Societe Generale SA

Ladies and gentlemen, welcome to the Societe Generale conference call. Gentlemen, please go ahead.

Good morning, everyone, and thank you for joining us today. I'm very proud to report strong performance numbers for 2025. As a result, we are upgrading our 2026 target for profitability and confirming all other CMD targets as well. 2025 was a defining year. We set new records for revenues with €27.3 billion and for group net income which reached the €6 billion mark. The successful transformation sets the stage for us to sustain long-term profitable growth. Significant improvement in our financial results in 2025 cuts across all metrics, outperforming the targets we upgraded in Q2 2025. Our revenues were up by almost 7%, excluding asset disposal. That's more than double our target of more than 3%. Even more remarkable is that all our businesses contributed to this strong performance. As you know, our commitment to reduce our cost base, both structurally and significantly, is absolute. The proof point here is the 2% decrease in costs excluding asset disposal over the past year. That 2% is far better than what we targeted, which was a decrease of at least 1%. And it translates into a cost-to-income ratio of 63.6% in 2025, an improvement of more than 5 percentage points over the last year. Keep in mind this is also better than the 2025 target we set of the cost to income below 65%. Cost of risk is within our guidance at 26 basis points reflecting the strength or asset quality and our capacity to effectively manage risks across the cycle. All of this has significantly boosted our profitability with a ROTI reaching 10.2% for the year and 9.6% excluding capital gains on disposals. This is above our 2025 target of around 9%. These earnings allowed us to further strengthen our capital by 20 basis points. Each year ratio now stands at 13.5% after Basel IV regulatory impact and after the extraordinary distribution of 2 billion euro through two additional share buybacks. As a result, The Board has decided to propose a total ordinary distribution of €2.7 billion, up 54% compared to 2024, including a dividend per share of €1.61 and a share buyback of €1.462 billion. Let me put all this into perspective. These results underscore the priorities we established two and a half years ago and have consistently executed on ever since. Our first decisive step to significantly strengthen the bank's capital, ensuring us both ample capital buffers as well as means to support our growth. Today, with a CTO ratio of 13.5%, the group is fully dedicated to fostering a sustainable long-term growth and consistently creating value for shareholders. Our second strategic priority, to enhance efficiency. The decrease in our cost-to-income ratio of more than 10 percentage points versus 2023 is a significant accomplishment. We still have a lot more work to do, and we will do everything to make sure this positive trend continues. Third, to significantly improve profitability. In 2025, we achieved exactly that. Our ROTI is now more than 4 percentage points higher compared to the 2018-2022 average. The result, sustainable value creation is now a reality with a total shareholder return of 237% over the past three years. As I mentioned a moment ago, all our businesses contributed to the strong performance. First, French retail, private banking, and insurance recorded strong revenue growth of 4.2% versus 2024, restated for asset disposals and the impact of short-term hedges. It was driven by a pickup in the net interest income and also by record-high assets under management, both in life insurance and private banking activities. Osobonk gained 1.9 million new clients, and that brings its total close to 9 million It is leading the market as a fully-fledged bank. Its average client maintains a balance of around €9,000 in assets under administration. It remained profitable for a third year in a row, proving the strength and sustainability of its business model. BIS had a record year in terms of revenues, delivering another excellent performance with a high RONI of 16.7% under Basel IV. The result of our strategy, global markets continue to deliver current and predictable revenues, reaching in 2025 a 16-year high and with a high RONI above 20%. FMA increased substantially its origination volumes at a high marginal rate of return thanks to increased capital velocities. Business also benefits from strong positioning on key sectors like energy and infrastructure. In international retail, KB and BRD consistently demonstrated solid commercial performance with the successful optimization and continued digitalization of their respective distribution networks. And last, our teams at Avent have done an outstanding job managing all the challenges that come with a complex integration. that integration is progressing as planned, and our decision to focus on profitability and risk management has resulted in a steady margin improvement throughout the year, but also allowed Havens to maintain a sound position while reaching its 2025 financial targets. In light of this performance, the total distribution for 2025 will amount to 4,679,000,000 euros, a growth of 169% versus last year. On ordinary distribution for 2025, we are proposing a dividend per share of 1.61 euro, of which 61 cents were already paid in October 2025 through the introduction of our first interim dividend. To resolve the final dividend of 1 euro per share will be paid in June 2026, subject to the AGM approval. In all, the total dividend per share represents an increase of 48% versus last year. Our ordinary distribution