Understanding our 2014 Q3 results

Our Group posted solid third quarter results thanks to the businesses’ good commercial performance, tightly controlled operating expenses and the decline in the cost of risk. The results of the asset quality review and stress tests carried out by the ECB confirm the solidity of our balance sheet and the pertinence of our universal banking model. The transformation undertaken for three years has paid off and the Group can confidently pursue the implementation of its strategic plan.

In France, Retail Banking activities proved resilient despite a sluggish economic environment and historically low interest rates. The commercial expansion of the three brands continued, with a sharp increase in openings of sight accounts and strong deposit inflow. The Group continued to support the economy: as a result corporate loan production was higher. In September, the Group launched a special investment loan offer aimed at small/medium-sized enterprises, very small enterprises and professionals.

International Retail Banking & Financial Services’ revenues were higher, benefiting from a geographically well-balanced business portfolio. The growth in outstanding loans was particularly marked in Africa, Russia and the Czech Republic. The Russian activities made a positive contribution to Group net income in an albeit challenging environment. The Insurance business and Financial Services to Corporates continued to enjoy buoyant commercial activity.

In Global Banking & Investor Solutions, Global Markets experienced a slowdown in activity, especially in equity markets, as did Securities Services and Brokerage. On the other hand, Financing & Advisory, to which the Group has decided to allocate more resources in the medium-term, particularly distinguished itself with higher revenues. Asset and Wealth Management enjoyed positive inflow.

This good commercial performance by the businesses was accompanied by a rigorous and disciplined approach with regard to operating expenses and a sharp decline in the cost of risk. With a cost of risk of 58 basis points, the Group is already in line with its medium-term target announced in the strategic plan.

Group net income totalled EUR 836 million. This result has bolstered our capital: the Common Equity Tier 1 ratio has therefore increased from 10.2% to 10.4%.

During this quarter, the ECB communicated the results of the asset quality review and stress tests. This was an unprecedented exercise in transparency: it lays the foundations for the new single supervisory mechanism in Europe and will help increase confidence in the sector. The stress tests highlighted the Group’s financial solidity including under an adverse stress scenario, with ratios well above the requirements set for these tests. These exercises confirm the resilience of Societe Generale’s business model and demonstrate the financial solidity and quality of the risk management of the Group, which embarked on a far-reaching transformation of its balance sheet for several years. Societe Generale is therefore able to finance its growth over the next few quarters helped by a very solid balance sheet.

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

Frédéric Oudéa, 
Chairman and CEO