, 2021, the
Group was also above its MREL requirements of 8.5% of the TLOF5(1)
(which, in December 2017, represented a level of 24.37% of RWA),
which were used as a reference for the SRB calibration.
The Group is rated by four rating agencies: (i)
Fitch Ratings - long-term rating “A-”, stable rating, senior
preferred debt rating “A”, short-term rating “F1”; (ii) Moody’s –
long-term rating (senior preferred debt) “A1”, stable outlook,
short-term rating “P-1”; (iii) R&I - long-term rating (senior
preferred debt) “A”, stable outlook; and (iv) S&P Global
Ratings - long-term rating (senior preferred debt) “A”, negative
outlook, short-term rating “A-1”.
-
FRENCH RETAIL BANKING
In EURm |
Q1 21 |
Q1 20 |
Change |
Net banking income |
1,847 |
1,880 |
-1.8% |
Net banking income excl. PEL/CEL |
1,859 |
1,905 |
-2.4% |
Operating expenses |
(1,453) |
(1,450) |
+0.2% |
Gross operating income |
394 |
430 |
-8.4% |
Net cost of risk |
(123) |
(249) |
-50.6% |
Operating income |
271 |
181 |
+49.7% |
Reported Group net
income |
203 |
219 |
-7.3% |
RONE |
7.2% |
7.8% |
|
Underlying
RONE(1) |
10.4% |
10.7% |
|
(1) Adjusted for the
linearisation of IFRIC 21 and PEL/CEL provision
Despite the extension of the health
restrictions, French Retail Banking’s commercial performance
continued to gradually improve. The networks continued to support
the economy, accompanying individual, corporate and professional
customers in this still uncertain environment.
Société Générale and Crédit du
Nord networks:
The bank disbursed a total amount of around EUR
18 billion in respect of State Guaranteed Loans (“PGE”) to support
the Corporate and Professional customers segment. In May, it will
also market a “Recovery Participatory Loan” (Prêts Participatifs
Relance) offering.
The average loan
outstandings of the Societe Generale and Crédit du
Nord networks rose 7% vs. Q1 20 to EUR 210 billion. Average
outstanding loans to corporate and professional customers climbed
16% to EUR 97 billion, bolstered by the distribution of State
Guaranteed Loans.
The average outstanding balance sheet
deposits6(1) of the Societe Generale and Crédit du Nord
networks increased 14% vs. Q1 20 to EUR 229 billion, still driven
by sight deposits.
As a result, the average loan/deposit ratio
stood at 92% in Q1 21 vs. 98% in Q1 20.
Insurance assets under
management totalled EUR 89 billion in Q1 21. Life
insurance saw its net inflow grow by EUR 0.7 billion, with the
unit-linked share accounting for 37% of new business in Q1 21.
Private Banking’s assets under
management totalled EUR 72 billion at end-March 2021. Net
inflow remained buoyant at EUR 1.3 billion in Q1 21.
In Personal Protection
insurance, premiums were up +3% vs. Q1 20. The
financial commissions of the Societe Generale and
Crédit du Nord networks were 7% higher than in Q1 20.
Boursorama:
The bank consolidated its position as the
leading online bank in France, with more than 2.8 million clients
at end-March 2021. Client onboarding at Boursorama reached a record
level, with 203,000 new clients in Q1 21. This quarter, the bank
distinguished itself by being classified No. 1 in Europe in the
digital performance ranking (D Rating ranking – March 2021).
Boursorama also topped the list of French people’s favourite brand
in the online Banks category (March 2021). Finally, the bank was
classified No. 1 in the Customer Relationship Podium ranking in the
banks category (March 2021).
Housing loan production experienced strong
growth (+27% vs. Q1 20). Deposit and financial savings climbed 30%
vs. Q1 20. Furthermore, the number of stock market orders increased
by 1.5x compared to Q1 20.
Net banking income excluding
PEL/CEL
Net banking income restated for PEL/CEL effects
was -2.4% lower than in Q1 20 at EUR 1,859 million. Net interest
income (excluding PEL/CEL) was down -5.7% vs. Q1 20, impacted
primarily by the negative effect resulting from higher deposit
volumes in a negative interest rate environment. Despite the
extension of lockdown measures, commissions rose +0.8% vs. Q1
20.
Operating
expenses
Underlying operating expenses totalled EUR 1,336
million, down -1.6% vs. Q1 20 and -2.3% excluding Boursorama. The
cost to income ratio (after linearisation of the IFRIC 21 charge
and restated for the PEL/CEL provision) stood at 71.9% in Q1 21 vs.
71.3% in Q1 20.
Cost of
risk
The commercial cost of risk was -51% lower than
in Q1 20. It amounted to EUR 123 million, or 23 basis points,
substantially lower than in Q1 20 (49 basis points).