also includes a share buyback of €1,462,000,000, up 68% versus last year. We have already obtained the ECB approval for this program. There is no change in our ordinary distribution policy with a 50% payout ratio, an interim dividend, and a balance mix between cash dividends and share buybacks. In terms of extraordinary distribution, as you know, in 2025, the group launched two extraordinary share buybacks for a total amount of €2 billion. Please note here that in the resolutions, authorizing share buybacks is mandatory to include a maximum purchase price. The resolution voted during the last AGM, when the share was around €40, maximum purchase price authorized was €75. Therefore, as the share price reached the maximum purchase price authorized by shareholders, we had to pause the buyback launched in November 2025 to remain compliant. This does not change our capital return strategy, and obviously we will submit a new resolution to the next AGM to increase this limit substantially. Going forward, distribution of excess capital will continue to depend on our capital allocation decisions. And as stated last year, in the best interest of shareholders, we are proactively managing our capital above a 13% CET1 ratio. This may include both extraordinary distributions and disciplined profitable growth. We will address potential extraordinary distribution once a year during the release of the Q2 results. At the same time, we will continue to apply strict capital allocation criteria towards the most profitable businesses. Given our current capital position, we are increasing our RWA growth target for the businesses, and in 2026, we expect an organic RWA growth of around 2%. Now, our 2026 targets reflect our continued focus on value creation through growth, operating leverage, and sound risk management. Execution of our roadmap to date leads us to upgrade our routine target versus the one set at the CMD in 2023. So for 2026, we expect an NBI growth above 2% versus 2025 on a reported basis. A net cost decrease of around 3% versus 2025 on a reported basis. Cost-to-income ratio below 60%. Cost of risk within the 25-30 basis points range. And finally, a royalty above 10%. In 2026, we will continue to deliver solid revenue growth plus strict cost discipline. We expect revenues to grow by more than 2%, driven by strong commercial momentum across all businesses. We will support that growth by allocating higher levels of capital to the most profitable businesses. Revenue growth will also benefit from a strong decrease in Boursauban's client acquisition costs as we target a net profit above €300 million in 2026 at Boursauban. Global markets revenues are expected to be above the top end of the guidance range between 5.1 and 5.7 billion euro. This new range is in line with our former guidance actually as we fully consolidate Bernstein US starting January the 1st. And of course, cost control remains a top priority for the group. We're confident in our ability to further reduce operating expenses by around 3% in 2026. What makes this possible is our ongoing group-wide transformation process. Now, at the business level, all of our 2026 financial targets are confirmed. Mentioned before, the global market target is adjusted for the consolidation of Bernstein US and is now between 5.1 and 5.7 billion euro. Also consistent is our resolve to pursue these goals with precision, determination, and a strong sense of discipline. I will now turn things over to Leo, who will review our Q4 performance.

Thank you, Slavoj Mir and good morning, everyone. Let's now dive deeper into the details of Q4 25 performance. The group's net income stands at 1.4 billion euros, up 36% versus Q4 24, resulting in a ROTI of 9.5% versus 6.6% in the same period the previous year. These solid results are supported by the continuation of the strong commercial momentum in all businesses, as well as by a tight discipline over costs. Looking more closely, revenues are up 6.8% versus Q4-24, excluding disposals, well above our natural target of above 3%. Meanwhile, costs fall further in absolute terms, down by minus 1.4% excluding asset disposals, and confirming, therefore, our constant cost control. As a result, our operational leverage improves further. The cost to income of 64.6% in Q4-25, down from 69.4% in Q4-24. As a quality-wise, the cost to bridge remains contained at 29 basis points within our annual guidance of 25 to 30 basis points. Let's move now to slide 12 to further explain the main revenue and cost drivers in Q4. Group revenues increased by 6.8% in Q4 compared with the previous year. When removing for comparison purposes, around €325 million of revenues related to completed disposals. In French retail, private banking and insurance, revenues grew by 7.9% in Q4 excluding disposals. The increase is mainly driven by NII, which is up by 8.5%, excluding asset disposals. In global banking and investor solutions, revenues eased by 2.3% compared to a very strong Q4-24. It was the best quarter ever in global markets. Revenues in mobility, international retail banking, and financial services were up by 8.6% versus Q4-24, excluding disposals. Finally, revenues at the corporate center grew by 157 million euros, supported by efficient management of our liquidity position. Regarding costs, operating expenses, excluding disposals, declined further by 1.4% this quarter. Group reports a structural cost reduction of 89 million euros, which more than offsets the 26 million euros of higher CTA. Moving on to cost of risk on slide 13. Cost of risk stands at 29 basis points in Q4-25 and 26 basis points for the whole