Societe Generale SA

Ladies and gentlemen, welcome to the presentation of the fourth quarter and full year 2024 results of the Societe Generale Group. I will now hand over to Mr. Slavoj Mirkrupa, Chief Executive Officer. Sir, please go ahead.

Good morning, everyone, and thank you for joining us today. I'm very pleased to be here with you to review our performance and achievements for the past year. But I'm also eager to share with you our future ambitions and the targets we have set for the year to come. Of course, I first want to welcome Leo, our new CFO who joined the call for the first time. Leo is a tremendous addition to our leadership team and we have been working together for about a month already and I'm very happy to have him on the team. 2024 was the first full year for the management team appointed in 2023. At our CMD, we set a clear path for the company. And since then, we've been relentlessly focused on the precise execution of our strategy. We are committed to building strength and sustainability through higher capital, strategic focus, and improved profitability. We have been successful in this first step towards our 2026 goals. Last year, we exceeded every single one of our financial targets. Our revenues were up 7%, well above our 5% target. And this is thanks to solid performance across all our businesses, but three in particular. GBIS, Avent, which posted higher revenues and increased margins, and international retail. We also had a first rebound performance in French retail. And for us, the winning equation is the sum of strong revenue growth plus strict discipline in cost management and risk management. Our costs are stable compared to 23, and we reached a cost-to-income ratio of 69% for the year. That's nearly a five-point improvement over last year. At 26 basis points, the cost of risk is at the low range of our through-cycle guidance, and this reflects the quality of our origination and the strength in terms of risk management. All this leads to a sharp improvement of our ROTI reaching 6.9% for the year, an increase of 2.7 percentage points compared to the full year 23. We succeeded at streamlining our business portfolio with 13 disposals. In fact, we just closed last week the disposal of our private bank in Switzerland. And these have generated positive outcomes in terms of price and buyers' quality. In terms of capital, we increased our CTO on ratio by around 20%, basis points throughout the year. Today, we stand at 13.3%, and not only is that a strong position, but it is also well ahead of plan. Based on the strong delivery of the financial performance, the Board has decided to propose a total distribution of €1.7 billion, up 75% compared to 2023. And this is equivalent to €2.18 per share. And here's how it will be split. a dividend of €1.09 per share paid in cash on May 28, and a share buyback program of €872 million, i.e. €1.09 per share. This slide is more a visual representation of how our performance improved over the last year across all our targets. As you can see, and as we promised, we are in a much stronger position this year. Before turning the page on 2024, let's look a little bit deeper at our business performance. French retail benefited, of course, from the rebound of the NII. The last time we saw the negative impact of the short-term hedges was in Q2 of last year. And we've also implemented a new operating model throughout the combined networks. This is increasing our commercial performance and our ability to gain market share. An example of this is our market-leading fundraising performance in investment products and life insurance. Bourse Bank continued to lead the market in client acquisition with 1.3 million new clients, while reaching profitability for a second year in a row. Once again, GBIS posted an exceptional performance in 2024 with over €10 billion of NBI and an 18.4% RONI. This was driven by global markets, and transaction banking. At the same time, we implemented an asset-light model in our global banking division. It supports both our origination capacity at constant capital and our quest to improve profitability even further. Within international retail, KB and BRD are continuing to show strong commercial performance. And lastly, Avent improved its margins steadily over the year, and this is, as you know, the heart of the value creation in this business. Thanks to this strong performance and to our capital trajectory, which is well ahead of plan, we have decided to increase the 2024 payout ratio to 50% with a balanced mix between cash dividends and share buybacks. Once again, we're proposing a total distribution of more than 1.7 billion euro, up 75% versus last year, It includes a cash dividend of €1.09, up 21% versus last year, and a share buyback of €872 million, more than double what it was in 2023. The cash dividend is subject to the AGM approval on May 20, 2025, and we have already obtained the ECB approval for the share buyback program, which will be launched as soon as next week. In