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Edited Transcript of ACA.PA earnings conference call or presentation 15-May-19 12:30pm GMT

Q1 2019 Credit Agricole SA Earnings Call

Paris May 28, 2019 (Thomson StreetEvents) -- Edited Transcript of Credit Agricole SA earnings conference call or presentation Wednesday, May 15, 2019 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jérôme Grivet

Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division

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Conference Call Participants

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* Anke Reingen

RBC Capital Markets, LLC, Research Division - Analyst

* Bruce Allan Hamilton

Morgan Stanley, Research Division - Equity Analyst

* Flora A. Benhakoun

Deutsche Bank AG, Research Division - Research Analyst

* Guillaume Tiberghien

Exane BNP Paribas, Research Division - Head of the European Banks Team & Analyst of Banks

* Jacques-Henri Michel Gaulard

Kepler Cheuvreux, Research Division - Head of Banks Sector Research

* Jean-Francois Neuez

Goldman Sachs Group Inc., Research Division - Executive Director

* Kirishanthan Vijayarajah

HSBC, Research Division - Analyst

* Matthew Clark

* Pierre Chedeville

CM-CIC Market Solutions, Research Division - Analyst

* Stefan-Michael Stalmann

Autonomous Research LLP - Partner, Swiss and French Banks

* Tarik EI Mejjad

BofA Merrill Lynch, Research Division - Equity Analyst

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, and thank you for standing by, and welcome to today's Crédit Agricole S.A. Q1 Results 2019 Conference Call. (Operator Instructions)

I just must advised you that the conference is being recorded today, and that's Wednesday, the 15th of May 2019. I'd now like to hand the conference over to your speaker today, Jérôme Grivet. Please go ahead and thank you, sir.

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [2]

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Good afternoon to everyone of you. Let me start this presentation on Page 4 of the document that you have probably already read since this morning. Just to remind you the 4 main messages on these results for the first quarter of 2015 (sic) [2019] for Crédit Agricole Group and for Crédit Agricole S.A. First main and important message, we are having a good level of underlying net profit. It is slightly up even in first quarter which as you all know, is always earmarked with some regulatory and tax headwinds. Second key point is that we managed to continue our cost control on all business lines throughout the group. The third main message is that the cost of risk continues to be low and even continued to decrease a little bit this quarter as compared to the same quarter last year. And finally, the solvency of the group improved further this quarter, plus 30 bps at group level and the solvency of Crédit Agricole S.A. remained stable on this quarter.

Page 5, just a few information that you all know. Equity market improved a little bit in the first quarter, but there is still some volatility and the rate situation has continued to deteriorate a little bit considering the businesses in which we are engaged.

On Page 6, you have the main profitability indicator for the group and for Crédit Agricole S.A. So the stated and underlying net profit for the group stand at EUR 1,350 million and EUR 1,435 million and for Crédit Agricole S.A., the figures are EUR 763 million and EUR 796 million.

On the following page, Page 8, we are seeing the global economic performance that we did this first quarter. As I already mentioned, the net income -- underlying net income for Crédit Agricole S.A. is slightly up for the quarter, plus 1% and if we take out of this quarter the figures coming from the contribution to the Single Resolution Fund, actually the performance would have been up 3.5%. It's also the performance that we did on the profit before tax, plus 3.5%. If we analyze a little bit the components of this profitability, what we can see is that the net profit of the 4 main business divisions of the group is globally up 8.2% and the 1% is explained by some volatility and one-offs on the corporate center, which reduce the base effect considering some elements of profits that we had in the first quarter of 2018. On Page 9, you may now take a look at the evolution of the revenues. And again, what you can see is that in context, where all in all the underlying revenues were flat, the revenues of the business line were up 1%. I just want to mention 2 of -- or 3 of them before undertaking the analysis of each business line. At LCL in French retail banking, we saw an improvement in the top line, and it's been also the case at CACIB, the Corporate and Investment Bank, which is in both cases, in the present context, a quite good performance. Regarding the specialized financial services division, we analyzed it a little bit further in the course of the presentation, but just let me remind you that part of the business does not translate into net banking income, it translates into equity-accounted components. It's all the business that we are doing for the car financing joint ventures, which is made under the form of joint ventures.

On Page 10, again, as I already mentioned, we confirm our capacity to control the cost evolution globally and in all the business lines. The cost control continues to be a key element of our performance of our profitability. Of course, we are developing a cost policy which is diversified across the different business lines. There are some businesses in which like the insurance business, we continue to invest and there are some businesses like retail banking activities, both in France and abroad, especially in Italy and specialized financial services where we deem necessary to continue to try and reduce a little bit the cost base in accordance with the prospects of evolution of the top line. I think that this performance of a flat evolution of the cost line is especially noticeable in the context where we all know that be it in the IT component of the cost line or be it for the salaries, we have spontaneous evolution, which is roughly of around 1.5% to 2% across the board.

If I go now to Page 11, where we have some indications about the evolution of the cost of risk, I think the main messages are again that the cost of risk is low, but the cost of risk continues to decline especially in the CIB space. And clearly, it's really the consequence of the further improvement of the asset quality of all of our balance sheets, the asset quality of our loan books and there is no sign of soon a deterioration of this asset quality. So I think it's a key component also of our strength nowadays. And this is illustrated by the evolution of the NPL ratios, which stand at 3.3%. It's down 90 bps as compared to 1 year before on the perimeter of Crédit Agricole S.A. and it stands at 2.6%, down 40 bps on the perimeter of Crédit Agricole Group. If we analyze a little bit further the cost of risk by business line on Page 12, what we can see is that at LCL and in the consumer credit business, we are now stabilized around a very low level, which may have some volatility, but clearly, it's volatility around a very low level. And again, no sign of clear deterioration going forward. And it's particularly important to note that the cost of risk remained stable in the context of an increasing loan book. So it means that finally, the additional bucket 1 and bucket 2 provision that we have to take regarding the new loans is completely offset by the global improvement of the loan quality. On the Italian retail banking activities, we continue to see a further a decrease of the cost of risk, which is coherent with the forecast that we had made, and we see some further room to see this continuing and going further. And lastly, on the financing activities of CACIB, of the CIB, we have, for the fourth quarter in a row, a negative cost of risk, so a provision reversal. Of course, this is not sustainable, and we may see a normalization going further. But all in, the quality of the loan book remains very healthy.