Net profits or losses from other
assets
Net profits or losses from other assets totalled
EUR 3 million in Q1 21. They amounted to EUR 131 million in Q1 20,
including a capital gain of EUR 130 million relating to the Group’s
property disposal programme.
Contribution to Group net
income
The contribution to Group net income was EUR 203
million, 7.3% lower than in Q1 20. Against a backdrop of low
interest rates and the transformation of the networks, RONE (after
linearisation of the IFRIC 21 charge and restated for the PEL/CEL
provision) stood at 10.4% in Q1 21 (vs. 10.7% in Q1 20) and 11.3%
excluding Boursorama.
-
INTERNATIONAL RETAIL BANKING & FINANCIAL
SERVICES
In EURm |
Q1 21 |
Q1 20 |
Change |
Net banking income |
1,862 |
1,964 |
-5.2% |
+0.1%* |
Operating expenses |
(1,089) |
(1,146) |
-5.0% |
+0.0%* |
Gross operating income |
773 |
818 |
-5.5% |
+0.2%* |
Net cost of risk |
(142) |
(229) |
-38.0% |
-34.9%* |
Operating income |
631 |
589 |
+7.1% |
+14.1%* |
Net profits or losses from other assets |
2 |
12 |
-83.3% |
-83.3%* |
Reported Group net
income |
392 |
365 |
+7.4%* |
+15.8%* |
RONE |
15.7% |
13.8% |
|
|
Underlying
RONE(1) |
17.4% |
15.4% |
|
|
(1) Adjusted for the
linearisation of IFRIC 21 International Retail
Banking’s outstanding loans totalled EUR 86.5 billion in
Q1 21. They rose +0.8%* vs. Q1 20 when adjusted for changes in
Group structure and at constant exchange rates. Outstanding
deposits increased by +7.7%* vs. Q1 20, to EUR 84.6 billion.
For the Europe scope, outstanding loans were up
+2.0%* vs. end-March 2020, driven by a healthy momentum in all
regions: Western Europe (+1.6%*), Romania (+1.7%*) and the Czech
Republic (+2.5%*). Outstanding deposits were up +9.7%* vs. Q1
20.
In Russia, commercial activity continued to be
impacted by the lockdown measures. Outstanding loans fell by
-4.6%*, the healthy momentum in the individual customers segment
being offset by a decline in the corporate customers segment due to
substantial repayments of loans granted in the context of the
crisis. Outstanding deposits increased by +1.9%* vs. Q1 20.
In Africa, Mediterranean Basin and French
Overseas Territories, outstanding loans remained stable.
Outstanding deposits grew by +6.3%* vs. end-March 2020.
In the Insurance business, the
life insurance savings business enjoyed a healthy momentum, with
outstandings increasing +6.8%* vs. end-March 2020. The share of
unit-linked products was very high in Q1, amounting to 40% of gross
inflow and 34% of outstandings. Despite an increase in France
(+1.3%*), Protection insurance fell slightly (-1.0%*). The increase
in property/casualty premiums (+1.0%*) was offset by a decline in
personal protection with premiums down -2.4%* vs. Q1 20.
Financial Services to
Corporates enjoyed a healthy commercial momentum in Q1 21.
The number of contracts for Operational Vehicle Leasing and Fleet
Management (ALD) was stable at 1.8 million vehicles at end-March
2021. Equipment Finance’s new leasing business was up +1.1%* vs. Q1
20, while outstanding loans were down -4.0%*, at EUR 14.2 billion
(excluding factoring).
Net banking
income
Net banking income amounted to EUR 1,862 million
in Q1 21, slightly higher (+0.1%*) than in Q1 20.
International Retail Banking’s
net banking income totalled EUR 1,187 million, down -3.8%* vs. Q1
20. Despite a good commercial momentum, revenues in Europe declined
by -6.1%*, impacted by the lockdown measures and an environment of
lower interest rates than in Q1 20. In a still challenging
environment in Q1, revenues were also lower (-3.4%*) for the SG
Russia scope. The Africa, Mediterranean Basin and French Overseas
Territories scope remained resilient, with revenues up +0.1%* vs.
Q1 20 and still buoyant activity in Sub-Saharan Africa (revenues up
+3.0%* vs. Q1 20).
The Insurance business posted
net banking income of EUR 236 million in Q1 21, an increase of
+3.5%* vs. Q1 20, which included a contribution of around EUR 6
million to the solidarity fund in France.
Financial Services to
Corporates’ net banking income was higher (+10.4%*) and
amounted to EUR 439 million, driven in particular by ALD which
posted an increase in leasing margins (+2%*) and the used car sale
result (EUR 439 per unit).
