Société Générale S.A. (OTC:SCGLY) Q2 2025 Earnings Call Transcript

Société Générale S.A. (OTC:SCGLY) Q2 2025 Earnings Call Transcript July 31, 2025

Société Générale S.A. beats earnings expectations. Reported EPS is $0.36, expectations were $0.32.

Operator: Ladies and gentlemen, welcome to the Société Générale Second Quarter and Half Year 2025 Conference Call. I now hand over to Mr. Slawomir Krupa, Chief Executive Officer. Sir, please go ahead.

Slawomir Krupa: Thank you. Good morning, everyone, and thank you for joining us today for our H1 results. I am delighted to present to you another strong set of results as well as an important new milestone in the execution of our strategic plan. Last quarter, we demonstrated that our continued improvement is sustainable, and we continue to perform ahead of our end of year targets. Through a consistent organic capital generation, we have further strengthened our capital ratio. Our overall performance gives us the confidence to take two major steps forward in our commitments. We are upgrading our annual targets, and we now expect a ROTE around 9% for 2025. And we are further improving shareholder return with today’s announcement of our first ever exceptional distribution of a portion of our excess capital through an additional share buyback of EUR 1 billion.

This is an important first step. Additionally, we are introducing an interim dividend of EUR 0.61 per share against the results of the first half of 2025. The unwavering dedication of our teams makes all this possible. We continue to execute our strategic road map with discipline and determination. And as a result, we are moving into the second phase of our 3-year plan with equal confidence based on this year’s first half results. Revenues increased by 8.6%, sorry, versus H1 ’24, excluding asset disposals, at a growth pace well above our initial target for 2025. Costs continued to decrease at a higher pace than initially planned. They are down 2.6% since the beginning of the year compared with last year, excluding asset disposals. This positive differential translates into a current group cost-to-income ratio of 64%, already below our initial annual target and roughly 7 percentage points better than last year.

Asset quality remains strong. The cost of risk remains low and below our annual guidance at 24 basis points for the first half. At this point, we see no signs of significant deterioration. And regardless, our assessment of the current environment keeps us prudent in terms of risk management. Together, all these factors contribute to a group ROTE of more than 10% at the end of the first half, with the group net income reaching EUR 3.1 billion. This is well above our initial annual target. Ultimately, our capital ratio further increased by 10 basis points in Q2 ’25 and the CET1 ratio now stands at 13.5% after accounting for the additional share buyback of EUR 1 billion. Therefore, we have decided to upgrade our annual targets on cost to income and ROTE based on strong positive jaws.

Looking forward, we now expect a cost-to-income ratio below 65% in 2025 versus below 66% before. And as the cost of risk guidance remains unchanged, we now expect an annual ROTE around 9% in 2025. We’re basing this decision to upgrade our targets in what we see in the numbers at the business level. We implemented our strategy through specific business initiatives, as you know, and which are delivering positive outcomes throughout the group. In French Retail, Private Banking and insurance, we are now pursuing a stronger strategic direction and renewed management practices, which leads to an increased commercial momentum and the opportunity to extract more synergies across the French Retail businesses. This is boosting growth in mortgage origination in fees, in private banking AUM and in life insurance outstandings.

At the same time, BoursoBank has already reached 8 million clients, 18 months ahead of our initial CMD targets. It keeps delivering an improved financial performance, which will accelerate next year. Our focus for the remainder of the year will be to maintain our current steady pace in terms of client acquisition. Overall, the RPBI RONE rose to 10.4% in H1 ’25 versus 3.3% in ’24. And the cost- to-income ratio decreased to 67% versus 81% over the same period. In Global Banking and Investor Solutions, we continue to deliver a high consistent, stable and predictable performance for the fifth year in a row within all our businesses, particularly within Global Markets. We have leading franchises in our Global Banking business that are well positioned across megatrends like infrastructure investments, energy transition and defense.

And overall, we continue to deliver leading profitability levels with a RONE of 17.7% in H1 ’25 post Basel IV. In Mobility, International Retail Banking and Financial Services, profitability is up by more than 2 percentage points versus last year. Margin and synergies at events are also increasing. KB and BRD are performing very well and leverage a successful digital overhaul. At the same time, we continue to streamline our business portfolio with the closing of the disposal of our subsidiary in Burkina Faso, and the announcement of the disposal of our subsidiary in Cameroon. Our CMD commitments were simple: deliver value creation, anchored in a strong capital position. We also committed to being good stewards of the capital of our shareholders by being more efficient in terms of capital allocation across our businesses, by streamlining our portfolio through targeted disposals and by improving, of course, our operating performance.

The tight execution of this road map gives us today the ability to substantially enhance shareholder returns. In this first half, we brought our CET1 ratio to 13.8% at the end of June 2025 before excess capital distribution. And we are therefore announcing the first additional share buyback of EUR 1 billion, which represents minus 25 basis points of CET1. And given that we have already received the ECB approval, it will be launched as soon as next Monday. As previously stated, we will continue to proactively manage our sustainable excess capital in the best interest of shareholders with a mix of exceptional distribution and profitable, disciplined growth. We are also introducing an interim dividend from 2025 onwards, and we intend to distribute an interim cash dividend of EUR 0.61 per share this year representing 35% of the H1 ’25 total distribution accrual.

It will be paid on October 9 of this year. I now leave the floor to Leo, who is going to take you through our second quarter performance.

Leopoldo Alvear: Thank you, Slawomir, and good morning, everyone. Let us move on to the financial performance in Q2 ’25. It is another strong quarter for the group, which reports a group net income of EUR 1.5 billion, up 30.6% versus Q2 ’24. This translates into a higher return on tangible equity of 9.7% versus the 7.4% that we had in Q2 2024. Going through Q2 ’25 details, we can see a solid revenue growth of 7.1% versus Q2 ’24, excluding disposals, driven by strong commercial performance across businesses, as we will see later. Reduced cost by minus 2.8% versus Q2 ’24, excluding the global employee ownership program, GESOP, and other disposals, showing our continued firm discipline on costs. Both movements translate into a further improvement in operational leverage with a cost-to-income ratio of 63.8% in Q2 ’25 down by more than 4 percentage points versus Q2 ’24, achieved despite a one-off noncash charge of EUR 100 million related to the launch of the Global Employee Share Ownership program in June 2025.

