Societe Generale: Third quarter 2021 earnings

RESULTS AT SEPTEMBER 30TH 2021

Press release

Paris, November 4^th 2021,

Q3 21: EXCELLENT QUARTER, UNDERLYING GROUP NET INCOME OF EUR 1.4 BILLION⁽¹⁾ (EUR 1.6 BILLION ON A REPORTED BASIS)

Revenues up +14.9% vs. Q3 20 (+15.0%*) driven by growth in all the businesses, in particular a very strong momentum in Financial Services and Financing & Advisory, a very good performance by Global Markets, and continued growth in Retail Banking

Underlying gross operating income: EUR 2.4 billion⁽¹⁾, up 32.8%⁽¹⁾ vs. Q3 20, with a positive jaws effect

Still low cost of risk: 15 basis points in Q3 21, with no significant provision write-back

Profitability (ROTE): 10.9%⁽¹⁾ on an underlying basis and 12.7% on a reported basis in

Q3 21

9M 21: UNDERLYING GROUP NET INCOME OF EUR 4.0 BILLION⁽¹⁾ (X5 VS.

9M 20)

Underlying gross operating income: EUR 6.6 billion⁽¹⁾, +61% vs. 9M 20, driven by revenue growth combined with continued good cost discipline

Cost of risk: 16 basis points

Profitability (ROTE): 10.4%⁽¹⁾ on an underlying basis and 10.0% on a reported basis in

9M 21

SOLID CAPITAL POSITION

Solid CET 1 ratio: 13.4%²(2) at end-September 2021, after provision for distribution and including the impact of the share buyback programme, or around 440 basis points above the regulatory requirement

Organic capital generation: 61 basis points in the first 9 months of 2021

Attractive shareholder return

• Launch of the share buyback programme, for an amount of around EUR 470 million, scheduled for November 4^th, with the programme expected to be finalised by end-2021
• Provision for distribution per share of EUR 2.03 in 9M 21 (financing both dividend and share buyback) consistent with a payout ratio of 50% of underlying Group net income³(3)

SUCCESSFUL EXECUTION OF OUR STRATEGIC PROJECTS

Detailed presentation of the new French Retail Banking operation (a full merger project progressing as scheduled)

Very satisfactory implementation of the strategy in Global Banking & Investor Solutions

Development of our differentiating assets (Boursorama, ALD, KB)

Frédéric Oudéa, the Group’s Chief Executive Officer, commented:

“The Societe Generale group enjoyed an excellent quarter, with strong commercial and financial performances in all the businesses and improvement of the cost-income ratio. The group also continued to benefit from the quality of its loan portfolio, with a low cost of risk combined with a continued very prudent provisioning policy. Thanks to the unfailing commitment of the teams, the different strategic projects announced, in particular the creation of a new French Retail Bank resulting from the merger of the Societe Generale and Crédit du Nord networks, are all progressing in line with the objectives set. The group is already starting to prepare its new strategic plan 2022-2025, drawing on its strong, innovative and fast-growing businesses and its recognised leadership in terms of corporate social responsibility.”

