Societe Generale: Results at 30 June 2020 Paris Stock Exchange:GLE - GlobeNewswire

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RESULTS AT JUNE 30TH 2020

Press release
Paris, August 3^rd 2020

Q2 20 AND H1 20 PERFORMANCE MARKED BY THE COVID CRISIS; REBOUND FROM MID-MAY
French Retail Banking and International Retail Banking activities impacted in the first half of Q2 20; rebound from mid-May
Resilient activities in Insurance, Private Banking and Transaction Banking
Good performance in Financing & Advisory and Fixed Income & Currencies; ongoing unfavourable market conditions for structured products in April and May and gradual recovery from mid-May
Non-cash exceptional items related to the review of the trajectory of Global Markets & Investor Services: impairment of goodwill for EUR -684m and deferred tax assets for EUR -650m
Group net income of EUR -1,264m in Q2 20 (EUR -1,590m in H1 20) and Group net income restated for non-cash exceptional items of EUR +70m in Q2 20

SHARP DECLINE IN COSTS
Decline in operating expenses of -9.6% in Q2 20 and -5.8% in H1 20, reinforcing the objective of underlying operating expenses of EUR 16.5bn in 2020
Objective to decrease costs in the medium term

HALF OF THE COST OF RISK IMPACTED BY IFRS9 EFFECTS AND COUNTERPARTY RATING DOWNGRADES
Net cost of risk of EUR 1,279m in Q2 20 (x4 vs. Q2 19), including EUR 653m related to provisions for expected credit losses in Stage 1 and Stage 2; Cost of risk at 81 basis points in H1 20
2020 cost of risk expected to be at the low end of the 70 to 100 basis points range  

SOLID CAPITAL AND LIQUIDITY POSITION
CET1 ratio of 12.5%⁽¹⁾ (12.6% pro-forma⁽²⁾) at June 30^th 2020, i.e. nearly 350 basis points above the regulatory requirement
81% of the financing programme achieved; LCR of 167%⁽³⁾
CET1 ratio expected to be at the high-end of the 11.5% to 12% range at end-2020

FINALISATION OF THE STRATEGIC REVIEW OF STRUCTURED PRODUCTS
Maintain a global leadership position in Equity structured products, recognised by our clients, and reduce the associated risk profile; improving the profitability of Global Markets through a reduction in costs of around EUR
450 million by 2022-2023

Frédéric Oudéa, the Group’s Chief Executive Officer, commented:
“During the first half of 2020, Societe Generale successfully adapted to the consequences of the health crisis and was therefore able to effectively support its customers and employees, thereby strengthening its position as a trusted partner. While April and May were heavily impacted by the reduction in activity of numerous economies around the world, the rebound in activities from mid-May is very encouraging. Drawing on a very solid capital base and a loan portfolio confirming its intrinsic quality, the Group will continue to adapt its activities to the new post-COVID crisis environment, extending in particular the efforts to reduce costs. The Group is already working on new initiatives to build its next strategic stage (2021-2023) focused around three priority objectives, customer centricity, corporate social responsibility and operational efficiency based on digital technologies.”

1.      GROUP CONSOLIDATED RESULTS

In EURm	Q2 20	Q2 19	Change		H1 20	H1 19	Change
Net banking income	5,296	6,284	-15.7%	-13.5%*	10,466	12,475	-16.1%	-14.2%*
Operating expenses	(3,860)	(4,270)	-9.6%	-7.7%*	(8,538)	(9,059)	-5.8%	-4.0%*
Underlying operating expenses(2)	(3,984)	(4,152)	-4.0%	-2.0%	(8,185)	(8,500)	-3.7%	-1.8%
Gross operating income	1,436	2,014	-28.7%	-25.9%*	1,928	3,416	-43.6%	-41.6%*
Underlying gross operating income(1)	1,312	2,132	-38.5%	-36.2%	2,281	3,975	-42.6%	-40.9%
Net cost of risk	(1,279)	(314)	x 4.1	x 4.1*	(2,099)	(578)	x 3.6	x 3.7*
Operating income	157	1,700	-90.8%	-90.4%*	(171)	2,838	n/s	n/s
Underlying operating income(1)	33	1,836	-98.2%	-98.2%	182	3,415	-94.7%	-94.6%
Net profits or losses from other assets	4	(80)	n/s	n/s	84	(131)	n/s	n/s
Underlying net profits or losses from other assets(1)	4	4	+0.0%	-0.8%	161	6	x 26	x 80.3
Impairment losses on goodwill	(684)	0	n/s	n/s	(684)	0	n/s	n/s
Income tax	(658)	(390)	+68.7%	-69.4%*	(612)	(645)	-5.1%	+3.0%*
Reported Group net income	(1,264)	1,054	n/s	n/s	(1,590)	1,740	n/s	n/s
Underlying Group net income(1)	8	1,247	-99.3%	-99.4%	0	2,332	-100.0%	n/s
ROE	-10.9%	6.9%			-7.2%	5.5%
ROTE	-6.5%	8.3%			-5.3%	6.9%
Underlying ROTE (1)	-1.3%	9.7%			-1.3%	9.1%

(1)    Adjusted for exceptional items and linearisation of IFRIC 21

Societe Generale’s Board of Directors, which met on July 31^st, 2020 under the chairmanship of Lorenzo Bini Smaghi, examined the Societe Generale Group’s results for Q2 and H1 2020.

The various restatements enabling the transition from underlying data to published data are presented in the methodology notes (section 10.5).

Net banking income
Q2 2020 was heavily impacted by the Covid-19 global health crisis and its economic consequences. As a result, the Group’s net banking income was down -15.7% vs. Q2 19. It was down -16.1% in H1 20 vs. H1 19.

Marked by the lockdown in April and May and the recovery in activity from mid-May, French Retail Banking’s net banking income (excluding PEL/CEL provision) was down -13.5% vs. Q2 19 (-10.8% excluding adjustment for tax related to commissions of EUR +61 million in Q2 19) and -7.5% vs. H1 19.

International Retail Banking & Financial Services saw revenues fall by -10.8%* vs. Q2 19 and
-4.7%* vs. H1 19. International Retail Banking revenues were 8.9%* lower in Q2 20, reflecting a significant decline in activity in April and May and a rebound in June. Insurance revenues were down -7.9% (-7.1%*) vs. Q2 19 given the unfavourable conditions in the financial markets, while Financial Services to Corporates’ revenues were down -20.9% (-17.7%*) vs. Q2 19.

Global Banking & Investor Solutions’ net banking income fell by -17.0% in Q2 and by -22.2% in H1 in an exceptional market environment that impacted Global Markets’ revenues.

Operating expenses
Operating expenses declined -9.6% in Q2 20 vs. Q2 19, to EUR 3,860 million, and -5.8%, to EUR 8,538 million in H1 20. Underlying costs came to EUR 3,984 million in Q2 20 and EUR 8,185 million in
H1 20.

All the businesses saw substantially lower costs in Q2 20: -8.5% in French Retail Banking, -7%* in International Retail Banking & Financial Services and -18.0% in Global Banking & Investor Solutions
(-9.2% when restated for the restructuring provision recorded in Q2 19 for EUR 227 million and the increase in the resolution fund of EUR +38 million in Q2 20).