If I go now on Page 13 and I start the analysis by business line, on Page 13, the first figures regarding the asset gathering business division, what we can see is that we have recorded a strong increase in the assets under management, plus 2.7% as compared to the end of Q1 '18, but close to 3% as regard to the end of last year. It's due of course to a significant and positive market and ForEx effect, but it's also due to a good inflows especially in life insurance and wealth management businesses. When it comes to asset management, you have already noted the publication of the results of Amundi. So you know that Amundi had some outflows in money market funds, but as regards the long-term asset, Amundi continued to enjoy positive inflows and quite strongly actually.

On Page 14, when it comes to the insurance business, I think that what we can note, in a nutshell, is that the overall level of activity remains excellent with significant inflows in the life insurance business, significant inflows which continue in unit-linked products but also a pickup in euro-denominated products this quarter. Regarding P&C and protection businesses, again, a very strong business momentum, plus 9.5% in premium income, which is the net realization of further market share gains across the board in France and abroad. When it comes to the financial figures, you will see that the profitability of this insurance division continued to increase, plus 3%, reaching EUR 284 million for the quarter. Maybe a last point I want to mention on this page, which is the good start of the Crédit Agricole Insurance CreVal partnership with net inflows significantly above our initial expectations and inflows of good qualities with more than 30% of the inflows made of unit-linked products.

Amundi asset management, I already mentioned what happened in terms of inflows and again, significant long-term asset inflows. Compared to the first quarter of 2018 where Amundi recorded significant performance fees, revenues are slightly down, actually almost flat, but thanks to the continuous good cost control and to the very good efficiency of Amundi, the profitability of Amundi is up close to 3% this quarter.

Retail banking activities in France, or LCL, I think that the 2 messages are very clear. The commercial activity is doing quite well actually, with customer savings up and loans outstanding significantly up and the financials are also very well oriented with top line up 1 and -- 1.3% Q1-on-Q1 and costs down 3.2% excluding Single Resolution Fund. Of course as in all business lines, the cost of the Single Resolution Fund increases quite significantly, plus 17%. But nevertheless, those performances are very positive and generated a net profit, which is up close to 18% for LCL this quarter.

In this context, the last point I wanted to mention is the fact that LCL is indeed gaining new customers with close to 20,000 new customers this quarter, almost 15,000 for individuals and close to 5,000 professional clients in this quarter.

International retail banking abroad, so Italy, Cariparma and Crédit Agricole Italia, good commercial momentum. Loans outstanding are up 1.8%. If I respect the Q1 figures on the fact that in the meanwhile, we have sold a significant amount of the nonperformance exposures. Customer savings are slightly down, which is mostly explained by the fact that Cariparma continued to actually end some costly customer resources that were going along with 3 banks that we bought and this was compensated by the issuance of the CASA bond in the Italian market, which was a success. In terms of financials, the top line is down close to 4%, but actually, it's almost completely explained by the fact that in Q1 '18, Cariparma made a capital gain on the sale of some BTPs of close to EUR 20 million, so besides the top line is more or less stable, the first line is down 1.5% and the cost of risk continued to decline by 15%. So in this context, the contribution of Crédit Agricole Italia to the profitability of the group increased by close to -- a little bit above than 8%. In addition to that, we mentioned the fact that globally, Crédit Agricole Group in Italy has made, in the first quarter of this year, a net profit of close to EUR 117 million, which is again up, this time 16% Q1-on-Q1. The rest of the international retail banking activities continued to do quite well with the net profit up 21%. I think there is nothing much more to mention on this division.

Specialized financial services. The commercial momentum is again very positive, and I already mentioned the fact that a significant contribution was made by the development of the car financing joint ventures, which have indeed a very good level of activity this quarter as globally all the consumer credit businesses, especially abroad. So the loans outstanding are globally up 7% for the managed loan book, a little bit less than that for the consolidated loan book of CACF. For leasing and factoring activities, also a good level of activity and in terms of leasing a loan book, which is up 2.7%. So all in all, the top line is globally slightly down minus 1.1% in the context of strong competition across the board, but due to the good cost control and to a level of cost of risk which remains quite low, as I already mentioned, the profitability of this business division is up close to 9% at EUR 194 million.

Lastly, I want to mention the new partnerships in which CACF entered this quarter with Tesla in the Netherlands, Harley-Davidson in Spain and Poland to [SPA] launch.

The last business division is the Large Customers division. It's been a volatile quarter across the board for all CIBs, and I'm happy to mention the fact that for CACIB, revenues were up this quarter than globally for the Large Customers division, including CACEIS. Revenues ended up at 3.3%. As far is CACIB is concerned, the quarter was quite positive for fixed income activities with CACIB gaining the position of #2 worldwide bond issuer, bond issuance arranger for its customers. For the financing activities, revenues are globally up 7%, which is a good performance and actually CACIB indeed took advantage of a very strong customer demand for new loans, which explains the increase that we had in RWAs forecasted this quarter, but you are used to that. This is already something we had in Q2 last year. And in terms of financial, this very good resilience of the revenues up 3.3%, a good cost control and a further decrease in the cost of risk because as I was mentioning, we have had for the fourth quarter in a row, a provision reversal this quarter at CACIB. The overall profitability of this business division is up 16.4% at EUR 232 million.

For CACEIS, it was also a good quarter in terms of activity with the gain of significant new loans with like Groupama in France and with also the conclusion of 2 very strategic moves, the negotiation with Santander and the offer that has been made on cash bonds in Netherlands. We expect those 2 strategic moves to be concluded probably by the end of this year.

Let me go now to the Regional Banks of Crédit Agricole on Page 22. And we will find more or less the same type of performances as the one we saw at LCL with very good commercial momentum. Loans are up 6.5% and customer savings up 4.2%. Also new customer gains, 35,000 new customers attracted -- individual customers attracted by the regional banks globally in the first quarter of this year and financial figures, which translate these very good commercial momentum. Revenues are up close to 4%. We all know that for the regional banks in the revenue line, you have at the same time, activity revenues and also portfolio revenues but globally up quite significantly. And after 2 years of strong investments, you have now a much more moderate evolution of the cost line, which is actually more or less stable this quarter. In the context where the cost of risk is declining quite sharply, minus 46%, the contribution of the Regional Banks to the profit of the group is up 13.4%, which is quite significant.