1. GROUP CONSOLIDATED RESULTS

In EURm	Q3 21	Q3 20	Change		9M 21	9M 20	Change
Net banking income	6,672	5,809	+14.9%	+15.0%*	19,178	16,275	+17.8%	+20.0%*
Operating expenses	(4,170)	(3,825)	+9.0%	+9.0%*	(13,025)	(12,363)	+5.4%	+6.6%*
Underlying operating expenses(1)	(4,272)	(4,002)	+6.8%	+6.7%*	(12,594)	(12,186)	+3.3%	+4.6%*
Gross operating income	2,502	1,984	+26.1%	+26.7%*	6,153	3,912	+57.3%	+63.4%*
Underlying gross operating income(1)	2,400	1,807	+32.8%	+33.5%*	6,584	4,089	+61.0%	+67.0%*
Net cost of risk	(196)	(518)	-62.2%	-62.4%*	(614)	(2,617)	-76.5%	-76.0%*
Operating income	2,306	1,466	+57.3%	+58.7%*	5,539	1,295	x 4.3	x 4.6*
Underlying operating income(1)	2,204	1,289	+70.9%	+72.7%*	5,970	1,472	x 4.1	x 4.3*
Net profits or losses from other assets	175	(2)	n/s	n/s	186	82	x 2.3	x 2.3*
Impairment losses on goodwill	-	-	n/s	n/s	-	(684)	n/s	n/s
Income tax	(699)	(467)	+49.7%	+50.9%*	(1,386)	(1,079)	+28.4%	+31.4%*
Net income	1,781	992	+79.5%	+80.9%*	4,343	(386)	n/s	n/s
O.w. non-controlling interests	(180)	(130)	+38.5%	+38.7%*	(489)	(342)	+43.0%	+43.5%*
Reported Group net income	1,601	862	+85.7%	+87.3%*	3,854	(728)	n/s	n/s
Underlying Group net income(1)	1,391	742	+87.4%	+89.3%*	4,038	803	x 5.0	x 5.5*
ROE	11.1%	5.7%			8.7%	-3.0%
ROTE	12.7%	6.5%			10.0%	-1.4%
Underlying ROTE(1)	10.9%	5.5%			10.4%	1.0%

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

Societe Generale’s Board of Directors, which met on November 3^rd, 2021 under the chairmanship of Lorenzo Bini Smaghi, examined the Societe Generale Group’s results for Q3 and 9M 2021.

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

Net banking income

Net banking income increased by +14.9% (+15.0%*) vs. Q3 20, driven by a very strong momentum in all the businesses and the beginning of the recognition of the second TLTRO allowance for around EUR 0.1 billion.

French Retail Banking continued the progress initiated for several quarters. As a result, net banking income (excluding PEL/CEL provision) increased by +5.7% vs. Q3 20, driven by the recovery in net interest income and commissions.

International Retail Banking & Financial Services enjoyed strong revenue growth (+12.8%* vs.

Q3 20), driven by the excellent momentum in Financial Services to Corporates (+39.9%* vs. Q3 20) and Insurance (+10.2%* vs. Q3 20). International Retail Banking also continued to progress (+4.0%* vs. Q3 20).

Global Banking & Investor Solutions also turned in an excellent performance, with revenues up +16.1% vs. Q3 20. Financing & Advisory enjoyed very strong growth (+30.7% vs. Q3 20) while Global Markets activity remained robust (+8.4% vs. Q3 20).

In 9M 21, the Group posted strong growth of +17.8% (+20.0%*) vs. 9M 20, with a positive contribution from all the businesses, and returned to a higher revenue level than in 9M 19 (EUR 18.5 billion).

Operating expenses

In Q3 21, operating expenses totalled EUR 4,170 million on a reported basis and EUR 4,272 million on an underlying basis (restated for the linearisation of IFRIC 21 and transformation costs amounting to EUR 97 million), representing an increase of +6.8% vs. Q3 20.

Driven by a positive jaws effect, underlying gross operating income rose +32.8% to EUR 2,400 million and the underlying cost to income ratio improved by nearly 5 points (64% vs. 69% in Q3 20).

In 9M 21, costs amounted to EUR 13,025 million on a reported basis and EUR 12,594 million on an underlying basis, up +3.3% vs. 9M 20. This limited growth can be explained by the rise in variable costs linked to the growth in revenues (EUR +595 million) and the increase in the IFRIC 21 charge (EUR +67 million). The other operating expenses declined by EUR 207 million, excluding structure effect.

Cost of risk

In Q3 21, the commercial cost of risk stood at a low level of 15 basis points, or EUR 196 million, lower than in Q3 20 (40 basis points) and slightly higher than in Q2 21 (11 basis points). It breaks down into a provision on non-performing loans of EUR 266 million and a provision write-back on performing loans of EUR 70 million.

The Group’s provisions on performing loans currently amount to EUR 3,486 million.

As part of the support provided to its customers during the crisis, the Group granted State Guaranteed Loans. At September 30^th 2021, the residual amount of State Guaranteed Loans represented around EUR 17 billion. In France, the total amount of State Guaranteed Loans (“PGE”) amounts to around

EUR 15 billion and net exposure is less than EUR 2 billion.

