Société Générale SA (PNK:SCGLY) Q1 2025 Earnings Call Transcript

Société Générale SA (PNK:SCGLY) Q1 2025 Earnings Call Transcript May 1, 2025

Operator: Ladies and gentlemen, welcome to the Société Générale First Quarter 2025 Results Conference Call. I now hand over to Mr. Slawomir Krupa, Chief Executive Officer. Please go ahead sir.

Slawomir Krupa: Thank you. Good morning everyone and thank you for joining us today. I am very pleased to be here with you to present together with Leo our first quarter results. I am happy with our performance this quarter and I am proud of the work and commitment from all of the SG teams. We still have a lot of work ahead of us, but our renewed ability to execute consistently and with discipline makes me confident that we will continue to build on our strong momentum. The environment is uncertain for sure, and our progress will not always advance in a straight line, but it will be consistent and predictable. We have taken what were once merely our aspirations and transformed them into a tangible execution track record. Since the CMD, the results we deliver continue to get better.

Our strategy is paying off. Revenues are up by 10% excluding asset disposals. This is above our full year target of more than 3% growth. We committed to at least a 1% cost reduction excluding disposals. The reality is we did better than that, reducing costs by more than 4% in Q1. As a result, we reached a cost-to-income of 65% this quarter. This compares with our target of less than 66% by year end. That’s an improvement of 10 percentage points versus Q1 2024. In addition, if the taxes that are entirely accounted for in Q1 were spread equally during the year, the cost-to-income ratio would stand at 62% this quarter. Our cost of risk is low and remains below our guidance range at 23 basis points. Leo will give you more details, but I would like to flag that it includes an increase in our S1 provisions reflecting our cautious stance in the current context.

And all this leads to a sharp improvement in our ROTI that has climbed to 11%, well ahead of our end of year guidance of more than 8%. If we restate from around 200 million euro of gains on asset disposals booked this quarter, and if we consider a quarterly linear distribution of taxes, the ROTI remains at 10.9%, well above the guidance. And finally, and you know this is at the heart of our strategy, we have a strong capital position with a CET1 ratio of 13.4%, post Basel IV implementation, once again ahead of our year-end target. This is a strong set of results and as you will see on the next slide, we are in a good position to navigate in the current context. Risk management is crucial in our business, whatever the environment and if we filter out the daily noise and focus on what matters here, a couple things could happen.

The first is a global macroeconomic slowdown linked to the disruption of the international trade order. And the second is prolonged market volatility linked to the deep uncertainty. These two factors could trigger a multitude of scenarios, but whichever one ultimately emerges, we are confident in our ability to successfully navigate through it. And my confidence stems from three of our strengths. First is our capital position with the CET1 ratio at 13.4%, which translates into a buffer of around 320 basis points over MDA. Second is our diversification. We are a very diversified bank in terms of revenue sources, in terms of geographies, and by the way, as you can see, many of our core countries are among the least affected by the tariffs risk and in terms of industry sector, with a maximum sector concentration of 3.2% of our EAD and an average of 2.7% for the top five sectors.

Third is risk management. We have a strong track record in terms of credit risk management and within our market activities, we’re benefiting from the deep repositioning and restructuring we did four years ago. As a matter of strategic policy, we maintain in this business a low risk profile as we maintain our focus on stable client revenue generation at a fraction of the risks we used to take on. After a month operating in the current climate, we can make two key statements. One, we don’t see any signs at this point of deterioration in our asset quality and we have a robust inventory of S1/S2 provisions that we just further increased. Two, market volatility has been rather supportive so far and we remain confident in the future performance of the global markets business.

Finally, I think it’s also very important to stress that in the current environment, the need for what we provide will not change; financing, hedging, mobility services and advisory services across the board. New opportunities arise, particularly within Europe, and we are well positioned to capture them. Now, let me hand over to Leo to go through the Q1 2025 financial performance.

Leo Alvear: Thank you, Slawomir, and good morning everyone. Moving on with the presentation in Slide 6, we show the key drivers of our strong revenue growth in Q1 2025, the group reported a solid 6.6% increase in revenues versus Q1 2024 and growth is even higher at 10.2% when adjusting for 2024 asset disposals, which amounts to 219 million Euros, mainly Morocco’s GEV [Phonetic], or private banking, both in Switzerland and the UK. Excluding these disposals, this is comparing the same perimeter, revenues in French retail, private banking and insurance increased by 16.5% while if we also exclude the drag from short-term hedges in Q1 2024 the increase stands at 2.5% supported by fee income. Revenues at global banking and investor solutions increased by 10% over Q1 2024 driven by conducive market conditions particularly in equities as well as in financing and advisory.

Lastly, revenues and mobility, international retail, banking and financial services grew by 0.8% versus Q1 2024, again when excluding disposals. Turning to the next slide you can see the achieved cost reduction in the quarter driven by the improvement in all our operating leverages. Expenses fall by 7.6% between Q1 2024 and Q1 2025 confirming our firm cost discipline. This is equivalent to minus 4.4% reduction including disposals. The reduction is driven by lower transformation charges by 278 million Euros, as guided, which offsets the increase in the following perimeter and inflationary elements. On the one hand we had higher taxes on higher variable computation in 2024 which accounted for 29 million Euros. This is the last quarter of the Bernstein perimeter impact which is 22 million Euros, given that it was not part of the bank in Q1 2024, the M&A transaction costs stand at 5 million Euros.

