Amundi Sa

Good morning, I'm Cyril Meyra Amundi's head of investigations. It's a real pleasure to welcome you at this video conference to present our second quarter results. We are here in Paris, which is less hot than a month ago in London for our Asian workshop. And this video conference will be broadcasted by Zoom. We shall have a presentation by our CEO, Valerie Baudson, and our deputy CEO, Nicolas Calcoen. The presentation should last approximately half an hour and will be followed by a Q&A session as usual. If you want to ask a question, please raise your hand virtually if you are online. And also, if you have the new Zoom version, it's probably hot with React, and then you have to ask to raise your hand. because the Zoom application has changed. We shall then give you, open your mic and please open your camera so that we can have a lively dialogue. We have changed again the setup this quarter so unlike last quarter there will be no delay between the moment we open your mic and the moment you can start talking. We are back to the previous setup which was more convenient. Before we get started, a short disclaimer. Throughout the presentation, we will make a number of forward-looking statements and mention forecasts. We call your attention to the fact that Amundi's actual results may differ from these statements. Some of the factors that may cause the results to differ materially are listed on our universal registration document. Amundi assumes no duty and does not undertake to update any forward-looking statements. I also wanted to highlight a few changes to our disclosure that you have to keep in mind. We will have this quarter the first contribution from ICG to our adjusted net income in the equity accounted contributions. We have consolidated 7.72% to be precise of their net income with a delay as we have explained on our website. A first half year P&L will also be compared with a first half 2025 P&L as if Amundi US had been equity accounted at 100% in Q1. You are now familiar with this pro forma comparison. We shall give no details about our JVs because of the IPO process of SBI-FM, which is now complete, but we still have to respect the period after it without any disclosure. I remind you also of a simplification of a disclosure by clients. We now have only three segments, retail, institutional excluding insurers, and Crédit Agricole and SocGen insurers. We also transferred the employee savings from institutional to retail and with that I now leave the floor to Valerie.

Thank you very much Cyril for all these details and good morning everyone. I am very pleased to share with you our key highlights before Nicolas takes a more detailed look at our financial results as usual. So, assets under management now stand at close to 2.6 trillion euros, up 14% year on year. First half net inflows of 56 billion were the highest in Amundi's history. I would like to highlight that most of these net inflows are in medium and long term assets, with more than 50 billion, again, a record for a first half. Q2 inflows reached 24 billion, with strong momentum across all strategic priorities. And again, the lion's share of these net inflows were in medium to long-term assets. This activity translated into very strong financial results, with net income of over 430 million, up almost 30% year on year. This was supported by strong revenue growth and a very positive Joe's effect. As a result, adjusted EPS was above 2 euros for the first time in a quarter. To sum up, Q2 in one line, record activity and record financial results supported by tangible Invest for the Future plan progress. So let's look at our highlights by strategic priorities, starting with clients. In retirement, we saw continued commercial success thanks to growing demand for individualized solutions. Retirement-related inflows reached €8 billion in Q2, driven by the dedicated business line we have created to accelerate growth. In France, we saw particularly strong momentum in employee retirement schemes. First-half inflows into PER collective plans reached 1.9 billion euros, up 90% year-on-year. PER individual inflows were also up 15%. In Germany, pension reform is driving a shift towards simpler, lower-cost and capital-market-based retirement savings. From 2027, new German pension accounts can invest in funds and ETFs and we are already very well placed to support. In Q2, we signed two new distribution agreements for Germany's reformed third-pillar pension market. reinforcing our early positioning in a significant growth area. Our dedicated retirement business also supports our ability to innovate. So we are using investment design and technology to support sophisticated lifecycle investing. This means moving beyond edge-based de-risking towards adaptable and goal-based client path. This is the focus of our new Amundi Institute-wide paper, the Life Cycle Remix, which sets out our thinking about the next generation of retirement solutions. Now, moving to geographies next. Well, the main highlight was the successful listing of SBI funds management. As you know, this is an important milestone for Amundi in Asia, which reflects the strength of a partnership built over more than 20 years with State Bank of India. SBI-FM is India's leading asset manager with around 280 billion euros of assets under management, a more than 15% mutual fund market share and a leading ETF position. The listing values SBI-FM at more than 10 billion euros and will generate an estimated 300 million euro net capital gain for Amundi to be booked in Q3 this year. Our approach to this capital gain