The gross doubtful outstandings ratio amounted to 3.1%⁴(1) at September 30^th 2021, stable vs. end-June 2021. The Group’s gross coverage ratio for doubtful outstandings also remained stable at 52%⁵(2) at September 30^th 2021 vs. June 30^th 2021.

The cost of risk is not expected to exceed 20 basis points in 2021.

Group net income

In EURm	Q3 21	Q3 20	9M 21	9M 20
Reported Group net income	1,601	862	3,854	(728)
Underlying Group net income6(1)	1,391	742	4,038	803
In %	Q3 21	Q3 20	9M 21	9M 20
ROTE	12.7%	6.5%	10.0%	-1.4%
Underlying ROTE(1)	10.9%	5.5%	10.4%	1.0%

Earnings per share amounts to EUR 4.02 in 9M 21 (EUR -1.38 in 9M 20). Underlying earnings per share amounts to EUR 4.06 over the same period (EUR 0.42 in 9M 20).

1. THE GROUP’S FINANCIAL STRUCTURE

Group shareholders’ equity totalled EUR 63.6 billion at September 30^th, 2021 (EUR 61.7 billion at December 31^st, 2020). Net asset value per share was EUR 65.5 and tangible net asset value per share was EUR 57.8.

The consolidated balance sheet totalled EUR 1,526 billion at September 30^th, 2021 (EUR 1,462 billion at December 31^st, 2020). The net amount of customer loan outstandings at September 30^th, 2021, including lease financing, was EUR 468 billion (EUR 440 billion at December 31^st, 2020) – excluding assets and securities purchased under resale agreements. At the same time, customer deposits amounted to EUR 487 billion, vs. EUR 451 billion at December 31^st, 2020 (excluding assets and securities sold under repurchase agreements).

At October 20^th, 2021, the parent company had issued EUR 31.5 billion of medium/long-term debt, having an average maturity of 5.4 years and an average spread of 38 basis points (vs. the 6-month midswap, excluding subordinated debt). The subsidiaries had issued EUR 1.4 billion. In total, the Group had issued EUR 32.9 billion of medium/long-term debt. As a result, the parent company had completed its 2021 annual financing programme on both vanilla debt and structured issuances.

The LCR (Liquidity Coverage Ratio) was well above regulatory requirements at 130% at end-September 2021, vs. 149% at end-December 2020. At the same time, the NSFR (Net Stable Funding Ratio) was at a level of 105% at end-September 2021, above the regulatory requirement of 100%.

The Group’s risk-weighted assets (RWA), including IFRS9 phasing, amounted to EUR 363.5 billion at September 30^th, 2021 (vs. EUR 351.9 billion at end-December 2020) according to CRR2/CRD5 rules. Risk-weighted assets in respect of credit risk represent 82.5% of the total, at EUR 300.0 billion, up 4.4% vs. December 31^st, 2020.

At September 30^th, 2021, the Group’s Common Equity Tier 1 ratio stood at 13.4%, or around 440 basis points above the regulatory requirement. The CET1 ratio at September 30^th, 2021 includes an effect of +19 basis points for phasing of the IFRS 9 impact. Excluding this effect, the fully-loaded ratio amounts to 13.2%. The Tier 1 ratio stood at 15.6% at end-September 2021 (16% at end-December 2020) and the total capital ratio amounted to 18.6% (19.2% at end-December 2020).

The leverage ratio stood at 4.5% at September 30^th, 2021 (4.8% at end-December 2020).

With a level of 29.9% of RWA and 8.6% of leverage exposure at end-September 2021, the Group’s TLAC ratio is above the FSB’s requirements for 2021 and 2022. At September 30^th, 2021, the Group was also above its 2022 MREL requirements of 25.2% of RWA and 5.91% of leverage exposure.

The Group is rated by four rating agencies: (i) Fitch Ratings - long-term rating “A-”, stable rating, 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”, stable outlook, short-term rating “A-1”.   

