Societe Generale S.a. Class A · EURONEXT:GLE
Societe Generale S.a. Class A — Q1 2007 Earnings Presentation
51 slides from Societe Generale S.a. Class A's earnings presentation, May 10, 2007
Slide 1: First Quarter 2007 Results
10 / 05 / 2007 FIRST QUARTER 2007 RESULTS
Slide 2: Disclaimer
Disclaimer The following presentation contains a number of forward-looking statements relating to Société Générale’s targets and strategy. These forecasts are based on a series of assumptions, both general and specific. As a result, there is a risk that these projections will not be met. Readers are
Slide 3: Agenda
Group results Results of core businesses Retail Banking & Financial Services Global Investment Management & Services Corporate & Investment Banking Conclusion Supplements FIRST QUARTER 2007 RESULTS 10 / 05 / 2007 3
Slide 4: Solid performances against a high base
SOCIETE GENERALE GROUP Solid performances against a high base In EUR m Q1 06 Q1 07 Change Net banking income 5,771 6,046 +4.8% +5.0%* NBI: +5.0%* vs. Q1 06 Operating expenses (3,412) (3,698) +8.4% +8.8%* NBI of core businesses: +7.0%* vs. Q1 06 Gross operating income 2,359 2,348 -0.5% -0.5% * Net
Slide 5: Top-line growth in all core businesses
SOCIETE GENERALE GROUP Top-line growth in all core businesses NBI (in EUR bn) Change Q1 07/Q1 06 Sustained expansion of growth 6.0 +5.0%* drivers (Retail Banking outside 5.8 Corporate & France, Financial Services and GIMS) Investment Banking 4.8 1.9 (+5.5% *) 2.0 Growth at French Networks: 1.6 G
Slide 6: Low cost/income ratio despite ongoing investments
SOCIETE GENERALE GROUP Low cost/income ratio despite ongoing investments Operating expenses (in EUR bn) Change Group C/I ratio: 61.2% Q1 07/Q1 06 (vs 59.1% in Q1 06) 3.7 +8.8%* 3.4 Corporate & French Networks: 67.0% excl. PEL/CEL Investment Banking 3.0 1.1 (vs. 67.6% in Q1 06) (+10.2% *) 1.1 G
Slide 7: Cost of risk remains low: 26 bp
SOCIETE GENERALE GROUP Cost of risk remains low: 26 bp Net allocation to provisions (in EUR m) 162 152 134 231 192 Retail Banking & Financial Services French Networks: 29 bp (vs. 26 bp in Q1 06) 88 Retail Banking outside France: 54 bp 84 Financial Services (vs. 67 bp in Q1 06) 60 66 Financial Serv
Slide 8: Agenda
Group results Results of core businesses Retail Banking & Financial Services Global Investment Management & Services Corporate & Investment Banking Conclusion Supplements FIRST QUARTER 2007 RESULTS 10 / 05 / 2007 8
Slide 9: Retail Banking & Financial Services
RETAIL BANKING & FINANCIAL SERVICES Q1 Q1 07 07 NBI: NBI: +8.4% +8.4% vs. vs. Q1 Q1 06; 06; +6.1% +6.1% like -for-like like-for-like French Networks Q1 28% Q1 07 07 net net income: income: ROE: 21.6% EUR EUR 609m, 609m, +9.7% +9.7% vs. vs. Q1 Q1 06 06 Q1 Q1 07 07 ROE ROE after after tax: tax: Retail
Slide 10: Slower progression against a high comparative base
FRENCH NETWORKS Slower progression against a high comparative base Individual customers Individual and business customers: Further growth in customer base: Change since +172,000 personal current accounts vs. Q1 06 steady franchise growth 2001 (+2.9%), of which +39,000 in Q1 07 (vs. +38,300 in Q1 0
Slide 11: Moderate increase in revenues
FRENCH NETWORKS Moderate increase in revenues NBI: +2.3% vs. Q1 06 excl. PEL/CEL 1,668 1,695 1,644 1,694 1,701 NBI in EUR m NBI: +2.0% vs. Q1 06, after reversal of EUR 26m PEL/CEL provisions (vs. EUR 30m in Q1 06) Financial 216 209 185 211 219 commissions Fee & Commission income: +7.3% vs. Q1 06
Slide 12: Further decline in C/I ratio
FRENCH NETWORKS Further decline in C/I ratio NBI excl. PEL/CEL: +2.3% vs. Q1 06 In EUR m Q1 06 Q1 07 Change Operating expenses: +1.3% vs. Q1 06 Net banking income 1,668 1,701 +2.0% Operating expenses (1,108) (1,122) +1.3% ªC/I ratio excl. PEL/CEL: 67.0% Gross operating income 560 579 +3.4% (vs.