The trend was also downward in H1 20: -5.3% in French Retail Banking, -2.0%* in International Retail Banking & Financial Services and -10.0% in Global Banking & Investor Solutions.

Underlying operating expenses are expected of around EUR 16.5 billion in 2020.

Cost of risk

The Group’s commercial cost of risk (expressed as a fraction of outstanding loans) amounted to 97 basis points in Q2 20, higher than in Q1 20 (65 basis points) and Q2 19 (25 basis points), or EUR 1,279 million. The net cost of risk in respect of loans classified in Stage 1 (performing) and Stage 2 (underperforming) amounted to EUR 653 million including EUR 490 million for the impact related to the review of macro-economic scenarios on the estimate of credit losses.

French Retail Banking’s cost of risk amounted to 85 basis points. The cost of risk of International Retail Banking & Financial Services and Global Banking & Investor Solutions came to 125 basis points and 95 basis points respectively.

The commercial cost of risk stood at 81 basis points in H1 20 and is expected to be at the bottom of the range of between 70 to 100 basis points for 2020.

The gross doubtful outstandings ratio amounted to 3.2%⁽¹⁾ at June 30^th 2020, and 3.1% at March 31^st 2020. The Group’s gross coverage ratio for doubtful outstandings stood at 54%⁽²⁾ at June 30^th 2020 (55% at March 31^st 2020).

Net profits or losses from other assets
Net profits or losses from other assets totalled EUR +4 million in Q2 20 and EUR +84 million in
H1 20, including EUR -77 million related to the application of IFRS 5 as part of the implementation of the Group’s refocusing plan in Q1 20.

Impairment loss on goodwill/Income tax

The Group recorded two non-cash exceptional items due to the review of the financial trajectory of Global Markets & Investor Services: a EUR -684 million expense in respect of the goodwill impairment of the Global Markets & Investor Services CGU and a EUR -650 million expense in respect of the impairment of deferred tax assets.

Group net income

In EURm	Q2 20	Q2 19	H1 20	H1 19
Reported Group net income	(1,264)	1 054	(1,590)	1,740
Underlying Group net income(1)	8	1,247	0	2,332

In %	Q2 20	Q2 19	S1-20	S1-19
ROTE (reported)	-6.5%	8.3%	-5.3%	6.9%
Underlying ROTE(1)	-1.3%	9.7%	-1.3%	9.1%

Earnings per share is negative and amounts to EUR -2.25 in H1 20 (EUR 1.69 in H1 19). Underlying earnings per share comes to EUR -0.38 over the same period.

2.      THE GROUP’S FINANCIAL STRUCTURE

Group shareholders’ equity totalled EUR 60.7 billion at June 30^th, 2020 (EUR 63.5 billion at December 31^st, 2019). Net asset value per share was EUR 61.8 and tangible net asset value per share was
EUR 54.3.

The consolidated balance sheet totalled EUR 1,453 billion at June 30^th, 2020 (EUR 1,356 billion at December 31^st, 2019). The net amount of customer loan outstandings at June 30^th, 2020, including lease financing, was EUR 447 billion (EUR 430 billion at December 31^st, 2019) – excluding assets and securities purchased under resale agreements. At the same time, customer deposits amounted to
EUR 440 billion, vs. EUR 410 billion at December 31^st, 2019 (excluding assets and securities sold under repurchase agreements).

At end-June 2020, the parent company had issued EUR 21.5 billion of medium/long-term debt, having an average maturity of 5.7 years and an average spread of 61 basis points (vs. the 6-month mid-swap, excluding subordinated debt). The subsidiaries had issued EUR 551 million.  At June 30^th, 2020, the Group had issued a total of EUR 22 billion of medium/long-term debt. The LCR (Liquidity Coverage Ratio) was well above regulatory requirements at 180% at end-Juin 2020, vs. 119% at end-December 2019. At the same time, the NSFR (Net Stable Funding Ratio) was over 100% at end-June 2020. 

The Group’s risk-weighted assets (RWA) amounted to EUR 360.7 billion at June 30^th, 2020 (vs. 
EUR 345.0 billion at end-December 2019) according to CRR/CRD4 rules. Risk-weighted assets in respect of credit risk represent 80.9% of the total, at EUR 291.9 billion, up 3.3% vs. December 31st, 2019.

At June 30^th, 2020, the Group’s Common Equity Tier 1 ratio stood at 12.5% (12.6% pro forma for the announced disposal amounting to 10 basis points), i.e. 350 basis points above the regulatory requirement of 9.05% as at June 30^th, 2020. This ratio includes an effect of +20 basis points for phasing of the IFRS 9 impact. Excluding this effect, the ratio amounts to 12.3%. The Tier 1 ratio stood at 14.6% at end-June 2020 (15.1% at end-December 2019) and the total capital ratio amounted to 17.7% (18.3% at end-December 2019). All of the effects in Q2 20 are presented in Appendix 10.

The CET1 ratio is expected to be at the top of the range of between 11.5% and 12% at end-2020.

With a level of 28.5%⁽¹⁾ of RWA and 8.2%⁽¹⁾ of leveraged exposure at end-June 2020, the Group’s TLAC ratio is above the FSB’s requirements for 2022. At June 30^th, 2020, the Group was also above its MREL requirements of 8.51% of the TLOF⁽²⁾ (which, in December 2017, represented a level of 24.4% of RWA), which were used as a reference for the SRB calibration. 

The leverage ratio stood at 4.2%⁽³⁾ at June 30^th, 2020 (4.3% at end-December 2019).

The Group is rated by four rating agencies: (i) FitchRatings - long-term rating “A-”, rating watch stable, senior preferred debt rating “A”, short-term rating “F1”; (ii) Moody’s – long-term rating (senior preferred debt) “A1”, stable outlook, short-term rating “P-1”; (iii) R&I - long-term rating (senior preferred debt) “A”, stable outlook; and (iv) S&P Global Ratings - long-term rating (senior preferred debt) “A”, negative outlook, short-term rating “A-1”.  

3.      FRENCH RETAIL BANKING

In EURm	Q2 20	Q2 19	Change	H1 20	H1 19	Change
Net banking income	1,754	1,994	-12.0%	3,634	3,910	-7.1%
Net banking income excl. PEL/CEL	1,749	2,021	-13.5%	3,654	3,949	-7.5%
Operating expenses	(1,233)	(1,348)	-8.5%	(2,683)	(2,834)	-5.3%
Gross operating income	521	646	-19.3%	951	1,076	-11.6%
Gross operating income excl. PEL/CEL	516	673	-23.3%	971	1,115	-12.9%
Net cost of risk	(442)	(129)	+242.6%	(691)	(223)	+209.9%
Operating income	79	517	-84.7%	260	853	-69.5%
Net profits or losses from other assets	5	1	+400,0%	136	2	x 68
Reported Group net income	60	356	-83.1%	279	590	-52.7%
RONE	2.1%	12.6%		4.9%	10.5%
Underlying RONE (1)	1.4%	1.4%		6.0%	11.5%

(1)    Adjusted for the linearisation of IFRIC 21 and PEL/CEL provision

After the substantial impact of the lockdown on activity in April and May, French Retail Banking’s commercial performance improved from mid-May. 