will be fully aligned with our Invest for the Future allocation commitment. This means prioritizing external growth initiatives while retaining the flexibility to return excess capital to shareholders. Importantly, we retain a share on the capital of SBI-FM of almost a third, a stake worth approximately 3.5 billion euros. This means continued exposure to India's long-term savings growth. More broadly in terms of geographies, the quarter underlined the power of our international growth engines with Asian inflows reaching 9 billion and Northern European inflows at 8 billion. Moving to solutions next, where we continue to see strong momentum. Starting with active management, where inflows reached 9 billion euros. This commercial momentum was supported by strong inflows into fixed income strategies. A key highlight was also the success of our US victory strategies distributed in Asia and Europe with close to 3 billion euros of inflows in equities and multi-assets. We have also completed our income fund range. We are now able to offer clients a full range of fixed income, equity, and multi-asset strategies designed to generate regular income and additional long-term returns. Q2 also saw strong performance from our flagship funds. Our global aggregate and emerging market bonds were both in the top decile over one year. ETF next, where assets under management now stand at more than 400 billion euros and net inflows reach 12 billion in the quarter. We are continuing to expand our offer to meet growing client demand for efficient, scalable investment building blocks. Innovation, as you know, is the key to success in this space. During the quarter, we introduced the first UCIT ETF weighted by GDP, bringing investors closer to the real economy. We also launched two new active ETFs reflecting our deep fixed income expertise. In Q2, we also won two new white label ETF clients. Fineco Asset Management will launch three Amundi co-branded products on Borsa Italiana, continuing our long-standing partnership. Poilin de Suez will use our platform to launch four active equity and fixed income ETFs in Europe. Private assets next. Here we delivered good second quarter inflows supported by several new institutional mandates for multi-manager strategies through Amundi Alpha Associates. We also saw ICG makes its first contribution to the adjusted results this quarter, reinforcing the growing role of private markets. In digital assets, we have launched Euro and US dollar tokenized share classes of the Amundi Money Market Fund with Ant International, the financial services arm of Alibaba Group. And last but not least, responsible investment inflows were positive as well, including 1 billion for the Global Green Bond Initiative Fund. and we also transformed into debt zero, an OCIO mandate of 1 billion for a European insurer. So the message on solutions in SIPL, we are growing in active, in ETFs and private assets and we continue to broaden and innovate our client offer. Turning now to Amundi Technology, which delivered a 25% increase in revenues year on year. This was supported by strong growth in licensed revenues, which is the recurring component for this activity. And we also signed two new clients again. The first was La Banque Postale Asset Management, which will use Alto Investment, our portfolio management solution. and the second is Sparer Banken, one of Norway's leading regional banking groups which serves over 2 million clients. Sparer Banken will use our Aalto wealth and distribution platform to support digital advice, more personalized client insight and enhanced reporting. This is a very good illustration of how our technology offer is evolving into a broader service model for wealth management clients. and it also shows the cross-selling potential of Amundi's integrated model combining technology with advisor support and fund selection. Before we move to the financial results, I wanted to briefly highlight efficiency, one of the six priorities of our Invest for the Future plan. The example on that slide is Amundi Intermediation, our regulated trading entity, and how we are using AI to improve execution performance and prices. Here, AI helps select the best equity execution strategy according to the characteristics of each order and market conditions. In fixed income, predictive tools also help portfolio managers identify which bonds train to trade and at the best available price. The benefits are clear. Between 2022 and 2025, both equity and bond execution added value improved significantly. This means that we were able via order execution to improve the fund performances for our clients. AI is also now embedded in workflows such as Know Your Broker, Due Diligence and RFP processes. So the message is simple. Once again, AI is becoming both an efficiency lever for Amundi as well as a commercial opportunity with our clients. Finally, before I hand over to Nicolas, I wanted to close this section with a visualization of the strong year-on-year progression of our Q2 results. Very strong asset growth translated into higher revenues, up 18%. These are supported by both market levels and the commercial momentum we are seeing across clients, geographies, and solutions. At the same time, we maintain our trademark operating discipline, which translated into a very positive Joe's effect and significant increase in net income up 29%. This culminates in EPS of two euros and nine cents, clearly showing the earning power of the model. With that, I will hand over to Nicolas, who will take you through the activity and financial results in more detail.

