Bnp Paribas Ord

Good afternoon, ladies and gentlemen, and welcome to the presentation of the BNP Paribas First Quarter 2024 results with Jean-Laurent Bonafé, Chief Executive Officer, and Lars Maschenil, Chief Financial Officer. For your information, this conference call is being recorded. Supporting slides are available on BNP Paribas IR website, invest.bnparibas.com. During today's presentation, you will be able to ask your questions by pressing star and one 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 Bonafé, Group Chief Executive Officer. Please go ahead, sir.

Thank you. Good afternoon, ladies and gentlemen. I'm pleased to welcome you alongside Lars for the presentation of our first quarter 2024 results. We'll be pleased to take your question at the end of the presentation. The group delivered solid performances in the first quarter 24, thanks to strong business momentum within the operating divisions. BNP Paribas continues to demonstrate its ability to generate value and confirmed its 24 guidance with expected revenue growth of more than 2% compared to 23, a net income higher than 23 distributable income of 11.2 billion euros. Moving on to the core of the presentation with slide 3, our net income group share clocked in at 3.1 billion euros in the first quarter 24, a very strong quarter for BNP Paribas. Those results are obviously driven by strong performances from our operational divisions, which will be further detailed by Lars. Our revenues were stable at minus 0.4% compared to the first quarter 23 on a distributable basis. All in all, our diversified model has absorbed the negative impact of a strong base effect in the first quarter 23 at FIC within global markets. This base effect will disappear in future quarters as normalization is coming to an end, inducing a back-to-normal trend of global markets revenues. Naturalizing for this seed-based effect, our revenues would have been up 3% versus last year on a distributable basis. Furthermore, thanks to our strong discipline on costs, Our operating expenses decreased by 1.4% year-on-year on distributable basis. The Jaws effect is therefore positive by 1.1 points. We have also announced additional recurrent annual savings of 400 million, whose benefits are expected to begin showing up in second quarter 24. Cost of risk remains at a low level, 29 BIPs. reflecting the strong quality of our credit portfolio throughout the cycle. As a result, our pre-tax income reached €4.4 billion, or 7.4% year-on-year growth, which is quite a strong performance. Having just finalized our share buyback, we are also pleased to report earnings per share of €2.51, higher than last year. Our financial structure is solid with a CT1 at 13.1%. Again, this quarter we provided a clear illustration of our ability to optimize our portfolio with the recent divestment of non-core activities combined with the ongoing redeployment of capital from Bank of the West. So to conclude on this first slide, strong results supported by a diversified model with a solid operational performance of our businesses within each division and a low level of cost of risks. Moving on to slide four, we take this opportunity based upon these strong quarterly results to confirm our 24 guidance within an overall environment that we expect to be more favorable in the second half of 24. First and foremost, our trajectory in 24 will be supported by the growth in our revenues, which we expect to be above 2% versus last year, our continued discipline on costs with positive jaws and our strong risk management culture, keeping the cost of risk below our 40 bps guidance. Hence, as previously announced, our net income for 24 will exceed 11.2 billion euros, which was our distributable net income in 23. Such an increase in our net income will come from the performance of our operational division with well-identified growth levels and tailwinds. On top of additional operational efficiency measures, credit quality of our portfolio and the deployment of capital internal catalysts will play a role. Namely, the current adaptation of personal finance with positive impacts on pre-tax income already seen in 2024. At CIB, further market shaggings and the end of the significant base effect in Europe on global markets revenues. The gradual throughput of lower interest rates will also benefit our specialized businesses within CPBS, reducing the pressure on financing costs. This shall allow us to overcome the after-tax negative impact of regulatory headwinds of €500 million in 2024, as well as the normalization of used car prices impacting Arval. And I would now like to hand it over to Lars, who will take you through the group and divisional results.

