Your SlideShare is downloading. ×
CREATING VALUE IN A CHANGING WORLD PRESENTATION - SOCIETE GENERALE - March 2013
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

CREATING VALUE IN A CHANGING WORLD PRESENTATION - SOCIETE GENERALE - March 2013

511
views

Published on

SOCIETE GENERALE …

SOCIETE GENERALE
MORGAN STANLEY
EUROPEAN FINANCIALS CONFERENCE
Séverin Cabannes, deputy CEO

Published in: Economy & Finance

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
511
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
10
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. SOCIETE GENERALE MORGAN STANLEYEUROPEAN FINANCIALS CONFERENCE Séverin Cabannes, deputy CEO CREATING VALUE IN A CHANGING WORLD MARCH 2013
  • 2. DISCLAIMERThis document may contain a number of forecasts and comments relating to the targets and strategies of the Societe relatingGenerale Group.These forecasts are based on a series of assumptions, both general and specific, notably - unless specified otherwise general- the application of accounting principles and methods in accordance with IFRS (International Financial Reporting accordanceStandards) as adopted in the European Union, as well as the application of existing prudential regulations.This information was developed from scenarios based on a number of economic assumptions for a given competitiveand regulatory environment. The Group may be unable: - to anticipate all the risks, uncertainties or other factors likely to affect its business and to appraise their potential likelyconsequences; - to evaluate precisely the extent to which the occurrence of a risk or a combination of risks could cause actual riskresults to differ materially from those provided in this presentation. presentation.There is a risk that these projections will not be met. Investors are advised to take into account factors of uncertainty Investorsand risk likely to impact the operations of the Group when basing their investment decisions on information provided basingin this document.Unless otherwise specified, the sources for the rankings are internal. internal.The Group’s consolidated accounts at 31 December 2012 thus prepared were approved by the Board of Directors on Group’12 February 2013. The consolidated financial statements are currently being audited by the Statutory Auditors. 2013. auditedThe financial information presented for the financial year ending 31th December 2012 has been prepared in endingaccordance with IFRS as adopted in the European Union and applicable at this date. applicable MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.2
  • 3. INTRODUCTION2010-2012: DELIVERING ON FIRST PHASE OF GROUP TRANSFORMATIONNEXT PHASE: RAISING SHAREHOLDER RETURN ON CAPITALCONCLUSION 3 MAY 2012
  • 4. GROUP SOCIETE GENERALE2010-2012: WE HAVE DELIVERED ON FIRST PHASE OF GROUP TRANSFORMATION Ambition SG 2015 (June 2010) Capital allocation by business at end 2012 • Client oriented Universal Banking model Total businesses: EUR 32.1 bn • Optimisation of the Group’s portfolio of activities • Strict risk management • Transforming the operational model PRIVATE BANKING, GLOBAL INVESTMENT MANAGEMENT AND SERVICES Accelerating the transformation (Sept. 2011) 3% FRENCH NETWORKS • Focus on strengths, cost reduction and 3% deleveraging 27% Retail: 62% CORPORATE AND • Basel 3 Core Tier 1 ratio well above 9% by end 2013 INVESTMENT BANKING 35% 16% 16% Second phase in Group transformation INTERNATIONAL RETAIL BANKING (Feb. 2013) • Refocus organisation around three core businesses SPECIALISED FINANCIAL to bolster future growth SERVICES AND INSURANCE • Increase operational efficiency through Group simplification MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.4
