U.S. Markets close in 3 hrs 29 mins

Edited Transcript of KN.PA earnings conference call or presentation 8-Nov-19 8:00am GMT

Q3 2019 Natixis SA Earnings Call

Paris Nov 14, 2019 (Thomson StreetEvents) -- Edited Transcript of Natixis SA earnings conference call or presentation Friday, November 8, 2019 at 8:00:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* François Riahi

Natixis S.A. - CEO

* Jean Raby

Natixis Investment Managers S.A. - CEO

* Nathalie Bricker

Natixis S.A. - CFO

================================================================================

Conference Call Participants

================================================================================

* Flora A. Benhakoun

Deutsche Bank AG, Research Division - Research Analyst

* Jacques-Henri Michel Gaulard

Kepler Cheuvreux, Research Division - Head of Banks Sector Research

* Jean-Francois Neuez

Goldman Sachs Group Inc., Research Division - Executive Director

* Jean-Pierre Lambert

Keefe, Bruyette & Woods Limited, Research Division - SVP and United Kingdom Analyst

* Karl Jonathan Peace

Crédit Suisse AG, Research Division - MD

* Lorraine Quoirez

UBS Investment Bank, Research Division - Director and Equity Analyst

* Omar Fall

Barclays Bank PLC, Research Division - Analyst

* Pierre Chedeville

CM-CIC Market Solutions, Research Division - Analyst

* Tarik EI Mejjad

BofA Merrill Lynch, Research Division - Equity Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [1]

--------------------------------------------------------------------------------

Hello. Good morning to all of you, very happy to have you, all, for the presentation of Natixis third quarter results.

As you have seen, so -- I'm sorry, Nathalie Bricker here with me, as usual, and we'll present to you these results.

As you have seen, our third quarter 2019, we are posting good results in a quarter that illustrates the diversification of our model and the relevance of our strategic choice we have made to face the current environment, with 8% revenue growth across our businesses, and even more importantly, with positive jaws across the board.

I'll come back later on the financial indicators and also on our climate change strategy. But let me spend a few minutes on a key topic, which is the reinforcement of our business through 3 key pillars.

First of all, in Asset Management, you may have seen that we have recently announced the creation of a Chief Operating Officer role at the Natixis investment managers level with the appointment of Joseph Pinto, who is currently having the same role at AXA IM. On top of that, following our internal reviews, we've decided to implement a few measures aimed at reinforcing our governance and control framework. This, notably, includes the split of Natixis IM risk and compliance functions, which means the creation of a head of risk role, separate from the head of compliance one, as well as an evolution of our risk monitoring framework to be more comprehensive. We also have several other initiatives in the pipe and actually already drafted, such as the establishment of a charter that informs Natixis IM relationships with its affiliates and vice versa or the evolution of some processes at the affiliate level when it comes to the appointments of the performance of key risk and compliance staff, notably functional reporting lines of the affiliate CRO to Natixis IM Head of Risk, as is currently the case with affiliates, Chief Compliance Officers, functionally reporting to Natixis IM's Head of Compliance.

The second element, which is linked because, of course, one of our priority is also to demonstrate the strength of our multi-boutique model at all levels, is the fact that we want to focus and prioritize on our existing perimeter with a reduction of our M&A budget by around EUR 200 million, and in parallel, a shore up of our 2020 core Tier 1 ratio target from 11% to 11.2% with no change to our dividend policy. I'll come back to it to explain more about it, but that's the second pillar of the reinforcement of our business.

Finally, third, I won't detail too much, but we are bringing some changes to the organization, which notably include a key appointment with Olivier Vigneron who will become Natixis' new Chief Risk Officer and member of the Senior Management Committee starting mid-January. Olivier is currently CRO of JPMorgan EMEA.

These 3 pillars will help us to ensure that we create value in a sustainable manner for all our stakeholders.

So now if I move to the results. As usual, on Slide 5 and 6, you've got the P&L evolution line by line, excluding exceptional items, detailed on Slide 7, to which I suggest we flick through before looking at the results in more details.

If you -- we go so directly to exceptional items. There are not many exceptional items this quarter. I would say that we only have usual exceptional items, which are the exchange rate on our deeply subordinated notes that benefited from a positive dollar impact and the cost of our transformation and business efficiency program, which altogether have a modest positive net P&L impact of EUR 15 million.

I also remind you that you don't need, but I do it anyway, that we finalized the disposal of our retail banking activities in the first quarter, which led to a EUR 586 million net positive impact at the time. So of course, for the 9 months 2019, the exceptional items are far higher.

On the next slide, let's look at our figures for the quarter. I would like to highlight the solidity of our top line for our business with a growth by 8% across all 4 businesses, 6% in constant terms. And what is really very, very positive is the fact that our 4 businesses have all growth in revenues.

Expenses are up 6% year-on-year, and are, in part, a reflect of the strong revenue growth in Asset Management. On the CIB side, I had told you during the first quarter that given, I would say, the revenue trend in the industry for 2019, which seem to be softening, we would focus more on cost management. When I presented to you the Q2 results, it was already, I think, visible in our figures, and I think it's even more the case for the third quarter. And that's, for me, a very important satisfaction. And Nathalie will give you more details when we come to it.

The cost of risk is an important element. Of course, it has decreased quarter-on-quarter after the large single high-impact in the Q2, but it remains above the normalized level. 2018 was a very benign year for the cost of risk. So it's evolution from a low basis weighs on the evolution of our profitability this quarter with a return on tangible equity of 9.5% at the Natixis level.

If we move to the 9 months 2018, of course, then we include the very high base effect for the CIB in the first half of 2018. But despite this very high base, I would like to highlight that we have almost matched the revenues of last year in constant change. We are decreasing only by 2%. And we have, I would say, managed to be around 10% of return on tangible equity despite, I would say, a very tough first quarter for global market revenues across the industry. This resilience is very much linked to our business model. And I would like to illustrate how much we have been transforming ourselves during the past year when it comes to asset-light strategy. Of course, every quarter, we talk about asset-light for the past years, but I think let's step back a moment and look at the evolution of our -- of the structure of our revenues.

