Banks

www.fitchratings.com 6 April 2018

France

Societe Generale S.A. Full Rating Report

Key Rating Drivers

Diversified Universal Bank: Societe Generale S.A.’s (SG) ratings reflect the bank’s sound

company profile, which benefits from franchise strengths across selected products and

geographies that result in well-diversified and resilient earnings. SG has a broad retail and

corporate banking network across France, several countries in central and eastern Europe

(CEE) and Africa, as well as Russia, a leading global equity derivatives franchise and a sound

presence in euro-denominated debt capital markets.

Asset Quality Weaker than Peers: SG’s asset quality remains weaker than peers, despite

material improvements since end-2013. Impaired loans represented 5% of gross loans at end-

2017, reflecting higher-risk pockets than Global Trading and Universal Bank (GTUB) peers in

SG’s domestic retail portfolios and certain international retail markets, as well as slower write-

off practices in France aiming to maximise recoveries. Loan impairment charges (LICs) can

therefore accrue through time, which in our view exposes the group to unexpected shocks.

Sound Profitability: SG’s earnings are sound and resilient thanks to the group’s

diversification. Market activities and exposure to emerging economies introduce some earnings

volatility, which has been well managed. Product and geographical diversification provides

cross-selling opportunities and results in stronger revenue per client. Delivering cost savings

will be important to improve operating profit. We expect French retail revenue to stabilise in

2018 as the proportion of renegotiated housing loans falls to negligible levels.

Strong Internal Capital Generation: SG’s strong internal capital generation mitigates the

group’s adequate regulatory capital ratios, which are at the lower end of GTUB peers. SG

targets a 12% fully loaded common equity Tier 1 (CET1) ratio by end-2020 and expects to

operate with a CET1 ratio of about 11.5% by end-2018, about 2pp above its expected end-

state regulatory capital requirement. We expect internal capital generation to be sufficient to

fund organic growth and potential bolt-on acquisitions.

Diversified Funding: SG has a well-diversified funding, consisting mainly of customer

deposits. The group has an established access to wholesale capital markets. Subsidiaries are

increasingly self-funded. The bank’s buffer of unencumbered liquid assets is equal to about

290% of unsecured short-term wholesale funding.

Senior Preferred Debt Uplift: Long-term senior preferred debt, deposits and derivative

counterparties are rated one notch above SG’s Long-Term Issuer Default Rating (IDR)

because of their preferential status over the bank’s large buffer of additional Tier 1, Tier 2 and

senior non-preferred debt, which was about 8.5% of risk-weighted assets (RWAs) at end-2017.

Rating Sensitivities

Weaker Earnings: A structural deterioration in profitability that weakens the bank’s internal

capital generation would put pressure on the ratings, as would higher gross impaired loans or a

material change in risk appetite. Sizeable litigation losses could result in a downgrade if they

durably reduce capitalisation without a credible plan to restore it to current levels.

Limited Upside: An upgrade would be contingent on a substantial strengthening of the bank’s

company profile and a material improvement in asset quality while maintaining sustainable

earnings, sound capitalisation and an unchanged risk appetite.

Ratings

Societe Generale S.A.

Long-Term IDR A

Short-Term IDR F1 Viability Rating a Support Rating 5 Support Rating Floor NF Derivative Counterparty Rating A+(dcr)

Compagnie Generale de Location d’Equipements Long-Term IDR A Short-Term IDR F1 Support Rating 1

Sovereign Risk Long-Term IDR AA

Outlooks

Long-Term IDRs Stable Sovereign Long-Term IDR Stable

Financial Data

Societe Generale S.A.

31 Dec

17 31 Dec

16

Total assets (USDbn) 1,529 1,457 Total assets (EURbn) 1,275 1,382 Total equity (EURbn) 55.5 56.0 Operating profit (EURm) 5,209 6,172 Published net income (EURm)

3,430 4,338

Operating profit/risk-weighted assets (%)

1.5 1.7

Impaired loans/gross loans (%)

5.0 5.7

Fitch Core Capital/risk-weighted assets (%)

12.6 12.7

Fully applied Basel III CET1 ratio (%)

11.4 11.5

Loans/customer deposits (%)

105.7 105.2

Related Research

Societe Generale S.A. - Ratings Navigator (October 2017)

European GTUBs Quarterly Update (January 2018)

Fitch 2018 Outlook: Global Trading and Universal Banks (December 2017)

Analysts

Christian Scarafia +44 20 3530 1012 christian.scarafia@fitchratings.com Luis Garrido, CFA +44 20 3530 1631 luis.garrido@fitchratings.com Rafael Quina, CFA +33 1 44 29 91 81 rafael.quina@fitchratings.com

Banks

Societe Generale S.A.

April 2018 2

Operating Environment

SG mainly operates in very stable and advanced economies, with typically high sovereign

ratings, developed and transparent regulatory frameworks, and robust financial markets.

Nonetheless, the bank has some exposure to more volatile countries, mainly in CEE and

Russia. We expect the recovery in economic conditions in Russia to help sustain the bank’s

return to profitability in the region. SG’s presence in the US and Asia (largely in corporate and

investment banking) provides some diversification benefits.

We expect France’s strong cyclical recovery will help sustain real GDP growth at 2.1% in 2018.

The high level of unemployment is a weakness for the sovereign rating level, but has been

falling. We expect SME lending to be more sensitive to changes in macroeconomic factors,

including unemployment. We believe the impact of high unemployment to be contained for

housing loans as household indebtedness is modest (58% of GDP) and lending is mainly

extended to borrowers in stable employment.

Concentrated Banking Market

The major French banks are large and banking sector assets are significant at about 3.5x GDP.

The sector is concentrated, and the six largest banks account for about 85% of banking sector

assets. Three French banks are classified as global systemically important banks (G-SIBs) by

the Financial Stability Board. Fitch Ratings considers barriers to entry into the French market

as high.

French banks have limited flexibility to reduce remuneration rates on deposits, as interest rates

paid on widely held regulated savings deposits are defined by the state and are higher than

market rates. Remuneration on the Livret A, which acts as a benchmark for other savings

products, is at 0.75%.

Company Profile

SG is a universal bank and the third-largest French bank by total assets. Retail banking

generates about half of revenue and pre-tax profit, both through three brands in France and

through operations in several countries in Europe and Africa, as well as Russia. In investment

banking, SG has a sound presence in euro-denominated debt capital markets and a leading

equity derivatives franchise. Structured equity derivatives account for less than 4% of group

revenue. Within International Retail Banking and Financial Services (IBFS), the bank is the

80% shareholder of ALD Automotive, Europe’s largest fleet management company by fleet

size. The group operates across three divisions: French retail banking, Global Banking and

Investor Solutions (GBIS), and IBFS.

Sound client, product and geographic diversification have supported resilient profitability,

despite pockets of higher risk. The breadth of SG’s product offering and geographical presence

provides cross-selling opportunities, mainly in corporate and investment banking, and

bancassurance. Revenue synergies, as measured by the bank, represented 30% of group

revenue in 2016. Revenue from sales and trading is typically more volatile, and accounted for a

manageable 18% of revenue in 2017, which is lower than at peers.

Moderate Franchise in French Retail

SG’s domestic retail franchise generates high revenue per customer, as it focuses on France’s

wealthier urban areas. The group’s deposit and loan market share of about 7% is significantly

lower than that of the dominant cooperative banking groups, which limits its pricing power. SG

operates in French retail banking through different brands: SG’s own network of about 2,000

branches; Credit du Nord (A/Stable/bbb+), which focuses on small- and medium-sized

enterprises through a network of eight regional banks; and the online bank Boursorama. The

multi-channel model allows the group to target different groups of clients. SG aims to reduce its

branch network to 1,700 by 2020, as it aims to fully digitise simple products and focus on

advisory activity in the remaining branches.

Economic Data (%) 2017 2018f 2019f

France: Real GDP growth

1.9 2.1 1.8

France: Unemployment rate

8.9 9.1 8.9

Source: National Institute of Statistics and Economic Studies (INSEE) end-2017 data, Fitch forecasts

France 44%

APAC5%

MEA 4% LatAm

1%

Exposure by RegionEnd-2017

Total: EUR872bn. Includes off-balance sheet exposuresSource: SG, Fitch

Other W Europe 23%

N America 13%

E Europe (EU) 7%

Other E Europe 3%

21% 27%

32% 22%

23%18%

7%13%

9% 11%9%

0%

20%

40%

60%

80%

100%

Revenue Pre-tax profit

Earnings Contribution2017

International retail French retailGM & IS Financial servicesFinancial advisory InsuranceAWM

Source: SG, Fitch

Related Criteria

Bank Rating Criteria (March 2018)

Global Non-Bank Financial Institutions Rating Criteria (March 2018)

AWM: Asset and wealth management

(booked in GBIS). GM & IS: global

markets and investor services

Banks

Societe Generale S.A.

April 2018 3

Broad International Retail Network

IBFS includes international retail banking, financial services to corporates and insurance. The

division’s contribution to group pre-tax profit increased to 49% in 2017 from 37% in 2016,

largely as a result of lower LICs in international retail.

In international retail, SG is active in several countries in Europe, mostly in CEE, the

Mediterranean basin, sub-Saharan Africa, French overseas territories and Russia. The group’s

largest international subsidiaries by assets are the 61%-owned Komercni Banka, the third-

largest bank in the Czech Republic, the 99.95%-owned Rosbank in Russia, one of the

country’s leading privately owned banks; the 60%-owned BRD-Groupe Société Générale S.A.,

the third-largest Romanian bank by total assets, and the fully owned SGMB in Morocco, the

country’s fourth-largest bank. Apart from these subsidiaries, international retail operates in 33

countries through subsidiary banks.

In CEE, SG has market shares of between 8% and 15%. These operations are jointly

strategically important for the group. We consider retail operations in CEE and Russia as

higher risk, given the large cyclical variations in profitability and LICs observed historically,

notably in Russia and Romania. Nonetheless, SG has managed its exposures well and

international retail banking generated a sound return on allocated capital of 16% in 2017.

Within IBFS, financial services to corporates cover equipment finance (through SG Equipment

Finance) and fleet financing (through ALD Automotive). At end-2017, ALD managed the largest

vehicle fleet in Europe with 1.4 million vehicles and EUR16 billion rental fleet assets.

