Societe Generale: First quarter 2023 earnings
RESULTS AT 31 MARCH 2023
Press releaseParis, 12 May
2023
SOLID RESULTS AND
FUNDAMENTALS
Robust business
performance driven by strong growth at
Boursorama, ALD and International Retail Banking, and an excellent
contribution by Global Banking and Investor Solutions, while French
Retail Banking has been temporarily impacted by a decrease in the
net interest marginGroup Revenues down
-3.8%*
under IFRS 17 vs.
Q1 22 with
business revenues
up by +0.3%* vs. Q1
22
Underlying cost-to-income
ratio, excluding contribution to
the Single Resolution Fund, at
60.5%
Low
cost of risk at 13 basis points
in Q1
23,
with limited defaults and a stable stock of provisions for
performing loans of EUR 3.8 billion at end-March 2023;
cost of risk for 2023 expected below 30 basis
points
Underlying Group net income of
EUR 1.5
billion(1)
(EUR 868 million on a reported basis, up +5.7% vs. Q1 22)
Underlying profitability (ROTE)
at
10.7%(1)
ROBUST BALANCE SHEET AND
LIQUIDITY PROFILE
CET 1 ratio of
13.5%(2)
at end-March
2023, around
410 basis points above the regulatory requirement, approval by the
ECB of the 2022 share buy-back programme for around EUR 440
millionLiquidity Coverage Ratio up by a sharp 171% at
end Q1 23 owing to a
0.7% increase in deposits over the quarter and liquidity reserves
strengthened to EUR 296 billion2023 long-term
funding
programme, more
than 70% completed
CONTINUED ORDERLY
EXECUTION OF
STRATEGIC INITIATIVES
Merger between the retail
banking networks in
France:
successful first IT migration in March, according to schedule.
Second IT migration planned for 13 and 14 May 2023
Growth of
Boursorama:
profitability breakeven reached in Q1 23 amid durably robust growth
in client’s acquisition
Acquisition of
LeasePlan by
ALD: agreement
signed by ALD to sell six subsidiaries. ALD’s Extraordinary General
Meeting to be held on 22 May 2023
Creation of
Bernstein:
a top-tier global equity research and cash equity
franchise,
signature of the acquisition agreement with AllianceBernstein
Fréderic
Oudéa, the Group’s Chief Executive
Officer, commented:“Amid a persistently
uncertain and complex economic and financial environment, Societe
Generale has posted again this quarter solid commercial
performances and results which confirm the quality of the Group’s
franchises and are based on sound cost and risk management. The
strength of the balance sheet is confirmed in every aspect,
capital, liquidity and the quality of the loan portfolio. We have
also fully achieved some very important milestones to renew the
Group’s business model following the successful execution of major
strategic projects, such as the creation of our new retail bank SG
in France, continued growth at Boursorama and the planned closing
of the LeasePlan acquisition by ALD to create a global leader in
sustainable mobility. These unprecedented and strongly
value-creating projects will help the Group meet its sustainable
profitability targets. On the eve of our managerial transition, I
would like to express my warmest gratitude to all the employees of
the Group for their tremendous support and for their extraordinary
contribution to the growth of our company.”
-
GROUP CONSOLIDATED RESULTS
|
In EUR m |
Q1 23 |
Q1 22 |
Change |
|
Net banking income |
6,671 |
7,043 |
-5.3% |
-3.8%* |
|
Operating expenses |
(5,057) |
(5,131) |
-1.4% |
+0.3%* |
|
Underlying operating expenses(1) |
(4,201) |
(4,147) |
+1.3% |
+3.6%* |
|
Gross operating income |
1,614 |
1,912 |
-15.6% |
-14.6%* |
|
Underlying gross operating income(1) |
2,470 |
2,896 |
-14.7% |
-14.1%* |
|
Net cost of risk |
(182) |
(561) |
-67.6% |
-51.4%* |
|
Operating income |
1,432 |
1,351 |
+6.0% |
-5.9%* |
|
Underlying operating income(1) |
2,288 |
2,335 |
-2.0% |
-8.7%* |
|
Net profits or losses from other assets |
(17) |
2 |
n/s |
n/s |
|
Income tax |
(328) |
(333) |
-1.6% |
-4.0%* |
|
Net income |
1,092 |
1,020 |
+7.1% |
-7.9%* |
|
O.w. non-controlling interests |
224 |
199 |
+12.6% |
+12.4%* |
|
Group net income |
868 |
821 |
+5.7% |
-12.0%* |
|
Underlying Group net
income(1) |
1,508 |
1,538 |
-2.0% |
-11.5%* |
|
ROE |
5.0% |
5.1% |
|
|
|
ROTE |
5.7% |
5.8% |
|
|
|
Underlying
ROTE(1) |
10.7% |
11.6% |
|
|
Societe Generale’s Board of Directors, which met
on 11 May 2023 under the chairmanship of Lorenzo Bini Smaghi,
examined Societe Generale Group’s results for Q1 23.
The various restatements enabling the transition
from underlying data to published data are presented in the
Methodology notes in Section 9.5.
Since 1 January 2023, Societe Generale has
retrospectively applied IFRS 17 – Insurance Contracts and IFRS 9 –
Financial lnstruments(2) to its insurance activities, with effect
from 1 January 2022. The press release published on 11 May 2023
detailing the standards’ impacts is set out in Appendix 3 (section
10).
Net banking
income
Net banking income showed resilience in
Q1 23 at -3.8%*
vs. Q1 22 and slightly up by +0.3%*
for the
businesses, driven by strong
revenue growth in Boursorama, ALD and International Retail Banking,
and by solid momentum in Global Banking and Investor Solutions,
while French Retail Banking is being temporarily impacted by a
decreased net interest margin.
Given that the benefit of rising interest rates
on deposits was largely offset by the ALM interest rate hedging
policy, Retail Banking’s revenues in France fell by -11.0% vs. Q1
22, largely due to higher interest rates on regulated savings
schemes, the end of the benefit of the TLTRO programme and the
usury rate’s impact on loan activity, despite sound momentum in
fees and a solid performance from Private Banking.
Revenues at International Retail Banking &
Financial Services grew by +6.5% (+15.3%*) vs. Q1 22, with solid
growth by International Retail Banking, where revenues increased by
+6.5%* vs. Q1 22, a very strong performance by Financial Services
of +26.3%* vs. Q1 22 that was driven by ALD, and by Insurance
revenues, which climbed by +51.2%* vs. Q1 22 under IFRS 17.