As a result, we managed to improve the operating leverage of all businesses as shown on the right hand side of the slide, with particular attention to our PBI’s evolution which reduces its cost-to-income by 18 percentage points. The group cost-to-income ratio, as Slawomir has commented before, fell 10 percentage points from 75% in Q1 2024 to 65% in Q1 2025, ahead of our 66% 2025 target. Moving on to asset quality in Slide 8, the cost of risk in Q1 2025 remains contained at 23 basis points in 9 last quarters and 4 basis points below Q1 2024. This quarter was largely driven by Stage 3 provisions, which account for 330 million Euros out of the total 344 million Euros charges in Q1 2025. In parallel, total outstanding Stage 1 and Stage 2 provisions remain high at 3.1 billion Euros.

The balance is stable from the last quarter and falls slightly from Q1 2024 due to asset disposals, mainly Morocco and Chad [Phonetic]. Stage 2 provisions in particular represent 4.7% of the corresponding Stage 2 stock of loans. The asset quality remains sound with NPL ratio at 2.82% in Q1 2025 and stable from last quarter and also the net coverage ratio stays solid at 82% in Q1, up 1 percentage point from Q4 2024. Let’s now turn to capital on Slide 9 where we can see our strong organic capital generation capacity. The CET1 ratio reached 13.4% in Q1 2025, which is 300 basis points above MDA. It represents an increase of 10 basis points versus the end of 2024 having absorbed this quarter the Basel IV impact. This 10 basis point increase is explained from left to right in the slide by return earnings which represent 18 basis points after accruing 50% payout.

The positive impact from asset disposals which are 43 basis points this quarter which includes ESCAF [Phonetic] as well as private banking in Switzerland and the UK, while on the other hand the implementation deposit port had a negative impact of 48 basis points, as guided. And, finally, other impacts are broadly neutral this quarter with a 2 basis point impact. Once again our strong capital ratio sits comfortably above 13% target, which shows our discipline and strong capital management quarter-after-quarter. In addition, as you can see at the bottom right hand side of the slide, all capital ratios are comparably above the regulatory requirements. Let’s review the liquidity profile of the group in Slide 10 we have a strong liquidity profile.

LCR ratio stands at 140% and NSFR ratio is 115% at the end of Q1 2025, both ratios are well above regulatory requirements. Moreover, liquidity reserves is at the 316 billion Euros with 53% of them being cash at central banks. 54% of our long term funding program has already been executed including most of the subordinated issuances on the back of strong ratings from all agencies. The deposit base remains granular and diversified. It decreased by around 3% from last quarter in line with our steering targets and strained management of liquidity buffers. And finally, the loan to deposit ratio is stands at 77% at group level. In Slide 11 we show a summary of the P&L for the group which we will cover in more detail in the next slide. Let’s move then to the business performance on Slide 13 starting with SocGen’s network, private banking and insurance.

In Q1 2025 loans outstanding decreased by 3% compared with last year or by minus 1.8% if we exclude state guaranteed loans, biggies. This said, home loan production is increasing strongly this quarter, thanks to a strong commercial momentum and it’s up 115% versus the figures of Q1 2024. Deposits are broadly stable easing only minus 1% versus Q1 2024 which is reflected in the continued shift of inflows to private banking and life insurance products. As a matter of fact, in this regard, AUMs in private banking represent 130 billion Euros, having increased by 6% versus Q1 2024, if we’re just for asset disposals or 4 billion this first quarter. On the other hand, like insurance outstanding grew by 5% versus Q1 2024, reaching 148 billion Euros, thanks to the continuation of strong inflows, it actually increased 2 billion Euros in the quarter.

Moving on to BoursoBank, once again in Q1, the bank maintained a high acquisition pace, gathering 458,000 new clients and reaching 7.6 million total clients. In terms of client satisfaction, BoursoBank remains number one in the French banking sector and was also recognized as best digital bank in France in January this year. At the same time, assets under administration, this is deposits and financial savings, improved further by 15% versus Q1 2024, reaching a total of $67 billion, which shows that BoursoBank deposit gathering remains very strong. Similarly, gross inflows in life insurance increased by 25% from Q1 2024, with a high share of unit-linked products representing 57% of the total. Note that the bank posted a new quarterly record in brokerage volumes with 3 million market orders executed in Q1 2025.

On the lending side, total standing loans grew by 7% versus Q1 2024. Moving to the pillar level for French retail, private banking and insurance on Slide 15. I would like to stress the very positive evolution of the cost-to-income ratio which goes down 18 percentage points from 86% in Q1 2024 to 68% in Q1 2025. This movement is driven by the sound 16.5 increase in revenues when excluding disposals and the strict cost management seen in the total expenses decrease of 6.6% again when excluding disposals. In the bottom part of the P&L, we can see the cost of risk came at 29 basis points, significantly lower than the 41 basis points in Q1 2024. All this translates into a net income of 421 million Euros, equivalent to a RONE of 9.5% for the quarter.

Turning now on to markets — global markets and investor services on Slide 16. We report another solid quarter with Q1 2025 total revenues for GMIS up 10% from Q1 2024. Starting with global markets, we had a strong Q1 versus an already high base in Q1 2024. This can be seen in the 10.9% increase in revenues, which reached 1.8 billion Euros. Equities in particular posted a record quarter with revenues up by 22% versus Q1 2024. The sound performance was supported by the increased volatility during the quarter, which drove and increased in client flows and we saw particularly high volumes on equity listed products and flows activities. Client volumes remained also strong in derivatives, supporting a strong performance this quarter as well. FIC revenues fell by 2.4% versus Q1 2024 on the back of lower client activity on rates investment solutions.

The performance this quarter also reflects some margin compression in financing activities. Having said that, we do note that ForEx and rate flow performed well benefiting from the increased volatility in the market. Lastly, in security services, revenues grew slightly by 1.4% supported by strong fund distribution fees. Let’s move on to Slide 17. Financial and advisory delivered a strong quarter with total revenues of 972 million Euros, up 10% versus Q1 2024. Global banking and advisory performed well with revenues up 10.5% versus Q1 2024, notably thanks to a robust performance in asset finance, steady results in asset-backed products despite less conducive market conditions and resilient performance in M&A and DCM. Transaction banking revenues grew by 8.7%, thanks to a solid organic build of payment volumes with institutional clients and good commercial performance on the corporate franchise.