In 2013, the net interest income was accounting for 33% of Natixis revenues. In 2019, it is 8%. So from 33% to 8% in 6 years. I think it's an outstanding transformation towards an asset-light model. And this is something, I think, we need to keep in mind. Of course, the disposal of the retail banking activities have played a role in that time. That's what we -- I explained when we to -- as a rationale for this operation. In 2008, net interest income was accounting for 18% of our revenue. So we have moved from 33% to 18% just through the change of business model of all our businesses and the business mix, and then the disposal of the retail banking activities have made us decrease the net interest income from 18% to 8%.

To my knowledge, maybe you have a more extensive knowledge than I have, that's the lowest part share of revenues coming from net interest income among European banks by far, which, in this context of negative interest rates in Europe, is not so uncomfortable.

If I move to the cost of risk. So at 41 bps for the quarter, the cost of risk is a little bit higher than our normalized cost of risk, which we consider at 30 bps. On a 12-month rolling base, we are roughly at a normalized level of 30 bps. But for me, what it means is that compared to what I was saying about 2018, I think the benign environment for cost of risk is no more the environment we are facing even if we think the normalized cost of risk remains the same.

If I move to the capital, just maybe just one word also on cost of risk this quarter, which is very specific. We have also included in our cost of risk EUR 8 million provision on Wealth Management. This is not typical, and we don't expect it to be recurrent. It's a file that happened just at the closing of our accounts, so we took a prudent approach on this file because we didn't have all the information we needed. And that's also an explanation of why we have a higher cost of risk.

If I move to the financial structure. On capital, we have continued to generate high level of solvency this quarter with 30 bps organically and on which we continue to accrue a 60% payout ratio, which is our minimum dividend policy. As a result, our core Tier 1 ratio is up by 7 bps quarter-on-quarter, [overall] remains at 11.5% due to the rounding differences that don't always play in our favor since we moved from 11.46% to 11.53%, with almost half of the RWA increase coming from FX, which does not impact the ratio since it is largely hedged.

Let me come back on the reinforcement of our core Tier 1 ratio target to 11.2%. First, I would like to say that maintaining our dividend-friendly policy is our top financial priority. The increase in our core Tier 1 ratio level in 2020 is linked to my vision of the context. I would not consider as sound today in the next months as we are finishing our New Dimension plan to have the same appetite for M&A. Financially, the prices are high, especially for payments, but also in asset management, given the increase in market levels. And operationally, I want the teams to focus on the reinforcement of our business with organizational and governance evolutions, in addition to delivering New Dimension initiatives and preparing the next plan. So we have a lot on their plate. And I think we need to remain focused.

In the same time, the 11% target in 2020 seems to be tight given the new and coming regulatory evolutions linked to the hardening of the economic context, for example, the contract cyclical buffers. Because we want to stick to our financial discipline, which is to distribute the excess of capital. It is important for us to adjust the target to what we think is necessary in order to maintain this financial discipline. I could decide that I don't change the target, and then I will keep more capital than the target at the end of 2020. That's not what I want to do because our financial discipline is clear, it's transparent to you. We don't want to have excess capital. So we need to adjust. It is an end of 2020 target, not 2019, one, of course, we want to keep flexibility. And if we consider that we would have to move higher than 11.2%, we would have done it. So I think -- I hope to have been clear on this topic. But of course, I'm sure you might have questions moving forward.

Let me spend a few minutes on our Green Weighting Factor, actually, I could spend hours on this topic. But I think it's important because this Green Weighting Factor that we have announced is a very good example of the type of innovation we want to lead. As you know, we are always looking for differentiation, and we have a lot of differentiating factors compared to others. And this Green Weighting Factor is a great differentiating factor. We have become, with this tool, the first bank in the world to monitor the loan portfolio, taking into account the environmental impact. We -- and for me, it's very meaningful because so far, green finance has been only focusing on the extremes. On green bonds for what is very green, and that's great, and we are doing more and more green bonds, the green bonds are increasing by a higher growth rate, but the only account in 2018 for 3% of the issuance of bonds. And on the other hand, we have exclusion policies on what is the most harmful to the environment. Coal, Arctic exploration and so on. So the green finance has not yet impacted, I would say, the heart of the finance. And this tool is a way to show that we need to move to a new way to under sustainable finance, which is handling transition, because the transition will come from the broad industries. So what we have done is defined a 7 -- level scale 7 shades of different impacts of -- on the environment, 3 shades of brown, 3 shades of green, 1 neutral. And we have assessed our full portfolio, except for financials because we have spent 18 months ourselves to assess the impact of our own portfolio, we don't have ideas on the other one's portfolio, but we have done it except for the financial sector. And we have, as you will see a little bit later with Nathalie, we have the color of our full portfolio, and we have start -- by starting to measure the impact of our portfolio on the environment, we will be able to monitor it to set targets, which is, of course, a very important element to make sure that we are financing the transition. This evolution, and I will be happy to have questions because I have to stop here not to spend a whole hour on that, this tool really puts us as a leader in this field. At the moment, where all banks try to compete to be expert because our clients need expertise in this field. And I can tell you that we have received an outstanding welcome of this tool by our clients.

But of course, our commitment to sustainability is broader. We have different illustrations of that. And it's, of course, a very important focus also for our Asset Management. Mirova, which is a leader in the -- and a pioneer on the sustainable front, has clearly a very good momentum, and we see more and more interest from our clients all over the world for Mirova products. 90% of Natixis IM asset under management are under UN Principles, and Natixis Assurances investment policy has been also pioneering by setting the goal to achieve a 2-degree trajectory by 2030. So I think all over the world, we have a strong commitment to sustainability, and this is very much acknowledged by our clients.

So I leave the floor to Nathalie for businesses and then take some questions later on.

--------------------------------------------------------------------------------

Nathalie Bricker, Natixis S.A. - CFO [2]

--------------------------------------------------------------------------------

Okay. Thank you, François, and good morning to all of you. So as usual, starting on Slide 15 with Asset & Wealth Management and a few key figures to focus on. Revenues and gross operating income, as you can see, are up by plus 12% year-on-year this quarter and plus 7% year-to-date. At constant exchange rate, we had revenue growth in line with the expense growth over the 2 periods, which notably reflects the variable structure of our cost base. I also remind you that our asset management revenues are not only made of management fees and performance fees, but also of other types of income, such as distribution, transaction or advisory fees as well as private equity capital gains, for instance. Some of these revenues might be a bit more subject to seasonality and a bit down year-on-year, but they are not part of our fee rate calculation, of course. That's why you can see that our average fee rate, although slightly down quarter-on-quarter due to a mix effect, remains at roughly 30 basis points, which is our target. The mix effect is mainly due to the lower share of average assets under management at Harris in the U.S. But interestingly, if we look at the fee rates affiliate by affiliate, it's not changing much overall and is even increasing in some cases.