Thank you Valerie and good morning everyone. I will now indeed comment on our activity and financial results. First activity. At the end of June, our assets under management totaled 2.6 trillion, rising by 14% over one year and 8% over the quarter. This is again a new record for Amundi. Most importantly, we gathered healthy inflows of 24 billion euros in the second quarter. Our asset also benefited from a strong market effect of 148 billion euros reflecting the low point in equity market at the end of March. And this was also complemented by a small positive foreign exchange effect thanks to a stronger dollar. And, as Cyril explained, we also integrated our share in ICG assets for the first time, or 7.7% of their fee-earning assets to be more precise. At the end of March 26, this represented 6 billion euros. This explains the scope effect shown on this chart. Let me now go into more detail about our flow performance which originates from most client segments, asset classes and geographies. If we take a step back and look at the activity over the first half, net inflows reach a new half-year record of 56 billion euros. This was driven by record inflows into medium to long term assets at 51 billion. This strong business momentum follows the trend of the past three years. The high level of business was reflected in ETF with 28 billion collected in the first half, in active management with 17 billion, in particular in fixed income, and in private assets where we gathered 4 billion thanks to our multi-management business Amundi Alpha. We won several large subscriptions from institutional clients in private assets in the second quarter. And this also builds on the large commitments from Credit Agricole Assurance in the first quarter. More specifically, in the second quarter, net inflows into medium- to long-term assets were also high and accounted for the bulk of net inflows of 20 billion. ETFs here again contributed 12 billion, while active management delivered 9 billion inflows. Fixed income was the main active management driver, but it should be noted that equities were also positive this quarter, with 1 billion. Treasury products put in net and flows, mostly coming from corporates, which redeem money market funds to bear the divisions, as is usually the case in the second quarter, on institutions, which favored short-term duration fixed income solutions. Investment performance next. Again, on this quarter, the key message is consistency. On a five-year basis, 78% of our funds outperform their benchmark in a very volatile micro-environment. And the message is exactly the same when we look at Morningstar rankings. Three-quarters of our assets in our open-ended funds are in the first and second quartiles over a three-year and five-year period. 264 Hammondy funds are rated 405 stars by Morningstar, a material increase compared to EARN25. As Valerie already mentioned, the investment performance of our fixed income flagships is particularly good. For example, our main flagship Global Aggregate outperformed its benchmark by close to 8% points over three years. and our emerging bond flagship by 11% points. Both strategies have more than 4 billion under management. Looking next at our client segments in the second quarter. Let's start with retail where net inflows totaled over 15 billion in the quarter, almost all in medium to long term assets. These were driven by inflows of 16 billion in third-party distribution, which is equivalent to 15% growth on an annualized basis. Outflows from unicredit networks were 5 billion in the second quarter overall, while total assets with these networks remained flat at 75 billion at the end of June, thanks to a positive market effect. Net outflows in the institutional segment of 7 billion can be attributed to three items. First, the net outflows in treasury products already explained for 7 billion. And two exits totaling 11 billion in large low margin mandates. One of 4 billion in the Middle East in an equity index mandate. and another one from the insurance company of Unicredi of several billion euros. And we have now 14 billion left in assets overall with the institutional part of Unicredi. And they have a margin similar to the mandate we manage for Credit Agricole and Societe Generale Insurers. Therefore, including these exits, the institutional business was very robust in long-term assets in the rest of Europe and Asia, with net inflows of 11 billion. Credit Agricole and Societe Generale insurers now also gathered 11 billion, of which 6 billion in long-term assets. This reflected continued appetite for Euro contracts, as well as a continued diversification of credit agricultural insurance investments. Finally, our associates also performed well in the quarter. All of our joint ventures in Asia posted positive inflows totaling 5.6 billion. And you may ask what is the status of the large edges we expect from the EPFO mandate in India. It is still expected, still likely to be approximately 30 to 40 billion euros and we hope soon in the coming months. However, as we said many times, this