Operating
expenses
Operating expenses remained stable when adjusted
for changes in Group structure and at constant exchange rates vs.
Q1 20 (and were slightly lower -0.2%* on an underlying basis). The
cost to income ratio stood at 58.5% in Q1 21.
In International Retail
Banking, operating expenses were down -1.0%* vs. Q1 20,
with a notable effort on the SG Russia scope (-2.0%* vs. Q1 20). Q1
20 included a EUR 11 million contribution to Covid funds in North
Africa.
In the Insurance business,
operating expenses were in line with the commercial expansion
ambitions and rose +2.4%* vs. Q1 20 to EUR 110 million.
In Financial Services to
Corporates, operating expenses were 2.6%* higher than in
Q1 20, generating a positive jaws effect.
Cost of
risk
The cost of risk amounted to 44 basis points in
Q1 21 vs. 67 basis points in Q1 20.
Contribution to Group net
income
The contribution to Group net income totalled
EUR 392 million, up +15.8%* (+7.4% at current exchange rates) vs.
Q1 20.
Underlying RONE stood at 17.4% in Q1 21, vs.
15.4% in Q1 20 (with RONE of 14.6% in International Retail Banking
and 21.1% in Financial Services and Insurance).
-
GLOBAL BANKING & INVESTOR SOLUTIONS
In EURm |
Q1 21 |
Q1 20 |
Change |
Net banking income |
2,509 |
1,627 |
+54.2% |
+60.4%* |
Operating expenses |
(2,051) |
(1,977) |
+3.7% |
+5.9%* |
Gross operating income |
458 |
(350) |
n/s |
n/s |
Net cost of risk |
(9) |
(342) |
-97.4% |
-97.2%* |
Operating income |
449 |
(692) |
n/s |
n/s |
Reported Group net
income |
356 |
(537) |
n/s |
n/s |
RONE |
10.0% |
-15.8% |
|
|
Underlying
RONE(1) |
18.1% |
-9.0% |
|
|
(1) Adjusted for the
linearisation of IFRIC 21Global Banking & Investor Solutions
posted robust revenues of EUR 2,509 million in Q1 21, a substantial
increase (+54.2%) vs. Q1 20 (+60.4%* when adjusted for changes in
Group structure and at constant exchange rates). The businesses
benefited from a normalising environment and strong market momentum
during Q1 21.
In Global Markets & Investor
Services, net banking income totalled EUR 1,651 million,
x2.3* vs. Q1 20. Global Markets enjoyed a record quarter, with the
highest level of activity since Q1 17.
The Equity businesses enjoyed their best quarter
since 2015, with a remarkable performance in each of the regions,
all activities having benefited from the good market conditions.
There was a significant rebound in revenues (+44% vs. Q4 20) and an
increase of +36% vs. the average level of 2019. Structured products
enjoyed a good quarter, while completing the review of the product
offering initiated in Q2 20. Listed products benefited from strong
volumes, particularly in Asia and Germany, where our franchise
received the award of “Certificate House of the Year” (source
Golden Bull).
Fixed Income & Currency activities posted a
strong performance, with revenues of EUR 625 million, up +51% vs.
Q4 20 and +25% vs. the average level of 2019 (level not restated
for the revenues of the commodities activity). The reflation theme
contributed to strong commercial activity. All the activities
performed well in all regions.
Securities Services’ revenues were also
substantially higher (+16.7%) than in Q1 20, at EUR 175 million.
Securities Services’ assets under custody amounted to EUR 4,341
billion at end-March 2021, an increase of +0.6% vs. end-December
2020. Over the same period, assets under administration were stable
at EUR 639 billion.
Financing & Advisory
revenues totalled EUR 633 million in Q1 21, up +2.9%* vs. a good Q1
20 (+0.6% at current structure and exchange rates).
Financing activities turned in a good
performance, particularly in aircraft financing and maritime
financing. The Asset-Backed Products platform also enjoyed a good
Q1.Investment Banking benefited from a strong momentum,
particularly in equity capital markets and acquisition financing.
The franchise posted solid revenues, with an increase in Q1.
Global Transaction and Payment Services
continued to deliver strong growth, up +5.0%* vs. Q1 20.
Asset and Wealth Management’s
net banking income totalled EUR 225 million in Q1 21, down -1.7%*
vs. Q1 20 (-2.2% at current structure and exchange rates).
Private Banking posted a slightly lower
performance (-1.1%*) than in Q1 20 (at EUR 173 million), impacted
by pressure on the interest margin and despite strong commercial
activity. Net inflow, which totalled EUR +2.5 billion, was positive
in all regions. Assets under management were up +4.1% vs.
end-December 2020, at EUR 121 billion.