Thank you, Jean. Good afternoon, fine ladies and gentlemen. If we browse through the document, I suggest skipping slide 6 with more details on the P&L and a clear demonstration of our solid operating performance with, if I can single out one number, a strong increase in earnings per share, clocking in at 2.51 euros. So if we turn to slide 7, where we give a global view of exceptional items this quarter. In particular, there are two main non-operating items. The first one relates to the reconsolidation of Eucurcy Bank. For the record, we hold 60% of Eucurcy Bank, the remaining 40%. is owned by the EBRD. And I remind you, they are operating at that more than 200 branches. This reconsolidation from January 1st, 2024 represents an exceptional gain of 226 million in the first quarter from an operational point of view. The QC Bank's contribution to our first quarter results include 77 million in revenues and 46 million in pre-tax income. The second element is a capital gain on the sale of 80% of our personal finance activities in Mexico that have been concluded in March as part of PF's strategic refocusing on the Eurozone and core countries, which represent an exceptional result of €180 million. These positive impacts roughly neutralize the usual adaptation costs that we have as well as the impact of IS29 linked to the hyperinflation situation in Turkey. Let's now swipe to slide eight on the performance by operating divisions, which illustrates clearly the strength of the model, the diversified business model. Overall, revenues were stable year on year in first quarter 24 compared to a year ago. In a normalized market environment, the CIB revenues were resilient, down 4% year-on-year, with a record quarter at global banking, plus 6%, a very good performance at security services, up 7%, with strong volumes and good resilience in global markets activities. They are reducing by 12%, but are supported the continued growth of our equity business and the strength of our prime brokerage platform. As expected, our FIG business was impacted by a significant base effect in the first quarter 2023, given the high demand in Europe for rates, forex, and in particular also commodities. This base effect in Europe is expected to end in the second quarter. When we switch to CPBS, The first quarter was positive with overall stable revenues, supported by the good performance of commercial and personal banking, up 1%, driven by growth in fees, up 4%, as well as increasing net interest revenues, up 5% year on year, when setting aside the negative impact of the Belgian government bonds, the ECB mandatory reserves, and the inflation hedges. representing around 150 million euros this quarter, but that will taper off towards the end of the year. Thirdly, also a resilient performance of the specialized business, so the other part of our CPBS, minus 0.7% year-on-year, supported by the early recovery of personal finance with higher volumes, notably in mobility and improved model. Arval is still being impacted by the normalization of used car prices, though still at a high level. So lastly, a very good performance this quarter from the new digital businesses. So this sums up CPBS, and let's move to the third division, IPS, which also saw strong performance in revenues, up 4% year-on-year when we exclude real estate and principal investments. In particular, wealth management and insurance delivered strong revenue growth of respectively 5% and 4% year-on-year. If we now turn to slide 9 and let's look at the costs of the operating divisions. Overall, costs are down, as mentioned earlier by Jean-Laurent, by 1.5% year-on-year. Thanks to strong discipline on costs, operating expenses were contained despite the prolonged inflationary context. If we look at the divisions, CIB, operating JAWS were under control with global banking and security services delivering very positive JAWS effects, 6.5 and 7.8 points respectively, combined with a significant decrease at global markets of 8% year-on-year. Second division, CPBS, contained growth in its operating expenses. If we look at the commercial and personal banking, very positive jaws for BNL and Luxembourg, whereas Belgium was impacted negatively by the banking taxes that we talked about at the end of last year. Within the specialized businesses, costs support growth with positive jaws effects for personal finance and leasing solutions. Thirdly, operating expenses were stable at IPS with very positive jaws effects of 3.9% when we exclude real estate and principal investments. So if we focus a second on costs and we turn to slide 10. In our plan 2025, so GTS 2025, we committed to a Jaws effect of at least two points on average and announced cumulative cost savings of 2.3 billion recurring between 2022 and 2025, so recurring basis as of 2025. we are well on track to deliver on both accounts. During the first quarter, costs have evolved well below inflation. Moreover, and in order to get there, in 2024, we are accelerating and enlarging our operational efficiency program with a further cost saving of 400 million to begin paving off in the second quarter, resulting in total cost savings in 2024 of 1 billion euros and stepping up the total recurring savings