Slide 13: Sustained growth of customer base
RETAIL BANKING OUTSIDE FRANCE Sustained growth of customer base Robust sales performance Breakdown of NBI +730,000 individual customers at constant by geographical zone (in EUR m) structure vs. end-March 2006 (+12.1%) Marked rise in customer deposits and loans CAGR: +22% Sub-Saharan • individual c
Slide 14: Dynamic organic growth momentum
RETAIL BANKING OUTSIDE FRANCE Dynamic organic growth momentum Targeted organic investment in high- potential markets Number of branches** Central and Eastern Europe, Mediterranean basin 2,436 Sub-Saharan 2,300 Africa & French 256 overseas Branch openings 254 territories +418 branches year-on-yea
Slide 15: Good financial performance
RETAIL BANKING OUTSIDE FRANCE Good financial performance In EUR m Q1 06 Q1 07 Change NBI: +10.3%* vs. Q1 06 Net banking income 641 763 +19.0% +10.3%* Operating expenses (378) (465) +23.0% +12.9%* Continued investments in organic Gross operating income 263 298 +13.3% +6.4%* growth Net allocation
Slide 16: Specialised Financing: strong growth in consumer credit
FINANCIAL SERVICES Specialised Financing: strong growth in consumer credit +17.9%* 15.6 Consumer credit** 13.1 Others 2.2 Outstanding in 1.1 3.1 New lending: EUR 2.5bn (+15.1%* vs. Q1 06) consumer credit** credit** 2.9 Germany 4.9 Outstanding at period-end: EUR 15.6bn (EUR bn) 4.3 Italy (+17.9%* v
Slide 17: Sustained increase in results
FINANCIAL SERVICES Sustained increase in results In EUR m Q1 06 Q1 07 Change Specialised Financing Net banking income 592 680 +14.9% +13.1%* NBI: +11.5%* vs. Q1 06 o.w. specialised financing 471 536 +13.8% +11.5%* Operating expenses: +11.3%* vs. Q1 06 Operating expenses (326) (367) +12.6% +10.8%*
Slide 18: Global Investment Management and Services
GLOBAL INVESTMENT MANAGEMENT AND SERVICES Q1 Q1 07 07 NBI: NBI: +19.5% +19.5% vs. vs. Q1 Q1 06; 06; +13.8% +13.8% like -for-like like-for-like Q1 Q1 07 07 net net income income:: EUR EUR 176m 176m (+13.5% (+13.5% vs. vs. Q1 Q1 06) 06) Q1 Q1 07 07 net net inflows: inflows: 15% of Group NBI EUR EUR 18
Slide 19: Net inflows remain very high
GLOBAL INVESTMENT MANAGEMENT AND SERVICES Net inflows remain very high Assets under management (in EUR bn) Asset management Very high net new money but on lower-margin +16.9 +1.9 -1.6 products: EUR 16.9bn (vs. EUR 12.4bn in Q1 06) • 19% of AuM on annualised basis Assets under management: EUR 371.2
Slide 20: Sharp increase in activity at Securities Services
GLOBAL INVESTMENT MANAGEMENT AND SERVICES Sharp increase in activity at Securities Services Securities Services for Institutional Assets under custody (EUR bn) Investors and Fund Administration 2,448 660 2S Banca Strong growth in assets under custody: EUR 2,448bn including EUR 660bn at 2S Banca 1,
Slide 21: Overall improvement in results
GLOBAL INVESTMENT MANAGEMENT AND SERVICES Overall improvement in results In EUR m Q1 06 Q1 07 Change Asset Management Net banking income 769 919 +19.5% +13.8%* Slight increase in NBI vs. a high base in Q1 06 o.w. Asset Management 333 340 +2.1% +5.9%* • Slight deterioration of margin as a result of
Slide 22: Corporate & Investment Banking