will not have any impact on SBI-FM profitability, let alone Amundi's. The US distribution of Victory Capital also posted positive flows during the quarter, after three quarters of steady improvements. And, as Valerie mentioned, the strategies managed by Victory Capital that Amundi distributed to its clients in Europe and Asia gathered 2.9 billion, showing increasing momentum since the start of this partnership. Let us now start the review of our results with the second quarter and with the revenues. Total revenues were 933 million on this quarter, up 18% year-on-year thanks to a strong growth in business-related fees both in asset management and in technology. Net management fees were up by 17% compared to the same quarter of last year, thanks to the strong growth in assets driven by the strong cumulative net inflows over the last 12 months, close to 100 billion, and the positive market effect. They also benefited from a high level of guaranteed fees from structured products. However, excluding this one-off effect, as well as all revenues related to the distribution contract with Unicredit, the gross rate in management fees would have been the same as the actual one of 17%. Performance fees were stable year on year, and technology revenues were up by 25% at 32 million. This reflects very healthy growth in licensed revenues, up by 20%. Finally, a word about our financial income. It more than doubled compared to the same period last year. This reflects two contracting elements. The decrease in Euro short-term rates resulted in a material drop of the return we get from the voluntary placement of our cash. However, this was more than offset by better mark-to-market effect and seasonal dividends. Turning now to our costs at 456 million euros. Operating expenses were up by 9%. 9 points below the top line growth in a context of healthy business development for Amundi as our strong inflows indicate. This good call control was achieved thanks to our continued efficiency efforts. It allowed us to continue to invest in our strategic priorities. As a consequence of this large positive Joe's effect, the adjusted cost income ratio was 49% 48.9% to be precise. Finally, our adjusted net income reached an all-time high for a quarter at 431 million euros. It was up by 29%. As Valerie highlighted, it reflects an acceleration from asset to revenues to gross operating profit, which was upped by 20% thanks to the very positive Joe's effects. And finally, the strong growth in the contribution from our associates, plus 30%, which dialed up the net income growth to 29%. This comes first for the contribution from ICG which accounts for less than half of the growth of Associates at 12 million euros. The contribution from our agent John Ventures grew by 10% and at constant repeat this growth would even have been doubled. And the contribution from Victory Capital was up by 31% to 35 million euros thanks to the synergies and despite currency headwinds. The adjusted net income includes the tax surcharge in France of 10 million for the quarter. At a reminder, it was 9 million in the second quarter of 25, so this surcharge did not have any effect on the net income growth. And finally, let me finish my comment about the third quarter result with our earnings per share. At 2.09 euros, it is above 2 euros for the first time ever. And this EPS does not take into account yet the accretive effect from our ongoing share buyback program. Let's finish by looking at our financial performance in the first half of this year. The trends here are very similar to those of the second quarter. Adjusted net income rose by 22% year over year to an all-time high of 781 million euros. Like in Q2, this growth was driven by revenues, 14% growth compared to the first half of 25, driven by activity-related revenues. Our revenue margin was 15.8 basis points in the first half, almost flat from the full year 25 level pro forma of the deconsolidation of Amundi US. The strong growth in revenues and control costs resulted in a positive Jaws effect of 4.7 points. As a consequence, the adjusted cost-income ratio improved further to 14.6%. The tax surcharge in France that totaled 56 million is equivalent to that of the first half of 25. And finally, the EPS was 3.78 euros. To finish, this good level of profitability only strengthens our financial position. As you can see, the tangible equity base reached 4.4 billion at end of June 26, up by 2% over a year. This increase was achieved thanks to retained earnings over the period and smaller gains from market and forex moves. And this was despite the impact in the first half of the year from the integration of ICG and the launch of our share-buy-back program, which had a combined negative impact of €0.6 billion. In fact, excluding these two effects, the tangible equity would have been up compared to N25 thanks to our record net profit in the first half of the year and despite the payment of the 25 dividend. I will now hand back to Valerie for concluding remarks before we take your questions. Thank you very much for your attention.