Equipment finance accounted for an additional EUR17 billion loans. SG’s insurance business

mainly focuses on France and other European countries, offering life (about two-thirds of 2016

insurance revenue) and non-life insurance products. At end-2017, SG managed EUR114 billion

client assets invested in life insurance policies.

Targeted Investment Banking Strategy

SG’s GBIS division includes global markets and investor services, financing and advisory

(F&A), and asset and wealth management. The group’s franchise is stronger in Europe, which

generated about 70% of GBIS revenue in 2016, with smaller contributions from the Americas

and Asia Pacific.

Global markets (18% of 2017 group revenue and 16% of group RWAs at end-2017) includes

SG’s sales and trading operations in fixed income, currencies and commodities (FICC), and in

equities. SG has the world’s second-largest market share by revenue in equity derivatives,

highlighting its sound franchise in the segment. This strength has allowed it to grow

internationally, including in Asia Pacific. SG is also Europe’s second-largest custodian (EUR3.9

trillion assets under custody at end-2017). Its securities services business, which also includes

clearing, trade finance and payment services, derives close to three-quarters of revenue from

retail banking networks, highlighting the value of the integrated group. The integration of

Newedge, a clearing, execution and prime brokerage specialist fully owned since 2014, has

expanded SG’s business in the US and helped increase its institutional client base.

F&A accounted for 9% of group revenue in 2017. Half of F&A’s revenue in 2016 came from

natural resources and asset financing. F&A also deals with corporate lending and advisory.

While revenue is fairly stable, LICs can be lumpy, due to the size of certain underwriting

commitments.

SG’s asset management operations are undertaken by Lyxor (EUR112 billion assets under

management (AuM) at end-2017), which specialises in alternative investments and has a good

franchise in exchange-traded funds. SG’s strong equity derivatives franchise supports Lyxor’s

activity. Private banking (EUR118 billion AuM at end-2017) remains predominantly European,

with part of the revenue generated through a joint-venture agreement with the French retail

network. The bank is repositioning its client franchise in certain European markets, notably

Switzerland and Belgium, which weighs on profitability.

GBIS35%

IBFS33%

French retail29%

Corp. centre

3%

RWA SplitEnd-2017

Total: EUR353bnSource: SG, Fitch

26%

19%15%

15%

9%

8%4%

55%

Fin serv corp Insurance

Czech Republic Africa & others

Romania W Europe

Other Europe Russia

IBFS Operating Profit2017

Right hand side: International retail. Fin serv corp: financial services to corporatesSource: SG, Fitch

Banks

Societe Generale S.A.

April 2018 4

Management and Strategy

SG’s strategy concentrates on selected growth opportunities and on improving the efficiency of

its operations. We view the bank’s 2020 strategic plan as a natural evolution of prior objectives.

SG has largely delivered on its 2014-2016 plan, with the exception of return on equity and

revenue growth targets, which were not met, partly because of the low-interest-rate

environment. Between 2015 and 2017, SG delivered EUR1.2 billion in cost savings, higher

than its EUR1.1 billion target, and at lower implementation costs than planned.

Meeting the revenue growth objective of above 3% will be important for SG to meet its financial

targets, as the group plans to contain the rise in operating expenses to 1.2% between 2016

and 2020. Sound or improving economic growth in many of the bank’s key markets and the

planned 3% growth in RWAs should help the bank generate revenue.

Increasing revenue faster than operating expenses will be challenging in French retail, where

strong competition erodes margins and changing client behaviour requires investment in

digitisation. SG plans to close some back offices and reduce its branch network by 15% by

2020 while increasing its digital offering. Sound economic growth in France should help the

bank expand its franchise with corporates. The group’s universal banking model offers cross-

selling opportunities, particularly in private banking and insurance. These initiatives should help

grow revenue at a cumulative growth rate of above 1% between 2016 and 2020, but revenue

fell 3% in 2017 following high rates of housing loan renegotiations.

SG’s revenue growth target of above 5.5% for IBFS reflects its presence in fast-growing

markets, including Russia and Africa, and in fleet leasing. We expect IBFS to continue driving

profit growth for the group. The planned fall in GBIS’s cost/income ratio (from 76% in 2016 to

about 68% for 2020) partly relies on recurring savings of about EUR0.35 billion financing

investments in digitalisation, maintaining and expanding the equity derivatives and natural

resources franchises and targeting selective growth, for instance in advisory and prime

brokerage.

SG’s executive and senior management teams have been generally stable with the exception

of some key departures, allowing a smooth implementation of the group’s strategy. SG’s board

of directors has 14 members, of whom 10 are independent and two are elected by employees.

The chairman and chief executive roles are split. SG applies the AFEP-MEDEF Corporate

Governance Code, which provides best practice recommendations to listed French companies.

Risk Appetite

Strengthened Underwriting Standards

We view SG’s risk appetite as moderate. The group has a good record in managing and

controlling credit and market risk, and exposure to higher-risk asset classes or products has

remained limited.

SG’s main exposure is to credit risk (82% of end-2017 RWAs). Underwriting standards in its

French loan book are conservative. A large portion of retail banking assets relates to housing

loans, where underwriting criteria largely rely on client affordability rather than on collateral

value. SG favours originating housing loans that qualify to be guaranteed by Crédit Logement.

The high proportion of new French retail loans that benefit from this guarantee underscores the

bank’s conservative underwriting.

The bank also has material exposure to emerging markets in CEE, Russia and Africa.

Origination in Russia has focused on larger corporates for a number of years, which has helped

reduce credit risk. Better economic conditions and underwriting standards in Russia and

Romania led the 55% fall in LICs for the bank’s international retail business in 2017.

Key Financial Targets (%) 2017 2020T

Cost/income 75a <63

Return on equity

4.9a ≥10

b

Basel III CET1 ratio

11.4 ≥12.0

Total capital ratio

17.1 ~16.5 – 17.0

Basel III Tier 1 leverage ratio

4.3 4.0 – 4.5

LICs/average gross loans

0.19 0.35 – 0.40

2016-2020 revenue growth (%)

2c >3

LICs: Loan impairment charges a Excluding non-recurring items, notably

EUR1.4bn litigation charges: 8.3% return on equity and 69% cost/income ratio

b Corresponding to a 11.5% return on

tangible equity c Shows 2013-2016 cumulative average

revenue growth rate Source: SG, Fitch

Banks

Societe Generale S.A.

April 2018 5

We believe SG has a fairly conservative approach to credit risk in the corporate and investment

bank compared with GTUB peers. The bank’s appetite for riskier asset classes is generally

below peers’, but SG is willing to continue operating in businesses where it has a relatively

limited presence and a sound record of risk management. SG’s leveraged finance operations

are predominantly European and focus on smaller transactions, which results in acceptably

sized underwriting positions and a granular portfolio.

Sound Risk Controls

SG’s risk reporting framework includes a comprehensive set of internal limits, with risk systems

consistently applied throughout the group’s international subsidiaries. The independent control

function reports directly to a deputy chief executive. Internal and financial reporting is based on

uniform definitions across the whole group, including on asset impairment, and risk-

management divisions are segregated from business units. The group’s centralised risk-

management unit monitors key risk indicators and limits as defined by management, including

credit, market, operational but also liquidity, business and insurance risks.

Significant Legal Cases and Provisions

Operational risk (14% of RWAs at end-2017) is significant for SG as for peers, given its broad

international presence and its large capital market operations. The bank remains exposed to

conduct and litigation risk, and is facing several investigations that could result in material fines.

SG’s sound earnings and significant litigation provisions should provide a sufficient buffer to

absorb further litigation costs. At end-2017, litigation provision was EUR2.3 billion, of which

about EUR1 billion was allocated to the Libyan Investment Authority (LIA) and interbank offered

rates cases.

We believe the most material legal cases for the bank relate to investigations by US authorities

into the setting of interbank offered rates and to the LIA case. On 19 March, SG said that it

expected to have resolved these cases “within the coming weeks”. Civil litigation in the UK

brought by the LIA in relation to the bank’s investments entered into on behalf of the LIA was

settled for EUR963 million in 1H17, but an investigation launched by the US Department of

Justice and the Securities and Exchange Commission on the matter is continuing. A third

relevant case relates to alleged violations of US embargoes and is still outstanding.

The French tax authorities have recently confirmed they intend to question the tax deductibility

of the EUR4.9 billion losses that resulted from Jérôme Kerviel’s unauthorised trading in 2008. A

potential deferred tax asset (DTA) write-down would not affect the bank’s regulatory capital,

which already deducts DTAs.

Major settled litigation cases related to Euribor rigging (EUR446 million fine in 2013, of which

EUR218 million refunded in 2016) and the US mortgage market (EUR100 million settlement

with the US Federal Housing Finance Agency in 2014).

Well-Controlled Growth

We expect growth to be largely organic and within the bank’s internal capital generation

capacity, complemented by selected bolt-on acquisitions. SG’s capital planning targets organic

capital generation of about 25bp a year, with 3% RWA growth and a 50% dividend pay-out

ratio.

Small-scale acquisitions are typically made to strengthen strategic activities. The bank acquired

the 50% stake in insurer Antarius that it did not already own in 2Q17. SG also purchased

Parcours (vehicle leasing) and Kleinwort Benson (private banking). SG has some flexibility to

partly finance these acquisitions by streamlining businesses.

-300-200-1000100200300400500600

0

500

1,000

1,500

2,000

2,500

3,000

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

Litigation provisions (LHS)

Litigation charges (RHS)

1Q16: Euribor fine refund. 1H17 litigation charges largely refer to LIA settlement Source: SG, Fitch

Litigation Provisions Rise

(EURm) (EURm)

n.d

.

n.d

.

Banks

Societe Generale S.A.

April 2018 6

In French retail, SG focuses on premium clients in a highly competitive market with low margins

and has grown below the market in 2017. SG expects to invest in growing its consumer finance

operations, while growth in SME loans is sound and in line with peers. In GBIS, continuing to

invest in asset finance and asset-backed products remains a priority for the bank.

Material but Well-Controlled Market Risk

SG’s exposure to market risk arises principally through traded market risk, where the bank has

a strong risk-management record, and through interest-rate risk in the banking book, where the

bank has a sound limit system.

