Bnp Paribas Ord

Good afternoon, ladies and gentlemen, and welcome to the presentation of the BNP Paribas 2023 full-year results with Jean-Laurent Bonafi, Chief Executive Officer, Lars Maschenil, Chief Financial Officer, and Jan Girardin, Chief Operating Officer, Corporate and Institutional Banking. For your information, this conference call is being recorded. Supporting slides are available on BNP Paribas IR website at invest.bnpparibas.com. During today's presentation, you will be able to ask your questions by pressing star 1 on your telephone keypad. If you would like to ask a question, please make sure to be in a quiet area to maximize audio quality. I would like now to hand the call over to Jean-Laurent Bonafi, Group Chief Executive Officer. Please go ahead, sir.

Thank you. So good afternoon, ladies and gentlemen. I'm pleased to welcome you alongside Lars and Jan for the presentation of our 2023 results. We'll be pleased to take your questions at the end of the presentation. So we are halfway through our GTS25 plan. We'd like to share with you through five key messages, but I take away from our 23 results, our 25 outlook, our model, our long-term strategy, and finally, our long-term value creation policy. My first message, looking here at slide four, this with our intrinsic performance in 23, which I would call very good. BNP Paiva delivered an 18% increase in distributable earnings per share in 23 compared to 22. Distributable net income, which stands at 11.2 billion euros, was up 10.2% compared to 2022 and was in line with our announced objectives for 2023, despite a fourth quarter that was more challenging than usual. Last, we'll give you all the necessary details for each division and we'll comment on the one-off items booked in particular in Q4 2023, which we absorbed over the full year and through Distributable Net Income in order to reflect the group intrinsic performance. What you should also keep in mind is that they will not wait either on future results. Overall, on a distributable basis, our revenues rose by 3.3% in 2023 compared to 2022 and our operating expenses decreased by 1%. The Joe's effect is therefore positive. The cost of risk was low and came in at 32 basis points, driven by the structural improvement in our risk profile over the past 10 years. Many of you have asked us about the redeployment of capital freed up by the sale of Bank of the West. The process is well underway, based on the discipline approach. As of the end of 2023, we have redeployed 3 billion, or 40 BIPs, one third in organic growth, and two-thirds through targeted partnerships and Bolton acquisitions. 70 BIPs remains to be redeployed. Our financial structure is solid, and our CT1 ratio trajectory is on track to absorb the new CRR3 requirements by 2025. I will come back to this point in a moment. Disreputable earnings per share came to €9.21, an 18% increase versus 22 reported. We confirm our 60% shoulder return policy and will propose a Euro 4.6 dividend per share at the Annual General Meeting on May 14th. We have also requested the ECB's approval to launch a Euro 1.05 billion share buyback programme. One last thing. In 2023, we continue to invest in technology and in artificial intelligence based on the same type of industrial approach that made our platform so successful. I will come back to this point in a moment. Beyond the very good results we achieved despite the headwinds, 23 was a pivotal year. And with that in mind, I would like to send out a message of confidence in our medium term outlook. Looking now at slide five, my second message today is about our 25 outlook. The economic outlook in Europe and geopolitical uncertainties have obviously made us cautious. However, despite these headwinds, BNP Paribas should continue to grow faster than its underlying economy, serve clients, and get market shares across all phases of the business cycle. These all phases of the business cycle is important. Personal finance and real estate have been particularly affected from the current cycle, but we are dealing with that we have set up some robust adaptation plans which should pay off as early as 26. In 23, we also took note of several decisions by public authorities. The end of ECB remuneration of minimum reserves, the new Belgium tax, and the issue of Belgium government bonds. For the sake of transparency, we cannot avoid mentioning the temporary pacts they have. In the end, taken together, these measures could bring our projected ROTE by 25 in the range of 11.5% and 12% and translate into a CAGR 2225 in net income group share of circa 8%. Thanks to our diversified and integrated model and the adaptations underway, we are confident in our ability to deliver a return on tangible equity of 12% by 26. Lars will detail further the growth targets by operating division in his presentation. Looking now at slide 6, this is a good way to transition to my third message, which is a reminder of what makes our client-centric, integrated, diversified and model at scale so valuable. The new figures in slide 6 illustrate quite simply the resilience of our model, which can generate long-term growth, our discipline in allocating capital between our businesses, one third to CAB, one third to commercial and personal banking, one third to for specialized businesses and IPS, the continuous evolution of our risk profile, and the steady improvement in our cost-income ratio. Some might argue that a solid track record and rock-solid reputation are not enough to make BNP Paribas an investment case. Nothing is ever taken for granted. This is why we feel it's important to reiterate on slide 7 our vision of the main challenges for the banking sector in Europe and how our long-term strategy is extremely well positioned to create above average value. And this is my fourth message. We have a clear view of these challenges. First, gain market shares at marginal cost. Second, optimize the capital cost constraint. Three, adapt to business cycles. Four, support the energy transition. And five, invest in people and technology. BNP Paribas' long-term strategy is nothing new and has demonstrated its efficiency as just evidenced in the previous slide. We recall it in slide 7, around 20 key points that are methodically addressed by each operational division. You will not be surprised to recognize most of the GTS25 strategic priorities that we shared with you. I will stop here for one final point before I turn it over to Lars. This is my final message, our commitment to creating shareholder value over the long term. A good illustration of this commitment can be found in the three graphs on slide 8 that recall the average annual growth rate since 2008 of tangible net book value per share, plus 7%, of net earnings per share, plus 8%, and of the cash dividend per share plus 11%. We are mobilized and focused on continuing this trajectory. I would like now to hand over to Lars, who will take you through the group and divisional results.