Lyxor’s net banking income amounted to EUR 47
million, EUR 3 million lower than in Q1 20. Lyxor’s assets under
management were substantially higher (+9.9%) than at end-December
2020, at EUR 154 billion. Net inflow was EUR +6.2 billion in Q1
21.
Operating
expenses
Underlying operating expenses were down -0.8%
vs. Q1 20, reflecting continued strict discipline against the
backdrop of an increase in the IFRIC 21 charge and variable costs
in conjunction with the growth in revenues. As a result, there was
a substantial improvement in operating leverage, with an underlying
cost to income ratio of 67%.
Net cost of
risk
The commercial cost of risk amounted to 2 basis
points (or EUR 9 million), well below the level of 87 basis points
in Q1 20, which was adversely affected by the start of the health
crisis and some specific files.
Contribution to Group net
income
The underlying contribution to Group net income
(after linearisation of IFRIC 21) came to EUR 646 million in Q1
21.Global Banking & Investor Solutions posted a significant
underlying RONE of 18.1%.
-
CORPORATE CENTRE
In EURm |
Q1 21 |
Q1 20 |
Net banking income |
27 |
(301) |
Operating expenses |
(155) |
(105) |
Underlying operating expenses(1) |
(71) |
(67) |
Gross operating income |
(128) |
(406) |
Underlying gross operating income(1) |
(44) |
(368) |
Net cost of risk |
(2) |
- |
Net profits or losses from other assets |
1 |
(77) |
Impairment losses on goodwill |
- |
- |
Net income from companies accounted for by the equity method |
1 |
1 |
Reported Group net
income |
(137) |
(373) |
(1) Adjusted for the
linearisation of IFRIC 21 and transformation costs in Q1 21 (EUR
50m)The Corporate Centre includes:
- the property management of the
Group’s head office,
- the Group’s equity portfolio,
- the Treasury function for the
Group,
- certain costs related to
restructuring charges for the whole Group, cross-functional
projects and certain costs incurred by the Group and not
re-invoiced to the businesses.
The Corporate Centre’s net banking income
totalled EUR 27 million in Q1 21 vs. EUR -301 million inQ1 20. It
includes notably the change in fair value of financial instruments
corresponding to economic hedges of financial debt but that do not
meet IFRS hedge accounting criteria.
Operating expenses totalled EUR -155 million in
Q1 21 vs. EUR -105 million in Q1 20. They include the Group’s
transformation costs for a total amount of EUR -50 million relating
to the activities of French Retail Banking (EUR -22 million),
Global Banking & Investor Solutions (EUR -17 million) and the
Corporate Centre (EUR -11 million). Underlying costs came to EUR 71
million, compared to EUR 67 million in Q1 20.
Gross operating income totalled EUR -128 million
in Q1 21 vs. EUR -406 million in Q1 20. Underlying gross operating
income was EUR -44 million.
Net profits or losses from other assets amounted
to EUR -77 million in Q1 20 and included primarily, in respect of
the application of IFRS 5 as part of the implementation of the
Group’s refocusing plan, a charge of EUR -69 million corresponding
to the finalisation of the disposal of Societe Generale de Banque
aux Antilles.
The Corporate Centre’s contribution to Group net
income was EUR -137 million in Q1 21 vs. EUR -373 million in Q1
20.
-
CONCLUSION
The beginning of this year has seen the Group
achieve a new milestone and confirm the rebound in activities
expected this year in relation to 2020, which was significantly
impacted by the crisis.
The Group will present the strategy for Global
Banking & Investor Solutions on May 10th, 2021, and then on
Corporate Social Responsibility in the second semester 2021.
-
2021
FINANCIAL CALENDAR
2021 Financial
communication
calendar May
18th, 2021 General
MeetingMay 25th,
2021 Dividend
detachmentMay 27th,
2021 Dividend
paymentAugust 3rd,
2021 Second quarter
and first half 2021 results November 4th,
2021 Third quarter
and nine-month 2021
results
The Alternative Performance Measures, notably the notions
of net banking income for the pillars, operating expenses, IFRIC 21
adjustment, (commercial) cost of risk in basis points, ROE, ROTE,
RONE, net assets, tangible net assets, and the amounts serving as a
basis for the different restatements carried out (in particular the
transition from published data to underlying data) are presented in
the methodology notes, as are the principles for the presentation
of prudential ratios. This document contains
forward-looking statements relating to the targets and strategies
of the Societe Generale Group.These forward-looking statements are
based on a series of assumptions, both general and specific, in
particular 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.These forward-looking statements
have also been developed from scenarios based on a number of
economic assumptions in the context of 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;
- evaluate 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 document
and the related presentation.