Let me go now to the solvency. I already mentioned that at CASA, the solvency ratio, the CET1 ratio stood stable at 11.5%. You have on Page 24 the different elements explaining the evolution between the 11.5% at the end of last year and the 11.5% at the end of this quarter. I think what you can note is the sharp increase in unrealized reserves, so OCI reserves and also a significant increase in the solvency consumption linked to the evolution of RWAs. Just a few words on this strong dynamic evolution of RWAs, plus a EUR 14 billion in a single quarter, it's not nothing. But I think that some elements are clearly important to keep in mind. Within this evolution, we have EUR 1.6 billion coming from the implementation of IFRS 16 January 1 this year. In CACIB, you have close to EUR 4 billion of RWA evolution, which is clearly in connection with what I mentioned, which is the strong credit demand coming from customers and the capacity of CACIB to generate actually new assets with a good level of profitability which you know now is what we did last year. That is something we can do on an approximate basis. And in the asset gathering business division, the strong evolution is mainly due to the insurance activities where you all know that the RWA increase is more than self-financed by another element of solvency because in this evolution, you have 2 components. The first one is the OCI reserves, which translates into an increase in RWA but another increase, which is more important in OCI reserves, for solvency and the second element is the fact that the profits made by the insurance company this quarter translates into RWA but also translates into capital through retained earnings. So I would say that all these RWAs in connection with the insurance activities are more than self-funded in terms of solvency.

At group level, the CET1 ratio further increased at 15.3%, so quite a significant increase, which is linked to the high level of retained earnings, which is linked to the evolution of the OCI reserves and which is linked to the fact that globally at group level, the organic RWA consumption is much lower than at CASA level. It's, in particular, due to the fact that at the Regional Banks level, we improved a little bit the efficiency of our credit model with the full approval of the ECB of course. On this page, you may also -- take a look at the other ratios and especially at the (inaudible) ratio and the TLAC ratio. The TLAC stands now at 22.6%, which is a little bit above the 22% target that we had set for 2019. It's especially due to the fact that in the first quarter, we issued an AT1 at the end of February which was not part of the initial funding plan that we had published.

Precisely, let's go now to the funding plan on Page 26. At group level, we already showed, by the end of April, EUR 15.7 billion of different categories of debt. And at CASA level, the figure is EUR 9 billion of debt excluding this AT1 I just mentioned. So EUR 9 billion at CASA level, it's more than half of the yearly program that has been indeed completed by the end of April this year. And I think that we can add this program was completed taking advantage of favorable market conditions especially when it came to issuing [either setting a monthly fair that institute] debt in March. Liquidity and funding, nothing much to mention. The liquidity position of the group remains very comfortable and with the same kind of metric than the one you usually know. And I think we can end this presentation with I would say the repetition -- the main messages, solvency at high level, good business momentum all business lines, good cost control, cost of risk, which is low and indeed a good level of profitability especially for our first quarter, which is earmarked again by IFRIC 21 and the Single Resolution Fund contribution. Lastly, you have all in mind the fact that we are going to meet in person in 3 weeks' time I think for the presentation of the new Medium-Term Plan. And now I'm ready of course to answer your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

Your first question comes from the line of Flora Benhakoun from Deutsche Bank.

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Flora A. Benhakoun, Deutsche Bank AG, Research Division - Research Analyst [2]

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The first question I'd like to ask is regarding the financing business. And you know going back to the significant RWA inflation that we've seen this quarter, it's true that the revenues are up but this quarter, the RWA inflation is slightly higher than the growth in the underlying revenues on a year-on-year basis, which is also a bit surprising because in this division, you have this originate to distribute model where you can use the securitization, for example, to reduce the other vehicle consumption. So the question is can you do better on growing basically the revenues without growing the RWA by the same amount? And the second question is regarding LCL where obviously the NII was very strong this quarter but driven by very significant loan growth. So the question on the NII would be, is it the case maybe that you are capturing some credit risk that others are leaving behind given the growth especially on corporate loans being so much higher than peers? And can you maybe elaborate on the weakness on the fee income this quarter?

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [3]

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Let's start with CACIB. Again, as I said, we had, this quarter, another financing view regarding the development of the financing business and of the loan growth and the RWA portfolio. The RWA at CACIB increased by roughly EUR 4 billion and the starting point was around 110, so it's -- the effect, around 4% increase. But the revenues in the financing division are up 7%. So actually, of course, the maths are a little bit more complicated. But what you can see with this very simple calculation is that these additional RWAs were relative rather than dilutive. In this context, we continued of course with our distribution policy. And as I -- as an indication of that, in the last 12 months actually, CACIB distributed 42% of the assets it generated in the financing businesses. So I'm not talking about securitization, I'm not talking about bond issuance, I'm really talking about the balance sheet business that we are doing. 42% of the assets that we originated in the last 12 months were primarily distributed. It's a significant increase. I think it was around 20% or 25% 5 years ago when we started this new policy and even 1.5 years ago, it was more in the region of 35%. So clearly, we accelerate our capacity to finally distribute the assets that we generate even in the space of credit and not only in the space of bonds. And I think we can continue. So of course, as I said, we have been taking some market opportunities, capturing some market opportunities this quarter. They may not repeat quarter-after-quarter, and we will continue to stick to a strict global RWA discipline and to a strict coherence between our capacity to generate capital and our capacity to allocate this capital to the different business lines. We did it once last year. In Q2, if I remember correctly, where CACIB increased quite significantly, its credit RWAs and after that, it remained absolutely stable. So we have this capacity of being agile in this regard, in this respect. At LCL, I don't know whether this idea of us taking bad risks come from but it's absolutely not the case. LCL is and has a long, I would say, expertise in having relationship with corporates, either small and medium-sized corporate or even sometimes bigger corporate. And so LCL is really taking advantage of its expertise, the recognition it has with customers. And we had decided, I think I already stated in previous calls, to allocate potentially more RWAs to LCL in order to enhance its development. They are taking advantage of it. But clearly, I'm not seeing any risk of credit deterioration going further in connection with this policy. When it comes to net banking income or net interest income, it's clear that volumes are much more up than NII simply because the margins continue to be under pressure. And you may have seen in the newspaper that in the last month, the average market rates for new home loans continues to decrease a little bit so LCL is in the same situation at its peers from this respect. But I think that what we have been proving at LCL in the last 1.5 years is the capacity to maintain a good -- a gap between the evolution of the top line and the evolution of the cost line, and this is what we will continue to do.