Asset quality wise, the cost of risk continues to be low at 25 basis points at the lower end of our guidance between 25 and 30. In addition, as mentioned by Slawomir, we continued to simplify our business portfolio with the closing of the disposal of SocGen Burkina Faso and the announced sale of SocGen Cameroon. Moving on with the presentation on Slide 9, we present the main drivers of our revenue growth in Q2 ’25. Disposed assets generated EUR 342 million of revenues in Q2 last year, mainly Morocco, Madagascar, SGEF and private banking in Switzerland and the U.K. Therefore, group revenues increased 1.6% versus Q2 ’24 on a reported basis, but 7.1% when adjusting for 2024 asset disposals. Revenues in French Retail, Private Banking and insurance increased by 10.7%, excluding disposals and by 2.8% if we also restate the drag from shortened hedges in Q2.

Revenues of Global Banking and Investor Solutions are up 0.7% versus a strong Q2 ’24 to reach a high level of EUR 2.6 billion, driven by solid performance in fixed income as well as in Financing and Advisory. Lastly, revenues in Mobility, International Retail Banking and Financial Services grew by 7.3% versus Q2 ’24, excluding disposals, supported by the sustained growth of Ayvens as we will see later. Continuing on the next slide, we can observe the ongoing improvement in our operating leverage. Total costs fell by 5.2% between Q2 ’24 and Q2 ’25, confirming our discipline on cost management. This is equivalent to a minus 2.8% reduction excluding both disposals and the charges related to GESOP launched in June ’25 for an amount of EUR 100 million.

This charge of GESOP is EUR 100 million is a noncash item, which, therefore, has no impact in CET1 nor on distributable net income as the P&L charge is offset by an equivalent positive impact in the equity. The decrease in cost is supported by EUR 93 million of lower transformation charges as expected and net cost savings across the board, representing EUR 30 million. As a result, the operating leverage improved in all businesses driven by both higher revenues and decreasing costs, as shown on the right-hand side of the slide. The improvement is particularly relevant at [ RPBI ], with a decrease of 12 percentage points from 77% last year to 65% in Q2 ’25. The group cost-to-income ratio falls 4 percentage points from 68% last year to the current 64% in Q2 ’25.

Overall, we are very confident we will reach our new target of a cost-to-income ratio below 65% in 2025. Let us take a closer look at the asset quality on Slide 11. The cost of risk in Q2 ’25 remains low at 25 basis points, which is at the lower end of our guidance, only 2 basis points higher than last quarter and minus 1 basis point below Q2 ’24. This quarter’s cost of risk mainly comprises of Stage 3 provisions, which account for EUR 390 million. In parallel, as you can see, total outstanding Stage 1 and Stage 2 provisions remain high at EUR 3 billion, slightly down from Q1 ’25, mainly due to asset disposals and assets. Stage 2 provisions, in particular, represent 4.3% of the corresponding Stage 2 stock of loans. Asset quality is solid, with an NPL ratio of 2.77%, down 5 basis points from the previous quarter.

And also, the net coverage ratio remained sound at 81% in Q2 down 1 percentage point from Q1, basically because of asset disposals. Let’s now turn on to capital on Slide 12, where we can see our strong capital position evolution. This is the basis for the first distribution of excess capital, as mentioned earlier by Slawomir. The CET1 ratio reached 13.5% in Q2 ’25. This is 330 basis points above MDA. This strong ratio is already net of the additional share buyback of EUR 1 billion, which corresponds to an impact of 25 basis points. All in all, we see the quarter a net increase of 35 basis points before the additional share buyback or a net increase of 10 basis points after it as explained from left to right in the slide. On one hand, retained earnings contributed with 50 basis points — 15 basis points after accruing a 50% payout.

We have a positive impact from asset disposals, not only related to the sale of Burkina Faso, some positive regulatory adjustments with an impact of 8 basis points and finally, other impacts, which added 2 basis points. 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. We have the liquidity profile of the group on Slide 13. Societe Generale maintained a strong liquidity profile with an LCR ratio at 148% at the end of Q2 and an NSFR ratio at 117%, both well above regulatory requirements. Liquidity reserves stands at EUR 313 billion in Q2 with a balanced mix between cash and securities. We’ve already executed around 80% of the long-term funding program with good access to liquidity in all currencies on the back of a strong long-term ratings from our agencies, including as a novelty for the quarter, the new stable outlook from Moody’s.

The deposit base remains strong, granular and highly diversified. Overall, loan to depo stands at 77% for the group. In Slide 14, we show a summary of the P&L of the group for Q2, which we will cover in more detail in the coming slides. Let’s move now to the business performance on Slide 16, starting with SocGen network, Private Banking and Insurance. In Q2 ’25, loans outstanding decreased by 2% compared to last year, are flat when excluding state guaranteed loans, while slightly up versus Q1 ’25. Home loan production continues to increase strongly in the quarter, thanks to a strong commercial momentum and it is up by 175% versus Q2 ’24. As expected, volumes of deposits are stabilizing as well as the mix between sites and term. They are slightly down 1% versus Q1 ’25.

Linked to this deposit evolution, we consider the strong momentum in asset gathering continues this quarter. On the one hand, we see AUM of private banking reaching EUR 132 billion in Q2, increasing by 6% versus Q2 ’24. If we adjust for asset disposals, while outstandings are up by more than EUR 2 billion when compared to Q1. On the other side, life insurance outstanding increased by 5% versus Q2 ’24, reaching a total of EUR 150 billion. That also represents plus EUR 2 billion versus Q1, thanks to continued strong inflows. Moving now to BoursoBank. Once again, in Q2, the bank maintained a high pace of acquisition, gathering 424,000 new clients. More importantly, it already reached the 8 million target in July, this is 6 quarters ahead of its December ’26 objective.

