Societe Generale has reported a 'continued dynamic structured product demand' despite a decrease in revenues in Global Markets & Investor Services, in both the third quarter and the first nine months of 2017.

Net banking income of Fixed Income, Currencies & Commodities (FICC), at €496m in the third quarter of 2017 (€1.9bn in the first nine months of 2017), declined by 27.8% compared to Q3 2016 and was down by 7.3% compared to 9M 2016, in 'a lacklustre market', characterised by a 'low volatility environment and reduced investor activity'. In this context, structured products turned in a good performance, according to the bank, 'confirming the successful expansion of our cross-asset structured products franchise'. In contrast, flow product revenues were lower on all underlyings, particularly on rates, impacted by low volatility, and on credit, hit by very tight spreads, the bank reported.

Societe Generale was the issuing party behind 106 structured products worth an estimated €1.4bn in the third quarter of 2017, down from 107 products with a sales volume of €1.9m during the same period last year, according to SRP data. The products were issued across 11 jurisdictions of which France, with 50 products, distributed via, among other, Adequity, Aréas Assurances, Crystal Partenaires, i-Kapital and Irbis Finance, was the most active market ahead of Sweden, where the bank issued 23 structured products in the third quarter. In Belgium, Societe Generale collaborated with Crelan, Deutsche Bank, SG Private Banking and VDK Spaarbank while in Hungary three certificates were issued via Erste Group Bank.  Outside Europe, the bank sold 10 products in Japan, which were distributed to the Japanese retail investors via local securities firms.

During the first nine months in 2017, Societe Generale issued 328 structured products worth €4.2bn compared to 447 products with a sales volume of €9.5bn in the same period last year. The majority of the bank's products this year were linked to equities, including 140 products linked to a single index, of which the Euro iStoxx Equal Weight Constant 50 (41 products), Eurostoxx 50 (34) and SBF Top 80 EW Decrement 50 Points (26) were the most frequently used.

Global Markets & Investor Services' net banking income amounted to €1.2bn in Q3 2017, down 20.7% versus the same period in 2016 and down 4.9% versus 9M 2016 at €4.3bn. While world markets continued on their upward trend, Q3 was marked primarily by the 'waitand-see' attitude of investors, in conjunction with historically low volatility, according to the bank.

The net banking income of the Asset and Wealth Management business unit totalled €226m in the third quarter, down 11.7% versus Q3 2016. Net banking income, at €743m was stable during the first nine months of 2017(-0.4% versus 9M 2016).

Private Banking's assets under management (AUM) amounted to €119bn at end-September 2017. Driven by positive inflow in Q3 17, assets under management were 2.6% higher than at end December 2016, according to the bank. Net banking income, at €177m, was down 14.9% vs. Q3 2016, and down 3.1% vs. 9M 2016, at €589m.

Lyxor's assets under management came stood at €110bn at September 30, 2017, up 3.8% compared to end-December 2016, underpinned by 'healthy inflow', according to the bank. Net banking income for Lyxor amounted to €45 million in the third quarter of 2017 (+7.1% vs. Q3 2016) and €140m for the first nine months of 2017 (+19.7% vs. 9M 16), driven by an 'excellent commercial momentum' on exchange-traded funds (ETFs), the bank reported.

'Despite an unfavourable financial environment, Societe Generale generated resilient Q3 results, driven in particular by International Retail Banking & Financial Services,' said Frédéric Oudéa (pictured), chief executive officer, Societe Generale in a statement. 'With increased underlying profitability in the first nine months of the year, a solid capital base and the commitment of its teams, Societe Generale is ready to embark on a new phase of its development and will present its strategic plan on November 28.'

Click the link to view the full Societe Generale Q3 and 9M 2017 results and presentation.

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