addition to that, the Board has decided to change our policy regarding distribution. From now on, the payout ratio will be 50% with a balanced mix between cash dividends and share buybacks. And also, as we established at the 2023 Capital Markets Day, we will proactively manage our sustainable excess capital above 13% of CETU on ratio in the best interest of shareholders with a mix of exceptional distribution and profitable disciplined growth. Now, against that strong 2024 backdrop, let's move on to 2025. I think we all heard the expression, if it ain't broken, don't fix it. And actually, I have a different take on that. I believe if it's working, keep improving it. That means for all our businesses, doing even better in terms of commercial momentum, client satisfaction, and disciplined capital allocation. And these initiatives apply across the board, in Bourse aux Banques, GBIS, French retail, Avens, and international retail, all the same. Our continued focus in these areas and execution discipline will deliver superior business outcomes in terms of profitable growth. It's always been important to me that we say what we do, and we do what we say. Thanks to a strategic plan, we've made substantial progress, and we're going to build on that. The 2025 targets we are setting are fully in line with our commitment to have a linear improvement in profitability towards our 2026 targets. So for 2025, we have an NBI growth above 3% versus last year, excluding the impact of disposed assets, a net cost decrease of more than 1%, excluding the impact of disposed assets, the cost-to-income ratio below 66%, the cost of risk within the 25-30 basis points range, and the ROTI above 8%. Key drivers for 2025 will be on the revenue side. The commercial momentum and our business investments paying off will more than offset an expected normalization trend in global markets, which would be at the higher end of the guidance, around 5.5 billion euros, and within events in terms of the UCS prices normalization. On the cost side, we remain committed as ever and confident in our ability to decrease our cost base further this year by more than 1%, and hence this additional estimate that we are giving you today. We've talked about revenue growth. We've talked about cost control. All these contribute to value creation through a higher operating leverage, and they will create a substantial lift to our GOI. It will increase by 6%, and even by 11%, excluding asset disposals. This is the winning formula. This is the equation that will continue to work for us. Improved efficiency with a free point decrease in our cost-to-income ratio from 69 to below 66 plus strict origination and strong risk management with a cost of risk within the 25-30 basis point range equals a ROTI above 8% for the year. It is our goal to deliver steadily a consistent and predictable improvement on this number and in terms of our overall performance. I will now leave the floor to Leo who will comment on the Q4.

Thank you, Slavoj Mira, and good morning, everyone. I'm very excited to be here at SACGEN, and I look forward to engaging openly with all of you very soon. Moving now on with the presentation on slide 12, we can find the key drivers for revenue and cost evolution in Q4-24. As you can be seen in the left chart, we had a strong 11.1% increase in group revenues in this quarter. The evolution is mainly explained by the growth of the revenues in French retail, private banking, and insurance, with a strong rebound on NII, actually 36 percent up versus Q4-23, as well as by high revenues in global banking and investor solutions, benefiting from conducive market conditions, in particular, on equities. Additionally, the group deployed a strict disk deployment on costs, as total costs are down by 1.5 percent in Q4-24 versus the same quarter last year, despite the inflationary perimeter impact of Bernstein. Restricted from that, we lowered our costs by around 2 percent. Regarding cost of risk on Site 13, in Q4-24, the cost of risk is limited to 23 basis points, down from 27 basis points in Q3-24. All in all, for the full year 24, cost of risk amounts to 26 basis points. This is at the lower end of our guidance. The cost of risk for the quarter, mostly composed of Stage 3 provisions, amounts to €338 million, down from both to 324 and 2423 levels. In parallel, total standing provisions in Stage 1 and Stage 2 assets remain high at €3.1 billion. These amounts are stable versus the 30th of September and lower versus 2423 due to perimeter effects. This is mainly due to the disposals completed in Morocco and Madagascar. On the other hand, S2 provisions represent 4.5 percent of loans classified in Stage 2. The quality of assets, therefore, remains strong, with NPL ratios at 2.81 percent in Q4 versus 2.95 in the same quarter in 2023. Finally, the net coverage ratio remains solid 81 percent at the end of the year. Let's now move on to capital on slide 14. The C2-1 ratio is at 13.3 percent in Q4. This is around 310 basis points