Performance fees are very high this quarter at EUR 192 billion and continue to run above what we would consider a normalized level, driven by H2O and also for a quite sizable chunk by AEW, which illustrates, again, the diversification of our strategies and the relevance of active asset management to deliver performance.

A quick word on Wealth Management. Since we now benefit from the consolidation of Massena Partners and also since we have a bit of an unusual item this quarter with an EUR 8 million provision against loan already flagged by François.

So now moving on Page 16 and regarding the assets under management. They continue to expand, as you can see there, with a 3% increase quarter-on-quarter to EUR 921 billion and almost EUR 30 billion of positive impact from mark-to-market and FX that more than offset net outflows of roughly EUR 4 billion on long-term products and EUR 1 billion on money market products.

On long-term products, we've experienced EUR 2 billion net inflows in Europe with great success at Mirova, for instance, whilst we've experienced a bit more than EUR 5 billion net outflows in North America across value strategies on the equity side and fixed income at Loomis.

Although it is always difficult to predict end of year behavior of U.S. mutual fund investors, based on activity so far this quarter and a strong pipeline for the months of November and December, we believe it's reasonable to expect net outflows in Q3 to represent a bottoming of the trend since the beginning of the year, and Q4 flows in the U.S. to mark an improvement versus Q3. And I would also like to highlight the recent rebound in performance for some of our flagship value funds at Harris.

Now moving on Slide 17 and 18. Just a quick reminder of the steady growth experienced by Natixis investment managers of the recent shares, which is, as you can see there, almost amongst the best-in-class in the industry.

Now moving on to CIB. On Page 19, the key highlight of the quarter is the fact that we've grown our revenues by plus 3% year-on-year while managing our expenses down, which is a 0.4 point of percentage positive jaws effect and a 2.4 point of percentage improvement in the cost-to-income ratio compared to Q3 2018. This can be achieved through a solid and increased diversification of our revenues together with a good cost control on which we try to put more emphasis in the current environment. I'm not going to comment again on the cost of risk, though it's interesting to notice that excluding the large single fine we've been impacted by in the second quarter, we would be running at a double-digit ROE in the CIB.

Now before moving on Page 20 and focus a bit more on the revenue side, the third quarter, as you can see, has been marked by the good resilience of our global market activities, we stick up by plus 2% year-on-year, and equities only down a little bit compared to last year. In terms of activity, I would like to highlight the good performance of credit and assets with a more mixed picture regarding rates, given the flat yield curve at levels we've never seen before.

In Global Finance, as you can see also, very strong performance with revenues up by plus 8% year-on-year, which is a trend in line with the message we gave during the previous conference call when we highlighted a good pipeline for the second half of the year as we syndicate loans following a few strong quarters of new production.

Across all sectors, energy and natural resources was a bit lower this quarter in terms of revenues, although on the real asset side, be it on aviation, real estate or infrastructure, we've seen some growth and with a distribution rate increasing to roughly 64%.

Finally, on IB and M&A, revenues are down this quarter, which we partly attribute to some delay in fee recognition that we would expect to fall in the fourth quarter.

Now looking at Insurance on Page 21. As you can see, this is very much business as usual since we're experiencing the same growth rates for revenues, costs and thus, gross operating income, both in Q3 2019 and in 9 months 2019. Our ROE at 9 months 2019 is largely in line with our New Dimension target of close to 30% by 2020.

And as far as solvency is concerned, in the current rate environment, we are comfortably above our requirements, and we do not need to put more capital into the business to support its growth. The last time we did it was a few years ago after we took over the new life insurance business from CNP and the Caisse d'Epargne networks.

And now flicking through Slide 22 with the growth drivers for life and nonlife. And as you can see, they are working pretty well. On one hand, the stock of life insurance assets under management is growing fast, roughly plus 11% year-to-date with the share of unit-linked products that keeps on increasing. And on the other hand, an equipment rate that keeps on improving also above -- across the 2 retail networks.

Premium growth also has been fairly sustained in the third quarter at roughly plus 3% year-on-year and with a share of unit-linked that remains above the French market average. And the combined ratio of our P&C activities, it has drifted up a little bit, but it remains well below our guidance of 94%.

Now moving on Payments on Page 23. And here, we keep on delivering solid revenue growth that comes together with a positive jaws effect and an improvement in the cost-to-income ratio. The growth rates, as you can see here, are a bit lower than what they were last year since we now only have a residual perimeter effects left. So we are essentially talking about organic growth. Our 3 main business units are expanding with steady growth across our processing activities, supplemented by the dynamism of our fintechs and new initiatives being launched, such as the partnership between PayPlug and Shopify to foster business growth with French and Italian SMEs or the implementation of SWIFT Global payment innovation for our instant cross payment, which is very much relevant for our CIB clients, notably.

In terms of EBITDA, which is a more common financial indicators across payment companies. We've generated a bit more than EUR 60 million year-to-date. And as you can see, this is equivalent to plus 15 growth -- 15% growth compared to last year.

And on Page 24, I'm not going to spend too much time on that slide, which is financial investments in the Corporate Center since Coface has already published its results last week. And now I leave it to François to conclude.

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [3]

--------------------------------------------------------------------------------

Thank you, Nathalie. I would like to conclude to say that even if economic and geopolitical environment are different and tougher than what we had foreseen when we were preparing the New Dimension plan, I think our results highlights the relevance of the strategic choices embedded in the New Dimension plan and, of course, before that. And if I take the strategic directions of our New Dimension plan business by business, on Asset & Wealth Management, the choice of active asset management and with what we are doing with our project on La Banque Postale Asset Management to gain scale on insurance asset management is a key project for us.

On CIB, with a focused sectorial approach solution with minimal flow business developing in green, I think we have chosen really a strategy that is very much fitting to the environment.

