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Quarterly Financial Information - Q4 2014

Good Performance by the Businesses in 2014

2014: GOOD PERFORMANCE BY THE BUSINESSES, CONTRIBUTION UP +3.5%

  • Net banking income: EUR 23.6bn, +5.0%* vs. 2013 Stable business net banking income: -0.5%* vs. 2013
  • Good control of operating expenses: -1.9%* vs. 2013
  • Sharp decline in the Group’s net cost of risk: -25.2%* vs. 2013
  • Businesses’ operating income up +20.9%*
  • Increase in Group net income to EUR 2,692m vs. EUR 2,044m in 2013 Businesses’ contribution to Group net income: EUR 3,504m, +3.5% vs. 2013
  • Fully loaded Basel 3 CET1 ratio: 10.1% (10.0% at end-2013)
  • Leverage ratio: 3.8% at end-2014
  • EPS(1)
  • Proposed dividend: EUR 1.20 in cash (payout ratio of 40%) : EUR 2.92

Q4 14: Increase in Group net income to EUR 511m (Q4 13: EUR 191m)

  • Net banking income up +7.5%* vs. Q4 13
  • Lower operating expenses*: -5.3%* vs. Q4 13
  • Sharp decline in the net cost of risk: -10.5%* vs. Q4 13

Societe Generale’s Board of Directors met on February 11th, 2015 and approved Societe Generale’s financial statements for 2014.

The Group presented its strategic objectives in May 2014. It also pursued efforts to adapt to the new economic and regulatory environment, based on its customer-focused universal banking model, the deployment of synergies and the implementation of its cost savings plan. During the year, Societe Generale continued with the refocusing of the portfolio in order to optimise the allocation of capital to the businesses: in particular, it increased its stake in Boursorama and Rosbank, acquired all of Newedge, disposed of its Private Banking subsidiary in Asia and refocused its consumer finance business on the Europe region and Africa.

The Group’s net banking income totalled EUR 23,561 million for 2014 (+5.0%* vs. 2013), with a decline in operating expenses (-1.9%*). The cost savings plan under way has already helped secure more than 80% of the EUR 900 million of savings expected by end-2015. The net cost of risk was substantially lower (-25.2%*), despite a total collective provision of EUR -400 million booked in 2014 in respect of litigation risk, testifying to the quality of the Bank’s portfolios.

In a particularly complex economic environment in 2014, marked by significant fluctuations in both currencies and commodity prices, as well as a challenging economic situation in some European countries, the Group’s businesses provided further evidence of their robustness. With generally stable net banking income over the period (-0.5%*), operating expenses under control (-1.0%*) and a substantially lower cost of risk, their contribution to Group net income came to EUR 3,504 million in 2014, up +3.5% vs. 2013. This contribution includes EUR -725 million of non-recurring costs in respect of the refocusing of consumer finance activities at end-2014 and the goodwill write-down on International Retail Banking & Financial Services’ activities in Russia. When restated for these non-recurring items, the businesses’ contribution would be nearly 25% higher than the previous year: stable in French Retail Banking (+0.8%) in a sluggish economic environment, up +12.5% in International Retail Banking & Financial Services, driven by increased earnings in Europe and in Financial Services to Corporates and Insurance, and a sharp increase (+59.1%) in Global Banking & Investor Solutions, notably in Financing & Advisory.

At end-2014, the Group’s capital ratios provided further confirmation of their robustness. The Group’s fully loaded Common Equity Tier 1 ratio stood at 10.1%, according to CRR/CRD4 rules. The Group has used the activities’ substantially positive earnings contribution (+103 basis points in 2014) in a balanced manner as part of its capital management. This contribution helped finance the growth in the Group’s risk-weighted assets, transactions relating to the acquisition and disposal of subsidiaries, new regulatory requirements and capital remuneration. The Group’s total capital ratio stood at 14.3% for a leverage ratio of 3.8% at end-2014 according to CRR/CRD4 rules including the delegated act adopted in October 2014, vs. 3.5% at end-2013. The short-term liquidity ratio (LCR) stood at 118% at end-2014.

Based on these results, the Board of Directors has decided to propose the payment of a dividend of EUR 1.20 per share, payable in cash, to the Annual General Meeting, with dividend detachment on May 26th, 2015 and payment on May 28th, 2015, subject to a favourable vote by the Annual General Meeting on May 19th, 2015. This amount corresponds to 40% of earnings per share(1), net of the effect of non-economic items (revaluation of own financial liabilities and DVA).

Commenting on the Group’s results at end-December 2014, Frédéric Oudéa – Chairman and CEO – stated:

“In 2014, Societe Generale successfully progressed in the implementation of its strategy focused on satisfying its customers, innovation, notably in digital technologies, and profitable growth. In a challenging and unstable environment, the Group posted a good business performance, confirming the businesses’ growth potential. The Group also demonstrated good control of costs and risks, which were substantially lower.
In 2015, and given its very solid balance sheet, the Group intends to pursue its 2016 strategic plan in a determined and disciplined manner. Supported by the effective organisational structure in place, enhanced governance and its teams’ commitment to serving its customers, Societe Generale will maintain the pace of its transformation with, as operating priorities, the continuation of targeted developments and the deployment of synergies, good control of costs and risks and the continued optimisation of capital allocation between the businesses. Despite an environment that remains uncertain and volatile, the Group is therefore embarking on this new financial year with confidence”