The impact of a 1% parallel shift of the yield curve on the net present value of future residual

fixed-rate positions is monitored and subject to an internal limit of EUR1 billion (about 1.6% of

group equity). During 2017, the sensitivity remained below 0.6% of the group’s regulatory

capital. The net interest margin sensitivity is also measured through various stress scenarios

on interest-rate curves.

Interest-rate risk in the banking book is managed using macro hedges and mainly arises from

fixed-rate housing loans net of fixed-rate liabilities. The main challenge to hedge this risk is to

maintain robust assumptions around housing loan prepayment rates and sight deposit

stickiness to model the net asset duration. In 3Q17, SG took a manageable EUR88 million

charge (1% of 2017 French retail revenue) to adjust its swaps hedging housing loans. Higher-

than-expected prepayments resulted in the amount of assets hedged becoming lower than the

sum of the hedging swaps. As the proportion of housing loans being renegotiated has fallen

significantly, we do not expect further hedging adjustments. However, prospects for sight

deposits in a rising rate environment after a long period of low interest rates remain untested.

We believe SG’s traded market risk appetite is lower than most of its GTUB peers’, but trading

operations are significant relative to its size. The bank expects market activities to keep making

up about a fifth of group revenue and RWAs. SG assesses its market risk using several risk

indicators, including value-at-risk (VaR; 99% confidence interval, one-day holding period, one-

year horizon using the historical simulation method) and stress tests, and a wide range of limits

are in place. About 90% of SG’s market risk capital requirement is assessed through internal

models.

The bank’s average trading VaR was a moderate EUR25 million in 2017. Overall, traded

market risk has declined in recent years, reflecting both a lookback period with lower market

volatility and structurally lower inventory, partly due to stricter regulatory capital requirements.

Higher market volatility seen in 1Q18 could lead to higher market-risk RWAs, but we believe

that this could also help the bank generate more revenue in client flow-based activities.

SG hedges a large part of its balance sheet so that there is limited volatility in its CET1 ratio as

a result of foreign-exchange fluctuations. Equities in the banking book amounted to EUR6.1

billion at end-2017 for those in the prudential scope (excluding insurance activities), which

included minority stakes in corporates and financial institutions and private equity investments.

Financial Profile

Asset Quality

SG’s asset quality is weaker than domestic and GTUB peers, despite material improvements

since end-2013. SG’s impaired loan ratio was still a relatively high 5.0% at end-2017 (end-

2016: 5.7%), despite a 13% yoy decline in the stock of impaired loans. At end-2017, 51% of

impaired loans were in France, 17% related to eastern Europe, 12% to western Europe, with a

combined 14% to Africa and the Middle East. SG’s French loan book includes Credit du Nord’s

SME-focused portfolio, with higher impaired loan ratios compared with SG’s average, and

consumer finance activities. We estimate loans in Russia, which account for 2% of the group’s

loan book, account for just under 10% of group impaired loans.

Other assets mainly include guarantee deposits paid on financial instruments Source: SG, Fitch

Fair valued assets 33%

Customer loans 33%

AFS assets 11%

Cash and central banks

9%

Due from banks

5%

Fixed assets

2%

Other 7%

Asset SplitEnd-2017

Banks

Societe Generale S.A.

April 2018 7

SG’s comparatively high gross impaired loan ratio partly reflects slower write-off practices in

the French banking sector, as well as international operations in higher-risk markets. In line

with French peers, the bank typically aims to fully resolve problem loans instead of writing them

off at an early stage. Despite the group’s sound record in impaired loan recoveries, slow write-

offs can result in LICs accruing through time. The relatively high volume of unreserved impaired

loans, which amounted to 19% of Fitch Core Capital (FCC) at end-2017, leaves the group’s

capital more exposed to unexpected shocks, in our view.

SG’s exposure at default (EaD) including off-balance-sheet commitments was EUR872 billion

at end-2017. About 80% of the bank’s credit risk is calculated using the internal ratings-based

method. Corporate clients are an important component of the bank’s European franchise and

accounted for 37% of the group’s EaD (at end-2017). Commitments to corporates were well

diversified by industry, generally well collateralised and largely to investment-grade corporates,

with a small percentage of poorly rated counterparties.

LICs have continued to benefit from improving macroeconomic conditions in key markets,

which resulted in loan-loss provision reversals in Romania and the Czech Republic in 2017.

The supportive economic environment in France also contributed to reduce loan and other

impairment charges to 19bp of gross loans for 2017, down from 37bp in 2016 according to the

bank. We expect LICs to increase slightly and SG expects LICs to account for between 35bp

and 40bp of gross loans by 2020 (between 25bp and 30bp for 2018).

Balanced Mix in French Retail

SG’s French retail accounts for about 40% of total loans at end-2017 and is evenly balanced

between lower-risk housing loans and loans to business clients, which includes higher-risk

loans to SMEs and self-employed professionals, including through Credit du Nord’s network.

SG’s underwriting standards in French housing loans have proven conservative, in line with

other French banks that focus on debt repayment capacity rather than collateral values. We

believe this leads to limited credit risk. Housing loan performance is mainly sensitive to

employment and household debt capacity.

Consumer finance activities globally included at end-2017 a small loan book (EUR11 billion) as

part of French retail, and EUR18 billion consumer loans in the rest of western Europe, notably

including Germany and Italy. Impairment charges in consumer finance can be high, but are

compensated by healthy margins. Fleet leasing (including ALD) and factoring loans were a

further EUR33 billion at end-2017. These loans generally perform well, but require

management of residual value risk.

International Retail Remains a Vulnerability

IBFS’s loan book (about 30% of total loans) is in our view SG’s main asset-quality challenge.

Exposure to emerging markets in eastern Europe, Russia and Africa can suffer from sharp

changes in economic conditions and therefore lead to more volatile LICs. Strong GDP growth

0

2

4

6

8

10

12

BNPP SG GBPCE Credit Mutuel CreditAgricole

DB BARC HSBC

SME Corps ex SME Households Total

BNPP: BNP Paribas S.A.; SG: Societe Generale S.A. GBPCE: Groupe BPCE; Credit Mutuel: Groupe Credit Mutuel; Credit Agricole: Groupe Credit Agricole; DB: Deutsche Bank AG; BARC: Barclays plc; HSBC: HSBC Holdings plc. HSBC SME exposure: 0 (EBA disclosure) Source: EBA Transparency Exercise

Non-Performing Exposures(% gross exposures, end-1H17)

(%)

0

2

4

6

8

10

-50

0

50

100

150

200

2013 2014 2015 2016 2017

(bp)

Impaired loans/gross loans (RHS)French retail (LHS)IBFS (LHS)GBIS (LHS)Group (LHS)

Source: SG, Fitch

(%)

Falling Loan Impairment Charges

Banks

Societe Generale S.A.

April 2018 8

in Romania and a stabilising economic environment in Russia contributed to LICs halving in

international retail in 2017. Overall, IBFS’s LICs accounted for 29bp of gross loans in 2017,

which we consider as being at a cyclical low and flattered by provision reversals.

SG’s loan portfolio in the Czech Republic (EUR24 billion at end-2017) is the largest of its

international retail operations and we do not expect it to be a major driver of LICs as the

economy approaches full employment. Economic stabilisation and the focus on larger

corporates in Russia resulted in more sustainable LICs, which fell 70% yoy. Exposure at default

net of provisions in Russia was about EUR16 billion (37% of FCC) at end-2017, of which 35%

related to retail clients and 25% to large corporates. Foreign-currency mortgage loans have

reduced significantly in Russia, and portfolios in Poland and the Czech Republic are small.

Low but Volatile Credit Provisions in GBIS

SG’s sizeable corporate finance activities are reflected in GBIS’s loan book of EUR136 billion

at end-2017. Exposures are typically well-managed. LICs are a smaller proportion of average

loans compared with other divisions, but large corporate exposures can lead to lumpy LICs and

reversals: the division released 1bp of average gross loans in loan loss reserves in 2017. This

partly reflects recoveries on counterparties sensitive to oil prices, which have recovered since

2016 and accounted for a limited 6% of EaD at end-2017. Higher provisioning in metals and

mining (4% of EaD) have reduced risks, in our view.

SG’s overall exposure to higher-risk sectors remains moderate. Leveraged finance is not an

area of strong focus and mainly relates to the European market, which is less exposed to rising

interest rates in the US. Underwriting exposures are comparatively small and well diversified.

Exposure to securitisations is moderate compared with that at most GTUB peers and is

declining as SG is running down its now small legacy asset portfolio. SG mainly acts as a

sponsor for asset-backed securities transactions and to a much lesser extent as an originator

to manage its own credit risk and create securities eligible for repo transactions. At end-2017,

SG’s exposure to consolidated ABCP conduits, for which the group provides liquidity lines, was

EUR18 billion.

Significant Equity and Reverse Repo Books

Fair valued assets accounted for a material 33% of assets at end-2017. SG’s sizeable trading

portfolio mainly reflects large derivative replacement values and reverse repurchase

agreements, but also sizeable equity and bond holdings. Of the EUR420 billion fair-valued

financial assets, EUR51 billion related to the insurance business. Derivative counterparty risk is

mitigated by master netting agreements and cash collateral, which bring the net trading

derivative exposure to a still significant EUR41 billion at end-2017, from EUR134 billion positive

replacement values. Two-thirds of these were interest rate instruments. Reverse repos are

broadly match-funded by repo borrowings (EUR4 billion net borrowing position, less than 1% of

total funding excluding derivatives).

Assets measured using the fair value option include structured bonds and loans fair-valued to

reduce accounting asymmetries with the hedging instruments. Level 3 financial assets, whose

valuation is based on financial models with unobservable inputs, were EUR6.6 billion at end-

2017 (a manageable 16% of CET1 capital) and included less liquid derivatives and long-term

equity investments.

Most of SG’s exposure to sovereigns and financials is to well-rated counterparties. Close to

80% of banking client exposure at default was rated ‘A’ and above at end-2017, with less than

10% being sub-investment grade.