Thank you, Jean-Laurent. Good afternoon also from my side, fine ladies and gentlemen. Let's start with slide 10 in the section of 2023 results. So as mentioned by Jean-Laurent, our 2023 distributable net income at 11.2 billion euros is in line with our objective. This year, the number and amount of one-off or what we call in our lingo extraordinary items are high. I would therefore like to give you some color to this conjunction of external and internal factors and give you all the necessary transparency. In a nutshell, we have been in a position to absorb these negative extraordinary items occurring particularly in the fourth quarter of 2023, had no immediate cost to shareholders with respect to the 2023 distribution. They will not weigh either on future results neither because we put them behind us. If you look at the slide 10, the waterfall gives a good picture of the restatements between the net group share result reported and the distributable result in 2023. So if we look at it beyond the 2.95 capital gain from Bank of the West, There are two main types of items that were adjusted from the distributable result in 2023 to reflect BNP Paribas' intrinsic performance. That is why we introduced the distributable one. It is coherent with the result of 2022, and it is the base for the one of 2024. So if we look at them, the first of these corrections is linked to the European banking regulatory environment, the Single Resolution Fund. We have decided to anticipate the impact of the end of the ramp up of the single resolution fund for one billion. I remind you that we have been paying for the last eight years something around the neighborhood of one billion in order to construct that fund. That fund is now there in 23, so there will no longer be contribution in 24, and so we basically took them already out in 23 to make it coherent. Secondly, there is the TLTRO. Well, there is the TLTRO, or in particular, the change of terms that the ECB applied and therefore the adjustment that was required on the hedges that were facing it. And so that is just shy of a billion of impact. So beyond these roughly 2 billion restatements, there are also some more idiosyncratic ones. Like for example, the extraordinary adaptation costs of 280 million, partly related to personal finance, Jean-Laurent told you that we're taking care of it, as well as provisions related to legacy portfolios amounted to 780 million euros. These are legacies. They are way gone, and we basically put them behind us as well. So these provisions, for example, include the extraordinary ones for mortgages in Poland and provisions for litigations to personal finance and provisions for receivables. So we also put those ones behind us. So that's the part. on the distributable income. I should propose to skip slide 11 because it's basically the P&L as Jean-Laurent has given it in color and I draw your attention, it was already mentioned, but an ROT of 11% and an EPS growth of 18% on the back of the earnings growth and the share buyback. I also propose to skip slide 12. It just reminds you that there are the extraordinary, so the one-off elements I just discussed, There are also the exceptional elements, which are basically stable compared to what we had the year before. And I just remind you also that there is the impact of hyperinflation weighing for $200 million additionally on the year 2023. So that's basically what I wanted to share with you before switching into slide 13. And the slide 13 talks about the revenue evolution in the businesses. So overall, you see the pickup, you see the pickup which is basically a tribute to a diversified setup. And that diversified setup at the level of BNP Paribas, but also in each of its divisions. So look at CIB, CIB revenues growth, strong increase at global banking, a rise at security services, and an activity more normalized at global markets. We'll come back to that. But there also you see the elements. If you look at CPBS, sustained revenue growth, strong increase at commercial and personal banking, driven by growth in net interest revenues. We'll also come back to those. And a strong increase at ARVAL and leasing solutions. and a less favorable environment in personal finance. Nevertheless, you see overall doing well. And then IPS, good performance, up 3.7% when we look at insurance, wealth management, and asset management, as indeed there is real estate which is being restructured and weighing a bit on IPS. So that's the view of the revenues as we see them. And before we move on and go to the results on a yearly basis, I want to make a comment on the fourth quarter. And you will find the fourth quarter and the details in the appendices. But I would like to make four very important points. First, the distributable net income clocked in at €2.7 billion in the fourth quarter and led to a distributable net income of €11.2 billion in 2023. as guided on the back of a nine-month restated distributable income of $9.2 billion and a fourth quarter of $2 billion. So that's the first thing. The second thing, if extraordinary one-off items weigh on the reported P&L, they are excluded from the distributable net income that reflects the intrinsic performance of the group and the base for the return to shareholders. So that's two. And then the third, when talking about those extraordinary one of items that were very negative in the fourth quarter, around 933 million negative, due mainly to extraordinary provisions for litigations, around 645. And they are recognized in the fourth quarter and as such will not weigh on the fruited results. So we took them out and we took them out of the distributable amounts. So that's the third. The fourth, don't forget that as usual, the fourth quarter results include some seasonality. And moreover, this year, the impact on cost of risk of some provisions on non-performing loans to be sold. I remind you that we have those elements provisions. They were deducted from capital. But with the intention to sell, we have to recycle that element in the P&L. So there's no impact on the common equity T1. These things are gone. It's just a blip in the cost of risk, and it will not impact our future look out. I also remind you that we had a similar thing but on the opposite side in the fourth quarter 22 where we had an idiosyncratic release due to alignment with European standards so we had to write back around 200 million. So no impact whatsoever on our 2024 outlook of this cost of risk and so we really stick to our benign 40 basis points guidance. So having done the 1, 2, 3, 4 on the fourth quarter in a nutshell These negative items and seasonality, which are in some ways very specific to the fourth quarter, should not divert you from having a look at a very solid intrinsic performance on a yearly basis. If with this, I can ask you to turn to the next page, 14, on costs. I'll be brief. You see basically that the operating divisions have cost contained, so up 2.3%. I don't have to remind you that in the Eurozone, inflation is 5.6% and something similar in the US. So you clearly see that the operating expenses are contained despite the inflationary context. If we continue on slide 15, it's also a reminder. It's basically a reminder of the structural improvement of the risk profile over the last couple of years. You know these slides, so I'll be brief. So on the left, you see 10 years of cost of risk expressed as basis points over outstanding, and you see them going down. And they don't come down just by luck. They come down because the two main elements like personal finance and BNL have been structurally been adapted. I'll come back to that. And so we stick to our guidance of below 40 basis points. And you see the same thing on the right, where you see the evolution upwards of global markets revenues, and you see stability of the VAR, which is basically the metric of the measure for market risk. So that's where we stand. I'm going to skip the next one because it's basically a variation on the team cost of risk is low. And so I'll take you to page 17 on the solid financial structure. Solid is probably also a sweet of an adjective as we have a common equity one at 13.2%. You know that we want to fly at 12%, so we are well above that. So we are well prepared for accompanying growth, redeploying the capital gains of Bank of the West, and basically be ready for the new regulation to come. So you see this, so we are very well capitalized, and it's not only on capital, it's also on liquidity. You know that our LCR ratio, which has to be above 100, is like 148. Maybe that number doesn't mean much. Always translate it in the immediately available liquidity reserves. which are like almost half a billion euros. And as you know, we don't have volts anymore, so that half a billion, we basically put it for a big part at the ECB, and that is one of the reasons why the impact on the mandatory euros have an impact. So that's basically on the capital position and the regulatory ones. So if we then take the next page, which is the redeployment of the capital of Bank of the World. So we heard you that we needed to synthesize what we're doing, and we're basically doing well. So we had like around 7 billion to redeploy. 