Global Banking & Investor Solutions
registered stable Q1 23 revenues relative to Q1 22. Global Markets
& Investor Services’ revenues were slightly below the very
sound Q1 22 performance (-1.7%), while Financing & Advisory
continued to post revenue growth, registering an increase of +4.7%
vs. Q1 22.
Operating
expenses
On a reported basis, operating expenses
came to EUR 5,057 million in Q1 23, down -1.4% vs.
Q1 22. On an underlying basis,
they totalled EUR 4,201 million (adjusted for IFRIC 21
linearisation and transformation charges), i.e. a moderate rise of
+1.3% relative to Q1 22.
Contribution to the Single Resolution Fund (SRF)
stood at EUR 672 million in Q1 23, which is EUR -192 million less
than in Q1 22 (EUR 864 million).
Excluding the Single Resolution Fund
contribution, the underlying cost-to-income ratio(2) is 60.5%,
which is below the target range between 66% and 68% for 2023.
Cost of
risk
The cost of risk for Q1
23 was low at 13 basis points,
i.e., EUR 182 million. It breaks down into a provision on
non-performing loans of EUR 206 million (14 basis points) and a
reversal on performing loans for EUR -24 million (-2 basis
points).
At end-March 2023, the Group’s provisions on
performing loans amounted to EUR 3,758 million, down EUR -11
million relative to 31 December 2022.
The non-performing loans ratio stood at 2.8%(2)
at 31 March 2023, down around 10 basis points vs. 31 March
2022. The gross coverage ratio on doubtful loans for the Group
stood at 49%(3) at 31 March 2023.
The cost of risk in 2023 is expected to
be below 30 basis points.
With respect to risk exposure, the Group has a
diversified corporate loan portfolio of EUR 385 billion at 31 March
2023 representing around 34% of Group exposure (EUR 1,136 billion
at 31 March 2023), with limited concentration risk. More
specifically, the Group has very limited exposure to regional banks
in the US (EaD(4) < USD 100 million).
The Group also has low exposure to the
commercial corporate real estate sector. Exposure to the sector
stood at 1.9% of the Group’s total Exposure at Default at 31 March
2023, within total exposure of 3.2% to the corporate real estate
sector. This exposure is based on a prudent and disciplined
origination policy and is diversified geographically – 79% in
Western Europe, 12% in the US and 7% in Asia – with moderate focus
on office real estate (25%) and presents a loan-to-value ratio(5)
of 50%.
Furthermore, the Group’s exposure to Leverage
Buy-Out (LBO) financing is small and has a low concentration level,
which is consistent with a selective lending policy. Exposure at
Default (EAD) is approximately EUR 5 billion, or ~0.4% of the
Group’s total EAD.
Last, offshore exposure to Russia was reduced by
around EUR 0.2 billion in the first quarter to EUR 1.6 billion
at 31 March 2023, i.e. a decrease of -50% since 31 December 2021.
The risk exposure on this portfolio is now estimated to be less
than EUR 0.5 billion, compared with less than EUR 0.6 billion for
the previous quarter. Total provisions stood at EUR 0.4 billion at
end-March 2023.
In addition, the Group’s residual exposure to
Rosbank was extremely limited at end-March 2023, at less than EUR
0.1 billion.
Group net
income
|
In EUR m |
Q1 23 |
Q1 22 |
|
Reported Group net income |
868 |
821 |
|
Underlying Group net income(1) |
1,508 |
1,538 |
|
As a % |
Q1-23 |
Q1 22 |
|
ROTE |
5.7% |
5.8% |
|
Underlying ROTE(1) |
10.7% |
11.6% |
(2)
Earnings per share amounted to EUR 0.88 in Q1
23. Underlying earnings per share amounted to EUR 1.05 over the
same period.
-
THE GROUP’S FINANCIAL
STRUCTURE
Group shareholders’ equity
totalled EUR 68.7 billion at 31 March 2023 (vs. EUR 67.0 billion at
31 December 2022). Net asset value per share was EUR 72.3 and
tangible net asset value per share was EUR 64.2.
The consolidated balance sheet totalled EUR
1,554 billion at 31 March 2023 vs. EUR 1,485 billion at
31 December 2022. The total funded balance sheet (see
Methodology note 11) stood at EUR 945 billion vs. EUR 930 billion
at 31 December 2022. The net amount of customer loan outstandings
totalled EUR 503 billion, which is a -2.5% decrease
compared with 31 December 2022. At the same time, customer deposits
amounted to EUR 598 billion, up +0.7% vs. 31 December 2022.
At 26 April 2023, the parent company had issued
EUR 27.6 billion of medium/long-term debt, having an average
maturity of 5.2 years and an average spread of 88 basis points
(over 6-month midswaps, excluding subordinated debt). The
subsidiaries had issued EUR 1.25 billion. In all, the Group has
issued a total of EUR 28.85 billion in medium/long-term debt.
The Liquidity Coverage Ratio (LCR) was well
above regulatory requirements at 171% at end-March 2023 (169% on
average for the quarter), vs. 141% at end-December 2022.
Concurrently, the Net Stable Funding Ratio (NSFR) stood at 115% at
end-March 2023.
The Group’s risk-weighted
assets (RWA) totalled EUR 361.0 billion at 31 March 2023
vs. EUR 362.4 billion at end-December 2022 according to CRR2/CRD5
rules. Risk-weighted assets in respect of credit risk account for
83.8% of the total, i.e., EUR 302.3 billion, down -0.1% vs. 31
December 2022.
At 31 March 2023, the Group’s Common
Equity Tier 1 ratio stood at 13.5%, or around 410 basis
points above the regulatory requirement. The CET 1 ratio includes a
+9 basis-point impact from the phase-in of IFRS 9. Excluding this
impact, the fully-loaded ratio amounts to 13.4%. The Tier 1 ratio
stood at 16.5% at end-March 2023 (16.3% at end-December 2022) while
the total capital ratio amounted to 19.4% (19.4% at end-December
2022).
The leverage ratio stood at
4.2% at 31 March 2023 (4.4% at end-December 2022).
With an RWA ratio of 33.7% and leverage exposure
of 8.5% at end-March 2023, the Group’s TLAC ratio is significantly
above the Financial Stability Board requirements for 2023.
Likewise, MREL-eligible outstandings, which stood at 34.3% of RWA
and 8.6% of leverage exposure at end-March 2023, are also far above
the regulatory requirements.