CORPORATE & INVESTMENT BANKING 32% of Group NBI Equities Q1 Q1 0707 NBI: NBI: 17% +3.6% +3.6% vs.vs. Q1 Q1 06 06 excl excl.. Cowen Cowen;; +5.5% +5.5% Fixed Income, like -for-like like-for-like Currencies & Commodities Q1 Q1 07 07 net net income income:: 9% Financing & EUR EUR 666m 666m (+4.6% (+4.6
Slide 23: Revenues up on a very high Q1 06 base
CORPORATE AND INVESTMENT BANKING Revenues up on a very high Q1 06 base Equities: NBI +5.4%* vs. very high Q1 06 Quarterly NBI (in EUR m) Record quarter with diversified revenues Very strong client-driven performances in both structured and flow products NBI of CIB in Q1 07 (in EUR m) Fixed Incom
Slide 24: Continuation of the profitable growth strategy
CORPORATE AND INVESTMENT BANKING Continuation of the profitable growth strategy Sustained growth momentum Ratio (NBI of Equities, Fixed Income, Step-up 2010: strengthen the origination - Currencies and Commodities) / Stress Test* distribution approach 110 Focus on areas of expertise • Derivatives
Slide 25: Very good financial performances maintained
CORPORATE AND INVESTMENT BANKING Very good financial performances maintained NBI: +5.5%* vs. Q1 06 In EUR m** Q1 06 Q1 07 Change Net banking income 1,879 1,947 +3.6% +5.5%* Operating expenses: +10.2%* o.w. Financing & Advisory 308 354 +14.9% +16.8%* vs. Q1 06 o.w. Fixed Income, Currencies & 543
Slide 26: Agenda
Group results Results of core businesses Retail Banking & Financial Services Global Investment Management & Services Corporate & Investment Banking Conclusion Supplements FIRST QUARTER 2007 RESULTS 10 / 05 / 2007 26
Slide 27: Solid growth in results in core businesses
SOCIETE GENERALE GROUP Solid growth in results in core businesses Net income (in EUR m) Revenue growth against a very high Q1 06 base in French Networks and 1,459 -1.9% 1,431 ROE ROE Corporate and Investment Banking after tax after tax Low C/I ratio despite ongoing 666 Corporate & 50% commercial
Slide 28: Outlook
SOCIETE GENERALE GROUP Outlook Confirmation of FY 2007 forecasts for the French Networks Continued profitable growth momentum in Corporate and Investment Banking Ongoing roll-out of the development strategy at Retail Banking outside France, Financial Services and GIMS based on commercial inves
Slide 29: Supplementary Data
10 / 05 / 2007 SUPPLEMENTARY DATA
Slide 30: Quarterly income statement by core business
SUPPLEMENT - SOCIETE GENERALE GROUP Quarterly income statement by core business Global Investment Corporate & In EUR m Retail Banking & Management & Investment Corporate Centre Group Financial Services Services Banking Q1 07 Q1 06 Q1 07 Q1 06 Q1 07 Q1 06 Q1 07 Q1 06 Q1 07 Q1 06 Net banking income 3,
Slide 31: Quarterly income statement
SUPPLEMENT - RETAIL BANKING & FINANCIAL SERVICES Quarterly income statement Retail Banking outside Total Retail Banking and In EUR m French Networks Financial Services France Financial Services Q1 07 Q1 06 Change Q1 07 Q1 06 Change Q1 07 Q1 06 Change Q1 07 Q1 06 Change Net banking income 1,701 1,668
Slide 32: Change in risk-weighted assets
SUPPLEMENT - RETAIL BANKING & FINANCIAL SERVICES Change in risk-weighted assets Average credit risk equivalent in EUR bn 179.0 168.2 172.9 162.4 156.3 150.4 38.6 Retail Banking 143.8 33.7 36.2 outside France 135.4 139.2 30.3 28.0 26.5 23.4 24.5 22.3 38.7 Financial Services 34.8 36.1 37.6 32.1 33.6 2
