Understanding our Q2 2016 results
Frédéric Oudéa's editorial
In a challenging environment, marked by very low or even negative interest rates in some regions, low commodity prices and, at the end of first half-year, by market turbulence due to the UK vote in favour of Brexit, our Group has achieved increased revenues of more than 4% at €13.2 billion* in the first half of 2016, benefiting from the good performances of our three core businesses: French Retail Banking, International Retail Banking & Financial Services and Global Banking & Investor Solutions. Accordingly, we generated Group Net Income of €2.4 billion* during the first six months of 2016, up 25.5%. Earnings Per Share, EPS adjusted for the Group’s own financial liabilities, amounts to €2.77, up +25% compared to the first half of 2015 (€2.22).
Societe Generale has announced sound results in the first half of 2016, driven by the quality of its business model and its portfolio of activities.
In a challenging environment, marked by very low or even negative interest rates in some regions, low commodity prices and, at the end of first half-year, by market turbulence due to the UK vote in favour of Brexit, our Group has achieved increased revenues of more than 4% at €13.2 billion* in the first half of 2016, benefiting from the good performances of our three core businesses: French Retail Banking, International Retail Banking & Financial Services and Global Banking & Investor Solutions. Accordingly, we generated Group Net Income of €2.4 billion* during the first six months of 2016, up 25.5%.
Earnings Per Share, EPS adjusted for the Group’s own financial liabilities, amounts to €2.77, up +25% compared to the first half of 2015 (€2.22).
French Retail Banking provided further confirmation of its commercial dynamism: record new customer acquisition during the second quarter of 2016 for Boursorama which strengthened its leadership position in online banking in France; robust growth in outstanding deposits (+7%) and outstanding loans (+3.5%) for the three brands. Net Banking Income declined slightly (-2.5% in the first half of 2016), due primarily to the effect of low rates on interest margins.
International Retail Banking & Financial Services revenues increased by more than 4.5% in the first six months of 2016, due to the good performance of Retail Banking in Central and Eastern Europe and in Sub-Saharan Africa, as well as the strong growth of Insurance activities and Financial Services to our business clients. In Russia, the economic environment is gradually normalising and business has grown stronger, especially with business clients.
After a first quarter in 2016 marked by sluggish markets and a still lacklustre economic environment, Global Banking & Investor Solutions once again demonstrated the resilience of its client-focused specialist model, with a decline in revenues limited to -8% in the second quarter of 2016.
The Group’s operating expenses remained stable in the first half-year of 2016 compared to that of 2015, proof of the efforts in cost control undertaken for several quarters and despite the increase in regulatory costs. There was a sharp decline in the commercial cost of risk to 38 basis points in the second quarter of 2016, versus 44 basis points in the same quarter of 2015, reflecting the good quality of our assets.
At the end of June 2016, the Common Equity Tier 1 capital ratio stood at 11.1%. On 29 July, the European Banking Authority published the results of the stress tests carried out on European banks with Societe Generale providing further confirmation of the soundness of its balance sheet and the quality of its portfolio with a capital ratio well above regulatory requirements.
The good commercial and financial performance of the Group’s businesses, as well as the capital gain on the disposal of Societe Generale Visa shares, have enabled us to post sound first half-year results. In a challenging environment, these results reflect the dynamism and strength of the Group’s well-balanced banking model, the quality of its portfolios and the commitment of its teams to serving their clients. Societe Generale is determinedly pursuing the far-reaching transformation of its business model, by strengthening the synergies between the businesses and regions as well as the initiatives to control costs, in order to finance investments in technology related to its digital transformation, absorb the increase in regulatory costs and improve the Group’s operating efficiency.
Once again, I would like to thank you for your loyalty and the trust you have placed in our Group.
Chief Executive Officer
Variations are based on adjustments for changes in Group structure and at constant exchange rates.
* Restated for the impact of the revaluation of the Group’s own financial liabilities and DVA.
Results by business
Sound results in a challenging environment
French Retail Banking
International Retail Banking & Financial Services
Global Banking & Investor Solutions
Interview with Frédéric Oudéa
Frédéric Oudéa, CEO, discusses the Group’s Q2 2016 results in an interview with EuroBusinessMedia (CEO-Direct).
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