Societe Generale SA

Thank you for holding. The conference will begin shortly. 🎵 🎵 Thank you. Welcome to the Societe Generale conference call. At any time during the presentation you may press star and 1 to enter the queue for the Q&A session. Thank you for holding. The conference will begin shortly. © transcript Emily Beynon Thank you for holding. The conference will begin shortly. Thank you. Thank you. Thank you. Thank you. © transcript Emily Beynon Ladies and gentlemen, welcome to the Societe Generale first quarter 2026 results conference call. I will now hand over to Mr. Slavomir Krupa, Chief Executive Officer. Sir, please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today on what I know is a busy morning. Leo and I are very pleased to present our results for the first quarter in what is the final year of our current strategic roadmap. We all know the volatility of the environment we operate in. It's complex, to say the least. And yet, once again, we continued our strong momentum in Q1 26. Here are some of the highlights that demonstrate how we are progressing with discipline towards the targets we have set for 2026. We delivered a strong profitability with a ROTI of 11.7% in Q1 26, which is well above our full-year target. Specifically, our revenues are slightly up by 0.3% versus Q1 25 on a reported basis and up 4.4% at constant perimeter and exchange rates. As you know, our absolute commitment to cost reductions continues to yield results. We further decreased our costs by minus 6% versus Q125, and minus 2.6% at constant perimeter and exchange rates. This translates into a cost-to-income ratio of 60.9%, or 57.6 when linearizing IFRIC 21 taxes, which were fully paid in Q1 26. It's in line with our end-of-year target of a cost-to-income ratio below 60%. We maintain a low cost of risk at 25 basis points for the quarter, and it is at the low end of our guidance for the year. We achieve this through rigorous risk management, and the quality of our credit portfolio is strong. Finally, we maintain a solid capital position with a C2 on ratio of 13.5% at the end of the first quarter of 26. These results, made possible by focused execution and discipline, are what we expect of ourselves in delivering on our financial targets. Now let me hand over to Leo to review our Q1 26 performance.

Thank you, Slavoj Mir and good morning, everyone. Moving on to slide six, we can see the key drivers of the revenue evolution in Q126. We posted a 0.3% increase in reported revenues versus Q125. First impact that we can see on the bridge, it's driven by the impact of disposals completed in 2025, with an overall impact amounting to minus 154 million euros in Q126. It's worth remembering that the overall revenue disposal impact for 26 versus 25 is largely concentrated in Q1 26. As a reminder, the main disposals completed in 25 were SCEF, private banking activities in the UK and Switzerland, and Guinea-Conakry. On the other hand, at constant perimeter and exchange rate, group revenues are strongly up by 4.4% versus Q1 25. Focusing on the businesses, Revenues in French retail, private banking, and insurance increased by 10.7% at constant perimeter and exchange rates, mainly driven by a strong momentum in net interest income, which grew by 13.8%. Revenues at global banking and investor solutions were slightly down this quarter by 0.5% at constant perimeter and exchange rates versus a very high Q125 due to less conducive market conditions. Finally, revenues in mobility, international retail banking, and financial services continue to grow by 2.9% versus Q125 at constant perimeter and exchange rates. As is already stated, our commitment to reducing our cost base is absolute, and this is precisely what is shown in this slide. are decreasing by 6% between Q1-25 and Q1-26 on a reported basis, and by 2.6% at constant perimeter and exchange rates. This decrease is resulting from disposals, which explain a variation of 100 million euros, an FX impact of minus 57 million euros, lower transformation charges as guided by 62 million euros, and a net cost decrease of 55 million euros, reflecting the savings generated quarter after quarter. The result? the group's operating leverage is improving, as you can see on the right-hand side of the slide. Indeed, the group customer income ratio is falling by more than 4 percentage points from 65% in Q125 to 60.9% in Q126, or 57.6% with IFRIC 21 linearization, which will already be below our below 60% 2026 targets. One last important point I would like to highlight on this slide is that all pillars are within their 2026 customer income radio target. Moving on to cost of risk on slide seven, cost of risk for the quarter stands at 25 basis points. This is at the low end of our 2026 guidance range between 25 and 30 basis points, thanks to our sound risk management framework. The cost of risk this quarter mainly comprises of the Stage 3 provisions, which account for €348 million and declined by 20% versus Q4-25. In Stage 1 and 2 provisions, we