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Operator [4]

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And it's from the line of Jacques-Henri Gaulard from Kepler.

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Jacques-Henri Michel Gaulard, Kepler Cheuvreux, Research Division - Head of Banks Sector Research [5]

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Two questions for me, please. I would like to bounce on [indiscernible] question because EUR 321 billion in risk-weighted assets is still something we haven't seen in a while actually, and it looks a little bit weird. So the question is more beyond the financing question whether you can bring it that back to the regular [EUR 310 billion] or if you can actually give us guidance on the RWA for the end of the year. And the second question would be on the wealth management business, which we if we exclude LCL, remains really -- for all French banks in general, the private banking business outside France, not something which is working very well, and it's the same for you, you had the consolidation of an asset bank, [I don't know], over this quarter, results keep going down. Is it really worth investing in this? That's it for me.

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [6]

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Yes. Good questions. As usual, Jacques-Henri. No. RWA, I think we are still significantly below the level that we had in mind when we published at the last media conference. So you have been used to us being quite disciplined in the evolution of RWA. You have also to be used that we may wants to take advantage of again business opportunities. But nevertheless, in the evolution that we have had this quarter, it's important to really make the difference between what is organic growth and typically and resume it fully at CACIB, the EUR 4 billion increase in (inaudible). And what is more either temporary or an element of volatility, and this is what is happening at the insurance division this quarter. Again, there is an increase of around EUR 2.5 billion of RWAs, which is in connection with the evolution of OCI reserves. And each time the OCI reserves increase, we are creating solvency at group level because the cost of -- the additional RWA is much less than the benefits of the solvency increase linked to this evolution of the OCI reserves. So this is something we have to note. This is not something on which we have the capacity of acting. But clearly, if the OCI reserves, the increase in RWA is much more than -- more than financed by, in terms of solvency, by the creation of additional capital. And in addition to that, you know that until we pay the dividend, we upstream the dividend from the insurance company to the mother company. We will have an increase in RWAs quarter-after-quarter because when insurance division is making EUR 300 million of profit, this is generating close to EUR 1.5 billion of RWAs, [332%]. And of course, this is a significant evolution of RWA but at the same time, we have the capacity, the possibility of integrating the EUR 300 million of net profit in our solvency. So in those cases, these RWA increases are more than self-financed by the evolution of the capital. So this is something, which is not of the same nature as what happened with CACIB. Your second question is about Private Banking activities. To put it in a nutshell, there is a decrease in the net profit between Q1 '18 and Q1 '19. There was a strong increase in the profitability between Q4 '18 and Q1 '19. So we are working on the overall efficiency of this business division. We are working on generating all the synergies that we expected from the acquisition that we made in the last 12 or 15 months. We know that we have some improvements -- further improvements to do, but clearly, this business remains a part of the overall business of the group, the business scopes of the group and I think that the best we have to do is to continue and improve the efficiency rather than taking some other kind of decisions.

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Operator [7]

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And your next question comes from the line of Stefan Stalmann from Autonomous.

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Stefan-Michael Stalmann, Autonomous Research LLP - Partner, Swiss and French Banks [8]

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Two questions from my side, please. First on the tax rate. I guess there's still a little bit of unclarity or lack of clarity about what actually the corporate tax rate will be this year. Are you accruing -- in France that is, are you accruing on the assumption that the corporate tax rate will be 31%? Or are you still have in mind last year's 33%? And the second question regarding the very strong performance in the car finance joint ventures that you pointed out. If we draw down to the operating level of these car finance joint ventures, what drove this very strong performance? Revenue, cost, cost of risk, or anything else to highlight there?

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [9]

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Okay. Tax rate, we kept which was to be frank, a, let me call, debate with our auditors. We kept this 33% tax rate. We know that the law that was passed last year had set the tax rate for this year at 31%, but we also heard the public announcement made by government regarding the fact that finally this year, it was going to be kept at 33%. So actually, we kept the 33% for this year because we didn't want to be in a situation where we had lowered the tax rate in the first quarter, and we had to catch up in the second and the third quarter. So even though from a purely accounting principle point of view, we should have put 31%, we kept the 33%. And you may have seen that the global tax rate increased a little bit. This is the consequence of the increase of the Single Resolution Fund contribution, which is, as you know, not tax-deductible, and so this is translating into an increase of the global tax rate that we had to spend this quarter, which is why the profit before tax on an underlying basis is up 3.5% when the profit after tax is up only 1%. In the car financing business, you know that we have 2 different activities. We have the partnership with FCA in Italy and in most other European countries, and we have the partnership with GAC in China. The situation is completely different in the 2 entities. GAC is a small carmaker in a China and so GAC managed to keep a good business momentum and a good level of sale in the Chinese car market, which is little bit more troubled in the last period of time. So the business is developing well in China despite, I would say, a more challenging environment for the car market. FCA is a much more important carmaker especially in Italy. FCA is developing quite well in Italy, and we also developed the partnership in several European countries. And you may have seen that we proactively expand with FCA Bank that the number of partnership that we have with other carmakers, so this also explains why we have this good momentum in the car financing business.

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Operator [10]

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And your next question comes from the line of Jean Neuez from Goldman Sachs.

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Jean-Francois Neuez, Goldman Sachs Group Inc., Research Division - Executive Director [11]

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I just wanted to ask on the French retail business, where there is obviously a very strong amount of loan growth and with also the margin, perhaps, that you described before, I just wanted to try to understand whether you'd be able to share some views as to -- obviously, Crédit Agricole has the #1 market share in mortgage as a group in France. And I just wanted to understand what your views on the drivers of this competitive dynamics were? And in a sense, at which stage, you start changing your minds on the interplay between volumes and margin, please?