Customers substantially reduced their activity during April and May: accordingly, the level of bank card transactions and corporate credit transfers during this period was well below the average level observed in Q2 2019. Loan production was focused in particular on State Guaranteed Loans (PGE), with a slowdown in production on other categories. Customer activity gradually picked up from mid-May, which resulted in the level of bank card transactions and corporate credit transfers in June close to the monthly average levels in Q2 19.

The networks continued to develop their digital offer in Q2.  Societe Generale expanded its offering for Professional and VSE customers, with the acquisition of Shine, the neobank for entrepreneurs.  It also launched the third generation of its digital application.

Boursorama consolidated its position as the leading online bank in France, with around 2.37 million clients at end-June 2020 and provided further evidence of the agility of its online banking model with a comprehensive offering. In a crisis environment, the commercial momentum remained robust. Boursorama’s contribution to Group net income was positive in Q2, driven by a decline in acquisition costs and a record activity in stock market activity.

Net inflow for wealthy clients remained robust at EUR 1.1 billion in Q2 (EUR 1.6 billion in H1), taking assets under management to EUR 67.3 billion (including Crédit du Nord) at end-June 2020.
Life insurance outstandings totalled EUR 93 billion, with the unit-linked share accounting for 26% of outstandings.
The networks continued to develop their insurance business, with a penetration rate of 21.6% on Personal Protection and 9.8% on Property/Casualty insurance.

Average investment loan outstandings (including leases), largely bolstered by State Guaranteed Loans, rose 16.7% vs. Q2 19 to EUR 81.2 billion (+8.5% excluding State Guaranteed Loans).
Average outstanding loans to individuals were up 7.4% at EUR 122.3 billion: after a sharp decline in consumer and housing loan production in April and May, production was strong from mid-May.
As a result, average loan outstandings climbed 11.2% (+8.3% excluding PGE) vs. Q2 19 to EUR 216.0 billion.

Average outstanding balance sheet deposits⁽¹⁾ were 11.3% higher than in Q2 19 at EUR 228.7 billion, still driven by sight deposits (+18.3% vs. Q2 19)⁽²⁾.
As a result, the average loan/deposit ratio stood at 94% in Q2 20 (stable vs. Q2 19).

In this exceptional period, French Retail Banking is fully supporting the economy, accompanying individual, corporate and professional customers. The Group was extremely reactive in setting up the State Guaranteed Loan (PGE). As of July 24^th, around 86,100 applications had been received for a total amount of EUR 19 billion at Group level.

Net banking income excluding PEL/CEL

Q2 20: revenues (excluding PEL/CEL) totalled EUR 1,749 million, heavily impacted by the effects of the lockdown on customer activity (-13.5% vs. Q2 19; -10.8% excluding adjustment for tax related to commissions of EUR +61 million in Q2 19).
Net interest income (excluding PEL/CEL) was 6.0% lower than in Q2 19 with, in particular, a significant increase in deposits adversely affecting the margin in a low interest rate environment.
Commissions were 14% lower than in Q2 19 (-7.6% excluding adjustment tax related to commissions in Q2 19), driven by the sharp fall in service commissions (-11.6% excluding adjustment for tax related to commissions in Q2 19) against the backdrop of the lockdown, despite the increase in financial commissions (+8.1% vs. Q2 19).
“Other revenues” were lower in Q2 (-71% vs. Q2 19) with, in particular, the impact of the non-payment of Crédit Logement dividends.

H1 20: after a dynamic first few months, revenues were impacted by the effects of Covid-19 and the lockdown measures: revenues (excluding PEL/CEL) totalled EUR 3,654 million, down -7.5% vs.
H1 19 and -6.0% excluding adjustment for tax related to commissions of EUR +61 million in H1 19.
Net interest income (excluding PEL/CEL) was 2.4% lower than in H1 19. Commissions were down
-8.4% vs. H1 19 (-5.0% excluding adjustment for tax related to commissions in H1 19), with the sharp fall in service commissions against the backdrop of the lockdown more than offsetting the strong increase in financial commissions.

Operating expenses

Q2 20: operating expenses were substantially lower at EUR 1,233 million (-8.5% vs. Q2 19), illustrating the Group’s work to reduce costs despite the increase in regulatory costs. The cost to income ratio (after linearisation of the IFRIC 21 charge and restated for the PEL/CEL provision) stood at 71.9%.

H1 20: operating expenses were lower at EUR 2,683 million (-5.3% vs. H1 19). The cost to income ratio (after linearisation of the IFRIC 21 charge and restated for the PEL/CEL provision) stood at 71.6%.

Cost of risk

Q2 20: the commercial cost of risk amounted to EUR 442 million or 85 basis points, substantially higher than in Q2 19 (27bp) and Q1 20 (49bp). It includes EUR 266 million of S1/S2 (performing/underperforming loans) provisioning and EUR 176 million of S3 (non-performing loans) provisioning.  The inclusion of new macro-economic scenarios in accordance with the application of IFRS 9 contributed EUR 179 million to S1/S2 provisioning.

H1 20: the commercial cost of risk amounted to EUR 691 million or 68 basis points, substantially higher than in H1 19 (23bp).

Net profits or losses from other assets

Q2 20: “Net profits or losses from other assets” amounted to EUR 5 million.

H1 20: “Net profits or losses from other assets” amounted to EUR 136 million including a capital gain of EUR 130 million relating to the Group's property disposal programme carried out in Q1 2020.

Contribution to Group net income

Q2 20: the contribution to Group net income totalled EUR 60 million (-83.1% vs. Q2 19). RONE (after linearisation of the IFRIC 21 charge and restated for the PEL/CEL provision) stood at 1.4% in Q2 20 (vs. 12.6% in Q2 19).

H1 20: the contribution to Group net income totalled EUR 279 million (-52.7% vs. H1 19). RONE (after linearisation of the IFRIC 21 charge and restated for the PEL/CEL provision) stood at 6.0% in H1 20 (vs. 11.5% in H1 19).

4.      INTERNATIONAL RETAIL BANKING & FINANCIAL SERVICES

In EURm	Q2 20	Q2 19	Change		H1 20	H1 19	Change
Net banking income	1,750	2,124	-17.6%	-10.8%*	3,714	4,200	-11.6%	-4.7%*
Operating expenses	(979)	(1,145)	-14.5%	-7.0%*	(2,125)	(2,349)	-9.5%	-2.0%*
Gross operating income	771	979	-21.2%	-15.1%*	1,589	1,851	-14.2%	-8.0%*
Net cost of risk	(418)	(133)	x 3.1	x 3.3*	(647)	(261)	x 2.5	x 2.5*
Operating income	353	846	-58.3%	-54.8%*	942	1,590	-40.8%	-36.1%*
Net profits or losses from other assets	(1)	0	n/s	n/s	11	1	x 11.0	n/s
Reported Group net income	226	515	-56.1%	-51.6%*	591	979	-39.6%	-33.7%*
RONE	8.4%	18.6%			11.0%	17.3%
Underlying RONE (1)	7.9%	18.9%			11.6%	18.2%

⁽¹⁾          Adjusted for the linearisation of IFRIC 21 and the restructuring provision of EUR 29 million Q2 19.