above the MDA buffer. Through the year, we have managed to increase our capital by 20 basis points. Now, with this strong ratio, it is important to mention that the capital phase buildup is behind us, as we will be post-plus-and-four implementation above 13 percent throughout all quarters in 2025. Focusing now on the evolution in the quarter, the 10 basis points increase is explained from left to right in the chart, first by a strong organic capital generation throughout earnings, representing 11 basis points up to the quill of the 50 percent payout. We had 20 positive basis point impact driven by the disposals, mostly led by Morocco. We had an impact of 15 basis points from regulatory headwinds, which had been expected and guided for previously. And then we had some minor other impacts, which account for minus five basis points. This strong ratio testifies our strong discipline and sound management throughout the year, and allows us to improve our distribution policy, as Slavoj Mir explained previously. As you can see on the bottom right-hand side of the slide, all other capital ratios are comfortably well above their requirements. Let's review the liquidity profile of the group in slide 15. Societe Generale has a strong liquidity profile, with an LCR ratio standing at 156 percent at the end of the year, and an FFR ratio at 117, both well above regulatory requirements. Liquidity reserves stand at 315 billion, at the end of the year, with 61 percent being cash at central banks. Regarding the funding plan, we've already completed 47 percent of it as of the end of January, with good access to liquidity in all currencies, on the back of a strong long-term rating from all agencies. The deposit base remains granular and diversified, and it grew by around 1 percent compared to Q3 24. And finally, the loan-to-deposit ratio of the group stands at 75 percent. In slide 16, we show a summary of the P&L for the group for the year, which we will cover in more details in the following slides. Let's move now to the business performance, starting with French retail on slide 18. This quarter, the market environment has been in a wait-and-see mode, particularly on loans. Loans outstanding decreased by 4 percent compared to last year. Although, when excluding state aid plan, this is the PGEs, loans are down 2.5 percent versus Q4-23. Corporate loans, excluding the PGEs, are now growing versus Q3-24, and there is a strong commercial momentum in the individual client segment as well. The positive chart decreasing by 1 percent versus Q4-23, as there is a shift to investment products. Indeed, on the savings front, we reached new record highs in both private banking ATMs, standing at 154 billion euros, and live insurance at standings at 146 billion euros, thanks to continued strong inflows in both cases. Lastly, we see steady increase in personal protection and P&C premium, up by 5% at constant perimeter this quarter versus the fourth quarter of last year. Now, focusing on BursaBank, Our digital bank is above the guided targets with almost 7.2 million clients at the end of the year. Bruce Bank confirmed its profitable growth, decreasing its cost per client by 17% versus 2023, whereas the client base increased by 22%. For the second year in a row, Bruce Bank passed a net positive result in 2024. Despite onboarding new clients at a high pace with 1.5 million new customers in the year, of which 461,000 were achieved in Q4. The low churn rates at 3 percent, which is still decreasing, on the back of a full-fledged banking offer and being among the leaders in terms of digital proposal and number one in client satisfaction. On the commercial performance front, Asset Center administration continues to steady growth as they are up more than 15 percent versus last year at 64 billion euros in Q4-24. At dollar pillar level on slide 20, the robust performance of the various activities in France led in Q4-24 to a strong increase in revenues, plus 15.5 percent versus the same period last year, while costs are down by 1 percent, and cost of risk is also decreasing to 20 basis points. This translates into a net income of €360 million for the quarter, equivalent to a RONI of 9.1%. When we go to the full year, revenues are up 7.5%, while costs are down 1.8%, thanks to strict cost control, and cost of risk is up to 30 basis points. Well, this results in a net profit of €991 million for the year, which translates into a RONI of 6.3%. up from the 3.9 figure last year. Turning now to global markets and investor services on slide 21, we have had another strong quarter with revenues up 9.8 percent and 4.5 percent in the four-year basis. On global markets, this is the best quarter ever, the best Q4 ever, with revenues up 9.5 percent at more than 1.3 billion euros. which is led by another strong performance in equities, up 10 percent versus an already very high Q4-23. This increase was supported by conducive market conditions for equities, resulting in a record Q4, which led also to a record year