ANNUAL REPORT 2002 SOCIÉTÉ GÉNÉRALE GROUP 1 Message from Daniel Bouton Chairman and Chief Executive Officer

Review 2002 Société Générale Group 2002 Review Société Générale Group Réf. 170148 Réf. RETAIL BANKING ■ ASSET MANAGEMENT & PRIVATE BANKING ■ CORPORATE & INVESTMENT BANKING RETAIL BANKING ■ ASSET MANAGEMENT & PRIVATE BANKING ■ CORPORATE & INVESTMENT BANKING Profile No.1 non-mutual The Société Générale Group retail banking group in France (1) is the ninth largest French company by market capitalization and the sixth largest bank in the euro zone. It employs 3rd largest corporate and over 80,000 people worldwide. investment bank in the euro zone (2) Its business mix is structured around three core businesses: Retail Banking, Asset Management and Private Banking, rd largest euro-zone bank and Corporate and Investment Banking. 3 (3) The Group is pursuing a profitable growth policy based in asset management on the selective development of its core activities th through a combination of organic growth and acquisitions, 9 largest market capitalization and is drawing on a strong capacity for innovation in France (EUR 23.9 billion geared towards satisfying its customers. at December 31, 2002) (4) The Group’s three fundamental values are Professionalism, Innovation and Team Spirit. AA- (Standards & Poor’s) Aa3 (Moody’s) AA (Fitch) (1) By net banking income and number of branches (source: Société Générale). (2) By net banking income (source: Société Générale). (3) By assets under management (source: Société Générale). (4) Source: Bloomberg. ANNUAL REPORT 2002 SOCIÉTÉ GÉNÉRALE GROUP 1 Message from Daniel Bouton Chairman and Chief Executive Officer The Société Générale Group turned in a satisfactory performance in 2002, despite the harsh environment Against a backdrop of highly volatile, debt and equity derivatives. However, Overall, Group net income was down bearish stock markets and uncertainties the contribution made by the Equity by 35.1% on 2001. Between 1999 that weighed on the outlook for the and Advisory activities was affected and 2001, the Group benefited from global economy, the Société Générale by the tough stock market sizeable capital gains realized on its Group maintained a satisfactory environment in 2002. industrial equity portfolio, totalling level of profitability in 2002. The Group reaped the rewards of its EUR 2.6 billion. In 2002, the Group Operating income edged up slightly tight cost-control policy, with operating was obliged to book EUR 772 million in relation to 2001, confirming expenses down when adjusted of provisions in accordance with its the robustness of the Group’s strategy, for changes in Group structure conservative provisioning policy. which is structured around three and at constant exchange rates. Over the year, the Group’s share price complementary core businesses: 2002 also saw the integration held up well: the Société Générale share Retail Banking, Asset Management of the major acquisitions made by outperformed the EURO STOXX BANK index and Private Banking, and Corporate the Group in 2001, notably Komercni by 15% and the CAC 40 index by 22%, and Investment Banking. Banka (KB), GEFA, ALD and TCW against a difficult background for all The business line ROE after tax (Trust Company of the West). stock market indices, including those came out at 18.7%, which represented The positive impact of these of financial stocks. a very creditable performance in an acquisitions, in terms of revenue growth Overall, 2002 confirmed the validity adverse climate. and an improvement in the cost/income of the Group’s positioning and objectives: The Group’s net banking income ratio, will be even more significant a well-balanced and evolving business showed a slight increase in 2002 in the years to come. mix, sustainable and profitable growth, in relation to 2001, rising by 4.2%. The increase in the cost of risk, and a focus on value creation. The Group’s 80,000 employees work The Retail Banking platform pursued which reflected the difficult environment hard to implement this strategy, inspired its profitable growth both in France in the United States and certain by our core values of innovation, and internationally. Asset Management industrial sectors, was limited, with professionalism and team spirit. and Private Banking continued the average cost of risk over the year to expand its activities, particularly (70 basis points) only slightly above In an ever-uncertain environment, in Europe and Asia. The Corporate our estimate under average economic the Group will be able to leverage these and Investment Banking arm held up and market conditions. This confirmed assets to continue to create significant well, in particular in fixed income, the Group’s ability to grow while value for its shareholders. controlling its risks. 