3 billion of them are basically redeployed. And we initially had the intention to do two-thirds organic and one-third inorganic. It's basically the other way around, given the economic environment in which we are. And what are the levers that we use this for? For example, we use it to get access to new distribution networks. For example, what we've done in Belgium with the Belgian Post. Or secondly, it gives an expansion of offerings or even new expertise, what we've done, for example, with JAB. or it can deliver new technological platforms, like what we've done with Cantos. So we're really well on track, and we will continue to do so. I propose to skip the next two slides, 19 and 20, so you know that we are very dedicated to it, and you see that we are well on track of delivering. So we basically, of the plan GTS, we've talked about growth, we've talked about sustainability, and on the next pages, 21 to 23, you have a synthesis of the T, the technological and the operational efficiencies. So I talked to you about what we're doing on the cost so you know. So we keep on optimizing our premises. That's on one hand. On the second hand, we keep on industrializing and pooling activities like our shared service center. We really step them up by 25% of people by 2025. And then we're also working on the infrastructure and the technologies. AI is several of them. So that's basically where we stand on the results. So let me now quickly go into the divisions. So if we start on page 27 with CIB. So CIB overall, revenues reached a record level of $16.5 billion in 2023, up 2% year-on-year on a like-for-like basis. This serving clients, leveraging strong franchises, and confirming a change of scale in the European landscape with strong market share gains. Total CIB costs were up 1.2% year-on-year or 2.9% on a like-for-like basis. It's positive jobs for global banking and security services. All in all, and considering a lower cost of risk, CIB generates the pre-tax income of 5.7 billion euros in 2023 and a record level by historical standards up 6.4%. Now moving into some further details about the business drivers of the various divisions. So if we start with global banking, Very good performance, supported by market share gains and our European leadership on bond markets and syndicated loans. Bond markets have been particularly active and transaction banking activity has been buoyant with accelerated growth in deposits late in the year. In this context, global banking revenues were up 14% in 2023, so that's doing fine. If we move to global markets, global markets activities were still resilient compared to a high base in 2022, decreasing by 6% compared to last year on a like-for-like basis. If we dive in, equity and prime services delivered a good performance with revenues increasing by 1% and supported by good business momentum in equity derivatives and prime brokerage. In particular, the rise is very strong if you look at the fourth quarter, up 69%, with a very high level of activities across prime brokerage and equity derivatives. In a nutshell, demonstrating again how powerful it is, the diversification, not only at group level, but also at businesses. With normalized activities on rate and foreign exchange, FIC revenues were down 10% year on year. And please note the very good performance in credit activities, offset by more normalized activities in EMEA from a very high 22 base in rates and foreign exchange markets, and in particularly commodities. You remember the high volumes at the end of 22. Finally, security services, the performance confirms the relevance of a diversified model with the benefits of new mandates. So that's CIB. If we now turn to slide 31 with respect to CPBS, it delivered solid results, consolidating on the good performance of 22. Overall, revenues clocked in at $26.6 billion with a 4% increase, good performance commercial and personal banking, a solid increase in revenues in the specialized businesses. Less favorable, I told you so, in personal finance. Loans were up 2.9% and essentially lifted by the specialized businesses with a slight increase in the Eurozone for the commercial banking. If you look at deposits, they were down 1.6% but were almost stable versus the third quarter. As you know, we are very well when it comes to liquidity and the main impact is the fact of the competition by the Belgian state bond. So please note, private banking net asset inflows were solid, reaching $12.5 billion, representing 5% of underlying assets under management, confirming our distinctive franchises and favorable client positions. It's a good example of how efficient our model is, attracting strong inflows through external client acquisitions and synergies with entrepreneurs, which supports the shift into savings products, meaning more free business. CPBS operating expenses up 3.5%, generating positive jobs. With the evolution of cost of risk, pre-tax income was down 2.6% compared to a year ago, clocking in at 7 billion. Now, if we look a little bit in the departments of CPBS, and if we start on the Eurozone. So in the Eurozone, in total, the commercial and personal banking revenues are up 4.6%, net revenues up 8%. So what do we see? In France, our good relative performance is supported by our strong franchises. Net interest income decreased by 0.7%, but increased by 2.2%, excluding the impact of the inflation hedges. I talked about it, and I'll come back to that in a minute. Our exposure to regulated savings remained low compared to the market. Our loan outstanding was up by 1%, and we continued to adjust our margins. Fees remained healthy, up 17% when you compare it to pre-crisis 2020. As announced, the net interest revenues were impacted by the inflation hedges, which accounted for minus 21 million in the fourth quarter. If we go to Italy, the positive impact of interest rates on deposit margins for BNL was quite substantial, with an acceleration in the fourth quarter. Results were up sharply in Belgium, with net revenues up 9% and a positive Joules effect. Still, a good momentum on credits and deposits were quasi-stable when excluding the impact of the issuance of the Belgian state bond. Also in Luxembourg, growth increased. interest revenues of 31%. If you now move to Europe Mediterranean, loans outstanding were up by 2% and targeted origination was prudent in Turkey and Poland, particularly with individual customers. Deposits increased by 8% with an increase in all countries. Revenues at 2.7 billion were up very sharply by 19% due in particular to the good increase in net interest revenues in Poland. Please note the hyperinflation situation in Turkey led to a decrease in non-order operating incomes of 200 million, as I mentioned at the start. Moving to our specialized businesses in CPBS, revenues were up 3.8%, when excluding personal finance, growth was 14%. On the back of continued expansion of the finance fleet, plus 7% year-on-year, as well as favorable volume impact in relation to shorter delivery times on new cars, our valent living solutions saw a healthy increase in revenues Up 12%. Personal finance, the shift to mobility is materializing and the transformation is progressing well. So that is the key elements of CPBS. If you now move to slide 35 on IPS, business momentum was contrasted due to the high base for principal investment and a significant slowdown for real estate. The activity was sustained thanks to good net asset inflow over 12 months for wealth management, 17 billion, and asset management, 13 billion. So focusing on P&L, IPS, revenues stood at 5.6 billion, excluding the contribution of real estate, which is affected by a market that slowed considerably, and principal investment because of a negative base, so a very high level before. So indeed, if we look through the key elements, very strong performance for wealth management, revenues up 6%, also insurance, revenues up 4%. So back to IPS, if we bring it all together, operating expenses were up 1.7% with positive jaws when you exclude real estate and principal investments. So that's IPS. So that's basically the synthesis. that you see about the results. So we've looked back to 23. If I now look rapidly forward to 25. So looking forward to 2025, so I can share that my optimism of what I see in 23 is going to be carried forward into what we have planned to do. And so even if we look at slide where you see an update of all the interest rates, GDP and inflation, which are a tad different than when we made the plan. Intrinsically, a lot of it, if you look at the rates, they changed a lot in December. But nevertheless, in the environment and the diversification that we have, we feel ready that we can continue our growth. Then talking about growth, if we go to the next page on page 40, there is an additional 1 billion in net interest income to come. So I remind you that we are for a large part in a fixed rate mortgages environment. And so that basically means that the repricing takes time. Overall, the repricing is there, but it takes time. You can see it on the chart. A loan that was originated 10 years ago and you see basically the forward curve on it, it basically gets repriced today and you see the rates are higher and that should basically translate. And so that basically there is a year to come. There is a year of a billion to come. There is already a billion in the bank. So we confirm the overall picture. So that's on that. We see that. Moreover, if we go to the next page and we look at the growth ambitions that we set forth for our divisions, and that's also where you again see the advantage of a diversified and complementary business. So overall, we have some that in this environment, changing environment, steps up its outlook, that's CIB. So CIB, which has been demonstrating the success of its long-term strategy, will review upwards the top line growth. Then, if you go to CPBS, and particularly with the impact of the environment that I talked about, both being the Frankfurt and Brussels, if I can say, and is leading to a review that you see. And then thirdly, there is IPS, which indeed has the impact of real estate, but also is faced by the new framework of IFRS 17, and so that's what we see. So all in all, you basically see it. There are, in the evolution, given the environment changing, also the adaptation and the reaction of these divisions is different and compensates. So that's basically what we have at the outlook. I think we can skip 42, which is basically saying, you know, that we look at growth at marginal cost and therefore have that objective over the plan of jaws of two points, of which half is basically done by the falling off of the single resolution fund. And then if I go to the next page, you also know that our cost of risk is well targeted. I already discussed it earlier. We guide to remain below 40 basis points. You do know what our setup is. You do know that we have restructured personal finance and BNL, which basically represents 60% of the cost of risk. And then in the stage one and two, we have $5 billion in the bank of additional reserves. That's that sense. And then when we look at the slide on capital, and so on capital we're basically ready. So I told you that we are at 13.2% of capital. And what you see is that we are already at the end of 25 to 12%. So what are the levers? Well, we're going to continue to be profitable, as you know, and more profitable every time, and so forth, generate 50 basis points organically. Then there are some other elements, meaning we're going to continue to securitize, we're going to underwrite insurance, we're going to have... The consolidation prudentially of Arval, so that basically will be neutral. We're going to continue to redeploy the remainder of Bank of the West. And then, of course, we have an inflation of the risk-weighted assets by 7% with the advent of finalization of Basel. And if you look at that, we will be at 12%. This is where we want to be. So we are ready to accompany this growth. With this, Jean-Laurent, over to you.