Slide 33: Customer deposits and savings
SUPPLEMENT - FRENCH NETWORKS Customer deposits and savings Change Average outstanding Q1 07/Q1 06 In EUR bn 188.3 191.6 193.8 197.6 204.6 +8.6% 62.4 +13.0% LIFE INSURANCE * 56.9 58.3 60.2 55.2 Managed savings SHARE ACCOUNTS +12.4% MUTUAL FUNDS 52.7 +12.3% 46.9 48.3 48.1 49.6 OTHER 2.2 -1.3% 2.2 2.1
Slide 34: Customer loans
SUPPLEMENT - FRENCH NETWORKS Customer loans Average outstanding Change In EUR bn Q1 07/Q1 06 111.9 115.7 119.6 122.8 125.9 +12.6% INDIVIDUALS o.w.: 57.6 +14.7% 54.4 56.1 - Housing 50.3 52.0 - Consumer credit 9.5 9.5 9.5 +1.1% & overdrafts 9.4 9.4 BUSINESS 53.1 54.5 55.9 +12.8% 49.6 51.6 CUSTOMERS* B
Slide 35: Productivity of the French Networks
SUPPLEMENT - FRENCH NETWORKS Productivity of the French Networks Change since 1997 160 +59% Bank cards (No.) +55% Savings accounts (No.) 145 +30% Individual customer current a/c (No.) 130 115 100 +1% Global headcount* 100 = 1997 85 -21% Administrative staff 70 1997 1998 1999 2000 2001 2002 2003 2004
Slide 36: Interest margin of the French Networks
SUPPLEMENT - FRENCH NETWORKS Interest margin* of the French Networks The interest margin is an aggregate indicator dependent on three elements: As a % Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Interest margin on loans Interest margin 3.19 3.15 3.11 3.05 3.00 2.93 2.82 2.72 2.62 Structu
Slide 37: Specialised Financing: a major European player
SUPPLEMENT – FINANCIAL SERVICES Specialised Financing1: a major European player with diversified and growing businesses Breakdown of Q1 07 NBI(1) by Breakdown of Q1 07 NBI(1) by activity geographical region Business Finance & Services Germany and Operational Vehicle Leasing & Fleet Management Italy
Slide 38: Change in risk-weighted assets
SUPPLEMENT - FINANCIAL SERVICES Change in risk-weighted assets Average credit risk equivalent in EUR bn 36.6 37.6 35.2 Operational Vehicle Leasing & 33.8 32.7 7.1 Fleet Management 6.9 6.6 6.3 6.0 14.6 15.1 Consumer Credit 13.4 14.1 12.8 Equipment Finance 13.6 13.9 14.3 14.7 15.1 IT Asset Leasing & M
Slide 39: Quarterly income statement
SUPPLEMENT – GLOBAL INVESTMENT MANAGEMENT & SERVICES Quarterly income statement In EUR m SG SS & Online Asset Management Private Banking Total GIMS Savings Q1 07 Q1 06 Change Q1 07 Q1 06 Change Q1 07 Q1 06 Change Q1 07 Q1 06 Change Net banking income 340 333 +6%* 191 164 +18%* 388 272 +20%* 919 769
Slide 40: Breakdown of assets under management by type of product
SUPPLEMENT - ASSET MANAGEMENT Breakdown of assets under management by type of product EUR 371.2bn at March 31, 2007 March 07 March 06 338.8 333.9 345.0 354.0 371.2 Alternative Alternative (1) 66.6 18% Investment 15% 55.1 60.1 Investment 51.2 53.9 (2) 56.0 Diversified 52.6 54.7 55.9 Equities & 53.1 3
Slide 41: Breakdown of assets under management by client segment
SUPPLEMENT - ASSET MANAGEMENT Breakdown of assets under management by client segment EUR 371.2bn at March 31, 2007 338.8 333.9 345.0 354.0 371.2 15% Third-party 14% 14% distribution 14% 14% 18% 17% 46% Retail French 17% Networks 17% 17% 14% 14% Life 15% 15% 15% Insurance 4% 4% 4% Asia 5% 4% 26% 26%
Slide 42: Quarterly income statement