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [12]

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Well, we have certainly the highest market share in home loans in France, that's for sure, if we -- if you add up regional banks and LCL. We don't see it as a market which would be independent from our global retail banking activity. We see it as a key component of the relationship we have with our retail customers and with the individual customers in France. So we are not going to decide to exit the home loan market and to stay on the rest of the retail market. It's just not possible actually. So the real base of the business that we've built in the last 100-and-something years is the retail market -- retail banking market in France. This market has a strong connection with home loans. We have to be active in the space of home loans. So of course, we would prefer the pricing of home loans to be a little bit higher, and actually we had hoped that in 2019, it was going to grow a little bit rather than decreasing as it did in the last 4 months. But we are not going to take an autonomous decision on the home loan market, and we are -- regarding the retail market globally. And in this market, we are performing well, we are gaining customer. This is what is important for us.

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Jean-Francois Neuez, Goldman Sachs Group Inc., Research Division - Executive Director [13]

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And as a follow-up to this is one of your competitors mentioned the possibility to start securitizing some of the loans without necessarily being so precise. So my question was leading to whether you think that going forward, there is a way to maybe be slightly more asset-light also in retail and whether the pricing allows this type of activities to develop on any different scale?

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [14]

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I think -- No. It's an interesting question, but we answered already a few years ago because actually, we did already, say, roll home loan securitization. Actually, only one of them was sold in the market. The rest of those were kept in our balance sheet, and we used them as a liquidity reserve that we may use in order to get funding from the ECB, but we know exactly how to master the construction of a home loan securitization in France. And of course securitization is a tool that we may use in order to balance our funding needs. But this is only a tool, and we are not going to decide to stay or to exit the home loan markets simply because it's possible or not possible to securitize the loans. And of course, in terms of pricing, the pricing in absolute terms doesn't have any meaning. It has to be compared with other assets of the same degree of risk. And if you compare the home loan which yields about 1.3%, 1.4% nowadays with a 10-year French government bond, which is 35 bps. Well, there is also some -- there may be also some interest coming from investors for that type of asset because in terms of security, it's not very different. But it has taken...

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Operator [15]

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And your next question comes from the line of Tarik EI Mejjad from the BAML.

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Tarik EI Mejjad, BofA Merrill Lynch, Research Division - Equity Analyst [16]

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I have a question on -- actually I have 3 questions please. And the first one is still on LCL. I mean there's a difference I guess between exiting home loans and having a more, I would say, a more, I would say, major volume growth because my question here is really on your strategy in terms of LCL because are you playing the volume game to offset the pressure from margin and then you enter into this circle where you have to keep up such a volume. So while you have some defects in terms of margins because of NII because clearly rates are not increasing significantly anytime soon? The second question is on large customers and mainly in the capital markets. So contrary to your main competitors, you didn't adjust your business in Q4 and not in Q1 obviously, but -- and you mentioned that it is the right size and the right format. But it was loss-making in Q1. Clearly better than peers, but still loss-making. So should we expect any adjustments, I would say, in there? And last question, very quickly on -- in Italy. So BNP mentioned some increasing competition in the country and also we entered the second wave of deleveraging or I would say, business mix shift. Do you see something similar? And I don't really reconcile the drop in revenues year-on-year only from the gains on BTPs from last year. There's clearly more weakness in there than that.

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [17]

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LCL, let's start with that. I think again, if we want to be a real retail bank in France, we have to serve our customers and our customers, for the time being, are demanding home loans, they are requesting home loans because the combination of the price of homes and the level of rates and their borrowing capacity is enabling a significant proportion of our customers to borrow. What will happen if we were saying to our customers requesting a loan? Well, we are not willing to lend to you because it's too cheap for the time being. We are going to lose customers, which is exactly the contrary to what we want to do. So we want to continue to develop our business, we want to take opportunities in order to gain new customers if we have the possibility, and this is what we did in the first quarter at LCL, like at the level of the Regional Banks. I think it's after that, up to us, to, I would say, crystallize the benefits of such a policy by developing the number of additional services and additional products that we can integrate in these relationships that we answered in -- with home loan. But again, a home loan is clearly a part, a significant part, a key part of the banking relationship in the retail market in France, and we want to be active in this field. At CACIB, well it's true that if you take the whole figures for the first quarter, we have been posting results, which is almost 0 on globally the debt capital -- the capital market activity, but it simply is due to the fact that with IFRIC 21 in the first quarter, you booked -- rebooked EUR 125 million of taxes that should have normally been a spread on all the 4 quarters. So actually, the debt -- or the capital market activities and investment banking activities are not a loss-maker at CACIB, if -- again, if you want to be recognized at the right level of profitability. So I'm not meaning that we wouldn't like to have a better operating position with higher revenues and less cost, but clearly, you shouldn't assess the profitability of the activity on a simple -- or single first quarter of the year due to IFRIC 21.

Last point in Italy. In Italy, you may see that revenues were down EUR 19 million between Q1 '18 and Q1 '19. As I mentioned, we made last year a one-off capital gain, which was around EUR 20 million in the sale of the portfolio of BTPs. So this is one element which mathematically explains the whole difference, but actually, many, many other things happened, I think that globally in terms of client revenues, we had a good momentum of net interest income in connection with the development of the loan book and in connection with the development especially of the home loan book, and the fees and other noninterest income revenues were a little bit affected by the customer behavior especially regarding savings products.

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Operator [18]

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And your next question comes from the line of Matthew Clark from Mediobanca.