On Insurance, the strong orientation of the New Dimension plan is about strengthening nonlife with the inclusion of Banque Populaire in the clients where we'll be serving directly through Natixis Assurance. This is a very good choice given the rate environment that -- so it's completely, I would say, strengthened by the environment. And for Payments, we have chosen, I would say, unlike other banks, to really have Payments as a full-fledged business with a strong ambition, and we are part of the European payment sector, which is a sector that is creating a lot of value. So all our strategic orientations are confirmed by the evolution of the context. So of course, we keep on -- we keep on implementing this plan with a lot of discipline and a lot of determination. And more generally, we continue to move towards an asset-light strategy. Of course, the disposal of retail banking activities has been accelerating our asset-light strategy during the New Dimension plan. This is a key asset to continue to create capital and to deliver value in the current environment, and we have achieved that with a lot of agility, transforming ourselves completely, which is also a key asset for our institution because agility in the current environment is very much an asset in the financial world. So we'll keep this agility, we'll reinforce this agility, but of course, we will also accompany it with robustness, and we have taken, and I have taken a few measures to reinforce our business. But of course, without, in any case, diminishing our agility that we need to maintain at the highest level and which is a very important element of pride for me about this institution.

So that's all for our presentation. And of course, we welcome any questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question comes from Lorraine Quoirez from UBS.

--------------------------------------------------------------------------------

Lorraine Quoirez, UBS Investment Bank, Research Division - Director and Equity Analyst [2]

--------------------------------------------------------------------------------

A few questions from me. So the first one is on the CET1 ratio target. You raised it to 11.2%. I was wondering why 11.2% and why not higher? Because if we think about regulatory hurdles in the future, they may be higher than just [20]? That's my first question.

The second question I have is on your Green Weighting Factor. Two of your key sectors, oil and gas and aircraft financing, which intuitively are not the most green-friendly sectors, so I was wondering whether we should expecting lower origination going forward?

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [3]

--------------------------------------------------------------------------------

Lorraine, thank you for asking about Green Weighting Factor. First, on core Tier 1 ratio, why not higher, because we think that's the right level. Of course, what we are -- we are not -- I would like to underline that I don't say that we will stop acquisitions forever or that our core Tier 1 ratio will be 11.2% forever. What I'm saying is about the end of 2020, and we are considering that 11.2% is the right level at the end of 2020. And again, I say again what I was saying earlier. We want to maintain a strong financial discipline to distribute all the excess of capital. So my point is not to set a level of core Tier 1 ratio very high. But we -- 11.2% is the right level.

We are starting to prepare for the next strategic plan. We will come to you before the end of 2020 with a new strategic plan, with new financial targets for 2024 and so on. So -- but for the end of 2020, I'm pretty confident with the target of 11.2%.

Now on Green Weighting Factor, it's an important question that you are asking. The transition, the climate transition will not come from the green sector, it will come from the brown sectors. And all the question for reaching the target the world has given to itself in terms of energy transition is in the hands of the energy companies, the oil-producing companies and the heavy users of energy.

So it's not an issue for us to be geared towards transition with our clients in the industries you have named. It's an asset because they need to work on their transition. They need to have a trajectory that will be accepted by the financial community as sustainable to continue to be financed, and they need advisory on that, and they need expertise. So with this Green Weighting Factor, we really position ourselves as one of the most expert bank when it comes to financing the climate transition, and this has a lot of value for our clients of the commodity sector, from the aircraft sector and from all our sectors actually. So it's really an asset.

I've been often asked, are you going to stop to work with some clients because of the Green Weighting Factor. The answer is, yes, probably, but we are not going to stop working with clients because they are brown or half brown, dark brown. But if they don't move, if they don't have a plan, and that really will be the real differentiation between the companies that will be the winners in the next decade and the ones that will lose feet.

So what we see today is helping our origination. And very often, I see [5], where we are positioned at the top level with sometimes some clients we were not so close previously because of our expertise in the green sector. So for me, Green Weighting Factor is, at the same time, of course, a testimony to sustainability, but also a commercial tool because we are positioned on something where the clients need help. I hope it answers your question.

--------------------------------------------------------------------------------

Lorraine Quoirez, UBS Investment Bank, Research Division - Director and Equity Analyst [4]

--------------------------------------------------------------------------------

Yes, very clear. Just one follow-up on this. It says on Slide 12 that RWA are reduced by up to 50% for green deals. Does that mean that ultimately you're giving incentive in terms of profitability for green deals? Or...

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [5]

--------------------------------------------------------------------------------

Yes, that's what it means. Actually, it means that when we assess the profit -- so of course, it's internal, it's not about what we report to the regulators, RWAs are not changing. But internally, when we assess the profitability of a deal, we take into account its impact on the environment, which is a way to show a signal for our teams, for our bankers on what we want to chase. And into next year, we'll probably set targets for what we want to achieve in terms of where we want to be on the color of our portfolio.

--------------------------------------------------------------------------------

Operator [6]

--------------------------------------------------------------------------------

The next question comes from Jon Peace from Credit Suisse.

--------------------------------------------------------------------------------

Karl Jonathan Peace, Crédit Suisse AG, Research Division - MD [7]

--------------------------------------------------------------------------------

So my first question is on capital. Would you be able to confirm whether you think your SREP ratio for next year will be unchanged? And how are you thinking about the capital ratios under Basel IV? Or should we think of the increase in target as we're preparing a buffer which will be used as you go into the Basel IV world?

And then my second question is just on the Asset Management business. If we look at the revenues from the more volatile elements of the distribution fees, the transaction fees, the private equity, it looks like they've run normally about EUR 100 million a quarter. Could you confirm that and what the shortfall was in Q3?

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [8]

--------------------------------------------------------------------------------

On your first question, of course, we don't have received the SREP letter from ECB. When it's the case, we will update it. But of course, when I set this target at 11.2%, we don't expect, in any case, that it will have an impact.

On your second -- on Basel IV, maybe, Nathalie, you want to...

--------------------------------------------------------------------------------

Nathalie Bricker, Natixis S.A. - CFO [9]

--------------------------------------------------------------------------------

On Basel IV we see, with the target we are giving is not just answering Basel IV question, and we'll see Basel IV also in the context of the preparation of our next strategic plan, so in the year to come.

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [10]

--------------------------------------------------------------------------------

Actually, there are still a few uncertainties on Basel IV. On your second question, we don't go as far as you would like in terms of details on the revenue of Asset Management. What I can say is there's no particular trend to highlight this quarter on the items you raised.