The Group is rated by four rating agencies: (i)
FitchRatings - 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”, stable
outlook, short-term rating “A-1”.
-
FRENCH RETAIL
BANKING
|
In EUR m |
Q1 23 |
Q1 22 |
Change |
|
Net banking income |
1,932 |
2,170 |
-11.0% |
|
Net banking income excl. PEL/CEL |
1,942 |
2,147 |
-9.5% |
|
Operating expenses |
(1,664) |
(1,698) |
-2.0% |
|
Underlying operating expenses(1) |
(1,535) |
(1,528) |
+0.5% |
|
Gross operating income |
268 |
472 |
-43.2% |
|
Underlying gross operating income(1) |
397 |
642 |
-38.2% |
|
Net cost of risk |
(89) |
(47) |
+89.4% |
|
Operating income |
179 |
425 |
-57.9% |
|
Net profits or losses from other assets |
5 |
0 |
n/s |
|
Group net income |
138 |
316 |
-56.3% |
|
Underlying Group net income(1) |
233 |
442 |
-47.2% |
|
RONE |
4.5% |
10.7% |
|
|
Underlying
RONE(1) |
7.5% |
15.0% |
|
(2) SG
networks
Average loan outstandings were stable on the Q1
22 level at EUR 211 billion. Outstanding loans to corporate and
professional customers (excluding government-guaranteed PGE loans)
were around +5% higher vs. Q1 22. Home loans were stable on the Q1
22 level, which is consistent with the Group’s selective
origination policy.
Average outstanding balance sheet deposits,
which include all deposits from corporate and professional, rose by
around +1% vs. Q1 22 to EUR 248 billion.
As a result, the average loan to deposit ratio
stood at 85% in Q1 23, which is a 1 percentage point improvement on
the Q1 22 level.
Life insurance assets under management totalled
EUR 111 billion at end-March 2023, stable vs. Q1 22 (with the
unit-linked share accounting for 33%). Gross life insurance inflows
amounted to EUR 3.3 billion at Q1 23.
Personal protection insurance premiums were up
+3% vs. Q1 22 while property/casualty insurance premiums increased
+7% vs. Q1 22.
Boursorama
Boursorama attracted around 297,000 new clients
in the first quarter of 2023, thereby consolidating its position as
the leading online bank in France, and registered more than 4.9
million clients atend-March 2023.
Average loan outstandings grew by +6.7% vs. Q1
22 to EUR 15.2 billion. Home loan outstandings climbed by +6.9% vs.
Q1 22, while consumer loan outstandings were up +4.7% vs. Q1
22.
Average outstanding savings including deposits
and financial savings were +39.4% higher vs. Q1 22 at EUR 51.0
billion. Deposits rose by a sharp +39.4% vs. Q1 22, notably on back
of durably brisk inflow momentum during the quarter. Life insurance
outstandings increased by +67.4% vs. Q1 22, with the unit-linked
share accounting for 42%.
Boursorama reinforced its day-to-day banking
operations, registering growth in payment volumes of +48% vs. Q1
22.
During the first quarter, Boursorama became B
CorpTM certified and pledged to continue improving its CSR
approach.
At end-March 2023, the online bank posted net
income at breakeven while pursuing its target to attract new
clients. Revenues accelerated relative to the year-earlier period
(1.6x vs. Q1 22, excluding new client acquisition costs) and were
notably driven by continued client onboarding growth and a
favourable interest rate environment.
At the same time, Boursorama posted decreases in
both client acquisition costs (~-9% vs. Q1 22 and ~- 21% vs.
Q1 21) and cost-to-serve (~-11% on average since 2019). Boursorama
is growing in step with a limited increase of its teams, 46 new
employees have been recruited since end-2021. The online bank’s
total headcount of full-time employees (FTE) stood at 898 at
end-March 2023.
Private Banking
Private Banking activities, which have been
housed in French Retail Banking since the beginning of 2022, cover
Private Banking activities in and outside of France. Assets under
management totalled EUR 132 billion at Q1 23, excluding
activities formerly managed by Lyxor. Private Banking’s net asset
inflows amounted to EUR 2.4 billion at Q1 23. Net banking income
stood at EUR 326 million in Q1 23, which is a +2.8% increase vs. Q1
22.
Net banking
income
Revenues for the quarter totalled EUR 1,932
million. Revenues are down -9.5% vs. Q1 22 excluding PEL/CEL. Net
interest income and other revenues including PEL/CEL was down by
-18% vs. Q1 22, and was notably impacted by higher interest rates
on regulated savings schemes, the consequences of the usury rate
and the end of the benefit of the TLTRO. Fee income was stable
relative to Q1 22.
As the benefit of positive interest rates on
deposits being temporarily offset by the short-term hedging policy,
2023 will be a transition year for French Retail Bank revenues due
to an expected decrease in the net interest margin, stemming
notably from the negative impacts of regulated savings (totalling
around EUR 0.4 billion compared with 2022), the end of the TLTRO
benefit (around EUR 0.3 billion compared to 2022), and the
consequences of the usury rate on mortgage loans, which affects
loan production volumes and margins, both of which have decreased.
Based on March 2023 forward rates and assumptions on outstandings
in line with current environment, the projection of net interest
margin of French retail banking in 2023 is expected down by around
-15% to -20% vs. 2022. The benefit of positive interest rates will
materialise as of 2024 as these hedges mature.
Operating
expenses
Operating expenses over the quarter were EUR
1,664 million (-2.0% vs. Q1 22) and EUR 1,535 million on an
underlying basis (+0.5% vs. Q1 22). The underlying cost-to-income
ratio stood at 79.5% at Q1 23.
Cost of
risk
Over the first quarter, the cost of risk
amounted to EUR 89 million or 14 basis points, which was lower than
in Q4 22 (35 basis points).
Group net
income
The contribution to underlying Group net income
was EUR 233 million in Q1 23, down -47% vs. Q1 22. Underlying RONE
stood at 7.5% in Q1 23.
