Dear shareholder,

In Q2 2018, our Group posted good results and an increase in profitability due to a solid performance by all the businesses, disciplined cost management and good risk control. The Group also carried out several strategic transactions contributing to the refocusing of its business model around its core franchises. We signed an agreement to acquire Commerzbank’s Equity Markets and Commodities operations as well as agreements for the disposal of our private banking activities in Belgium and our shareholdings in Express Bank (Bulgaria) and Societe Generale Albania.

Frédéric Oudéa, Executif Chief Officer

During Q2 2018, French Retail Banking’s three brands, Societe Generale, Crédit du Nord and Boursorama, displayed a solid commercial momentum, particularly for their target customers. The Societe Generale and Crédit du Nord networks strengthened their franchises on mass affluent and wealthy clients (number of clients up 5.1% vs. Q2 17) and continued to develop the expertise made available to Professional and Business customers with, in particular, 75 Professional corners located in branches as at 30 June, 2018. Against a backdrop of persistently low interest rates and continued pressure on loan margins, the Group confirmed its selective origination strategy. Boursorama accelerated its client onboarding process. It exceeded 1.5 million clients in July, which should help Boursorama achieve its objective of 2 million clients as from end-2019, one year ahead of schedule. The trend in operating expenses in H1 2018 reflects the acceleration of digital transformation investments and the development of growth drivers: more than half the increase in operating expenses, with a controlled increase.

International Retail Banking & Financial Services continued to deliver solid growth, with revenues up 5.4% compared to Q2 2017 (+6.1% when adjusted for changes in Group structure and at constant exchange rates), driven by an excellent commercial momentum in all regions and businesses. There was an increase in International Retail Banking business, with strong growth in Europe and expanding activity in Russia and Africa. Outstanding loans were up 7.2% (+8.4% at constant exchange rates) compared to Q2 2017. Our bancassurance activities saw net banking income rise +5.8% compared to Q2 2017. Finally, Financial Services to Corporates demonstrated a healthy commercial momentum, with ALD’s vehicle fleet increasing by 10% and Equipment Finance’s outstanding loans rising 7.1% compared to Q2 2017.  Financial Services to Corporates confirmed its capacity for very profitable growth.

Global Banking & Investor Solutions posted slightly higher revenues in Q2 2018. Despite a mixed start to the year and market conditions that remained less favourable in Europe than in the United States, the Global Markets & Investor Services franchise enjoyed a good level of commercial activity, with an increase in all regions. There was an increase in Financing & Advisory businesses, with a robust commercial momentum and an excellent level of origination activity. The development of our franchises is being carried out while maintaining strict cost discipline, with costs declining 1.3%. In line with Societe Generale’s strategy, the signing of the agreement to acquire EMC (Equity Markets and Commodities) will consolidate the bank’s global leadership position in derivatives and investment solutions across all asset classes and contribute to Lyxor’s expansion in Europe by strengthening its ETF franchise.

Underlying net income totalled €1,265 million in Q2 2018, corresponding to a return on tangible equity (ROTE) of 11.2%.

The balance sheet structure remains very solid and we maintain a good level of capital (CET1 ratio of 11.1%). This enables the Group to continue to comply with all its prudential obligations.   

The results demonstrate that our diversified and value-creating business choices enable the Group to engage in a profitable and sustainable growth momentum. Despite strong transformation ambitions especially in French Retail Banking, we have maintained strict cost discipline. Several strategic transactions are contributing to the refocusing of our business model around our core franchises. Finally, a few weeks ago now, we settled the LIA([1]) and IBOR litigation issues. We are continuing to roll out our Culture & Conduct programme in order to establish a culture of responsibility at all levels of the company.

During this very active H1 2018, we have been proactively involved in implementing our strategic plan “Transform to Grow” with very encouraging initial results.

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



([1]) Libyan Investment Authority