to 2.7 billion. We are implementing this while continuing to support growth of our businesses and investing in our future. Basically, the 400 million additional savings offset the impact of inflation. Our industrial priorities remain clearly mutualization via near and offshoring. It also is continuing automation, robotization, digitalization Thirdly, acceleration in the rollout of the cloud and the use of artificial intelligence for optimization and flexibility in our premises. And lastly, discipline in managing our external expenses. So we've talked about the top line. We've talked about the cost. Let's now talk about the cost of risk. And let's do this by looking at slide 11. So the trend of the past five years provides a clear illustration of our strong risk management culture, as also mentioned in the beginning by Jean-Laurent. Our risk management has been quite efficient on two main contributors in terms of cost of risk for BNP Paribas, namely personal finance and BNL, thanks to repositioning of the portfolios therein. So our exposure, moreover, to commercial real estate is quite low, representing less than 4% of our portfolio, and With the sale of Bank of the West, we hardly have any exposure in the United States. So let me also stress our pretty high stock of so-called Stage 1 and 2 provisions that are close to 5 billion euros. I let you peruse the cost of risk of our divisions on the next slide. You will basically observe they are characterized by variations on the theme, quote-unquote, low cost of risk. If with this, so we talked about the top line, the cost, the cost of risk, let's also look at the capital. So if we look at the capital redeployment that we are so far, as you can see, things are well underway. As announced, we will have invested relatively half of the total, so 55 basis, so half of the total. We expressed the capital to be redeployed of Bank of the West. as basis points of the common equity T1 ratio. So we have 110 basis points to redeploy. And by the summer, we will have done 55. And I remind you that the return that is generated by that in 2025 will be above 16, so 1.6%. So the redeployment took place with a variety of organic and inorganic opportunities having materialized in the past two years. To make it simple, one-third have been redeployed organically, particularly at CIB to support clients. Two-thirds have been redeployed through partnerships and bolt-on acquisitions. Our goal is to promote the long-term interests of our franchises and our shareholders, meaning that these investments should provide long-term value to the group by consolidating its positions in growth areas or bring scale and complement our product offering and our team's expertise. Several transactions have already taken place in the insurance sector, and we just signed an agreement with Fosunto Acquire. It's around 9% stake in Aegeus, whose subsidiary, AGI, in which BNP Paribas owns, BNP Paribas Fortis owns 25%, exclusively manages property and casualty insurance, as well as life insurance distributed by BNP Paribas for this. Another thing is mobility. It's also a strategic sector for us, as you know, and we are growing our transversal mobility initiatives thanks to partnerships and bolt-on acquisitions involving personal finance, Arval, Cardiff, CID. Furthermore, strong assets and technological platforms, we have been able to move on Let's take Flora in payments or Cantox on Forex, and they allow an expansion of the offering. Lastly, there are aspects like what we've done with BPOS Bank in Belgium, a way to improve the operational efficiency of our retail activities through the integration of external networks. So good progress is being made and opportunities are being explored organically or through external growth. Having said that, so the redeployment of the capital, let's turn to the capital. Let's go to slide 14. And as you see that at the end of the first quarter, our common equity tier 1 clocked in at 13.1%, a solid level well above our objective to fly at 12%. Compared to year-end 2023, there is an evolution of 10 basis points down, resulting from the combined impact of, on one hand, organic capital generation, net of charges, changes in the risk-created assets in the first quarter, so that's basically generating 30 basis points. Out of this, there is, of course, setting aside the distribution in the first quarter, that being saying 50% in cash, 10% in share buyback, so minus 10%. 