Dear shareholder,

Our Group is continuing with its far-reaching transformation and at the start of the implementation of the 2018-2020 “Transform to Grow” strategic plan, Q1 2018 results are posted in line with our strategic ambitions. Commercial performances are solid for the majority of our businesses, particularly in Retail Banking, and despite the mixed trend in the different market activities, the Group generated very encouraging underlying profitability.

Frédéric Oudéa, Executif Chief Officer

In French Retail Banking, Q1 2018 continued in the same vein as 2017, in an environment of persistently low interest rates and with the ongoing transformation of the French networks. Against this backdrop, French Retail Banking delivered a solid commercial performance with resilient profitability. Boursorama once again demonstrated the strength of its client onboarding process, with the acquisition of 126,000 clients in Q1 2018, resulting in a total of 1.4 million clients at March 31st, 2018. It also strengthened its leadership position. At the same time, the Societe Generale and Crédit du Nord networks expanded their mass affluent and wealthy clients base (5.4% increase in the number of clients in Q1 18), while maintaining a selective origination strategy in order to protect the level of margins. The deceleration in revenue erosion looks set to continue over the next few quarters in line with the expected stabilisation for 2018.

International Retail Banking & Financial Services continued to enjoy strong growth, thanks mainly to International Retail Banking and Insurance. International Retail Banking provided further evidence of its strong momentum, with outstanding loans increasing +4.0% (+8.2% when adjusted for changes in Group structure and at constant exchange rates) vs. Q1 17, confirming the positive trend in Europe, especially on consumer credit, as well as robust activity in Africa in a buoyant economic environment. Our Insurance activities continued to grow, with an increase in the contribution to Group net income in Q1 (+18% vs. Q1 17; +8% excluding Antarius). Finally, Financial Services to Corporates maintained its commercial momentum in Q1 2018, while retaining an underlying ROTE (return on tangible equity) of around 17%. This growth was achieved while controlling costs, with a positive jaws effect in these activities.

Global Banking & Investor Solutions experienced a mixed commercial performance, depending on region and product. Revenues were lower in relation to a Q1 2017 that was at its highest level for 5 years with regard to rates, credit, currency and commodity activities, and earnings were adversely affected by an unfavourable dollar effect. Commercial activity was buoyant for Financing & Advisory’s growth drivers. The Group also maintained rigorous cost discipline.

Overall, underlying net income came to EUR 1,204 million in Q1 2018, corresponding to a ROTE of 10.9%. The Group demonstrated its ability to control its operating expenses against the backdrop of an acceleration in the transformation of the businesses and increased regulatory costs. Finally, disciplined risk management is reflected in a very low cost of risk in all businesses and geographical regions.

The balance sheet structure remains solid, which recently led to Moody’s raising our senior debt rating from A2 to A1. We maintain a good level of capital (CET1 ratio of 11.2%), enabling the Group to continue to comply with all its prudential obligations.   
At the Annual General Shareholders’ Meeting on May 23rd, we will propose the payment of a cash dividend of EUR 2.20 per share for the 2017 financial year. This is identical to the dividend paid last year.

We have just put in place a new General Management team, determined to carry through our strategic plan. The Group is more confident than ever of its ability to successfully implement all the current transformation projects and meet its strategic and financial objectives.
We are developing our growth drivers, investing in innovation in order to serve our customers while ensuring we control our costs, and continuing to optimise our portfolio. We are rolling out our Culture & Conduct programme and incorporating corporate social responsibility issues in our activities. A final agreement with the relevant authorities on IBOR and Libyan matters is expected to be reached within the coming days or weeks. Demonstrating that we have set  the highest integrity and compliance standards will be a major guarantee of our commitment in terms of responsibility.

Once again, I would like to thank you for your loyalty and the trust you have placed in our Group.

Frédéric Oudéa,
Chief Executive Officer