This growth is achieved together with the churn rate that remains below 4%. In terms of client service, BoursoBank was recently recognized as the best digital bank in France by Euromoney. At the same time, assets under administration improved further, reaching EUR 70 billion. This shows that BoursoBank as a gathering remains very strong, notably with deposits growing by 16% versus Q2 ’24. Similarly, life insurance outstanding increased by 7% versus Q2 ’24 with higher rates of unit-linked products, representing 48% of the total. Note also that BoursoBank posted strong growth in market orders, plus 33% versus Q4 ’24. While finally, on the lending side, total loans outstanding grew by 10% versus Q2 ’24. Reviewing now the 4 pillar level for French Retail, Private Banking and Insurance on Slide 18.

I would like to highlight once again the very positive evolution of the cost to income ratio, which falls more than 12 percentage points to 65.1% in the quarter. This is driven by the strong 10.7% increase in revenues, excluding disposals and the strict cost discipline as demonstrated by the decrease in cost by minus 5.7% compared to Q2 ’24, again, excluding disposals. Further down in the P&L, you see that the cost of risk came at 25 basis points, lower than the 29 that we had in Q2 ’24. Collectively, this results in a net income of EUR 488 million in Q2 ’25, equivalent to a RONE of 11.2% for the quarter and the Basel IV requirements, which compares to 5.7% last year under the previous Basel III. Turning now to Global Markets and Investor Services on Slide 19.

Q2 total revenues for GMIS, are stable versus Q2 ’24, which was particularly strong in our market businesses. Focusing on global markets, Q2 ’25 revenues increased slightly by 0.8% versus Q2 ’24, combining normalization in equity revenues and a robust performance in FIC. On the equity revenue side, these were resilient in Q2 ’25, down by 2.9% versus Q2 ’24. Commercial activity remained sound in equity derivatives. It is very important to highlight the base effect in the comparative with Q2 ’24, where equities benefited from very high volumes across all activities. Indeed, Q2 ’24 was our best second quarter since 2010 in this segment. FIC delivered a solid quarter with revenues increasing by 7.3% versus Q2 ’24, thanks to the robust performance in activities like flow and finance.

We also benefited from strong commercial activity in a challenging economic environment where visibility and global macro prospects are uncertain. With that, FIC managed to mitigate the slowdown in derivatives. Lastly, in Securities Services, revenues eased by 3.1% versus Q2 ’24, where the decrease in interest rates has impacted the steady commercial momentum in the quarter by SGSS. Let’s move on to Slide 20. Financing & Advisory, total revenues are up by 1.3% versus Q2 ’24. Global Banking & Advisory continued to improve, with revenues increasing by almost 4%. This good performance is largely driven by acquisition finance, fund financing and infrastructure finance as well as a continued upward momentum in both originated and distributed volumes.

In investment banking, DCM delivered a good performance in Q2 ’25, while ECM is showing encouraging signs of recovery in a market environment that is still challenging. Regarding transaction banking, revenues declined by 4.7% in Q2. Performance was impacted by the decrease in interest rates, offsetting the solid commercial activity with both corporate and institutional clients. Looking at the whole GBIS pillar on Slide 21. We can see that overall, GBIS maintained a solid performance with revenues reaching EUR 2.6 billion in Q2 ’25, slightly up versus as mentioned, a very high Q2 ’24. We keep up with strong cost discipline, with expenses down minus 1% in the quarter. The cost to income ratio decreased 1.1 percentage points from 62.7% in Q2 last year to the current 61.6%.

Cost of risk remained contained at 19 basis points in the quarter. As a result of all the previous GBIS delivered net income contribution of EUR 750 million in Q2 ’25, equivalent to a high RONE up 16.8% under Basel IV. Let’s now move to International Retail. Overall, revenues continued to increase this quarter, up by 2.7% compared to Q2 ’24 at constant exchange rate and perimeter. This is driven once again by the European businesses. In Europe, loans are up 7% while deposits remained stable versus Q2 ’24 at constant exchange rate and perimeter. Revenues on the other hand, increased by 6% versus Q2 ’24. Again, at constant exchange rate in perimeter, supported by higher net income both in KB and BRD. In Africa, loans decreased by 3% versus Q2 ’24 at constant exchange rate and perimeter.

Given economic and political situations in certain countries, we observe a wait-and-see attribute in the corporate sector. On the other hand, deposits within the same perimeter grew 2% year-on-year. Revenues remained resilient, though, versus a high Q2 ’24, with an increase in net interest income of 2% versus Q2 ’24 at constant exchange rate and perimeter. Focusing now on Mobility and Financial Services, the combined businesses posted a strong increase in revenues of 11.1% versus Q2 last year. At constant exchange rates and perimeter this is excluding, for example, the disposed gas. Ayvens revenues improved strongly by 10.6%. Margins increased to 550 basis points from 539 in Q2 last year. UCS revenues were supported by lower depreciation and the UCS cost per unit are normalizing but at still a slower pace than anticipated.

They represented around EUR 1,250 per vehicle versus the EUR 1,480 per vehicle in Q2 ’24. Earning assets remained roughly stable at around EUR 53 billion on the back of proactive fleet management to favor profitability in core countries. On an underlying basis, excluding not to be the falling depreciation charges and Turkey hyperinflation adjustments, revenues fell by 3% versus Q2 ’24. Consumer Finance performed very well this quarter, with revenues up by 12.6% versus Q2 ’24, benefiting from margin expansion and higher NII, mainly in France as well as a minor positive impact from asset revaluation. We see positive growth jaws driven by higher revenues by 7.2% and decreasing costs, down 4.2% versus Q2 ’24, both at constant perimeter and exchange rate, despite an inflationary context.