2 SOCIÉTÉ GÉNÉRALE GROUP ANNUAL REPORT 2002 Interview Société Générale is committed to corporate governance and sustainable development You chaired the AFEP-MEDEF (1) by focusing on three key issues: also means reaffirming the Group’s role working group’s review of corporate organization, transparency and in the community, which we do through governance. How is the Société appraisal, respecting both the letter and our sponsorship of major sporting Générale Group putting its the spirit of the recommendations and cultural events, for example. recommendations into practice? of the AFEP-MEDEF report. Professionalism, Innovation Daniel Bouton: For a number of years, In 2001, Société Générale signed and Team Spirit are the three values Société Générale has endeavored the United Nations Statement that the Société Générale Group to apply best practices in terms by Financial Institutions on highlighted in 2002. Why? of corporate governance. As such, the Environment and Sustainable Daniel Bouton: The Société Générale the Board has completely rewritten Development. How has the Group Group has grown rapidly. Within its Internal Rules and the Director’s implemented this initiative? the space of four years, we have Charter to bring them into line with Daniel Bouton: I am convinced that developed into a truly international the recommendations of the the values that underpin the Group’s financial services group, with over AFEP-MEDEF report. The Board has economic performance are also key 80,000 employees, of whom over 40% recommended that the General Meeting to its medium-term development. are based outside France. The three of Shareholders increase the number These values are already widely shared values, Professionalism, Team Spirit of independent members on the Board within the Group. and Innovation, were chosen following from one third to half of all members. Société Générale believes that an in-depth study that involved The Board also carried out a second self- promoting these values provides some 2,000 employees. A major appraisal of its performance. the opportunity to reaffirm the mainstay communication campaign was launched Furthermore, our Annual Report provides of the banking industry, namely in 17 languages in March 2002. full information on Société Générale’s confidence. More than ever, and The aim is for these values to become corporate governance. particularly in the light of recent events, the cornerstone underpinning This year’s report not only contains the Group’s behavior must convince the work of all Group employees. the Group’s by-laws, like last year, its customers and shareholders that The values, which are applied by all but also includes the Committee’s its business ethics are irreproachable. employees in their daily work and Internal Rules and the Director’s Charter. Employees are the Group’s key asset, are materialized through management In 2003, the Board will strive and as such, the Group must be initiatives at the level of each entity, to improve corporate governance an attractive employer, able to offer will contribute to driving the performance motivating career development of each business within the Group: prospects. Being a responsible company “generating value from our values”. (1) Association Française des Entreprises Privées (Association of French Private-Sector Companies) and Mouvement des Entreprises de France (French Business Confederation). ANNUAL REPORT 2002 SOCIÉTÉ GÉNÉRALE GROUP 3 Strategy Three guiding principles: continued commercial development, The crisis that hit the banking sector Against this backdrop, the guiding the Group is the third largest euro-zone in 2002 was highly particular. It was principles of Société Générale’s 2004 bank (2) and has built up a top-tier not exactly a growth crisis, as no strategic plan – continued commercial position in alternative management. geographic region experienced a real development, reduction in the The Group will continue to invest recession in 2002, and some areas – breakeven point and improvement in external growth opportunities in order such as Central and Eastern Europe and of the risk profile – as announced to bolster its platform, while respecting Asia (excluding Japan) – even continued to the market on April 19, 2002, its commitment to selectivity and to record sustained growth. Some have proved particularly relevant, even shareholder value. spoken of a crisis of confidence, if adjustments to the assumptions These investments will take the form resulting from a number of of average economic and market of acquisitions or partnerships, uncertainties at both a political level conditions are necessary. These guiding which enable the Group to leverage (insecurity linked to terrorism, crisis principles are described below. its existing production capacities in Iraq, etc.) and an economic level and increase its market share,

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