Fair Valued Assets (EURbn) 2017 (% equity)

Trading portfolio 343 535 Bonds 27 42 Shares 80 125 Derivatives 134 210 Reverse repo 101 158

Fair value option 77 120 Bonds 27 42 Shares 28 44 Loans, others 22 35

Total fair value assets

420 655

Source: SG, Fitch

Banks

Societe Generale S.A.

April 2018 9

Earnings and Profitability

SG’s sound earnings capacity benefits from its universal banking model. Client, product and

geographical diversification mitigate shocks in single regions or businesses, while also

benefitting from growing businesses, particularly in international retail and fleet management.

More volatile capital market activities account for a lower share than GTUB peers, but higher

than most European universal banks. Profitability in retail banking is helped by SG’s presence

in recovering or fast-growing emerging markets, and well-integrated insurance and consumer

finance operations.

Unusually large litigation expenses (including allocations to provisions and the LIA settlement),

totalling EUR1.4 billion, weighed on SG’s results in 2017. Excluding litigation, SG’s operating

return on RWAs would have improved 40bp to 1.9% for 2017. SG’s reported 4.9% return on

equity (RoE) in 2017 was also dented by a EUR390 million restructuring charge in French retail

banking, the tax impact of French tax reform and other exceptional items, without which SG

would have generated a 8.3% RoE, 40bp higher than in 2016. We expect SG’s operating

profitability to remain sound.

SG targets a cumulative average growth rate in revenue of above 3% by 2020, enabled by

RWA growth of about 3%, with higher growth targeted in international retail and specialised

financial services. At the same time, SG plans to generate about EUR1.1 billion in recurring

savings from 2020, funded by about EUR1.5 billion in investments, EUR0.5 billion of which

were expensed in 2017. Delivering cost savings will be important to improve operating leverage

and meet the group’s expected 1.2% operating expense growth between 2016 and 2020.

French Retail Revenue to Stabilise in 2018

We expect SG’s French retail division to generate adequate returns in 2018, despite pressure

on costs from investments in digitisation. Revenue pressure should ease into 2018, as the rate

of housing loan renegotiations fell to a low 3% in 4Q17 and SG expects revenue to be broadly

unchanged in 2018.

The favourable interest-rate environment for borrowers in France had resulted in a high

proportion of housing loans being renegotiated at lower interest rates, which has put pressure

on banks’ net interest income. Early repayments resulted in early redemption fees, which

temporarily boosted revenue, mostly in 2015 and 2016. About 21% of SG’s loan book was

renegotiated in 2016, with a further 11% in 2017. Net interest income, which accounted for 56%

of revenue in 2017, fell 6% yoy and led to a 3% revenue decline. Pre-tax income in the division

fell 12% yoy to EUR1.9 billion in 2017, excluding restructuring charges and a small fine.

SG has positioned itself conservatively in the French market, aiming to favour client profitability

over client acquisition, even at the expense of market share losses. Competition has eroded

net interest margins, and SG’s approach is to minimise balance-sheet risks from low-margin

products. Fee generation will therefore be key to grow revenue, and SG’s integrated insurance

+38%-33%

-21%+6% +18%

+14%+54%

0500

1,0001,5002,0002,500

2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017

Internationalretail

French retail Global markets& investorservices

Financialservices tocorporates

Financialadvisory

Insurance Wealth & assetmanagement

27% 22% 18% 13% 11% 9% 1%

(EURm) Reported pre-tax profit French retail restructuring costs

Excluding 'other' in IBFS and the corporate centre. Bold: yoy % change. Percentages below the x-axis show the business' contribution to group pre-tax profit (excluding corporate centre) and may not add up due to rounding.Source: SG, Fitch

Retail Banking Drives Group Pre-Tax ProfitPre-tax profit by business

0% 50% 100%

GBPCE

CA

CM11

SG

BNPP

French retail and commercial banking

Corporate & investment bankingª

Financial services and international retailᵇ

Simplified Pre-Tax Profit Split2017 pre-tax profit

CA: Credit Agricole; CM11: Groupe Credit Mutuel-CM11.a Includes financing, global markets, investor and securities services, trade financeb Includes insurance, asset management, specialised financial services and international retailSource: SG, Fitch

-1.5-1.0-0.50.00.51.01.52.02.53.03.5

20

12

20

13

20

14

20

15

20

16

20

17

Operating Profit/RWAsSG vs. peers

Green line: SG. Red dot: GTUB peer median. Blue dots: GTUB peer rangeSource: Fitch

('a'earn

ings im

plie

d f

acto

r score

)(%)

Banks

Societe Generale S.A.

April 2018 10

and consumer finance offering should help. Investments in digitalisation will result in a growing

cost base, making revenue growth even more important.

Significant Contribution from International Retail

International retail banking’s contribution to pre-tax profit increased to 27% in 2017 from 19% in

2016, excluding the corporate centre. The 25% pre-tax profit increase in IBFS was mainly

attributable to international retail, which benefitted from very low LICs and favourable economic

conditions in most regions. Economic growth is cyclically strong in Romania and is

accompanied by rapid loan growth in Africa. The Czech Republic’s is the second-largest

contributor to international retail’s net income, and the country benefits from low

unemployment. Recovery in Russia led to loan growth and significantly lower LICs. This

demonstrates the benefits of SG’s presence in faster growing economies, but at the same time

highlights the variability of income in more volatile regions.

We expect consumer finance operations to continue to perform well. In western Europe, loan

growth was a strong 15% at constant scope and exchange rates, buoyed by car loans.

Financial services to corporates accounted for a meaningful 13% of pre-tax profit excluding the

corporate centre and saw a 6% pre-tax profit rise, reflecting new equipment finance business

and ALD’s growing vehicle fleet, despite its lower contribution following the initial public offering

of a 20% stake in 2Q17. Insurance premium growth helped pre-tax profit, with an increase in

the share of more remunerative unit-linked policies to 26% at end-2017.

Some Volatility from Market Activities

Muted client activity and market volatility in 2017 resulted in a 5% yoy revenue fall for GBIS.

Revenue was 7% lower in fixed-income sales and trading, 6% lower in equity sales and trading

and 6% lower in financing and advisory, resulting in GBIS’s 9% yoy pre-tax profit fall.

Financing and sales and trading revenue are largely determined by changing client activity and

therefore introduce some earnings volatility. This is mitigated by the bank’s relatively well-

balanced mix between fixed-income and equity activities, and fairly resilient revenue historically

for market activities. The contribution from sales and trading (18% of group revenue in 2017)

and financing activities (9%) was manageable and towards the lower end of GTUB peers.

Higher market volatility should increase clients’ hedging and portfolio rebalancing, boosting

GBIS’s revenue.

Capitalisation and Leverage

SG’s capitalisation is adequate, but sensitive to a structural weakening in the group’s earnings

generation. The bank’s diversified business model results in strong internal capital generation,

while capital ratios are at the lower end of GTUB peers’. SG targets a 12% Basel III fully loaded

CET1 ratio by end-2020, and expects to operate with a CET1 ratio of about 11.5% by end-

2018. The group’s 11.4% CET1 ratio at end-2017 fell 10bp yoy, reflecting the commitment to a

minimum 50% dividend pay-out ratio amid significant litigation charges, restructuring costs and

negative tax effects in 2017. Excluding these items and an operational risk RWA add-on (14bp

negative impact), SG would have generated 41bp of RWAs in capital organically in 2017, net of

dividend provision (50bp negative impact), which we view as strong.

We expect organic growth and bolt-on acquisitions to be funded by internal capital generation

or business sales. In 2017, the sale of a 20% stake in ALD more than offset the negative

capital impact of the acquisition of the remaining 50% stake in Antarius and the disposal of

SG’s Croatian subsidiary. SG’s capital remains sensitive to unexpected litigation costs in

excess of the bank’s strong earnings and provisions for litigation, which increased to what we

view as a material EUR2.4 billion at end-2017. More challenging than expected collateral

realisation or impaired loan recoveries could also weigh on capital, as unreserved impaired

loans accounted for a comparatively high 19% of FCC at end-2017.

0

5

10

15

20

25

30

0.0

0.5

1.0

1.5

2.0

2.5

FIC

C

F&

A

Equ

ity

AW

M

SS

Prim

e

Th

ou

san

ds

Average revenue (LHS)2017 revenue (LHS)Volatility (RHS)

GBIS' Revenue Variability

(EURbn) (%)

Equity: Equity sales and trading. SS: Securities services. Average revenue: Average yearly revenue 2014-2017. Volatility: Quarterly standard deviation/average revenue, 2014-2017 Source: Fitch

Banks

Societe Generale S.A.

April 2018 11

We expect SG will execute on its plan to sell up to 5% of RWAs in non-core businesses by

2020, which will help it reduce its CET1 capital generation needs. This is because SG would

have to increase its CET1 capital by about EUR7 billion by end-2020 to meet its 12% CET1

target and its 3% RWA growth target for its businesses, excluding the corporate centre and

non-core business reductions. Between end-2014 and end-2017, SG’s CET1 capital increased

by EUR4.5 billion.

a Illustrative figure based on SG’s 2020 target capital structure of ≥12% CET1, about 1.5% - 2% AT1, about 3% Tier 2,

about 7% senior non-preferred and maximum 2.5% senior preferred debt.

SG’s 2020 CET1 ratio target of at least 12.0% is well above its 2019 9.5% CET1 requirement

(excluding 0.1% in respect of the counter-cyclical buffer) pursuant to the ECB’s Supervisory

Review and Evaluation Process (SREP), assuming no changes to the 1% G-SIB buffer and

2.5% capital conservation buffer the bank will be subject to in 2019. We expect the bank to

keep solid buffers above regulatory minima. At end-2017, SG had a buffer of about EUR10

billion over its 8.7% SREP CET1 requirement applicable in 2018, which is the relevant

threshold under which discretionary payments (dividends, coupons, bonuses) can be restricted.

Focus on Senior Non-Preferred Debt

SG’s 2020 implied total capital ratio target of about 17% is lower than its previous 18% target,

as the bank optimises its cost of complying with total loss-absorbing capacity (TLAC)

requirements, favouring senior non-preferred (SNP) debt rather than Tier 2 subordinated debt.