20 basis points. So there is 10 basis points uptick. Then there is the capital redeployed from the Bank of the West sale. We talked about that we have progressed by five basis points. So there's five basis points that are consumed. And then there is the regulatory effect that's requiring an updating of models as we had announced at the year end. So there is 15 basis points that is consumed. And that's basically in the anticipation of the CRR3 that is to come. And so other impacts on the ratio were limited overall. So then there are many other ratios. I'll basically skim through that rapidly. You have the leverage ratio. It clocked in at 4.4%, well above our aim to fly at 4.3%. Our liquidity is very strong, so we are flying at 134%. I remind you, well above where we have to be. So having said that, we've talked about the elements of the P&L. Then there is also other things. There is the environment. And so you know that ESG is very important to us. That's what you see on slide 15. And so last quarter, we showed the strong acceleration of our commitment to financing the production of low carbon energies and exit fossil fuels. As an illustration, we selected this quarter major innovative solutions In each of our three divisions, major debt raising in CIB, a combined offer of services in mobility of CPBS by Arval and Leasing Solutions, and the launch of the first global equity fund dedicated to the net zero transition. So that is a bit more detail on why the results of the first quarter are comforting us in reconfirming our overall guidance. So if we now look at the divisions, so if you follow me and we go on to slide 17 where we start with CIB. What you have seen this quarter is our unique CIB model once again at work, delivering a strong performance thanks to its unique and very differentiated positioning. If we look first at global banking, revenues at 1.5 billion euros posted a record quarter. I'm not bragging about it, but that's how it turns out to be. and it is up 6% in EMEA and the Americas. Revenues in particular were up sharply in the capital markets platform, particularly in the Americas and EMEA. They posted also strong growth in transaction banking, in this case, particularly in EMEA, with virtually stable deposits in cash management during the quarter. If we then turn to financing, The financing activity was very strong in India on the bond markets, market up 26% compared to a year ago, and in syndicated loans, also up 14% compared to a year ago. Finally, loans at €178 billion were down 1.4% compared to a year ago, but up 0.4% compared to the fourth quarter. Deposits at €2.17 billion continued to grow. So that's the first part in CIB. If we now move to global markets, the work accomplished over the last four years, let's say since 2021, with the successful development of the prime brokerage activity and the creation of exams, so cash equities, has allowed global markets to leverage this quarter on the sustained activity in equity and prime services. Within FICs, A tangible increase in credit markets has partially offset the decline in the macro environment amidst a normalization reflecting a base effect versus the first quarter 2023. Such a base effect is expected to end the next quarter. So this is the last time that we have this base effect as markets started to return to normalized level in the second quarter of 2023. I will come back to that in detail on the next slide. So if we end CIB with security services, the first quarter performance confirms the relevance of the business model with the benefit from new mandates kicking in in the first quarter. With outstandings of 10%, thanks to the positive market environment, revenues went up by 7% year on year. I would call that solid performance. Overall, thanks to a low cost of risk and operating costs well under control, as I mentioned before, CIB pre-tax income reached a significant level, 2 billion euros, up 2.4% year on year. If we now take a look at slide 18, where we focus on the FIC activities, as I mentioned. So FIC revenues in the first quarter, 24, when you compare it with the first quarter in 23 and 22, those revenues are down. And I remind you that 23, so the first quarter, 22 and 23, formed a very high base, in particular for European activities, due to the exceptional geopolitical and financial conditions over these five quarters in Europe. But still, BNP Paribas FIC in the first quarter, the revenues are on average significantly higher than the revenues of the other quarters. If we look at the history since 2021, which shows our continuous market share gain. In particular, when you combine the fact that we are a leader in Europe with 60% of the fake earnings generated in that region, and that that region has been impacted by the normalization of rates, Forex, in 2022, so a comparison quarter on quarter doesn't really make sense. Having said this, intrinsically, the story of global markets is all about continuing to take market share quarter after quarter. As such, this will continue in 2024, especially in EMEA. Furthermore, we will also continue to invest in the Americas and in credit business. So to conclude, we have a platform with our FIG activities that is very well positioned for growth. So that's CIB. If you now stick with me and we turn to slide 19, where we look at CPBS. So CPBS delivered solid results for the first quarter with good business momentum offsetting headwinds. Indeed, the performance of the division has been marked by those headwinds that appeared during the second half of 2023, with a total negative impact of nearly 150 million euros in the first quarter, of which around 50 million euros related to the French inflation hedges, 50 million related to the Belgian bonds, and 50 million euros to the mandatory reserves of Frankfurt. So this in line with our previous assessments as we made at the year end. Overall, these headwinds will weigh on our first half results and will gradually taper off in the second half of 2024, in the