--------------------------------------------------------------------------------

Operator [11]

--------------------------------------------------------------------------------

The next question comes from Jacques-Henri Gaulard from Kepler Cheuvreux.

--------------------------------------------------------------------------------

Jacques-Henri Michel Gaulard, Kepler Cheuvreux, Research Division - Head of Banks Sector Research [12]

--------------------------------------------------------------------------------

I have 2 questions, actually. The first one is on the coupon on [DP] subordinated note, that seems to have increased quite a bit this quarter. Can we have a little bit of a guidance of what it means for Q4 and maybe next year because that is included into your EPS calculation?

The second question, I would like to come back on transition and on Green Weighting. And François, I would like to ask you the question, because you have the experience of it now. Obviously, you probably must have pitched quite a lot of clients as well. And with hindsight, all the banks are selling this as being the greatest opportunity since the invention of toast bread. But in reality, it seems that it's a negative sum game, isn't it? Resources of the planet are actually going down. You need to effectively gear down towards carbon consumption. So you are probably anticipating a decline that will probably be even worse for your competitors. How do you look at this? Is it actually a carefully considered retreat more than anything else?

--------------------------------------------------------------------------------

Nathalie Bricker, Natixis S.A. - CFO [13]

--------------------------------------------------------------------------------

Okay. So Nathalie speaking. Starting with the first question concerning the coupons on the DSN. Just saying that the evolution of the coupons is also impacted by the new amendment concerning IAS 12. And going forward, we will have a EUR 10 million benefit in the income tax line and EUR 35 million below the line deduction. And the Q3, as you may have seen, is impacted by the catch-up effect related to Q1 and Q2, but there is not much to say apart from that concerning those coupons. So nothing particular to expect in the next quarter.

--------------------------------------------------------------------------------

Jacques-Henri Michel Gaulard, Kepler Cheuvreux, Research Division - Head of Banks Sector Research [14]

--------------------------------------------------------------------------------

So basically, we should keep it at roughly 105, [100] -- so we add EUR 10 million annually to what it was before, and we reduce EUR 10 million on the income tax side. Is that the right way to look at it?

--------------------------------------------------------------------------------

Nathalie Bricker, Natixis S.A. - CFO [15]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [16]

--------------------------------------------------------------------------------

On your question, I'm not sure I have fully understood exactly your question. I try to answer, and you tell me if it's not what you expect. I would say that this question of a transition is crucial for the economy. So we need to have a transition, and all the different players are positioning on this transition. Of course, it's not that it will have an impact globally on the revenues of CIB because of that. It's the fact that the needs are moving, the transition in green.

So for example, if I take green bonds, we have a great growth on green bond issuances. Of course, these green bonds are not coming on top of usual bonds. They are coming to replace usual bonds. So if you are not positioned to capture this new trend, then you lose market share on the capacity.

But on the opposite, what we can see, and that's why, for us, we really take it as a growth engine. It's an opportunity to reshuffle the market shares. It's true for green bonds, for example. It's true also for the fact that the transition needs funding. So if you're an expert in renewable energy as we are, if you're an expert on energy transition as we are, you are capable to gain market share. Doesn't say that the pie is growing. So it's very important, in my view, to be well positioned on this because it's a trend.

I can tell you that with the CEOs of our corporate clients, when I met -- when I meet them, I spend half of the meeting on this topic because that's top of their priority list. And if you -- as we are -- you are well positioned to talk about it, to help them about it, that's something where you can gain market share, you can gain momentum with these clients, and that's what we see today in our business. It's really, for us, like our sector strategy. So it's really about being focused on expertise. And here, it's an expertise that we have developed where I think we are best in class. Of course, I don't say that we are the only one or the best one, but we are best in class. We are amongst the banks that have really invested and made it a priority, and that's why this Green Weighting Factor has given us a lot of visibility because I think on that, we are clearly ahead of the crowd.

--------------------------------------------------------------------------------

Operator [17]

--------------------------------------------------------------------------------

The next question comes from Jean-Francois Neuez from Goldman Sachs.

--------------------------------------------------------------------------------

Jean-Francois Neuez, Goldman Sachs Group Inc., Research Division - Executive Director [18]

--------------------------------------------------------------------------------

I wanted to ask about general risk appetite across the bank in light of your changes in terms of risk and compliance management players announced today as well as the increase in the capital target that you set for 2020. So essentially, what I'm trying to get at is there has been the loss in equity derivatives last year. And then there have been maybe completely unrelated, but still events with the asset management, which have led to headlines, which were negative. Today, you're taking steps. I just want to understand whether the risk appetite in terms of revenue generation across the group has changed and whether this is a way to kind of tell us maybe expectations need to be dampened in -- also for top line generation going forward or whether it's completely additional and has nothing to see with the way that the bank operates from a front office perspective.

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [19]

--------------------------------------------------------------------------------

Thank you, Jean-Francois. No. Actually, our risk appetite is not changing. We have been very much, during the past years, strengthening our structures, our risk culture, of course, after the financial crisis. And in a way, we have been facing 2 important incidents in the past 12 months on the Asia equity derivatives. Also, as you said, even if you did not name, it's H2O in June. But if you look a little bit before that, on the contrary, I think for the past 10 years, we have been really showing a very strong resilience, robustness, not being hurt by fines or by difficulties and so on because we have been really strengthening our structure and because our risk appetite has been very sound.

What I -- the sense of the initiatives that have been launching this quarter is that if we look at the past -- very past years, we have been transforming ourselves so much that we need to revisit a little bit our structures to strengthen our structure to continue to be as robust as we were and to continue to have a risk appetite that is unchanged, actually.

And of course -- and it's also because we want to continue to be able to innovate with our multi-boutique models, we used to have it only in the U.S. We have developed it in Asset Management in Europe. We have developed it in M&A. We have developed it in a way in Payments with fintech. So it's really a model we believe in, and we have been developing because it gives us a lot of agility and entrepreneurial spirit, which is very good, and we like it. But of course, we need to make sure that our structures, our organization, continues to be adaptive to the development of our business, and it's precisely because we continue to need agility. We continue -- we will be needing even more agility in the current context, even more capacity to differentiate from others, that we need to strengthen our structure to make sure that we won't have the same type of incident that we had during the past 12 months.