This once again demonstrates the strict cost discipline across the businesses. The cost of risk stands at 35 basis points, falling from the 45 basis points in Q2 ’24. So overall, the whole pillar of mobility, International Retail Banking and Financial Services posted a net income of EUR 404 million up by 41% versus Q2 ’24, adjusting for the perimeter and exchange rates. Finally, the RONE improved 4 percentage points to 15.3% under Basel IV. To conclude now on the financial performance, let’s move to Slide 25 to the corporate center. NBI improved versus Q2 ’24, notably thanks to a proactive efficient management of excess liquidity. Operating expenses include EUR 100 million related to the Group Employee Share Ownership Program, which, as explained before, is a noncash item and, therefore, does not affect CET1 nor shareholder distribution.

In addition, Q2 ’25 included notably the disposal of Burkina Faso, both in net profit or losses from other assets. Let’s now give back the floor to Slawomir.

Slawomir Krupa: Thank you, Leo. Our economies and industries are facing multiple challenges in terms of technology, environment and social change. And navigating these complex dynamics requires, in our view, perspective and anticipation. So we announced this quarter the final composition of our Scientific Advisory Council. It consists of 8 members, world-leading scientists and experts with complementary skills. No group is better equipped in our view to help us responsibly, take advantage of the secular trends that will influence the entire world economy for decades to come. At the same time, we continue to craft innovative solutions. For instance, we recently participated in the United Nations Ocean Conference, and we acted as the exclusive adviser for the Maritime Upgrade debt fund.

Through our REED subsidiary, Société Générale completed its ninth equity investment within the EUR 1 billion envelope, which we dedicate to support leading emerging players in the energy transition. An upgraded rating at the last Sustainalytics review puts us among the top banks worldwide, and we also received the world’s best bank for ESG Award from Euromoney. As usual, let’s finish simply by looking at the facts. Our track record shows that we consistently turn our commitments into actions and our actions into tangible results. We are on track to deliver on the upgraded targets for 2025 and to deliver our plan in 2026. Now next year and for years to come, we will stay relentlessly committed to bringing costs down and increasing efficiency.

This is crucial for us and will remain crucial for us in order to consistently deliver a sustainable value creation for all our stakeholders. Thank you very much, and let’s now start the Q&A with our usual polite request to stick to 2 questions per person. The floor is yours.

Q&A Session

Operator: [Operator Instructions] The first question comes from Tarik El Mejjad of Bank of America.

Tarik El Mejjad: Sorry for my voice. Well done for those strong sets of results for the whole team. So first question on capital, please. You had a strong capital build in Q2 with a strong bps, 30 bps pre the buyback. We should be ending the year on 13.6%, if we add Cameroon proceeds 6 bps and we add the share issuance for employees of 5 bps, you are way away above your NIM requirement. First of all, can you confirm what’s the moving parts in the second half of this year in terms of capital? If I’m missing something there beyond Cameroon, share issuance and organic generation. And also, you mentioned a few times that you don’t want to build much capital excess above 13%. Is it realistic to expect more share buyback in the second half of this year?

If you start your’s in August next week, given the liquidity, you can probably finish it in the next 3 months. By the way, if you can — do you have a deadline on when you want to complete it. And you mentioned a few times in the slides in the call that this is your first exceptional. So would you be planning to do one? Is this realistic? Have you asked the ECB for another one? That’s my first question. Second one is on the targets. ’25’s new targets upgrade is welcomed and I think remains on a cautious side. But my question is more than ’26 where now it’s very close to ’25 targets, given that we expect some acceleration from many fronts, growth in France, cost synergies and so on. So what makes you think that 10% is the max you can deliver in ’26?

And when is actually your next CMD, is it something early next year?

Slawomir Krupa: Thank you, Tarik. It feels like 10 questions, but I’ll try and answer. So on capital, I mean, let’s keep it simple. We do have a high capital ratio. We did say very clearly that we do not intend to accumulate capital above our target. And we can only acknowledge that we are creating organic capital further. And so we most likely be regularly for the foreseeable future in a position to have to make decisions on how to use excess capital. We have said in the past that we will use this by being very, let’s say, rigorous in analyzing the opportunities between additional return to shareholders, in particular in the form of buybacks, which still has a high ROI, although decreasing, which is a good news, obviously, and organic growth opportunities, which are substantial in our businesses and which carry, as you know, as well, usually very high marginal rates of return on employed capital and then theoretically, at least inorganic opportunities.

So we will continue to do this. And I can only acknowledge that we’re in a position, which will lead us to have to make these decisions regularly. We don’t comment on what we filed with the ECB or when we filed with the ECB. Just look at our track record and what I just said. In terms of your second question, the 2026 guidance is not changed at this point because we don’t change intra-year longer-term targets. We will, as always, comment very precisely on them at Q4 ’25 and giving our indications for the 2026 performance. Again, it is true that if you look at the underlying performance, so if you adjust for the exceptional positive items that we had in H1, we are running slightly above 9% in terms of group ROTE. So once again, I can only acknowledge the fact, but the guidance at this point is unchanged.

But rest assured that we will do our best in a given environment to deliver the best possible results. And in terms of CMD, well, same thing, I don’t have anything in particular to announce, but we are committed to transparency. We are committed to open, precise, fact-based dialogue with our shareholders. And so it is fair to expect that we will clearly discuss the forward-looking plan at some point next year, but no decision was made as to when, how and that’s it. Thank you.

Operator: The next question is from Flora Bocahut of Barclays.

Flora A. Benhakoun Bocahut: I wanted to ask you a question on French Retail Banking revenues specifically. Simply asking why you’re not providing us with the guidance on the revenue outlook there for this year? We have a scope that is clean now in this division post Q2. We are past the half year mark. We have visibility on delivery rate, what’s going to happen actually tomorrow. So why don’t you want to provide us with the guidance on French Retail revenues? And maybe can I ask in that direction, should we expect a pickup both in NII and fees from here? So compared to the Q2 base in French Retail. That is then further emphasized by the Boursorama strategic change on the customer acquisition in 2026.