1. FRENCH RETAIL BANKING

In EURm	Q3 21	Q3 20	Change	9M 21	9M 20	Change
Net banking income	1,976	1,836	+7.6%	5,729	5,470	+4.7%
Net banking income excl. PEL/CEL	1,963	1,857	+5.7%	5,711	5,511	+3.6%
Operating expenses	(1,351)	(1,292)	+4.6%	(4,101)	(3,975)	+3.2%
Gross operating income	625	544	+14.9%	1,628	1,495	+8.9%
Gross operating income excl. PEL/CEL	612	565	+8.3%	1,610	1,536	+4.8%
Net cost of risk	5	(130)	-103.8%	(124)	(821)	-84.9%
Operating income	630	414	+52.2%	1,504	674	x 2.2
Net profits or losses from other assets	(2)	3	-166.7%	2	139	-98.6%
Reported Group net income	451	283	+59.4%	1,092	562	+94.3%
Underlying Group net income (1)	414	274	+50.9%	1,107	613	+80.6%
RONE	16.4%	9.5%		13.0%	6.5%
Underlying RONE(1)	15.0%	9.2%		13.2%	7.1%

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

Societe Generale and Crédit du Nord networks:

Average loan outstandings were 2% lower than in Q3 20 at EUR 207 billion. They were 9% higher than in Q3 19. Average outstanding loans to individuals were up +1%, bolstered by the growth in home loan production (+58% vs. Q3 20). The production of medium/long-term loans to corporate and professional customers climbed +48% excluding State Guaranteed Loans vs. Q3 20.

Average outstanding balance sheet deposits⁷(2) increased by +7% vs. Q3 20 to EUR 240 billion, still driven by sight deposits, whose rate of growth nevertheless decelerated.

As a result, the average loan/deposit ratio stood at 87% in Q3 21 vs. 95% in Q3 20.

Insurance assets under management totalled EUR 91 billion at end-September 2021. Gross life insurance inflow amounted to EUR 1.9 billion in Q3 21, with the unit-linked share accounting for 36%.

Private Banking’s assets under management totalled EUR 76 billion at end-September 2021. Net inflow remained buoyant at EUR 1.1 billion in Q3 21.

Property/casualty insurance premiums were up +3% vs. Q3 20, as were personal protection insurance premiums (+3% vs. Q3 20).

Boursorama:

The bank consolidated its position as the leading online bank in France, with more than 3.1 million clients at end-September 2021, thanks to the onboarding of 163,000 new clients in Q3 21 (+26% vs. Q3 20). Boursorama has exceeded 3 million clients ahead of its onboarding plan.

This quarter, Boursorama distinguished itself by obtaining 2022 award in the rankings for best online bank awarded by Moneyvox. Boursorama was also classified No. 1 in the rankings for best bank for students in France 2021 awarded by Selectra. The bank also received an award for its retirement savings plan (“MATLA”) from the business magazines Challenges and Le Particulier (Victoire d’or). In addition, the bank received the 2022 Excellence Label for personal loans awarded by Les Dossiers de l’Epargne magazine.

Average outstanding loans rose +28% vs. Q3 20 to EUR 13 billion. Home loan outstandings were up +30% vs. Q3 20.

Average outstanding savings including deposits and financial savings were 30% higher than in Q3 20 at EUR 35 billion, while outstanding deposits were up +29% vs. Q3 20. Life insurance outstandings were 14% higher than in Q3 20 while assets under management in UCITS increased by +35% vs.

Q3 20.

Net banking income excluding PEL/CEL

Q3 21: revenues (excluding PEL/CEL) totalled EUR 1,963 million, up +5.7% vs. Q3 20. Net interest income (excluding PEL/CEL) was up +5.9% vs. Q3 20. Commissions were 5.2% higher than in Q3 20 owing particularly to an increase in financial commissions against the backdrop of recovery.

9M 21: revenues (excluding PEL/CEL) totalled EUR 5,711 million, up +3.6% vs. 9M 20. Net interest income (excluding PEL/CEL) was stable (+0.5%) vs. 9M 20. Commissions were 5.1% higher than in 9M 20, benefiting from the strong growth in financial commissions.

Operating expenses

Q3 21: operating expenses totalled EUR 1,351 million (+4.6% vs. Q3 20) and EUR 1,390 million on an underlying basis. The cost to income ratio (after linearisation of the IFRIC 21 charge and restated for the PEL/CEL provision) stood at 68.8%, an improvement of 0.8 points vs. Q3 20.