All in all, GBIS had another sound quarter with total revenues reaching $2.9 billion and growing 10% versus Q1 2024. We maintained strong cost discipline keeping expenses flat in the quarter and this combination translates into sound positive jobs [Phonetic]. Again, the cost to income ratio decreased by 6 percentage points from 67 in Q1 2024 to the current 61 in Q1 2025. The cost of risk remained low at 13 basis points and as a result of all this, GBIS delivered a net income contribution of 856 million Euros in the quarter, equivalent to a 18.7% rolling. Focusing now on international retail, overall revenues grew by 2% in Q1 compared to Q1 2024 at constant exchange rates and perimeter and this was driven by the strong performance in Europe where we saw loans up by 6% versus Q1 2024, notably in home loans, while deposits increased slightly by 1% driven by Romania.

Revenues growth was robust, up 5%, thanks to both NII and fees. Performance in Africa has been more stable. Loans were broadly flat year-on-year with a mixed momentum across geographies. Outstanding deposits on the other hand grew by 2% driven by site deposits from corporate clients. Turning now to mobility and financial services, Ayvens’ revenues were stable versus Q1 2024 with increasing margins, earning assets grew by 1.4%, margins increased by 40 basis points to 562 basis points, and both drivers offset the continued expected normalization of used car sales results per unit, which fell to 1,229 Euros versus 1,661 Euros in Q1 2024. Cost to income ratio stands at 58%, which is well in line with the guidance for 2025. On the other hand, consumer finance revenues were stable in Q1 2025 with loans still falling by 3% but at a slower pace.

All in all, the pillar of mobility, international retail and financial services posted an increase in net income of 14.5% or 24.4% when adjusting the perimeter, reaching a RONE of 11.2% in Q1 2025. This reflects disciplined cost management and lower cost of risk. The cost-to-income ratio improved 3 percentage points from 62.5 in Q1 2024 to the current 59% in Q1 2025. Revenues grew 1.1% at constant perimeter and exchange rate driven by international retail in Europe, while they’re down 7.4% versus the full numbers in Q1 2024 because of the perimeter changes. Cost increased slightly reaping the benefits from a strict discipline, 4.8% at constant perimeter and exchange rates, and cost of risk of 31 basis points in Q1 is down from 42 basis points in Q1 2025.

To conclude in the financial performance, let’s move to Slide 22 with Corporate Central. In Q1 2025, Corporate Central was close to breakeven with a net profit of 12 million Euros. And this benefited from, on the one hand, the negative results in NBI which improved versus Q1 2024, thanks to management actions and to a more efficient use of excess liquidity, operating expenses which fell from Q1 due to lower transformation charges, and in addition in Q1 2025 it includes the accounting impacts from asset to disposals of the SGEF and private banking in Switzerland and UK. This was booked in the net profits or on other losses from other assets line and it amounted to 200 million Euros. I will now give back the floor to Slawomir.

Slawomir Krupa: Thank you Leo, I’d like to say a few words about the delivery of our ESG roadmap. We continue to move forward in line with our commitments and ambitions and here what truly matters are the emissions trajectories of our financing portfolios over time and, as you can see, they are going down substantially. In the long term, nothing’s changed global warming and energy transition challenges will persist and we are progressing with the de-carbonization of our portfolios and we are supporting the financing of the energy transition. Through our policies and actions, we have received very good ratings from extra financial agencies and we have been recognized with awards for our ability to help our clients with their own transition strategies.

In closing, our targets are clear, our performance is compelling, our commitment is unwavering, in particular in terms of sustained and sustainable cost reduction, as our bank’s efficiency remains our core focus. You should continue to expect from us a consistent execution of our roadmap. Thank you very much. Let’s now start the Q&A with our usual kind request to stick to two questions per person. The floor is yours.

Q&A Session

Operator: Thank you, sir. [Operator Instructions] The first question comes from Flora Bocahut of Barclays.

Flora Bocahut: Thank you. Good morning. The first question is on cost. Costs were much better than expected this quarter. It was in particular the case in the French retail banking division. So can you just elaborate on what the drivers of the lower cost base year-on-year have been this quarter and how sustainable you think this performance is? So basically elaborate on the work you’ve been doing on the cost base here. And the second question is still on French retail, but this time on the RONE, the return on equity. I think you achieved almost 10% this quarter in French retail. Normally it’s only the beginning of the improvement in this division. So I’d be curious to know what kind of RONE you think you can get to in French retail on a multi-year view. Thank you.

Slawomir Krupa: Thank you very much. Good morning. On costs, it’s two things. First, we do have a benefit linked to the fact that we do not spend CTA that much anymore and that’s a key driver. Let’s be clear about this. Between these two quarters, Q1 2024 and Q1 2025, that’s the most important impact. Now, as I said many times during this call and in meetings with investors and in my conclusion, costs and the long-term improvement of the efficiency of the bank from a breakeven standpoint as much as from an efficiency, efficiency of spending, efficiency of investment, efficiency of our technology spend, et cetera, is a strategic core focus of ours and we are implementing constantly new ideas in this space and trying to do better, beyond the big Vision 2025 projects, which is also delivering its own share of savings.

