Societe Generale : 4th quarter and full-year 2022 results

RESULTS AT 31 DECEMBER 2022

Press release

Paris, 8 February 2023

EXCELLENT PERFORMANCE ACROSS BUSINESS LINES

Record revenues up by +9.3%(1) vs. 2021, driven by historical highs in Financing & Advisory, Global Markets and ALD, sharp growth in Private Banking and International Retail Banking, and a solid performance by French Retail Banking

Strong improvement in the cost to income ratio to 61.0%(1) (vs. 64.4%(1) in 2021), excluding

contribution to the Single Resolution Fund

Cost of risk at 28 basis points, with a low level of defaults at 17 basis points and continued prudent provisioning resulting in provisions on performing loans of EUR 3.8bn at end-December 2022

Underlying Group net income of EUR 5.6bn(1) (EUR 2.0bn on a reported basis including the impact of the disposal of Rosbank and its Russian subsidiaries), underlying profitability of 9.6%(1) (ROTE)

SOLID QUARTERLY RESULTS

In Q4 22, underlying gross operating income came to EUR 2.2bn(1) +14.9% vs. Q4 21

Underlying Group net income at EUR 1.1bn(1) (EUR 1.2bn on a reported basis), underlying profitability at 7.6%(1)

CET 1 ratio of 13.5%(2) at end-2022, around 420 basis points above the regulatory requirement

DISTRIBUTION TO SHAREHOLDERS

Distribution of EUR 1.8bn, equivalent to EUR 2.25 per share(3) (4), i.e.:

• a cash dividend of EUR 1.70 per share to be proposed at the General Meeting
• a share buyback programme, of approximately EUR 440m, equivalent to around EUR 0.55 per share

FINANCIAL TARGETS

2025: financial targets confirmed, notably a cost to income ratio below 62%, expected profitability of 10% (ROTE) based on a CET1 ratio target of 12% post Basel IV

2023: a transition year, with the negative impacts related to the end of the TLTRO benefit and to the specific functioning of the French retail banking market

Underlying cost to income ratio (1), excluding contribution to the Single Resolution Fund, expected at between 66% and 68%

Cost of risk is expected at between 30 and 35 basis points

1. Underlying data (see methodology note No. 5 for the transition from accounting data to underlying data), (2) Phased-in ratio (fully-loaded ratio of 13.3%), (3) Based on the number of shares in circulation at 31/12/2022, (4) Subject to usual approvals from the General Meeting and the ECB

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MAJOR ACHIEVEMENTS IN STRATEGIC INITIATIVES

Decisive milestones achieved in the merger of the retail banking networks in France, resulting in the legal merger - on schedule - of the Societe Generale and Crédit du Nord networks on 1 January 2023 and the launch of a new retail bank in France

Accelerated development of Boursorama, with record annual new client growth of 1.4 million, taking the total number of clients to 4.7 million at end-2022

Plans on track to create global leaders in sustainable mobility and equities with the acquisition of LeasePlan by ALD and the creation of the Bernstein joint venture

Rapid and successful adaptation amid a complex and uncertain environment, particularly as regards the Rosbank disposal, which had limited capital impact

Upscaled ESG actions and commitments by the Group, notably by integrating ESG considerations across all Group activities and a reinforcement of our decarbonisation ambitions

Ongoing rollout of digital transformation initiatives and operational efficiency improvement actions

Fréderic Oudéa, the Group's Chief Executive Officer, commented:

"2022 marked a decisive stage for the Group, which was able to deliver record underlying performances while adapting itself swiftly and efficiently to an uncertain and complex environment. Throughout the year, the Group made major strategic progress that has unlocked value. We launched the new SG retail bank resulting from the merger of our networks in France and pushed further ahead at Boursorama. The planned acquisition of LeasePlan by ALD in the mobility sector and the planned Bernstein joint venture deal for our Equities business will create global leaders. We also defined the Group's new CSR ambitions with the aim of supporting our clients in responsible energy transition. Building on the commercial momentum of the businesses and the strength of the balance sheet, the Group is confident of being able to reap the benefit of ongoing projects and business developments, confirms its financial guidance for 2025, and is embarking with determination on 2023, a year of transition in many respects."