9M 21: operating expenses totalled EUR 4,101 million (+3.2% vs. 9M 20) and EUR 4,062 million on an underlying basis. The cost to income ratio (after linearisation of the IFRIC 21 charge and restated for the PEL/CEL provision) stood at 71.8%, an improvement of 0.3 points vs. 9M 20.

Cost of risk

Q3 21: the commercial cost of risk represented a write-back of EUR 5 million or -1 basis point, a significant improvement vs. Q3 20 (24 basis points), and virtually stable vs. Q2 21 (1 basis point).

9M 21: the commercial cost of risk amounted to EUR 124 million or 8 basis points, a substantial decline compared to 9M 20 (52 basis points).

Contribution to Group net income

Q3 21: the contribution to Group net income was EUR 451 million vs. EUR 283 million in Q3 20 (+59% vs. Q3 20). RONE (after linearisation of the IFRIC 21 charge and restated for the PEL/CEL provision) stood at 15.0% in Q3 21 (9.2% in Q3 20) and 16.1% excluding Boursorama.

9M 21: the contribution to Group net income was EUR 1,092 million (+94% vs. 9M 20). RONE (after linearisation of the IFRIC 21 charge and restated for the PEL/CEL provision) stood at 13.2% in 9M 21 (7.1% in 9M 20) and 14.2% excluding Boursorama.

1. INTERNATIONAL RETAIL BANKING & FINANCIAL SERVICES

In EURm	Q3 21	Q3 20	Change		9M 21	9M 20	Change
Net banking income	2,107	1,891	+11.4%	+12.8%*	5,958	5,605	+6.3%	+9.8%*
Operating expenses	(1,015)	(999)	+1.6%	+2.3%*	(3,115)	(3,124)	-0.3%	+2.6%*
Gross operating income	1,092	892	+22.4%	+24.7%*	2,843	2,481	+14.6%	+19.0%*
Net cost of risk	(145)	(331)	-56.2%	-56.7%*	(408)	(978)	-58.3%	-57.0%*
Operating income	947	561	+68.8%	+75.0%*	2,435	1,503	+62.0%	+69.0%*
Net profits or losses from other assets	4	(2)	n/s	n/s	10	9	+11.1%	+11.1%*
Reported Group net income	584	337	+73.3%	+80.0%*	1,498	928	+61.4%	+69.4%*
Underlying Group net income (1)	570	323	+76.5%	+83.7%*	1,512	942	+60.5%	+68.3%*
RONE	22.6%	12.9%			19.7%	11.6%
Underlying RONE(1)	22.1%	12.3%			19.9%	11.8%

(1)   Adjusted for the linearisation of IFRIC 21





International Retail Banking’s loan and deposit production experienced an increase in all geographical regions. Outstanding loans totalled EUR 90.9 billion. They rose +4.3%* vs. end-September 2020. Outstanding deposits were 9.6%* higher than in September 2020, at EUR 90.1 billion.

For the Europe scope, outstanding loans were up +5.1%* vs. September 2020 at EUR 58.1 billion, driven by all the regions: +4.4%* in the Czech Republic, +7.5%* in Romania, and +5.2%* in Western Europe. Outstanding deposits increased by +12.1%*.

In Russia, outstanding loans enjoyed healthy growth (+8.0%*), with a robust performance in home loans and in the corporate customers segment with outstanding loans up +15%* and +7%* respectively vs. Q3 20. Outstanding deposits also rose (+3.6%*).

In Africa, Mediterranean Basin and French Overseas Territories, outstanding loans rose +0.9%*. Outstanding deposits, up +7.2%*, enjoyed a healthy momentum.

In the Insurance business, the life insurance savings business saw outstandings increase +8%* at end-September 2021 vs. September 2020 to EUR 132 billion. The share of unit-linked products in outstandings was 35%, an increase of +5 points vs. September 2020.

Financial Services to Corporates also enjoyed a healthy momentum. Operational Vehicle Leasing and Fleet Management had 1.7 million contracts, including 1.4 million financed vehicles, an increase of 0.6% vs. end-September 2020. Equipment Finance’s new leasing business was up +11%* vs. Q3 20 (+12%* in 9M 21), while outstanding loans were stable vs. end-September 2020, at EUR 14.3 billion (excluding factoring).