Slawomir Krupa: Thank you. On the first question, I mean the — we have not been providing this guidance to my recollection at least, I’m certain, not under my management. I think at some point, I mean, I’ll be very honest with you and very direct. At some point, these things can only be estimated and then they carry inordinate amount of let’s say, emotions. And I think it’s more important to discuss the substance, right? So the substance and it’s a little bit your second question, but the substance is we have indeed a clean slate now and we have dynamics in the French market, which are basically volumes, both in terms of deposits and loans in absolute terms, should be 0 plus in the current environment, although we had a technical beat on French GDP yesterday, but we remain confident that it’s a resilient economy with a strong corporate structure across the entire country, et cetera.

But we clearly do not expect at this point anything explosive. So on volumes, something which would be 0 plus. In terms of margins, we see a slight improvement, especially driven by the stabilization, which we discussed in the past many times in terms of the deposit mix. So lower cost of deposits because of the lowering regulatory savings rate and coupled with the stabilization, especially in terms of the site deposits. And so this will be a feature, which you understand is going to be slightly supportive, right? So we’re constructive on NII based on what I just said. And also remember, we have a progressive repricing of the back book, which in the French Retail market is obviously heavily weighted towards mortgages and long-dated fixed rate mortgages.

And that back book is slowly, slowly repriced up. And so that’s also something which is slightly supportive. So overall, you see we’re fairly constructive and that’s what I can say on NII. On fees, as you’ve seen, we’re up quarter-on-quarter and the first half to the first half of last year. And for technical reasons, flat versus Q1 ’25. It has to do with campaigns, dynamics, marketing campaigns and specific products, et cetera, but here again, without expecting something that would be in the very high single digits in terms of growth, we are constructive as well as we support a better increased momentum, more focus on origination in the retail network. And as you’ve seen, pretty strong dynamics across Boursorama, BoursoBank, private banking and, of course, the life insurance products where we have leading market performance.

So that’s the color I can give you on the revenue outlook. In terms of ’26 and going forward, basically, it’s all the same ingredients that, everything else being equal, so in that environment in terms of GDP, you will see that steady increase. Again, everything else being equal, based on the exact same ingredients that I just described.

Operator: The next question is from Matthew Clark of Mediobanca.

Jonathan Matthew Balfour Clark: A couple of questions on the CIB, please. Firstly, could you just talk about sequential GTPS revenue second quarter versus first quarter? When I try to impute what they’ve done, it looks like they came down quite a lot. So just to understand what the drivers are then — are there if that’s the correct interpretation? And whether you see the first quarter or second quarter as more of a run rate for GTPS after the tremendous growth for the last few years? And then second question is on the Bernstein joint venture in the U.S. I just thought it should have been a very strong quarter for that business. But looking at the associates line within GBIS, it has actually got slightly worse. So just to understand, is that joint venture going to plan? And why aren’t we seeing any impact from that in the associates line of GBIS yet?

Slawomir Krupa: So on GTPS, it’s very simple. It’s volume slightly up, rates significantly down, and this is one of these businesses that we have in the mix, which is directly curated to rates, which had significant tailwinds in the last few years. And this quarter, again, was experiencing these headwinds from a rate perspective. So it’s indeed down a few percentage points versus Q2 ’24, you’re right in that assumption. And again, it’s a matter only of price effect in terms of commercial dynamic and volume growth and client acquisition, we’re still growing substantially in this business. And we have invested a lot of money over the last 5 years, and we continue to invest in this business. In terms of Bernstein, you have one particular technical fact, which is Bernstein America, so our U.S. business, U.S. JV is not consolidated.

So you don’t see it in the revenue numbers. So the quarter was logically good at that unit, but we’re not reporting it in the NBI line because of the structure of the JV at this point. It might change in the future gradually to something more standard. But today, this is why you don’t see this. It’s purely technical, but indeed, from an overall perspective, in terms of revenues, integration, team dynamics. We are very happy with how it works. And obviously, we would have liked to have more volumes on the primary markets in the world, but this has for all kinds of reasons, which you know perfectly well, was subdued, but it will be another supporting factor in the future.

Jonathan Matthew Balfour Clark: Can I just follow up? I guess, why don’t we see it in the associates line, so below the operating profit line, presumably, that’s where the net profit or your share of the net profit gets booked? So I’m just curious why we’re not seeing a modest tens of millions impact there from that business? And then secondly, just coming back to GTPS, have you now digested the recent rate moves within that second quarter revenue number? Or do you maturity intermediate there, in which case we’ve still got kind of a lag to drag to come through as a kind of replicating portfolio rolls over?

Slawomir Krupa: I mean the — so on Bernstein, again, the current structure of the JV is such that the ultimate bottom line in a business which, as you know, has a high cost income ratio anyway, is more limited than what it will be down the road. So the share of the bottom line that we get from the U.S. business is lower than what it will be in the future at this point. So this is just the technical way that JV was set up at its inception. In terms of GTPS, most of the rate action happened. And then it’s just a matter which, frankly, I don’t have in my head of the average duration of some of the products, et cetera, et cetera. But philosophically, this is cash management and transaction banking. So most of the adjustment happens on a very short-term basis.

So the answer to your question is most of it is behind us. And again, just to give you a sense in terms of the volumes we’re talking about double-digit — high double-digit increases in terms of the volumes at this business level.

Operator: The next question is from Delphine Lee of JPMorgan.

Delphine Lee: My first one is on the cost management in general. You’ve done really well so far, minus almost 2.5% in the first half. I was just wondering for ’26 is the objective to have — is it specific to this year? Or can we expect also a reduction after in ’26 as well — and in ’26? And then the second question is on capital. I mean you’re at 13.5% at the end of June. And clearly, you’re going to have a bit more capital generation in the second half. I mean, you talk about 13%, but there’s clearly still a bit of buffer. I was just wondering if the intention to have — to get closer at some point to the 13% and step up the buyback? Or is it to have a little bit of room above the 13%?

Slawomir Krupa: Thank you. On cost management, overall, well, let me say this way, right, keeping with my promise not to change the guidance for 2026, but I will give you color referring you to some of the comments I made in my presentation in which I make very, very often, which is efficiency and cost structure of the bank is the #1 focus of the management team because this is the heart of our specific idiosyncratic challenge. We are very good, and I explained this very clearly at the CMD as well. We are structured historically through the cycle, very good at generating gross margin defined as NBI on RWA across virtually all our businesses if you look through the cycle. But yes, with the cost structure, which was inefficient and which is getting better, but there’s room to go further down, it must be an intense focus for the management.