Thank you, Lars. Overall, our 23 performance was very strong and in line with the announced objectives. Distributable net income was up 10.2% and net income distributable per share was up 18% in 23 compared to 22 amplified by our 23 share-by-buy programs. 23 marks a turning point for the group in the financing of low-carbon energies and a new technological milestone with the widespread adoption of AI. This is important because it will shape our future growth. Beyond our 23 results, BinPayPi is solid and well positioned in the new phase of the economic cycle. Our priorities for 2024 are very clear. Deploy your platforms and sales force at full speed to gain market share and remain focused on cost-correction and risk control. And I'm very confident with this approach looking ahead. Thank you for your attention. We look forward to your questions now.

Ladies and gentlemen, if you'd like to ask a question, please press star and 1 on your telephone keypad. Please lift your handset. Ensure that the mute function on your telephone is switched off and that you're in a quiet area to maximize audio quality. We will take questions as many as time permits. Again, please press star and 1 to ask a question. The first question is from Stefan Stolman with Autonomous Research. Please go ahead.

Yes, good afternoon, gentlemen. Thank you very much for taking my questions. I have two, please. So the first is on your target tweaks. You have basically left the $2 billion incremental NII guidance intact. But at the same time, you are explaining the fact that you're tweaking the return on tangible equity target down a bit. with NII-related impacts from minimum reserve compensation and Belgian retail bonds. And also I wonder how the slightly lower return on tangible equity target fits with the fact that you're actually not changing your operational targets really in terms of revenue CAGR, JAWS, cost of risk, etc. So I wonder how the fact that your return on tangible target comes down actually jives with otherwise stable guidance on these other metrics. And the second question is on capital. If I start with your current CT1 ratio and I've taken out Arval and I take out Basel IV and I take out these model adjustments, I'm basically at 12%. And so that means there's basically no excess capital anymore, whereas at the same time you still think you have about four and a half billion of Bankwest excess capital to reinvest. So where is this excess capital to go to this reinvestment? Thank you. Lars?

Yes, Stefan, thank you for your questions. So I'll start with the second one. If you look at the slide that we have on page 44, you basically see the evolutions. So on one hand, the 13.2% is where we stand. And you see that over the period 23 to 25, we're going to generate organically 50 basis points. So you know that we generate between 20 and 30 per year. So let's take 50 basis points. That's one. Then on the second one, yes, there are further optimizations that we do. Take on, we're going to sell something. We're going to do originate to distribute. We're going to do securitization. That will have a positive effect. But that will basically be compensated by the fact that prudentially, we have to reconsolidate our wealth. So that's neutral. Then you have the bucket three, which is basically talking about the redeployment of capital. And that's why you see we have still 70 basis points to go. And that's what you see. And then the last bucket is the impact of Basel, where we said that our impact is 7% of risk-weighted assets. So if you do the math, yes, you will end up at 12. But that is after having absorbed Basel, having had the redeployment of Bank of the West, and doing our natural growth.

But Lars, isn't now the redeployment of capital just redeploying your organic growth capital that you're generating?

No, there's two buckets. So we basically have, if you look at it, so on one hand, the bucket number three is the 70 billion that we redeploy in the sense of that is the capital that we have. On the first one, the organic growth additional, that is basically what is remaining after the natural growth. So we have the natural growth that we do. over and above so to make it very simple return 60 to shareholders then we basically use capital to cover the organic growth and then we have the additional one so that's basically that and so you clearly see the the growth objectives that we have and then on your other question on on on the on the target i understand your your point it is indeed what the main thing is the pivot that happened in december so when we had our outlooks which were basically done in october and we gave them also with our third quarter results we basically had the impact on net interest income was basically above 2 billion. And what happened in December with the new, if you look at the forward-looking, the guidance and the rates that we see, we basically see that above 2 billion has basically become 2 billion. And that's the delta which is the answer to your question.

Right. Makes sense. Thank you very much.

The next question is from Anke Rengen with RBC. Please go ahead.

Thank you very much for taking my question. I just wondered about your IoT adjustment. I mean, bringing it down from 12 to 11.5 to 12 is relatively small in absolute terms. Why did you think it was necessary to revise the target at this stage? And then with respect to the adjustments and 23, Are you planning to continue to adjust now for the distributed profit going forward? Thank you very much.

Thank you, Anke, for this. Listen, this is something, the introduction of extraordinary and therefore leading to a distributable income. was only for 23. We have 23, let's be fair, we had some exceptional elements, which basically fall at the same time. Yes, we had Bank of the West sale, then we had the ECB changing the terms of its TLTRO, and then we basically allowed it to handle the single resolution fund, we allowed it to handle heritage litigation. So that's basically it, but now we will return to the run of the mill, and so that's basically what we will see, and it's that run of the mill that we will continue to grow on which we will pay the dividend and so forth. So that's on the extraordinary items. And then on the ROT, listen, you know us. So we have that guidance. We know that intrinsically we are diversified. So headwinds we can compensate. We see some headwinds on the horizon with slowing GDP. So that is basically what we can compensate. But we wanted to be transparent that these two events might weigh on it. And yes, that we are prudent, but we prefer to guide it with you. And we know that by 26th.

we will have compensated thank you the next question is from a delphin leave it at JP Morgan please go ahead good afternoon thank you for taking my questions but to my first one is on 24 because there's no this doesn't seem to be much guidance for 24 Just wanted to confirm that your 8% increase per annum on net income also applies to 24. And then my second question is on the revenue growth. Just wondering, because in 23, your revenue growth in your core divisions were around 2.5%, and now you're targeting by 25, more like mid-single digits. So there is like a decent acceleration. Maybe can you just give us a bit of color of where you see that change in terms of the volumes or in the different divisions? Maybe is there, I mean, how much of the one-offs or negatives on real estate or some of the divisions are going away? If you could just like explain a little bit that step up that we are going to see in 24-25.