Of course, you can always -- and I can always be dramatic -- dramatize them, okay, we had a loss on equity derivatives last year in Asia. But one, some other banks also had losses in their equity derivatives, the same quarter because of market conditions; and two, 2018 was still our second best year in history. H2O, as you said, has been more in the news than in our figures. But still, we cannot face these type of events moving forward, and we need to strengthen our infrastructure to maintain the same risk appetite and the same appetite for agility.

Let me give you an example of a deal, a recent deal of our M&A boutique model. It's the acquisition by Banijay of Endemol Group in the U.S. Banijay is a very close client in France. We are adviser -- M&A adviser for this transaction in the U.S. through Peter J. Solomon. That's a good example of the win-win, multi-boutique model. No way without Peter J. Solomon settlement, we would have been able to advise such a major transaction for a French client on the U.S. soil to create a global leader.

On the other side, never Peter J. Solomon without being into Natixis would have been advising the transaction because they wouldn't know Banijay. So this transaction is a perfect illustration of the strength of this multi-boutique model and the fact it's win-win, both for the boutique and for ourselves. And of course, when we do the M&A transaction, we also do the financing. We also do the hedging. And that's, of course, a great transaction for us, which, of course, is not shown in the figures of the third quarter. So I've been long to answer that, but I think it's an important question.

And I think you had a second question, which was?

--------------------------------------------------------------------------------

Jean-Francois Neuez, Goldman Sachs Group Inc., Research Division - Executive Director [20]

--------------------------------------------------------------------------------

Yes. No, my second question, I haven't asked it yet, but then I can ask you. I can ask it now, if that's okay. It was about Payments. You said that deals were too expensive now in terms of multiples, probably you mean. Now your Payment business is still relatively small. So it's almost arguably -- and in the past, you've made the point or your management has made the point that it's important to keep up and to be big in that business and to gain scale. So I just almost wondered whether the opposite strategic rationale would now not be -- would have to be considered as opposed to whether the status quo is a realistic option at all.

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [21]

--------------------------------------------------------------------------------

We are not in a status quo mode. We are in a growing mode. And the question is about the organic growth and external growth. We can also decide to invest more in the organic growth and building ourselves some developments. What -- of course, is important also to mention in the payment sector because of the multiples, if it's about, I would say, combining assets where our assets are benefiting from the same multiples, of course it can be considered. If we can maybe dispose one asset by another one with the same multiples without taking a financial risk at this multiple, of course it can be considered. And then what I said is about just the next months, we are -- we start to work on our strategic plan. We look at what we are going to do between 2021 and 2024. Again, what I said about acquisition is not forever. It's more about the next months.

--------------------------------------------------------------------------------

Operator [22]

--------------------------------------------------------------------------------

The next question comes from Flora Benhakoun from

[Deutsche Bank].

--------------------------------------------------------------------------------

Flora A. Benhakoun, Deutsche Bank AG, Research Division - Research Analyst [23]

--------------------------------------------------------------------------------

I have 2 questions, please. The first question is regarding the performance fees. So I know it's very difficult to forecast. It can vary, obviously, every quarter. But I think you have been guiding for usually a 7% contribution to revenues from performance fees in the Asset Management business. Obviously, it's been many quarters now that you're running at double the rate. So the first question is, do you stick to the 7% guidance for 2020 and beyond?

And the second question is regarding the flow picture. With a specific focus maybe on Harris given the rebound we've seen in value funds, whether you could shed some more light on the developments quarter-to-date.

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [24]

--------------------------------------------------------------------------------

Maybe I'll take the first question. I'll leave the second one to Jean Raby, who wants to say a words about it. On the performance fees, I think we have a very high level of performance fees this quarter coming from -- mostly from 2 affiliates, H2O and AEW. I think these performance fees are not random. They are the results of the economic environment. That H2O is a global macro asset manager. So when there are some very strong moves in the macro, then there's an impact, a very big impact on performance of their funds.

In the case of the third quarter, of course, the main driver of this performance is about the tightening of the spread in the eurozone because that's a very strong position of H2O to [be leaving] the -- in the tightening of the spread in the eurozone, and that's what happened during the quarter. And of course, it leads to a high level of performance fees.

But I would -- what I would like to stress is the fact that the same economic context can be very positive for H2O funds and very negative for Harris funds, for example. But that's the strength of our multi-boutique model. If you take the Q3 context, the value strategies have been, I would say, very tough because of the macro and because of the context. And then if there's a change of context, probably, we'll see less performance fees in H2O, but in the same time, we'll see a rebound on value strategies in Harris or the DNCA. And today, if you look at our results, the share of H2O and AEW is higher. But a few quarters ago, Harris was very high, and it was not the case of the others.

So we are not in a situation of dependency on 1 or 2 affiliates or 1 of 2 strategies. We are in a situation to have a diversity of strategies. And quarter-after-quarter, it's not the same strategies that are benefiting from the context, but this gives us some robustness. And when you look at the slides we have included on the long run of our Asset Management model, you can see the resilience and the robustness. Even if you take affiliate by affiliate, you can have some erratic moves given the evolution of the economic context.

But I leave the floor to Jean about Harris.

--------------------------------------------------------------------------------

Jean Raby, Natixis Investment Managers S.A. - CEO [25]

--------------------------------------------------------------------------------

Thank you, François. I would make the following remarks. First, as a general matter, when you have a shift in performance, either outperformance or underperformance, there's always a time lag between the time investors take stock of that and the reality. And that reflects also the fact that investors look very much at the 1-year or 3-year performance before informing their investment decision.

So as you would -- as you mentioned, and as we have seen, there's been a rebound in performance, notably at certain Harris funds, and we expect that to drive flows over time, not necessarily immediately. That being said, as was mentioned earlier, given what we see currently in the quarter, overall, in the U.S., we see the trend bottoming out. We have a significant pipeline, some of which have been funded, some of which we expect to be funded before the end of the year. And what's interesting is that, of course, we see some outflows but there's a clear difference, a marked difference between the inflows we see in value-add strategies, high conviction that therefore carry a good asset-based fee and the outflows, which we see in lower-priced assets. So overall, we would expect that, although not impacting a lot Q4 numbers, that would flow into 2020.

We have to be cautious. U.S. mutual fund investor behavior at the end of the year is always difficult to predict because of tax and other considerations. But as was said before, we would expect this will translate into a net improvement, improvement, compared to Q3 flows in the U.S.