Therefore, although Societe Generale believes that these statements
are based on reasonable assumptions, these forward-looking
statements are subject to numerous risks and uncertainties,
including matters not yet known to it or its management or not
currently considered material, and there can be no assurance that
anticipated events will occur or that the objectives set out will
actually be achieved. Important factors that could cause actual
results to differ materially from the results anticipated in the
forward-looking statements include, among others, overall trends in
general economic activity and in Societe Generale’s markets in
particular, regulatory and prudential changes, and the success of
Societe Generale’s strategic, operating and financial initiatives.
More detailed information on the potential risks that could affect
Societe Generale’s financial results can be found in the
Registration Document filed with the French Autorité des Marchés
Financiers.Investors are advised to take into account factors of
uncertainty and risk likely to impact the operations of the Group
when considering the information contained in such forward-looking
statements. Other than as required by applicable law, Societe
Generale does not undertake any obligation to update or revise any
forward-looking information or statements. Unless otherwise
specified, the sources for the business rankings and market
positions are internal. |
9. APPENDIX
1: FINANCIAL DATA
GROUP NET INCOME BY CORE
BUSINESS
In EURm |
Q1-21 |
Q1-20 |
Change |
French Retail Banking |
203 |
219 |
-7.3% |
International Retail Banking and Financial Services |
392 |
365 |
+7.4% |
Global Banking and Investor Solutions |
356 |
(537) |
n/s |
Core Businesses |
951 |
47 |
x20.2 |
Corporate Centre |
(137) |
(373) |
n/s |
Group |
814 |
(326) |
n/s |
CONSOLIDATED BALANCE
SHEET
|
31.03.2021 |
31.12.2020 |
Cash, due from central banks |
177,582 |
168,179 |
Financial assets at fair value through profit or loss |
445,009 |
429,458 |
Hedging derivatives |
16,220 |
20,667 |
Financial assets measured at fair value through other comprehensive
income |
50,250 |
52,060 |
Securities at amortised cost |
16,525 |
15,635 |
Due from banks at amortised cost |
63,243 |
53,380 |
Customer loans at amortised cost |
456,474 |
448,761 |
Revaluation differences on portfolios hedged against interest rate
risk |
284 |
378 |
Investment of insurance activities |
169,878 |
166,854 |
Tax assets |
4,900 |
5,001 |
Other assets |
67,651 |
67,341 |
Non-current assets held for sale |
675 |
6 |
Investments accounted for using the equity method |
103 |
100 |
Tangible and intangible assets |
30,367 |
30,088 |
Goodwill |
3,821 |
4,044 |
Total |
1,502,982 |
1,461,952 |
|
31.03.2021 |
31.12.2020 |
Central banks |
3,095 |
1,489 |
Financial liabilities at fair value through profit or loss |
404,263 |
390,247 |
Hedging derivatives |
10,762 |
12,461 |
Debt securities issued |
137,230 |
138,957 |
Due to banks |
145,530 |
135,571 |
Customer deposits |
467,711 |
456,059 |
Revaluation differences on portfolios hedged against interest rate
risk |
5,655 |
7,696 |
Tax liabilities |
1,239 |
1,223 |
Other liabilities |
89,727 |
84,937 |
Non-current liabilities held for sale |
167 |
- |
Liabilities related to insurance activities contracts |
148,334 |
146,126 |
Provisions |
4,743 |
4,775 |
Subordinated debts |
16,215 |
15,432 |
Total liabilities |
1,434,671 |
1,394,973 |
SHAREHOLDERS' EQUITY |
|
|
Shareholders'
equity, Group
share |
|
|
Issued common stocks and capital reserves |
22,371 |
22,333 |
Other equity instruments |
9,295 |
9,295 |
Retained earnings |
31,646 |
32,076 |
Net income |
814 |
(258) |
Sub-total |
64,126 |
63,446 |
Unrealised or deferred capital gains and losses |
(1,206) |
(1,762) |
Sub-total equity, Group share |
62,920 |
61,684 |
Non-controlling interests |
5,391 |
5,295 |
Total equity |
68,311 |
66,979 |
Total |
1,502,982 |
1,461,952 |
-
APPENDIX 2: METHODOLOGY
1 - The financial
information presented for the quarter ending 31 March
2021 was reviewed by the Board of
Directors on 5 May 2021 and has been
prepared in accordance with IFRS as adopted in the European Union
and applicable at this date, and has not been audited.
2 – Net banking incomeThe
pillars’ net banking income is defined on page 41 of Societe
Generale’s 2021 Registration Document. The terms “Revenues” or “Net
Banking Income” are used interchangeably. They provide a normalised
measure of each pillar’s net banking income taking into account the
normative capital mobilised for its activity.