  • 5. GROUP SOCIETE GENERALEBASEL 3 COMPLIANCE SECURED Group Shareholders’ Equity (in EUR bn) Shareholders’ bn) RWA (in EUR bn) bn) BASEL 2 BASEL 2.5 ~2x 46.4 47.1 49.8 42.2 346 324 335 349 324 36.1 27.2 DEC. 07 DEC. 08 DEC. 09 DEC. 10 DEC. 11 DEC. 12 DEC. 08 DEC. 09 DEC. 10 DEC. 11 DEC. 12 Core Tier 1 ratio Road map to Basel 3 (1) BASEL 2 BASEL 2.5 +45bp -15bp +15bp -15bp +90bp ~-240bp 9.5%- 9.0% Earnings Dividend Legacy TCW & IAS 19 Fully loaded Further 10.7% provision assets NSGB Basel 3 disposals/ 10.7% disposals impact RWA 9.0% growth, 8.4% 8.5% safety buffer 6.7% DEC. 08 DEC. 09 DEC. 10 DEC. 11 DEC. 12 31 DEC. 2012 31 DEC. 2013 BASEL 2.5 BASEL 3(1) Cf. 2012 full year results OBJECTIVE MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.5
  • 6. GROUP SOCIETE GENERALEGROUP’S FUNDING STRUCTURE* STRENGTHENED Stronger funding profile (in EUR bn) bn) ST needs fully covered (in EUR bn) bn) 642 652 69% 73% 100% 101% ST ISSUANCE 66 164 118 % COVERAGE OF SHORT -43% 65 8 INTERBANK ST 131 133 TERM NEEDS DEPOSITS 113 113 115 114 114 149 SHORT TERM FUNDING 24 OTHER +63% in EUR bn 91 84 MLT FUNDING LIQUID ASSET BUFFER in EUR bn 311 266 +17% CUSTOMER DEPOSITS NET AVAILABLE CENTRAL 65 BANK DEPOSITS EQUITY 33 46 52 26 31 2007 2012 JUNE 11 DEC. 11 JUNE 12 DEC. 12Reduced reliance on ST funding & deposits increase Excess of stable resources over LT assets (in EUR bn) bn) ST funding /total Loan to deposit funded assets (in %) Ratio (in %) 51 36% 131% 21 20% 118% -14 DEC. 07 DEC. 12 DEC. 11 DEC. 12 DEC. 11 JUNE 12 DEC. 12* Scope and definition of funded balance sheet and loan to deposit ratio changed at end-2012 MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.6
  • 7. GROUP SOCIETE GENERALEREFOCUSING THE GROUP THROUGH BUSINESS DISPOSALS Key disposals Rationalization of the portfolio RFS Belrosbank 1 Boosting Basel 3 Core Tier 1 ratio by 52 bp 2 Reducing management complexity and risk profile 3 Supporting future net earnings MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.7
  • 8. GROUP SOCIETE GENERALE IMPROVED RISK PROFILE Group cost of risk* under control NIG legacy assets down to EUR 3.1bn Net book value Basel 3 Capital (EUR bn) bn) (EUR bn) bn) 106 6.1 83 67 60 75 3.8 NON INVESTMENT -49% GRADE ASSETS 23 21.0 -55% 3.1 1.7 MONEY GOOD -73% ASSETS 2007 2008 2009 2010 2011 2012 5.7 1.3 -54% 0.6* In basis points. Excluding provisions for disputes, CIB legacy assets and Greek government bonds JUNE 11 DEC. 12 JUNE 11 DEC. 12 Diversified portfolio with very low exposure to GIIPS Reduction in market & operational risk Breakdown of 2012 EAD by zone (EUR 677bn)* MARKET COST OF RoW STRESS TEST OPERATIONAL RISK NORTH FRANCE – Retail excl. residential mortgage 2007-2012 2007-2012 ** AMERICA 5% 8% FRANCE – Residential mortgage RUSSIA 10% 12% 3% FRANCE – Corporate & SME -56% -58% 9% CEE 17% FRANCE : 48% 4% AFRICA & MED BASIN 1% FRANCE – others 16% 4% 7% FRANCE – Banks & local government 4% WESTERN FRANCE – Sovereign & Central bank EUROPE - OTHER * Excluding Egypt GIIPS Working on lowering the Group-specific Cost of Equity **Excluding rogue trading loss MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.8
  • 9. GROUP SOCIETE GENERALESTRONG ACTIONS ON COSTS DELIVERING POSITIVE RESULTS Group Operating expenses (in EUR bn) and C/I (1) (in %) bn) Positive jaw effects (NBI and Operating expenses changes 2012 vs. 2011*) 66.9% 65.6% +4.9% NET BANKING INCOME +2.6% OPERATING +1.4% EXPENSES +0.0% 17.0 Excl. bonus 16.4 expenses -0.4% -0.1% -0.6% -2.8% 2011 2012 -5.8% -8.9% Group total staff (3) -9,6% 165,928 FRENCH INTERNATIONAL SG CIB SFS AND PRIVATE 149,292 NETWORKS (2) RETAIL Core INSURANCE* BANKING BANKING* activities (1) & GIMS* -10% * Systemic tax has been excluding in 2012 from all the businesses operating expenses ** When adjusted for changes in Group structure and at constant exchange rates (1) Excluding impact of legacy assets and asset sales and restructuring charges in 2011 (2) Excluding PEL/CEL 2008 2012 (3) Adjusted for TCW and NSGB disposal in 2012, for SMC and shared service centers in 2008 MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.9