At end-2017, SG had issued around EUR7 billion of SNP debt (1.9% of RWAs). Together with

17.1% in total capital, the bank’s TLAC-eligible instruments amounted to 19% of RWAs, close

to the 19.5% TLAC requirement by 2019. We believe the bank can reach the 2019 target with

further SNP issuance, which could potentially rise up to 4.5% of RWAs in 2022 if the bank

chooses not to use senior preferred debt to meet its 21.5% TLAC requirement from 2022. This

is feasible, given the bank’s plans to issue around EUR6 billion-EUR7 billion SNP debt annually

between 2018 and 2020. The TLAC term sheet allows the inclusion of up to 2.5% of RWAs in

senior preferred debt, giving SG further flexibility.

SG’s Basel III fully loaded Tier 1 leverage ratio of 4.3% at end-2017 was within its targeted

range of between 4.0% and 4.5% by 2020 and was broadly in line with European GTUB peers.

TLAC-eligible instruments accounted for 6.6% of leverage exposure at end-2017, well above

the 6% 2019 requirement and just shy of the 6.75% 2022 requirement.

Limited Impact of Regulatory Revisions

Following the finalisation of the Basel III framework in December 2017, we believe the impact

on SG’s capital ratios will be manageable. The bank estimates that the proposed revisions to

credit and operational risk measurement would increase end-2016 RWAs by 10% based on the

end-2016 balance sheet. We expect SG will adjust its business model to mitigate the actual

impact, which will only be visible once the revisions to the capital framework become binding,

likely from 2022. The fundamental review of the trading book could significantly increase

12.011.411.510.910.1

2.53.02.62.5

3.23.42.8

1.7

0

4

8

12

16

20

20202017201620152014

TargetActual

CET1 AT1 T2 AT1/T2 Total capital

Basel III fully-loadedSource: Fitch, SG

17.1 17.0a

SG's Total Capital(% RWAs)

4.5 4.5 4.5

1.5 1.5 1.51.3 1.9 2.5

1.0

0

2

4

6

8

10

Jan 17 Jan 18 Jan 19

G-SIB bufferCapital conservation bufferPillar 2RPillar 1

Graph does not show additional Tier 1 and total capital requirements (= CET1 + 1.5% AT1 + 2% Tier 2). Including countercyclical buffer (0.1% in 2019)Source: SG, Fitch

(% RWAs)

SG's SREP CET1 Capital Requirements

7.8 8.79.6

Banks

Societe Generale S.A.

April 2018 12

market risk RWAs, but these accounted for a limited 4% of total RWAs at end-2017.

SG indicated that the implementation of IFRS9 should have a limited impact on the CET1 ratio

of around 15bp upon adoption of the accounting standard in January 2018.

Funding and Liquidity

SG’s long-term funding profile is well diversified by source, with customer deposits accounting

for 46% of total funding excluding derivatives. Client deposits covered about 65% of funding

excluding derivatives, repos and trading liabilities, which are broadly matched on the asset

side. Wholesale funding of about EUR205 billion remains material and accounted for the

remainder. It includes deposits from banks (around half of which are matched by interbank

assets), senior unsecured and subordinated debt, and short-term borrowings. The group is a

regular issuer in the market and has a granular and well-diversified investor base. Long-term

funding maturities are fairly well distributed over the next four years.

Structured senior notes account for a material 31% of total long-term funding at end-2017

(which also includes certificates of deposit and commercial paper with remaining maturity

greater than a year). These structured notes are beneficial to the group in terms of cost of

funding and are distributed to institutional investors, private banks and retail networks,

domestically and internationally, which provides for a sufficiently diversified funding base for

these instruments, which are, however, not TLAC eligible.

Subsidiaries accounted for 9% of total long-term funding, consistent with SG’s strategy to

increasingly self-fund foreign subsidiaries. The group has made notable progress in this

respect, as retail banking subsidiaries outside France raise funds from customer deposits and

local issuances. Funding provided by the group to international retail banking subsidiaries

(excluding consumer finance) was EUR1.8 billion at end-2017, higher yoy but on a longer

downward trend (EUR3.9 billion at end-2014).

Short-term wholesale funding of EUR60 billion at end-2017 contributed only 8% of the funded

balance sheet, which compares well with European peers, and has declined materially since

2013 (15%). The bank has implemented a nominal internal limit on short-term wholesale

funding since end-2014. The group’s liquid asset buffer, around half of which typically relates to

deposits with central banks, more than covers short-term wholesale funding (around three

times at end-2017 and end-2016).

US dollar-denominated assets typically account for between 20% and 25% of group assets,

with US dollar funding in excess of assets. SG has reduced the funding from US money market

funds, which fell to USD5.9 billion at end-2017, compared with USD6.4 billion at end-2016 and

USD15.1 billion at end-2015. Access to short-term US dollar funding for SG is largely provided

by deposits from central banks, corporate deposits and asset managers.

Sound Liquidity Management

SG’s liquidity management is prudent and its liquidity buffer is ample and of good quality. The

group’s liquidity coverage ratio (LCR) was comfortably above regulatory minima, at 124% on

average in 4Q17. SG disclosed that its net stable funding ratio was above regulatory

requirements (more than 100%). The bank actively manages the size and composition of its

liquid asset buffer ahead of idiosyncratic events. The vast majority of high-quality liquid assets

(HQLA) included in the bank’s liquid asset buffer qualified as level 1 HQLA.

The bulk of the liquidity buffer is held by the parent company. We believe liquidity is largely

fungible across the group, given that deductions from the LCR’s numerator due to fungibility

restrictions are small.

Total: EUR168bn. Totals may not add up due to roundingSource: SG, Fitch

Structured notes 31%

Senior preferred

15%

Subordinated debt 14%

Secured 14%

Interbank & TLTRO

14%

Subsidiaries 9%

Senior non-preferred

4%

Long-Term FundingEnd-2017

0

5

10

15

20

25

30

35

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

> 2

02

7

As of end-2017Source: SG, Fitch

Long-Term FundingMaturities

(EURbn)

Banks

Societe Generale S.A.

April 2018 13

Support

Similar to peers, SG's Support Rating of ‘5’ and Support Rating Floor of ‘NF’ reflect Fitch’s view

that senior creditors can no longer rely on receiving full extraordinary support from the French

sovereign if the group becomes non-viable. In Fitch’s view, the EU’s Bank Recovery and

Resolution Directive (BRRD) and the Single Resolution Mechanism now provide an effective

resolution framework that is likely to require senior creditors to participate in losses, if

necessary, instead of, or ahead of, a bank receiving sovereign support.

The BRRD has been effective in EU member states since 1 January 2015, including minimum

loss-absorption requirements before resolution financing or alternative financing (such as

government stabilisation funds) can be used. The BRRD was transposed into French law in

August 2015, and implementation of the bail-in tool under the BRRD has been effective since 1

January 2016.

Debt Ratings

SG’s Derivative Counterparty Rating and long-term senior preferred debt and deposit ratings

are one notch above the bank’s Long-Term IDR because derivatives, deposits and structured

notes have preferential status over the bank’s buffer of qualifying junior debt (which includes

additional Tier 1 and Tier 2 instruments) and senior non-preferred debt.

We estimate that SG’s buffer of QJD and senior non-preferred debt at end-2017 was equal to

about 8.5% of RWAs, which we expect to be sufficient to recapitalise the bank after a resolution

without causing losses to senior preferred creditors. We expect the bank to issue further senior

non-preferred debt, which should result in a further increase of the buffer, and which we view

as sustainable since SG will have to meet TLAC requirements.

Subordinated debt and other hybrid capital issued by SG and some of its subsidiaries are all

notched down from SG’s Viability Rating (VR) in accordance with our assessment of each

instrument’s respective non-performance and relative loss severity risk profiles.

Additional Tier 1 instruments are rated five notches below the VR. The issues are notched

down twice for loss severity, reflecting poor recoveries as the instruments can be written down

well ahead of resolution. In addition, they are notched down three times for very high non-

performance risk, reflecting fully discretionary coupon omission.

Legacy Tier 1 securities are rated four notches below the VR, made up of two notches for high

loss severity relative to average recoveries, and two further notches for non-performance risk,

reflecting that coupon omission is partly discretionary.

Subordinated Tier 2 debt is rated one notch below the VR for loss severity, reflecting below-

average recoveries.

Rated Subsidiary

The Long- and Short-Term IDRs and Support Rating of SG’s French specialist financing

subsidiary Compagnie Generale de Location d’Equipement are based on institutional support

from SG. The subsidiary is rated under Fitch’s Global Non-Bank Financial Institutions Criteria.

Compagnie Generale de Location d’Equipements’ Long- and Short-Term IDRs are equalised

with those of SG and the Outlook on the Long-Term IDR is the same as the parent’s. This is

because we view this entity as a key and integral part of the group given its importance and

integration with its parent.

Banks

Societe Generale S.A.

April 2018 14

Peer Group Analysis

Societe Generale S.A. (a)

BNP Paribas S.A.

