EuroBusiness Media (EBM): Société Générale, one of the largest European financial services groups, reports results for the third quarter of 2019. Frédéric Oudéa, hello.
Frédéric Oudéa: Hello.
EBM: You are the CEO of Société Générale. What’s your analysis of these results?
Frédéric Oudéa: Overall, I would say that we are posting performances very much consistent with all our objectives and priorities. As you know, our top priority, the priority which is the most important for our shareholders, is around capital. And we have a strong increase of our CET1 ratio which stands at 12.5%, including the provisioning of our dividend – 2.2 euros target – and we have provisioned ¾ of that, so 1.65 euros per share in cash. That’s a great satisfaction.
Beyond, the adaptation of our businesses is going fine, exactly the same thing, in line with our objectives. French Retail, we have a good activity, resilient profitability. We of course pursue the adaptation of the businesses. Overall good growth, like previous quarters, in International Retail, which are not in the eurozone - so which do not suffer from the same situation of the rates - and of course in Financial Services. Regarding our Global Banking and Investor Solutions, the restructuring is going on smoothly. It is actually achieved regarding the capital, in advance compared with our timeframe, and regarding the restructuring of the activities we are in line - we are not yet benefitting in terms of cost - but we will benefit from that in 2020 and of course the revenues are going down, in particular because we have reduced the perimeter of activities. But everything is in line with our objectives.
Costs are going down, strong attention on that, strong discipline. The cost of risk remains fundamentally stable and at a low level - 26 basis points for the quarter, 24 basis points for the first nine months – that reflects the quality of the credit portfolio.
And all in all, a resilient profitability, 8.1% for the first nine months. Net profit which is going down this quarter because last year we booked, in the third quarter of 2018, close to a 300 million euro capital gain. This year we have also the impact of the disposal in IFRS5, but nothing which is not in line with our objectives.
EBM: Could you tell us more about the trends in your main business lines?
Frédéric Oudéa:
- In French Retail Banking, going into a little bit more the detail in terms of commercial activity, a strong activity in France - +5% on the individual loans - even higher for the Corporates. Corporates are carrying on investing in an economy which is doing pretty well compared with the other European economies. And also, a good momentum, for example with Boursorama, which has now above 2 million clients, ahead of its target at end of year.
- Regarding International Retail Banking across the Group, strong growth of credit, strong growth of deposit, again in economies which are growing more than the eurozone and again in banking markets which are not suffering from these low rates environment. And same thing, a good activity for our car Fleet Management, increasing, in number of cars under management as well as in leasing.
- Regarding Global Banking and Investor Solutions, a more contrasted picture: Strong and good growth for the Structured Finance Businesses and for Transaction Banking and Cash Management and a decrease of revenues regarding the market activities with an environment which was not that favourable and again, of course, due to the reduction of the perimeter. All in all, a resilient contribution of these businesses, and I’m confident about the capacity to have more growth once we have turned the page of this restructuring. Of course, let me highlight that regarding the cost of GBIS, we are not yet benefitting from the restructuring, we will benefit from the savings in 2020. And regarding the revenues of the integration of the Commerzbank activity which will fuel more dynamism in the revenues next year.
EBM: What are your priorities for the quarters to come?
Frédéric Oudéa: I’m ready to carry on: Carry on regarding the capital, pursuing a disciplined allocation of capital, of course putting more money, more capital in the most profitable activities. Second, keeping the same discipline on the costs. It’s very important in terms of improving profitability and of course being cautious in terms of credit origination, if the cycle is turning, and maintaining a low cost of risk. That’s for the P&L.
Beyond, I would say that I think European banks are facing at the same time four challenges, three of them being pretty specific to European banks:
- Of course, embracing new technologies, and it’s common to all banks in the world, but here we pursue the digital transformation;
- But we have then to face this new environment of low rates, even negative rates, probably for long. That’s something specific to Europe, to the eurozone;
- The new regulatory framework, we will have to adapt our businesses going forward to this new regulatory framework;
- And everything around climate change. And here, I am saying this is specific, because yes, it’s true that probably the need for change, the public opinion, the politicians are more sensitive than in other regions. I want to look at this as an opportunity for business and I’m very proud that we are a leader in the financing of renewables in an overall strategy to provide to our clients all kinds of ESG (Environmental, Social, and Governance) products and we want also to pursue that transformation with a lot of determination.
So, a lot to do, but I must say I’m very confident that we will carry on delivering good performances with all our teams, on board, sharing the same positive energy and team spirit, which I think is a recipe for success.
EBM: Frédéric Oudéa, thank you very much.
Frédéric Oudéa: You’re welcome.
