Understanding our 2014 Q2 results
Frédéric Oudéa's editorial
The announcement of the second quarter 2014 results is our first meeting since the presentation of our strategic plan on 13 May. The performance of the businesses over the quarter demonstrates the relevance and strength of our growth-driven model, and we are fully on track with our roadmap. In a mixed economic environment with historically low interest rates, the Group posted a solid commercial performance. Earnings from the businesses are good, continuing the trend from the first quarter.
The announcement of the second quarter 2014 results is our first meeting since the presentation of our strategic plan on 13 May. The performance of the businesses over the quarter demonstrates the relevance and strength of our growth-driven model, and we are fully on track with our roadmap.
In a mixed economic environment with historically low interest rates, the Group posted a solid commercial performance. Earnings from the businesses are good, continuing the trend from the first quarter. French retail banking has held up well, bolstered by the quality of its customer base and by sustained deposit inflows. Additionally, Societe Generale was named Best Bank in France for 2014 by Euromoney. Earnings are up for International Retail Banking & Financial Services, driven by Financial Services to corporates which are particularly dynamic. In Russia, earnings are increasing. Business at Global Banking & Investor Solutions is up overall, with good client-driven activity in a mixed market and reduced volatility. Global Markets revenues are up: the Equity business has capitalised on its solid leadership positions and the Fixed Income, Currencies and Commodities business posted good commercial revenues supported by corporate client franchise. Financing and Advisory revenues were driven by excellent equity issuance earnings, particularly with financial institutions clients, as well as the good performance of bond issuance and structured financing.
This strong business performance has been accompanied by rigorous cost control across all of the businesses. The cost reduction programme initiated in 2013 continued, with secured recurrent annual savings totalling EUR +550 million, out of total programme of EUR 900 million.
At the same time, the net allocation to provisions diminished significantly, despite a EUR 200 million increase in the collective provision for litigation issues. The commercial cost of risk also fell, particularly for International Retail Banking & Financial Services.
We have a solid balance sheet structure: our Common Equity Tier 1 Ratio has risen to 10.2%, our leverage ratio stands at 3.6% and our liquidity position is very strong.
Overall, Group net income in the second quarter of 2014 was EUR 1,030 million, up +7.8% on the second quarter of 2013, while return on equity stood at 8.8%.
We continued rigorously manage of our business portfolio. In this respect, we reinforced our position in our Boursorama and Rosbank subsidiaries by purchasing shares held by minorities, and acquired the entire Newedge Group with the ambition of creating a major player in post-trade activities. At the same time, we embarked on the disposal of our private banking activities in Asia.
Societe Generale's teams remain committed to serving their customers and the economy and continue to be involved in the implementation of the Group's strategic plan, which was presented in May.
Thank you for your loyalty and your trust in our Group.
Chairman and Chief Executive Officer
2014 Q2 key figures
EUR 6.3bn (+0.6%* vs. Q2 13)
Revenues from Group businesses
-1.3%* vs. Q2 13
Decline in operating expenses
-22.6%* vs. Q2 13
Sharp decline in the net cost of risk
* When adjusted for changes in Group structure and at constant exchange rates.
EUR 1.0bn (+7.8% vs. Q2 13)
Group net income
ROE of 8.8% (+0.4 points vs. Q2 13)
Return on equity
Basel 3 Common Equity Rier 1 Ratio of 10.2%
2014 H1 key figures
Group net income
Results by business
The good performance of the businesses in Q2 2014 illustrates the relevance of our banking model.
French Retail Banking
International Retail Banking & Financial Services
Global Banking & Investor Solutions
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