(a+)

Barclays plc

(a) Deutsche Bank AG

(bbb+) Credit Suisse Group AG (a-)

UBS Group AG

(a+)

HSBC Holdings plc

(aa-)

2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

Structural indicators Total assets (EURbn) 1,275 1,382 1,960 2,077 1,277 1,416 1,521

a 1,591 680 764 782 872 2,103 2,253

Total equity (EURbn) 55 56 99 97 62 72 66a 60 36 39 44 51 145 155

Fitch Core Capital (EURbn) 43 43 81 78 52 61 54a 47 32

a 33 34

a 37 109 125

Net income (EURm) 3,430 4,338 8,207 8,115 -1,007 3,300 -497 -1,356 -810 -2,523 1,060 3,158 9,905 3,269 Asset quality

Impaired loans/gross loans (%) 5.0 5.7 5.0 5.7 1.6 1.6 1.7a 1.8 0.8

a 0.9 0.3 0.3 1.6 2.1

Reserves for impaired loans/impaired loans (%) 60.7 62.7 65.8 64.7 77.6 71.2 60.5a 61.0 42.0

a 37.9 61.6 61.3 48.4 43.1

Loan impairment charges/average gross loans (%) 0.2 0.4 0.4 0.5 0.6 0.6 0.1a 0.3 0.1 0.1 0.0 0.0 0.2 0.4

Growth of gross loans (%) -0.3 4.1 1.9 4.9 -6.8 -1.7 -3.2a -4.5 0.8 1.1 4.3 -1.8 11.6 -6.9

Earnings & profitability Operating profit/RWAs (%) 1.5 1.7 1.7 1.7 1.1 0.8 0.5 0.1 0.7 -1.0 2.2 1.7 2.0 1.7 Return on equity (%) 5.8 7.5 8.1 8.3 -1.5 4.7 3.6

a -2.2 -2.2 -6.1 2.3 6.1 7.0 2.0

Return on assets (%) 0.3 0.3 0.4 0.4 -0.1 0.2 0.1a -0.1 -0.1 -0.3 0.1 0.4 0.5 0.1

Cost/income ratio (%) 74.7 69.0 69.2 68.4 73.3 76.0 91.9 95.5 89.4 114.2 81.8 86.1 67.8 68.9 Capitalisation & leverage

Fitch Core Capital/RWAs (%) 12.1 12.7 12.6 12.2 14.8 14.2 15.1a 13.2 13.7

a 12.9 16.5

a 17.5 15.0 15.4

CET1 ratio (fully loaded) (%) 11.4 11.5 11.8 11.5 13.3 12.4 14.0 11.9 12.8 11.5 13.8 13.8 14.5 13.6 Basel III leverage ratio (fully loaded) (%) 4.3 4.2 4.6 4.4 4.5 4.6 3.8 3.5 5.2 4.4 4.7 4.7 5.6 5.4 Unreserved impaired loans/FCC (%) 19.0 20.3 15.9 18.9 2.9 3.6 4.9

a 6.2 3.5

a 4.4 1.1

a 1.0 6.1 7.9

Funding & liquidity Loans/customer deposits (%) 105.7 105.2 98.2 96.6 86.3 93.9 69.7

a 75.2 77.3 77.8 78.3 72.4 71.1 68.3

Customer deposits/total funding (%) 46.0 44.1 58.3 57.4 51.9 57.9 63.2a 61.3 53.2 51.6 59.4 64.1 69.9 72.0

Liquidity coverage ratio (%) 124 142 121 123 154 131 140 128 185 202 143 132 142 136 a End-9M17 or 9M17

Viability Rating shown in parenthesis after the bank’s name. LCR: As at end-quarter/average for the last quarter in the period for CS, SG, UBS Source: Fitch, banks’ disclosure

Banks

Societe Generale S.A.

April 2018 15

Societe Generale S.A.

Income Statement31 Dec 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014

Year End Year End As % of Year End As % of Year End As % of Year End As % of

USDm EURm EURm EURm EURm

Audited -

Unqualified

(Emphasis

of Matter)

Audited -

Unqualified

(Emphasis of

Matter)

Audited -

Unqualified

Audited -

Unqualified

Audited -

Unqualified

1. Interest Income on Loans 15,523 12,943 1.2 13,134 1.1 14,062 1.2 15,100 1.3

2. Other Interest Income 12,876 10,736 1.0 11,526 1.0 11,369 1.0 9,432 0.8

3. Dividend Income 603 503 0.0 460 0.0 722 0.1 432 0.0

4. Gross Interest and Dividend Income 29,001 24,182 2.3 25,120 2.1 26,153 2.3 24,964 2.2

5. Interest Expense on Customer Deposits 5,875 4,899 0.5 4,769 0.4 5,721 0.5 6,118 0.5

6. Other Interest Expense 10,031 8,364 0.8 10,424 0.9 10,404 0.9 8,415 0.7

7. Total Interest Expense 15,906 13,263 1.2 15,193 1.3 16,125 1.4 14,533 1.3

8. Net Interest Income 13,095 10,919 1.0 9,927 0.8 10,028 0.9 10,431 0.9

9. Net Fees and Commissions 8,183 6,823 0.6 6,699 0.6 6,678 0.6 6,475 0.6

10. Net Gains (Losses) on Trading and Derivatives 11,106 9,260 0.9 5,669 0.5 4,488 0.4 6,817 0.6

11. Net Gains (Losses) on Assets and Liabilities at FV (4,800) (4,002) (0.4) 445 0.0 2,116 0.2 (2,235) (0.2)

12. Net Gains (Losses) on Other Securities 639 533 0.1 507 0.0 385 0.0 307 0.0

13. Net Insurance Income 353 294 0.0 294 0.0 212 0.0 428 0.0

14. Other Operating Income 714 595 0.1 1,695 0.1 1,219 0.1 1,440 0.1

15. Total Non-Interest Operating Income 16,194 13,503 1.3 15,309 1.3 15,098 1.3 13,232 1.1

16. Total Operating Income 29,289 24,422 2.3 25,236 2.2 25,126 2.2 23,663 2.0

17. Personnel Expenses 11,692 9,749 0.9 9,455 0.8 9,476 0.8 9,049 0.8

18. Other Operating Expenses 10,199 8,504 0.8 7,689 0.7 8,121 0.7 7,339 0.6

19. Total Non-Interest Expenses 21,891 18,253 1.7 17,144 1.5 17,597 1.5 16,388 1.4

20. Equity-accounted Profit/ Loss - Operating 110 92 0.0 129 0.0 231 0.0 213 0.0

21. Pre-Impairment Operating Profit 7,509 6,261 0.6 8,221 0.7 7,760 0.7 7,488 0.6

22. Loan Impairment Charge 1,120 934 0.1 1,764 0.2 2,361 0.2 2,595 0.2

23. Securities and Other Credit Impairment Charges 142 118 0.0 285 0.0 126 0.0 33 0.0

24. Operating Profit 6,247 5,209 0.5 6,172 0.5 5,273 0.5 4,860 0.4

25. Equity-accounted Profit/ Loss - Non-operating n.a. n.a. - n.a. - n.a. - n.a. -

26. Goodwill Impairment n.a. n.a. - n.a. - n.a. - 525 0.0

27. Non-recurring Income (17) (14) (0.0) 490 0.0 165 0.0 141 0.0

28. Non-recurring Expense n.a. n.a. - 0 0.0 0 0.0 0 0.0

29. Change in Fair Value of Own Debt (68) (57) (0.0) (355) (0.0) 671 0.1 (101) (0.0)

30. Other Non-operating Income and Expenses 0 0 0.0 n.a. - n.a. - n.a. -

31. Pre-tax Profit 6,162 5,138 0.5 6,307 0.5 6,109 0.5 4,375 0.4

32. Tax expense 2,048 1,708 0.2 1,969 0.2 1,714 0.1 1,384 0.1

33. Profit/Loss from Discontinued Operations n.a. n.a. - n.a. - n.a. - n.a. -

34. Net Income 4,114 3,430 0.3 4,338 0.4 4,395 0.4 2,991 0.3

35. Change in Value of AFS Investments (261) (218) (0.0) (321) (0.0) 425 0.0 636 0.1

36. Revaluation of Fixed Assets n.a. n.a. - n.a. - n.a. - n.a. -

37. Currency Translation Differences (2,504) (2,088) (0.2) 389 0.0 797 0.1 402 0.0

38. Remaining OCI Gains/(losses) (55) (46) (0.0) (82) (0.0) (83) (0.0) (215) (0.0)

39. Fitch Comprehensive Income 1,293 1,078 0.1 4,324 0.4 5,534 0.5 3,814 0.3

40. Memo: Profit Allocation to Non-controlling Interests 748 624 0.1 464 0.0 394 0.0 299 0.0

41. Memo: Net Income after Allocation to Non-controlling Interests 3,365 2,806 0.3 3,874 0.3 4,001 0.3 2,692 0.2

42. Memo: Common Dividends Relating to the Period 2,131 1,777 0.2 2,005 0.2 1,854 0.2 1,170 0.1

43. Memo: Preferred Dividends and Interest on Hybrid Capital Accounted

for as Equity Related to the Period

n.a. n.a. - 771 0.1 726 0.1 721 0.1

Exchange rate USD1 = EUR0.83382 USD1 = EUR0.9487 USD1 = EUR0.9185 USD1 = EUR0.8237

Earning

Assets

Earning

Assets

Earning

Assets

Earning

Assets

Banks

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April 2018 16

Societe Generale S.A.

