ANNUAL GENERAL MEETING, 20 MAY 2014 emerging markets, and there is an ever increasing development of international trade and exchange. Finally, technological innovation and the advent of the “digital society” will affect the behaviour of our customers. Taken together, this is what we call the “great transition” and it demands a rapid and flexible response. Societe Generale’s strengths The Group has demonstrated its ability to change with the work that went into implementing Basel 3. Our universal banking model is now radically simplified, more efficient and fit to deliver for all our customers – individuals, corporates, institutional investors – offering additional value-added services that will enrich the business relationship and last over the long term. Looking beyond financial metrics, Societe Generale can draw on a combination of four strengths that is unique in the European banking landscape: the long-term relationships that it builds with its customers, its historical expertise in corporate and investment banking, the growth potential of its franchises which is above average for its European rivals, and, finally, the sense of innovation, commitment and responsibility that drives its employees. The Group’s ambitions for 2016 Societe Generale has laid solid foundations to build on and set ambitious growth targets for the next three years. For 2016, the bank has set three major targets which will apply to all business lines. 6 | LETTER TO SHAREHOLDERS_2014 1 Continuous improvement in customer satisfaction Customer satisfaction has been at the heart of the efforts made in all Societe Generale business lines since 2010. With large corporates, we must have a detailed understanding of our customers’ strategy and be ready to support them internationally, where the bulk of growth is to be found. This is why we are prioritising the quality of our bankers. Meanwhile, individual customers are demanding ever more sophisticated expertise, particularly in savings, as well as fair fees for services rendered and digital applications. Smartphones did not exist in 2007 but are now the primary way we relate with our customers as measured by number of contacts. We plan to maintain our lead in this field through innovation. 2 Generating growth Between now and 2016, Societe Generale plans to grow revenues, on average, at an annual target rate of 3%. Some business lines will be growing more slowly, such as French Retail Banking and global markets. Others will be more dynamic, like insurance or private banking, or those serving particular regions such as Africa, Asia, Russia and Germany. But overall, all will contribute to growth. Synergies, the reason underlying the universal banking model, will also play their part. The combination of different business lines and customers only makes sense if all branches of the Group combine to deliver a high value added response. In this way, commercial relationships can generate greater revenues. 3 Delivering sustainable profitability We will also be keeping a rigorous check on costs: management fees must not rise by more than 1% annually on average to 2016 (like-forlike). Thanks to the savings made under the 2012 and 2013 plans we will continue to invest to ensure our business lines remain competitive. In addition, our risk management model has been fundamentally upgraded in the way it handles operational, credit and market risks. Commercial cost of risk is thus set to fall. Finally, capital allocation will remain balanced. Our strategy targets a return on equity* to 2016 of more than 10% and earnings per share* of €6. We also intend to raise the payout from profit to 40% in 2014, then 50% in 2015 and 2016. * For definitions see the Group’s 2014 registration document. Appointment Lorenzo Bini Smaghi Italian national Lorenzo Bini Smaghi began his career in 1983 as an economist at the Bank of Italy. In 1994 he became head of policy at the European Monetary Institute, which evolved to become the European Central Bank (ECB), where he sat on the Executive Board from 2005 to 2011. He has been working as a non-executive Chairman of Italian gas group SNAM Rete Gas. He was elected with 99.06% of the votes, will sit as an independent Director and was appointed Second Vice-Chairman of the Board of Directors.
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