had limited net allowance of €7 million, which conceals our prudent approach in an uncertain and complex environment, including forward-looking overlays relating to the geopolitical crisis, which were broadly offset by some reversals. As a result, Total outstanding Stage 1 and Stage 2 provisions remain stable at a high level of 2.9 billion euros, representing around two years of cost of risk. Overall asset quality, on the other hand, remains very solid, as illustrated by the NPL ratio at 2.75% in Q1-26, decreasing when compared to both last quarter and last year. And finally, the net coverage ratio remains high at 82% in Q1-26, stable versus Q4-25. Let's now turn on to slide eight, where we can see the evolution of our strong capital position. Group CT1 ratio stands at 13.5% at the end of Q126, representing a strong buffer over MDA of around 325 basis points. It is stable compared to Q425 level. Going through the bridge on the slide from left to right, retained earnings contributed to an increase of 20 basis points after accruing a 50% payout. RWA organic growth represents an impact of minus 2 basis points. Given the evolution of market parameters during the last quarter, OCI and PVA represent an impact of minus 3 basis points. As stated in the UOD, the consolidation of Bernstein activities in the U.S. had an impact of minus 6 basis points. And finally, we have regulatory and other impacts which represent minus 7 basis points. In addition, as you can see at the bottom right-hand side of the slide, All other capital ratios are comfortably above the regulatory requirements. On slide 9, liquidity reserves remain high at €334 billion in Q126, with a balanced mix between cash and securities. The liquidity profile of the group remains strong, with sound liquidity ratios. The LCR ratio stands at 149% this quarter, and the NSFR ratio was 117%, both well above regulatory requirements and in line with our student targets. 55% of the 2026 long-term funding program has already been completed, driven by a 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. And overall, the loan-to-debit ratio stands at 76% at group level. In slide 10, we show a summary of the P&L of the group for Q126, which we will cover in more detail in the following slides. Let's move now to the individual businesses, starting on slide 12 with subject network, private banking, and insurance. In Q126, loans outstanding were stable compared with last year. It would exclude state-guaranteed loans, this is BGEs. Outstanding deposits fell by 2% versus Q125. Within a context of continued growth, of retail savings and investment products. These off-balance sheet products contribute to the continued strong momentum in overall assets gathering. On one hand, AUMs in private banking reached a record high of 138 billion euros at the end of March 26, increasing by 6% versus Q125. On the other side, life insurance outstandings reached record level of 159 billion, increasing by 8% versus Q125, thanks to record high net inflows. Moving now on to BursaBank. As we can see, commercial performance remains very strong within the asset and administration gathering, which continue to grow steadily, reaching 80 billion euros at the end of March, or around 9,000 euros per client. This represents a 15% increase versus Q125, helped by the continued strong increase in deposits of 12% versus Q125. Similarly, life insurance outstandings increased by 14% versus Q125, with a high proportion, 48%, of unit-linked products. Ursabank also saw record number of market orders at 4 million, representing an increase of 30% compared to Q125. On the lending side, total loans outstandings are up by 8% versus Q125. Ursabank serves now 8.9 million clients, This quarter, Bruxelles Bank achieved the best NPS score in the French banking sector. The bank was also awarded the number one position in customer relationship among French banks. In Q126, Bruxelles Bank's net income stands at €92 million, well on track to reach the 2026 target of €300 million. Finally, the RONI for the bank stood at 65.9%, a very good proof of the profitability of this model. Looking now at the whole pillar on slide 14, French retail, private banking, and insurance posted a strong increase in revenues of 8.9% versus Q125, which include a 12% growth in NII. At the same time, operating expenses fell by 4.6% from Q125. As a result, the cost-to-income ratio stood at 59.7% in Q126, which represents a substantial improvement of 8.4 percentage points since Q125. All in all, the net income lands at 625 million euros for the quarter, or 48.4% up versus Q1 2025, with the revenue at 13.7% versus 9.5% last year. Let's move now to global markets and investor services on slide 15. Global markets consolidated another good quarter compared to a high base in Q1 2025, with the revenue decrease of 3.9% versus Q1 2025, and a slight increase of 0.5% at constant currency. Equities posted a record quarter with revenues up 5.5% versus Q1 2025. If we adjust for the material depreciation