Thank you.

Thank you for your questions. Listen, you know what we typically do in guidance is we give a guidance over a period. And so that is what we've done. I mean, I know there are banks that are forward guidance that give you every quarter and the likes, but that's not what we do. We have a long-term plan. You've seen that we basically deliver on that plan. So that's basically where we stand on the outlook. Then on the NBI, if you look at the overall NBI, what do you see? Well, you have evolutions. If you look at it, indeed, if you take CIB, there is a pickup because we really see that the model, the integrated model, is really stepping up and the role that we play. So that's what we see. And then on the other activities, indeed, there will be a part coming from the fact that there is personal finance, there is real estate, that will basically happen. So it is indeed a rebound that we will see on IPS.

So that will be my answer, Delphine. Thank you.

The next question is from Tariq Almejad from Bank of America. Please go ahead.

Hi, good afternoon. So you said in your introduction remark that you want to send a message of confidence to the market, but I mean, you did just the opposite by the small downgrade of the ROTE. I mean, I understand you want to be transparent, as you said, but you also said you can easily offset some of these elements. I mean, Lars, what you can really go through is that a lot of these headwinds that you mentioned that would push you to cut EPS by 1%, is actually 2024 events, the Belgium note, and the other elements. So what really is impacting 2025 to impact the ROT of 2025? And the second question, I mean, Q4 has been quite poor in most of the divisions, and we won't go through them all, but if you have any area that you think should recover quicker than the other, one, and that would be really seasonality and maybe just some market effects, just to have a sense of what's the trend in the coming quarters. Thank you.

Well, unfortunately, away from the, let's say, the Belgian bond, the decision by the ECB not to give any payment on interest on reserves and the Belgium tax, the banking Belgium tax are both to stay for forever. So they cannot be, I would say, just quantified as 24 events. This is going to stay in 25, 26, 27. This is the way it is. The central bank is not going to pay any more, in my opinion, interest on reserves. And again, the banking tax in Belgium is going to stay. So unfortunately, and this is the bulk of the impact. The bond is not the bulk. The bulk are those two elements. So unfortunately, they are impacting as well 25. This is unfortunate, but this is the way it is. To some extent, you are mentioning that we are marginally adapting the target. This is true. But when we started with the plan in 22, we said above 11% as an ROTE and we were committing that well, it was above 11, but under certain circumstances, it could be close to 12. And then we exited Bank of the West and thanks to the redeployment of the proceeds, we said, okay, 12. So this is the same kind, I would say, of approach. And, well, being transparent, we have to give the information. And the business model, the diversification, can clearly counterbalance a European economy that is slowing slightly more than expected, even more than slightly more than expected. But at the end of the day, if you had a This slowdown that was unexpected and those negative news, let's say, Central Bank, Belgium banking, Belgium taxes, at the end of the day, it's slightly more difficult. So this is why we are adapting, I would say, the target. And, well, only 26 with the rebalancing, the complete rebalancing of personal finance and the the real estate business will be able to counterbalance completely those two effects. So this is why we postponed the 12% target in 26, knowing that, of course, starting in 24, personal finance is going to be one of the business that will start to rebound. Probably real estate will start to some extent to rebound, of course, in 24. Yann Gérardin for sure will comment around the fourth quarter for global markets and maybe looking globally at the situation in 2024, the beginning of the year. So, well, I would say elements that will progressively rebalance the trend of the fourth quarter that is, well, weak, but that is not to stay. So this is the vision we have around this situation. Maybe Yann can comment on the global market

Good afternoon, Tariq. As far as the global market is concerned, when I do analyze the performance of a given business, obviously I do look at the currency impact, Eurodollar in that case, the business mix and geographical mix impact, and then the true performance impact. So I guess you are more interested by the FICC performance than by the Stellar Equity performance. So to come back on FICC, what is FICC? It's a combination of Forex, Rate, Credit and Como in three different regions, EMEA, Americas and EPAC. Fair to say that our FICC is very different from the average FICC you have been looking at since the early announcement on the other one this morning. Our FICC is much more European and much more macro and como oriented than the other ones. which means that last year we had a very strong business mix and geographic mix effect, because last year all the action was happening in Europe in the rates and in commodities in a nutshell, while this year specifically in Q4 the action was more in the US and more in the credit world. So that's why last year, Q421 to Q422, we posted a stellar performance in the FICC world, triggered by what I just described, a combination of a business mix, geographical mix, impact, together with a strong rule. performance and we were significantly above last year all the other players in the FICC world. This year the business and geographic mix plays a disadvantage and certainly in Q4 hence this performance. As far as the future is concerned, I am quite sure that what is happening on the geospatial environment inflation side, the macro activity and the commodity activity will normalize in the near future and will be less subdued with what it has been in Q4.

Thank you.

The next question is from Jeff Dawes with SG. Please go ahead.

Yeah, good afternoon, everyone. It's Jeff Dawes here from SockGen. A couple of questions, again, on targets, but a very quick one. You reiterate more or less the EPS target of being 40% above the baseline of 2022. If there are more headwinds, the quickest way to stabilize that is obviously to increase the buyback envelopes. Is that something that would be a consideration if more headwinds come up over 24 and 25, that you could increase the buyback envelope and just stabilize the EPS target rather than look at the ROTE target, which obviously can be moved in different ways? So that's the first question. Second question, consumer is something you've mentioned as one of the headwinds that you've already identified. Can you just give us a little bit of color on the duration of the wholesale funding there? Obviously, I don't need specific numbers, but just is it more or less than a year? How quickly is the funding cost benefit going to spill over into the net interest income and revenue on the consumer line? And then finally, just a very quick one. The portfolios of MPLs held for sale come up again and again. Are they opportunistically being sold or are they on market right now? Is that something we should expect to see? So sorry that's three, but thank you very much.

I'll take your consumer headwinds. So as you know, we basically aim to finance a bit at the same duration as that we redeploy. And so if you look at it, you have some parts, if you take the credit card and the likes, they are rather short funding, and there the impact should come. Right. But then with the new portfolios, which are like either the car financing, it tends to be a bit longer. So yeah, that's a bit the mix. So you should think of it as in the analogy of the duration. So it depends a bit on which activity it is, but on average, a tad more than a year is an orientation. Perfect. On the targets, as you know, when it comes to the redeployment of capital, For us, as you know, the most efficient way is redeploying it. Even the most efficient is organic because organic, it's immediate bottom line. You know the risk that you take and the likes. Then next to that, the bolt-on acquisition is also very complementary. So our intrinsic objective is to stay to that track and then the EPS will follow.