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [26]

--------------------------------------------------------------------------------

Thank you, Jean. And as you know, Harris has been a believer in the fact that the European financial sector was strongly undervalued. I can only thank them for their trust in -- during the -- at the beginning of the year, they were a little bit -- it was not demonstrated by the market. But as you all know better than me, the trend has been better for the past weeks.

--------------------------------------------------------------------------------

Operator [27]

--------------------------------------------------------------------------------

The next question comes from Tarik EI Mejjad from Bank of America Merrill Lynch.

--------------------------------------------------------------------------------

Tarik EI Mejjad, BofA Merrill Lynch, Research Division - Equity Analyst [28]

--------------------------------------------------------------------------------

I have one question, actually. Your ROTE derated materially from last year, which was above 14%. And now you are around 10% even adjusted for the cost of risk. I mean, point taken that this is not driven by low-risk appetites because, clearly, revenues has dropped a lot in the CIB and your control of RWA has also softened versus what you used to do. So my question is, what are the actions you will then take to be back on track to deliver or to get closer to your target by 2020? So I'm not asking for the next plan, but for the ongoing one because your credibility on delivering on your target has really warranted the multiple premium you've been trading at. So now how you can do to actually really be back on track and close the gap at least? And also, the derating especially has been done in the context where your reliance on NII, as you pointed out, has dropped materially in the last year or so. So really, your input will be helpful here.

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [29]

--------------------------------------------------------------------------------

Thank you, Tarik. Actually, as I mentioned, I think the context of the 2019 year has been tough, especially on the first quarter. If you remember, after -- for the results of the first quarter, I was telling you that, that was a very tough quarter. I was expecting better in the second quarter. It has been the case. The second quarter results, I said that the trend was still improving. And I think the third quarter is also -- is better. I continue to see, I would say, a more positive trend for the fourth quarter, which is unusual because when we forecast, for us, the CIB revenues, in particular, are geared more towards Q1 and Q2. And when we prepare our budget, we consider that there's a seasonal effect, favoring Q1 and Q2. It seems to be different this year. And I see other peers saying the same.

So I think there has been, I would say, a context in the year 2019, which is unusual, which has been severe in the first quarter, and we are recovering. And of course, the -- I would say the derating that you are expressing is also linked to that.

Now, of course, we are working on our 2020 budget. This is work in progress, and it will also take into account what we see about the fourth quarter. We are not going to take additional, I would say, different ways, different roads. We stick to our strategy. We will continue to, I would say, implement it with a lot of discipline. Of course, maintaining a strong eye on costs. One initiative, which is not mentioned in our financial communication because it's, I would say, early, is the widening of our activities in Porto. We have increased our staff in Porto on IT topics. We are widening our Porto setup on other functions, all functions, compliance, risk, finance and so on, HR. But this is an important development for us to continue to have agility and cost efficiency.

We'll have also the project between Ostrum and La Banque Postale Asset Management. We need to assess exactly what will be the impact of the project. But of course, we expect some cost synergies. So we are working on all of these after our budget process. If we have a financial target in our budget for 2020, which are not in line with our New Dimension target, of course we will update you when we present the Q4 results. But today, for me, it's too early to tell you exactly what would be the levers for next year.

--------------------------------------------------------------------------------

Operator [30]

--------------------------------------------------------------------------------

The next question comes from Omar Fall from Barclays.

--------------------------------------------------------------------------------

Omar Fall, Barclays Bank PLC, Research Division - Analyst [31]

--------------------------------------------------------------------------------

François, sorry to come back on the CET1 target, but can you just confirm that none of it was driven by any regulatory reviews by the supervisor, please?

And then when you talk about the new regulations to come as being an input, why do you quote the countercyclical buffer increase in France? Because, I guess, we've known that since Q1. And in the past, you've highlighted your comfort around Basel IV and TRIM. So what's really changed there?

The second question is just on the distribution rate in global finance is up, and the fixed income performance view wasn't amazing. So why are group RWAs up 2%? It looks mainly to be credit risk? I noticed that the balance sheet is up 7% sequentially as well. So just some clarity there would be great.

And then, sorry, a third question. At last quarter's results, you told us that H2O flows in July were positive. Just to clarify, were they then negative over the course of the quarter?

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [32]

--------------------------------------------------------------------------------

Thank you. Maybe on the -- first on the increase in RWAs. It's important to have in mind that half of this increase is due to FX impact. So actually, the increase is relatively smaller and in line, I would say, with our activity.

When it comes to H2O flows, they were flattish this quarter, slightly negative, but it's -- the trend is changing these days, but nothing very, very notable.

On the core Tier 1 target, it's not a request by any regulator. It's our assessment of what we need to have as a solvency ratio at the end of 2020 and where we will be comfortable to distribute all the excess of capital above this level.

So it takes into account multiple elements. And -- so multiple elements, but it's really a financial assessment of where we think is the right level to stand for Natixis at the end of 2020. Countercyclical buffers is an example. But -- I really mentioned it as an example because countercyclical buffer is a request by the supervisor, which is linked to the economic context. That's why I gave it as an example because when supervisor requests some increases due to something and so the question to know whether it's a supervisor request or linked to the economic environment, actually, it's the same because the rationale for the supervisor is also linked to the economic environment.

So again, it's a lot of different things. If they were -- at a certain point, you can absorb without changing your target, new elements, but at a certain point in time, you need to address the target. And again, we did it because of our financial discipline, which is -- as it's very important for us to stay at the level above which we are going to distribute all the excess capital, not to remain in a kind of fog situation on that. We updated it.

--------------------------------------------------------------------------------

Nathalie Bricker, Natixis S.A. - CFO [33]

--------------------------------------------------------------------------------

Concerning perhaps your question related to the balance sheet growth. In fact, the balance sheet growth is due to the valuation in derivatives for this quarter due to the lower rates, and you can see that it's the same on the asset side and on the liability side. And also, you can see that there has been no impact on the leverage ratio due to that. So it's just, if I can say so, a technical effect.

--------------------------------------------------------------------------------

Omar Fall, Barclays Bank PLC, Research Division - Analyst [34]

--------------------------------------------------------------------------------

Got it. That's very clear. Just a very quick follow-up. Could you just confirm that out of the performance fees, there was a limited amount related to crystallization of exiting clients at H2O? Is that correct, it was really the performance in the quarter?

