Societe Generale's Global Banking & Investor Solutions, has reported lower revenues in the first quarter of 2018 which were impacted in particular by a weaker dollar and lower revenues in market activities compared to the same period of 2017. The French bank reported dynamic commercial performance in Retail Banking but saw its Global Markets & Investor Services' net banking income down-18.2% to €1.3bn compared to Q1 17 (-13.1%).

'After a buoyant start to the quarter, characterised by robust activity in conjunction with increased volatility, the return to volatility levels close to those of 2017 reduced commercial activity,' stated the bank in its quarterly results report.

At €535m, the revenues of Fixed Income, Currencies & Commodities (FICC) were down -31.1% (-27%) vs. Q1 17 which was a record quarter since 2012. Flow activities were hit by a slight decline in new business on all products and less favourable market conditions, with an extremely low level of volatility in Europe. Credit and Financing activities were also lower than last year, in a less buoyant environment.

'The continued healthy momentum on structured products failed to offset this downward trend,' stated the bank.

The bank's revenues of Equities and Prime Services were down -10.7% in Q1 18 vs. Q1 17 (-5%) at €659 million. In an environment of rising volatility, revenues from flow products benefited from a rebound in client activity, posting a substantial increase. As a result, the Prime Services franchise recorded revenues at their historic high.

However, this good performance was 'more than offset by the decline in structured product revenues, adversely affected by less dynamic commercial activity in Europe and by increased carry and hedging costs, in a European market where volatility returned to levels close to those of 2017,' according to the bank.

'This lower performance in relation to the industry can be attributed to our business mix, which is more geared towards structured products, and our geographical mix, which is more focused on Europe,' stated Societe Generale.

Securities Services' assets under custody amounted to €4bn, up +2.8% vs. end-2017. Over the same period, assets under administration were slightly lower (-0.7%) at €646bn. Securities Services' revenues were up +9.2% in Q1 18 vs. Q1 17 at €178m, on the back of the healthy commercial momentum.

Structured Products

Societe Generale remains a top 10 bond provider across markets excluding leverage and flow products with its SG Issuer behind 387 structures worth US$31.6bn. As a distributor group the French bank is also a top 10 provider in terms of sales volumes with US$3.1bn sold during the first quarter of 2018, according to SRP data.

SRP data also shows that Societe Generale has marketed over 48,000 products including leverage and flow products across markets in Q1 2018, of which over 28,000 are still live. Most of the products marketed by Societe Generale in Q1 were sold in Germany / Austria (46,471), and Hong Kong (1,644). Other markets were the French bank has been active include its core market France were it has sold 69 structures, Australia (eight), Italy (six), the UK (three), Japan and international (two apiece), and the US market where it sold a callable note linked to the interest rate.

Most of the products sold in Germany and Austria were warrants, investment certificates and leverage certificates while in Hong Kong the wrapper of choice was callable bull/bear contracts. Other wrappers used by the French bank this year include pension, life insurance, structured notes and deferred purchase agreements.

The French bank also saw the revenues of its Asset and Wealth Management business line down -3.6% vs. Q1 17, at €243m in Q1 18. Private Banking's assets under management amounted to €117bn at end-March 2018, stable (-0.5%) vs. end-2017.

'Despite healthy transactional activity and robust inflow in France, Private Banking revenues were impacted by a decline in international activities,' stated the bank. 'Despite negative market and currency effects, Lyxor's assets under management came to €117bn, up +4.2% vs. Q4 17, on the back of strong inflow of €7.4bn. This total represents a new high for the business.'

Lyxor's revenues totalled €52m in Q1 18, up +13.0% vs. Q1 17, with an increase in commissions received.

New appointments

The French banking group has also renewed the general management team following the departure of Didier Valet in mid-March. Frédéric Oudéa has been reappointed as chief executive officer for a further four-year term and will be supported by four deputy CEOs including Diony Lebot, currently Group Chief Risk Officer; Philippe Aymerich, currently CEO of Crédit du Nord, who will be in charge of French Retail Banking activities and their Innovation, Technology & IT department, as well as Group resources (IT, Real Estate and Sourcing); Séverin Cabannes, who takes over supervision of the Global Banking and Investor Solutions activities; and Philippe Heim, currently Chief Financial Officer, who will be in charge of International Retail Banking activities, Financial Services and Insurance.

As part of the changes, Bernardo Sanchez Incera, deputy chief executive officer in charge of retail banking, will leave the bank; while Sylvie Rémond, currently co-head of coverage and investment banking will become Group chief risk officer. I addition, William Kadouch-Chassaing, currently head of group strategy, is appointed group chief financial officer; and Françoise Mercadal-Delasalles, currently deputy CEO of Crédit du Nord will become Crédit du Nord's CEO.

At an equity derivatives level, the French bank has seen a number of departures and arrivals in Q1 including Richard Quessette, head of equity & equity derivatives for global markets at Societe Generale Corporate & Investment Banking (SG CIB), in Paris, who left in late April; Julien Lascar who was promoted to head of global market sales for Europe (excluding France), reporting to Yann Garnier, head of sales for global markets, shortly after; and Inhwan Oh who replaced Garnier as head of global markets sales for Asia Pacific in Hong Kong. These appointments will be effective as of 14th May 2018.

Click in the link to read the Societe Generale results reports.

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