Okay, so no temptation to front load buybacks because that's the quickest way to get DPS benefit and the numbers straight away.

As I said, Chief, for us, we want to accompany the economy and that the best way we can do it is by redeploying it this way. Jeff, you had a third question as well that I didn't fully capture. What was your third question?

It's a very quick one. As you go through the divisions, in a lot of places it mentions small marks on portfolios of NPLs held for sale. Are those being packaged up to sell kind of immediately, or is that just an opportunistic thing?

It's an opportunity. It's basically, we mentioned them, it's basically those that weigh on the cost of risk. So as a quick reminder, so we have these kind of heritage loans. They are provisioned, but in equity. And so the moment you decide to sell because you see there is an opportunity whatsoever, at that moment you have to recycle. So it's not something new, it's a recycling. So yes, with what we see in the market, because the opportunity is if we get it out of the balance sheet, well, we basically optimize the balance sheet. But there's nothing else to read into it, Jeff.

Perfect. Thank you very much, gentlemen.

The next question is from Chris Hallam from Goldman Sachs. Please go ahead.

Yeah, just two questions from me. So first of all, the 4.6 billion of capital that you intend to deploy, can I just double check? Based on slide 44, that's all going to happen this year, right, in 2024. And so could you give us an idea of the phasing through the year? Should we assume that's gradual or is it back-end loaded? And would you be comfortable – I guess if you want to give a guidance on what kind of run rate revenue uplift we should assume starting from January the 1st, 25 from that. And then secondly, just to come back to the release yesterday, could you walk through how you come to that decision to redetermine those three items as extraordinary? So should we assume future adaptation costs will normally be labeled as extraordinary, or how should we think about the difference between exceptional and extraordinary?

Looking at basically the Swiss franc mortgages, those portfolios are quite old. Half of it basically are coming from a subsidiary of a subsidiary of personal finance that is closed now for many years. Progressively, we came across, I would say, adverse news the French just decided for many years in a quite positive way looking at the situation, positive way for us and then in 2018 progressively this was I would say rebalanced and at the end of the day we decided to get rid of the whole situation after the last decision taken in October of this year. So it was November or October. So this is the decision. Down to that moment we were in a kind of controversial situation but at the end of the day we came to the decision that we had to cover the whole situation. So we had to qualify as extraordinary items books that were belonging to the end of the 2000 years. So this is why we qualified those provisions as extraordinary. And in a parallel mode, we had for different reasons the same evolution with the Polish, I would say, portfolio in Swiss francs, booked into the Begezet Bank we bought in 2015. It's a bank that was I would say having those portfolios, we didn't originated as BNP 500 portfolios, but progressively it went the same way. And well, it appeared progressively in 23 that we have to cover the book completely, so 100%. So again, we get rid of the full exposure. So this has nothing to do, I would say, with something that is new. It's that progressively we were provisioning, covering the exposure, but with the expectation that ultimately there will be a kind of balance exit. On the contrary, in 2023, progressively it appeared that the exit couldn't be balanced. So at the end of the day, we covered everything. The important point is that doing that way, recalibrating to some extent those, I would say, provisions, including at the very beginning of the year 23, we kept the level of payout to shareholders. So in fact, what we did is a way to protect the earning per share. protect the dividend and the return to shareholders. So this is the story around this, I would say, portfolio. So this is the major, I would say, hit in the fourth quarter of 23. And it's coherent with the fact that those portfolios are very old and they belong to businesses that are That was discontinued years ago. So it's something that belongs to the past story. They were originated before the year 2010, 11, 12. This is very old stories. Part of it, we got them through an acquisition. Part of it through, I would say, second year subsidiary of personal finance. So this is the story around those books. Looking at the... the redeployment of the proceeds of Bank of the West. Initially, looking at the economy and the trend of the economy, we had the feeling that, let's say, two-thirds of it could be redeployed through additional organic growth. The fact is that we're looking at, especially in Europe, but not only in Europe, at an economy that is moving at a slower pace. uh it's still feasible to grab additional market share but you cannot expect to to move that far we have to be uh conscious that uh potentially cost of risk could could grow so we have to be very uh very disciplined in the way we we are redeploying this equity in terms of organic growth, especially in businesses like consumer lending. I mean, on the contrary, you have to be quite restrictive in originating those type of loans. The same for SMEs, mass market and so on. So, well, we rebalance, I would say, the approach and we move towards something quite different. one-third organic, two-thirds bolt-on and new business model. This is a more long-term approach, and it takes additional time. So ultimately, the remaining basis point billions to be invested, reinvested, are going to be redeployed more progressively than expected in 24, of course, but also in 25. So this is the situation. It doesn't help. the 25 target. It's clear that if we were in a position to redeploy more rapidly through organic growth or equity, maybe we could have swallowed the negative news coming from the central bank and so on and so on. But this is not the situation. So as always, we are operating in a quite prudent way. And this is going to be redeployed progressively. We need to find the right investments We need to find the right new business model. We need to find the right bolt-ons. And it's not a question only of return on the investment we are doing. It's also around the fact that this has to fit the global business model. It cannot be something on the side of the company, the kind of isolated mode, just because this is profitable. It has to be part of the story of the company. So it takes time. And again, the $4 billion to be reinvested are going to be reinvested again in 24 and 25, postponing to some extent the full benefit of the redeployment of Bank of the West. And this will help, of course, 26.

Okay, thanks. That's helpful.

The next question is from Jacques-Henri Collard. from Kapler-Chevreux. Please go ahead.

Yes, good afternoon. Two questions for me. Actually, I rebound a little bit on the previous question. Why did you remain married to this concept of distributable income so long? Because in effect, to get to $11.2 billion, you had to really release quite a lot of these expenses. And in effect, you are binding yourself and removing a bit of flexibility on capital, which could have been helpful for your investment case, and I appreciate you don't like share buybacks, but still people talk a little bit about it. That's the first question. The second question, if I look at the litigation and the payment on the CH book on personal finance, your litigation section in your annual report is virtually empty. It's very, very full in many other banks. You have quite a lot of detailed aspects about what is being litigated and what. The question is, are we going to get more surprises of things that we're not necessarily aware of? And that's it. Thank you.

Yes.

On the distributable, I don't think we are married to it. On the contrary, we said that the distributable, we would use it for the year, and that's basically what we've done. So next year, 2020, well, this year, 2024, will be the traditional results. So that's basically it. And on the litigation, listen, as Jean-Laurent said, we basically accelerated it. So if you go back to the annual financial statements of 2022 on page 273, sorry to be specific, you basically see the impact. So they were there. What happened is, what Jean-Laurent basically said, during this year, we basically accelerated it and put it behind us. So Jacques, that will be the two answers.