third quarter for French inflation hedges, in the fourth quarter for the Belgian bonds. Adding to that, the normalization of used car prices for Arval also weighed on the first quarter performance. On the other hand, we have seen positive drivers this quarter. First, positive business momentum with commercial and personal banking supporting intrinsic growth in net revenues, up 5% year-on-year, setting aside the identified headwinds. In addition, our capacity to generate value with fees has been confirmed. Fees were up 4.4% this quarter, supported by a good performance in France and Europe Med. Talking about Europe Med, we are now able to regain control of our commercial and personal banking activities in Ukraine, as mentioned before. Regarding the specialized businesses, let me point out a few positive drivers. Overall, the increase in financial margin and margin on services driven by high volume. For personal finance, the shift to mobility is materializing with increased volumes in relation to our partnership with Stellan. Margins at production are improving, supporting growth in revenues. Lastly, our new digital businesses confirmed their role as a new client acquisition engine with the continued expansion of our client base at Nikon. Overall, CPBS revenues clocked in at 6.7 billion euros in the first quarter, stable year-on-year, and so driven by, first, the good performance of commercial and personal banking, up 1%, And second, the resilience of the specialized businesses down 0.7%. As a result of dynamic growth at specialized businesses, loans at CPBS were up 1.8%. Deposits down 1.7%, mainly driven by the impact of the Belgian government bonds. They were stable overall versus the fourth quarter, 23%. Now, moving into some further details about the business drivers of commercial and personal banking in the Eurozone. In France, good business resilience in a normalized environment. Net interest revenues were stable, excluding headwinds. Our exposure to regulated savings remained low compared to the market. As well as the proportion of our demand deposits in our total deposits, which remains high compared to the market. What is also important is the confirmation of our strong capacity to generate fees. So up 5%, driven by our ability to cross out with the insurance activities or to leverage on our strong presence in cash management. As announced, net interest revenues were impacted by inflation in the amount of negative 54 million euros in the first quarter, in line again with our estimates and what we've mentioned. If we go to Italy, the positive impact of interest rates on deposit margins for BNL was quite substantial, with an acceleration this quarter due to growing volumes, in particular on corporate deposits. Net interest income grew by 13.7% year-on-year. Fees were stable. If we turn to Belgium, results were significantly impacted by the government bonds. Deposits were quasi-stable when excluding the impact of the issuance of the Belgian government bonds, and I remind you, they are maturing in September of this year. Excluding headwinds, net interest income in Belgium were down 1.7% on resilient performance considering the very competitive environments on loan margins in that country. Fees were down 2.5%, with higher financial fees being offset by lower banking. If we turn to Luxembourg, net interest revenues up 9% year-on-year. If we move to Europe Mediterranean, we see good business momentum in Poland supporting the growth in net interest revenues and increased fees in Turkey. You can see the negative impact of hyperinflation in Europe Med pre-tax income through a decrease 76 million euros compared to a year ago. Also, If I can ask you to look at slide 20, where we provide some further color on our ambitions in the payments and flow initiative, which has basically joined CPBS and CIB. And so we basically step up our ambitions that we announced before. But first, let me remind you why we consider payments and flow as a strategic initiative. Payments are at the cornerstone of a banking relationship, serving a broad range of customers, Individuals to corporates, small, large, supporting them in their day-to-day businesses through secured processes. Payments are also an incredible source of data to build value-added services, again, for individuals or merchants. But more importantly, this is a fee business, partly recurring but also linked to transaction volumes and the source of liquidity. Hence, a business that creates value for our clients and shareholders. Second, BNP Paribas is a key player in the payment ecosystem with a unique position. Let's start with our European leadership in cash management. According to the latest ranking by Coalition Greenwich, we are number one in penetration rate with European large corporates at 51%, widening the gap with the number two and number three competitors. Our pan-European presence allows for the full coverage of retail payment services in the countries. In the context of the GTS plan 2025, BNP Paribas had announced an initial objective of additional revenues linked to our payment and flow initiative of €600 million compared to 2021. This target has been reached. and even exceeded two years in advance, and