In International Retail Banking, outstanding loans totalled EUR 85.8 billion. They rose +3.2%* vs. end-June 2019 when adjusted for changes in Group structure and at constant exchange rates. They were down -6.4% at current structure and exchange rates, given the disposals finalised since June 2019 (SKB in Slovenia, Societe Generale Montenegro, Societe Generale Serbia, Mobiasbanca in Moldova, OBSG in Macedonia and Societe Generale de Banque aux Antilles). April and May were heavily impacted by the lockdown due to Covid-19, but there was a rebound in activity from June. Outstanding deposits climbed +7.1%* (-4.0% at current structure and exchange rates) vs. June 2019 to EUR 80.3 billion, with a healthy momentum in all regions. 

For the Europe scope, outstanding loans were up +3.2%* vs. Q2 19, at EUR 53.6 billion (-9.2% at current structure and exchange rates), driven by Western Europe (+3.7%) and the Czech Republic (+3.4%*, -1.6%). Outstanding deposits were up +5.4%* (-10.0% at current structure and exchange rates), with a healthy momentum in the Czech Republic (+6.7%*, +1.5%) and Romania (+4.9%*, +2.6%).

In Russia, outstanding loans rose +1.6%* at constant exchange rates (-7.1% at current exchange rates) while outstanding deposits climbed +11.3%* (+3.5% at current exchange rates).

In Africa, Mediterranean Basin and French Overseas Territories, activity remained generally buoyant, especially in Sub-Saharan Africa. Outstanding loans rose +4.0%* (or +1.5%) vs. Q2 19. Outstanding deposits enjoyed a strong momentum, up +8.2%* (+6.1%).

In the Insurance business, the life insurance savings business saw outstandings increase +1.8%* vs.  Q2 19. The share of unit-linked products in outstandings was 30% at end-June 2020, up 1.9 points vs. Q2 19. Protection insurance fell -3.2%* vs. Q2 19. The 6.1%* increase in Property/Casualty premiums was offset by a decline in personal Protection insurance (-8.5%* vs. Q2 19), where a rebound was observable from June. 

Financial Services to Corporates delivered a resilient commercial performance.  Operational Vehicle Leasing and Fleet Management saw an increase in its vehicle fleet (+3.8% vs. the end-June 2019) to 1.76 million vehicles at end-June 2020. Equipment Finance’s outstanding loans were stable* vs. end-June 2019, at EUR 17.7 billion (excluding factoring).

Net banking income

Net banking income amounted to EUR 1,750 million in Q2 20, down -10.8%* (-17.6%) vs. Q2 19. Revenues totalled EUR 3,714 million in H1 20, down -4.7%* (-11.6%) vs. H1 19.

In International Retail Banking, net banking income totalled EUR 1,157 million in Q2 20, down -8.9%* (-18.1%) vs. Q2 19, marked by a fall in commissions due to the reduced activity in the lockdown environment and the impact of the decline in rates on net interest margin in the Czech Republic, Romania and Russia. In Africa, Mediterranean Basin and French Overseas Territories, revenues include an impact of EUR -31 million related to repayment moratoriums in Tunisia.
Net banking income amounted to EUR 2,450 million in H1 20, down -3.1%* excluding the structure and exchange rate effects (-12.5%) vs. H1 19.

The Insurance business saw net banking income decrease by -7.1%* to EUR 211 million in Q2 20
(-7.9%), marked by a decline in financial margins in an unfavourable environment in the financial markets. When adjusted for the contribution to the Solidarity Fund in France, it was 4.7%* lower than in Q2 19. Net banking income fell -3.9%* (-4.3%) in H1 20, to EUR 440 million.

Financial Services to Corporates’ net banking income was down -17.7%* (-20.9%) vs. Q2 19 at
EUR 382 million. ALD revenues included EUR 30 million of additional impairments on residual values and EUR 9.6 million of impairments on used vehicles in Q2 20. When restated for these items, Financial Services to Corporates’ revenues were down -8.2%*. Financial Services to Corporates’ net banking income totalled EUR 824 million in H1 20, down -9.5%* (-12.4%) vs. H1 19.

Operating expenses

Operating expenses were down -7.0%* (-14.5%), at EUR -979 million, vs. Q2 19, which included a restructuring provision related to the simplification of the head office structure amounting to EUR 29 million. When restated for this provision, operating expenses were down -4.3%* vs. Q2 19, reflecting rigorous cost control. They fell -2.0%* (-9.5%) in the first six months, to EUR 2,125 million. The cost to income ratio stood at 55.9% in Q2 20 and 57.2% in H1 20.

In International Retail Banking, operating expenses were down -2.9%* (-12.8%) vs. Q2 19 and were stable* (-9.7%) vs. H1 19.

In the Insurance business, operating expenses rose +4.2%* (+3.7%) vs. Q2 19 to EUR 84 million and +4.0%* (+3.8%) vs. H1 19.

In Financial Services to Corporates, operating expenses were down -8.6%* (-12.6%) vs. Q2 19 and
-3.0%* (-7.1%) vs. H1 19.

Cost of risk

Q2 20: the commercial cost of risk amounted to 125 basis points (or EUR 418 million), vs. 38 basis points in Q2 19, which included net provision write-backs in the Czech Republic and Romania, and 67 basis points in Q1 20. The Q2 cost of risk includes EUR 144 million for the estimate of expected credit losses in Stage 1 and Stage 2, including EUR 135 million for the impact related to the review of macro-economic scenarios.
H1 20: the cost of risk stood at 96 basis points (EUR 647 million). It was 39 basis points in H1 19.

Contribution to Group net income

The contribution to Group net income totalled EUR 226 million in Q2 20 (-56.1%* vs. Q2 19) and
EUR 591 million in H1 20 (-39.6%* vs. H1 19). Underlying RONE stood at 7.9% in Q2 20, vs. 18.9% in Q2 19, and 11.6% in H1 20, vs. 18.2% in H1 19.

5.      GLOBAL BANKING & INVESTOR SOLUTIONS

In EURm	Q2 20	Q2 19	Change		H1 20	H1 19	Change
Net banking income	1,880	2,266	-17.0%	-17.3%*	3,507	4,505	-22.2%	-22.7%*
Operating expenses	(1,570)	(1,915)	-18.0%	-18.2%*	(3,547)	(3,941)	-10.0%	-10.3%*
Gross operating income	310	351	-11.7%	-12.4%*	(40)	564	n/s	n/s
Net cost of risk	(419)	(33)	x 12.7	x 13.0*	(761)	(75)	x 10.1	x 10.1*
Operating income	(109)	318	n/s	n/s	(801)	489	n/s	n/s
Reported Group net income	(67)	274	n/s	n/s	(604)	414	n/s	n/s
RONE	-1.9%	7.1%			-8.6%	5.2%
Underlying RONE (1)	-3.3%	10.0%			-6.2%	8.9%

(1)    Adjusted for the linearisation of  IFRIC 21

Finalisation of the strategic review of structured products in Global Markets 

The Group has finalised the strategic review carried out in Global Markets on structured products and has set three priorities:

• Maintaining its global leadership role in equity structured products and remaining a major player in investment solutions
• Reducing the risk profile on equity and credit structured products in order to decrease the sensitivity of Global Markets’ revenues to market dislocations.  This refocusing will have an impact on revenues of between EUR -200 million and EUR -250 million
• Improving the profitability of Global Markets by reducing the breakeven point through a net cost reduction of around EUR -450 million by 2022-2023.