-
INTERNATIONAL RETAIL BANKING & FINANCIAL
SERVICES
|
In EUR m |
Q1 23 |
Q1 22 |
Change |
|
Net banking income |
2,206 |
2,071 |
+6.5% |
+15.3%* |
|
Operating expenses |
(1,108) |
(1,083) |
+2.3% |
+12.2%* |
|
Underlying operating expenses(1) |
(1,039) |
(1,011) |
+2.8% |
+13.5%* |
|
Gross operating income |
1,098 |
988 |
+11.1% |
+18.6%* |
|
Underlying gross operating income(1) |
1,167 |
1,060 |
+10.1% |
+17.0%* |
|
Net cost of risk |
(91) |
(325) |
-72.0% |
-31.9%* |
|
Operating income |
1,007 |
663 |
+51.9% |
+26.6%* |
|
Net profits or losses from other assets |
(1) |
2 |
n/s |
n/s |
|
Group net income |
564 |
361 |
+56.2% |
+19.6%* |
|
Underlying Group net income(1) |
600 |
400 |
+50.1% |
+17.6%* |
|
RONE |
21.4% |
13.1% |
|
|
|
Underlying
RONE(1) |
22.7% |
14.5% |
|
|
(2)(3)
International Retail Banking’s
outstanding loans posted growth of +5.8%* vs. Q1 22 to EUR 88.9
billion. Outstanding deposits grew slightly by +0.7%* vs. Q1 22 to
EUR 81.5 billion.
In Europe, outstanding loans rose by +7.7%
compared with end-March 2022 to EUR 65.3 billion, driven
by strong momentum in all regions, and particularly in the Czech
Republic (+9.8% vs. Q1 22) and Romania (+11.1% vs. Q1 22).
Outstanding deposits advanced by +1.5% vs. Q1 22 to EUR 55.1
billion, up by +6.9% on end-December 2022.
Commercial performances continued to be solid in
all regions in Africa, Mediterranean Basin and French Overseas
Territories, where loan outstandings rose by +5.0% vs. Q1 22 to EUR
23.6 billion amid an improved economic context. Deposits also
increased by +5.1% vs. Q1 22 to EUR 26.4 billion, taking the
loan-deposit ratio to 89% in Q1 23.
In the Insurance
activity, life insurance outstandings
were stable on Q1 22 at EUR 132.9 billion. The share of unit-linked
products in outstandings was 37%, up +1 point over the same period.
Gross life insurance savings inflows amounted to EUR 3.6 billion,
with France registering solid momentum (+1.7% vs. Q1 22).
Protection insurance saw a +3.5%* increase vs. Q1-22, driven by a
+7.4%* rise in P&C insurance over the same period.
Financial Services also posted
very robust growth. Operational Vehicle Leasing and Fleet
Management posted growth of +3.2% vs. end-March 2022, driven by
strong commercial momentum (excluding contracts involving Russia,
Belarus, Portugal, Ireland and Norway, excepting NF Fleet Norway).
The number of contracts totalled 1.8 million at end-March 2023.
Equipment Finance outstanding loans were slightly higher by +1.5%
relative to end-March 2022 at EUR 14.8 billion.
Net banking
income
Net banking income amounted to EUR 2,206 million
in Q1 23, up by +15.3%* vs. Q1 22.
International Retail
Banking’s net banking income stood at EUR
1,262 million in Q1 23 up by +6.5%* vs. Q1 22.
Revenues in Europe climbed +3.2% vs. Q1 22,
driven by strong growth in Romania and a continued high net
interest margin in the Czech Republic.
Rebounds were confirmed in all regions across
Africa, Mediterranean Basin and French Overseas Territories, which
saw strong increases of +14.3% vs. Q1 22, with revenues driven by a
high net interest margins and dynamic commercial activity in
foreign exchange transactions.
The Insurance business
registered net banking income growth of +51.2%* to EUR 147 million
vs. Q1 22 under IFRS 17.
Financial Services’ net banking
income grew sharply (+26.3%*) vs. Q1 22 at EUR 797 million. ALD
continued to benefit in the first quarter from the adjustment of
vehicle depreciation costs (EUR 163 million in Q1 23), which
is consistent with the increase in the residual value of vehicles
and high income from used-car sales, with the average selling price
per vehicle in Q1 23 being EUR 2,535 (EUR 3,102 excluding the
depreciation curve adjustment).
Operating
expenses
Operating expenses increased by +12.2%* on a
reported basis (+13.5%* on an underlying basis) vs. Q1 22 to EUR
1,108 million, generating a positive jaws effect with an underlying
cost-income ratio of 47.1% in Q1 23, lower than in Q1-22
(48.8%).
At International Retail
Banking, the costs increase remained
under control over the quarter at +6.1%* on an underlying basis vs.
Q1 22 despite spiking inflation.
In the Insurance business,
operating expenses increased by +21.0%* vs. Q1 22, resulting in a
cost-to-income ratio of 15.6%.
At Financial
Services, operating expenses increased by
+32.5%* on an underlying basis vs. Q1 22. The increase can be
attributed to the recognition of expenses related to the
preparation of the LeasePlan acquisition.
Cost of
risk
Over the first
quarter, the cost of risk fell to 27
basis points (or EUR 91 million) vs. 40 basis points in
Q4 22.
Group net
income
The contribution to Group net income was EUR 564
million in Q1-23, up by +19.6%* vs. Q1 22 and
EUR 600 million on an underlying basis (+17.6%* vs. Q1
22).
Underlying RONE stood at 22.7% in Q1 23, vs.
14.5% in Q1 22. Underlying RONE was 18.2% in International Retail
Banking and 27.7% in Financial Services and Insurance at end-March
2023.
-
GLOBAL BANKING & INVESTOR SOLUTIONS
|
In EUR m |
Q1 23 |
Q1 22 |
Change |
|
Net banking income |
2,758 |
2,755 |
+0.1% |
-1.3%* |
|
Operating expenses |
(2,043) |
(2,172) |
-5.9% |
-6.1%* |
|
Underlying operating expenses(1) |
(1,603) |
(1,611) |
-0.5% |
-0.8%* |
|
Gross operating income |
715 |
583 |
+22.6% |
+15.9%* |
|
Underlying gross operating income(1) |
1,155 |
1,144 |
+1.0% |
-1.9%* |
|
Net cost of risk |
(5) |
(194) |
-97.4% |
-97.4%* |
|
Operating income |
710 |
389 |
+82.5% |
+68.5%* |
|
Group net income |
565 |
302 |
+87.1% |
+73.1%* |
|
Underlying Group net income(1) |
899 |
734 |
+22.6% |
+18.7%* |
|
RONE |
15.5% |
8.6% |
|
|
|
Underlying
RONE(1) |
24.7% |
20.8% |
|
|
Net banking
income
Global Banking & Investor
Solutions once again delivered an outstanding performance
in the first quarter, posting revenues of EUR 2,758 million, which
is stable with respect to the very strong Q1 22 result.
