Societe Generale SA

Good morning, everyone. I am pleased to be here with you today on this call to discuss our quarterly earnings, and I thank you for joining us. We have two important topics to cover this morning about the group's performance. The first is the strong and materially improved results achieved during Q3-24, showing a better progress than originally anticipated. The second is a review of the consistent delivery of our strategic plan. We are moving forward in our group-wide transformation and hitting all the interim targets that we set at our capital markets day a year ago. Among them, and most importantly, are capital and cost-to-income targets. Starting with the quarterly earnings, you can see that revenues are up by 10.5% compared to Q3 23, and by nearly 6%, excluding the €300 million positive one-off proceeds received in Q3 and booked in the corporate center. These higher revenues are driven by solid business performance in key areas. First, the strong rebound in French NII versus last year, in line with the latest assumptions updated in Q2, and in line with our end-of-year estimates. And secondly, once again, a remarkable performance of global banking and investor solutions. We've continued strong contributions from our equity and transaction banking divisions. We have also strictly managed our costs, and we see the first benefits from the many initiatives that we have launched. Costs decreased by almost 1% in Q3 2024 compared to last year in a context of higher business performance, and despite a base effect related to past inflation. This translates into strong positive jaws and a cost-to-income ratio down to 63.3% in Q3 2024. That's 7 percentage points lower than in Q3 2023. For the first nine months, it stands at 68.8%. Cost of risk is stable at 27 basis points and in line with the yearly estimates. All of this impacts our operating income, which is up by nearly 40% compared to last year. The Q3 group net income rose 4.6 times to 1.4 billion euro, which translates into a 9.6% reported ROTI and 7.8% excluding the one-off. For the first nine months, the ROTI stands at 7.1%. In terms of capital, the CET1 ratio is up by around 10 basis points at 13.2% at the end of Q3. That's a level that's consistent with our 2024 end-of-year targets. It is post-distribution provision, which is based, as you know, on a 50% payout ratio. At the end of September, we have already provisioned an equivalent of 1.66 euro per share for distribution. Liquidity ratios remain comfortably above target levels. And note that we have completed the 2024 long-term funding program. It is against this backdrop of strong performance that I'd like to give you some additional insights into the management team changes we announced today. Moving forward, We will operate with two members of the general management executive team, Pierre Palmieri and me. Philippe Emmerich will step down from his role today, and I will assume the direct supervision of retail banking activities in France, private banking, and insurance. I have already made key talent moves in those who will report to me. I'm bringing on leaders with substantial experience and a strong track record of growth creation in retail banking. I am certain they will strengthen this area of the bank. I am also pleased to announce the appointment of Leopoldo Alvear as the Group CFO and member of the Group Executive Committee, effective January 7th of next year. He will succeed Claire Dumas, who will remain with us until the end of January 25 to ensure a seamless transition of the CFO duties. Leo has an outstanding reputation in the industry and I'm looking forward to working with him. I wanted to highlight these important evolutions. Because it's always been my belief that strong organizations recognize the need for change when their performance is on the rise. We are on an upward trajectory, and this is the right team at the right time to keep that positive momentum going. Coming back now to our solid Q3 results. They confirm our ability to execute on our strategy. They also show that we are not nearly finished. The bank's profitability continues to improve in a gradual and sustainable way. At the Capital Markets Day, I presented a three-year plan with deep structural changes to build a rock-solid, simplified, and more efficient bank. This is exactly what we are doing. Hard work has kept us on track to deliver on three fundamental points. One, our capital. Two, our efficiency and profitability. And three, the streamlining of our business portfolio. Capital build-up is a cornerstone of the strategy. The CET1 ratio is currently well ahead of the trajectory represented at the CMD. This is thanks to a strict allocation of resources to businesses and the deployment of a more asset-light model. The capital trajectory, which is already solid, will be further strengthened by the closing of signed M&A transactions. They will offset to a large extent the impact linked to the implementation of Basel IV. Efficiency and profitability have started to improve in the last quarters. The gross operating income is up by 37% in Q3-24 versus last year, and by 18.9% after three quarters versus the nine-month 23 print. As you can see, quarterly cost-to-income ratio and ROTI are both improving sequentially and year-over-year. Since Q2 last year, this improvement in profitability has led to a steady rise in the TNAF per share, which now stands at 64.6 euros at the end of September. At CMD, we also announced the proactive reshaping of the business portfolio. That led to several key transactions. These disposals will simplify the group structure, improve efficiency, and positively contribute to the capital buildup for about 60 basis points, of which 15 basis points by the end of the year, the