EuroBusiness Media (EBM): Société Générale, one of the largest European financial services groups, reports results for Q3 2020. Frédéric Oudéa, hello.
Frédéric Oudéa: Hello Nadia, and perhaps can I take off my mask? We are at a distance which is secure.
EBM: Absolutely, go right ahead. You are the CEO of Société Générale, how did Société Générale perform during this third quarter which saw a slight rebound in the economic activity?
Frédéric Oudéa: Well, we posted good performances and we confirmed the expected rebound of the performances of all our businesses in a better environment following the end of the lockdowns in most of the geographies in which we operate. So we have actually revenues which have increased very significantly versus the second quarter of 2020, but also which are actually slightly up, even compared with the third quarter of 2019. We are maintaining very strong discipline on the costs and hence we are posting a very strong increase of our gross operating income. Very good news is the cost of risk. The cost of risk is at 40 basis points, higher than last year which was very low, but significantly below the provisioning in the first half of the year, and we can confirm the very good quality of our assets. We are able to confirm the outlook for the full year at the low range of the initial figures we had in mind at the beginning of the crisis. At the end of the day, beyond the net result which is a profit of more than €860 million there is the capital. The capital ratio is also increasing very significantly. We have a significant buffer, above our regulatory requirement, and it’s a very important element which should give comfort to our investors, both in terms of financing our activity, but also which gives us flexibility in terms of distribution of dividends and remuneration of the capital they have invested in Société Générale.
EBM: Focusing on your various business lines now, what were the key trends?
Frédéric Oudéa: Let me start perhaps with Global Banking and Investor Solutions (Financing and also Capital Market activities), the ones which suffered from the dislocation of the market in the first half of the year. The very good news is really we have a strong increase of the revenues, not just versus the second quarter but also compared with last year. That shows the quality of the franchise. We are, of course, moving forward in the reduction of our risk appetite in certain segments, but again we were alongside our clients and we can demonstrate that yes we have expertise which are valuable. And the net contribution of this activity is significantly higher compared with last year.
Regarding the French Retail, we are benefitting from the fact that French people are consuming again, paying more, spending more money and of course with a good dynamic on the credit, in particular on the corporate side. And the teams of Société Générale are fully mobilised to help the economy moving forward and we have €20 billion of guaranteed loans which have been already validated by our teams for our clients, for example. And on this activity, the revenues are going down versus last year, due to the interest rate which weighs on our margin in particular because of the flow of deposits which is a cost for us banks, but beyond, a very strong resilience of return on equity.
And regarding the International Retail and Financial Services, with differences from one country to another, overall also a good rebound of economies that have had lockdowns, but the end of the lockdowns have taken place at the end of the second quarter, and we see similarities with the French Retail, a rebound of the activity and overall a very good resilience of what we see as growth engines going forward.
EBM: And finally, as a second lockdown is deployed in countries around the world with additional economic impact, what are your priorities going forward?
Frédéric Oudéa: Well clearly to finish 2020 as well as possible, meaning to carry on accompanying our clients, adapting to this environment, but we know how to operate in these conditions.
Beyond, I think it’s important, and we reflect that in our communication, we think forward, and regarding structural trends that this crisis is accelerating, I have in mind the digital transformation, and from that perspective we want to pursue the accompaniment of our clients in the way they consume banking services, but also the energy transition. And we have taken very, very concrete commitments to show that we are embarking on a journey of responsibility towards that, in particular regarding our footprint in the extraction of oil and gas. We have decided to take a commitment to reduce in absolute terms, in the short term – 2025, a date aligned with our strategic road map – this footprint by 10%. Of course, carrying on accompanying our clients in their own transition and in particular financing the gas which is a legitimate energy and needed as a transition, but also putting forward the renewable and we are number 1 in the world in the financing of renewable energy at the end of September. So we are going also to exit the new financing of onshore gas and oil extraction in the US as part of that plan. So you see something which is measurable and which illustrates the responsibility we have in this matter.
Overall in the coming months, we are going to develop our next strategic plan, but we will take immediate actions in terms of communicating to our investors in the coming weeks on growth businesses like ALD in the very coming days. Regarding our French Retail, end of the year we will illustrate the conclusion of the study to combine our two French networks but also the potential of growth of Boursorama, the leading online bank in France. And then in the first quarter regarding our wholesale activities, whether its financing or capital markets. So we will give a lot of clarity to our shareholders on where we want to go and I think it should give them a lot of comfort on the potential of Société Générale in this still challenging environment.
EBM: Frédéric Oudéa, thank you very much.
Frédéric Oudéa: You’re welcome. Thank you.
