Societe Generale SA

Ladies and gentlemen, welcome to the Societe Generale second quarter 2026 results conference call. I will now hand over to Mr. Slawomir Krupa, Chief Executive Officer. Sir, please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today. Leo and I are delighted to present to you another strong set of results. They demonstrate the strength of our execution as we enter into the final stage of our current strategic roadmap. Our high-quality financial performance during the first half of 2026 puts us ahead of our 2026 annual targets and results in a record net income for the Group of 3.5 billion euros. In light of this performance, we are pleased to announce the launch of a 1.5 billion euro extraordinary share buyback as well as an interim dividend for the first half of 2026 of 0.75 euro per share, 75 euro cents, up plus 23% versus last year. These strong results, delivered in a highly uncertain and volatile environment, demonstrate the success of our transformation over the past three years. Today we are much more efficient, focused, and profitable with a well-diversified business mix. The numbers illustrate this. Our revenues are up by plus 2.4% versus 8.25% on a reported basis. This is in line with our 2026 annual guidance of revenue growth of more than plus 2%. Our actions on costs are paying off, continue to pay off, driving greater efficiency with operating expenses down minus 5% versus H1-25. It far exceeds our original 2026 target of around a 3% reduction and delivers substantial value creation with a 7.3 percentage point of positive JAWS. This leads logically to a cost-to-income ratio of 59.7%, which is in line with our year-end target of a cost-to-income ratio below 60. With a cost-to-risk of 26 basis points, we remain at the low end of our guidance range, demonstrating both the prudent risk management and the strong quality of our credit portfolio. All of this translates into a group ROTI of 12%, H1-26, well above our full-year target of more than 10%. But this merely represents a base camp for us in what is an ongoing climb upwards. Ultimately, our capital remains strong with a CET1 ratio standing at 13.2% after taking into account the extraordinary share buyback of 1.5 billion euros. Given these strong results, we are upgrading our annual targets on costs and ROTI. We now expect for 2026 a cost reduction of around minus 4% compared with around minus 3% before, and a ROTI around 11% in 2026 versus above 10% before. Now let me hand over to Leo, who will go through our Q2 26 performance. All yours, Leo.

Thank you, Slawomir, and good morning, everyone. Let's now turn to our financial performance for the quarter. The group continued its strong momentum, explained by a solid revenue growth of 4.5% versus Q2 2025, notably driven by sound commercial performance in French retail banking and global banking and investor solutions, as we will see later. At constant perimeter and exchange rates, the revenue growth stands at 6.1% versus Q2 2025. Costs On the other hand, are substantially lower by minus 4.1% versus Q2-25, confirming our strong cost discipline. This translates into further improvement in our operational leverage with a cost-to-income ratio of 58.6% in Q2-26 or down by more than 5 percentage points versus Q2-25. As a quality-wise, the cost of risk continues to be contained at 27 basis points. within the 25 to 30 basis points guidance range. This positive expansion of JOS, together with the contained cost of risk, explains the record quarterly group net income of €1.8 billion, which translates into return on tangible equity of 12.2% versus 9.7% in Q2 2025. Moving on to slide 7, we can see the key drivers behind the revenue growth in Q2 2026. The group recorded a strong 4.5% increase in reported revenues. The first item on the bridge reflects the impact of disposals, with an overall effect of minus 70 million euros. The impact is mainly related to the disposals of activities in Cameroon, Mauritania, Guinea-Conakry, and Equatorial Guinea. At constant perimeter exchange rate, the evolution of group revenues is even higher, at 6.1% versus Q2-25. From a business perspective, revenues in French retail, private banking and insurance increased by 12.6% on a reported basis, mainly driven by a strong performance of net interest income, which grew by 14.9%. Revenues at Global Banking Investor Solutions continue to progress this quarter, an increase of 2.7% versus Q2 2025, or 4% at constant perimeter and exchange rate. Revenues in mobility, international retail banking and financial services decreased by minus 4.9% versus Q2 2025 at constant perimeter and exchange rates. These are results of low revenues in events driven by lower used car sales results, which are still under normalization as guided. Finally, in corporate center, revenues improved by 112 million euros, notably in the back of an optimized management of the excess liquidity. We have repeatedly highlighted in recent quarters rigorous cost discipline is a cornerstone of our 2026 strategic roadmap. And Q226, once again, demonstrates our ability to execute on this commitment. Our costs are down by 4.1% versus Q225 on a reported basis, and by 2.7% at constant perimeter and exchange rate, from ILE supported by structural savings. This decrease is driven by disposals, which explain a variation of 41 million euros, by