Global Markets & Investor
Services recorded net banking income of EUR 1,931 million
in Q1 23, which was slightly down by -1.7% on the Q1 22 level.
Global Markets’ first-quarter performance very
nearly matched last year’s record (4) (5) of EUR 1,721 million
(a slight -3.2% decrease vs. Q1 22) on the back of robust
commercial activity, particularly in the rates activities and
financing businesses.
Against a favourable backdrop of spiking
volatility in interest rates and currencies, Fixed Income and
Currencies (FIC) turned in their best quarter since Q1-12, posting
revenues of EUR 890 million, up by a strong +16.0% vs. Q1 22. This
excellent performance can be attributed to robust commercial
momentum.
The Equities business recorded an overall
positive performance, posting Q1 23 revenues of
EUR 831 million, down -17.7% vs. a record(2) Q1 22 and up
+28.8% vs. Q4 22. Market conditions were less favourable due to
lower volumes and weaker volatility.
Securities Services’ revenues grew by +11.7%
over the quarter to EUR 210 million. Excluding the impact of the
revaluation of our stake in Euroclear, business activity was stable
compared with Q1 22. Assets under Custody and Assets under
Administration totalled EUR 4,605 billion and EUR 584 billion,
respectively.
Financing & Advisory
activities registered a solid performance with Q1 revenues
of EUR 827 million, up +4.7% vs. Q1 22.
The Global Banking & Advisory business
turned in a very praiseworthy performance, with revenue decreasing
slightly by -4.9% vs. Q1 22, which was a record first quarter. This
activity benefited notably from very strong market momentum in
Asset Finance. Investment banking returned to growth amid
persistently complex market conditions, thanks notably to debt
capital market activities and telecommunications, media and
technology (TMT) sector financing. The Asset-Backed Products and
Natural Resources platforms showed sound resilience, posting minor
contractions compared with a Q1 22 result that bordered on a record
high. Activities involving the renewable energies sector continued
to deliver solid growth.
Global Transaction and Payment Services once
again posted an excellent performance, with revenue growth of
+51.1% vs. Q1 22 that took advantage of positive interest rates and
very sound commercial performances.
Operating
expenses
Operating expenses came to EUR 2,043 million in
Q1 23, down -5.9% vs. Q1 22. The decline can be attributed to the
highly disciplined approach to cost management and to the smaller
contribution to the Single Resolution Fund (SRF) (in Q1 23,
contribution to the SRF came to EUR 491 million vs. EUR 622 million
in Q1 22). Excluding the SRF contribution and on an underlying
basis, operating expenses rose by a very minor +1.7% vs. Q1 22.
This brought the underlying cost-to-income ratio excluding the SRF
contribution to 53.7% vs. 52.8% in Q1 22.
Cost of
risk
Over the first quarter, the cost of risk
improved sharply to 1 basis point (or EUR 5 million) vs. 16 basis
points in Q4 22.
Group net
income
The contribution to Group net income was EUR 565
million on a reported basis and EUR 899 million on an underlying
basis, up by a strong +22.6% vs. Q1 22.
Global Banking & Investor Solutions posted
strong underlying RONE of 24.7% in Q1 23 (or 27.3% restated for the
impact of the SRF contribution), i.e. an improvement on the Q1 22
RONE of 20.8%.
-
CORPORATE CENTRE
|
In EUR m |
Q1 23 |
Q1 22 |
|
Net banking income |
(225) |
47 |
|
Operating expenses |
(242) |
(178) |
|
Underlying operating expenses(6) |
(23) |
3 |
|
Gross operating income |
(467) |
(131) |
|
Underlying gross operating
income(1) |
(248) |
50 |
|
Net cost of risk |
3 |
5 |
|
Net profits or losses from other assets |
(21) |
- |
|
Income tax |
113 |
19 |
|
Group net income |
(399) |
(158) |
|
Underlying Group net
income(1) |
(225) |
(37) |
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
cross-functional projects, as well as several costs incurred by the
Group that are not re-invoiced to the businesses.
The Corporate Centre’s net banking
income totalled EUR -225 million in Q1 23 vs. EUR +47
million in Q1 22. It notably includes the negative impact from the
unwinding of derivatives taken out against the TLTRO scheme for
around EUR -0.1 billion at Q1 23 (approximately EUR -0.3 billion in
2023) and the negative impact of the introduction of IFRS 17
(almost 70 million euros), which was offset by operating expenses,
resulting in an almost zero impact on gross operating income.
Operating expenses totalled EUR -242
million in Q1 23 vs. EUR -178 million in Q1 22. In
particular, they include the Group’s transformation costs for a
total amount of EUR -182 million relating to French Retail Banking
activities (EUR -140 million), Global Banking & Investor
Solutions (EUR -11 million) and the Corporate Centre (EUR -31
million). Underlying costs came to EUR -23 million in Q1-23 vs. EUR
+3 million in Q1 22.
Gross operating income totalled EUR -467
million in Q1 23 vs. EUR -131 million in Q1 22. Underlying
gross operating income totalled EUR -248 million in Q1 23 vs. EUR
50 million in Q1 22.
The Corporate Centre’s contribution to
Group net income totalled EUR -399 million in Q1
23 vs. EUR -158 million
in Q1 22. The Corporate Centre’s contribution to Group underlying
net income stood at EUR -225 million in Q1 23 vs. EUR -37 million
in Q1 22.
