deep dive into market activities and asia - 06/03/2018 · 2018. 6. 3. · deep dive into market...
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DEEP DIVE INTO
MARKET ACTIVITIES & ASIA
SOCIETE GENERALE
0 6 . 0 3 . 2 0 1 8
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06.03.2018 2 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
DISCLAIMER
This presentation 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 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.
Figures in this presentation are unaudited.
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FRANK DROUET
H E A D O F G L O B A L M A R K E T S
DEEP DIVE INTO MARKET ACTIVIT IES
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06.03.2018 4 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
GLOBAL MARKETS WITHIN SOCIETE GENERALE
In the presentation, Global Markets includes Fixed Income, Equity and Prime Services
(1) Source: 2016 Coalition Index
A STRONG FRANCHISE
EUR 5.0bn revenues
5.2% 2016 market share(1)
24 Primary dealerships
130 Market venues presence
35% revenues derived from
Top 3 positions segments
INNOVATION IS OUR DNA
150 structurers
One of the largest teams
in the industry
500+
APIs in our catalogue
60% IT infrastructure on a
Public/Private cloud
INTERCONNECTING
REGIONS
Europe ~60% of Global Markets
staff and revenues
Americas ~20% of Global Markets
staff and revenues
Asia ~20% of Global Markets
staff and revenues
TRANSFORM TO GROW:
2020 OBJECTIVES
~+2.5% CAGR NBI 2016-2020
Global Markets and
Investor Services
RWA Global Markets
<20% of Group total
RONE Contribute to Global
Banking and Investor
Solutions target of
~14%
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06.03.2018 5 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
Global
Finance
Coverage &
Investment
Banking Wealth and
Asset
Management
Securities
Services
International
Retail
Banking
French Retail
Banking
Corporate Equity derivatives
Distribution of ECM issuances
GLOBAL
MARKETS
AN ACTIVITY AT THE SERVICE OF SOCIETE GENERALE’S MODEL
(1) Fixed Income, Currencies and Commodities
GTPS
Liquidity Management
Prime Services
client introduction
FICC(1) derivatives for Corporates
Distribution of DCM issuances
Forex
Lyxor: distribution of ETFs, hedging, swaps
Private Banking: distribution of structured
products, execution of client orders
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06.03.2018 6 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
A CLIENT ORIENTED BUSINESS CONSTANTLY ADAPTING TO THEIR NEEDS
Equities includes Prime Services. 2016 data
Financial Institutions Own account
Financial Institutions Distribution
Corporates Own account
Share in Global Markets client revenues Share in Global Markets client revenues Share in Global Markets client revenues
60%-70%
15%-20%
Global Markets acts as an intermediary and a solution
provider to FIs for their own execution and hedging needs
Global Markets acts as an investment solutions provider
for FIs which sell our products to their own final clients
Global Markets provides corporate clients with hedging
solutions of their risks
~50% ~50%
Equities FICC
~70% ~30%
Equities FICC
Banks
Hedge Funds
Asset Managers
Insurers
Banks
Insurers
Asset Managers
~10% ~90%
Equities FICC
10%-20%
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06.03.2018 7 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
AN AGILE AND DIVERSIFIED BUSINESS MIX
(1) Source: 2016 Coalition Index, Top 12 banks excl. SG (BoA, Barc, BNPP, Citi, CS, DB, GS, HSBC, JPM, MS, UBS), excl. US munies High Medium Low High
correlation
Medium
correlation
Low
correlation
INVESTMENT SOLUTIONS 28% Strong ability to address our clients
investment requests
One of the largest structuring teams in the
industry
An all-assets Structured Products house
A distribution leader
FINANCING SOLUTIONS 24% Servicing clients needs in a low rates
environment
Development via Newedge acquisition
Active player in Bonds and Equity repo
markets
Asset backed products push
Balance sheet optimisation
FLOW BUSINESS 48% Constant provider of liquidity
Leader in Equity flow derivatives
Long standing commitment to
Commodities
Leader in agency listed products
Equities
FICC
Equities
FICC
Equities
FICC
. Peers(1)
Scarce
resources ROE
Volatility Market
level
Market driver
sensitivity
Differentiating
factors
Equities
solutions
FICC
solutions Innovation
Funding
Macro themes
Primary activity
Group footprint FIC flow
Size of franchise
Financing Commodities