lower transformation charges, as guided, for minus 8 million euros. We have a higher contribution from charges related to the Global Employee Share Ownership Plan, launched in June 2026, for an amount of 127 million euros, versus 101 in Q2 2025, which, in any case, it's important to remember, it's an item that has no impact on the distributable net income. An update of AFRIC 21 tax estimate includes a reduction of 36 million euros of costs and then we have a net cost decrease of 117 million euros confirming the sustainability of our cost savings efforts quarter after quarter. As a result, groups operating leverage is improving as you can see on the right hand side of the slide. The cost-to-income ratio is falling by more than 5 percentage points from 63.8% Q2 2025 to the current 58.6% in Q2 2026, which is already, by the way, below our below 60% 2026 target. One final highlight in this slide relates to the fact that all pillars are within their end-of-the-year targets. Let's move now to cost of risk on slide 9. Cost of risk for the quarter stands at 27 basis points. and it's fully in line with our target range between 25 and 30 basis points for the year. Business-wise, the cost of risk stands at 38 basis points for RPBI, three for GBIS and 43 for MIBS. Both RPBI and MIBS probably accounted for some generic overlays in S1, S2 provisions. But GBIS had a strong risk management this quarter without any significant defaults. Cost of risk this quarter mainly comprises a stage three provisions. which account for 405 million euros and are slightly up versus Q2-25. Stage 1 and Stage 2 provisions, we had limited reversals of 50 million euros which included overlays offset by some reversals, concealing our prudent approach in this uncertain and complex environment. The result, total outstanding Stage 1 and Stage 2 provisions remain stable, a high level of 2.9 billion euros or two years of cost of risk. NPL ratio stands at 2.7% in Q2-26, down versus both last quarter and last year. And finally, the net coverage ratio remains high at 83% in Q2, slightly up versus 82% in Q1-26. Now I'll turn onto slide 10, where we can see the evolution of our strong capital position. The Group C-Q1 ratio stands at 13.2% at the end of Q2-26, representing a strong buffer over MDA of around 290 basis points. This ratio includes 39 basis point impact from the extraordinary share buyback of 1.5 billion euros as announced previously by Slawomir. Before adjusting the extraordinary share buyback, the CT1 ratio is slightly up compared to Q1-26. Going through the bridge in the slide from left to right, return earnings contributed to an increase of 19 basis points after accruing a 50% Distribution Payout. RWA organic growth represented an impact of minus 8 basis points. And all in all, the recent disposal of sub-chain Cameroon regulatory model changes and other inputs contribute to a net decrease of 6 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 11, liquidity reserves remain high at €339 billion in Q2-26, the balance mix between cash and securities. The liquidity profile of the group remains strong, with sound liquidity ratios. The LCR stands at 146% this quarter, while the NSFR was 115%, both well above regulatory requirements and in line with our steering talk. The 2026 Long-Term Funding Program is already almost completed, with 96% execution rate, 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. An overall loan-to-deeper ratio stands at 76% at group level. In slide 12, we show a summary of the P&L for the group for Q226, which we will cover in more detail in the following slides. Let's move now to the individual businesses, starting with Subject Network, Private Banking and Insurance. At Subject Network, Q226 loans and standing fell by 2% versus Q225 and are stable compared to Q126. Outstanding deposits fell by 3% versus Q225 or 1% versus Q126 as site deposits are up and term deposits are down. This took place within a context of continued strong growth of retail savings and investment products. It's contributed to the continued solid momentum in overall asset gathering. On the one side, AUMs in private banking reached a record high of 145 billion euros at the end of June 26, increasing by 10% versus Q2 25. On the other side, life insurance outstanding reached a record level of 167 billion, increasing by 11% versus Q2 25. Moving on to BursaBank. Commercial performance remains very strong within the asset gathering administration space, which continued to grow steadily, reaching €84 billion at the end of June. This represents a 16% increase versus Q2 2025, helped by the continued strong increase in deposits of 9% versus the same period last year. Similarly, life insurance outstanding increased by 20% versus Q2 2025, with a high proportion, 51%, of unit leak products. Urso Bank also saw a record number of market orders at 3.7 million, representing an increase of 25% compared to Q2 2025. On the lending side, total loans at standings are up by 8% versus Q2 2025. Urso Bank serves now around 9.1 million clients. After onboarding more than 280,000 new clients in Q2 2026, while the trend rate remains below 4%. In Q2 26, Borzoi Bank's net income stands at 84 million. This is 176 million for the first half of the year or well on track to reach its 2026 target of more than 300 billion euros. Finally, the RONI for Borzoi