EuroBusinessMedia (EBM): Societe Generale, one of the largest European financial services groups, publishes results for 2016. Frédéric Oudéa, hello. You are the CEO of Societe Generale, so, how did Societe Generale Group perform in 2016?
Frédéric Oudéa: I think very well indeed in an uncertain and sometime turbulent environment. We benefitted from the well-balanced business model that we have. That means that in particular we benefitted from very strong performances of our International Retail and Financial Services which posted strong growth and good profitability. In French Retail as well as in Global Banking and Investment Solution businesses we had very resilient performances in terms of revenues and client impact. Overall, we had strong commercial performances. We, of course, maintained the strong discipline on the cost management and the risk management, with the level of cost of risk in particular which is at a very low level. All in all, we were able to post an improvement in our net profit, an improvement of our earning per share and of course an improvement of our dividend by 10%. So a year of value creation for our shareholders. Beyond this, we were also able to further enhance the balance sheet across all the ratios, capital and liquidity ratios in particular we increased our Core Tier 1 ratio which is now at 11.5%. So a very good performance, both commercially and financially as I’ve said, in an environment which was not that easy to manage.
EBM: This year also marked the end of your strategic plan for 2014-2016. How would you sum up your achievements?
Frédéric Oudéa: When I look back in an environment which was of course very different from the one we had in mind three years ago, we have delivered globally on our strategic and financial goals. We wanted to have more client impact that meant, in particular refocus, simplify the Group. We did that, with some sales but as well as some acquisitions which made sense for our business model. Today the Group is more compact and more meaningful for our clients. Second, we were able also, from an operational point of view, to very significantly improve our cost management and decrease the cost of risk and we delivered beyond our objectives. Third, one objective was also to meet all the regulatory requirements that at that time were announced, and we did that also beyond expectations. Finally, in terms of profitability, we were also able to improve structurally the profitability of our businesses. So, all in all, I think we delivered and we’ve built very solid foundations to look at the coming years with confidence.
EBM: What was 2016 like for your Retail Banking networks here in France?
Frédéric Oudéa: Our French Retail, it is our presence in the Eurozone in retail. It is the country in which we have these activities and of course they are impacted by the low rate environment, even sometimes negative rates environment that means revenue which is going down. But, despite that we are conquering clients. This is the most important thing. The three networks, Societe Generale, Crédit du Nord and Boursorama, have been able to add an additional 400,000 new individual clients and also we entered into relations with 4,000 new SMEs. So very positive from a commercial point of view, and thanks to the good management of the costs, also cost of risks which is going down, we were able despite this environment which is challenging from a rate point of view, to post an increase of our net profit in this business by 3% in 2016 compared with 2015.
EBM: As regards International Banking and Services, has its growth potential been confirmed?
Frédéric Oudéa: Totally, we have here revenues which are growing and thanks again to the strong management of cost and risk, a strong increase of the contribution, a strong increase of our profitability. We are delivering services and making our business in countries which are overall growing pretty well. In banking markets which are not that mature, where we can take market share and of course innovate and increase the wallet of services to our clients. This is true for Central Eastern Europe, Russia which has done much better than expected, Africa which is of course a growing engine. But it’s also true in our Financial Services, both for individual clients and corporates and we have in the beginning of this year two very interesting projects. First of all, we are announcing the signing of the acquisition of the Aviva share in Antarius. Antarius is the insurance company of Crédit du Nord. We are going to then merge Antarius with Sogecap, our insurance company, and extract a lot of synergies for the benefit of our clients as well as for our shareholders. For our Car Fleet Management business, ALD, we are announcing the intention to float this business. Why? Because we want to be a leader of this new, very fast growing business which is around mobility. The relationship of both individual clients, corporates, municipalities is changing regarding cars and we have built in the last years a fantastic business where we finance cars, we manage the cars, we repair the cars, we maintain the cars for the benefit of clients which are corporates. We see many new avenues for more diversified client base, with more services, with a lot of innovation around this and we want to give ALD all the flexibility, whether it’s strategic, operational or financial, to take advantage of these opportunities.
EBM: 2016 was certainly a volatile year for stock markets. Did this have an impact on your Global Banking and Investor Solutions activity?
Frédéric Oudéa: In 2016 with the turbulences that you mention, we were able to confirm how significantly we have changed our business models in GBIS. We have shown a very strong resilience of the revenue base despite these turbulences and we have been able to grow the market share with our clients in an environment where we still see competitors which are reviewing their strategy. We have again maintained very well our cost and our risk at a very low level, hence a resilient contribution. We want to pursue this strategy, to take advantage of expertises which are leading expertises, recognised as top class. It can be for derivative product as well as for project finance for example and further deliver more value to our clients, gain market share while of course improving step by step the profitability.
EBM: So, in conclusion, how is your Group approaching 2017 and what are its medium-term prospects?
Frédéric Oudéa: In the short term, as we know, 2017 might be a year with uncertainty for political reasons, whether in the US or Europe. But the underlying economies are doing relatively well at the beginning of this year and we want to take advantage of this. We want to pursue the development of our businesses, I think we have very strong and good business models, we have new projects to further enhance our impact with our clients and I think we can show the growth of our revenues and client base. Of course, we will maintain the discipline in terms of cost and risk and again 2017 should be an additional year of value creation for our shareholders. In the longer term, in the coming years, we would like to emphasise again further three main dimensions. Again, on the client centricity of all our Group, our businesses. We think we can do better on this and we want to fundamentally align all our strategy on the client needs and I think we can be very successful in doing that, conquering again market shares.
Second, innovation in particular related to digital technologies, has to be further spread across the businesses internally and externally. Of course, it’s for the French Retail but beyond the French Retail, when I think about Africa for example, there is a lot of innovation in Africa even if it’s a different one from the developed economies and same thing for the corporates and the investors. So really embracing across the businesses, all this technology like pioneers. Then internally, of course, use these technologies to make the company more agile, more flexible.
And third, it’s around culture and conduct, we are launching our programme. We have the building stones, with key values, HR instruments, leadership model which are disseminated across the Group, training sessions which are fully consistent with that. What we want to ensure with this programme is that these tools are used practically on a daily basis in all the business and functions in a consistent way, so that the culture of Societe Generale is seen both by our clients but of course also all our staff. All in all, we are going to work in 2017 to put all these elements in a new strategic plan which we intend to communicate before year-end to our shareholders,
EBM: Frédéric Oudéa, you are the CEO of Societe Generale, thank you very much.
Frédéric Oudéa: Thank you.
