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Q4 2020 Financial Results
Frédéric Oudéa, Chief Executive Officer, presents the 4th quarter and full-year 2020 financial results
2020 Annual Results
Interview with Frédéric Oudéa, Chief Executive Officer
EuroBusiness Media (EBM): Societe Generale, one of the largest European financial services groups, reports full-year results for 2020. Frédéric Oudéa, hello.
Frédéric Oudéa: Hello.
EBM: You are the CEO of Societe Generale, how did Societe Generale perform this fourth quarter and more generally in 2020, marked by the health and economic crises?
Frédéric Oudéa: Obviously an extraordinary year for all of us. In the fourth quarter, first there is the confirmation of the rebound of the performances of our businesses. All our businesses, but in particular the improvement of the performances of our Capital Markets activities, which were impacted in the first half of the year. So we saw, for example, revenues growing compared with the third quarter of 2020.
We maintained very strong discipline in terms of the management of our costs and we also have the confirmation of the quality of our credit portfolio, of course something very important in this crisis, with a cost of risk which is under control despite a prudent provisioning.
Now, if I step back and beyond the profit of the fourth quarter, when I look at the full year, it’s a very contrasted year. First of all, of course, a year of intense commitment towards our clients and the capacity to accompany them in this crisis. From a financial and commercial perspective, two halves; A first half with the impact of the lockdowns, the generalised lockdowns and the dislocations of the markets. Then, for Societe Generale, a second half which illustrated the normalisation of our activities, the capacity to adapt. A very different second half.
Overall, when I look at the results, I can see also the benefit of a disciplined management of our costs, of our risk and of our capital because we end the year with a very high level of capital ratio. It’s very important for the future, you know it’s our safety net, but it’s also the way to finance our development. We have a very high core tier one, which is allowing us also to pay a dividend, as the supervisors have said to European banks “You can resume the payment of dividends”. Thanks to that and the quality of our balance sheet, we are happy to resume the payment of the dividend. It’s also something that is important in terms of the confidence we send to our investors.
So, all in all, a very intense, challenging year, but again a second half which was better than the first one.
EBM: Focusing on the Group’s various business lines now, what were the key trends in 2020?
Frédéric Oudéa: First, let’s start with the French Retail. Not so much change compared with what we saw in the third quarter, for example. Normalisation of the activity. Of course, the erosion of the interest margin related to low rates, negative rates even. And again, overall, good management of the risk.
In International Retail, the situation is better because we do not face negative rates. Nevertheless, we saw rates going down, so we also have an erosion of the margin in certain countries. But overall, the growth dynamics are better and the commercial activity was pretty good across the board. Regarding Financial Services, a very strong performance, I must say, at the end of this year, even better than last year for example for the Fleet Management business, so something very promising for 2021.
And again, regarding our Wholesale activity, a very strong performance for the Financing and Advisory businesses, much better than last year, and as I’ve said, for our Capital Markets, a second quarter of normalisation of revenues. It’s still a work in progress but it’s also encouraging for 2021.
Overall, as you can see, again as I’ve said, across the board, improvement in the second half compared to the first half.
EBM: Beyond this year’s results, you’ve launched a certain number of strategic initiatives, could you tell us more about them?
Frédéric Oudéa: Yes, indeed. You know this crisis, I’m not sure that it changes the world, but it is accelerating certain structural trends. And I would like to highlight in particular the importance of corporate and social responsibility and the expectations around that and, of course, the usage of digital technology.
If we start with corporate and social responsibility, it’s around how to accompany the clients in this crisis, it’s how to restructure, to build the new business models, to accompany our own staff and train, for example, for new businesses. And, of course, it’s around climate transition and, in 2020 we took very important initiatives, to reduce our footprint in the fossil energy portfolio credit portfolio as well as pursuing the development of the financing of renewables. And all these efforts were acknowledged by all the rating agencies which are specialised in CSR.
Then the second thing is digital technology, we have all used during these lockdowns more digital channels for different usages, but in particular for banking services and I think it’s very important to speed up the process of transforming our business models.
Beyond this, we have also announced very specific new initiatives regarding certain businesses, very structural ones. For example, the combination of our two French networks, Societe Generale and Crédit du Nord, to build a new bank which will provide better service to our clients, increase the level of satisfaction, as well as accelerate the development of Boursorama, which is the leading French online bank and which, of course, is a business model validated by 2020. But I could add, for example, the acceleration of the development of our Car Fleet Management business. Mobility services are also changing in this world as well as the ambitious development of our Czech Republic subsidiary, which again has strong growth potential. So, as you can see, a lot of different initiatives to build the future.
EBM: Finally, as uncertainties continue to strongly impact economies, what are your priorities for 2021?
Frédéric Oudéa: Well, of course I remain realistic. The level of uncertainty remains strong regarding the health and economic environment, and at the same time we engage in 2021 with determination and confidence that it will be a year of rebound for Societe Generale.
The priority is to execute our strategic roadmap well. I’ve just described a series of initiatives; we want to execute the first milestones efficiently. It’s true for certain specific businesses as well as to do more in CSR, complete the roadmap in terms of climate change for example as well, of course, accelerate the digital transformations.
All in all, we will also complete the strategic direction for 2025. We have - in particular regarding the Wholesale business - to explain where we want to go. We will do that in the first half, on the back of a lot of transformations which are taking place, and all in all I look at 2021 as a year of demonstration of the quality of the franchise of the bank and a year of completion of our strategic roadmap.
EBM: Frédécric Oudéa, thank you very much.
Frédéric Oudéa: You’re welcome.
“The Q4 results provide further confirmation of the rebound in our businesses observed in Q3 after a beginning of the year marked by the impacts of the COVID crisis. Confident in the quality of our franchises and our balance sheet, drawing on the exceptional commitment of our teams, in H2 we defined ambitious and value-creating strategic trajectories for our businesses, demonstrating our ability to adapt and transform in a durably more uncertain environment.
We are therefore entering 2021 with confidence and determination with, as a priority, the execution of our strategic roadmap. Consistent with our raison d’être, we will continue to support our customers in all the transformations accelerated by this crisis, whether they concern the growing use of digital technologies or increased attention to corporate social responsibility issues.”
Frédéric Oudéa, Chief Executive Officer
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