Société Générale: departure of the General Manager – 10/10/2022 at 09:19

(AOF) – Société Générale has announced the departure of Gaëlle Olivier, Deputy Managing Director and Chief Operating Officer, starting from 31 December 2022. “Gaëlle Olivier has decided to take up new professional challenges,” explained the bank.

Gaëlle Olivier joined the group in 2020 to take over the management of Société Générale for the Asia-Pacific region. In December 2021, she joined the Group General Management team as Deputy General Manager and General Manager responsible for group resources, IT sector coordination, digital transformation and innovation.

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Key points

– Bank founded in 1864, one of the leading European financial services groups;

– Net banking income of 25.8 billion euros generated by retail banking in France – Société Générale, Crédit du Nord and Boursorama brands, international retail banking, financial services and insurance, then wholesale banking customers and solutions for investors;

– Business model at the forefront of positive transformations: a 100% digitized bank, open platforms and architectures, winner of the race for European leadership;

– Capital characterized by the presence of employee shareholders (6.65% and 11.9% of voting rights), with a board of directors of 16 members chaired by Lorenzo Bini Smaghi, with managing director Frédéric Oudéa;

– Solid balance sheet with, at the end of June, 64.6 billion euros of net assets, a CET 1 ratio of 12.9%, a liquidity coverage ratio of 140%, a leverage ratio of 4.1%, ‘where an A-rated debt.

Challenges

– Vision 2025 strategy, based on the merger with Crédit du Nord, local roots, responsiveness, adaptation to customer needs and responsibility: annual revenue growth of at least 3%, improvement in the cost / revenue ratio of at least 62% and return on capital employed at 10% / target CET 1 ratio of 12%;

– Innovation strategy rooted in the group’s DNA, focused on the emergence of a data-driven bank through artificial intelligence: 200 million euros of annual value creation through data and AI / 8/10 of servers in the cloud (2025 cloud of “second generation” objectives, of which 50% in private cloud and 25% in public cloud / new business models – Shine for individual customers, Forge for digital obligations, reezocar for vehicle rental and treezor, platform payment and digital currencies;

– Environmental strategy 2025 with the aim of becoming the world leader in sustainable finance with 2 axes: integration of criteria in all companies: 100% responsible savings offer, support to customers in the energy transition, etc. / commitment to sustainable transition: funding increased to € 300 million Reduction of 10% of overall exposure to oil and gas extraction, complete elimination of thermal coal by 2030-40 and guaranteed loans from reserves by 2023, i.e. + 150 billion euros of assets in the energy transition;

– Continued integration of the Crédit du Nord, finalized in 2023;

– After the refocusing of activities, financial availability to refocus on mobility (purchase of LeasePlan by the subsidiary ALD).

Challenges

– Net equity per share of 67 euros, to be compared with the market price;

– welcome investors to the new CEO who succeeds Frédéric Oudéa;

– Impact of the Russia-Ukraine war: sale of the stake in Rosbank with an impact of 3.2 billion euros on the income statement, which drops to minus 640 million euros, causing the CET ratio to drop to 12.9%;

– After a 15% increase in the earning margin and a 17% increase in the operating result, the targets for 2022, a sharp increase in the cost / income ratio between 66 and 68% and a falling cost of risk of 30 basis points;

– Distribution rate of 50%, including share program, and forecast of a 2022 dividend of 1.44 euros.

The negative effects of rising interest rates

Rising interest rates usually cause bank income to increase through loans. In Europe, according to a survey conducted by S&P of 85 banking institutions, the sector expects an average increase of 18% in the interest margin. However, this new inflationary environment also has undesirable effects, notably an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s activities, from loans to asset management, whose income is correlated to market valuations. Reassuring element: euro area banks are strong enough to cope with a deteriorating environment.

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