3 – Operating expensesOperating
expenses correspond to the “Operating Expenses” as presented in
note 8.1 to the Group’s consolidated financial statements as at
December 31st, 2020 (pages 466 et seq. of Societe Generale’s 2021
Registration Document). The term “costs” is also used to refer to
Operating Expenses.The Cost/Income Ratio is defined on page 41 of
Societe Generale’s 2021 Registration Document.
4 – IFRIC 21 adjustmentThe
IFRIC 21 adjustment corrects the result of the charges recognised
in the accounts in their entirety when they are due (generating
event) so as to recognise only the portion relating to the current
quarter, i.e. a quarter of the total. It consists in smoothing the
charge recognised accordingly over the financial year in order to
provide a more economic idea of the costs actually attributable to
the activity over the period analysed.
5 – Exceptional items – Transition from
accounting data to underlying data
It may be necessary for the Group to present
underlying indicators in order to facilitate the understanding of
its actual performance. The transition from published data to
underlying data is obtained by restating published data for
exceptional items and the IFRIC 21 adjustment. Moreover, the Group
restates the revenues and earnings of the French Retail Banking
pillar for PEL/CEL provision allocations or write-backs. This
adjustment makes it easier to identify the revenues and earnings
relating to the pillar’s activity, by excluding the volatile
component related to commitments specific to regulated savings.
The reconciliation enabling the transition from
published accounting data to underlying data is set out in the
table below:
Q1 21 (in
EURm) |
Operating Expenses |
Net profit or losses fromother
assets |
Incometax |
Group net income |
Business |
Reported |
(4,748) |
6 |
(283) |
814 |
|
IFRIC 21 linearisation |
601 |
|
(141) |
448 |
|
Transformation charges* |
50 |
|
(14) |
36 |
Corporate Center(1) |
Underlying |
(4,097) |
6 |
(438) |
1,298 |
|
|
|
|
|
|
|
Q1 20 (in
EURm) |
Operating Expenses |
Net profit or losses fromother
assets |
Incometax |
Group net income |
Business |
Reported |
(4,678) |
80 |
46 |
(326) |
|
IFRIC 21 linearisation |
490 |
|
(131) |
347 |
|
Group refocusing plan* |
|
77 |
0 |
77 |
Corporate center |
Underlying |
(4,188) |
157 |
(85) |
(56) |
|
* Exceptional item(1) Transformation and/or
restructuring charges related to RBDF (EUR 22m), GBIS (EUR 17m) and
Corporate Center (EUR 11m)
6 – Cost of risk in basis points,
coverage ratio for doubtful
outstandings
The cost of risk or commercial cost of risk is
defined on pages 43 and 635 of Societe Generale’s 2021 Registration
Document. This indicator makes it possible to assess the level of
risk of each of the pillars as a percentage of balance sheet loan
commitments, including operating leases.
|
(In EUR m) |
Q1 21 |
Q1 20 |
French Retail
Banking |
Net Cost Of Risk |
123 |
249 |
Gross loan Outstandings |
217,606 |
201,139 |
Cost of Risk in bp |
23 |
49 |
International Retail Banking and Financial
Services |
Net Cost Of Risk |
142 |
229 |
Gross loan Outstandings |
130,196 |
136,407 |
Cost of Risk in bp |
44 |
67 |
Global Banking and Investor Solutions |
Net Cost Of Risk |
9 |
342 |
Gross loan Outstandings |
154,651 |
158,064 |
Cost of Risk in bp |
2 |
87 |
Corporate Centre |
Net Cost Of Risk |
2 |
0 |
Gross loan Outstandings |
12,963 |
9,710 |
Cost of Risk in bp |
4 |
2 |
Societe Generale Group |
Net Cost Of Risk |
276 |
820 |
Gross loan Outstandings |
515,416 |
505,319 |
Cost of Risk in bp |
21 |
65 |
The gross coverage ratio for doubtful
outstandings is calculated as the ratio of provisions recognised in
respect of the credit risk to gross outstandings identified as in
default within the meaning of the regulations, without taking
account of any guarantees provided. This coverage ratio measures
the maximum residual risk associated with outstandings in default
(“doubtful”).
7 – ROE, ROTE, RONE
The notions of ROE (Return on Equity) and ROTE
(Return on Tangible Equity), as well as their calculation
methodology, are specified on page 43 and 44 of Societe Generale’s
2021 Registration Document. This measure makes it possible to
assess Societe Generale’s return on equity and return on tangible
equity. RONE (Return on Normative Equity) determines the return on
average normative equity allocated to the Group’s businesses,
according to the principles presented on page 44 of Societe
Generale’s 2021 Registration Document.Group net income used for the
ratio numerator is book Group net income adjusted for “interest net
of tax payable on deeply subordinated notes and undated
subordinated notes, interest paid to holders of deeply subordinated
notes and undated subordinated notes, issue premium amortisations”
and “unrealised gains/losses booked under shareholders’ equity,
excluding conversion reserves” (see methodology note No. 10). For
ROTE, income is also restated for goodwill impairment.