  • 10. GROUP SOCIETE GENERALECONTINUING TO DELIVER RESILIENT PERFORMANCE Underlying* Net Banking Income (in EUR bn) bn) Underlying* Group Net Income (in EUR bn) bn) 2008 2009 2010 2011 2012 2011 2012 15.5 15.5 16.3 16.6 16.7 2.3 2.2 RETAIL BANKING 3.1 3.2 3.5 3.4 3.5 SPECIALISED FINANCIAL SERVICES AND INSURANCE 0.5 0.7 5.0 4.7 4.9 5.0 5.0 INTERNATIONAL 0.3 0.3 RETAIL BANKING 7.8 8.2 8.2 1.4 1.3 FRENCH NETWORKS 7.4 7.5 PRIVATE BANKING, GLOBAL INVESTMENT 2.5 0.3 MANAGEMENT AND SERVICES 0.2 2.3 2.2 2.2 CORPORATE AND 2.8 INVESTMENT BANKING 9.8 1.6 1.8 7.8 6.6 6.9 4.7 -0.3 -0.9 -0.3 -0.4 -0.8 -0.6 -0.9 CORPORATE CENTRE 22.8 26.9 26.0 25.0 25.0 3.5 3.4 TOTAL* Excluding legacy assets, non economic and non recurring items, as published in 2012 full year results on slide 31 MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.10
  • 11. GROUP SOCIETE GENERALEMARKET PERCEPTION OF SHARE PRICE AND CDS Société Générale share price Socié Supported by CDS market normalization 70 Société Générale 5 years CDS spread evolution Socié SG CDS 5Y 60 Net asset value 450 ITRAXX FINANCIALS 50 Tangible net 5Y CDS asset value 400 SG Share price 350 40 300 30 250 200 20 150 100 10 50 0 0 03/01/2011 03/05/2011 03/09/2011 03/01/2012 03/05/2012 03/09/2012 03/01/2013 Name Resumption of dividend payment: pay out of 26%* 0.45 EUR dividend per share in 2013 with scrip dividend option* Group Net Income, excluding revaluation of own financial liabilities MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.11
  • 12. GROUP SOCIETE GENERALENEXT PHASE: RAISING SHAREHOLDER RETURN ON CAPITAL Increase business ROEs through revenue growth and cost efficiency Reduce cost of excess liquidity and impact of non operational items MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.12
  • 13. GROUP SOCIETE GENERALEFOCUS ON GROUP AND BUSINESSES ROES Structurally lower ROE than in the 2000’s 2000’ 2012 Business ROEs(*) Underlying Group ROE and ROTE 12.6% 9.8% 20.3% 8.9% 7.5% 7.3% 15.2% 15.4% 6.0% ROE 13.0% ROTE 5.0% FRENCH INTERNATIONAL CORPORATE AND SPECIALISED PRIVATE BANKING, 2010 2011 2012 NETWORKS RETAIL BANKING (2) INVESTMENT FINANCIAL GLOBAL INVESTMENT BANKING SERVICES MANAGEMENT AND CORE ACTIVITIES (1) AND INSURANCE SERVICES (3) From 2012 Business ROEs(*) to Group ROE IMPACT FROM GOODWILL, CAPITAL NON 14.5% ALLOCATED TO CORE BUSINESSES AND COST REVENUE DRAG OF TSS AND TSDI FROM EXCESS LIQUIDITY 10.0% 7.3% CORE BUSINESSES UNDERLYING GROUP ROE ROE* BEFORE GOODWILL(1) Excl. discount on asset sales(2) Excl. goodwill impairment on Russia and one-off item(3) Excl. goodwill impairment on Newedge and TCW *Based on 9% capital allocation and before goodwill MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.13
  • 14. SOCIETE GENERALE GROUPBRIDGING THE GAP TO REACH GROUP ROE TARGET Increase business ROEs French Networks: continue to invest and innovate while actively managing the cost base International Retail Banking operations: realize the full growth potential Restore profitably in Russia and in Romania Expand businesses in areas with dynamics and profitable growth prospects CIB: gain market share and develop the Originate to Distribute model Generate synergies under the new simplified organization Deliver ROE above COE MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.14
  • 15. FRENCH NETWORKSFOCUS ON CLIENT SATISFACTION, COSTS AND RISKS Cost/income ratio (in %) (1) Preserve net banking income in a durably low interest rate environment 68.4 67.6 • Leverage on three differentiated brands and entrench 66.3 66.4 asset repricing initiated in 2012 65.8 64.4 64.5 • Enhance the corporate footprint while optimising use of 64.1 scarce resources • Further develop the multi-channel distribution system, implement useful innovation (mobile banking & payment) 2005 2006 2007 2008 2009 2010 2011 2012* Achieve greater efficiency to offset pressure on NBI • “Convergence” programme positive effect on GOI French Networks Exposure at Default (EAD) As of end 2012: EUR 208bn (2) • Gradually adapt branch network Keep cost of risk under control RESIDENTIAL MORTGAGES MID SIZE & LARGE • Home loan credit quality supported by conservative CORPORATES origination criteria 35% 25% • Corporate loans: prudent loan origination and quality 13% guarantees 20% 7% SME & SPECIALISED FINANCING OTHER CREDIT TO LOCAL GOVERNMENT INDIVIDUALS & VERY SMALL ENTERPRISES* Excluding EUR -35.5m systemic tax in 2012(1) Published data excluding PEL/CEL(2) Excluding banks and sovereigns MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.15
