Understanding our 3rd Quarter 2016 Results

Dear Shareholder,

The good commercial and financial performance in the third quarter of 2016 demonstrate the pertinence of our well-balanced and diversified banking model, as well as our ability to grow our businesses in a challenging environment. We recorded Net Income, excluding non-economic items, of €1.26 billion in Q3 2016, up +39.0% year-on-year.

In an environment marked by political and economic uncertainty, very low or even negative interest rates in the Euro zone, commodity prices under pressure and financial markets without any clear direction, for Q3 2016, our Group delivered sound revenues amounting to €6.3 billion (+3.7%), excluding non-economic items, thanks to the good performances of International Retail Banking & Financial Services and Global Banking & Investor Solutions.

French Retail Banking confirmed its strong commercial momentum, with the number of new customers rising both in the business segment (+6% vs. 9M 2015) and in the individual customer segment (+29% vs. 9M 2015). With more than 915,000 customers at the end of September 2016, Boursorama has notably strengthened its leadership position in online banking in France. The growth in outstanding deposits (+8.8% Q3 2016 vs. Q3 2015) and outstanding loans (+2.7% Q3 2016 vs. Q3 2015) also testifies to the commercial dynamism of our three brands. However, Net Banking Income declined by a little more than 5% in Q3 2016, due principally to the effect of low interest rates on net interest income and the high basis for comparison achieved last year.

International Retail Banking & Financial Services’ revenues rose by 1.8% when adjusted for changes in Group structure and at constant exchange rates during Q3 2016, driven by the growth in all businesses. It is worth noting the strong recovery in International Retail Banking activities with, in particular, SG Russia’s return to profitibility, as well as the continued high level of performance by our Insurance activities and Financial Services to business clients.

After a first half of  2016 marked by a lacklustre economic environment and low trading volumes, Global Banking & Investor Solutions once again demonstrated the resilience of its business model with revenues up by 13.7% over the third quarter of 2016, driven primarily by the sharp rise in Global Markets.

Operating expenses were overall stable at the Group level and remain in line with our full-year targets, despite the pressure of regulatory costs and against the backdrop of the Group’s transformation. The cost savings plans implemented should enable the Group to save nearly €2 billion over the period 2012-2017, thereby generating room for manoeuvre to invest, notably in the digital transformation process. 

The Cost of Risk was significantly lower at 0.34% of outstandings in Q3 2016 vs. 0.46% in Q3 2015, confirming the good quality of the Group’s loan approval policy and asset portfolio.

Earnings Per Share amount to €4.19 at the end of September 2016 compared to €3.23 at the end of September 2015, an increase of +30%. These sound results obtained in a complex environment enable us to provision 50% of our economic earnings for the dividend payment, while at the same time strengthening our capital. At the end of September 2016, the Common Equity Tier 1 ratio stood at 11.4% (10.9% at the end of 2015).

In conclusion, our Group is pursuing its trajectory in a disciplined manner, with a view to winning new customers and enhancing its added value offering, notably by integrating digital technologies, while at the same time rigorously managing its costs and risks. Benefiting from the constant commitment of its teams, sharing a common ambition and culture, the Group is confident about its outlook and determined to pursue the challenge of its transformation process.

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