Balance Sheet31 Dec 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014

Year End Year End As % of Year End As % of Year End As % of Year End As % of

USDm EURm Assets EURm Assets EURm Assets EURm Assets

AssetsA. Loans

1. Residential Mortgage Loans 149,102 124,324 9.7 119,547 8.6 115,689 8.7 106,618 8.2

2. Other Mortgage Loans n.a. n.a. - n.a. - n.a. - n.a. -

3. Other Consumer/ Retail Loans 287,558 239,772 18.8 240,842 17.4 232,930 17.5 205,830 15.7

4. Corporate & Commercial Loans n.a. n.a. - n.a. - n.a. - n.a. -

5. Other Loans 63,150 52,656 4.1 57,495 4.2 52,868 4.0 59,407 4.5

6. Less: Reserves for Impaired Loans 15,021 12,525 1.0 14,815 1.1 15,366 1.2 16,014 1.2

7. Net Loans 484,789 404,227 31.7 403,069 29.2 386,121 28.9 355,841 27.2

8. Gross Loans 499,811 416,752 32.7 417,884 30.2 401,487 30.1 371,855 28.4

9. Memo: Impaired Loans included above 24,756 20,642 1.6 23,639 1.7 24,411 1.8 25,689 2.0

10. Memo: Specific Loan Loss Allowances 13,449 11,214 0.9 13,281 1.0 13,978 1.0 14,758 1.1

B. Other Earning Assets

1. Loans and Advances to Banks 53,155 44,322 3.5 46,612 3.4 47,983 3.6 48,659 3.7

2. Reverse Repos and Securities Borrowing 166,657 138,962 10.9 189,125 13.7 178,987 13.4 165,446 12.6

3. Derivatives 178,401 148,754 11.7 201,682 14.6 207,590 15.6 232,587 17.8

4. Trading Securities and at FV through Income 154,012 128,418 10.1 134,502 9.7 152,917 11.5 174,537 13.3

5. Available for Sale Securities 64,149 53,489 4.2 61,646 4.5 59,314 4.4 60,926 4.7

6. Held to Maturity Securities 4,273 3,563 0.3 3,912 0.3 4,044 0.3 4,368 0.3

7. Other Securities n.a. n.a. - n.a. - n.a. - n.a. -

8. Total Securities 222,434 185,470 14.5 200,060 14.5 216,275 16.2 239,831 18.3

9. Memo: Government Securities included Above n.a. n.a. - n.a. - n.a. - n.a. -

10. Memo: Total Securities Pledged n.a. n.a. - n.a. - n.a. - n.a. -

11. Equity Investments in Associates 840 700 0.1 1,096 0.1 1,352 0.1 2,796 0.2

12. Investments in Property 765 638 0.1 630 0.0 657 0.0 n.a. -

13. Insurance Assets 170,189 141,907 11.1 122,664 8.9 116,803 8.8 110,146 8.4

14. Other Earning Assets 16 13 0.0 4,252 0.3 171 0.0 866 0.1

15. Total Earning Assets 1,277,246 1,064,993 83.5 1,169,190 84.6 1,155,939 86.6 1,156,172 88.4

C. Non-Earning Assets

1. Cash and Due From Banks 137,205 114,404 9.0 96,186 7.0 78,565 5.9 57,065 4.4

2. Memo: Mandatory Reserves included above n.a. n.a. - n.a. - n.a. - n.a. -

3. Foreclosed Assets n.a. n.a. - n.a. - n.a. - n.a. -

4. Fixed Assets 26,672 22,240 1.7 19,436 1.4 17,144 1.3 16,326 1.2

5. Goodwill 5,982 4,988 0.4 4,535 0.3 4,358 0.3 4,331 0.3

6. Other Intangibles 2,327 1,940 0.2 1,717 0.1 1,620 0.1 1,591 0.1

7. Current Tax Assets 1,482 1,236 0.1 1,091 0.1 1,439 0.1 1,264 0.1

8. Deferred Tax Assets 5,715 4,765 0.4 5,330 0.4 5,928 0.4 6,183 0.5

9. Discontinued Operations n.a. n.a. - n.a. - n.a. - n.a. -

10. Other Assets 72,632 60,562 4.7 84,756 6.1 69,398 5.2 65,238 5.0

11. Total Assets 1,529,261 1,275,128 100.0 1,382,241 100.0 1,334,391 100.0 1,308,170 100.0

Liabilities and EquityD. Interest-Bearing Liabilities

1. Total Customer Deposits 472,797 394,228 30.9 397,357 28.7 360,178 27.0 327,764 25.1

2. Deposits from Banks 105,507 87,974 6.9 82,678 6.0 90,355 6.8 72,257 5.5

3. Repos and Securities Lending 153,982 128,393 10.1 155,225 11.2 172,766 12.9 187,156 14.3

4. Commercial Paper and Short-term Borrowings 54,798 45,692 3.6 52,068 3.8 50,221 3.8 58,719 4.5

5. Customer Deposits and Short-term Funding 787,085 656,287 51.5 687,328 49.7 673,520 50.5 645,896 49.4

6. Senior Unsecured Debt 69,011 57,543 4.5 50,134 3.6 56,191 4.2 49,939 3.8

7. Subordinated Borrowing 16,367 13,647 1.1 14,103 1.0 13,046 1.0 8,834 0.7

8. Covered Bonds n.a. n.a. - n.a. - n.a. - n.a. -

9. Other Long-term Funding n.a. n.a. - n.a. - n.a. - n.a. -

10. Total LT Funding 85,378 71,190 5.6 64,237 4.6 69,237 5.2 58,773 4.5

11. Memo: o/w matures in less than 1 year 2,173 1,812 0.1 386 0.0 1,436 0.1 1,013 0.1

12. Trading Liabilities 144,448 120,444 9.4 140,546 10.2 123,488 9.3 123,553 9.4

13. Total Funding 1,016,911 847,921 66.5 892,111 64.5 866,245 64.9 828,222 63.3

14. Derivatives 186,244 155,294 12.2 206,692 15.0 207,816 15.6 236,300 18.1

15. Total Funding and Derivatives 1,203,155 1,003,215 78.7 1,098,803 79.5 1,074,061 80.5 1,064,522 81.4

E. Non-Interest Bearing Liabilities

1. Fair Value Portion of Debt n.a. n.a. - n.a. - n.a. - n.a. -

2. Credit impairment reserves n.a. n.a. - n.a. - n.a. - n.a. -

3. Reserves for Pensions and Other 7,336 6,117 0.5 5,687 0.4 5,218 0.4 4,492 0.3

4. Current Tax Liabilities 1,193 995 0.1 984 0.1 1,108 0.1 990 0.1

5. Deferred Tax Liabilities 800 667 0.1 460 0.0 463 0.0 426 0.0

6. Other Deferred Liabilities n.a. n.a. - n.a. - n.a. - 1,558 0.1

7. Discontinued Operations n.a. n.a. - n.a. - n.a. - n.a. -

8. Insurance Liabilities 157,058 130,958 10.3 112,777 8.2 107,257 8.0 103,298 7.9

9. Other Liabilities 82,918 69,139 5.4 97,824 7.1 83,609 6.3 74,071 5.7

10. Total Liabilities 1,452,461 1,211,091 95.0 1,316,535 95.2 1,271,716 95.3 1,249,357 95.5

F. Hybrid Capital

1. Pref. Shares and Hybrid Capital accounted for as Debt n.a. n.a. - n.a. - n.a. - n.a. -

2. Pref. Shares and Hybrid Capital accounted for as Equity 10,273 8,566 0.7 9,680 0.7 8,772 0.7 9,069 0.7

G. Equity

1. Common Equity 61,714 51,458 4.0 50,603 3.7 48,671 3.6 45,572 3.5

2. Non-controlling Interest 5,594 4,664 0.4 3,753 0.3 3,638 0.3 3,645 0.3

3. Securities Revaluation Reserves 1,232 1,027 0.1 1,199 0.1 1,495 0.1 1,027 0.1

4. Foreign Exchange Revaluation Reserves (2,017) (1,682) (0.1) 397 0.0 12 0.0 (757) (0.1)

5. Fixed Asset Revaluations and Other Accumulated OCI 5 4 0.0 74 0.0 87 0.0 257 0.0

6. Total Equity 66,526 55,471 4.4 56,026 4.1 53,903 4.0 49,744 3.8

7. Memo: Equity plus Pref. Shares and Hybrid Capital

accounted for as Equity 76,800 64,037 5.0 65,706 4.8 62,675 4.7 58,813 4.5

8. Total Liabilities and Equity 1,529,261 1,275,128 100.0 1,382,241 100.0 1,334,391 100.0 1,308,170 100.0

9. Memo: Fitch Core Capital 51,293 42,769 3.4 43,408 3.1 42,232 3.2 38,090 2.9

Exchange rate USD1 = EUR0.83382 USD1 = EUR0.9487 USD1 = EUR0.9185 USD1 = EUR0.8237

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Societe Generale S.A.

April 2018 17

Societe Generale S.A.