  • 16. INTERNATIONAL RETAIL BANKING2013: LEVER FOR SIGNIFICANT GROWTH POTENTIAL International Retail Banking: Maintain Czech Republic subsidiary’s profitability Major zones 2012 net income and ROE* level through productivity initiatives 2012 ROE 38% 2012 NET INCOME (EURm) Engineer renewed growth in Russia and Romania 16% 8% Expand further in dynamic zones with high ROE: Sub Saharan Africa and Mediterranean Basin 265 125 Increase synergies within the Group 102 <0% • Consumer finance segment • Revenue synergies with CIB, Private Banking and -97 Custody • Reduce costs thanks to mutualisation of support CZECH RUSSIA ** SOUTH AFRICA (***) REPUBLIC EASTERN EUROPE (Mediterranean Basin & functions and staff (Romania & other CEE) Sub Saharan Africa)* ROE based on normative equity before goodwill** SG Russia scope before goodwill impairment*** Excluding Egypt MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.16
  • 17. INTERNATIONAL RETAIL BANKING2013: TARGET RENEWED GROWTH IN RUSSIA AND ROMANIA SG Russia*** results Russia: deliver growth In EUR m 2011 2012 Change • Leverage on client-focused organisation with Net banking income 1,257 1,314 +2.1% * coverage across the country: increase individual Operating expenses (941) (958) -0.6%* customer deposits and intra-group synergies Gross operating income 316 356 +10.0% * • Further efforts on costs: reorganise head-office, Net cost of risk (157) (213) +32.4%* rationalise IT system Operating income 159 143 -12.2%* Group net income 105 102** -5.0% * • Strict discipline in risk management RWA end of period 15,873 16,824 C/I ratio 74.8% 72.9% Romania: focus on restoring profitability • Strong franchise: n° privately owned local network 1 Romania results • Develop innovative and high value added products, increase X-selling, reinforce leadership on large In EUR m 2011 2012 Change corporates Net banking income 648 581 -5.9% * Operating expenses (353) (328) -2.2%* • Further improve efficiency: pragmatic network Gross operating income 295 253 -10.3% * adjustment, simplification and pooling of processes Net cost of risk (288) (437) +59.5%* and operations Operating income 7 (184) n/s Group net income 5 (84) n/s • Gradual decrease in cost of risk C/I ratio 54.5% 56.5%* At constant exchange rates** Excluding Goodwill impairment*** Contribution of Rosbank, Delta Credit, Rusfinance Bank, Société Générale Insurance, ALD Automotive, and their consolidated subsidiaries to Group core business results MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.17
  • 18. INTERNATIONAL RETAIL BANKINGPROFITABLE EXPANSION IN DYNAMIC ZONES: FOCUS ON AFRICA Average GDP growth over last 4 years: +5.2% in Sub Africa EUR 1bn* NBI in 2012 EUR 11.2bn* loans outstanding Saharan Africa and +4.4% in Mediterranean Basin 14% of 2012 ROE**: 16% 2012 NBI* Strong local positions thanks to historical presence Morocco 4th local Solid financial performances with potential for growth privately-owned because of low banking penetration bank • ~+8% NBI* growth per year on 2008-2012 period Cote d’Ivoire • 2012 contribution to Group Net Income: EUR125m**, ROE: 16%** 1st local bank • Excess liquidity position: 92% L/D* ratio in 2012 by total assets Senegal, Cameroon 1st local bank Development, innovation and operational efficiency by total loans • 951 branches** at end 2012, ~100 branch net openings target in 2013 9% of 2012 NBI* • Pursue implementation of innovative solutions: electronic wallet, low cost banking, Corporate clients solutions • Further improve C/I ratio through shared services centers and centralized IT Mobile payment solution platform* International Retail Banking excluding Greece and Egypt,** Excluding Egypt MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.18