7. 2023
AND 2024 FINANCIAL CALENDAR
|
2023 and 2024 Financial communication calendar |
|
May 23rd, 2023 Combined annual
general meetingAugust 3rd, 2023
Second quarter and half year 2023 resultsNovember 3rd, 2023 Third
quarter and nine-month 2023 resultsFebruary 8th,
2024 Fourth quarter and full
year 2023 results |
|
The Alternative Performance Measures, notably the notions
of net banking income for the pillars, operating expenses, IFRIC 21
adjustment, 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 section “Risk Factors” in our Universal
Registration Document filed with the French Autorité des Marchés
Financiers (which is available on
https://investors.societegenerale.com/en). 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. |
8. APPENDIX 1: FINANCIAL
DATA
GROUP NET INCOME BY CORE
BUSINESS
|
In EUR m |
Q1 23 |
Q1 22 |
Variation |
|
French Retail Banking |
138 |
316 |
-56.3% |
|
International Retail Banking and Financial Services |
564 |
361 |
+56.2% |
|
Global Banking and Investor Solutions |
565 |
302 |
+87.1% |
|
Core Businesses |
1,267 |
979 |
+29.4% |
|
Corporate Centre |
(399) |
(158) |
n/s |
|
Group |
868 |
821 |
+5.7% |
CONSOLIDATED BALANCE
SHEET
|
In EUR m |
|
31.03.2023 |
31.12.2022 |
|
Cash, due from central banks |
|
223,149 |
207,013 |
|
Financial assets at fair value through profit or loss |
|
494,709 |
427,151 |
|
Hedging derivatives |
|
30,909 |
32,971 |
|
Financial assets at fair value through other comprehensive
income |
|
93,598 |
92,960 |
|
Securities at amortised cost |
|
27,288 |
26,143 |
|
Due from banks at amortised cost |
|
79,019 |
68,171 |
|
Customer loans at amortised cost |
|
494,317 |
506,635 |
|
Revaluation differences on portfolios hedged against interest rate
risk |
|
(1,942) |
(2,262) |
|
Investments of insurance companies |
|
438 |
353 |
|
Tax assets |
|
4,415 |
4,484 |
|
Other assets |
|
68,277 |
82,315 |
|
Non-current assets held for sale |
|
1,050 |
1,081 |
|
Deferred profit-sharing |
|
- |
- |
|
Investments accounted for using the equity method |
|
156 |
146 |
|
Tangible and intangible fixed assets |
|
34,457 |
33,958 |
|
Goodwill |
|
3,784 |
3,781 |
|
Total |
|
1,553,624 |
1,484,900 |
|
In EUR m |
|
31.03.2023 |
31.12.2022 |
|
Due to central banks |
|
10,513 |
8,361 |
|
Financial liabilities at fair value through profit or loss |
|
375,254 |
304,175 |
|
Hedging derivatives |
|
43,242 |
46,164 |
|
Debt securities issued |
|
137,501 |
133,176 |
|
Due to banks |
|
129,836 |
133,011 |
|
Customer deposits |
|
536,228 |
530,764 |
|
Revaluation differences on portfolios hedged against interest rate
risk |
|
(8,777) |
(9,659) |
|
Tax liabilities |
|
1,807 |
1,645 |
|
Other liabilities |
|
92,667 |
107,315 |
|
Non-current liabilities held for sale |
|
204 |
220 |
|
Insurance contracts related liabilities |
|
138,606 |
135,875 |
|
Provisions |
|
4,391 |
4,579 |
|
Subordinated debts |
|
16,782 |
15,948 |
|
Total liabilities |
|
1,478,254 |
1,411,574 |
|
Shareholder's equity |
|
- |
- |
|
Shareholders' equity, Group share |
|
- |
- |
|
Issued common stocks and capital reserves |
|
21,215 |
21,248 |
|
Other equity instruments |
|
10,136 |
9,136 |
|
Retained earnings |
|
36,243 |
34,479 |
|
Net income |
|
868 |
1,825 |
|
Sub-total |
|
68,462 |
66,688 |
|
Unrealised or deferred capital gains and losses |
|
285 |
282 |
|
Sub-total equity, Group share |
|
68,747 |
66,970 |
|
Non-controlling interests |
|
6,623 |
6,356 |
|
Total equity |
|
75,370 |
73,326 |
|
Total |
|
1,553,624 |
1,484,900 |
-
APPENDIX 2:
METHODOLOGY
1 -
The financial information presented for
the first quarter 2023 was
examined by the Board of Directors on May
11th,
2023 and has been prepared in
accordance with IFRS as adopted in the European Union and
applicable at that date. This information has not been audited.
2 - Net banking income
The pillars’ net banking income is defined on
page 41 of Societe Generale’s 2023 Universal 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 expenses
Operating expenses correspond to the “Operating
Expenses” as presented in notes 5 and 8.2 to the Group’s
consolidated financial statements as at December 31st, 2022. The
term “costs” is also used to refer to Operating Expenses. The
Cost/Income Ratio is defined on page 41 of Societe Generale’s 2023
Universal Registration Document.
4 - IFRIC 21 adjustment
The 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.
The contributions to Single Resolution
Fund
(“SRF”)
are part of IFRIC 21 adjusted charges, they include contributions
to national resolution funds within the EU.
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:
|
in EUR m |
Q1 23 |
Q1 22 |
|
|
Exceptional operating expenses (-) |
856 |
984 |
|
|
IFRIC linearisation |
674 |
841 |
|
|
Transformation costs(1) |
182 |
143 |
|
|
Of which related to French Retail Banking |
140 |
104 |
|
|
Of which related to Global Banking & Investor Solutions |
11 |
14 |
|
|
Of which related to Corporate Centre |
31 |
25 |
|
|
Total exceptional items
(pre-tax) |
856 |
984 |
|
|
Total exceptional items (post-tax) |
640 |
717 |
|
|
Reported Net income - Group Share |
868 |
821 |
|
|
Total exceptional items - Group share
(post-tax) |
640 |
717 |
|
|
Underlying Net income - Group Share |
1,508 |
1,538 |
|
(1) 6 -
Cost of risk in basis points, coverage ratio for
doubtful outstandings
The cost of risk is defined on pages 42 and 691
of Societe Generale’s 2023 Universal 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 23 |
Q1 22 |
|
French Retail Banking |
Net Cost Of Risk |
89 |
47 |
|
Gross loan Outstandings |
252,689 |
242,645 |
|
Cost of Risk in bp |
14 |
8 |
|
International Retail Banking and Financial
Services |
Net Cost Of Risk |
91 |
325 |
|
Gross loan Outstandings |
134,988 |
140,547 |
|
Cost of Risk in bp |
27 |
92 |
|
Global Banking and Investor Solutions |
Net Cost Of Risk |
5 |
194 |
|
Gross loan Outstandings |
177,590 |
170,749 |
|
Cost of Risk in bp |
1 |
45 |
|
Corporate Centre |
Net Cost Of Risk |
(3) |
(5) |
|
Gross loan Outstandings |
16,537 |
14,413 |
|
Cost of Risk in bp |
(6) |
(12) |
|
Societe Generale
Group |
Net Cost Of Risk |
182 |
561 |
|