And so this is the combined result of this focus. Now how sustainable that is? I mean, the efforts are targeted at sustainable cost reduction. So we’re really working in the weeds of again, cultural aspects, organization and ways we engage our resources, again both in terms of investments, technology, spend, et cetera, et cetera. So it is sustainable and we will continue this work. I mean, this quarter because of the CTA, the performance is particularly strong, but you should expect from us a continued focus on this topic. On the RONE side, you’re right, I think it’s 9.5%, so close to 10 indeed. And normally, as you say, it is, maybe not the beginning, because I think actually the bank and my predecessors have worked on this for a long time and we are still focused on working further on improving the efficiency and the profitability of this division.

So I don’t think it’s the beginning of the work, but it’s clearly not the end. And as I said, as far as the costs are concerned, we are going to continue to focus on this across the entire group, but in retail in particular, but also in terms of commercial momentum and in terms of making sure that we do everything we should be doing to support our clients, to acquire clients in this business, to retain client in this business. So in a simple word, to sustain the commercial performance and the commercial dynamic, we will also do that part. So the combination of the cost action and the revenue action should continue to support positive development in terms of RONE in this business.

Operator: The next question is from Tarik El Mejjad of Bank of America.

Tarik El Mejjad: Hi, good morning and congratulations on this good quality set of results. Two questions from me as well. First, I will come back on costs. So I hear you about the focus and efforts on improving cost efficiency. But if I do some, if I calculate — sorry, if I want to make sure that you reached below 60% cost-to-income target in France and the group in 2026, I calculate there is still 500 million, [Phonetic] 700 million cost savings to implement. This is considering actually consensus and not extrapolating the strong Q1 global market performance. Where are the areas that you can still work on to address that gap and should we expect more fresh announcements in the future? And then the second question on capital return; strong capital build this quarter.

Doing some simple maths, if I start with 13.4% in Q1, I deduct 35 BPs of FRPB to be conservative and add 1015 BPs of capital generation in Q2. That leads me to around 13.2% in first half. That’s more than 1 basis point above 13% fully loaded Basel IV targets. Now if I look at full year and add back FRPB because that’s not being deducted this year, your CG1 reported will be below above 13.6%, which actually could penalize your ROTE progress growth. I mean, with this in mind, is it fair to expect more distribution in the second half this year or is it fair to wait for the full year? And I would be happy to hear your thinking here. And last one, really little capital, I’m only asking because — I’m asked 10 times a day by investors. What’s your position on introducing an interim dividend for that topic?

Thank you.

Slawomir Krupa: Thank you. Thank you very much, Tarik. So on interim dividends, I’ll leave that to the one Spaniard on the team, so I’ll leave that to Leo in a second. In terms of the costs, first, as discussed in the past, you have two things that are stemming from the past efforts which are ongoing, which is one, the continued delivery of the Vision 2025 savings throughout 2025, right. I think in terms of the branch mergers, we’re now above 80%, well above 80% in terms of branch closures. That gives you a sense for where we are there. And so the full delivery and then in 2026 the full impact of the savings there, the gross savings there will be supporting the cost-to-income reduction both at retail and group level. That’s one factor.

The second one, of course, remember, Ayvens is also in the middle of substantial restructuring and merger activity. As you can see in their own figures, the cost to income is now substantially better than it was last year, in line within the range of the objectives that were given there. And so you have still actually significant improvements to come in terms of cost of income from Ayvens that will benefit once again the group. And then third, it’s the entire scope of all the efforts that I keep on referring to across our ways of working, across our ways of spending, across our ways of engaging in technology, both investments and run the bank cost, etc. So we are working across the entire bank today and we will continue to do so for the years to come in terms of improving further our efficiency.

And the combination of all three makes us reasonably confident about next year’s target. And of course I know you know, but there’s also the BoursoBank input into this trajectory in terms of the positive GOI and positive contribution of 300 million Euro, which is also going to help. And lastly, as I said in my earlier answer, we are — of course right, it’s our job; as bankers, we are also working on sustaining the revenue generation. And just to give you one example, so that it doesn’t sound like just an empty statement, our home loan production in Q1 in the French retail was up 115%. Well, arguably from a low base, but still capturing a very significant market share in the French market in terms of home loan production. And as you know, it’s an anchor product and while in itself not hugely profitable, it’s also a very low risk product but it is an anchor of the relationship and will help drive the top line up as well.

So this is the combination of the factors that are going to make us deliver on our target there. In terms of capital return, well, I mean, you said it all almost. I cannot disagree with you in terms of the fact that we have more than one basis point above 13%. And consistent with what we’ve said in the past, our target is 13%. As soon as we consider, as the Board considers and management considers, but for Board decision, ultimately that we have a sustainable buffer of excess capital above this target, we will act on it. The Board will act on it through three ways; you know it, capital distribution to shareholders, organic growth or inorganic growth. In the current circumstances, it is obvious that the first order of analysis points to rather a combination of distribution of excess capital and organic growth than to anything else.

And the main uncertainty for us to be able to qualify this excess as sustainable is indeed the FRPB and once we have clarity about this, we will make decisions, right, and that’s the spirit of it. And in terms of what’s going to preside over the decision, it is clearly a disciplined and rational stewardship of our shareholders capital. In terms of interim dividends, Leo.

Leo Alvear: So in terms of interim dividend, with my background, I think this is something that’s very common in Spain. I always thought that this was very much related to the shareholder structure, especially in Spain, where retail shareholders have a broad part of the total shareholding space and they’re more eager for cash flows than anything else. Institutional investors have always been probably more focused on buybacks, which is financially more accretive. Now this is becoming a hot topic on this regard. I think, as Slawomir said, we had a very solid capital position. We are well on track to reach our return on tangible equity targets for the year. So I don’t see any reason not to discuss this with the Board and we will do it, and it’s finally their decision to make in the future.

Slawomir Krupa: So more to come, no philosophical opposition to it.

Tarik El Mejjad: Thank you very much.