Details of the corrections made to book equity
in order to calculate ROE and ROTE for the period are given in the
table below:
ROTE calculation: calculation
methodology
End of period |
Q1 21 |
Q1 20 |
Shareholders'
equity Group
share |
62,920 |
62,581 |
Deeply subordinated notes |
(9,179) |
(8,258) |
Undated subordinated notes |
(273) |
(288) |
Interest net of tax payable to holders of deeply subordinated notes
& undated subordinated notes, interest paid to holders of
deeply subordinated notes & undated subordinated notes, issue
premium amortisations |
(51) |
1 |
OCI excluding conversion reserves |
(723) |
(648) |
Dividend provision(7) |
(353) |
|
ROE equity end-of-period |
52,340 |
53,387 |
Average ROE
equity |
51,771 |
53,279 |
Average Goodwill |
(3,928) |
(4,561) |
Average Intangible Assets |
(2,506) |
(2,369) |
Average ROTE
equity |
45,337 |
46,349 |
Group net Income
(a) |
814 |
(326) |
Underlying Group net income (b) |
1,298 |
98 |
Interest on deeply subordinated notes and undated subordinated
notes (c) |
(144) |
(159) |
Cancellation of goodwill impairment (d) |
|
|
Ajusted Group net Income (e) = (a)+
(c)+(d) |
670 |
(485) |
Ajusted Underlying Group net Income
(f)=(b)+(c) |
1,154 |
(61) |
|
|
|
Average ROTE
equity (g) |
45,337 |
46,349 |
ROTE [quarter: (4*e/g)] |
5.9% |
-4.2% |
|
|
|
Underlying ROTE |
45,821 |
46,773 |
Underlying ROTE [quarter: (4*f/h)] |
10.1% |
-0.5% |
RONE calculation: Average capital
allocated to Core Businesses (in EURm)
In EURm |
Q1 21 |
Q1 20 |
Change |
French Retail
Banking |
11,342 |
11,182 |
1.4% |
International Retail Banking and Financial
Services |
9,963 |
10,563 |
-5.7% |
Global Banking and Investor Solutions |
14,271 |
13,615 |
4.8% |
Core Businesses |
35,576 |
35,360 |
0.6% |
Corporate Center |
16,195 |
17,919 |
-9.6% |
Group |
51,771 |
53,279 |
-2.8% |
8 – Net assets and tangible net
assets
Net assets and tangible net assets are defined
in the methodology, page 46 of the Group’s 2021 Registration
Document. The items used to calculate them are presented below.
End of period |
Q1 21 |
2020 |
2019 |
Shareholders'
equity Group
share |
62,920 |
61,684 |
63,527 |
Deeply subordinated notes |
(9,179) |
(8,830) |
(9,501) |
Undated subordinated notes |
(273) |
(264) |
(283) |
Interest, net of tax, payable to holders of deeply subordinated
notes & undated subordinated notes, interest paid to holders of
deeply subordinated notes & undated subordinated notes, issue
premium amortisations |
(51) |
19 |
4 |
Bookvalue of own shares in trading portfolio |
(25) |
301 |
375 |
Net Asset Value |
53,391 |
52,910 |
54,122 |
Goodwill |
(3,927) |
(3,928) |
(4,510) |
Intangible Assets |
(2,527) |
(2,484) |
(2,362) |
Net Tangible Asset Value |
46,937 |
46,498 |
47,250 |
|
|
|
|
Number of shares used to calculate NAPS** |
850,427 |
848,859 |
849,665 |
Net Asset Value per Share |
62.8 |
62.3 |
63.7 |
Net Tangible Asset Value per Share |
55.2 |
54.8 |
55.6 |
** The number of shares considered is the number
of ordinary shares outstanding as at March 31st, 2021, excluding
treasury shares and buybacks, but including the trading shares held
by the Group.In accordance with IAS 33, historical data per share
prior to the date of detachment of a preferential subscription
right are restated by the adjustment coefficient for the
transaction.
9 – Calculation of Earnings Per Share
(EPS)
The EPS published by Societe Generale is
calculated according to the rules defined by the IAS 33 standard
(see page 45 of Societe Generale’s 2021 Registration Document). The
corrections made to Group net income in order to calculate EPS
correspond to the restatements carried out for the calculation of
ROE and ROTE. As specified on page 45 of Societe Generale’s 2021
Registration Document, the Group also publishes EPS adjusted for
the impact of non-economic and exceptional items presented in
methodology note No. 5 (underlying EPS).