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Matthew Clark, [19]

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So a couple of questions on capital again, please. Firstly, on the 52 basis points of unrealized AFS gains, CET1. Can you split that out into equities and bonds, please? I guess thinking about the pull to par is going to be more affecting bonds but also wondering whether there was any kind of temporary impacts there this quarter from BSF ahead of the disposal because I think it should still be an AFS investment for you. And then second question coming back to the financing division risk-weighted assets. Was there anything really that unusual about the additional business that they did this quarter? I'm just wondering whether this was within the normal risk limits given to the business. So it was just normal activities that happened to still be there when the end of third quarter (inaudible) got taken? Or was this really an active decision taken at a group level that involved group sign-off to take on this traditional risk and see risk-weighted assets growth this much this quarter. I am trying to work out how usual or unusual this was

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [20]

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On OCI, you are right that the evolution of the OCI reserve is the combination of the decreasing rates which triggered an increase in unrealized capital gains on the bond portfolios that we have in the bank and also in the insurance company. It's also the effect of the good behavior of the stock market on the portfolio of stocks, on the equity portfolio within the insurance company. And there is also a component link to the BSF Holding because as you know, considering the accounting of BSF, all the variations of the price of the share of BSF are accounted for in OCI. I'm not able to give you the breakdown of the evolution of the OCI between the different categories, but all these elements played in this a role. Going back to CACIB and the evolution of RWAs, of course all these credit-granting evolutions were fully inside all credit limits and inside the normal credit policies that we have in the different businesses. Of course, we are not modifying the credit policy simply because there are some opportunities. Maybe an additional point on the evolution of RWAs at CACIB, there is also -- I don't have the precise impact in mind, but there is also an impact coming from the ForEx because, obviously, as you know, the dollar increased as compared to the euro in the first quarter, and so there is quite significant actually dollar effect in the evolution of RWAs at CACIB.

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Matthew Clark, [21]

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Okay. Just a follow-up on the AFS. Does the impact of the disposals has -- on capital that has been guided so far, does that change because of the strong performance of the BSF share in the mark-to-market?

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [22]

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No, no, no. Actually not. What we signed a few weeks ago now that after the end of the first quarter was the effective sale of 5% of the capital of BSF, so this tail has now taken place. It has taken place in the course of the second quarter, and this is going to free a few bps of capital at CASA level in the second quarter that you will see at the end of June. And we have also granted an option to the buyer to buy an additional 6% at the price which is set, and this additional sale, if it takes place before year-end, is going to translate to an additional and more significant liberation of capital at CASA level, but -- and it doesn't change whether it was the evolution of the price of the BSF. Of course, the buyer will decide on his option regarding the price of the share on the market, obviously.

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Matthew Clark, [23]

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Okay, just so I understand the mechanism right, if the share price keeps rising in the interim, you book a benefit in the interim, but then it means a larger negative impact of maturity. Is that the right way to think about it?

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [24]

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Yes, exactly.

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Operator [25]

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Your next question comes from the line of Anke Reingen from Bank of Canada.

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Anke Reingen, RBC Capital Markets, LLC, Research Division - Analyst [26]

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Just a follow-up on the 52 basis points, just confirming this is like a net number or would be -- would there be an additional positive, almost partly offsetting impact from a reduction risk-weighted asset, so almost like opposite of what we have seen in Q1. And then just confirming on the net interest margin at French retail banking. Your slide say, yes, the net interest margin improved, but -- so is it fair to say that's mainly a mix effect reading from the comments you made earlier?

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [27]

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I think I didn't fully get your first question. Can you repeat?

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Anke Reingen, RBC Capital Markets, LLC, Research Division - Analyst [28]

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Yes. So and -- so I guess the 23 basis points we've seen in the capital improvement in the first quarter, that is just from the increase in the CET1 capital, but then there's a partially offsetting impact for higher risk-weighted assets as a result of the higher OCI. So if that what we've -- so I guess we have the negative 23 basis points in the Core Tier 1 capital, but the risk-weighted assets come down as well. So the net effect will be smaller than...

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [29]

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Well, it depends on what category of risk-weighted assets. Of course, the risk-weighted assets calculated on the basis of the equity counted by the insurance company is absolutely going to go down if there is a reversal in market parameter. But of course, there is no connection between the evolution of the OCI reserve on the one hand and the evolution of CACIB RWA on the other hand.

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Anke Reingen, RBC Capital Markets, LLC, Research Division - Analyst [30]

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No, no, no, I wasn't making the reference to the CACIB RWA. I was making the reference to 2.9 (inaudible)

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [31]

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No. No. So for the rest is true. It's true. And actually, the 23 bps of capital -- of solvency that was generated by the evolution of the OCI reserve is a net between the increase in the OCI reserve and the capital consumption connected to the RWA increase leading to that. So it's a net, it's a positive effect. Okay?

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Anke Reingen, RBC Capital Markets, LLC, Research Division - Analyst [32]

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All right. Okay.

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [33]

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And your second question about LCL. So in the margin, there are many, many things that we take into account and that play a role. What is true is that there is a slight evolution of the breakdown of the loan book between we are growing more rapidly, the corporate and SME loan book than the home loan book lastly, but it doesn't play a significant role in the evolution of the NII especially because it's -- as time passes by that -- it has a role.

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Anke Reingen, RBC Capital Markets, LLC, Research Division - Analyst [34]

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Okay. So the margin improvement is coming from, if you're saying...

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [35]

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The margin improvement is coming from what we did on the previous quarter. It's coming from evolution of the volume, and it's coming also from different additional element, the number of days in the quarter and so on and so forth.

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Operator [36]

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Your next question comes from the line of Bruce Hamilton from Morgan Stanley.

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Bruce Allan Hamilton, Morgan Stanley, Research Division - Equity Analyst [37]

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Just circling back on -- the question was asked around the level of growth in the French retail, but I mean I think you are on to basically see the cross-sell is critical to making a success of your strategy, yet fees were pretty weak in Q1 in LCL and also in Italy. Now is that just a function of market weakness in Q4, and we get a rebound from here? Or is that a risk to your strategy? Because I guess fee growth is something that should see through if your strategy is working so I'm just interested in I how we should think about the outlook there. And then secondly, so just on the auto-related financing, given comments around sort of distribution and so forth, should we expect that there will be some reduction in RWAs in Q2 just because you've got -- the debt is on balance sheet now, but you'd expect some of those to roll off in Q2.