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

Delphine Lee : Good morning. Thank you for taking my questions. First of all, I’d like to ask on French retail, just wondering if you’re still confident about your previous guidance of NII being fairly stable this year. I hear your comments on your mortgage production being up quite significantly, but the volume trends are still a bit challenging, the deposit mix as well. So just kind of wondering when we are going to see a bit of that inflection. And secondly, just a very quick one on your comment around capital and distribution, does the general kind of environment and macro uncertainties around trade and tariffs change that view or do you think there is enough considering the buffer on capital to go ahead as soon as you have clarity on FRPB? Thank you.

Slawomir Krupa: Thank you. So, on your first question I see what you tried to do here, which is for me to confirm a guidance which I never gave. So that’s not going to happen. There is no guidance on NII for SocGen this year, but I’m going to give you some components which are the following, right. One we have, on the back of, as we discussed in the past, a rather conservative stance in terms of loan origination across the board. We have a trend from this perspective which is stabilizing, but which was on the negative side in terms of growth of inventories, right. So this is going to stabilize and we expect the book broadly to be also stable in terms of margins, right. So indeed this factor will be of stability, modest growth to stability.

The very strong increase in terms of home loan production, as you know, is not a big driver of NII because of the net margin in France on this product, which again is a very low risk product in France, is pretty low. The good news is that it’s positive and no longer deeply negative like it used to be in the last two years. So this will be on the margin, basically neutral, let’s call it neutral. And then from a deposit perspective, again, our expectation is that we will have something stable, stable to slightly up in terms of inventories with potentially some, let’s say, marginal negative effect from deposit beta likely compensated by the [Indiscernible], a tailwind which we already saw to have with it having gone down to 240% as you know. And we also expect the formula to be applied and which today points to a further decrease in August on this point.

So if you take all these factors, they point to something which is fairly stable and I remind you that it’s 1.061 billion this quarter, which points to, if you multiply by four to a certain number, which is not our guidance. So, that’s on French retail. Capital and distribution, the short answer is our target is 13. So when I took over as the CEO of the group, as you certainly remember, this was a major decision that was taken by the Board at my recommendation and obviously was framing somewhat part of our strategy for this first cycle of three years. And it was precisely the idea that 12%, the previous target, was not enough, was not enough to be comfortable, to have the right strategic autonomy in terms of weathering crisis, in terms of seizing opportunities, et cetera, et cetera, right.

And so this is why we moved from 12 to 13, which is a substantial increase in the buffer that we have over the MDA, and precisely so that when things get more uncertain and or opportunities arise, we don’t have any pressure from this perspective. So this is the answer. The target doesn’t change today because of the current environment and that’s, I hope, clear.

Delphine Lee : Great, thank you very much.

Slawomir Krupa: Thank you.

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

Matthew Clark: Hello. So firstly, another question on capital, please. Could you say whether bar breaches or counterparty risk or anything like that as a result of April volatility are likely to have a noticeable impact on your risk-weighted assets for the second quarter? Just any comfort you can give on how you fared in the recent volatility. And then a sort of similar question, but from the opposite direction. Your market risk went down in the first quarter, despite clearly lots of opportunities in the market. Do you think you were leaving money on the table there? Could you be more aggressive or do you think that really you were deploying as much capital as you think it was prudent to do in that environment? And then a final question on French retail, NII, again, when I try to reverse out the scope impact of the sale of Switzerland from your year-on-year growth numbers, it sort of suggests a 30 million-ish impact there, which seems a bit high, so intuitively to me.

So can you just confirm what the scope impact of the first quarter versus fourth quarter was on NII and then what the remaining impact that’s yet to come through in subsequent quarters is from the sale of the UK business? Thank you.

Slawomir Krupa: All right, so was there any noticeable impact on our market risk in Q2? No. Without going too much into the details, the answer would be no, so market risk down. Are we leaving money on the table? I mean, clearly, right, when you run a bank you can always take more risk, right; that’s always an option, it’s not ours. I think we have, and I have a pretty consistent track record of trying to balance the opportunities with risk management. And I think in specifically the global markets, as you can see, we’re faring well. We are going to be most likely in a central scenario above the top range of our guidance by the end of the year given the performance of Q1. But I want to emphasize that indeed this performance is achieved with minus 70% on our stress test consumption versus 2020.

So it is a strategic stance that we have in this business to run it with a low risk profile and that’s not going to change. In terms of the impact of the private banking disposals, it’s 35 million per quarter of NII that was sold, if you will, and it was — the closings were during the middle. I mean both, if you balance both, it was mid quarter, right. So you do the math but more or less 35 million Euro of NII that was sold, 35 million Euro per quarter.

Matthew Clark: And that’s both businesses, UK and Switzerland?

Slawomir Krupa: Yeah.

Matthew Clark: Okay, thank you.

Slawomir Krupa: Thank you.

Operator: The next question is from Giulia Aurora Miotto of Morgan Stanley.

Giulia Aurora Miotto: Yes, hi, good morning. My first question is on this year’s target; ROTE above 8%, cost-to-income below 66. Why not upgrade these targets because it seems like you are way ahead of them? Is there anything negative you see coming or — yeah, any comment there? And then secondly, Spanish banks have a very good asset liability management disclosure in terms of hedges, in terms of asset portfolio, duration, yields and all of that. Leo, is there a plan to bring something similar to SocGen because I think the market would benefit from better visibility on hedges. And I’m not talking about just French retail. I know we talk about it a lot in general, but I think having a better understanding of the group NII evolution would be beneficial. Thank you.