Net banking income

Net banking income amounted to EUR 2,107 million in Q3 21, up +12.8%* vs. Q3 20. Revenues amounted to EUR 5,958 million in 9M 21, up +9.8%* vs. 9M 20.

International Retail Banking’s net banking income totalled EUR 1,271 million in Q3 21, an increase of +4.0%* vs. Q3 20. Thanks to a healthy commercial momentum and an increase in commissions (+17%* vs. Q3 20), revenues in Europe were 6.2%* higher than in Q3 20. Activity in the individual customers segment remained particularly robust in specialised consumer finance, with revenues up +14%* vs. Q3 20. For the SG Russia⁸(2) scope, revenues were down -4.8%* (-1.4%* vs. 9M 20) despite a healthy momentum in the corporate customers and home loan segments. The Africa, Mediterranean Basin and French Overseas Territories scope posted revenues up +4.4%* vs. Q3 20. International Retail Banking’s net banking income totalled EUR 3,689 million in 9M 21, up +2.6%* vs. 9M 20.

The Insurance business posted net banking income up +10.2%* vs. Q3 20, at EUR 246 million in

Q3 21. The gross premiums of the life insurance savings business were 59%* higher in Q3 21 than in Q3 20, with an attractive share of unit-linked products (43%). Protection insurance saw an increase of +7%* vs. Q3 20. Property/casualty premiums rose +10%* (including +8%* in France and +17%* internationally), as did personal protection insurance (+5%* vs. Q3 20). The Insurance business’ net banking income was 8.8%* higher in 9M 21 than in 9M 20 at EUR 720 million.

Financial Services to Corporates’ net banking income was substantially higher (+39.9%*) than in

Q3 20, at EUR 590 million. This performance was driven primarily by the activities of ALD which posted an increase in leasing margins (+12%⁹(1) vs. Q3 20) and the used car sale result (EUR 1,126 per unit in 9M 21). Financial Services to Corporates’ net banking income totalled EUR 1,549 million in

9M 21, up +32.6%* vs. 9M 20.

Operating expenses

Operating expenses totalled EUR 1,015 million, an increase of +2.3%* on a reported basis and +2.3%* also on an underlying basis vs. Q3 20, in conjunction with the growth in revenue. As a result, the quarter generated a positive jaws effect. The cost to income ratio stood at 48.2% in Q3 21. Operating expenses amounted to EUR 3,115 million in 9M 21, an increase of +2.6%* vs. 9M 20.

In International Retail Banking, operating expenses were up +3.4%* vs. Q3 20. Operating expenses were slightly higher (+2.0%*) in 9M 21 than in 9M 20.

In the Insurance business, operating expenses were in line with the expansion ambitions and rose +4.5%* vs. Q3 20 and +4.3%* vs. 9M 20.

In Financial Services to Corporates, operating expenses increased by +2.0%* vs. Q3 20 and +4.1%* vs. 9M 20.

Cost of risk

Q3 21: the commercial cost of risk amounted to 43 basis points (EUR 145 million), vs. 37 basis points in Q2 21 and 102 basis points in Q3 20.

9M 21: the cost of risk amounted to 41 basis points (EUR 408 million). It was 98 basis points in 9M 20.

Contribution to Group net income

The contribution to Group net income totalled EUR 584 million in Q3 21 (+80.0%* vs. Q3 20) and

EUR 1,498 million in 9M 21 (+69.4%* vs. 9M 20). Underlying RONE stood at 22.1% in Q3 21 (vs. 12.3% in Q3 20) and 19.9% in 9M 21 (11.8% in 9M 20).