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1. GROUP CONSOLIDATED RESULTS

In EURm	Q4 22	Q4 21	Change	2022	2021	Change
Net banking income	6,885	6,620	+4.0%	+6.2%*	28,059	25,798	+8.8%	+9.7%*
Underlying net banking income(1)	6,885	6,503	+5.9%	+8.1%*	28,059	25,681	+9.3%	+10.2%*
Operating expenses	(4,610)	(4,565)	+1.0%	+3.3%*	(18,630)	(17,590)	+5.9%	+7.5%*
Underlying operating expenses(1)	(4,718)	(4,617)	+2.2%	+4.5%*	(17,991)	(17,211)	+4.5%	+6.1%*
Gross operating income	2,275	2,055	+10.7%	+12.5%*	9,429	8,208	+14.9%	+14.4%*
Underlying gross operating income(1)	2,167	1,886	+14.9%	+16.9%*	10,068	8,470	+18.9%	+18.4%*
Net cost of risk	(413)	(86)	x 4.8	x 6.3*	(1,647)	(700)	x 2.4	+93.0%*
Operating income	1,862	1,969	-5.4%	-4.7%*	7,782	7,508	+3.6%	+5.3%*
Underlying operating income(1)	1,754	1,800	-2.6%	-1.7%*	8,421	7,770	+8.4%	+10.1%*
Net profits or losses from other assets	(4)	449	n/s	n/s	(3,290)	635	n/s	n/s
Income tax	(484)	(311)	+55.5%	+55.5%*	(1,560)	(1,697)	-8.1%	-5.8%*
Net income	1,381	1,995	-30.8%	-30.2%*	2,947	6,338	-53.5%	-53.2%*
O.w. non-controlling interests	221	208	+6.3%	+7.6%*	929	697	+33.3%	+32.3%*
Reported Group net income	1,160	1,787	-35.1%	-34.5%*	2,018	5,641	-64.2%	-64.0%*
Underlying Group net income(1)	1,126	1,226	-8.1%	-7.2%*	5,616	5,264	+6.7%	+7.9%*
ROE	6.9%	12.1%			2.6%	9.6%	+0.0%	+0.0%*
ROTE	7.8%	16.6%			2.9%	11.7%	+0.0%	+0.0%*
Underlying ROTE(1)	7.6%	9.2%			9.6%	10.2%	+0.0%	+0.0%*

(1) Underlying data (see methodology note No. 5 for the transition from accounting data to underlying data)

Societe Generale's Board of Directors, which met on 7 February 2023 under the chairmanship of Lorenzo Bini Smaghi, examined the Societe Generale Group's results for Q4 and FY 2022.

The various restatements enabling the transition from underlying data to published data are presented in the methodology notes (section 9.5).

Net banking income

Underlying net banking income(1) grew strongly in 2022 at +9.3% (+10.2%*) vs. 2021, fuelled by record performances in Financing & Advisory, Global Markets and ALD, strong growth in Private Banking and International Retail Banking and a solid performance by the French Retail Bank.

French Retail Banking revenues grew +4.1% vs. 2021 fuelled notably by robust service fee growth and a very solid showing by Private Banking.

International Retail Banking & Financial Services' revenues rose +12.4% (+17.9%*) vs. 2021, driven by a record performance at ALD and strong growth at International Retail Banking whose revenues grew +11.5%* vs. 2021. Financial Services' net banking income was significantly higher by +35.8%* vs. 2021, while Insurance net banking income increased by +6.5%* vs. 2021.

Global Banking & Investor Solutions' revenues were up +14.3% (+12.9%*) vs. 2021. Global Markets & Investor Services' revenues posted a +18.7% increase in revenues (14.1%*) vs. 2021, while Financing & Advisory activities increased by +15.2% (+10.7%*) vs. 2021.

In Q4 22, the Group continued to post robust revenue growth of +5.9% (+8.1%*) vs. Q4 21.

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Operating expenses

In 2022, operating expenses totalled EUR 18,630 million on a reported basis and EUR 17,991 million on an underlying basis (restated for transformation costs), i.e., an increase of +4.5% vs. 2021 (on an underlying basis).

The rise can be mainly attributed to the EUR 864 million contribution to the Single Resolution Fund, and increase of EUR 278 million, currency effects, notably in US dollars and a rise in the variable components of employee remuneration associated with higher revenues.

Underlying(1) gross operating income increased by +18.9% to EUR 10,068 million in 2022, while the underlying(1) cost to income ratio (excluding the Single Resolution Fund) posted a 3.4 point improvement to 61.0% (vs. 64.4% in 2021).

In Q4 22, operating expenses totalled EUR 4,610 million on a reported basis and EUR 4,718 million on an underlying basis (restated for the linearisation of IFRIC 21 and transformation costs), i.e., a limited increase of +2.2% vs. Q4 21.