Net banking income
Q2 20: Global Banking & Investor Solutions’ revenues were down -17.0% at EUR 1,880 million.
H1 20:  when adjusted for the impact of restructuring (activities in the process of being closed or scaled back) completed last year, the revaluation of SIX securities (EUR +66 million in H1) and the disposal of Private Banking in Belgium, net banking income was down -18.7% vs. H1 19 (and -22.2% on a reported basis).

In Global Markets & Investor Services, net income banking totalled EUR 991 million, down -28.1% vs Q2 19 adjusted for restructuring.
In H1 20, when adjusted for restructuring and the revaluation of SIX securities (EUR +34 million in Q1 19), revenues were down -30.8% vs. H1 19.

Fixed Income & Currencies enjoyed an very good Q2, in all regions. When restated for the impact of restructuring, revenues amounted to EUR 700 million and were substantially higher (+38.1%) than in Q2 19. They were driven by the healthy commercial momentum, particularly in financing, and by the exceptional number of primary issues. Flow activities (rates and credit) and emerging market activities continued to benefit from favourable market conditions. The Americas region performed particularly well in Q2 20.
In H1 20, revenues restated for restructuring were up +43.6% at EUR 1,309 million.

Equity net banking income declined by -79.5% vs. Q2 19.  In April and May, structured product activities continued to be impacted by the cancellation of dividend payments (loss of EUR 200 million), a still strong correlation and strict production constraints. These activities saw a gradual recovery from mid-May.
Listed product revenues were significantly higher than in Q2 19, driven by flow investment solutions (notably due to EMC activities integration). This increase, combined with the strong performance of equity flow activities, was not enough to offset the losses recorded on structured products at the beginning of the quarter.

Securities Services’ assets under custody amounted to EUR 4,238 billion at end-June 2020, up +3.1% vs. end-March 2020. Over the same period, assets under administration were up +3.5% at EUR 599 billion. Securities Services’ revenues totalled EUR 149 million in Q2 20, in line with Q1 20. They were down -16.8% vs. a strong Q2 19.

Financing & Advisory revenues totalled EUR 657 million in Q2 20, up +2.0% vs. Q2 19.  They amounted to EUR 1,286 million in H1 20, slightly lower (-1.1%) than in H1 19.
Investment banking enjoyed an excellent quarter, driven by a record number of issues in the debt capital markets and buoyant acquisition financing activity. The Group therefore strengthens its leadership position in the European market.
Financing activities proved resilient in this environment impacted by the crisis.  New business remained stable.
After a challenging Q1, the Asset Backed Products platform delivered a good performance in Q2, against the backdrop of a stabilisation in the market environment.
Global Transaction and Payment Services proved resilient in light of the crisis and a significant decline in volumes.

Asset and Wealth Management’s net banking income totalled EUR 232 million in Q2 20, slightly higher (+0.4%) than in Q2 19.
In H1 20, when adjusted in Q1 19 for the revaluation of SIX securities (EUR +32 million) and for the disposal of Private Banking in Belgium, net banking income was 2.9% higher.

Private Banking posted a robust performance in Q2 20, driven by good transactional revenues in France and positive net inflow.  Net banking income amounted to EUR 187 million in Q2 20, up +6.9% vs.  Q2 19 (and +6.3% vs. Q1 20). Assets under management increased by +2.4% vs. March 2020, to EUR 114 billion.
Private Banking posted net inflow of EUR 1.5 billion in H1 20, driven by France. Net banking income amounted to EUR 363 million in H1 20, up +5.5% vs. H1 19, when adjusted for the disposal of Private Banking in Belgium and the revaluation of SIX securities.

Lyxor posted a performance down -21.6% in Q2 20, impacted by the challenging market conditions. Lyxor’s assets under management totalled EUR 132 billion at end-June 2020, an increase of +5.1% vs. March 2020. Lyxor is the first provider to launch an ETF ecosystem to tackle climate change, which further strengthens its leadership status in the Green Bonds segment.
Revenues were 5.3% lower in H1 20 than in H1 19, impacted by market effects on equity indices.

Operating expenses
Q2 20: when restated for the increase in the resolution fund (EUR +38 million) and the restructuring provision, recorded in Q2 19 for EUR 227 million, operating expenses were down -9.2% vs. Q2 19.
H1 20: restated operating expenses were down -6.8%.

Net cost of risk
Q2 20: the commercial cost of risk amounted to 95 basis points (or EUR 419 million), vs. 87 basis points in Q1 20 and 8 basis points in Q2 19. The Q2 cost of risk includes EUR 240 million related to Stages 1 and 2 (with EUR 176 million related to the review of macro-economic scenarios on the estimate of credit losses) and EUR 178 million related to Stage 3.
H1 20: the cost of risk amounted to 91 basis points (EUR 761 million). 

Contribution to Group net income
The contribution to Group net income amounted to EUR -67 million in Q2 20 and to EUR -604 million in H1 20. Underlying RONE is negative on H1 20.

6.      CORPORATE CENTRE

In EURm	Q2 20	Q2 19	H1 20	H1 19
Net banking income	(88)	(100)	(389)	(140)
Operating expenses	(78)	138	(183)	65
Gross operating income	(166)	38	(572)	(75)
Net cost of risk	-	(19)	-	(19)
Net profits or losses from other assets	-	(81)	(77)	(134)
Impairment losses on goodwill	(684)	-	(684)	-
Income tax	(598)	7	(450)	63
Reported Group net income	(1,483)	(91)	(1,856)	(243)

The Corporate Centre includes:

• the property management of the Group’s head office,
• the Group’s equity portfolio,
• the Treasury function for the Group,
• certain costs related to cross-functional projects and certain costs incurred by the Group and not re-invoiced to the businesses.

The Corporate Centre’s net banking income totalled EUR -88 million in Q2 20 vs. EUR -100 million in Q2 19 and EUR -389 million in H1 20 vs. EUR -140 million in H1 19.

Operating expenses totalled EUR -78 million in Q2 20 vs. EUR +138 million in Q2 19, which included an operating tax adjustment for EUR +241 million. They amounted to EUR -183 million in H1 20 vs. EUR +65 million in H1 19.

Gross operating income totalled EUR -166 million in Q2 20 vs. EUR +38 million in Q2 19 and
EUR -572 million in H1 20 vs. EUR -75 million in H1 19.

Net profits or losses from other assets was nil in Q2 20 and amounted to EUR -77 million in H1 20, related to the application of IFRS 5 as part of the implementation of the Group’s refocusing plan in
Q1 20.

The review of the financial trajectory of Global Markets & Investor Services resulted in the impairment of the associated goodwill for EUR -684 million and deferred tax assets for EUR -650 million.

The Corporate Centre’s contribution to Group net income was EUR -1,483 million in Q2 20 vs.
EUR -91 million in Q2 19 and EUR -1,856 million in H1 20 vs. EUR -243 million in H1 19. 

7.      CONCLUSION

During H1 20, Societe Generale demonstrated its ability to absorb the impacts of the crisis due to the quality of its asset portfolio and the robustness of its balance sheet with, in particular, a capital level of 12.5%, or 350 basis points above the regulatory requirement.

Drawing on this solid base, the Group will continue to adapt its activities to the new post-COVID crisis environment, particularly in structured products, as well as its efforts to reduce costs in 2020 and in the medium term, through structural initiatives.