Thank you.

The next question is from Samuel Morin-Smith with Barclays. Please go ahead.

Hi, good afternoon. Thanks for taking my questions. So I've got two, both on personal finance. So firstly, on the slightly revised divisional income target, so thanks for the justification on slide 41, but I wanted to focus on the specialised businesses where you've decreased the CAGR from 4.5%. to 3.5%. I acknowledge that the personal finance restructuring is going on, but this was known last year when you downgraded that CAGR for the first time. So my question is essentially, what else is different in the outlook for those businesses now? And then secondly, it appears that BNP could be twice exposed to potential UK motor finance claims from both a lender's perspective through BNP personal finance, but also through the dealer, whether or not I appreciate both may be small in the context of the group, but in the absence of clear disclosure, could the group confirm any sort of estimated impact? And then just a slight follow-up, just to confirm that the £221 million provision taken today does not relate to that. Thanks.

You have to re-clarify a bit those two other questions, but I'll start with the first one. So indeed, if you look at the targets that we have updated, so indeed there are some, given the environment, that are stronger. That's what we talked about, CIB goes up. And then if you look at the activities, especially if you look at the specialized financing ones, those are deteriorated because the timing of the pickup of personal finance is a bit slower. I remind you that the initial idea was to have it ramping up by 25, but given the environment, what we see basically since December, we said that that return will be 26, and therefore, on the horizon, 25, that is the driver behind that. And then can you rephrase your second question? I'm not sure I grasped it.

yeah absolutely um so it was just on the uk motor finance uh claims that we're seeing um i understand you might have some exposure to that through your personal finance business but also through your car leasing business so um any comment you could give us on the impact no well if you look at the car leasing intrinsically the exposure to the uk is limited and so if you look at the financing going on and personal finance

Again, the exposure we have in the UK is limited, so it is not a material guidance that would be needed on this one. Great, thank you.

The next question is from Giulia Miotto from Morgan Stanley. Please go ahead.

Hi, good afternoon. Thank you. My first question goes back to slide 44. So it looks to me like if everything was exactly to plan, you end up at 12% CET1 by 2025. Now, I'm wondering, would management be prepared to perhaps temporarily drop below 12% should the earnings trajectory perhaps disappoint or should any unexpected higher WA impact come up? So that's my first question. The second question is, If I look at capital generation and I compare BNP versus other European banks, it seems to me that BNP is slightly below, which is what also leads to a lower payout of 60% versus 70% on average. So I know that you want to buy businesses which are capital light and which should increase capital generation. But on the flip side, would you consider And are you actively looking to sell businesses which are materially below cost of equity and which perhaps add noise to your investment case? Like, I don't know, like Europe Med, Poland. I can think of a decent list. Thank you.

Maybe I can start with the 12%. Listen, we want to hover around 12%. Now, that doesn't mean that if there are opportunities, what have you, we cannot be a little bit lower. So that's fine. But we want to hover for all the environments around us. We want to hover at 12%. The reason why we want to do that, basically, if we would temporarily, we could drop a bit below it. But intrinsically, we want to hover at 12%. And why the 12%? And that basically comes to the next question on capital generation. If you look at it the way we are very balanced in that sense. So there is 60% that over the plan we return to shareholders. and the remaining 40%, a chunk of that is used to support organic growth, and a chunk is basically used, yes, if there are opportunities to grow. All of this is basically accelerated by the capital gain on Bank of the West. And so that is it. I mean, we are in a situation, being pan-European, having all of these platforms, that we can redeploy the capital. So that is why we have a good balance. 60% is returned to shareholders. The rest is being redeployed to capture growth. So that is basically that. On selling things, I'm looking at Jean-Laurent. Jean-Laurent, do you have a list of things to sell?

No, but we are accustomed to exit businesses that either doesn't fit the business model or doesn't fit the return on equity target. Bank of the West is a good example. We also exited a number of retail banks in Africa. We're exiting currently a number of countries in personal finance. We exited the same way a number of countries in asset management, consumer lending. Looking at CIB, we are continuously rebalancing portfolios, moving to a certain approach, to other approach. It's a continuous process. If you look at the past 10 years, we totally delivered certain businesses. We ramped up new businesses. We sold franchises. So it's a continuous process. I'm not aware of a business in the BNP Baiba group that is not good enough for the future. If it's not good enough, we are restructuring the business. If we are not able to restructure to get the the relevant, I would say, level of profitability, or if, again, it doesn't fit anymore the business model, we exit. And this is exactly what we are doing, for example, with personal finance. Part of the solution is exiting certain geographies that, for a number of reasons, cannot provide the level of, I would say, certainty in terms of cost of risk or in terms of profitability. And some other points are around extracting a better portfolio a better return. So at the end of the day personal finance is going to be massively a eurozone platform and not anymore a kind of global rich consumer lending platform. And this move is costly, takes some time, to some extent it's complex because you cannot exit so many countries over the weekend. you can do it, but at an extraordinary price. So we tend also to move and to manage those situations the right way in the best interest of our shareholders. So, well, it's a discipline, and we will continue that way.

Thanks.

The next question is from Pierre Chaudville with CIC. Please go ahead.

Yes, good afternoon. Can you hear me? Yes, we can. Okay, thank you. First question, a quick focus on real estate, which is a business that we didn't know very much. Are you experiencing loss today, or it's just a big decrease in revenues and contribution? And what do you intend to do? You talked about restructuring measures about this business. What do you have in mind? Second question is regarding the adjustment of your profitability. We all know that you are very, very good in reducing cost. Didn't you find any leeway to cost cut a little bit more just to balance the decrease in revenues? I was surprised by that because generally you know how to industrialize. First question is about the CIB. I would like, Jan, to explain a little bit more. How do you intend to gain market share? Because now we all see that investment banks that experienced difficulties in the past, and of course I have in mind Deutsche Bank, are a little bit in a better shape And we have seen, for instance, that the Chabon this morning increased revenues perspectives from 30 to 32 billion euros. And what is exactly now the leeway you have to increase your market shares, and particularly in global markets with a very fierce competition? And regarding the commercial banking, retail banking, could you tell us a little bit more about the development of your strategy regarding digital banking, Hello Bank, but also in Europe, or do you see that in Italy, etc., in order maybe to improve your profitability, which remains quite low in retail banking area, and maybe a better capacity to treat the mass markets online and the wealthier individual in branches. Thank you very much.