Summary Analytics31 Dec 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014

Year End Year End Year End Year End

A. Interest Ratios

1. Interest Income/ Average Earning Assets 2.1 2.1 2.2 2.2

2. Interest Income on Loans/ Average Gross Loans 3.1 3.2 3.6 4.2

3. Interest Expense on Customer Deposits/ Average Customer Deposits 1.2 1.3 1.6 1.9

4. Interest Expense/ Average Interest-bearing Liabilities 1.2 1.4 1.5 1.4

5. Net Interest Income/ Average Earning Assets 1.0 0.8 0.9 0.9

6. Net Int. Inc Less Loan Impairment Charges/ Av. Earning Assets 0.9 0.7 0.7 0.7

7. Net Interest Inc Less Preferred Stock Dividend/ Average Earning Assets 1.0 0.8 0.8 0.9

B. Other Operating Profitability Ratios

1. Operating Profit/ Risk Weighted Assets 1.5 1.7 1.5 1.4

2. Non-Interest Expense/ Gross Revenues 74.7 67.9 70.0 69.3

3. Loans and securities impairment charges/ Pre-impairment Op. Profit 16.8 24.9 32.1 35.1

4. Operating Profit/ Average Total Assets 0.4 0.4 0.4 0.4

5. Non-Interest Income/ Gross Revenues 55.3 60.7 60.1 55.9

6. Non-Interest Expense/ Average Total Assets 1.4 1.2 1.3 1.3

7. Pre-impairment Op. Profit/ Average Equity 10.5 14.1 14.0 14.7

8. Pre-impairment Op. Profit/ Average Total Assets 0.5 0.6 0.6 0.6

9. Operating Profit/ Average Equity 8.8 10.6 9.5 9.5

C. Other Profitability Ratios

1. Net Income/ Average Total Equity 5.8 7.5 7.9 5.9

2. Net Income/ Average Total Assets 0.3 0.3 0.3 0.2

3. Fitch Comprehensive Income/ Average Total Equity 1.8 7.4 10.0 7.5

4. Fitch Comprehensive Income/ Average Total Assets 0.1 0.3 0.4 0.3

5. Taxes/ Pre-tax Profit 33.2 31.2 28.1 31.6

6. Net Income/ Risk Weighted Assets 1.0 1.2 1.2 0.9

D. Capitalization

1. FCC/ FCC-Adjusted Risk Weighted Assets 12.6 12.7 12.3 10.8

2. Tangible Common Equity/ Tangible Assets 3.7 3.5 3.4 3.2

3. Equity/ Total Assets 4.4 4.1 4.0 3.8

4. Basel Leverage Ratio 4.3 4.2 4.0 3.8

5. Common Equity Tier 1 Capital Ratio 11.6 11.8 11.4 10.9

6. Fully Loaded Common Equity Tier 1 Capital Ratio 11.4 11.5 10.9 10.1

7. Tier 1 Capital Ratio 14.0 14.8 14.0 12.6

8. Total Capital Ratio 17.2 18.2 16.8 14.3

9. Impaired loans less Reserves for Impaired Loans/ Fitch Core Capital 19.0 20.3 21.4 25.4

10. Impaired Loans less Reserves for Impaired Loans/ Equity 14.6 15.8 16.8 19.5

11. Cash Dividends Paid & Declared/ Net Income 51.8 64.0 58.7 63.2

12. Risk Weighted Assets/ Total Assets 27.7 25.7 26.7 27.0

13. Risk Weighted Assets - Standardised/ Risk Weighted Assets 28.9 28.3 33.3 34.6

14. Risk Weighted Assets - Advanced Method/ Risk Weighted Assets 71.1 71.7 66.7 65.4

E. Loan Quality

1. Impaired Loans/ Gross Loans 5.0 5.7 6.1 6.9

2. Growth of Gross Loans (0.3) 4.1 8.0 3.5

3. Reserves for Impaired Loans/ Impaired Loans 60.7 62.7 63.0 62.3

4. Loan Impairment Charges/ Average Gross Loans 0.2 0.4 0.6 0.7

5. Growth of Total Assets (7.8) 3.6 2.0 5.9

6. Reserves for Impaired Loans/ Gross Loans 3.0 3.6 3.8 4.3

7. Net Charge-offs/ Average Gross Loans n.a. 0.0 0.0 n.a.

8. Impaired Loans + Foreclosed Assets/ Gross Loans + Foreclosed Assets 5.0 5.7 6.1 6.9

F. Funding and Liquidity

1. Loans/ Customer Deposits 105.7 105.2 111.5 113.5

2. Liquidity Coverage Ratio 116.0 142.0 124.0 n.a.

3. Customer Deposits/ Total Funding (excluding derivatives) 46.0 44.1 41.2 39.2

4. Interbank Assets/ Interbank Liabilities 50.4 56.4 53.1 67.3

5. Net Stable Funding Ratio n.a. n.a. n.a. n.a.

6. Growth of Total Customer Deposits (0.8) 10.3 9.9 2.4

Banks

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April 2018 18

Societe Generale S.A.

Reference Data31 Dec 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014

Year End Year End As % of Year End As % of Year End As % of Year End As % of

USDm EURm Assets EURm Assets EURm Assets EURm Assets

A. Off-Balance Sheet Items

1. Managed Securitized Assets Reported Off-Balance Sheet n.a. n.a. - n.a. - n.a. - n.a. -

2. Other off-balance sheet exposure to securitizations n.a. n.a. - n.a. - n.a. - n.a. -

3. Guarantees 81,151 67,665 5.3 68,904 5.0 64,204 4.8 69,873 5.3

4. Acceptances and documentary credits reported off-balance sheet n.a. n.a. - n.a. - n.a. - n.a. -

5. Committed Credit Lines 242,243 201,987 15.8 182,820 13.2 175,371 13.1 132,270 10.1

6. Other Contingent Liabilities n.a. n.a. - n.a. - n.a. - n.a. -

7. Other Off-Balance Sheet items 30,835 25,711 2.0 31,063 2.2 30,015 2.2 n.a. -

8. Total Assets under Management 275,839 230,000 18.0 222,000 16.1 217,000 16.3 192,000 14.7

B. Average Balance Sheet

1. Average Loans 501,993 418,572 32.8 412,479 29.8 388,410 29.1 363,502 27.8

2. Average Earning Assets 1,359,346 1,133,450 88.9 1,190,331 86.1 1,186,197 88.9 1,138,174 87.0

3. Average Total Assets 1,618,453 1,349,498 105.8 1,389,935 100.6 1,356,534 101.7 1,284,710 98.2

4. Average Managed Securitized Assets (OBS) n.a. n.a. - n.a. - n.a. - n.a. -

5. Average Interest-Bearing Liabilities 1,277,750 1,065,413 83.6 1,114,764 80.6 1,096,275 82.2 1,057,317 80.8

6. Average Common equity 66,074 55,094 4.3 53,653 3.9 51,336 3.8 48,051 3.7

7. Average Equity 71,422 59,553 4.7 58,165 4.2 55,618 4.2 51,078 3.9

8. Average Customer Deposits 479,106 399,488 31.3 382,999 27.7 351,075 26.3 325,794 24.9

C. Maturities

Asset Maturities:

Loans & Advances < 3 months 89,963 75,013 5.9 82,926 6.0 0 0.0 n.a. -

Loans & Advances 3 - 12 Months 79,479 66,271 5.2 58,473 4.2 0 0.0 n.a. -

Loans and Advances 1 - 5 Years 224,518 187,208 14.7 163,147 11.8 0 0.0 n.a. -

Loans & Advances > 5 years 90,829 75,735 5.9 98,523 7.1 0 0.0 n.a. -

Debt Securities < 3 Months n.a. n.a. - n.a. - n.a. - n.a. -

Debt Securities 3 - 12 Months n.a. n.a. - n.a. - n.a. - n.a. -

Debt Securities 1 - 5 Years n.a. n.a. - n.a. - n.a. - n.a. -

Debt Securities > 5 Years n.a. n.a. - n.a. - n.a. - n.a. -

Loans & Advances to Banks < 3 Months 38,855 32,398 2.5 29,346 2.1 n.a. - n.a. -

Loans & Advances to Banks 3 - 12 Months 4,737 3,950 0.3 4,264 0.3 n.a. - n.a. -

Loans & Advances to Banks 1 - 5 Years 8,186 6,826 0.5 11,299 0.8 n.a. - n.a. -

Loans & Advances to Banks > 5 Years 1,377 1,148 0.1 1,703 0.1 n.a. - n.a. -

Liability Maturities:

Retail Deposits < 3 months 364,434 303,872 23.8 313,044 22.6 0 0.0 n.a. -

Retail Deposits 3 - 12 Months 25,907 21,602 1.7 29,867 2.2 0 0.0 n.a. -

Retail Deposits 1 - 5 Years 23,915 19,941 1.6 29,134 2.1 0 0.0 n.a. -

Retail Deposits > 5 Years 58,541 48,813 3.8 25,312 1.8 0 0.0 n.a. -

Other Deposits < 3 Months n.a. n.a. - n.a. - n.a. - n.a. -

Other Deposits 3 - 12 Months n.a. n.a. - n.a. - n.a. - n.a. -

Other Deposits 1 - 5 Years n.a. n.a. - n.a. - n.a. - n.a. -

Other Deposits > 5 Years n.a. n.a. - n.a. - n.a. - n.a. -

Deposits from Banks < 3 Months 57,041 47,562 3.7 50,686 3.7 0 0.0 n.a. -

Deposits from Banks 3 - 12 Months 14,488 12,080 0.9 9,699 0.7 0 0.0 n.a. -

Deposits from Banks 1 - 5 Years 27,420 22,863 1.8 20,225 1.5 0 0.0 n.a. -

Deposits from Banks > 5 Years 6,559 5,469 0.4 2,068 0.1 0 0.0 n.a. -

Senior Debt Maturing < 3 months 37,810 31,527 2.5 31,005 2.2 0 0.0 n.a. -

Senior Debt Maturing 3-12 Months 16,988 14,165 1.1 21,063 1.5 0 0.0 n.a. -

Senior Debt Maturing 1- 5 Years 45,336 37,802 3.0 35,437 2.6 0 0.0 n.a. -

Senior Debt Maturing > 5 Years 23,675 19,741 1.5 14,697 1.1 0 0.0 n.a. -

Total Senior Debt on Balance Sheet 123,810 103,235 8.1 102,202 7.4 0 0.0 n.a. -

Fair Value Portion of Senior Debt n.a. n.a. - n.a. - n.a. - n.a. -

Subordinated Debt Maturing < 3 months 878 732 0.1 296 0.0 0 0.0 n.a. -

Subordinated Debt Maturing 3-12 Months 1,295 1,080 0.1 90 0.0 n.a. - n.a. -

Subordinated Debt Maturing 1- 5 Year 760 634 0.0 2,302 0.2 n.a. - n.a. -

Subordinated Debt Maturing > 5 Years 13,433 11,201 0.9 11,415 0.8 0 0.0 n.a. -

Total Subordinated Debt on Balance Sheet 16,367 13,647 1.1 14,103 1.0 13,046 1.0 8,834 0.7

Fair Value Portion of Subordinated Debt n.a. n.a. - n.a. - n.a. - n.a. -

D. Risk Weighted Assets

1. Risk Weighted Assets 423,713 353,300 27.7 355,478 25.7 356,725 26.7 353,196 27.0

2. Fitch Core Capital Adjustments for Insurance and Securitisation Risk

Weighted Assets (16,941) (14,126) (1.1) (14,219) (1.0) (12,994) (1.0) n.a. -

3. Fitch Core Capital Adjusted Risk Weighted Assets 406,771 339,174 26.6 341,259 24.7 343,731 25.8 353,196 27.0

4. Other Fitch Adjustments to Risk Weighted Assets n.a. n.a. - n.a. - n.a. - (11,800) (0.9)

5. Fitch Adjusted Risk Weighted Assets 406,771 339,174 26.6 341,259 24.7 343,731 25.8 341,396 26.1

E. Fitch Core Capital Reconciliation

1. Total Equity as reported (including non-controlling interests) 66,526 55,471 4.4 56,026 4.1 53,903 4.0 49,744 3.8

2. Fair-value adjustments relating to own credit risk on debt issued 503 419 0.0 275 0.0 281 0.0 513 0.0

3. Non-loss-absorbing non-controlling interests 0 0 0.0 0 0.0 0 0.0 0 0.0

4. Goodwill 5,982 4,988 0.4 4,535 0.3 4,358 0.3 4,331 0.3

5. Other intangibles 2,327 1,940 0.2 1,717 0.1 1,622 0.1 1,591 0.1

6. Deferred tax assets deduction 2,599 2,167 0.2 2,123 0.2 2,367 0.2 2,641 0.2

7. Net asset value of insurance subsidiaries 4,800 4,002 0.3 4,484 0.3 3,512 0.3 3,482 0.3

8. First loss tranches of off-balance sheet securitizations 29 24 0.0 34 0.0 93 0.0 122 0.0

9. Fund for general banking risks if not already included and readily

convertible into equity 0 0 0.0 0 0.0 0 0.0 0 0.0

10. Fitch Core Capital 51,293 42,769 3.4 43,408 3.1 42,232 3.2 38,090 2.9

Exchange Rate USD1 = EUR0.83382 USD1 = EUR0.9487 USD1 = EUR0.9185 USD1 = EUR0.8237

Banks

Societe Generale S.A.

April 2018 19

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