of the U.S. dollars versus Q1 2025, equity revenues would have increased by 10.9% at constant currency. This sound quarter was supported by strong activity levels in flow products. Performance in financial activities was also strong, showing increased volumes in prime brokerage. In fixed income and currencies, revenues declined by 18.2% versus Q125, or by 15.1% at constant currency. Same as in previous quarters, we were impacted by our large weighting in rates Europe. Lower revenues resulted from a high volatility, tight spreads in environment, which limited our ability to monetize flows. Lastly, security services revenues grew by 7.7%, versus Q125 on the back of a strong commercial momentum in all of the key markets. Let's turn now to slide 16 on the evolution of financing and advisory. Revenues declined by 8.6% versus Q125 and by 3.8% at constant currency. Revenues in global banking and advisory declined by 10.7% versus Q125 or by 5% at constant currency. The comparative reflects a strong base effect as Q125 was our best Q1 ever, and it also reflects softer activity in investment banking. Having said that, the commercial momentum remained solid, and origination revenues continued to increase across key sectors, including infrastructure or telecom and media. Lastly, in transaction banking and payment services, revenues declined by 2.4% versus Q125 on a reported basis, but remained stable when adjusted for the currency impact. The strong commercial activity with sustained growth in corporate deposits was upset by the negative impact of interest rates. And now moving to slide 17 for the overall view of GBIS. At the pillar level, revenues declined by 4.9% versus Q125. In the quarter, we maintained a disciplined cost margin management and the reduction of operating expenses by minus 1.9% versus Q125, resulted in a cost-to-income ratio of 62.5% in Q1-26. At the same time, cost of risk remained low at 12 basis points in Q1-26, almost as stable versus Q1-25. All in all, TBIS posted a net income of €773 million in Q1-26, down by 9.7% versus Q1-25, and resulted into a high RONI of 18.3%. Few words now on international banking in slide 18. This quarter, the business posted higher revenues up 2% versus Q125 at constant perimeter and exchange rates. We saw strong commercial momentum in both Czech Republic and Romania. Overall loans were up 6% and deposits 10% compared to Q125 at constant perimeter and exchange rates. We observed stable revenues over this period, mainly due to positive one-off on fee income in Q125 in both countries, while NII continued to increase. In Africa, mixed situations in geographies led to broadly stable outstanding in both loan and deposits versus Q125 at constant perimeter and exchange rate. Revenues, on the other hand, increased by 5% versus Q125 at constant perimeter and exchange rates, thanks to higher level both in NII and fees. Moving on to mobility and financial services, in slide 20, the division grew by 3.7% at constant perimeter and exchange rates. This is excluding SKAF, which was disposed in Q125. AVENS posted a revenue growth of 1.7% versus Q125 at sub-gen level, supported by higher margins. The strategic focus on profitability is paying off, with a strong margin at 587 basis points, up by 25 basis points compared to Q125. The normalization of results of used car sales is still ongoing, but partially upset by the lower level of depreciation adjustments. The used car sales results per car stood at 470 euros in Q126. within the target range of 600 to 200 for the year. When adjusted from non-recurrent items, the revenues in total decreased by 1.6% in Q126. Consumer finance business posted a strong financial performance this quarter, with revenues up 13.9%, notably thanks to better margins despite a challenging environment. Now, a pillar level on slide 20. MIPS delivered an increase in revenues of 2.9% in Q126 versus Q125 at constant perimeter and exchange rates. On the other hand, we maintained a very disciplined cost management, which can be seen in the strong decrease of cost by 5.3% in Q126 at constant perimeter and exchange rates. As a result, the cost-to-income ratio improved significantly by 5.3 percentage points versus Q125, standing at 53.7%. Cost of rates this quarter stood at 40 basis points, compared to the 31 basis points in Q125, which was a low base and included some write-backs. All in all, MIPS posted a net income of €365 million, representing an increase of 21.6% versus Q125 at constant perimeter and exchange rates, reaching a RONI of 13.7%, up by 2.5 percentage points. To conclude with these quarterly results, let's move on quickly to slide 21 with the Corporate Center. This quarter, the disposal of real estate property in France was booked in net profit or losses from other assets. As a reminder, in Q125, the accounting impacts from the disposals of SGEF, private banking in Switzerland and the UK, were also booked in net profits or losses from other assets. Let me now give back the floor to Stavemir.