Accordingly, in 2020 the Group anticipates:

• underlying costs of around EUR 16.5 billion, substantially lower than in 2019 (EUR 17.4 billion)
• a cost of risk at the bottom of the range of between 70 to 100 basis points
• a CET1 ratio at the top of the range of between 11.5% and 12.0% at end-2020

Finally, Societe Generale is already preparing its 2021-2023 strategic plan based around its three priority objectives:

• further improving its capacity to place the customer at the centre of its activities
• ramping up our commitment in responsible finance to strengthen its leadership position
• increasing operational efficiency with the support of digital technologies

8.      2020 FINANCIAL CALENDAR

2020 Financial communication calendar

November 5th, 2020   Third quarter and nine-month 2020 results February 10th, 2021   Fourth quarter and FY 2020 results May 6th, 2021   First quarter 2021 results August 3rd, 2021   Second quarter and first half 2021 results November 4th, 2021   Third quarter and nine-month 2021 results

The Alternative Performance Measures, notably the notions of net banking income for the pillars, operating expenses, IFRIC 21 adjustment, (commercial) cost of risk in basis points, ROE, ROTE, RONE, net assets, tangible net assets, and the amounts serving as a basis for the different restatements carried out (in particular the transition from published data to underlying data) are presented in the methodology notes, as are the principles for the presentation of prudential ratios. This document contains forward-looking statements relating to the targets and strategies of the Societe Generale Group. These forward-looking statements are based on a series of assumptions, both general and specific, in particular the application of accounting principles and methods in accordance with IFRS (International Financial Reporting Standards) as adopted in the European Union, as well as the application of existing prudential regulations. These forward-looking statements have also been developed from scenarios based on a number of economic assumptions in the context of a given competitive and regulatory environment. The Group may be unable to: - anticipate all the risks, uncertainties or other factors likely to affect its business and to appraise their potential consequences; - evaluate the extent to which the occurrence of a risk or a combination of risks could cause actual results to differ materially from those provided in this document and the related presentation.  Therefore, although Societe Generale believes that these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, including matters not yet known to it or its management or not currently considered material, and there can be no assurance that anticipated events will occur or that the objectives set out will actually be achieved. Important factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements include, among others, overall trends in general economic activity and in Societe Generale’s markets in particular, regulatory and prudential changes, and the success of Societe Generale’s strategic, operating and financial initiatives. More detailed information on the potential risks that could affect Societe Generale’s financial results can be found in the Universal Registration Document filed with the French Autorité des Marchés Financiers. Investors are advised to take into account factors of uncertainty and risk likely to impact the operations of the Group when considering the information contained in such forward-looking statements. Other than as required by applicable law, Societe Generale does not undertake any obligation to update or revise any forward-looking information or statements. Unless otherwise specified, the sources for the business rankings and market positions are internal.

9.      APPENDIX 1: FINANCIAL DATA

GROUP NET INCOME AFTER TAX BY CORE BUSINESS

In EURm	Q2 20	Q2 19	Change	H1 20	H1 19	Change
French Retail Banking	60	356	-83.1%	279	590	-52.7%
International Retail Banking & Financial Services	226	515	-56.1%	591	979	-39.6%
Global Banking & Investor Solutions	(67)	274	n/s	(604)	414	n/s
Core Businesses	219	1,145	-80.9%	266	1,983	-86.6%
Corporate Centre	(1,483)	(91)	n/s	(1,856)	(243)	n/s
Group	(1,264)	1,054	n/s	(1,590)	1,740	n/s

CONSOLIDATED BALANCE SHEET

	30.06.2020	31.12.2019
Central banks	144,417	102,311
Financial assets at fair value through profit or loss	419,147	385,739
Hedging derivatives	21,845	16,837
Financial assets measured at fair value through other comprehensive income	55,606	53,256
Securities at amortised cost	14,877	12,489
Due from banks at amortised cost	55,292	56,366
Customer loans at amortised cost	458,500	450,244
Revaluation differences on portfolios hedged against interest rate risk	470	401
Investment of insurance activities	163,219	164,938
Tax assets	5,052	5,779
Other assets	77,196	68,045
Non-current assets held for sale	3,788	4,507
Investments accounted for using the equity method	106	112
Tangible and intangible assets	29,812	30,652
Goodwill	4,045	4,627
Total	1,453,372	1,356,303

	30.06.2020	31.12.2019
Central banks	2,980	4,097
Financial liabilities at fair value through profit or loss	405,113	364,129
Hedging derivatives	12,705	10,212
Debt securities issued	136,261	125,168
Due to banks	121,542	107,929
Customer deposits	444,470	418,612
Revaluation differences on portfolios hedged against interest rate risk	8,629	6,671
Tax liabilities	1,239	1,409
Other liabilities	94,115	85,062
Non-current liabilities held for sale	928	1,333
Liabilities related to insurance activities contracts	140,701	144,259
Provisions	4,348	4,387
Subordinated debts	14,662	14,465
Total liabilities	1,387,693	1,287,733
SHAREHOLDERS' EQUITY
Shareholders' equity, Group share
Issued common stocks, equity instruments and capital reserves	30,115	31,102
Retained earnings	32,457	29,558
Net income	(1,590)	3,248
Sub-total	60,982	63,908
Unrealised or deferred capital gains and losses	(323)	(381)
Sub-total equity, Group share	60,659	63,527
Non-controlling interests	5,020	5,043
Total equity	65,679	68,570
Total	1,453,372	1,356,303

10. APPENDIX 2: METHODOLOGY

1 – The financial information presented in respect of Q2 and H1 2020 was examined by the Board of Directors on July 31^st, 2020 and has been prepared in accordance with IFRS as adopted in the European Union and applicable at that date. The limited review procedures carried out by the Statutory Auditors are in progress on the condensed interim consolidated financial statements as at June 30^th, 2020.

2 – Net banking income
The pillars’ net banking income is defined on page 43 of Societe Generale’s 2020 Universal Registration Document. The terms “Revenues” or “Net Banking Income” are used interchangeably. They provide a normalised measure of each pillar’s net banking income taking into account the normative capital mobilised for its activity.

3 – Operating expenses
Operating expenses correspond to the “Operating Expenses” as presented in note 8.1 to the Group’s consolidated financial statements as at December 31^st, 2019 (pages 423 et seq. of Societe Generale’s 2020 Universal Registration Document). The term “costs” is also used to refer to Operating
Expenses.
The Cost/Income Ratio is defined on page 43 of Societe Generale’s 2020 Universal Registration Document. 

4 - IFRIC 21 adjustment
The IFRIC 21 adjustment corrects the result of the charges recognised in the accounts in their entirety when they are due (generating event) so as to recognise only the portion relating to the current quarter, i.e. a quarter of the total. It consists in smoothing the charge recognised accordingly over the financial year in order to provide a more economic idea of the costs actually attributable to the activity over the period analysed.

5 – Exceptional items – Transition from accounting data to underlying data

It may be necessary for the Group to present underlying indicators in order to facilitate the understanding of its actual performance. The transition from published data to underlying data is obtained by restating published data for exceptional items and the IFRIC 21 adjustment.
Moreover, the Group restates the revenues and earnings of the French Retail Banking pillar for PEL/CEL provision allocations or write-backs. This adjustment makes it easier to identify the revenues and earnings relating to the pillar’s activity, by excluding the volatile component related to commitments specific to regulated savings.