Slawomir Krupa: Thank you. So on targets, listen, I mean, the statement we want to make is the following. It’s twofold. One, we historically tend not to change targets during the year because again, right, to some extent our job is to run the bank. We gave you a vision at the beginning of the year in some form of a central scenario about where we wanted to land at a minimum. Right, of course, that’s one statement and so as a matter of policy, we tend not to change the guidance. Second statement, of course, in a central scenario, in our current central scenario, based on what we have done in Q1 and what we see of April, so to speak, we do expect in the central scenario to outperform our targets. In terms of ALM well, listen, you have various circles, right, in terms of benchmarks.

Our first circle is France and we’re trying to be among the best in terms of disclosure in France. So you have a number of data sensitivities that we’ve given in the past, of course, in terms of the overall sensitivity to rates. But we also gave way back at the CMD, I think actually 18 months ago, some indication of the sensitivity in terms of site deposits, inventories, et cetera. So, I mean, we are going to continue to monitor what the benchmark is and clearly, I mean our general stance is to be as transparent and as precise as possible, and so we will continue to try and improve that. That’s all I can say at this point.

Giulia Aurora Miotto: Thanks. Yes, we are asking the same question to the other French banks. I think the French are good at disclosing, at disclosing these things. So I would benchmark SocGen against the Pan European banks. But thank you very much.

Slawomir Krupa: We choose our benchmark eventually, right? I mean, I’m with you, I’m with you.

Giulia Aurora Miotto: Okay, thank you.

Operator: The next question, sir, is from Pierre Chedeville of CIC Market Solutions.

Pierre Chedeville: Yes, good morning. I have one question regarding SGSS. I know that your strategic review is a constant process, but I was wondering if now you consider that SGSS is complementary from your activities in global markets, for instance, or global banking. What is your view on this asset? And regarding asset financing, you mentioned a good performance this quarter and I was wondering what type of assets were you financing, shipping, aircraft or anything else? And how do you see the evolution of asset financing in the current environment? Thank you.

Slawomir Krupa: Thank you. Thank you. On the SGSS business, let me make two statements, right. One, it is a business in our shop, which is deeply embedded in the value chain of the group. So it’s a business which obviously works with a number of our GBIS clients. And not only we have issuer services, we have investor services there, we have a retail component which is also important, very much connected to obviously our retail businesses in France. So from this perspective it is complementary to our activities and it is part of what we need to take into account when considering strategic aspects around this business. On the other hand, it is also clear that it’s a fundamentally scale driven business. And there I would not surprise you by saying from a scale perspective, it’s probably something that is a bit of a bind for us at this point, right.

And so as in everything within any strategic consideration, you want to balance all the aspects and make sure that you have a sustainable business. And so we’re constantly, like for any other business in our portfolio, making sure that we both understand what is the standalone capacity for a given business to develop, to grow at a sustainable pace and with a decent contribution to the group profitability versus what are the other options and this is no different for SGSS but again, it’s a little bit of both right scale questions. On the other hand, high level of complementarity and synergies within our group. In terms of the asset finance, it’s mostly infrastructure and some real estate which, you know, fueled the growth this quarter. I mean going forward it’s the way we think about this in the end is, are we financing the right assets from an economic cycle perspective, from a long-term investment rational perspective, in terms of the infrastructure and there many opportunities exist, as you know, because many regions and countries in the world have a profound need to deepen, expand, better their infrastructure and we are there for this all over the world.

And from this perspective it’s a very diversified business and second at the right price. And so this is what drives our culture here because we are focused obviously on the long-term risk management of the bank in this business, as you know, and it has a very strong track record, has had for decades, and so we’re still focused on this. We believe that depending on the macro scenario within an unchanged base case scenario of, let’s say, slower yet clearly positive growth globally, we think it’s a business which is going to thrive; in a scenario where there’s a bigger downturn, bigger slowdown, it’s a business which is going to slow down, but again the good news is that some of that is linked to critical infrastructure that will not be stopped in terms of investment policies, et cetera anytime soon.

Pierre Chedeville: Okay. Thank you very much.

Slawomir Krupa: Thank you.

Operator: The next question is from Kiri Vijayarajah of HSBC.

Kiri Vijayarajah: Yes, good morning everyone. A couple of questions if I may. So firstly, just on your IFRS 9 provisioning and your macro scenarios, assumptions, etc. When I look at Slide 4 and that box on the left is the message that the tariff impact and the fiscal stimulus side largely offset each other. So you’re kind of confident that there’s no need to alter your input assumptions for now or is it more a case that actually you’re going to have to wait until mid-year or even year end to make a more thorough assessment as things get a bit clearer. So how should we interpret the message on the macro assumptions for the purposes of IFRS 9? And then on the excess capital position at Ayvens. I know it’s very, very early days, but hypothetically if Ayvens were to do a share buyback, would SocGen participate pro rata, would you like to let your percent ownership in Ayvens creep up, so just your thoughts there because Ayvens as well is in a position where they should be contemplating extra capital return as well?

Slawomir Krupa: Thank you. Thank you on the first topic. So maybe let me explain once again what we’ve done this quarter. You know, most of cost of risk is a fact, not an opinion, right, and there’s a dimension of opinion in the forward looking provisions of course, but which still need to be grounded right in a proper analysis, proper scenario development and proper documentation. So what happened this quarter is our standard NCR on the back book, if you will, was very low, helped on the S1/S2 side by a write back on a significant single counterparty provision that we had, which we wrote back and this is why you see only 14 million, if I’m not mistaken, which went into increasing the S1/S2 inventory, but it actually is significantly more because of that write back.

So we took a position to cover some of the uncertainty that was rising clearly in Q1 in terms of forward looking and it’s, let’s say, more substantial number than 14 million opportunity and this is why we feel comfortable at this point. Now, to your very statement about the thorough assessment and the timing of it, you are absolutely right. It is way too soon to have a final opinion on the topic. And as I said, depending on where the tariffs thing lands, but also on how beyond the mechanical adjustments in terms of supply chain structure, in terms of regionalization of production for our clients, et cetera, it will come cause disruption bigger or smaller depending on the tariffs, et cetera, and it will impact the macro scenario in ways which at this point we cannot yet characterize.

