EuroBusinessMedia (EBM): Societe Generale, one of the largest European financial services groups, reports Q2 results for 2019. Frédéric Oudéa, hello.
Frédéric Oudéa: Hello.
EBM: You are the CEO of Societe Generale. What is your analysis of the Group’s second quarter figures for 2019?
Frédéric Oudéa: I think my main takeaway of these second quarter results is that we are delivering. We are delivering in our trajectory, in particular regarding our two main financial objectives, which are very important for our shareholders:
- The capital: in just six months - half year 2019 - we are at the level that we aim, the 12% Core Tier 1 ratio. That is a great achievement.
- And second, in terms of profitability, because in an environment that remains challenging, we are posting a pretty resilient profitability - just below 10% in terms of return on tangible equity (ROTE).
This is the result of overall good commercial dynamics of our businesses, in particular in the Retail Activities and Financial Services. The result also of a strong discipline of our costs. A low cost of risk, which reflects the quality of the credit portfolio, and all in all it translates into profitability, which is pretty good in an environment which is remaining challenging, in particular in Europe.
EBM: And more specifically, what were the trends in your main business lines?
Frédéric Oudéa: As you know, we have three main businesses.
If I start with the first one, the French Retail Banking, we are doing well in an economy which is growing, in particular supported by a strong dynamic of the investment by the corporates. It’s a sound growth from that perspective and, for example, the growth of our equipment loans for SMEs is increasing by 8% compared with last year.
But we see also a development of our high net worth and mass affluent client base in our Retail Networks by 2%, and Boursorama is carrying on growing very fast as the leading online bank in France, with 1.9 million clients, very close to the 2 million target that we have for this year.
Beyond the commercial dynamism, let me just highlight that quality of service to our clients is key going forward, and I was very happy, I must say, to see that in a recent survey, a newspaper called Challenges asked three professional associations of people in charge of finance in corporates, which was their preferred bank, and actually Societe Generale is ranking number 1. It reflects the commitment of our teams on the ground on a daily basis, and I think it’s very good for the future.
All in all, we have a revenue which is growing, despite a low rate environment which is difficult for us. We monitor well our costs, which are going down, and so we are able to post a pretty good profitability.
Regarding our second business, International Retail Banking and Financial Services, as previous quarters, I must say that everywhere it is growth. It is positive operating draws, and with a low cost of risk, it’s an improvement of the profitability which remains very high. It’s really our growth driver, everywhere, whether it’s in Central or Eastern Europe, Russia, Africa, or in Financial Services, everywhere we have a positive picture and remain very confident in the coming quarters.
And regarding our Wholesale Activities, the third business, we have again very sound financing activities. The ones related to Infrastructure finance, Trade finance, Export finance – we are a leader in the world regarding these activities. In the capital markets, it’s resilient revenues, going down versus last year, but improving compared with the first quarter, taking into account that we are just in the middle of the restructuring, and we have decided to stop a certain number of activities in the FICC business and, of course, the revenues reflect this. But overall a pretty sound performance in a challenging environment, in particular in Europe.
EBM: So, what are your priorities for the coming quarters?
Frédéric Oudéa: Needless to say, of course, to carry on delivering on our financial objectives. And I must say I’m confident that in the coming quarters, that we are going to further develop a profitable model and, of course, consolidate this sound capital ratio.
But beyond these financial objectives, I think that what is very important, in the coming quarters, is to carry on in developing a business model which will be both innovative and responsible.And I think this is the recipe for success for banks going forward. Innovation: what does that mean? Further transform the business model towards the change of behaviours of our clients. Embrace the new technologies. Develop new ways of providing our services and we carry on putting a lot of emphasis on this.
Regarding the responsibility: this world of innovation and digital technology means, for example, the need to protect privacy and the data of our clients. But of course, beyond, there are other dimensions. The climate change is of course at the heart of the public opinion questioning. We are very much engaged in that. What we did this quarter is, first of all, further develop our financing of renewable energies. We had this ambition of financing €100 billion between 2016 and 2020. We are at 89% of this target mid-2019 – we will probably do even more than we had in mind initially.
Beyond, we have a strategy to exit the coal industry: in 2030, for our clients with activities based in Europe and the OECD countries, and in 2040 for the other regions, in line with all the international agreements to limit the increase of temperature. For example, with innovation in certain more specific sectors, we were one of the promoters and we have signed the so-called Poseidon Principles, which will ensure to limit also the CO2 emissions of all the shipping industry. And here Societe Generale is providing its expertise, and of course its capacity to finance, to help this industry to do better in this environmental field.
Beyond the climate, can I just mention again Africa, which is a very specific, but very important angle for Societe Generale. We are there to implement our Grow With Africa initiative, which ranges from development of large infrastructures, which are needed for these countries, to financial inclusion for people who do not even access banking accounts. We remain absolutely committed to that, also with good success on the ground.
EBM: Frédéric Oudéa, thank you very much.
Frédéric Oudéa: You’re welcome.