Gross loan Outstandings |
581,804 |
568,354 |
|
Cost of Risk in bp |
13 |
39 |
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 of Societe Generale’s 2023
Universal 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 43 of
Societe Generale’s 2023 Universal 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. 9). 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 (in EUR m) |
Q1 23 |
Q1 22 |
|
Shareholders' equity Group share |
68,747 |
66,089 |
|
Deeply subordinated notes |
(10,823) |
(8,178) |
|
Interest of deeeply & undated subodinated notes, issue premium
amortisations(1) |
(102) |
(65) |
|
OCI excluding conversion reserves |
640 |
72 |
|
Distribution provision(2) |
(421) |
(415) |
|
Distribution N-1 to be paid |
(1,803) |
(2,285) |
|
ROE equity end-of-period |
56,238 |
55,218 |
|
Average ROE equity |
56,072 |
54,764 |
|
Average Goodwill |
(3,652) |
(3,624) |
|
Average Intangible Assets |
(2,876) |
(2,747) |
|
Average ROTE equity |
49,544 |
48,393 |
|
|
|
|
|
Group net Income |
868 |
821 |
|
Interest on deeply subordinated notes and undated subordinated
notes |
(163) |
(119) |
|
Cancellation of goodwill impairment |
- |
2 |
|
Ajusted Group net Income |
705 |
704 |
|
Average ROTE equity |
49,544 |
48,393 |
|
ROTE |
5.7% |
5.8% |
|
|
|
|
|
Underlying Group net income |
1,508 |
1,538 |
|
Interest on deeply subordinated notes and undated subordinated
notes |
(163) |
(119) |
|
Cancellation of goodwill impairment |
- |
2 |
|
Ajusted Underlying Group
net Income |
1,345 |
1,421 |
|
Average ROTE equity (underlying) |
50,183 |
49,110 |
|
Underlying ROTE |
10.7% |
11.6% |
RONE calculation: Average capital
allocated to Core Businesses (in EURm)
|
In EURm |
Q1 23 |
Q1 22 |
Change |
|
French Retail Banking |
12,392 |
11,822 |
+4.8% |
|
International Retail Banking and Financial Services |
10,564 |
11,026 |
-4.2% |
|
Global Banking and Investor Solutions |
14,562 |
14,127 |
+3.1% |
|
Core Businesses |
37,518 |
36,975 |
+1.5% |
|
Corporate Center |
18,554 |
17,789 |
+4.3% |
|
Group |
56,072 |
54,764 |
+2.4% |
8 - Net assets and
tangible net assets
Net assets and tangible net assets are defined
in the methodology, page 45 of the Group’s 2023 Universal
Registration Document. The items used to calculate them are
presented below:
|
End of period (in EUR m) |
Q1 23 |
2022 |
2021 |
|
Shareholders' equity Group share |
68,747 |
66,970 |
65,067 |
|
Deeply subordinated and undated subordinated notes |
(10,823) |
(10,017) |
(8,003) |
|
Interest of deeply & undated subordinated notes, issue premium
amortisations(1) |
(102) |
(24) |
20 |
|
Book value of own shares in trading portfolio |
130 |
67 |
37 |
|
Net Asset Value |
57,952 |
56,996 |
57,121 |
|
Goodwill |
(3,652) |
(3,652) |
(3,624) |
|
Intangible Assets |
(2,878) |
(2,875) |
(2,733) |
|
Net Tangible Asset Value |
51,423 |
50,469 |
50,764 |
|
|
|
|
|
|
Number of shares used to calculate
NAPS(2) |
801,471 |
801,147 |
831,162 |
|
Net Asset Value per Share |
72.3 |
71.1 |
68.7 |
|
Net Tangible Asset Value per Share |
64.2 |
63.0 |
61.1 |
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 44 of Societe Generale’s 2023 Universal 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 2023 Universal 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 23 |
2022 |
2021 |
|
Existing shares |
829,046 |
845,478 |
853,371 |
|
Deductions |
|
|
|
|
Shares allocated to cover stock option plans and free shares
awarded to staff |
6,899 |
6,252 |
3,861 |
|
Other own shares and treasury shares |
20,838 |
16,788 |
3,249 |
|
Number of shares used to calculate
EPS(1) |
801,309 |
822,437 |
846,261 |
|
Group net Income |
868 |
1,825 |
5,641 |
|
Interest on deeply subordinated notes and undated subordinated
notes |
(163) |
(596) |
(590) |
|
Adjusted Group net income (in EUR m) |
705 |
1,230 |
5,051 |
|
EPS (in EUR) |
0.88 |
1.50 |
5.97 |
|
Underlying EPS (in EUR) |
1.05 |
5.87 |
5.52 |
10 - The
Societe Generale Group’s
Common Equity Tier 1 capital is calculated in accordance
with applicable CRR2/CRD5 rules. The fully loaded solvency ratios
are presented pro forma for current earnings, net of dividends, for
the current financial year, unless specified otherwise. When there
is reference to phased-in ratios, these do not include the earnings
for the current financial year, unless specified otherwise. The
leverage ratio is also calculated according to applicable CRR2/CRD5
rules including the phased-in following the same rationale as
solvency ratios.
11 – Funded balance sheet, loan to
deposit ratio
The funded balance sheet is
based on the Group financial statements. It is obtained in two
steps:
- A first step aiming at reclassifying
the items of the financial statements into aggregates allowing for
a more economic reading of the balance sheet. Main
reclassifications:
Insurance: grouping of the accounting items
related to insurance within a single aggregate in both assets and
liabilities.Customer loans: include outstanding loans with
customers (net of provisions and write-downs, including net lease
financing outstanding and transactions at fair value through profit
and loss); excludes financial assets reclassified under loans and
receivables in accordance with the conditions stipulated by IFRS 9
(these positions have been reclassified in their original
lines).Wholesale funding: Includes interbank liabilities and debt
securities issued. Financing transactions have been allocated to
medium/long-term resources and short-term resources based on the
maturity of outstanding, more or less than one
year.Reclassification under customer deposits of the share of
issues placed by French Retail Banking networks (recorded in
medium/long-term financing), and certain transactions carried out
with counterparties equivalent to customer deposits (previously
included in short term financing).Deduction from customer deposits
and reintegration into short-term financing of certain transactions
equivalent to market resources.
- A second step aiming at excluding
the contribution of insurance subsidiaries, and netting
derivatives, repurchase agreements, securities borrowing/lending,
accruals and “due to central banks”.