Now we have — already before that we had a pretty conservative macroeconomic scenario which we have adjusted slightly downward to something which remains positive in terms of global growth at this point, yet clearly muted in a number of jurisdictions and something around that kind of central scenario. So depending on the outcome, yes, we might revise that, but obviously it could be revised both ways to some extent we don’t yet know. And then the other impact, and that’s not really your question is obviously market volatility, but I spoke to this earlier, we do maintain a conservative approach in terms of working through the volatility and it is been supportive of our business so far. In terms of the excess capital at Ayvens, like for SocGen, we do not have as a policy to run excess capital in Ayvens and this will be considered in due time by the Board of Ayvens and we will act as a rational shareholder.

Now increasing our participation further is a matter of strategic decision and a matter of managing excess capital, which is going to be assessed within that kind of effort by the SocGen Board when the time comes.

Kiri Vijayarajah: Understood. Thank you, Slawomir. Cheers.

Slawomir Krupa: Thank you.

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

Anke Reingen: Yeah, thank you for taking my questions. The first one, sorry, just coming back on costs, I just noted the slow growth in the cost in CIB in spite of the strong revenue growth. And I just want to make sure that’s basically because some of the cost savings coming through, not because there could potentially be like a true up later in the year. And in terms of cost savings, I don’t know if you’ve given ever like an absolute number, your target for 2025 and maybe just on how far or how much is realized at the Q1 stage. And then secondly on BoursoBank, I mean, the new acquisitions in Q1 are still running at a relatively high level. I’m just trying to understand if you changed anything in terms of your view slowing down customer acquisitions or, I mean, is it now cheaper or more opportune to grow the customer base at the moment? Thank you very much.

Slawomir Krupa: Thank you. So on the cost side, within GBIS, very simple statement, the variable compensation linked to the performance of Q1 has been accounted for. So there will be no true up based on this and so the number you see is the real number, and indeed it comes from a combination of higher cost, mostly linked to performance — I mean, linked to the higher performance, offset by continued efforts on the cost base, like I said, a focus of ours across the entire group. I’ll leave the second portion of your cost answer to Leo in a second. And I’m going to address the acquisition levels in BoursoBank. So the strategy for BoursoBank is unchanged, meaning it is maximizing the growth potential in terms of client base, in terms of client acquisition for this asset, which again is of strategic importance for SocGen and actually for the French market, I would venture, in terms of retail banking for the next decade.

And we are going to continue to act on the opportunity, if you will, within the framework of our strategy, which was acquisition with up to 150 million Euro of negative GOI investment. And the good news is that we’re doing much better from this perspective because we are operating the strategy, the growth strategy, at basically zero net income for this business. So BoursoBank continues to deliver a slightly positive net income to the group, which is again better than what we initially had intended to do, while maintaining a very high pace of high quality origination and with maintaining a very high ranking in terms of client and customer feedback, customer quality being number one once again, again, and with a very low churn. So right now we’re operating the strategy in a very successful way.

We continue to do so within the framework of the CMD strategy. Leo, just on that one last point on costs.

Leo Alvear: Sure. So, hi, good morning. Basically we have given a guidance for 2025. Our guidance was that after disposals, we expect our cost line to go down 1% in net terms versus 2024. So this compares to the 4.4 that we had in the quarter. Of course, this quarter, it was impacted by a significant reduction in transformation charges versus Q1 last year but there’s still some more to come in terms of lower transformation charges this year. We did around 650 last year. We are expecting to do around 300 this year. So that should be a total of 350 down. We did around to 80 in the first Q. And then also we had some extraordinaries in Q1 which we also — I also tried to tackle before, like the taxes on the variable compensation, which is a one-off for Q1, and also the Bernstein perimeter effect, which will not be there in the coming quarters.

In other words, we are very much committed to actually probably exceeding our target in this minus 1% net cost reduction for the year.

Anke Reingen: Thank you.

Slawomir Krupa: Thank you.

Operator: The next question is from Jacques-Henri Gaulard of Kepler Cheuvreux.

Jacques-Henri Gaulard: Yes, good morning. Well done on the results. Two questions. First on the corporate center, on the Slide 22, you’re mentioning the management action to more efficiently use excess liquidity. Can I assume that this improvement is something that could actually linger now structurally in the corporate center? Just try to get the guidance up there just in case. And the second question, more generally, is on the equities business, on which really you have phenomenal performance, which is not totally intuitive considering that some of your competitors have been much more vocal about how much they spend and everything. What is your ambition for that business, eventually, I would say two, three years down the road, and maybe a little bit link that to your fixed income business, which is probably not as big as you would wish it to be, or do you view those two businesses are a little bit more independent? Thank you.

Slawomir Krupa: So on the first question, I’ll leave that to Leo, but I’m going to start by answering the second one. Thank you very much, Jaco. So I mean on equities we have the ambition of continuing to operate this business with a very much low risk profile and contained risk profile. If you compare to our historical, let’s say, management of this business, especially if you take the reference point of 2020 and I’ve given the figure about the stress test, which I think is eloquent, which is synthetic but eloquent. So we want to continue doing this while continuing to enhance our client footprint. In the end, this is the strategy, right, so making sure that while not substantially increasing our risks, we continue to increase the depth of the client franchise.

