“Dear shareholders,


Q2 2020 began in exceptional conditions, with part of the global population in lockdown and numerous economies shut down. Since the start of the crisis, we have supported and accompanied our customers, thanks primarily to the substantial commitment of our teams and the increasing digitalisation of our activities, and we have protected the health of our employees. In France, in particular, we were extremely reactive in setting up the State Guaranteed Loan (PGE) aimed at securing companies’ cash flow and thereby enabling them to preserve their production capacity and jobs.


After April and May which were heavily impacted by the COVID crisis, we observed an improvement in the second half of the quarter. Accordingly, Retail Banking and Financial Services experienced a rebound from mid-May. Insurance and Private Banking proved resilient in Q2. Financing & Advisory and Fixed Income & Currencies delivered good performances. In April and May, the unfavourable market conditions continued to adversely affect market activities related to structured investment solutions, but they also saw a gradual recovery from mid-May. We finalised the strategic review of these activities during Q2. Our aim is to maintain our global leadership position in Equity structured products while reducing the associated risk profile.

Improving our operational efficiency is our priority and, at the end of April, we announced additional cost reductions. Our efforts are paying off. There was a further decline in our operating expenses in Q2 (-9.6%), with an objective of operating expenses of around EUR 16.5 billion for 2020. We will continue this effort to reduce costs throughout the year and beyond.

The increase in the cost of risk, inherent to the crisis that we are experiencing, is in line with our expectations. It can be attributed partially to the application of IFRS9 which requires us to book provisions for expected future losses, including on performing loans and normally repaid. For 2020, we expect the cost of risk to be at the bottom of the range that we indicated to the market (70 to 100 basis points of our outstandings) and the cost of risk in H2 is therefore expected to decline in relation to H1.

The Group’s balance sheet, which reflects the extent of our reserves, is robust with, in particular, a capital ratio (CET1 pro-forma) of 12.6% at end-June. Moreover, this ratio is expected to be at the top of the range of 11.5% to 12% at end-2020.

The European Central Bank recently recommended suspending any dividend payment in 2020, while stating that it will examine the situation at the end of the year with regard to 2021 dividend distributions. The Board of Directors is closely monitoring these regulatory developments.

The Group generated total net income of EUR 70 million in Q2, when restated for non-cash exceptional items not affecting our core Tier 1 capital ratio. The review of the financial trajectory of Global Markets & Investor Services resulted in the impairment of the goodwill associated with these activities for EUR -684 million and our deferred tax assets for EUR -650 million. Accordingly, our Group net income including these two exceptional items amounts to EUR -1,264 million.

 We have just experienced an exceptional situation, both in health and economic terms. Uncertainty remains but at the end of this detrimental H1, we are approaching the next few months with the prospect of a rebound in our revenues, conservative loan portfolio provisioning levels and capital and liquidity buffers enabling us to seize growth opportunities and support our customers. I am therefore very confident of our Group’s ability to overcome this crisis and adapt. 

In order to start preparing the Group's new strategic phase, I proposed on August 3rd  to the Board of Directors, chaired by Lorenzo Bini Smaghi, a change in the organisation of our Group's General Management, which was approved. The aim is to build by my side a renewed General Management team with, as of January 1st 2021, two deputy CEO instead of four and the creation of three new roles of Deputy general manager, where the new incumbents, embodying a new generation of high-potential managers, will each be devoted to one of the three major strategic issues for the Group: the trajectory of French Retail Banking, the improvement in the profitability of our Corporate and Investment Banking activities and the improvement in our operational efficiency thanks primarily to the reduction in our costs.  This team will draw on our in-house talents, with diversified and strengthened banking skills, to ensure a rapid rebound in our financial performance, accelerate the transformation of our businesses and prepare our new 2021-2023 strategic plan as soon as possible.

Rest assured of my total commitment and the commitment of our teams to ensuring the recovery of the Group’s financial performances and our collective determination to build an efficient and responsible banking model serving our customers and the economies in which we conduct our banking activities.

I would like to thank you again for your loyalty and the trust you have placed in our Group.”

Frédéric Oudéa,
Chief Executive Officer

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