The reconciliation enabling the transition from published accounting data to underlying data is set out in the table below:

Q2 20 (in EURm)	Operating Expenses		Net cost of risk	Net profit or losses from other assets	Impairment losses on goodwill	Income Tax	Group net income	Business
Reported		(3,860)	(1,279)	4	(684)	(658)	(1,264)
(+) IFRIC 21 linearisation		(124)				58	(62)
(-) Goodwill impairment*					(684)		(684)	Corporate Centre
(-) DTA  impairment*						(650)	(650)	Corporate Centre
Underlying		(3,984)	(1,279)	4	0	50	8
H1 20 (in EURm)		Operating Expenses	Net cost of risk	Net profit or losses from other assets	Impairment losses on goodwill	Income Tax	Group net income	Business
Reported		(8,538)	(2,099)	84	(684)	(612)	(1,590)
(+) IFRIC 21 linearisation		353				(166)	179
(-) Group refocusing plan*				(77)		0	(77)	Corporate Centre
(-) Goodwill impairment*					(684)		(684)	Corporate Centre
(-) DTA impairment*						(650)	(650)	Corporate Centre
Underlying		(8,185)	(2,099)	161	0	(128)	0

Q2 19 (in EURm)			Operating Expenses	Net cost of risk		Net profit or losses from other assets	Group net income	Business
Reported			(4,270)	(314)		(80)	1,054
(+) IFRIC 21 linearisation			(138)				(101)
(-) Restructuring provision*		(256)					(192)	GBIS (EUR -227m) / IBFS (EUR -29m)
(-) Group refocusing plan*				(18)		(84)	(102)	Corporate Centre
Underlying			(4,152)	(296)		4	1,247
H1 19 (in EURm)			Operating Expenses	Net cost of risk		Net profit or losses from other assets	Group net income	Business
Reported			(9,059)	(578)		(131)	1,740
(+) IFRIC 21 linearisation			303				222
(-) Restructuring provision*	(256)						(192)	GBIS (EUR -227m) / IBFS (EUR -29m)
(-) Group refocusing plan*					(18)	(137)	(177)	Corporate Centre
Underlying			(8,500)	(560)		6	2,332

(*) exceptional item

6 - Cost of risk in basis points, coverage ratio for doubtful outstandings

The cost of risk or commercial cost of risk is defined on pages 45 and 574 of Societe Generale’s 2020 Universal Registration Document. This indicator makes it possible to assess the level of risk of each of the pillars as a percentage of balance sheet loan commitments, including operating leases.

	(In EUR m)	Q2 20	Q2 19	H1 20	H1 19
French Retail Banking	Net Cost Of Risk	442	129	691	223
	Gross loan Outstandings	207,517	192,896	204,328	192,159
	Cost of Risk in bp	85	27	68	23
International Retail Banking and Financial Services	Net Cost Of Risk	418	133	647	261
	Gross loan Outstandings	133,475	139,634	134,941	134,747
	Cost of Risk in bp	125	38	96	39
Global Banking and Investor Solutions	Net Cost Of Risk	419	33	761	75
	Gross loan Outstandings	175,673	164,162	166,868	164,512
	Cost of Risk in bp	95	8	91	9
Corporate Centre	Net Cost Of Risk	0	19	0	19
	Gross loan Outstandings	10,292	8,705	10,001	8,977
	Cost of Risk in bp	3	86	3	42
Societe Generale Group	Net Cost Of Risk	1,279	314	2,099	578
	Gross loan Outstandings	526,958	505,397	516,138	500,395
	Cost of Risk in bp	97	25	81	23

The gross coverage ratio for doubtful outstandings is calculated as the ratio of provisions recognised in respect of the credit risk to gross outstandings identified as in default within the meaning of the regulations, without taking account of any guarantees provided. This coverage ratio measures the maximum residual risk associated with outstandings in default (“doubtful”). 

7 - ROE, ROTE, RONE

The notions of ROE (Return on Equity) and ROTE (Return on Tangible Equity), as well as their calculation methodology, are specified on page 45 and 46 of Societe Generale’s 2020 Universal Registration Document. This measure makes it possible to assess Societe Generale’s return on equity and return on tangible equity.
RONE (Return on Normative Equity) determines the return on average normative equity allocated to the Group’s businesses, according to the principles presented on page 46 of Societe Generale’s 2020 Universal Registration Document.
Group net income used for the ratio numerator is book Group net income adjusted for “interest net of tax payable on deeply subordinated notes and undated subordinated notes, interest paid to holders of deeply subordinated notes and undated subordinated notes, issue premium amortisations” and “unrealised gains/losses booked under shareholders’ equity, excluding conversion reserves” (see methodology note No. 9). For ROTE, income is also restated for goodwill impairment.

Details of the corrections made to book equity in order to calculate ROE and ROTE for the period are given in the table below:

ROTE calculation: calculation methodology

End of period	Q2 20	Q2 19	H1 20	H1 19
Shareholders' equity Group share	60,659	62,492	60,659	62,492
Deeply subordinated notes	(8,159)	(9,861)	(8,159)	(9,861)
Undated subordinated notes	(283)	(280)	(283)	(280)
Interest net of tax payable to holders of deeply subordinated notes & undated subordinated notes, interest paid to holders of deeply subordinated notes & undated subordinated notes, issue premium amortisations	20	(39)	20	(39)
OCI excluding conversion reserves	(834)	(636)	(834)	(636)
Dividend provision		(717)		(717)
ROE equity end-of-period	51,403	50,959	51,403	50,959
Average ROE equity	52,388	50,250	52,830	49,842
Average Goodwill	(4,270)	(4,541)	(4,416)	(4,619)
Average Intangible Assets	(2,417)	(2,194)	(2,393)	(2,194)
Average ROTE equity	45,701	43,515	46,021	43,029
Group net Income (a)	(1,264)	1,054	(1,590)	1,740
Underlying Group net income (b)	8	1,247	0	2,332
Interest on deeply subordinated notes and undated subordinated notes (c)	(161)	(192)	(320)	(357)
Cancellation of goodwill impairment (d)	684	41	684	108
Ajusted Group net Income (e) = (a)+ (c)+(d)	(741)	903	(1,227)	1,491
Ajusted Underlying Group net Income (f)=(b)+(c)	(153)	1,056	(321)	1,975
Average ROTE equity (g)	45,701	43,515	46,021	43,029
ROTE [quarter: (4*e/g), 6M: (2*e/g)]	-6.5%	8.3%	-5.3%	6.9%
Average ROTE equity (underlying) (h)	46,973	43,612	47,611	43,325
Underlying ROTE [quarter: (4*f/h), 6M: (2*f/h)]	-1.3%	9.7%	-1.3%	9.1%

RONE calculation: Average capital allocated to Core Businesses (in EURm)

In EURm	T2-20	T2-19	Variation	S1-20	S1-19	Variation
French Retail Banking	11,460	11,306	+1.4%	11,321	11,281	+0.4%
International Retail Banking & Financial Services	10,820	11,051	-2.1%	10,708	11,336	-5.5%
Global Banking & Investor Solutions	14,453	15,543	-7.0%	14,024	16,064	-12.7%
Core Businesses	36,733	37,900	-3.1%	36,053	38,681	-6.8%
Corporate Centre	15,655	12,350	+26.8%	16,777	11,162	+50.3%
Group	52,388	50,250	+4.3%	52,830	49,842	+6.0%