year 25. This is in the lower range of our through-the-cycle guidance. Cost of risk this quarter mainly comprises Stage 3 provisions, which account for €435 million and remain broadly stable versus Q3-25. In Stage 1 and Stage 2 provisions, we had a limited net reversal of €26 million, which conceals our prudent approach. As a result, total outstanding Stage 1 and Stage 2 provisions remain high at €2.9 billion and stable from last quarter. As a quality remains solid, as illustrated by the NPL at 2.8% in Q4, probably stable when compared with last year and last quarter. And finally, the net coverage ratio remains high at 82% in Q4-25 and stable versus Q3-25. Let's now turn to slide 14, where we can see the evolution of our strong capital position. The CT1 ratio closed at Q4 at 13.5%, which is 320 basis points above MPA. The ratio also reflects the minus 27 basis point impact from new additional share buyback of 1 billion euros, which we announced and started executing in November. Before adjusting the additional buyback, the CT1 ratio increases by nine basis points from Q3-25, reflecting the following impacts shown from left to right in this slide. Retained earnings contributed with 16 basis points after accruing a 50% payout. LWA evaluation represents an impact of minus one basis point. We had minor regulatory adjustment that had an impact of five basis points. And finally, other impacts account for one basis point. In addition, as you can see in the bottom right-hand side of the slide, All other capital ratios are comfortably above the regulatory requirements. On slide 15, liquidity reserves remain high at €318 billion in Q4-25, with a relatively balanced mix between cash and securities. The liquidity profile of the group remains strong, with strong sound liquidity ratios. The LCR ratio was 144 this quarter, and the NSFR ratio was 116, both well ahead of regulatory requirements and in line with our steering targets. 45% of the 2026 long-term funding program has already been completed. We maintain good access to liquidity in all currencies on the back of strong long-term ratings from all agencies. The deposit base remains strong, granular, and highly diversified. Overall, the loan-to-deposit ratio remains at 77% at group level. In slide 16, we show a summary of the P&L for the group for Q4-25. which we will cover in more detail in the following slides. Let's move now to the individual businesses on slide 18, starting with subject network, private banking, and insurance. In Q4-25, loans outstanding increased by 1% compared to last year, or by 2% if we exclude state-guaranteed loans, this is PGEs. Corporate loans production was sound and increased 19% versus Q3-25. Absentee deposits fell 3% versus Q4-24, but increased 2% versus Q3-25, in a context of continued strong growth of retail savings and investment products. Lease of balance sheet products contribute to the continued strong momentum in overall asset gathering. The one-side AUM in private banking increased by 9% versus Q4-24, with just four disposals. and reached 137 billion euros at the end of December 25. This is 2 billion higher than at the end of September 25. On the other side, life insurance outstanding reached 158 billion, increasing by 8% versus Q4 24, or by 5 billion versus Q3 25, thanks to continued strong net inflows. Moving now to BursaBank. In Q4, Brazil Bank acquired a record number of 575,000 new clients. In Q4-24, it represents an increase of 1.9 million new clients, or 22%, with a consistently low turn rate, which remains below 4%. Assets under administration continue to grow steadily, reaching 78 billion at the end of December, or around 9,000 euros per client. This represents an 18% increase versus Q4-24, thanks in particular to the continued strong increase in deposits of 15% versus Q4-24. Similarly, life insurance outstandings increased by 13% versus Q4-24. Deutsche Bank also saw record high openings of brokerage accounts, which grew by 25% compared to the previous year. On the lending side, total loans outstanding are up 9% versus Q4-24. Looking now at the whole pillar on slide 20. Retail banking, private banking, and insurance posted a solid increase in revenues of 4.2% versus 2024 when we exclude disposals and the impact of short-term hedges. And this included a sound 3.1% growth in NII. At the same time, operating expenses fell by 3.9% from 2024, excluding disposals. As a result of both, the GEOs widened it significantly, and therefore the cost-to-income ratio, it stood at 61.1% in 2025, to represent a substantial improvement of 10 percentage points from 76.4% in 2024. All in all, net income lands at 1,815 million euros for the year, or up 80% versus 2024, to the RONI above 10% under Basel IV, versus 6% last year under the previous Basel III standards. Let's move now to global markets and investor services on site 21. Global markets consolidated a fairly strong year in 2025, with revenues reaching a record since 2009 of 5.98 billion euros. while growing 2.7% versus 2024 in constant currency. In Q425, revenues eased by 8% versus Q424. Equities posted 5% lower revenues affected by a high base in Q424 and currency headwinds. Performance also reflected the lower commercial activity in Europe and Asia, as well as our geographic mix. where Europe and Asia represent around three-quarters of 2025's total revenues. However, if we focus on the Americas, where market conditions were more conducive, we posted a very strong performance, with revenues up by 24% versus Q4-24. In fixed income and currencies, revenues fell by 13% from an also very strong Q4-24, and affected by negative