for this activity. On FIC, revenues are up 8.8 percent in the quarter, benefiting from good client engagement following the U.S. elections and its impact on rates and currencies. With regards to security services, revenues are up 12.4 percent on a reported basis versus Q4-23, or 5 percent, excluding the positive equity participation impact in this quarter last year. This is due to the continued strong fee generation and robust business momentum in fund distribution, both in France and Italy. Let's move now to slide 22. Financing and advisory delivered another strong quarter. very close to record level for a Q4 back in 2022. With revenues at $964 million, this is up 16.7 percent versus Q4 23. On a yearly basis, they are up 5.8 percent at $3.6 billion, which is a record year for this business. Global banking and advisory delivered strong performance with revenues up 13.7 percent versus Q4 23, notably thanks to strong momentum in structured finance and strong rebound in M&A. This is the second-best quarter for this activity, close to the record in Q4 2022. On a yearly basis, revenues are up 3.2 percent. Final year transactions banking, revenues are up 26.1 percent in Q4 2024, thanks to strong commercial momentum across the board with a high level of fees, especially in correspondent banking. On a yearly basis, this is the best year for the business again, with revenues up 13.9 percent versus 2003. Overall, this is another remarkable quarter for GBIS, with a 12.4 percent increase in revenues versus 2004-2023, reaching $2.5 billion in the quarter, or 5 percent on a yearly basis, another record year since 2009, with NBI above the $10 billion mark. Costs have been very well contained, being up only 2.7 percent in the quarter, while down 3.6 percent in the year, translating into strong positive jobs, both on a quarterly and a yearly basis. Overall, GBIS delivered a very strong quarter and a very strong year, with a net contribution of 627 million euros, or 2.8 billion euros in the year. The revenue of this pillar reached 18.4%, which is an increase of 3.6 percentage points on 2023's profitability. Moving now on to international retail. For this pillar, commercial activity post a good momentum across the board with outstanding up on loans by 3% and deposits by 4% at constant perimeter and exchange rates. In Europe, loans are up by 5% and deposits by 4% versus the same quarter last year at constant exchange rates in both countries. In Africa, the business activity is reversed with stable loans and a 4 percent growth in deposits versus Q4-23 at constant and exchange rates, both largely on the retail side. Overall, revenues on the international banks improved by 3 percent versus Q4-23 at constant perimeter and exchange rates. Turning now to mobility and leasing services. Evans shows a strong performance this quarter, with revenues sharply up 16 percent versus Q4 2023 in reported and 2 percent excluding non-reported items, notably the negative impacts linked to market-to-market of the hedging portfolio that took place in the last quarter of 2023. Margin revenues are increasing by 12 percent versus last quarter, reaching 541 basis points, reflecting commercial action initiatives launched this year to increase profitability. UCS results per vehicle continue to gradually normalize as expected. In Q4-24, it amounts to 1,267 euros versus 1,420 in the last quarter, well within our guidance, which was from 1,100 to 1,600 for the year. In consumer finance, revenues are down year on year, but they're stabilizing compared to the previous quarter. while we observe a recovery in margins on the new production. All in all, the contribution to the group's net income from this pillar remains high, at €314 million in Q4-24, or 10.5% up versus Q4-23, which is equivalent to a running of 12% versus 11% in the same quarter last year. Overall, versus Q4-23, revenues are up, driven by the strong performance in AVENS, as I just explained, and costs, are down, reaping the benefits from strict discipline across the pillar. Over 2024, while revenues are almost stable, the pillar's net income comes at 1,270 million euros, down by 21% versus 2023. This leads to a decrease in RONI to 12% versus the 17% of last year, mostly reflecting the high cost to achieve due to this plan integration this year, which was well-guided. To conclude on the financial performance, let's move to slide 27 with the corporate center. The revenues of the corporate center comprise the current impacts related to the management of the structural risks and excess liquidity of the group, while the net profit and losses from other activities are mainly impacted by the various ongoing disposals. In Q4-24, the corporate center lost a net result of minus 261 million euros. Last, please note that the Corporate Center will, as per 2025 onwards, allocate 13% of capital to businesses in line with our 13% capital target instead of the 12% which is currently being allocated. I will now give the floor back to Slavoj. Thank you, Leo.