rest coming mostly in the first half of next year. At the same time, this reshaping also focuses on the investments we're making for the future of our core activities. We're doing this by strengthening their leadership positions and by optimizing their cost of doing business. Boursaubanque is a unique digital-only business that has the potential to be one of the leading and most profitable retail banks in France. Boursaubanque is already outpacing the entire market in terms of client acquisition. The growth is high, the churn is very low, and that's due to having the highest level of client satisfaction in the industry. But we managed to accomplish this despite having the lowest cost to serve by a margin, and it is already profitable. For the second quarter in a row, Boursauban posts a positive net result while continuing to acquire a large number of new customers, now totaling roughly 7 million clients. We are integrating lease plan within AVENS in line with our plan, We are building a global sustainable mobility leader there, which post-integration will generate a sustainable 13% to 15% road team. Within CIB, we are building with Bernstein a high-quality leader in global cash equities and research. Together with Brookfield, through the partnership, we will deliver bespoke capital solutions to clients that together we can scale. And we will be able to do this with an optimized capital intensity on our end. Both are perfect examples of the future we are building. In Europe, we are investing in digitalizing KB, which drives a complete overhaul of the client experience, and it will enhance KB's performance for the long term. In France, the merger of the retail banks is happening. We are now well into the process of branch closures and staff reductions. The execution of our ESG roadmap continues to move forward. we have reduced our upstream oil and gas exposure by more than 50%, which is ahead of the trajectory presented during CMD. We are also ahead of plan in reaching our 300 billion euro target in terms of sustainable finance. And today, we're establishing a new target of 500 billion euro for the 2024-2030 period. That number is now mainly composed of loans, which represent roughly 80%, of the total target. So with regards to the bank's overall performance, there is still hard work to be done. But we are moving in the right direction, and I am deeply convinced in our ability to consistently deliver on what we say we're going to do. Our objective remains unchanged, sustainable performance that creates long-term value for shareholders and all stakeholders. I will now leave the floor to Claire, who will comment on group and business performance.

Thank you, Slavomir, and good morning, everybody. Let's move on to slide 9 on the group's performance. You can see on the chart the strong improvement of the gross operating income that is last year, both for the quarter and for the first nine months. It is a double-digit growth in both cases, even excluding the exceptional item booked in the corporate center. Overall, the cost-to-income ratio is down to 63.3% in Q3 and 68.8% for the first nine months of 24, which shows our ability to reach a cost-to-income level below annual guidance. Regarding cost of risk on slide 10, in Q3, it remains stable and contained at group level at 27 basis points. It's mostly composed of Stage 3 provisions for about €400 million this quarter, a level comparable to Q3 last year, roughly 20% below Q2, and very limited Stage 1 and 2 write-backs. In parallel, total outstanding of provision on Stage 1 and 2 assets remain high at €3.1 billion. It's broadly stable as we stated from the application of the IFRS 5 norm on the new disposals announced in Q3. Since the beginning of the year, the cost of risk amounts to 27 basis points in line with guidance. Regarding the NPR ratio, it's slightly down at 2.95 in Q3, that is 3.03 in Q2. As far as the net coverage ratio, it increases to 84% the society in Q2. Let's turn to capital, slide 11. The core tier-run ratio lands at 13.2% in Q3, around 300 basis points above MDA. It's up by around 10 basis points in Q3, thanks to a strong organic capital generation through earnings, represented 16 basis points per distribution provision. As expected, business RWAs have increased this quarter. The related impact was minus 12 basis points in Q3, while the decrease in business RWA during the first half of the year has generated a positive impact of around 15 basis points at the end of June. This is consistent with a maximum increase of 1% in business RWAs in 2024, which means a maximum impact of 15 basis points of capital throughout the year. I will not comment on slide 12. And let's move to the business performance, starting with French retail on slide 14. In Q3, the market environment was in line with the last assumptions we had factored in in Q2, which means, on the one hand, a still-wait-and-see context on loan production. Home loans origination further improved, up by more two times versus Q3 last year, and plus 15% versus Q2. But it remains lower than in past years. And overall, loan outstanding are down by 1% versus Q2. On the other hand, we see a continued increase in deposits versus Q2, driven by interest-bearing products. On the saving front, we reached new record highs in both private banking AUM and life insurance outstandings at €164 billion and €145 billion respectively, thanks to a continued strong inflow in both cases. Last, we see a steady increase in personal protection and TMC premium. They're up by 5% this quarter, that is the third quarter of last year. Let's now turn to slide 15 on NII. Overall, NII reaches 1,062 million euros in Q3. It's up plus 43 percent versus last year, and sequentially by 170 million euros compared with Q2. It's