Bank stood at 60.7%, strong proof of the profitability of this model. Looking at the whole pillar on site 16, French retail, biobanking, and insurance posted a strong increase in revenues of 12.6% versus Q2 2025, which included a 14.9% growth in NII and 11.3% growth in fees. At the same time, operating expenses fell by minus 4.1% from Q2 2025. As a result, the customer income ratio stood at 55.5% in Q2 2026, which represents A substantial improvement of almost 10 percentage points versus Q225. All in all, net income lands at 674 million euros for the quarter, up 38% versus Q225, with a revenue at 14.7% versus 11.2% last year. Moving on to global markets and investor services on site 17. Lower markets revenues declined slightly by 1% versus Q2 2025 compared to a high base case in Q2 last year. And we benefited from strong client activity following the announcement of U.S. tariffs. Equities posted a strong quarter with revenues up 5.5% versus Q2 2025 supported by sound commercial activity. Derivatives, financing, and prime services were the key drivers for this good performance. In fixed income and currencies, revenues declined by 11% versus Q2 2025. As we saw in previous quarters, we're still affected by unfavorable market conditions for our business mix, which, as you know, is mostly exposed to Europe and rates. Lastly, revenues in security services grew by 3.9% versus Q2 2025, on the back of growth in fee income and a stronger net interest income performance. Let's turn to slide 18 on the evolution of financing and advisory. Revenues increased by 8.9% versus Q2 2025 on the back of a strong business dynamics. Revenues in global banking and advisory grew by 9.7% versus Q2 2025, driven by solid origination and strong client activity. By sectors, growth was supported by good momentum in energy, infrastructure, and commodities trade finance. We also saw a strong rebound in investment banking on the back of DCM and ECM revenues, which were driven by landmark transactions and spreading across different sectors and geographies. Lastly, in transaction banking and payment services, revenues increased by 6.7% versus Q2-25. Commercial activity was strong, driving growth in corporate deposits across all regions. Now moving to slide 19 for the overall view on GBIS. The pillar level, revenues grew by 2.7% versus Q2-25. One more quarter, we maintained disciplined cost management. That can be seen through the reduction of operating expenses by minus 2.7% versus Q2-25. The increase of revenues and the reduction of costs explain the cost-to-income ratio of 58.4% in Q2-26, 3.2%. for such points lower than the same ratio in Q2-25. At the same time, the cost of risk was particularly low at three basis points in Q2-26, which compares with 12 last quarter. All in all, GBIS posted a net income of €867 million in Q2-26, up by 15.6% versus Q2-25, and resulting into a very high RONI of 19.9%. Turning now to international retail banking in slide 20. The strong commercial momentum continued in Europe, supported by both KB in the Czech Republic and BRD in Romania, where loans and deposits increased by 9% each versus Q225 at constant perimeter and efforts. This translates into a 3% revenue increase versus Q225, despite lower spreads this quarter. In Africa, the 2% growth in revenue is in line with the lending dynamic. Leopoldo Alvear at 610 basis points in Q226 or up 60 basis points versus Q225, thanks to good dynamics in both leasing and services. These were more than balanced by lower results from used car sales, as the secondary market is still normalizing, as was well anticipated and guided. The average result per unit in the quarter was around €330, within the range of €200 to €600 that AVENS guided for the full year 2026. The customer income already stands at 50.3% and the ROTI at 13.4%, both in line with targets for the year. Finally, looking at consumer finance performance, margins continue to improve, translating into an NII growth of 9% versus Q2 2025. This quarter, we have a base effect due to a positive revaluation of one asset back in Q2 2025, leading to flattened revenues overall this quarter. In slide 22, MIPS overall shows the same level of operational efficiency as last year, reflecting the combination of lower revenues, minus 5%, which were netted through strict cost discipline, reflected in a reduction of cost of minus 4%, both at constant perimeter and FX versus Q2-25. At 52% in Q2-26, the cost-to-income ratio is below the target of 55% for the full year. Costa Rica's quarter stood at 43 basis points, very similar to the 40 basis points that we had in Q126. MIPS fostered a net income of €360 million, down by 8.5% versus Q225 at constant perimeter and exchange rates, but still translating into a good level of profitability with a running at 13.4%. To conclude with the quarterly results, let's move on quickly to slide 23 with the corporate central. Similar to previous quarters, revenues improved versus Q2-25, notably thanks to continued efficient management of liquidity and also positive revaluations of liabilities accounted at fair value through P&L. Operating expenses include 127 million euros related to the Group Employee Share Ownership Program, which as a reminder is a non-cash item and therefore does not affect neither CD1 nor shareholder distribution. Let me now give back the floor to Slawomir.