8 - Net assets and tangible net assets

Net assets and tangible net assets are defined in the methodology, page 48 of the Group’s 2020 Universal Registration Document. The items used to calculate them are presented below:

End of period	H1 20	Q1 20	2019	H1 19
Shareholders' equity Group share	60,659	62,580	63,527	62,492
Deeply subordinated notes	(8,159)	(8,258)	(9,501)	(9,861)
Undated subordinated notes	(283)	(288)	(283)	(280)
Interest, net of tax, payable to holders of deeply subordinated notes & undated subordinated notes, interest paid to holders of deeply subordinated notes & undated subordinated notes, issue premium amortisations	20	1	4	(39)
Bookvalue of own shares in trading portfolio	335	381	375	431
Net Asset Value	52,572	54,416	54,122	52,743
Goodwill	(3,928)	(4,611)	(4,510)	(4,548)
Intangible Assets	(2,458)	(2,376)	(2,362)	(2,226)
Net Tangible Asset Value	46,186	47,429	47,250	45,969
Number of shares used to calculate NAPS**	851,133	851,133	849,665	844,026
Net Asset Value per Share	61.8	63.9	63.7	62.5
Net Tangible Asset Value per Share	54.3	55.7	55.6	54.5

** The number of shares considered is the number of ordinary shares outstanding as at June 30^th, 2020, excluding treasury shares and buybacks, but including the trading shares held by the Group.
In accordance with IAS 33, historical data per share prior to the date of detachment of a preferential subscription right are restated by the adjustment coefficient for the transaction. 

9 - Calculation of Earnings Per Share (EPS)

The EPS published by Societe Generale is calculated according to the rules defined by the IAS 33 standard (see page 47 of Societe Generale’s 2020 Universal Registration Document). The corrections made to Group net income in order to calculate EPS correspond to the restatements carried out for the calculation of ROE and ROTE. As specified on page 47 of Societe Generale’s 2020 Universal Registration Document, the Group also publishes EPS adjusted for the impact of non-economic and exceptional items presented in methodology note No. 5 (underlying EPS).
The calculation of Earnings Per Share is described in the following table:

Average number of shares (thousands)	H1 20	Q1 20	2019	H1 19
Existing shares	853,371	853,371	834,062	821,189
Deductions
Shares allocated to cover stock option plans and free shares awarded to staff	2,728	2,972	4,011	4,214
Other own shares and treasury shares			149	249
Number of shares used to calculate EPS**	850,643	850,399	829,902	816,726
Group net Income	(1,590)	(326)	3,248	1,740
Interest on deeply subordinated notes and undated subordinated notes	(320)	(159)	(715)	(357)
Capital gain net of tax on partial buybacks
Adjusted Group net income	(1,910)	(485)	2,533	1,383
EPS (in EUR)	-2.25	-0.57	3.05	1.69
Underlying EPS* (in EUR)	-0.38	-0.07	4.03

* Excluding exceptional items and including linearisation of the IFRIC 21 effect.
** The number of shares considered is the number of ordinary shares outstanding as at June 30^th, 2020, excluding treasury shares and buybacks, but including the trading shares held by the Group. 

10 - The Societe Generale Group’s Common Equity Tier 1 capital is calculated in accordance with applicable CRR/CRD4 rules. The fully-loaded solvency ratios are presented pro forma for current earnings, net of dividends, for the current financial year, unless specified otherwise. When there is reference to phased-in ratios, these do not include the earnings for the current financial year, unless specified otherwise. The leverage ratio is calculated according to applicable CRR/CRD4 rules including the provisions of the delegated act of October 2014.

Table of the change in the CET1 ratio in the quarter

In bp
CET1 as at 31/3/2020	12.6%
Own funds evolution	-7bp
Organic RWAs change* of which	-15bp
RWAs of businesses	+2bp
Non-guaranteed part of State-Guaranteed loans	-4bp
Rating migration	-8bp
Corporates credit line drawdowns	-5bp
SME supporting factor	+14bp
Effect of waiting period on State-guaranteed loans (based on an assumption of a final loan guarantee rate of approximately 90%)	-27bp
Quick fix BCE Of which	+12bp
VaR/sVaR multiplicator	+7bp
PVA transitional provision	+5bp
CET1 as at 30/06/2020	12.3%
Phasing IFRS 9	+20bp
CET1 as at 30/06/2020 including IFRS9 phasing	12,5%

NB (1) The sum of values contained in the tables and analyses may differ slightly from the total reported due to rounding rules.

(2) All the information on the results for the period (notably: press release, downloadable data, presentation slides and supplement) is available on Societe Generale’s website www.societegenerale.com in the “Investor” section.

Societe Generale

Societe Generale is one of the leading European financial services groups. Based on a diversified and integrated banking model, the Group combines financial strength and proven expertise in innovation with a strategy of sustainable growth. Committed to the positive transformations of the world’s societies and economies, Societe Generale and its teams seek to build, day after day, together with its clients, a better and sustainable future through responsible and innovative financial solutions.

Active in the real economy for over 150 years, with a solid position in Europe and connected to the rest of the world, Societe Generale has over 138,000 members of staff in 62 countries and supports on a daily basis 29 million individual clients, businesses and institutional investors around the world by offering a wide range of advisory services and tailored financial solutions. The Group is built on three complementary core businesses:
▪    French Retail Banking which encompasses the Societe Generale, Crédit du Nord and Boursorama brands. Each offers a full range of financial services with omnichannel products at the cutting edge of digital innovation;
▪      International Retail Banking, Insurance and Financial Services to Corporates, with networks in Africa, Russia,    Central and Eastern Europe and specialised businesses that are leaders in their markets; 
▪    Global Banking and Investor Solutions, which offers recognised expertise, key international locations and   integrated solutions.

Societe Generale is included in the principal socially responsible investment indices: DJSI (World and Europe), FTSE4Good (Global and Europe), Euronext Vigeo (World, Europe and Eurozone), four of the STOXX ESG Leaders indices, and the MSCI Low Carbon Leaders Index.

For more information, you can follow us on Twitter @societegenerale or visit our website www.societegenerale.com

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The footnote * in this document corresponds to data adjusted for changes in Group structure and at constant exchange rates
^([1]) including 20 basis points for IFRS9 phasing

^([2]) pro-forma for the announced disposal of SG Finans (+10 basis points)

^([3]) quarterly average

⁽¹⁾ NPL ratio calculated according to the new EBA methodology

⁽²⁾ Ratio between the amount of provisions on doubtful outstandings and the amount of these same outstandings

⁽¹⁾ Adjusted for exceptional items and the linearisation of IFRIC 21

⁽¹⁾ Including 2.5% of senior preferred debt
⁽²⁾ Total Liabilities and Own Funds

⁽³⁾4.4% including the “quick fix” in respect of the exclusion of deposits with central banks announced by the ECB at end-June, not yet applicable (estimation based on deposits with the ECB only)

⁽¹⁾  Including BMTN (negotiable medium-term notes)

⁽²⁾ Including currency deposits

Attachment

• Societe Generale_Press Release Q2-2020

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