EuroBusiness Media (EBM): Société Générale, one of the largest European financial services groups, reports results for the third quarter of 2017. Frédéric Oudéa, hello. You are the CEO of Société Générale. How has the Groupe Société Générale fared in this third quarter of 2017, particularly from a commercial point of view?
Frédéric Oudéa: We posted contrasted performances, good and robust on all our retail activities, whether they are in France or internationally, but we saw a slowdown on the capital market activities in an environment where, beyond the seasonality of the summer, there was a kind of wait-and-see mode of investors.
So, we saw effectively in practice a decrease of our revenues which was largely, fortunately, offset by good monitoring of our costs and also very low cost of risk again this quarter - it shows the quality of the balance sheet.
Beyond these elements, we have also decided to complement our general provision for disputes by €300 million this quarter, to raise it to €2.2 billion in total. We are discussing with the US authorities regarding the resolution of two disputes, one related to the IBOR indexes, the other to the LIA. All in all, we decided in that context to increase our provisioning and we hope to be able to find a resolution of these disputes in the coming weeks or in the coming months.
All in all, the net profit is going down this quarter, but the underlying profitability of the group for the first 9 months is improving which I think reflects the benefit of the transformation of our business model.
EBM: And as you said, these Q3 results are a reflection of an unfavorable market environment, how much of an impact has this had on your Market activity?
Frédéric Oudéa: Beyond the traditional seasonality of the summer, investors were I think waiting in particular for the decisions of the central banks regarding their monetary policies and in particular the European Central Bank.
So there was less activity, in particular in the equity business, on structured products, we saw more resilience in structured products in fixed income, but all in all a decrease of activity.
EBM: Looking now to International Retail Banking and Financial Services - have they continued their growth dynamic?
Frédéric Oudéa: Absolutely, and that’s really across the board, and I’m very happy with that. The potential of growth and profitable growth is confirmed. It’s true for all the geographies actually, Europe, Russia - Russia which is really confirming its rebound with a more dynamic credit market and we were able to grow significantly our origination and we’ve a good net contribution of €38 million this quarter. It’s true for Africa, it’s also true for Insurance, its true for our Fleet Management and Equipment Finance. Across the board this business again confirms the capacity to grow and I think we’ll see these trends going forward similarly.
EBM: What are your thoughts on France's current economic environment, and how has your French Retail Banking business adapted to this context?
Frédéric Oudéa: Definitely, the economic outlook in France as well as actually in the Eurozone is improving, and we saw that in the credit origination, in particular regarding the corporates, with a good increase of our production of credit to SMEs. It’s also true of mortgage loans which remain relatively dynamic in a low interest rate environment.
Overall, for example, we entered into a relationship with new clients on the SME side, 3,500 new clients in the first 9 months.
But because of the low interest rate this is not reflected in an increase of revenues, we still see the margin interest going down. Fortunately, the commissions are dynamic, they are increasing on the other hand and we see a mix which is more geared towards commission progressively, so that’s in the long-term something positive.
EBM: And finally, in a few weeks, you will be introducing your new strategic plan. Tell us about your outlook, as Société Générale launches this new phase?
Frédéric Oudéa: By essence, I can’t tell you that much about it and give you any specific detail, but I would say we are preparing this Investor Day with a lot of energy, a lot of ambition, with the conviction of the potential for growth of our business model, with the conviction also that we are able to build on solid foundations, a robust capital base and strong balance sheet. So, on that basis, we are going really to take advantage of our growth potential in the different businesses.
We are fully aware of the challenges that the European banking industry is facing, because we see changes in the behaviours of clients, in particular related to the introduction of new technology, so the need for investments and to innovate is across the board, but we have many projects from that perspective and always with the willingness to anticipate and not just be a follower.
So, we are preparing this with enthusiasm and we will present, again, to the market on the 28th of November.
EBM: Frédéric Oudéa, CEO of Société Générale, thank you very much.
Frédéric Oudéa: You’re welcome.
