• May 04, 2017
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Societe Generale releases Q1 2017 results

Societe Generale’s Board of Directors, which met on May 3rd, 2017 under the chairmanship of Lorenzo Bini Smaghi, examined the results for Q1 2017. The Societe Generale Group’s businesses turned in a good commercial and financial performance in Q1 2017. Group net income was EUR 747 million (EUR 924 million in Q1 2016). This result includes an additional allocation to provision for disputes of EUR -350 million and, as for each first quarter, the effect of the implementation of the IFRIC 21 accounting standard.

When corrected for these factors and non-economic items, Group net income totalled EUR 1,392 million, up +50.0% vs. Q1 2016 (excluding partial refund of the Euribor fine amounting to EUR 218 million) and the corresponding underlying ROE stood at 10.5% in Q1 2017 (vs. 7.1% in Q1 16).

The businesses’ contribution to Group net income was up +31.4% in Q1 2017 excluding the Euribor refund in 2016, driven by the strong growth in International Retail Banking & Financial Services and Global Banking & Investor Solutions, whereas French Retail Banking’s earnings were slightly lower against a backdrop of low interest rates and increased investments in the transformation of its business model.

Net banking income, excluding non-economic items, totalled EUR 6,452 million in Q1 2017, up +7.0% vs. Q1 2016, testifying to the businesses’ good commercial performance. French Retail Banking’s net banking income was slightly lower in an environment of still low interest rates (-1.3%), whereas the revenues of International Retail Banking & Financial Services and Global Banking & Investor Solutions were significantly higher (+8.4% and +5.4% respectively). Book net banking income totalled EUR 6,474 million in Q1 2017 (+4.8% vs. Q1 2016).

There was a controlled increase in operating expenses of +2.6% (+1.4%*) in Q1 2017 vs. Q1 2016, reflecting the acceleration of investments in French Retail Banking, the increased activity in International Retail Banking & Financial Services, and the effects of Global Banking & Investor Solutions’ cost savings plans. The net cost of risk (excluding the above-mentioned additional allocation to provision for disputes) was at the low level of EUR -277 million in Q1 2017, a substantial decline vs. Q1 2016 (EUR -524 million). The commercial cost of risk stood at the very low level of 24 basis points in Q1 2017 (46 basis points in Q1 2016).

After the Q1 Board review of the accounts, Societe Generale has today announced that it has reached a settlement with the Libyan Investment Authority regarding the civil dispute opposing them and relating to transactions dating back to 2007 amounting to EUR -963 million. The parties will notify the UK court of the settlement this morning to enable the court to put an end to the proceedings. Given notably the additional provision for disputes booked in Q1 17 for EUR 350 million, the impact of this settlement in full-year Group net income is fully covered as from Q1 2017.

The detailed accounting will be recorded in Q2 with notably an impact in the Corporate Centre’s net banking income corresponding to the amount of the settlement. The Common Equity Tier 1 (fully-loaded CET1) ratio was up +10 basis points vs. December 31st, 2016, at 11.6%. Earnings Per Share, excluding non-economic items, amounts to EUR 0.76 at end-March 2017, vs. EUR 0.90 at end-March 2016

Commenting on the Group’s results for Q1 2017, Frédéric Oudéa – Chief Executive Officer – stated:

“Once again, Societe Generale has demonstrated the quality of its diversified and integrated banking model, with a good performance in all its businesses. Group net income testifies to the substantial increase in the contribution of its businesses, underpinned by its revenue growth and its cost and risk control. The Group is also continuing with its transformation. It has initiated a process to simplify its organisational set-up which will enable it to even better serve its customers, increase its agility and innovative capacity, and continue to exploit synergies between its businesses. Finally, over the next few quarters, the Group will continue actively working to bring an end to past disputes and complete the Culture and Conduct projects in order to further enhance the quality of its services and the control of its risks.”

Re-disseminated by The Asian Banker