EuroBusinessMedia (EBM): Société Générale, one of the largest European financial services groups, is reporting results for the third quarter. Frédéric Oudéa, welcome.
Frédéric Oudéa: Thank you for having me.
EBM: You are the Chairman and CEO of Société Générale, what are the underlying operating trends that we should be reading into your Q3 results?
Frédéric Oudéa: Overall, very solid results, despite the environment and in particular good positive dynamics in terms of client acquisition, commercial activity. Secondly, good monitoring of the costs; a cost of risk which is going down hence net profit which is increasing by close to 57% compared with last year. We are in line with our objectives.
EBM: Your French retail business is continuing to face headwinds especially in fee income growth. When do you see this trend bottoming out?
Frédéric Oudéa: In any mature market for any retail activity in the Euro zone, growth is difficult. We know in France the economic activity is not great; credit demand is not that strong. So we have to face that. But what was very good and very positive is, thanks to the focus on the client satisfaction, we acquired new clients; +24% compared to last year. Boursarama will have close to 600,000 clients, as expected. The production of new loans for corporates is increasing - by 6% in the first nine months - and of course we carry on collecting deposits. So all in all we can compensate, thanks to these volumes, the negative impact, for example, of the decrease of interest rates. Then we monitor closely the costs, going down. The cost of risks is going down despite the environment. All in all the net profit of this business is increasing by more than 5% compared to last year. So good performance.
EBM: How did international retail banking perform considering the outlook in Russia which is clouded by international tensions?
Frédéric Oudéa: I think also we are delivering there good performances, good collection of deposits, growth of loan outstandings. Let me just take Russia. Including in Russia, we have a growth of loans by 5% despite an economy which is effectively more sluggish, under pressure with the sanctions. And we pay also a lot of attention to costs in Russia. The cost of risk is stable, hence we have a positive contribution, modest but positive contribution of our business. Beyond Russia, may I say that we have good growth in Africa, we have a good performance in the Czech Republic which is a pillar of our international retail and of course also very strong performance of our financial services to corporates; fleet management, equipment finance and insurance. So all in all the revenues are growing by more than 2%, costs are under control and the cost of risk is well monitored. So the net contribution of these businesses is also improving compared with last year, and progressively, and in line with our expectations.
EBM: Your Global Banking and Investor Solutions Division showed mixed results in CIB. How can you explain that and what is the outlook for returns in CIB?
Frédéric Oudéa: May I point out that our CIB business remains one of the most performing and profitable in Europe and this quarter confirms that again. Of course, revenues are lower, because in the summer there was limited activity on the markets, in particular on equities, with low volatility, plus the traditional seasonality. But despite that, we have a very low cost of risk, costs are also monitored, so the profitability remains very high. All in all in the first nine months we have a profitability of 17% return on equity [9 month ROE of 17% for Market activities; 15,6% for the whole Global Banking And Investor Solutions] and we have also a low cost/income ratio. So we have model, I think, which is well suited for the new world. We are growing, we are developing in the financing business, for example, we have put more capital at work so we are growing by 15% the revenues with new loans and we are also, for example, number 2 in the league tables for the debt capital market activity, the Euro Bonds for corporates. That’s exactly the target we have, so I’m also happy with the progress we are making in this business.
EBM: Société Générale successfully passed the comprehensive assessment of the ECB. What are the implications for the group?
Frédéric Oudéa: I think we should not underestimate this crucial milestone. We are now in the Banking Union. It was a huge project, very important for Europe. Before entering there was this big check-up, huge effort, many, many people involved in our bank, outside the bank to check, and I would like to thank our people for their efforts and it confirmed all the hard work done and the quality of the balance sheet, the quality of the methods of provisioning. That’s very important for the future and it’s actually reflected in our third quarter results, as I’ve said, with the cost of risk which is going down. That means we are able also to fuel the future growth of our activities. The Core Tier 1 stands at 10.4% Basel 3 fully loaded end of September, that means that beyond provisioning for our dividend we are able to capture opportunities of growth, finance organic growth, for example we can do that with comfort.
EBM: Are you on track with your medium-term strategic plan despite renewed economic uncertainties?
Frédéric Oudéa: Yes, because I think we factored the fact that there would not be a miracle on the economy in Europe in general, that it would be a slow improvement. There can be parameters which can vary but overall, we factored this kind of environment and we are working very hard. And I think Société Générale, what is very important is that we anticipated early, compared to our peers, the changes in the financial sector. The Digital transformation for example, we are a leader in innovation in Digital, but also in the capital markets. We know that capital markets will change. So today we are building for the long term the businesses which are well suited for the new environment and I think with this focus on the quality of service, we reap the fruit of all these efforts, we conquer new clients and I’m very happy that it will deliver in the future additional revenues. So yes, we are on track, and I’m happy and positive with the development and the implementation of our strategic plan.
EBM: Frédéric Oudéa, Chairman and CEO of Société Générale, thank you very much.
Frédéric Oudéa: Thank you.