Equities flow Coverage
Pricing consistency
FICC
financing Resources allocated
Client AuM (PB) Equities
financing
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06.03.2018 8 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
4.6% 5.2% 5.2% 5.5%
3.1% 3.6% 3.6% 3.7% 3.5%
4.8% 5.6%
7.2% 8.2% 8.4%
9.1% 9.7%
3.8% 4.2%
4.7% 4.9%
2014 2015 2016 H1-17 2014 2015 2016 H1-17 2014 2015 2016 H1-17 2014 2015 2016 H1-17 2014 2015 2016 H1-17
Global Fixed Income Commodities Equity Prime services
A BUSINESS MODEL GAINING MARKET SHARE
(1) Source: Coalition report. Top 12 banks: BoA, Barc, BNPP, Citi, CS, DB, GS, HSBC, JPM, MS, SG, UBS
Market share vs. top 12 banks(1)
Overall derivatives
house of the year Most innovative IB for
Risk management
Equity derivatives
house of the year
Europe House
of the Year
Interest rates
house of the year
Bank technology
provider of the year
FICC House
of the Year
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06.03.2018 9 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
WE FACED CHALLENGES AND SUCCESSFULLY ADAPTED OUR BUSINESS
Eurozone crisis
Basel II
Basel III
Dodd-Franck
FATCA
EMIR
Volcker
French Banking Law
IHC
MAD/MAR
Cash consumption reduced by 2/3 in 3
months
Cash consumption reduced by 30%
French Systemic tax
UK Bank Levy
SRF
Subordination costs
Newedge acquisition
Diversification
Mitigation
actions
Headwinds
Prime Services
Commodities agency
Offer expansion
Diversification
FICC
reengineering
Diversification
LCR Liquidity
crisis
Equity: Asian crisis Historical low volatility levels FICC market
slowdown Volatility decline
Lower interest rates
2010 2012 2013 2014 2015 2016 2017 2011
Mifid II
PRIIPS
NSFR
Basel IV FICC: low volumes
WE HAVE REMAINED SIGNIFICANTLY MORE PROFITABLE THAN THE INDUSTRY
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06.03.2018 10 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
GLOBAL MARKETS: 2016-2020 ROADMAP
STRENGTHEN OUR EDGE AS A
GLOBAL LEADER IN
DERIVATIVES
BECOME A TOP PLAYER
ACROSS PRODUCTS
IN EUROPE
BUILD THE
PARTNER BANK
Prime brokerage platform development
Expand our SG Index Platform
Grow our derivatives solutions franchise
with Corporate clients
Invest in Fixed Income,
notably Rates and Credit
Leverage our Bank network
in Eastern Europe
Right capital allocation
Active risk recycling
Adapting to regulatory changes
Tight cost management
OPTIMISE
OUR RESOURCES
Enhance our digital offering
and client experience:
a portal and an open library of APIs
Provide advisory in risk management
Extend our Positive Impact offering
GLOBAL MARKETS & INVESTOR SERVICES REVENUES ~+2.5% CAGR 2016-2020
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06.03.2018 11 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
FICC
Equity
Prime Services
GLOBAL MARKETS: 2016-2020 ROADMAP
OUR AMBITION
Share of 2016-2020 Global Markets revenue growth
STRENGTHEN OUR EDGE AS A GLOBAL
LEADER IN DERIVATIVES
BECOME A TOP PLAYER ACROSS
PRODUCTS IN EUROPE
A well-balanced contribution
Prime Services development
increases model diversification
while improving revenues stability
Stable regional contribution
US bank 1
EU bank 1
US 2 US 3 SG US 4 EU 3 EU 4 US 5 EU 5 EU 6 EU 7
EUR 6bn
Prime
Services
Equities
Fixed Income
Commodities
Close the gap in Europe
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06.03.2018 12 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
3. ALTERNATIVE RISK TRANSFER TO HEDGE FUNDS
2. TRADING POSITIONS
1. BEST-SELLING
STRUCTURED PRODUCTS
Inventory of risks in our
trading books
Development of
trade opportunities
Increased capacity
for structured products
Transferring Societe Generale
risk for the benefit of investors
Market activities daily results (EUR m – 2017)
The quality of risk
management of
Societe Generale
market activities is
RECOGNIZED BY
THE INDUSTRY:
Very limited daily losses for market activities among the past years
LCR well-above 100%, NSFR in excess
Continued risk optimization
We focus on diversification (by client, product, market,…)
We have developed the capability to recycle our risks while meeting client
demand
Diversification & Innovation
Our dedicated Market Risk Advisory provides tailored solutions to help our
clients successfully address their risk management issues
Risk management advisory
GLOBAL MARKETS: 2016-2020 ROADMAP
OPTIMISE OUR RESOURCES
MAINTAIN AN EFFICIENT RISK FRAMEWORK
0
20
40
60
80
100
< -1
0
-10
> <
0
0 >
< 1
0
10
> <
20
20
> <
30
30
> <
40
40
> <
50
50
> <
60
< 6
0