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [35]

--------------------------------------------------------------------------------

Yes, yes. I can confirm it. There's almost no crystallization. It's really -- the bulk of the performance fee is linked to the performance. And as I said, the performance is very much linked to the macro environment and especially on Italy.

Maybe we take a last question, if any.

--------------------------------------------------------------------------------

Operator [36]

--------------------------------------------------------------------------------

The last question comes from Jean-Pierre Lambert from KBW London.

--------------------------------------------------------------------------------

Jean-Pierre Lambert, Keefe, Bruyette & Woods Limited, Research Division - SVP and United Kingdom Analyst [37]

--------------------------------------------------------------------------------

Two questions, please, of clarification. First one is, again, on performance fees, if you can indicate a rough split between H2O and AEW?

And the second question related to performance fees. The second question is, the cost base has increased in parallel for both performance fees and the normal fees in Asset Management, why would costs go up if performance fees are up? Just a question of understanding the parallel.

And then the second question related to risk is, can you give some color on the risk increase? Is it across sectors? Is it a particular file? What are the main drivers, as you can see them?

And the third one, maybe quickly, the risk weighted asset increase on the green side, do you associate that with changes in pricing or variable pricing depending on the green dimensions?

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [38]

--------------------------------------------------------------------------------

Thank you. About your question on performance fees between H2O and AEW. It's roughly -- I would say, performance fees in H2O are roughly the double of the ones of AEW.

On the cost base, maybe just -- there's an effect linked to the performance fees because part of it, and it's different affiliate by affiliate, have an impact on the variable compensation. So that's a part of the increase in costs. And also, as mentioned in our documents, there has been also in the Q3 some investments on digital IT that have been important for us, I think, really positive. But if you look at the 9-months' evolution of cost, it's not the same picture.

About risk -- cost of risk, it's -- I would say if there's one trend we can see, it's more on the oil sector, especially in the U.S. because the prices have been a little bit under pressure. And also, I think it's -- I would link it with your last question, which is the fact that the transition, of course, puts also some pressure on some players in the oil industry. But it's not -- I wouldn't say that it's a majority of the cost of risk this topic on oil. But if I -- there are several files. It's not one file as in the Q2. So it's not -- you have a little bit of everything. But if I have to intensify just one trend, it's more -- we have something around oil in the U.S.

On the question of the Green Weighting Factor, we are not price makers. The price depends on the market. So we don't have a direct link between the adjustment on RWAs that we do internally and the market price. But of course, I think the market price is evolving and will evolve taking into account the climate risk or the risk -- the increase of risk on sectors or players that would not fit to -- into the transition because you increase the risk that, for example, you can increase the refinancing risk of a company. If it's not sustainable, maybe investors or lenders will not come next time to refinance the debt.

So that's something that will start to and will continue to drive, I would say, a price effect -- a differentiating price effect according to the climate impact, but that's not our mechanism that will have directly an impact on pricing.

I think there's still a last question. So let's take it and -- don't want to frustrate anyone. No? Last word. Okay.

--------------------------------------------------------------------------------

Operator [39]

--------------------------------------------------------------------------------

We have a question from Pierre Chedeville from CM-CIC.

--------------------------------------------------------------------------------

Pierre Chedeville, CM-CIC Market Solutions, Research Division - Analyst [40]

--------------------------------------------------------------------------------

Two quick questions. Regarding capital, you talk about your global capital. Could you give us any comments regarding your capital in the Insurance business? As you know that it's a kind of concern in the current situation of the euro activity -- euro contract activity. And regarding the measures on risk control, can you tell us, [a part], the nomination of manager, if you will reinforce significantly the teams that work on risk? Or is it only, I would say, a game of new managers?

--------------------------------------------------------------------------------

François Riahi, Natixis S.A. - CEO [41]

--------------------------------------------------------------------------------

Okay. Well, on your first question, as your phone was not working properly, I restate what Nathalie was saying. We don't have any issue on our capital for our insurance subsidiary. So we don't expect any capitalization -- recapitalization of it. We don't have any solvency issue, even if in the current environment.

About risk. Just maybe on that. On the Insurance business, on the life insurance business, the negative interest rates have 2 consequences. One is short term, immediate. It's a consequence on solvency. The second one is very long term. It's a consequence on profitability. Of course, both are linked because solvency in Solvency II depends on the projection on the long run of your profitability. Again, we don't have any issue short-term on the solvency. We don't have any issue on the solvency.

So of course, now negative interest rates are completely changing the landscape of savings, and we are working on initiatives from a commercial standpoint on what we are going to do on pricing because, clearly, the capital guarantee of euro contract has -- is more costly, and it should be priced properly, in a context of negative interest rates. On the other hand, of course, we probably should revisit also our prices on the unit-linked to make it more attractive in this environment.

So of course, we are working on it. The negative interest rates will have an impact on the commercial actions on the pricing on maybe some products. The business mix between products we maybe changed in the long run. But that's really something that we -- has a minimal impact, I would say, in the short-term framework. It doesn't change really what we can expect for next year, for example.

On your second question, you have -- we are strengthening our risk teams, and we have been doing it constantly like, I would say, other financial institutions because as the regulatory environment has been changing, and you take the -- if you take the evolution of staff in the financial industry, I think the risk function and the compliance function have been clearly beefing up in all financial divisions, including us, and we will continue to strengthen our teams. But -- so what we have announced is on one hand, some evolution on the governance framework in Natixis Investment Managers that have been detailed -- detailing. And of course, we have also a new CRO. So it's a very important evolution for us because it's a member of the senior management committee. And we are very pleased to welcome Olivier Vigneron with a very experienced -- with a very strong track record at JPMorgan, and I'm sure we will benefit from his experience moving forward.

I would like to take this opportunity to say how happy I am to see -- we have 3 new best-in-class people that just decided to join us. Olivier Vigneron, that I just mentioned; Joseph Pinto as a COO of Natixis Investment Managers; Philippe Setbon, to lead the merge of our activities in insurance asset management between Ostrum and La Banque Postale Asset Management. These 3 people are industry leaders in their field. And I think it gives an idea of the attractiveness of our business model to 2 very, very high profiles. So I think this is something which is comforting us, of course, in addition to our asset-light model, again, which is an incredible strength, leading to a solid capital generation and a very distribution-friendly institution. That's our track record, and it won't change in the years to come.

So thank you very much for your attention, and see you next time.

Thank you. Bye-bye.