And for instance the investment in Bernstein was part of this strategy. As you know, only part of Bernstein is today integrated in the top line of the equities, but we continue obviously to go through the integration and improve our performance there. It is very good in terms of the secondary flows. The ECM part is obviously a little subdued but we are very confident that this will contribute to this increase in client revenues at that part of the market shop. In terms of the fixed income, it is somewhat independent. I mean it’s a different asset class that has its own opportunities and challenges in given markets. As you know, we have a footprint which is slightly different from our peers. So we tend to be overweight on rates, right. And so when we have strong trend and strong opportunities from a hedging perspective — hedging needs perspective for the clients, et cetera, we tend to fare well and better, let’s say, than average.

When it’s a more commodities or credit driven situation in a given quarter, we tend to fare less well than the others. I’ll make one technical comment on this in a second. And then and lastly when it’s a trend which is — and remember also commodities is something we don’t do anymore in this business like the way we used to 10 years ago. And so these are usually like the discretionary discrepancies you will see between our performance and the performance of others depending on what the trend were at the sub-asset class level. One technical comment; remember, part of what is in the credit business elsewhere, part of it like the one which is linked to asset-backed products and securitization, in our case is largely accounted for in the global banking business, right, because historically this is how we developed this business.

And so what you see sometimes is that part of that credit content over performs at the global banking division rather than at the FICC division, it was for instance the case last quarter. So that’s for that business and the ambitions again, right, I mean it is to deliver within the range, listen, most likely towards the top end of the range or slightly above the range. When we will update the strategic plan at some point we will obviously make sure that we update very thoroughly this part of the guidance. Leo?

Leo Alvear: Sure. So just as a reminder, the corporate center has basically two main goals; first, to manage the structural interest rates and exchange rate risks for the group and second to steer the scarce, this is liquidity and capital. In other words, we have the cost of the buffers above the requirements predatory minimum or the internal targets for both liquidity and capital kept at the group level. On this regard, we have launched several initiatives to progressively reduce the cost borne by the corporate center by for example optimizing the level of our liquidity which is what we have done this quarter. We were operating with high levels of liquidity last year. LCR was as high as 160% plus at the end of last year. So we have started to reduce the burn of that excess liquidity which we don’t need to steer our business.

We have guided before that we want to run the bank with an LCR in the region of 130%. So what we did this quarter, it is we reduced the surplus of cash basically through lower borrowing of very short term cash by the treasury and a greater consumption of cash by the businesses. So it’s the normal activity that we want to foster in the coming quarters which is to steer in a better way the corporate center by reducing the burn of this excess of liquidity and capital.

Jacques-Henri Gaulard: Thank you.

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

Sharath Kumar: Good morning. Thank you for taking my questions. I just have one left. Can you provide us the USD exposures in terms of revenues and costs? Also is there any CET1 sensitivity on account of the USD depreciation? Thank you.

Slawomir Krupa: Thank you. I’ll leave this question to Leo.

Leo Alvear: Sure. So basically we have sensitivity of around 1 — less than 2 basis points for a 10% appreciation or depreciation. Actually if the dollar depreciates, we have negative impact of a little bit less than 2 basis points every 10%, and again if the dollar appreciates, it’s the other way around, so we have a positive sensitivity of around close to 2 basis points for these 10% movement. As for the P&L, actually our sensitivity to a 10% move, it’s less than 2% of GOI, again, in the same direction. Depreciation would be bad for the bank and appreciation would be good for the P&L.

Sharath Kumar: Thank you. Very clear.

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

Joseph Dickerson: Hi, thank you. Firstly, just a point of clarification on the interim dividend consideration. I presume that’s for this year’s dividend. Can you clarify that? And then going back to the question on BoursoBank, clearly by the end of Q2, assuming similar run rates, you’ll be at or about the 8 million magic number for customers, would you expect in the second half that some of the customer acquisition costs can fall away so that next year we’re still looking at greater than 300 million of earnings? And staying on Bourso, the 16% deposit growth, has there been any amplification in the first quarter from the BoursoFirst launch in December? Thank you.

Slawomir Krupa: So, on the interim dividend, yes, the answer is yes, it’s this year’s business, not without prejudice to the decision, but it’s this year’s business. In terms of BoursoBank, so the idea is we again committed to the growth strategy up until the end of 2025 with the idea that we would spend 150 million Euro of negative GOI, so to speak. So we’re doing much better in terms of the spent and we’re doing well in terms of acquisition and we’re going to continue to do this until the end of 2025, also, because as you implicitly pointed out, remember, the rates are going down, right. So from this perspective, the more customer and inventories of deposits and loans, et cetera, we have the better for the 2026 performance.

Lastly, in terms of the deposit growth versus client acquisition, I think it’s 20% client acquisition, 16% deposit growth, which by the way, shows you the value creation that happens substantially, right, as we execute this growth strategy. It is with high content and not just client numbers. It’s with high content because BoursoBank is a full-fledged bank with a deep and wide product offer, right. Is this helped by BoursoFirst; right now, not yet in a material way, at the size that BoursoBank has today. But the first results are very encouraging and while I’m not going to disclose the number, but the average balance per BoursoFirst client is very high and more of a, let’s say, lower level of retail private banking rather than retail banking, right.

So we’re very much encouraged but it doesn’t yet show, you know, in the 45 billion Euro of deposits for BoursoBank.

Slawomir Krupa: So I think there’s no more questions, so let me just say two more things before I conclude. One, we have posted a very strong performance which puts us well ahead of the annual targets, right. So today we are in a position that in a central scenario we are likely to outperform them. And in terms of the capital distribution because it was logically a focus of this call, again, right, everything above 13 sustainably is excess and the core trigger for considering the strategic decision by the Board is the final decision on FRPB, which we expect in Q2 and so based on this market factor — market fact we will move on to make a decision on the excess capital management. With that I thank you very much for your time and I wish you a good busy day and see you I mean or talk to you in July for the Q2. Thank you very much. Take care.

Leo Alvear: Thank you very much. Bye.

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