It has been, you’re seeing it, and it will remain so. So based on this comment, you can expect us to continue to try to do our best to decrease structurally and continue to decrease for the years to come, structurally the inefficiencies throughout the company. Let me leave it at that. And it’s a very, very serious strong commitment of ours. In terms of the capital, thanks for the very precise question. Listen, while as we said, we will not run the show at 13.01%. That’s for sure. It’s a matter of just being serious about an important topic for any bank. But on the other hand, we will converge in terms of using the excess capital to something which is close to 13%, right? I mean, there’s no buffer on top of the buffer. At 13%, we have enough buffer to handle our destiny well in terms of whatever headwinds we may face.

So the answer clearly is over time, I’m not saying it’s going to happen in Q3, but over time, strategically, the direction is to converge to something very close to 13.1%, not being 1 basis points above. So hopefully, that gives you some clarity. But again, it’s a mix like dealing with the excess capital is a mix of intentions between shareholder return and investment in the business, which we will carry out very transparently, very openly and with a very high regard to high marginal returns, if invested in organic growth.

Operator: Next question is from Giulia Miotto of Morgan Stanley.

Giulia Aurora Miotto: So first one on BoursoBank. The target is for EUR 300 million net income next year, but given that you are so much ahead of target in terms of customer acquisition, how is the profitability of that business at the moment? Could you share some numbers on that? And then secondly, I noticed quite a big drop in loans in GBIS in Slide 39. And I was wondering what is driving that?

Slawomir Krupa: Thank you. So on BoursoBank first, and then I’ll let Leo answer the second question, which, as you will see, is a fairly technical matter. On BoursoBank, so yes, we are ahead. And so the average number of clients in 2026 and their average tenure with the bank will be higher than initially expected. The one thing that is lower than initially expected, obviously, it’s the other rates. And remember, in the way BoursoBank generates its income, it is heavily, heavily weighted towards NII. And so this is why at this point, even if we were upgrading or discussing targets for 2026, which we are not, but even if we were, we would have to take this into account. And at this point, frankly, we would not, in this hypothetical discussion that we’re not having, we would not upgrade that number because of what I just described.

And in terms of P&L drivers at BoursoBank, without going into the details because we’re not disclosing them, but you should think about this, its NII stemming a lot from deposits, from the deposit base and a certain amount of fees across a very vast product offer, but also with the USP, which is based on a fairly competitive rates on all the basic products, right? So it is highly rate dependent. And then on the negative side, which is actually booked as negative NBI, you have the acquisition costs which are all accounted for entirely the minute that they happen. So at this point in time, nothing is capitalized there. So you have the entirety of the cost of acquisition being deducted from the NBI when the acquisition of the new client happens.

So that’s the color. Leo, on the loans?

Leopoldo Alvear: Sure. Thank you for the question. So basically, the loans go down by EUR 15 billion this quarter versus Q1 ’25 and it’s basically driven by two impacts. One of them is technical and explains EUR 9 billion of the EUR 15 billion, and this is basically an overnight loan to [ back ] the funds, which was booked as the loan until Q1 ’25, and now it’s accounted as cash. And the second one, which accounts for almost EUR 5 billion, EUR 4.8 billion, it’s driven by the ForEx effect in the quarter.

Giulia Aurora Miotto: Very clear. Just a follow-up, if I can, Slawomir, you talked about the dependence on level of rates, et cetera. I keep thinking that some good NII disclosure with the sensitivities, hedges, AUM, et cetera, would be helpful. Just something to keep in mind for the future.

Slawomir Krupa: Thank you.

Operator: The next question is from Joseph Dickerson of Jefferies.

Joseph Dickerson: Could you just give us an update on the RWA trajectory because I think you’ve talked about ’24 to ’26 growth of 1%? We’re currently flat at the moment. I guess how do we think about deploying those organically in priority — order of priority? Is it Ayvens, BoursoBank and then the IB? And just a follow-up on BoursoBank, more specifically on the point that you’ve reached 8 million clients. Last year, you ran about EUR 245 million of customer acquisition costs, as you pointed out, as a contra revenue. I guess, do you start to dial that back next year and the second half of this year? I guess what’s the optimal level now of clients? Do you intend to grow it meaningfully beyond 8 million or do you intend to grow inorganically, like you did in the past with ING? I guess a little bit of color on BoursoBank there because it’s clearly inflecting in a big potential lever next year irrespective of rates.

Slawomir Krupa: Absolutely. Thank you. On the first question, I think I want to say a few things. First, we do have room in terms of organic capital allocation to business growth within that CMD guidance like you just implied. So I’m just confirming that. And that’s the spirit with which we operate. But remember, in a management framework, which we have quite drastically changed and in which we have a very, very big focus on optimizing capital allocation, and I’m trying to do our best with every penny that we invest organically. So you see here both the opportunity because there is room to deploy this capital across the businesses. I’ll go into the second part of your question in a second. But on the other hand, I will not change the management stance on the quality and rigor with which the capital is allocated.

So again, while there is capital available and will be made available — is made available to businesses organic growth, the standards of deploying it are unchanged. So don’t expect everything else being equal, anything explosive, once again, from a growth perspective there, but do expect us to increase seriously, rigorously the allocation to the businesses. Which ones? I think if I give you today the list, I would tell you first, the IB and F&A business, but once again with a big focus on the asset rotation and on being aware of the fact that the macro context, while resilient, right, clearly resilient with some uncertainties kind of abating recently, but remains potentially challenging. So with the pretty strong focus on risk management as well.