Good afternoon, thank you for your question. So as far as CIB is concerned, the market share gain story, as you know, a very long story because we took market share every year in the last year. And by the way, we took market share in 23 as well because the last estimate I got from the consulting firm coalition expecting a decrease for the CIB revenue industry by 2% in 23 in euro as we posted a plus 0.6% It really shows that in 2023, again, on the full year, we gain market share. We gain market share in global banking for sure. In global market, at the end of September, we gain market share as well. Despite the fact that the business mix was playing against us, we'll see when all our competitors will have published what it means for the full year. For the future, I'm very confident that our capacity to gain market share on the basis of the recipe and discipline we used in the past will still be powerful. If you take global banking, for instance, the combination of increased country focus in every country where we are present in Europe mainly, Germany, UK. Scandinavia, Switzerland, where we have room for improvement, a significant one. For instance, this year, we are the fifth IB in Europe, despite the competition you mentioned, and the first European bank in the IB business in EMEA. We are improving our transaction making business every year by investing. As far as global market is concerned, the global equity franchise encompassing cash equity, prime brokerage, and equity derivatives is brand new. It's its first year. Not delivering everything it can yet, and I'm sure that in the coming years it will The momentum will be even more powerful. Security services, we are the fifth security services on a worldwide basis. We are gaining new mandate and very large one every quarter also. So I'm very optimistic that the scale we reach leveraging the integrated model of the bank will help us to keep on delivering the kind of market share we have been posting quarter after quarter and year after year in the past.

And listen, maybe I can clarify your question, Pierre, on real estate. So, as you know, for us, real estate is a very complementary business with all the other activities that we do in banking. And therefore, the P&L also reflects this. And this is one of the reasons why we don't publish the P&L of real estate itself. It's part of the larger entity, WAM in English. So that's a bit the part. The one thing I can tell you is that we like the business, we're going to keep the business, but we use the fact that there is a lower demand to review and optimize the overall structuring in the future. So that is what it is. We're really fully with that. and so by 2026 i put it the other way around we could see an improvement which will be above 200 million and i remind you this just i know you know pierre but i tell it also to the other people this is our real estate department yeah this is not our portfolio in real estate book and so on this is a division which is basically impacted by the lower demand that's what you see We're very happy campus with this activity. We use it to adapt it to even better positions going forward, and there would be a return of up to 200 million going forward. Then when it comes to your costs, and so the thing is, If you want to manage the group, you really focus them on growth, going after clients. And the way we do this is by basically focusing them on JOLs. So saying we orient to grow at marginal cost, but at the same time, if some investments are needed to do so, that's what it is. So JOLs is what we go for. JOLs is what we deliver. JOLs is what we reiterate. So that's basically what we go for. on digital i'll maybe give a reminder of where we stand on digital what we have in in our networks is we basically segment the delivery yeah so if you require very uh basic uh transactions you have nickel then you can go up with easy go which is then basically around hello bank and you can go even one step further which is then you can have the branches and support so we have segmented through tools, therefore optimize the distribution of our services. And that, we will then even step that up forward. So that's the system that we have. We will then further step it up using artificial intelligence, as you know. So we already have it. We will further embed it. We have now the tools to do it. We are optimizing it into the segment, and it basically covers many aspects. It covers the revenue generation, because we will have a better read on what is going on. We will have better client experience. client experience think about the optimization in the call centers we will have operational efficiency because things will be done in a standard and industrial way and also on risk management it gives us a better read so that is a bit the segmentation that we do and how we blend AI in it and to go back to commercial personal finance you have to remember that the model for BNP Paribas is not mass market

small SMEs, it's very much around mid-caps, innovative companies, wealth management, private banking, affluent individuals. So it could be Italy, France, whatever. I mean, this is the strategy, and we do not plan to expand in the mass market area. The only business that is operating in the mass market universe is personal finance, the consumer lending arm. for which we're having this adaptation program. But looking at the rest of the CPBS, this is very much around, I would say, the best part of the economy, the economy that is growing faster, upper affluent people, private banking, mid-caps, innovative companies, the bank is really focusing at. And probably, if you look at the to the domestic bank because we are so strong in the SME mid-cap innovative company and in private banking waste management. To some extent, we can counterbalance the very negative effect of the rate scenario in the more regular mass market universe. And if you compare the performance thanks to that structure, It's much better and it's very much linked to the quality of the franchise. And this is really the strategy in any domestic market for the bank. We're moving that way in Turkey, we're moving that way in Poland, we're moving that way in Belgium, Luxembourg, France, Italy. So this is really the bulk of it. And again, it's like banking on the part of the economy, on the part of the European economy that is doing much better than average and doing much better... on average, in terms of growth, but also in terms of risk profile. And we'll stick to it.

And this is typically the clients we are working with in the CIB world and proposing them our capital market products.

Thank you very much.

The last question is from Kiri Vijayaraja with HSBC. Please go ahead.

Yes, good afternoon, everyone. A couple of questions from my side. Firstly, on Belgium and the sovereign bond, just to clarify those comments from Jean-Laurent earlier. So is it your assumption that the NII drag disappears from September 2024? Or is there some partial carryover into 2025? I guess I'm asking indirectly, you know, what are your thoughts on the risks? that the Belgium government does a repeat exercise when this particular bond matures in September. And then secondly, on Arval, and we're seeing some quite large price cuts on electric vehicles at the moment, and that's obviously a growing part of your fleet mix. And I know it's early days, but what are your thoughts on Arval potentially needing to take some revaluation exercise or change the depreciation curve reflect this kind of adverse impact on EV residual values. Just your thoughts there, please, on R-val and the EV residual value risk, please. Thank you.

Thank you very much for your questions. Yes, on the OLO, so the Belgian state bond, just to position it a bit. So what they've done is basically they have done an issuance for 23 billion euros maybe that doesn't mean much to you but basically to position it belgium typically in order to to stick to their indebted level they have to issue seven yeah so they've done 23 and they've done it at four percent yeah so this comes to a term at the summer so on one hand i think it is unlikely that they will reissue it entirely But there is a chunk, let's say the 7 billion of this, of 23, and maybe another part. So I'm not sure what amount it will be, but it is not impossible that a part will be reconducted all of that. But as I said, the one that is basically staying is the one, the bank tax that you have in Belgium. And so, so far... it is around 50, so back to the OLO, it's 50 million per quarter that will last until the third quarter of this year, and then we'll see if they end it entirely, if they end it partially, we'll see. So that is that. And on Arval, there is this whole dynamic also on the car pricing. What you see today is that indeed on the electric cars, the repricing is different. But on the other hand, today if you look at the volumes, it is rather the hybrid cars that are there. So from that point of view, if you look at the P&L today of Arval, the electric and the pricing and repricing is not of a concern to the P&L. So, Kiri, that would be my two answers.

Great. That's helpful. Thank you.

Mr. Bonafide, that was the last question. I turn the conference back to you for the closing remarks.

So, thank you very much for your time. And as you know, you can count very much on us to deliver 24 and 25. Thank you so much. Take care.

Bye-bye.

Ladies and gentlemen, this concludes the call of BMP Paribas 2023 full-year results. Thank you for participating. You may now disconnect.