Excluding the Single Resolution Fund, the underlying(1) cost to income ratio is expected to range between 66% and 68% in 2023, based notably on normalised revenues in Global Markets.

Cost of risk

The cost of risk remained moderate at 28 basis points in Q4 22, or EUR 413 million. It breaks down into a provision on non-performing loans which remains limited at EUR 346 million (23 basis points), and an additional provision on performing loans of EUR 67 million (5 basis points).

Over the full year, the cost of risk amounted to 28 basis points, landing below the guidance of between 30 and 35 basis points.

Offshore exposure to Russia was reduced to EUR 1.8 billion of EAD (Exposure At Default) at 31 December 2022, i.e., a decrease of around -45% since 31 December 2021. Exposure at risk on this portfolio is estimated at less than EUR 0.6 billion, compared with less than EUR 1 billion for the previous quarter. Total associated provisions stood at EUR 427 million at end-December 2022.

Moreover, at end-December 2022, the Group's residual exposure to Rosbank amounted to less than EUR 0.1 billion, corresponding mainly to guarantees and letters of credit.

The Group's provisions on performing loans amounted to EUR 3,769 million at end-December, an increase of EUR 414 million in 2022.

The non-performing loans ratio amounted to 2.8%(2) at 31 December 2022, down 10 basis points vs. 31 December 2021. The gross coverage ratio on doubtful loans for the Group stood at 48%(3) at 31 December 2022.

The cost of risk in 2023 is expected to range between 30 and 35 basis points.

1. Underlying data (see Methodology note No.5 for the transition from accounting data to underlying data)
2. NPL ratio calculated according to EBA methodology published on 16 July 2019
3. Ratio of S3 assets calculated on the gross carrying amount of the loans before offsetting guarantees and collateral

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Group net income

In EURm	Q4 22	Q4 21	2022	2021
Reported Group net income	1,160	1,787	2,018	5,641
Underlying Group net income(1)	1,126	1,226	5,616	5,264
As a %	Q4 22	Q4 21	2022	2021
ROTE	7.8%	16.6%	2.9%	11.7%
Underlying ROTE(1)	7.6%	9.2%	9.6%	10.2%

Earnings per share amounts to EUR 1.73 in 2022 (EUR 5.97 in 2021). Underlying earnings per share amounts to EUR 6.10 over the same period (EUR 5.52 in 2021).

Shareholder distribution

The Board of Directors approved its distribution policy to an equivalent of EUR 2.25 per share(2). A cash dividend of EUR 1.70 per share will be proposed at the General Meeting of Shareholders on 23 May 2023. The dividend will be detached on 30 May 2023 and paid out on 1 June 2023.

The Group is also planning to launch a share buyback programme for a total of around EUR 440 million, i.e., equivalent to EUR 0.55 per share. The rollout of the programme is conditional on receiving the usual clearances from the ECB.

Considering the strong financial performance in 2022 and an exceptional year, this distribution level ensures on one hand a fair remuneration of shareholders, and on the other hand, further strengthens the Group CET 1 ratio.

Upscaled ESG actions and commitments by the Group

The Group defined its new CSR ambition in 2022 and committed to accelerating the decarbonisation of its business portfolios. It also adopted a global approach to preserve biodiversity, enhance positive local impact and deploy an ESG culture to support clients in responsible social and energy transition.

On this score, Societe Generale strengthened its ambitions to reduce finance for the most carbon- emissive sectors by setting new targets for upstream oil and gas. We are committed to reducing our exposure by -20% out to 2025 vs. 2019 and to scaling down scope 3 carbon emissions by -30% out to 2030 vs. 2019. Likewise, Societe Generale is targeting power generation emission intensity of 125g of Co2/KWh out to 2030. During 2022, the Group fixed a new sustainable finance contribution target of EUR 300 billion out to 2025. At end-2022, the bank had already exceeded the EUR 100 billion mark.

The bank has also implemented several sectorial initiatives such as playing an active role in market coalitions destined to establish a common financing framework on aluminium, steel and aviation, and being at the forefront of rapid-growth economies, such as hydrogen. Societe Generale also increased the weight of biodiversity concerns when managing new commitments involving agriculture and logging operations by giving them greater prominence in its activities, and by taking active part in market initiatives to create common frameworks.

Last, to integrate ESG considerations within the Group, Societe Generale launched a vast internal programme to make ESG culture second nature among its employees, notably by rolling out an extensive training programme and making ESG transformation operational as part of the "ESG by Design" strategic project.

1. Underlying data (see methodology note No.5 for the transition from accounting data to underlying data)
2. Subject to usual approvals from the General Meeting and the ECB

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