Understanding our second quarter 2023 results

Letter to shareholders N°137

Dear shareholders, 

During the quarter, commercial activity was good in most of the Group’s businesses, notably solid contributions from the financing and advisory, insurance, vehicle leasing, and international retail banking businesses, as well as record revenues by Private Banking and increased revenues at Boursorama. Underlying revenues contracted by -5.4% on the Q2 22 level to EUR 6.5 billion. The decrease is notably due to unfavourable base effects on market activities whose revenues continued to be solid, but which were down in comparison to a very high reference point last year, owing to a less conducive market environment. In addition, French Retail Banking revenues were again penalised by downward pressure on the net interest margin, as was also reported last quarter. Last, the booking of one-off items under Corporate Centre also contributed to lower revenues this quarter. 

Operating expenses were contained despite persistent inflationary trends and the underlying cost-to-income ratio came to 65.8%, excluding the contribution to the Single Resolution Fund. The cost of risk stood at a low 12 basis points, reflecting the quality of our loan portfolio, with limited defaults and a level of provisions for performing loans of EUR 3.7 billion at end-June 2023.

Underlying Group net income totalled EUR 2.7 billion for the first half of the year, and underlying profitability (ROTE) stood at 9.1%. The Group also showed a solid balance sheet with a CET 1 ratio at 13.1%* at end-June 2023, which is around 330 basis points higher than the regulatory requirement, and a very robust liquidity profile of 152%, with liquidity reserves of EUR 284 billion. In this context, we confirm the launch of a share buyback programme of around EUR 440 million for fiscal year 2022.

We also pursued the execution of our ongoing strategic projects, notably the closing of the LeasePlan acquisition by ALD on 22 May 2023, the successful completion of the IT migration for the merger between the retail banking networks in France, and the signing of agreements to sell subsidiaries in Congo, Equatorial Guinea, Mauritania and Chad. In addition, the number of Boursorama clients reached the 5 million mark at the beginning of July.

Last, the new management team has been fully operational since taking office on 24 May this year and is working to prepare the next chapter of the Group’s strategy. I will have the pleasure of presenting the new strategic roadmap on 18 September at our Capital Markets Day.

I would like to express my thanks for the trust you have placed in our Group and I look forward to sharing these new strategic ambitions with you soon. 

Slawomir Krupa
Chief Executive Officer

^{*including IFRS 9 phasing, or 13.0% fully-loaded}