So growth opportunity, but again, rigorously executed. And then I would tell you Ayvens, but even within here, again, a very clear mandate, which is not one of the destroying value through a growth, which is unhealthy. If you look at our performance and contrast it with the market, you will see that we have a very specific focus on making sure that our GOI generation there remains healthy and that we focus, right, on the balance between margin dynamics, risks taken and growth opportunities. It’s very easy, as you know, in our businesses to generate unhealthy growth, and this is not what we’re going to do. And then it’s a little bit across all the businesses. I mean, KB, BRD do well and have room to grow in markets which are sound and exhibit healthy growth.

On the retail side, I mean the need for RWA today because of the backdrop that I gave you on the Retail in France side. Because of the macro backdrop, I mean, the need there is not very significant. So that’s for the RWAs. And in terms of the BoursoBank dynamics. So first, we will not slow down the pace in 2025 in terms of acquisition. It’s a market which is a highly competitive market. It’s a market which is, if anything, competition is increasing in this market and maintaining our leadership, leading the market in terms of acquisition and almost more importantly, in terms of client feedback and client quality, we’re still #1 in that regard in France with BoursoBank in terms of client satisfaction. And so we will continue to make these investments.

And I do believe that going forward, what we need to do is to find the right path for continued growth with more balance between the cost of acquisition, which are already decreasing and have been decreasing for a while, a focus on generating higher NBI per client at the same time as the clients mature, if you will, in the client base. But maintaining some of the competitive edge we have, and that’s basically the equation that we will have to solve for and which we will in the next few months. And organic — listen — in organic since, you brought up, I mean, I don’t see right now any inorganic opportunities that would make sense at this point. But obviously, if they were to come we would look at them. But again, with a lot of rigor and conservatism.

Operator: The next question comes from Sharath Kumar of Deutsche Bank.

Sharath Kumar Ramanathan: Sorry, I was mute. Firstly, a follow-up to the very last comment that you made on inorganic opportunities. Given that you’re tracking well above 13% CET1, one of Ayvens shareholders is in the midst of selling their stake. Is their appetite opportunistically increase the stake here given you view this business to be strategic? The second one, not a question but more a request on BoursoBank. I think it will be useful to have better disclosures to see the contribution from BoursoBank separately. Is this something that you’re willing to consider?

Slawomir Krupa: I mean starting — thank you very much for your question. So starting with the second one. I mean, we’re willing to consider anything that investors or the market community yourself are putting on the table. Now for now, we’re not planning on disclosing anything further now. But as we go into 2026, we have a very clear commitment in terms of bottom line contribution. And so we definitely will be giving you more color at least at that horizon. And what I can tell you today is that for H1, after 2024 where BoursoBank was profitable, H1 ’25 BoursoBank is profitable, profitability being defined as above 0 in terms of net to income. And when I say above 0, it’s a number which is not material at the group level, but it’s obviously quite a bit higher than 0, which evidences and that’s, I think, the important point that while at the CMD, we made a very clear statement in terms of strategic vision for this business, which is clearly growth, right?

For 100 clients that we acquire in the French market at BoursoBank, 10 of them roughly come from SocGen and 90 of them come from our competitors. So I like these maths very much. And so from this perspective, this was the statement. And we had said that we would invest EUR 150 million of negative GOI. This was the metric that we had discussed at the time at the CMD. But of course, like with everything else, we try to do better, right? We try to do better. And as we saw a path to optimize both the acquisition costs and revenue generation, at BoursoBank, we were able, actually, throughout the plan, and this is going to remain the case for the remainder of the year, to actually not spend that GOI. And we’re actually — we actually made money throughout the cycle.

So saving substantially more over the period, saving substantially more than EUR 150 million. So that’s right? I mean that’s all I can say at this point. On the inorganic opportunities, it’s important to again look at this as you have capital that needs to have a return that is healthy and that you can justify versus the other opportunities that you have. Today, we have on the return to shareholders in the form of buyback a certain level of ROI, which is high. In terms of organic growth, we have marginal returns, which are very high, again, because of virtually unlimited, virtually, right, unlimited operating leverage and the opportunity of reinvesting in portion of the minority stakes in Ayvens is one which obviously exists theoretically, at this point, we have not decided to do it.

Operator: The next question is from Alberto Artoni of Intesa Sanpaolo.

Alberto Artoni: Just two from my side. The first is more strategic. And are you comfortable with the current assets of SocGen of today? Or are you willing to consider if you’re not the best owner of everything, as you’ve said in the past? Or do you think that the journey is pretty much done? And the second question is just a little bit more color on the cost of risk, given the uncertainty that we see at the geopolitical level, macroeconomic level? I think your remarks were quite constructive, but if you can just give a little bit more color on the numbers that actually are pretty strong on that front.

Slawomir Krupa: Thank you for your question. On the portfolio of assets, well, after what we’ve done, we feel today reasonably comfortable that we’re are decent, if not the best, but very decent shareholder of most of the businesses that we either own or run within the mother company. Now what we committed to at the CMD, which is to keep a very close eye on the performance and the strategic equation of all businesses remains true. So we will continue every single day, so to speak, to monitor the performance and the changes in competitive dynamics and strategic dynamics in our assets. And we will make sure that if the parameters that I very often commented upon in this call, which are headline ROE, ROE versus cost of equity, amount of synergies, tail-risk et cetera, all these criteria if a business were to fall outside of, let’s say, what we target from this perspective, it will be instantly puts in a situation where we would review our strategic options.

But clearly, at this point in time, we are very much towards the end of this adjustment process in terms of this portfolio. In terms of cost of risk, giving you a little bit more color. Listen, today, within an environment which was of resilient growth worldwide, lots of uncertainty and lots of clients, issuers and corporates, et cetera, being in a wait and see mode, we have not seen a material deterioration in the asset quality or in the, let’s say, the macro outlook for the asset quality of our portfolio for all kinds of reasons. I mean, we do run from this perspective, a very rigorous risk management apparatus and strategy. So origination quality is one factor. But also, I mean, clients have had opportunities through the inflation cycle to rebuild somehow or increase their margins.