consistent with the latest assumptions updated in Q2, and that I have just described on the previous slide. Note that at the end of Q3, Interest-bearing deposits represent 56% of total deposits. Regarding Boursaubanque on slide 16. For the second quarter in a row, Boursaubanque got a net positive result in Q3 with an RO&E above 30% despite maintaining a high pace of growth through new client acquisition. This shows the strength and the flexibility of the model, which can deliver superior sustainable returns. For the second quarter in a row, Boursauban proactively managed the acquisition space of new clients to target 310,000 in Q3. In terms of commercial performance, Boursauban has nearly reached its end of year target in terms of client base, with around 6.8 million clients at the end of September. At the same time, assets under administration continue to steadily grow. They're up by around 15% versus last year at €53 billion in Q3, contributing to the 33% increase in revenues realized year-to-date. At PLA level, on slide 17, the robust performance of the various activities in France leads to a strong increase in revenue by 19% versus Q3, with costs down by 1.4% thanks to a strict cost control. Adding a stable cost of risk versus Q2 at 30 basis points, it translates into a net positive contribution of €368 million in Q3 equivalent to an RO&E approaching 10%. In global markets and investor services, slide 18, it's another strong quarter. Global markets revenues are up 9% at more than €1.4 billion in Q3, with another strong performance in equities across the board. This is the second best Q3 ever. On fixed income, revenues are up 6% versus last year, with a good momentum in rates and correct flow activities, especially in the U.S. Last, in security services, revenues are up 1% on a reported basis and up 10%, excluding a positive equity participation in past interest rates last year, thanks to continued strong fee generation and robust business momentum in private markets and fund distribution. Let's turn to financing and advisory, slide 19. This is a robust quarter with revenues at €843 million, stable in comparison to a high Q3 last year. Concerning global banking, revenues are down by 3%, Performance in financing is however good versus the high Q3 last year. Elsewhere, we can highlight another excellent quarter in securitization and more mixed momentum in IBD. Regarding transaction banking, the performance continues to be strong with a 9% increase in revenues versus last year, driven by strong commercial momentum in cash management and correspondent banking. Overall, this is another remarkable quarter for GBIS, with a 5% increase in revenues, reaching more than €2.4 billion in Q3. Costs are very well contained. They are only up by 1% at €1.5 billion. With a cost of risk still very low at seven basis points, GBIS delivered a very strong quarter with a ROE of 18% and a net contribution of 699 million euros. Moving on to international retail on slide 21. We continue to see a good momentum in business activity across the board. At constant change in perimeters, loans are up by 6%, deposits by 5% in Europe, In Africa, loans progress by 1%, deposits by 3%, both largely on the retail side. Overall, revenues of the international banks improve by 5%. Turning now to mobility and leasing services. AVENS revenues are down minus 15% versus Q3 last year, but only down minus 4%, excluding non-recurring items. This is notably due to the unfavorable base effects versus last year, mostly linked to fleet rate valuation, which had a positive impact of around 114 million euros last year versus zero this quarter. In addition, The variation in prospective depreciation and PPA adjustment has a net impact of around 35 million euros versus last year, while the impact of hyperinflation in Turkey and those linked to the market to market of the swap portfolio offset each other versus last year. Restated from these elements, underlying margins remain stable in euros in Q3 at around 690 million euros. Regarding UCS results per vehicle, it continues to normalize as expected. In Q3, it amounts to 1,420 euros on average per car, that is 1,480 euros last quarter. In a context of deep transformation, which is progressing as planned with a strict test discipline, The underlying performance of events remained overall solid, as illustrated by the underlying cost-income ratio at 64.3% for the first nine months. In consumer finance, the environment remains challenging. Revenues are down year on year, but they are stabilizing compared to the previous quarter. And last, equipment finance recorded stable revenues and outstanding compared to last year. Slide 23. Overall, the contribution of the PILAR to the group net income remains high at 367 million euros in Q3, which is equivalent to only above 14%. Finally, let's move to slide 24 with the corporate centre. In Q3, the corporate centre put a net result of minus 67 million euros. In addition to structural items related to the management of the group of structural risks and scale resources buffers, it includes both positive and negative one-offs. On the one hand, around €300 million in revenues closing out the remaining exposures in Russia linked to past local presence through Rosdank. On the other hand, accounting entries related notably to announced disposals in accordance with IFRS 5 rules. I will now let the floor to Flavomir for the conclusion.

As you can see, we have made further progress in Q3-24 towards our annual and 2026 targets across all metrics. The figures speak for themselves and they are compelling on their own. We remain committed, focused, and determined to do better. So let's start now the Q&A with our usual kind request to stick to two questions per person. The floor is yours.