The calculation of Earnings Per Share is
described in the following table:
Average number of shares (thousands) |
Q1 21 |
2020 |
2019 |
Existing shares |
853,371 |
853,371 |
834,062 |
Deductions |
|
|
|
Shares allocated to cover stock option plans and free shares
awarded to staff |
3,728 |
2,987 |
4,011 |
Other own shares and treasury shares |
|
|
149 |
Number of shares used to calculate EPS** |
849,643 |
850,385 |
829,902 |
Group net Income |
814 |
(258) |
3,248 |
Interest on deeply subordinated notes and undated subordinated
notes |
(144) |
(611) |
(715) |
Capital gain net of tax on partial buybacks |
|
|
|
Adjusted Group net
income |
670 |
(869) |
2,533 |
EPS (in EUR) |
0.79 |
(1.02) |
3.05 |
Underlying EPS* (in EUR) |
0.83 |
0.97 |
4.03 |
* Based on underlying Group net income excluding
linearisation of the IFRIC 21 effect. EUR 1.36 including IFRIC 21
linearization.** The number of shares considered is the number of
ordinary shares outstanding as at March 31st, 2021, excluding
treasury shares and buybacks, but including the trading shares held
by the Group.
10 – The
Societe Generale Group’s Common Equity
Tier 1 capital is calculated in accordance with applicable
CRR/CRD4 rules. The phased-in ratios include the earnings for the
current financial year and the related provision for dividends.
The difference between phased-in ratio and fully-loaded ratio
is related to the IFRS 9 impacts. The leverage ratio is calculated
according to applicable CRR/CRD4 rules including the provisions of
the delegated act of October 2014 and the phased-in follows the
same rationale as solvency ratios.
NB (1) The sum of values contained in the tables
and analyses may differ slightly from the total reported due to
rounding rules.
(2) All the information on the results for the
period (notably: press release, downloadable data, presentation
slides and supplement) is available on Societe Generale’s website
www.societegenerale.com in the “Investor” section.
Societe Generale
Societe Generale is one of the leading European
financial services groups. Based on a diversified and integrated
banking model, the Group combines financial strength and proven
expertise in innovation with a strategy of sustainable growth,
aiming to be the trusted partner for its clients, committed to the
positive transformations of society and the economy.
Active in the real economy for over 150 years,
with a solid position in Europe and connected to the rest of the
world, Societe Generale has over 133,000 members of staff in 61
countries and supports on a daily basis 30 million individual
clients, businesses and institutional investors around the world by
offering a wide range of advisory services and tailored financial
solutions. The Group is built on three complementary core
businesses:
-
French Retail Banking, which encompasses the
Societe Generale, Crédit du Nord and Boursorama brands. Each offers
a full range of financial services with omnichannel products at the
cutting edge of digital innovation;
-
International Retail Banking, Insurance and Financial
Services to Corporates, with networks in Africa, Russia,
Central and Eastern Europe and specialised businesses that are
leaders in their markets;
-
Global Banking and Investor Solutions, which
offers recognised expertise, key international locations and
integrated solutions.
Societe Generale is included in the principal
socially responsible investment indices: DJSI (World and Europe),
FTSE4Good (Global and Europe), Euronext Vigeo (World, Europe and
Eurozone), four of the STOXX ESG Leaders indices, and the MSCI Low
Carbon Leaders Index.
For more information, you can follow us on
twitter @societegenerale or visit our website
www.societegenerale.com
(1) underlying data. See methodology note No. 5
for the transition from accounting data to underlying data(2)
including 25 basis points in respect of IFRS 9 phasingThe footnote
* in this document corresponds to data adjusted for changes in
Group Structure and at constant exchange rates(1) Adjusted for
exceptional items and the linearisation of IFRIC 21(2) Ratio
between the amount of provisions on doubtful outstandings and the
amount of these same outstandings(3) calculated on the basis of
underlying Group net income excluding linearisation of IFRIC 21.
Taking into account IFRIC linearisation, it is EUR 1.36 in Q1 21
and EUR -0.07 in Q1 20
(1) TLOF: Total Liabilities and Own Funds
(1) Including BMTN (negotiable medium-term
notes)(7)The dividend to be paid is calculated based on a pay-out
ratio of 50% of the underlying Group net income, excluding IFRIC
21, after deduction of deeply subordinated notes and on undated
subordinated notes
- Societe Generale_ Q1-2021 earnings
Grafico Azioni Societe Generale (BIT:1GLE)
Storico
Da Feb 2024 a Mar 2024
Grafico Azioni Societe Generale (BIT:1GLE)
Storico
Da Mar 2023 a Mar 2024