They have had also access to liquidity, albeit a little more expensive, but they have had access to liquidity as well. So overall, the parameters are still — frankly, we see them as very constructively across our entire portfolio, including in France, which shows good resilience. Now while uncertainties have abated a little bit this past, literally 10 days in terms of the whole tariff saga and the likes, we are still in a world where the risk of significant disruptions to international trade, to supply chain, because in the tariffs, the supply chain aspect is almost most important than — more important than the straight trade considerations. We remain in an environment where the uncertainty while lower than 3 weeks ago is still high. So from this perspective, I do expect some more prudent attitude, maybe a little less wait and see, but still some of that happening and which I also see as a stability factor in terms of the portfolio.

So at this point in time, across the entire business portfolio that we have, retail, wholesale, we still are very constructive.

Operator: The next question is from Anke Reingen of RBC.

Anke Reingen: I just have two small questions. The first is on the mix of your distribution of 50%. Is the distribution — the cash distribution in the first half a good indication for the mix between cash and buybacks for the full year? And then secondly, on your capital path, you showed 8 basis points benefit in the capital ratio from regulatory benefits. Is there anything more we should be expecting?

Slawomir Krupa: Thank you. So on the regulatory first, on the — it’s — I mean, you know the drill. The entire industry in Europe is subject constantly to all kinds of reviews by the regulators across all of the businesses. And in the past, it resulted in a number of headwinds for the industry in terms of add-ons and et cetera. But in essence, these add-ons are meant to be temporary. So temporality with the regulator is not exactly the same as with normal human being. So things tend to take a lot of time, especially when it’s on the removal of temporary add-on side. But listen, this time around, we got that the right way. And so you should not see these as substantial flows. Things will happen both ways but this will not be a substantial impact to the overall equation either way. So that’s for that. If I got your question because I had trouble hearing the beginning of your question, but if your question was 35% versus — why don’t you take that, Leo?

Leopoldo Alvear: Sure. In that regard basically what we wanted to be, it’s conservative on this front, and we want to have an interim dividend, which is lower than the final cash dividend at year-end. Dividend policy has not changed in that regard and we have a balanced mix between cash dividend and share buybacks. The only thing that we did in Q1, it’s to be conservative on the interim dividend, and that’s why it was 35%. So that the year-end final cash dividend should be higher than the interim one. But we have not changed our policy in that regard. I mean, with regards to the mix of cash and share buyback, which remain the same, and it’s balanced.

Operator: The next question is from Chris Hallam of Goldman Sachs.

Chris Hallam: I just have two — last two short ones. I guess, on the buyback, when did you apply for approval? I thought that was happening after the FRTB question was settled which I guess would mean that the approval was super quick. So I guess, is that correct? And did you learn anything from that process? And then second, slightly tangential, but we have the stress test results tomorrow night, anything you think we should look out for or consider for SocGen, in particular or for the sector more broadly considering your [ ETF ] role?

Slawomir Krupa: So on the first question, I can’t comment on the particulars, obviously, but we try to be very precise in our communication and what you described of our communication is a fact. Let me leave it at that. So on the stress test results, I mean, same thing we can’t comment, it is going to come out tomorrow. But listen, I mean, considering just the helicopter view, I mean, normally, right, in an environment which, as we discussed throughout the call, remains resilient, not extraordinarily supportive but resilient, and with, I assume, the overall progress that the industry makes under the leadership of its supervisor, I would expect things to improve, right, not to deteriorate. That’s all I can say, right, but it’s a theoretical comment.

Operator: The final question is from Pierre Chedeville of CIC Market Solutions.

Pierre Chedeville: Two questions. First question regarding securitization operation. One of your competitor insists on the fact but it’s very useful tool to manage capital. And I wanted to know where do you stand regarding this type of operation, if you have any program, any policy regarding that? Second question is regarding consumer credit. You mentioned that the situation is better. But at the end of the day, it remains quite small and not very profitable compared to your main competitors in France and in Europe. And I wanted to know if you have somewhere here a plan to develop organically or by external growth this business, which is — which seems to be in a better shape? And maybe as I am the final one, last question. Do you have any equipment rate in mind regarding protection products in your retail — French Retail banking?

Slawomir Krupa: Thank you. Thank you. So on the securitization of the SRTs, so very simple and clear answer. In our case, we use these techniques virtually only for risk management purposes, which is another way of saying that it does not have a material impact on our capital trajectory and is not intended to have one. We believe that for all kinds of reasons, overusing these two in terms of capital management is tricky, right? And we don’t want to engage in this and so we are not engaging in this. So that’s for the securitization piece. On consumer credit, listen, it’s a matter of business mix. The performance improves. It’s a business which has been challenged, obviously, in France by the whole usually rate issues, et cetera, compressing margins and at times where post COVID actually in the high inflation environment, the cost of risk has risen in the market.

And through normal adjustments, both in terms of origination criteria, better margins, no longer usury rate issues, the business is both growing at a very decent pace, but also generating better margins and better returns. And we have had a very good history in terms of profitability for this business in terms of ROE. And while, obviously, there was a compression in the context that I just described, it is now slowly converging back to the historical level. So we’re very comfortable with that business from this perspective. And today, we do not have any plans to increase its size within our business mix. It’s a good business when will run, we’re happy with it. It’s not on our exit list and has never been, but it’s not also an area of focus for anything inorganic in particular.

Last question. I mean we do not disclose these equipment rates. But as you know, and I’m sure this is also why you’re asking the question, it is a product which historically was — we were later to the game, so to speak, on the protection products, and we are focusing on the growth but we are, in terms of market rate below the best competitors that we have in France, which we see as an opportunity for further growth in terms of fees and revenues in the French retail.

Operator: There are no more questions registered at this time, back to you for any closing remarks, please.

Slawomir Krupa: So thank you very much. Thank you for your time. I know you’re very busy, so thank you very much for making the time. And listen, I wish you a nice summer, especially if you’re taking a break, and I do look forward to speaking with you again for Q3. Thank you very much again, and take care.

Leopoldo Alvear: Thank you.

Operator: Ladies and gentlemen, this concludes today’s Société Générale conference call. Thank you for your participation. You may now disconnect.