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [38]

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Okay. Let's start with retail. It's absolutely true that the cross-sell will translate into an improvement of fees. It's also absolutely true that contrary to NII, fees are connected first to the actual act of sale, so it needs a salesperson, and it needs a sale contract of a specific product to book the fees. And so then it needs some customer appetite. And what happened in the first quarter, as I mentioned, is that considering the evolution of stock market in the fourth quarter of 2018 and considering I would say the lag a little bit between the event from the market and the customer behavior, all the customers were a little bit shy before purchasing equity of a risky savings product. So this translated both at LCL and at Crédit Agricole Italia into a weaker level of fees. So fee is really the outcome we expect from cost savings, but fee is not a given and fee has to be, I would say, compared quarter after quarter, that's for sure. So this is of course something on which we are working, and this is why we try permanently to enhance our product offer in order to be able to be relevant in what we propose to our customers. But the overall trend despite a weaker quarter is nevertheless positive in the development of fees in all our retail banks. The second question was again regarding the financing opportunities. Is that right?

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Bruce Allan Hamilton, Morgan Stanley, Research Division - Equity Analyst [39]

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Yes. So I was just trying to understand it in a way if you...

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [40]

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(inaudible) No. Well, what you can expect is us to continue to comply fully with the target of CET1 ratio that we delivered. So we are -- we have a CET1 target. We have a broad target, quite significantly, it seems at certain time. So we have the capacity to -- we have some room of maneuver, so we are not going to sell down assets, I would tell you, quite forcefully in order to reduce the RWA level and in order to enhance CET1 ratio, which doesn't need to be enhanced, but we are going to continue to monitor our solvency globally in a quite prudent manner with the idea, of course, of keeping the -- remaining fully able to comply with our commitment to pay out dividend and to comply with all regulatory strengthening that we may incur going forward. So again -- really our commitment again is much more on the CET1 ratio and on capital policy globally than on the simple level of RWA especially on a quarterly basis.

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Operator [41]

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The next question comes from the line Guillaume Tiberghien from Exane.

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Guillaume Tiberghien, Exane BNP Paribas, Research Division - Head of the European Banks Team & Analyst of Banks [42]

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I've got 1 clarification and then 3 questions. The clarification relates to the EUR 20 million gain in Italy or in Q1 '18. I couldn't find it in your documentation so maybe I missed it but in the future, if you do have some one-offs, could you put them in the documentation, please?

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [43]

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This was a question, Guillaume?

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Guillaume Tiberghien, Exane BNP Paribas, Research Division - Head of the European Banks Team & Analyst of Banks [44]

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No, no. I said 1 clarification and 3 questions.

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [45]

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This was not even a clarification. It's a statement that you made.

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Guillaume Tiberghien, Exane BNP Paribas, Research Division - Head of the European Banks Team & Analyst of Banks [46]

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Sorry, statement then or request, put it that way. So the question is number one, the ACPR recently said that they were going to look quite closely at the pricing of unit-linked products in France including for a particular unit linked for bank insurers and normal insurers. So can you maybe elaborate on your perception that what could it trigger in terms of revenue impact? The second question related to the fact that for the first time this quarter, you had no positive draw effect between revenue and cost growth and then you're going to have to absorb a normalization of the cost of risk. So without giving us all the obviously in advance the targets of the Capital Markets Day, can you at least tell us whether you think you can grow earnings from a high base given the local sub-risk? And the third question again to the capital, if you go to the Slide 24 and I just focus on the 24 bps of reserves and 29 bps of organic growth? I understand your comment about we're not going to breach regulatory minimums, and we want to give a dividend. But here this quarter, you're not even paying the dividend, you're just making earnings and losing it all in capital consumption. So can you maybe give us a feel as to what sort of organic RWA growth you intend to achieve?

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [47]

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Well, I'm afraid I'm going to repeat some messages but nevertheless. First regarding what you said about the ACPR and the pricing of unit-linked product. As you know I've running the insurance business for 5 years and so I've had many ACPR inquiries on all the aspects of our policy in the insurance business, and I think that every time we have questions, we have been able to answer to those questions showing that we were absolutely, I would say, compliant with all the regulations of market standout. So I'm not aware of the specific request, but I'm not really frightened by this issue.

The second question was about the draw effect. If you take a look at the evolution of the underlying performances of the business lines in this quarter, the draw effect is tiny, but it's real. The top line for the business line improved by all in all, 1% and the cost line the including IFRIC 21, so including this quarter, a significant one-off that is not going to repeat in the following quarters, it will be only 0.6, tiny draw effect, but still some draws effect. Nevertheless, I think that this policy of trying to keep the positive gap between the evolution of the NBI and the evolution of the cost line has to be seen on a more -- on a global basis than only a single quarter actually. So we are going to commit to this same policy, and we are going to give more details in 3 weeks time. But be sure that this will remain a key feature of the financial strategy that we want to develop.

The last point, well I'm not fully in agreement with what you said. For the first reason is that IFRIC 21 is consuming 10 bps of capital this quarter of unrealize profit, EUR 400 million, so it's quite significant. And the second point again is the fact that part of the RWA evolution is either, I will say, a temporary or conjunctural, so again it's not on the basis of a single quarter, especially in first quarter that you may want to assess globally our policy. The last point is that you have to take into account the starting point of our solvency. We are at 11.5, we are not at 11.0, and we need to be only at 11.0.

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Operator [48]

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The next question comes from the line of Kirishanthan Vijayarajah from HSBC.

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Kirishanthan Vijayarajah, HSBC, Research Division - Analyst [49]

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So just on the basis of what you just said there and really trying to sort of understand the RWA trajectory in the financing business for the rest of the year. So my question is really what would it take for you to put the brakes on the RWA growth in particularly the financing business? So if that CET1 ratio were to slip closer to 11.0, would that be kind of the wake-up call where you tell the guys putting on the RWAs in financing to hit the brakes?

And then the second question just quickly on Italy where I see the deposit base Italy retail, the deposit base has continued to shrink. And I guess the question is really at what point does the loan-to-deposit ratio there or in your Italian business collectively start getting a little bit more uncomfortable? Because I think it's several quarters now the deposit base has been shrinking in Italy.