  • 19. CORPORATE AND INVESTMENT BANKINGFROM A POSITION OF STRENGTH… Leading positions with superior profitability Leadership in Equity Derivatives, Structured Equity Derivatives House Best Global Structured Products, Euro Rates and Credit, Natural Resources of the Year Products House Risk awards 2013 & IFR awards 2012 Euromoney awards for excellence 2012 Finance Solid footprint with European clients #6 in Overall Euro Rates Best overall Commodity N° on all Corporate bond issuance in Euro YTD* 2 (cash & derivatives) Finance Bank Euromoney rates survey 2012 Trade Finance awards 2012 With the size to compete on targeted markets • EUR 7bn of revenues in 2012** • Balanced mix of activities** (30% Equities, 40% FICC, SGCIB client NBI by category and by region 30% Financing & Advisory) with a solid share of recurring client revenues (in %) 1% • Broad client franchise with corporate focus 6% 18% 23% An efficient set-up 12% • Headcount of 10 280 employees, down -12% in 2012 42% 52% • 2012 Cost/Income ratio: 59%** 8% 38% • 2012 Compensation ratio: 32%** CORPORATE & FINANCIAL SPONSOR AMERICA EUROPE 2012 ROE: 20%** on 9% Basel 2.5 capital 61% allocation FINANCIAL INSTITUTION ASIA FRANCE SOVEREIGN CEMEA OTHERS• At 8 March 2013** Excluding discount on loans sold and legacy assets MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.19
  • 20. CORPORATE AND INVESTMENT BANKING… TO GAINING FURTHER MARKET SHARE Targeted strategic development Market share* (in %) • Upgrade the flow fixed income platform 5.9 5.1 • Selectively expand to better serve our clients, on 4.6 segments where we have a specific edge (Emerging, 3.6 2007 CEEMEA, Credit) 2012 2.8 2.9 2.9 • Develop our presence on Financial Institution segment 1.7 • Pursue set-up optimisation, adapt to regulatory changes • Develop Originate to Distribute model Total EQUITY FICC F&A Develop synergies within the Group Originate to distribute initiatives • Offer tailor made solutions to HNWI and family offices Partnership • Develop innovative and integrated post-trade services for our investor clients Partnership with Axa Private placement Underwriting, Primary syndication & Capital market solutions Bridge to bond, Project bond Revolving facility, Term facility* Based on 2012 revenues, excluding non recurring items. Pool comprised of JPM, Citi, GS, MS, BoA, Liquidity facility,NMR, DB, UBS, CS, BARCAP, HSBC, RBS, BNPP, CACIB and SGCIB; 2007 pool also comprised of ML, BS Project finance Bond private bond programme,and LB placement IL & IR hedging MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.20
  • 21. SOCIETE GENERALE GROUPBRIDGING THE GAP TO REACH OUR ROE TARGET Reducing cost of excess liquidity in Corporate Center while maintaining our funding structure Lowering negative impact from Legacy asset portfolio Deliver ROE above COE MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.21
  • 22. SOCIETE GENERALE GROUPPOSITIONING OURSELVES TO CREATE VALUE IN A CHANGING WORLD We have delivered on our objectives during the 2010-2012 transformation phase We have real levers to improve our ROE French networks: continue to invest and innovate while actively managing the cost base International Retail: realize the full growth potential CIB: gain further market share and enhance the OTD model Develop income synergies and implement further cost measures thanks to the new organization Reduce non business item impacts We are strongly committed to raising our ROE MORGAN STANLEY CONFERENCE 20 MARCH 2013 | P.22
  • 23. INVESTOR RELATIONS TEAMHANS VAN BEECK, STÉPHANE DEMON, MURIEL KHAWAM, CLAIRE LANGEVIN, LUDOVIC WEITZ +33 (0) 1 42 14 47 72 investor.relations@socgen.com www.investor.socgen.com | P.23