SUPPLEMENT - CORPORATE & INVESTMENT BANKING Quarterly income statement Total Corporate & Investment Total Corporate & Investment In EUR m Banking (excluding Cowen) Banking Q1 07 Q1 06 Change Q1 07 Q1 06 Change Net banking income 1,947 1,879 +4% +6% * 1,947 1,957 -1% +6% * o.w. Financing & Advisory 3
Slide 43: Change in risk-weighted assets
SUPPLEMENT - CORPORATE & INVESTMENT BANKING Change in risk-weighted assets* Change over Change over 12 months 12 months like-for-like In EUR bn 89.8 +12.1% +15.4% 80.2 81.9 82.0 79.6 75.2 77.1 70.2 62.2 +7.0% Counterparty risk +68.7% Market risk Mar 05 Jun 05 Sep 05 Dec 05 Mar 06 Jun 06 Sep 06 Dec 0
Slide 44: League table rankings
SUPPLEMENT - CORPORATE & INVESTMENT BANKING League table rankings Euro capital markets All markets Best Debt House in France (Euromoney – July 2006) Bonds No. 4 bookrunner of euro bond issues (IFR – March 2007) No. 3 bookrunner of corporate euro bond issues (IFR – March 2007) No. 1 bookrunner of c
Slide 45: League table rankings
SUPPLEMENT - CORPORATE & INVESTMENT BANKING League table rankings Derivatives Equity Derivatives Equity Derivatives House of the Year for the fourth year in a row (The Banker - October 2006) Best Equity Derivatives Provider in all regions: Europe, Asia and North America (Global Finance - September
Slide 46: Corporate Centre
SUPPLEMENT - SOCIETE GENERALE GROUP Corporate Centre* GOI down on Q1 06 EUR 33m decline in income from the equity portfolio In EUR m Q1 07 Q1 06 Negative impact of mark-to-market variation on interest rate hedging of equity instruments Gross operating income 22 133 Net income from other 0 2 At M
Slide 47: Trading VaR
SUPPLEMENT - RISK MANAGEMENT Trading VaR* Quarterly average of 1-day, 99% Trading VaR (in EUR m) 36,4 31,7 Trading VaR 27,2 26,0 25,1 23,6 24,4 21,4 19,8 20,3 21,8 16,4 Credit 17,6 16,2 15,2 Fixed Income 16,3 10,8 16,3 15,7 16,3 11,8 14,5 10,7 12,3 12,6 14,6 12,8 12,7 11,6 15,6 18,4 19,2 18,8 Equity
Slide 48: Provisioning of doubtful loans
SUPPLEMENT - RISK MANAGEMENT Provisioning of doubtful loans 31/12/2006 31/03/2007 Customer loans (in EUR bn) 279 286 Doubtful loans (in EUR bn) 10.6 10.8 Doubtful loans/customer loans 3.8% 3.8% Provisions (in EUR bn)* 6.7 6.8 Overall coverage ratio for 63% 63% doubtful loans * Excluding stable portf
Slide 49: Determination of number of shares used to calculate EPS
TECHNICAL SUPPLEMENT Determination of number of shares used to calculate EPS and book value per share 2005 2006 Q1 07 Average number of shares (thousands) Existing shares 437,836 443,065 461,425 Deductions Shares allocated to cover stock options awarded to staff and 16,456 11,939 8,641 restricted sh
Slide 50: Economic and financial environment
TECHNICAL SUPPLEMENT Economic and financial environment Q1 06 Q4 06 Q1 07 Interest rates (quarterly average) (%) 10-year French government bond 3.51 3.79 4.05 3-month euribor 2.61 3.59 3.82 Indices (end of period) CAC 40 5,220 5,542 5,634 EuroStoxx 50 3,854 4,120 4,181 Nasdaq 2,340 2,415 2,422 Curre
Slide 51: Investor relations
10 / 05 / 2007 Investor relations Patrick SOMMELET, Sayuri AOKI, Stéphane MARTY, Pascale MASSOUD-AYOUB Tel.: +33 (0)1 42 14 47 72 E-mail: [email protected] - Internet: www.ir.socgen.com