1. GLOBAL BANKING & INVESTOR SOLUTIONS

In EURm	Q3 21	Q3 20	Change		9M 21	9M 20	Change
Net banking income	2,361	2,034	+16.1%	+15.4%*	7,210	5,541	+30.1%	+32.5%*
Operating expenses	(1,608)	(1,478)	+8.8%	+8.2%*	(5,307)	(5,025)	+5.6%	+6.9%*
Gross operating income	753	556	+35.4%	+34.5%*	1,903	516	x 3.7	x 4*
Net cost of risk	(57)	(57)	-	-	(83)	(818)	-89.9%	-89.5%*
Operating income	696	499	+39.5%	+38.4%*	1,820	(302)	n/s	n/s
Group net income	563	381	+47.8%	+46.6%*	1,441	(223)	n/s	n/s
Underlying Group net income (1)	467	295	+58.0%	+56.4%*	1,537	(137)	n/s	n/s
RONE	14.7%	10.3%			13.1%	-2.1%
Underlying RONE(1)	12.2%	7.9%			14.0%	-1.3%

(1)   Adjusted for the linearisation of IFRIC 21





Net banking income

In Q3 21, Global Banking & Investor Solutions enjoyed a healthy momentum in its businesses, with revenues of EUR 2,361 million, substantially higher (+16.1%) than in Q3 20.

In 9M 21, revenues rose +30.1% vs. 9M 20 (EUR 7,210 million vs. EUR 5,541 million), and were higher than 9M 19 revenues (EUR 6,518 million).

In Global Markets & Investor Services, net banking income totalled EUR 1,349 million (+8.4% vs.

Q3 20). It amounted to EUR 4,388 million in 9M 21 (+46.1% vs. 9M 20).

The Equity market was active, driven by commercial activity that remained buoyant throughout the quarter. The business posted revenues of EUR 814 million, up +53% vs. Q3 20, with a good performance in all activities. Volumes were particularly high on investment solutions products (structured products and listed products) and on prime services products.

Revenues totalled EUR 2,423 million in 9M 21 (vs. EUR 682 million in 9M 20).

Market conditions were less favourable for the Fixed Income franchise model: substantial spread compression on financing, coupled with reduced client demand in Fixed Income markets. The environment was also unfavourable in Asia. However, commercial activity remained resilient on the Corporates franchise. Fixed Income & Currency activities posted revenues of EUR 380 million in

Q3 21, down -33% vs. a good Q3 20.

Revenues were 21% lower in 9M 21 compared to the exceptionally high level in 9M 20.

Securities Services’ revenues saw a further increase, with revenues up +6.9% vs. Q3 20, at EUR 155 million. They were 10% higher in 9M 21 than in 9M 20, at EUR 490 million.

Securities Services’ assets under custody amounted to EUR 4,475 billion, slightly higher than at end-June 2021. Over the same period, assets under administration were up +2.9%, at

EUR 680 billion.

Financing & Advisory delivered the best historical performance, with revenues of

EUR 757 million in Q3 21, up +31% vs. Q3 20. They amounted to EUR 2,110 million in 9M 21, significantly higher (+13%) than in 9M 20 (+15%* when adjusted for changes in Group structure and at constant exchange rates).

Investment Banking enjoyed an excellent quarter, driven by the strong momentum of advisory, M&A and Leveraged Buyout activities. Revenues from Asset Finance, Natural Resources and Infrastructure activities and the Asset-Backed Products platform also showed a substantial increase.

Global Transaction and Payment Services continued to enjoy strong growth, up +23% vs. Q3 20.

Asset and Wealth Management’s net banking income totalled EUR 255 million in Q3 21 (+21% vs.

Q3 20). It was 6% higher in 9M 21.

Private Banking posted a substantial increase in its revenues (+20% vs. Q3 20) to EUR 184 million. The business benefited from a favourable market environment and strong commercial activity. Net inflow amounted to EUR +2.2 billion during the quarter.

Net banking income totalled EUR 528 million in 9M 21, up +2.3% vs. 9M 20 (when restated for an exceptional impact of EUR +29 million related to an insurance payout received in 2020, it is up +8.4%). Net inflow was high (EUR +6.8 billion in the first nine months) and positive in all geographical regions.

Assets under management totalled EUR 127 billion. They rose +11% vs. end-September 2020.

Lyxor’s net banking income amounted to EUR 64 million, an increase of +21% vs. Q3 20. Assets under management were up +28% vs. end-September 2020, at EUR 169 billion.

Revenues were 17% higher in 9M 21 than in 9M 20, with net inflow of EUR +14 billion.

