• May 04, 2016
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Société Générale releases 2016 Q1 results

Q1 16: SOUND RESULTS BENEFITING FROM THE DIVERSIFICATION OF THE BUSINESS MODEL

• Net banking income of EUR 6.2 billion (vs. EUR 6.4 billion in Q1 15, -3.3% excluding non-economic items): the good performance of all Retail Banking activities, the diversification of the business model and the development of synergies have helped offset the decline in market revenues in a challenging start to the year for the banking sector
• Operating expenses under control: -0.5% (excluding refund of part of the Euribor fine and adjusted for the effects of the IFRIC 21 accounting standard)
• Lower net cost of risk (-10.1%) reflecting the quality of assets. Commercial cost of risk at 46 basis points(1) (-9 basis points vs. Q1 15)
• Group net income of EUR 924 million in Q1 16 (EUR 868 million in Q1 15, +6.5%) and EUR 829 million excluding non-economic items (EUR 833 million in Q1 15), marked by the substantial growth in all Retail Banking activities.
• CET1 ratio up +25 basis points vs. end-2015, at 11.1% at the end of Q1 16 (10.9% at end-2015) Leverage ratio of 4.0% (stable vs. end-2015)
• Stable EPS: EUR 0.90 in Q1 16 (EUR 0.91 in Q1 15)

Societe Generale’s Board of Directors met on May 3rd, 2016 under the chairmanship of Lorenzo Bini Smaghi and examined the results for Q1 2016.

Book Group net income amounted to EUR 924 million in Q1 16, vs. EUR 868 million in Q1 15 (+6.5%). If non-economic items are stripped out, Group net income totalled EUR 829 million (vs. EUR 833 million in Q1 15), and benefited from the diversification of the Group’s universal banking model. The healthy momentum of French Retail Banking (with a contribution up +17.6%) and International Retail Banking & Financial Services, whose contribution to Group net income doubled in relation to last year, helped offset the lower contribution from market activities which enjoyed a very favourable environment in Q1 2015, whereas conditions at the beginning of 2016 were challenging.

Net banking income totalled EUR 6,175 million in Q1 16 (-1.8% vs. Q1 15). If non-economic items are stripped out, it amounted to EUR 6,030 million (-3.3%* vs. Q1 15).

The Group continued with its efforts to control operating expenses: when adjusted for changes in Group structure and at constant exchange rates, excluding the effect of the refund of the Euribor fine and adjusted for the impact of IFRIC 21, they were down -0.5% vs. Q1 15. The decline reflects the success of the cost savings plans implemented since 2012. Aware of the need to maintain these efforts, the Group has implemented a new cost-cutting plan in Global Banking & Investor Solutions aimed at saving an additional EUR 220 million by end-2017. This supplements the EUR 850 million plan already announced for the same deadline.

The Group’s commercial cost of risk continued to decline to 46 basis points (vs. 55 basis points in Q1 15), underpinned by the good quality of the Group’s assets. The net cost of risk amounted to EUR 524 million in Q1 16, down -10.1% vs. Q1 15 (at its lowest level since 2008).

The “Basel 3” Common Equity Tier 1 (fully-loaded CET1) ratio stood at 11.1% (10.9% at end-2015) due to the good capital generation during the quarter (+25 basis points). The leverage ratio stood at 4.0% and the total capital ratio amounted to 16.4% (respectively 4.0% and 16.3% at end-2015).

Commenting on the Group’s results for Q1 2016, Frédéric Oudéa – Chief Executive Officer – stated:

“In a more challenging environment at the beginning of the year than last year, the Group generated sound results in Q1 2016, illustrating the benefits of its diversified and highly integrated business model, which is reflected in the constantly increasing synergies between the businesses. Despite the low interest rate environment, French Retail Banking continues to deliver a solid commercial and financial performance, while pursuing the far-reaching transformation of the operating and customer relationship model. International Retail Banking & Financial Services has doubled its contribution to Group net income and provided further evidence of its growth and profitability potential. In an unfavourable market environment, Global Banking & Investor Solutions has posted resilient results and reinforced measures to adjust its business model and increase operating efficiency. With a sound balance sheet and robust solvency ratios, the Group is confident about its outlook for 2016, and will continue to invest in its growth drivers, while at the same time rigorously managing its costs and risks.”

Re-disseminated by The Asian Banker