Societe Generale(US:SCGLY)2024-08-01 20:44Financial Data and Key Metrics Changes - The group's net income improved by 24% year-over-year, reaching €1.1 billion in Q2 2024, with a quarterly ROTE of 7.4% [2] - Revenues increased by 6% compared to last year, totaling €6.7 billion in Q2 2024, driven by strong performance across most business lines [2][3] - The cost-income ratio improved to 68.4% for the quarter, moving closer to annual targets [2] Business Line Data and Key Metrics Changes - In French Retail, net interest income (NII) increased by over 10% year-over-year, but faced headwinds from higher deposit beta and subdued loan origination [12][10] - Global Banking and Investment Solutions (GBIS) revenues rose by 10% year-over-year to €2.6 billion, with strong contributions from Global Markets and Transaction Banking [4][16] - International Retail Banking revenues increased by 3% year-over-year, with loans and deposits up 6% and 8% respectively in Europe [18] Market Data and Key Metrics Changes - The loan-to-deposit ratio stood at 75% at the group level, with deposits growing by around 2% compared to Q1 2024 [8] - The cost of risk remained stable at 26 basis points in Q2 2024, in line with expectations [6] Company Strategy and Development Direction - The company is focused on simplifying its business portfolio and executing its strategic plan to build a more profitable bank [3] - The development of BoursoBank is a key strategic initiative, reaching 6.5 million clients and launching a €1 billion investment for energy transition [3][20] - The company aims to maintain a disciplined cost management approach to achieve strong positive jaws in a challenging economic environment [2] Management's Comments on Operating Environment and Future Outlook - Management noted a muted market environment in France, impacting loan origination and leading to a cautious origination policy [10][12] - The company expressed confidence in achieving its capital targets, expecting the core Tier 1 ratio to remain above 13% by year-end [7][24] Other Important Information - The liquidity profile of the group is robust, with a strong LCR of 152% and NSFR of 118% [8] - The net coverage ratio remains high at 80%, indicating strong asset quality management [7] Q&A Session Summary Question: Insights on French Retail NII guidance - Management explained that the revised guidance for French Retail NII is influenced by higher deposit beta and lower loan volumes, with a cautious outlook for recovery [21][22] Question: Capital distribution assumptions - Management confirmed that the capital distribution policy remains unchanged, with a focus on maintaining a strong capital trajectory [59][60] Question: Trends in NII and lending activity - Management acknowledged the challenges in deposit gathering and the cautious approach to lending, emphasizing the need for a prudent origination policy [26][31] Question: Asset disposals and capital generation - Management indicated that asset disposal processes are underway, with no specific updates but a commitment to conservative portfolio management [50] Question: Cost of risk and asset quality - Management noted that the cost of risk in France is primarily due to specific market conditions, with no overall deterioration in asset quality observed [50][51]