currency impacts. Performance reflects, as well, the more challenging commercial dynamics in rates products, notably in Europe. Lastly, security services revenues grew by 3% versus Q4-24, on the back of sound activity levels and the continuation of a strong commercial momentum in all the main markets. Let's turn to slide 22 on the evolution of financing and advisories. Again, it maintained a very strong performance with revenues growing by 5.1% versus Q4-24. Its strong momentum is even more visible when focusing on global banking and advisory, with revenues grew by 8.6% versus Q4-24, accelerating from last quarter. It represents our best quarter ever, driven by the solid performance in financing activities, combined with the continuation of good momentum in both originated and distributed volumes. In addition, our DCM and ECM franchise delivered one more quarter of sound revenue growth. Lastly, in transaction banking and payment services, revenues declined by 5% versus Q4-24 due to negative interest rates and currency impacts. That, however, shadows the good underlying commercial momentum and the continued growth in deposits. For the whole of 2025, GDPS total revenues eased marginally by 1.2% versus 2024. Moving now to slide 23 for the overall view of the GBIS pillar. You can see that GBIS recorded record revenues this year at 10.4 billion, growing by 2.6% versus 2024. That combined the 1% growth in global markets and investor services with a 5% growth in financing and advisory. Moreover, we managed to grow our revenue base while maintaining our strict cost discipline, showed by reduction of operating expenses by minus 1% versus 2024. The results just widened and the cost of income cuts to income ratio improved 2.3 percentage points from 64.4 in 24 to 62.1 in 25. At the same time, cost of which remained moderate at 18 basis points in 25. So all in all, GBIS posted a net income of 2.9 billion euros in 25. up by 3.7% versus 24, which translates into high ROEMI of 16.7% under password 4. Let's now focus on international retail banking in slide 24. Overall, revenues improved by 2.7% versus Q4 24 at constant perimeter and exchange rate. Europe posted a solid commercial momentum in both countries. with an 8% increase in loans outstanding and a 7% in deposits versus Q4-24 at constant perimeter and exchange rates. The revenues were slightly down, 1%, at constant perimeter and exchange rates, with lower fees in the Czech Republic compared to an exceptionally high Q4-24 level. The situation is different in Africa. Outstanding loans and deposits were broadly stable versus Q4-24 at constant perimeter and exchange rates, while revenues increased strongly by 9% in the same period, driven by strong free income growth. On mobility and financial services, in Site 25, the revenues increased by 11.7% in Q4. At constant perimeter, this is excluding SCAF. Havens revenues grew by 15% versus Q4-24 on a reported basis, while when adjusted for depreciations and non-recurrent items, they fall by 8%. This evolution reflects the continued normalization of used car sales results as anticipated. In Q4-25, the results per unit sold was 702 euros compared to 1,267 euros in Q4-24. On the other hand, the margin increases to 567 basis points in Q4-25 or 26 basis points higher than in Q4-24. It highlights the continued ramp-up in synergies and the strategic focus on profitability and asset risk. In 2025, Avian successfully reached all its financial targets, delivering total synergies by €360 million, while the average UCS results for the full year 2025 stand at €1,075 per unit. This is at the high end of the 700 to 1,100 guidance. And the cost-to-income ratio was finally 56.1%, better than the guidance range of 57 to 59%. Regarding consumer finance, the business delivered a solid revenue growth of 5.9% thanks to better margins. In slide 26, focusing on the whole MIPS pillar, you can see that revenues increased by 6.1% in 25, excluding disposals and FX impacts, notably driven by AVENS. Costs in 2025 fell by 3.3% versus 2024, excluding also disposals and effects impacts. The strong positive Joe's evolution drove a substantial improvement in the cost-to-income ratio, from 59.6% in 2024 to 54.2% in 2025, highlighting the strict cost discipline across the pillar, despite the high inflation in certain geographies and the additional banking tax in Romania. Costs of risk improved from 42 basis points in 24 to 33 basis points in 25. And all these led to a net income of 1.5 billion euros in 25, increasing by 28% after disposals and FX adjustments. This translates into a robust ROANI of 13.9% in 25, up versus an 11% in 2024. To conclude with the quarterly results, let's move on to slide 27 with the corporate center. In 2025, revenues increased by more than 160 million euros thanks to continued efficient liquidity management and improving funding conditions. Operating expenses in 2025 include 100 million euros related to the global employee share ownership program recorded in Q2 this year, which compared to only 3 million euros in 2014. In addition, the accounting impacts for the various asset disposals closed this year, mostly SGA Equipment Finance, private banking in Switzerland and the UK, generated a positive impact accounted in net profits or losses from other assets of around €300 million. On a quarterly basis, revenues increased by more than €150 million for the same reasons I just mentioned for the full year, while costs are up by around €50 million compared to a very low base in Q4-24. and more in line with the quarterly historical average. May I give back the floor to Saboumeh?