Operating expenses

Q3 21: operating expenses totalled EUR 1,608 million and EUR 1,733 million on an underlying basis. Higher underlying costs (+9.3% vs. Q3 20) can be explained by the rise in variable costs related to the increase in earnings and IFRIC 21 charges. Thanks to a very positive jaws effect, there was an improvement in the cost to income ratio of 5 points (68% vs. 73% in Q3 20).

9M 21: operating expenses were up +5.6% on a reported basis and +5.4% on an underlying basis.

Net cost of risk

Q3 21: the commercial cost of risk amounted to 14 basis points (or EUR 57 million), the same level as in Q3 20.

9M 21: it was at a low level of 7 basis points, well below 9M 20 (66 basis points) which was adversely affected by the health crisis.

Contribution to Group net income

Q3 21: the contribution to Group net income was EUR 563 million on a reported basis (+48% vs.

Q3 20) and EUR 467 million on an underlying basis (+58% vs. Q3 20).

9M 21: it was EUR 1,441 million and EUR 1,537 million respectively.

Global Banking & Investor Solutions posted a significant underlying RONE of 12.2% in Q3 21 and 14.0% in 9M 21.

1. CORPORATE CENTRE

In EURm	Q3 21	Q3 20	9M 21	9M 20
Net banking income	228	48	281	(341)
Operating expenses	(196)	(56)	(502)	(239)
Underlying operating expenses (1)	(110)	(69)	(259)	(226)
Gross operating income	32	(8)	(221)	(580)
Underlying gross operating income (1)	118	(21)	22	(567)
Net cost of risk	1	-	1	-
Impairment losses on goodwill	-	-	-	(684)
Income tax	(166)	(84)	(6)	(534)
Reported Group net income	3	(139)	(177)	(1,995)
Underlying Group net income (1)	(69)	(137)	(132)	(586)

(1)   Adjusted for the linearisation of IFRIC 21





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 as well as certain costs incurred by the Group and not re-invoiced to the businesses.

The Corporate Centre’s net banking income totalled EUR 228 million in Q3 21 vs. EUR +48 million in Q3 20 and EUR +281 million in 9M 21 vs. EUR -341 million in 9M 20.

Operating expenses totalled EUR 196 million in Q3 21 vs. EUR 56 million in Q3 20. They include the Group’s transformation costs for a total amount of EUR 97 million relating to the activities of French Retail Banking (EUR 46 million), Global Banking & Investor Solutions (EUR 23 million) and the Corporate Centre (EUR 28 million). Underlying costs came to EUR 110 million in Q3 21 compared to EUR 69 million in Q3 20.

Operating expenses totalled EUR 502 million in 9M 21 vs. EUR 239 million in 9M 20. They include the Group’s transformation costs for a total amount of EUR 232 million relating to the activities of French Retail Banking (EUR 106 million), Global Banking & Investor Solutions (EUR 66 million) and the Corporate Centre (EUR 60 million). Underlying costs came to EUR 259 million in 9M 21 compared to EUR 226 million in 9M 20.

Gross operating income totalled EUR 32 million in Q3 21 vs. EUR -8 million in Q3 20 and EUR -221 million in 9M 21 vs. EUR -580 million in 9M 20. Underlying gross operating income came to EUR +22 million in 9M 21.

The Corporate Centre’s contribution to Group net income was EUR 3 million in Q3 21 vs. EUR -139 million in Q3 20 and EUR -177 million in 9M 21 vs. EUR -1,995 million in 9M 20. It includes a capital gain on a property sale amounting to EUR 185 million, before tax is taken into account (EUR 132 million net of tax).

1. CONCLUSION

The Group delivered an excellent performance in the first 9 months of 2021. All the businesses experienced healthy revenue growth, compared to the first 9 months of 2020, and a improvement in their cost to income ratio due to disciplined cost management.

At end-September 2021, the Group’s CET1 ratio stood at 13.4%¹⁰(1) comfortably above its regulatory requirement, after taking account of the distribution provision of EUR 2.03¹¹(2) (financing both dividend and share buyback) and the capital impact of the announced share buyback programme of around EUR 470 million. Authorised by the ECB on September 30^th 2021, the Group intends to implement the programme as from November 4^th and by end-2021. During this period, the group will suspend the liquidity contract.

Furthermore, the Group continues to execute its strategy with the achievement, this quarter, of a new key mil