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06.03.2018 13 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
A ONE STOP SHOP as a
MARKETS EXPERT /
ADVISOR
RELIABLE DELIVERY
Products & Services,
MASS RELEVANT
CLIENTS AS PARTNERS
Quality & performance
matter for a substainable
long term relationship
Effective capacity to ACT AS ONE
A PLATFORM of
RELEVANT content and solutions
SIMPLIFY
our clients’ life
Continue to deploy new Products & Services,
offered to our clients through
their preferred channel
INNOVATE FOR OUR CLIENTS
MORE
SERVICES
SGMarkets Single Dealer
Platform
API
Multi Dealer
Platforms
Channels
SGBot Chat platforms
GLOBAL MARKETS: 2016-2020 ROADMAP
BUILD THE PARTNER BANK
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HIKARU OGATA
H E A D O F A S I A - PA C I F I C
DEEP DIVE INTO ASIA
0 6 . 0 3 . 2 0 1 8
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06.03.2018 15 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
>2,000 clients
EUR 1.0bn Asian client revenues
worldwide
o/w 45% Corporates
o/w 55% Financial Institutions
67 International awards
ASIA PACIFIC WITHIN SOCIETE GENERALE
2017 data
(1) Revenues originated by ASIA business unit, 100% booked within Global Banking and Investor Solutions
A STRONG AND
BALANCED CLIENT
FRANCHISE
A FRANCHISE
CONNECTING ASIA AND
THE WORLD
A STRONG AND
RESILIENT WHOLESALE
FRANCHISE
A DIVERSIFIED PRESENCE
13% of Global Banking and
Investor Solutions
revenues
~40% Corporate clients
revenues generated
outside their domestic
region
>EUR 175m revenues generated with
APAC corporate clients
outside APAC region,
cross-selling both
wholesale and non-
wholesale products
EUR 1.2bn Revenues(1)
RONE
Greater than Global
Banking and Investor
Solutions average
Top positions Structured products
Equity derivatives
G10 Rates, Commodities
Natural Resources
Strong footprint Asset Finance
Corporate Lending
Prime Services
150 years
Presence in the region
12 Countries presence
17 Exchange memberships
20 Main local regulators
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06.03.2018 16 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
A DIVERSIFIED AND CONNECTED CLIENT PORTFOLIO
2017 data
* CEEMEA: Central Eastern Europe, Middle East and Africa
45% 55%
EUR 1bn
REVENUES
GENERATED FOR THE
GROUP BY ASIAN
CLIENTS
500 core clients
Revenues in all the countries where the Group is present
~ 40% of revenues generated outside their domestic region
Corporate clients
Revenues split by client segment
180 core clients
Diversified portfolio
~70% of revenues from Japanese, Korean and Chinese clients
Financial institutions
Revenues split by region
Asia-Pacific
61%
CEEMEA*
5%
Europe
excl. France
19%
France
9%
Americas
6%
Banks &
Security
dealers
60%
Asset
Managers
2%
Insurers
21%
Sovereigns
and Supras
8%
Hedge funds
3%
Others
6%
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06.03.2018 17 DEEP DIVE INTO MARKET ACTIVITIES AND ASIA
A PROFITABLE, LEADING AND GROWING FRANCHISE
Top 3
Top 4-7
Top 4-7
8.7%
3.1%
2.4%
8.1%
2.5%
2.2%
Equity Derivatives
G10 Rates
Commodities
APAC market shares H1 17(1)
APAC ex. Japan APAC
Growing wealth creation
Strong appetite for Positive Impact Finance
across the region
Increasing globalisation of Investors and Corporate clients
Need for Project, Infrastructure and Trade Financing
A PROFITABLE AND LEADING FRANCHISE
A CONNECTED FRANCHISE POSITIONED TO CAPTURE MARKET GROWTH
Leadership positions in Derivatives, Investment Solutions and Natural Resources
Financial institutions: selective and successful expansion in Fixed Income and Prime
Services
Corporate clients: increased penetration with EMEA footprint, hedging solutions and DCM
Innovation in product and digital delivery, including partnering with fintechs
Grow activities consistently with the global CIB strategy and by tackling regional
growth opportunities
Offering clients an access to the best of our expertise in terms of services and network
Onshore teams providing proximity to our clients in the region
Strong execution capacity in all Asian markets
Pursue strategies to develop and gain market share in key areas (Prime Services,
Real Estate, Aircraft financing, Asset-Backed Products)
Consolidation of our market leading positions (Equities, Japan, Korea, Taiwan) and
further development in frontier markets (China) (1) Source: Coalition
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SOCIETE GENERALE INVESTOR RELATIONS
+33 (0)1 42 14 47 72
www.societegenerale.com/en/investors