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [50]

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Let's start with the RWA evolution. I think we don't need any kind of wake-up call. I think we are pretty aware of the evolution of RWA. It's quite simple considering that the fact that the command chains are quite short between the head of the group and the people at CACIB. It's quite easy to monitor the evolution of RWAs. Actually, we have budget processes, we have limits, we have ceilings, we have all the kind of tools, and we are perfectly, I would say, comfortable on our capacity to monitor the situation. We again proved it in Q2 last year. In Q2 last year, we had the same discussions, we had the same type of evolution of RWAs at CACIB, and I had, if I remember correctly, the same kind of answer, and in the second half of the year, the evolution of RWA at CACIB were absolutely close to flat. So really, we show that this is something we are able to monitor, and we are not going to -- if you said we may go down to 11% simply by developing the RWAs at CACIB, so 50 bps of capital would make a certain number, certain level of additional RWA at CACIB which are not ready to allocate to this business as of today.

Deposits in Italy, well what is important for us, of course, the evolution, the relative evolution between customer deposits and customer loans is important. But you may see on the Slide 17 regarding Italy that actually, the loan book did not increase if we take into account -- which is financially the truth, if we take into account the fact that we disposed of EUR 1.4 billion I think of NPL in the period so actually we are monitoring the balance between the customer deposits and customer assets or customer loans. And we are also, as I mentioned, developing the capacity of Crédit Agricole Italia to complement its customer funding on the Italian market with the issuance of different categories of bonds, the last one being a covered bond of EUR 750 million, which was very well welcomed by the market, with a book which was 6x covered actually. So the -- absolutely no issue regarding this bond. But it's true that we are not going to continue to see a significant increases in the evolution of the customer deposits.

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Operator [51]

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The next question comes from the line of Pierre Chedeville from CIC.

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Pierre Chedeville, CM-CIC Market Solutions, Research Division - Analyst [52]

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Jérôme, two questions from my side. I would like to focus on countries in your international retail business because I'm quite surprised to see that with around 20% of outstanding and realized close to same performance as Italy. And in terms of net income, which seems to prove that it's very much more interesting to make banking in exotic, I would say, countries than in domestic countries close to France. And when I look at the comments you've made on the -- on these countries, I am a little bit fascinated by the fact that there, it seems that the net banking income is increasing in very high manner, plus 9% in Egypt, 9 -- 3% in Poland, 13% in Ukraine, et cetera, and 10% in Serbia where several of our banks are leading and in the same time, the cost of risk seems quite nil everywhere. So I think you have found there some magic countries and probably it would be interesting for us to understand why you don't develop them faster in order to balance the poor profitability of your international retail banking due to Italy.

My second question is regarding SFS. You have mentioned the fact that despite a very significant growth in production 8%, plus 8.5%, I guess on a like-for-like basis, the net banking income is increasing by close to 2%, and you mentioned that there is a huge pressure on margins due to competition. Do you think that this pressure is structural? Or do you think it's due to the fact that in the beginning of the year, you take to -- you try to take some market share and then things we're seeing on medium term?

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [53]

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Okay. Many interesting questions. The first one regarding the rest of the international retail banking entities outside Italy is quite, I would say, inspiring. No, just a few elements to try to answer your important question. The first element is that these countries are not euro countries, so we need to cover the cost of equity, which is obviously much higher in those countries than in Italy. So it means that, all things being equal, we need to show a better profitability because of the higher degree of risk, which is obviously the case the profitability is significantly better. The second element is that regarding Italy, if you want to assess the profitability of what we're doing there, you need to take it into account all the universal banking model that we have deployed in Italy. And actually, you must look not only at the EUR 43 million that we made with the retail bank but at the EUR 168 million that we made globally in Italy this quarter. The third point is that in the -- in exotic countries, to use your expression, you were referring to part of the business that we do is done with corporate that we know from France or some -- from some other countries and that we help to develop their activities locally. So it's the business that we do in connection with CACIB or with LCL or the Regional Banks. And last point, the third -- the fourth and maybe the most important point is that we don't have the possibility to scale up this business exactly like we would like. I think that if we were to decide to double the size of the business, we would probably multiply by 4, 5, 6 the cost of risk because simply one of the key features of the business is the fact that it's been developed quite prudently actually, very prudently. As illustrated, for example, by the fact that we don't want to have to provide funding to these countries, so we must develop the business alongside with our capacity to locally fund it.

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Pierre Chedeville, CM-CIC Market Solutions, Research Division - Analyst [54]

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If I may, can I have a follow-up question on -- you said that in Italy, we have to consider the universal model that is nourishing over divisions, but can't you develop, for instance, insurance, Amundi, CACIB, you mentioned it for these countries in order to develop them without taking more risk in terms of funding, for instance?

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [55]

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No, that's a good question. That's a good question, but considering...

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Pierre Chedeville, CM-CIC Market Solutions, Research Division - Analyst [56]

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I insist.

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [57]

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No, no. You're right, this is what we're trying to do actually. For example, we've launched a P&C insurance company in Poland. We created the company 4 years ago, it's starting very, very slowly, so it's not impacting quite significantly the number of policies managed overall by Crédit Agricole, but this is exactly what we did. And we are doing the same in life insurance, we are developing the life insurance distribution also in Poland. In Ukraine, to be frank, I think that besides probably some leasing activities, I think we are going to stick to the bank that we have in this country, but it's a very specific situation. In Egypt, we are developing much more the synergies between CACIB and Crédit Agricole Egypt. And in Morocco, we have also consumer credit business and asset management business. So it's of course less developed than in Italy, but in each country, in a coherent manner with the state of development of those countries, we are trying to implement the same type of model. Specialized financial services and consumer credit, it's true that the loans outstanding managed by CACF are up 8%, but the loan group consolidated with the CACF is up only 2%. So the minus 2% in terms of NII or NBI has to be compared with the plus 2% in terms of loan book, which is still different, and this difference is explained by the competition I was referring to, but also by the evolution that we continue to have in the breakdown of asset between revolving assets and amortizing loans.

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Operator [58]

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We have no further questions at this time. Please continue.

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Jérôme Grivet, Crédit Agricole S.A. - Deputy GM & Head of the Group Finance Division [59]

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Well, I think that the sunny weather that we have outside is probably quite appealing. So again, thank you very much to all of you for your questions. And I think we are going to see you in person in 3 weeks time here in Moundridge. Looking forward to it. Have a good rest of the afternoon. Bye-bye.

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Operator [60]

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Ladies and gentlemen, that does conclude today's conference. Thank you for participating. You may now disconnect.