The Group loan/deposit ratio is
determined as the division of the customer loans by customer
deposits as presented in the funded balance sheet.
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.
-
APPENDIX 3: IMPACTS OF THE NEW IFRS 17
STANDARD
Press release
Paris, 11 May 2023
Societe
Generale
publishes today new
series of 2022 quarterly results
following the application since 1 January
2023 of IFRS 17
“Insurance
Contracts” and IFRS 9
“Financial
lnstruments”
73for its insurance
activities, with retrospective effect
from
1 January 2022.
While the application of IFRS 17 and IFRS 9 does
not modify the profitability of insurance contracts over the
duration of the life of the contracts, it does however impact the
following:
-
group net income, mainly due to the change in the pace of P&L
recognition and a modification of the presentation of operating
expenses relating to the execution of insurance contracts, now
deducted from net banking income;
-
consolidated shareholders’ equity, due to changes in valuation
methodology for the relevant assets and liabilities under the new
IFRS 17 standard, as well as for assets and liabilities subject to
the IFRS 9 standard.
At Societe Generale Group level, the first-time
application of these standards on 1 January 2023 impacted the
financial statements in the following ways:
- a
EUR 193 million decrease in 2022 reported Group net income due to
the change in pace of P&L recognition (see Appendix 1);
- a
EUR 519 million net increase in Group shareholders’ equity from the
date on which the standards first applied, i.e. 1 January
2023.
The series of 2022 quarterly results have been
adjusted consequently and are available on the Societe Generale
website.
(The figures included in this press release are
unaudited.)
Appendix 1: Financial
impacts following the application
of the IFRS 17 and 9 standards on
2022 net income
|
In EUR m |
Group |
|
French Retail
Banking |
|
|
|
|
|
|
Published 11.05.23 |
Published 08.02.23 |
Gap |
|
Published 11.05.23 |
Published 08.02.23 |
Gap |
|
|
|
|
|
Net Banking Income |
27,155 |
28,059 |
(904) |
|
8,706 |
8,839 |
(133) |
|
|
|
|
|
Operating expenses |
(17,994) |
(18,630) |
636 |
|
(6,403) |
(6,473) |
70 |
|
|
|
|
|
Gross operating income |
9,161 |
9,429 |
(268) |
|
2,303 |
2,366 |
(63) |
|
|
|
|
|
Group net income |
1,825 |
2,018 |
(193) |
|
1,399 |
1,445 |
(46) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In EUR m |
International Retail Banking and Financial
Services |
|
Global Banking & Investor Solutions |
|
Corporate Centre |
|
|
Published 11.05.23 |
Published 08.02.23 |
Gap |
|
Published 11.05.23 |
Published 08.02.23 |
Gap |
|
Published 11.05.23 |
Published 08.02.23 |
Gap |
|
Net Banking Income |
8,595 |
9,122 |
(527) |
|
10,082 |
10,082 |
0 |
|
(228) |
16 |
(244) |
|
Operating expenses |
(4,009) |
(4,334) |
325 |
|
(6,634) |
(6,634) |
0 |
|
(948) |
(1,189) |
241 |
|
Gross operating income |
4,586 |
4,788 |
(202) |
|
3,448 |
3,448 |
(0) |
|
(1,176) |
(1,173) |
(3) |
|
Group net income |
2,226 |
2,376 |
(150) |
|
2,427 |
2,427 |
(0) |
|
(4,227) |
(4,230) |
3 |
Press
contact:
Jean-Baptiste Froville_+33 1 58 98 68
00_
jean-baptiste.froville@socgen.comFanny
Rouby_+33 1 57 29 11 12_
fanny.rouby@socgen.com
Societe
GeneraleSociete 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. Committed to the positive transformations of the world’s
societies and economies, Societe Generale and its teams seek to
build, day after day, together with its clients, a better and
sustainable future through responsible and innovative financial
solutions.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 117,000 members of staff in 66 countries
and supports on a daily basis 25 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 with the SG bank, resulting from the merger of the
two Societe Generale and Crédit du Nord networks, and Boursorama.
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, with networks in Africa, 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 (Europe), FTSE4Good
(Global and Europe), Bloomberg Gender-Equality Index, Refinitiv
Diversity and Inclusion Index, Euronext Vigeo (Europe and
Eurozone), STOXX Global ESG Leaders indexes, and the MSCI Low
Carbon Leaders Index (World and Europe). In case of doubt regarding
the authenticity of this press release, please go to the end of
Societe Generale’s newsroom page where official Press Releases sent
by Societe Generale can be certified using blockchain technology. A
link will allow you to check the document’s legitimacy directly on
the web page. For more information, you can follow us on Twitter
@societegenerale or visit our website societegenerale.com.
(1) Amounts restated compared with the financial
statements published in 2020 (See Note1.7 of the financial
statements)(2) The number of shares considered is the number of
ordinary shares outstanding as at end of period, excluding treasury
shares and buybacks, but including the trading shares held by the
Group.(1) Underlying data (see Methodology note No. 5 for the
transition from accounting data to underlying data), (2) Including
IFRS 9 phasing , 13.4% fully-loadedAsterisks* in the document refer
to data at constant scope and exchange ratesNB: 2022 data in this
document was restated, in compliance with IFRS 17 and IFRS 9 for
insurance entities(1) The number of shares considered is the
average number of ordinary shares outstanding during the period,
excluding treasury shares and buybacks, but including the trading
shares held by the Group7 The application of IFRS 9 on insurance
subsidiaries could be deferred pursuant to the criteria allowed
under the amendments to IFRS 17 and IFRS 4 published by the
IASB on 25 June 2020 and extended by EU Regulations 2017/1988 and
2020/2097 of the European Commission.(1) Underlying data (see
Methodology note No. 5 for the transition from accounting data to
underlying data)(2) Ratio calculated according to EBA methodology
published on 16 July 2019(3) Ratio of S3 assets calculated on the
gross carrying amount of the loans before offsetting guarantees and
collateral(4) Exposure at Default(5) Ratio between the gross loan
outstanding and the value of the financed real estate asset
(1) Underlying data (see Methodology note No. 5
for the transition from accounting data to underlying data)
(1) Including PEL/CEL provision and adjusted for
the linearisation of IFRIC 21
(1) Underlying data (see Methodology note No. 5
for the transition from accounting data to underlying data)
- Societe-Generale_PR_Q1-2023
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