we are pleased to confirm that we have set a new target of additional revenues linked to this initiative at €800 million, so topping it up by €200 million. If this concludes CPBS, let's turn to the third division, IPS. During the first quarter, IPS revenues grew by 0.8% and by 4.2% when excluding real estate and principal investments. showing the very positive business momentum of insurance, asset management, wealth management. Starting with insurance, revenues were up 4.2% and gross rate and premiums were up 27%. In savings, activity was sustained thanks to a sharp increase of 34% year-on-year in gross asset inflows and good business drives, particularly in France, supporting the growth in net inflows. Good performance also in protection, thanks to the rollout of new partnerships, as well as the continued expansion of existing partnerships. Dynamic business activity and revenue growth at wealth management and asset management, with revenues up year-on-year, respectively 5% and 2.6%. Supported by the relationship with high-network clients, internationally and from our commercial and CB banking networks, Wealth management saw net asset inflows of 8 billion euros, combined with a strong market performance, pushing overall assets under management up by 4%. Client transactions rebounded, driving fees upwards. Strong business drive with asset management would grow in assets under management, supporting higher fees. Of note, a sustained net inflow of 7 billion euros, driven by money market and passive On the downside, the continued downturn in real estate combined with a base effect for principal investments. So that's the synthesis of IPS. And then if you look also at the key element of it on page 22, I let you review the trend in global assets and the management. You have a clear representation of the main drivers we just described with good net asset inflow of 17.7 billion euros, combined with a strong market performance impact of about 27 billion euros. Overall, our assets under management clocked at 1.3 trillion euros driven by market performance effects and net inflows. I now hand it back to Jean-Laurent for concluding remarks.

Thank you, Lars. To conclude, BNP5 has delivered a strong first quarter 24. thanks to the solid performance of the operating divisions. We confirm our 24 guidance, as well as the strength and agility of our business model, and as a solid bank committed to the energy transition and dedicated to serving clients who are entering the new phase of the economic cycle in a pole position. Thank you for your attention. We look forward to your questions.

Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad. Please lift your handset. Ensure that the mute function on your telephone is switched off and that you are in a quiet area to maximize your audio quality. We will take questions as many times as permits. Again, please press star 1. To ask a question, we will pause for a moment to allow everyone to signal for questions. The first question is from Tariq Elmayad with Bank of America. Please go ahead.

Hi. Good morning, everyone. Two quick questions from me. The first one, so I wanted to come back on your net profit guidance for 24, and to be honest, more importantly on the broad momentum in your earnings into 25. So if you look at Q1, so all indicated it's a trough. So even if you analyze that level, you are still well above 11.2. And then as indicated in many times in the presentation, the second half should be actually much better because of few elements, you know, Belgium retail, French retail, from Q3, the FIC, personal finance, the cost measures, and maybe some more capital gains. So, I mean, would you be comfortable to actually be more precise on your 24 guidance? I mean, to be honest, it's not about the 24 again I'm saying. It's more to be comfortable about the base you will grow into 25 because if you deliver something around 11.2, that means you still have to do heavy lifting in 25 versus 24 to deliver your CAGR you've disclosed with the full year results in 23 of 8% net profit. I mean, so this is the first question. I mean, unless I'm having something, I'm missing something, so you can tell us where you think could be some offsets to stay around 11.2. And the second question is on AGEA's deal. I mean, I would like to hear what you say about the rationale for this deal. I mean, I understand you want to strengthen your partnership in Belgium by securing the shareholding of AGEA's. But, you know, isn't that fitting perfectly your product factory growth story? You know, I mean, with high multiple, highly accretive business, if you have to do a full takeover, what would be the constraints? What's your strategy long-term more than having just a 9% stake? Thank you very much.

Yes, if you look at the 24 guidance, I mean, clearly... Our internal search scenario is ending up clearly above 2023. So saying that 24 net result is going to be above 23 is kind of a minimum. If you look back at the first quarter, and if you correct the base effect from global market, in fact, the top line is growing at more than 3%. And 3% could be considered a kind of central scenario, even if we are committed to deliver more than 2%. So clearly, the central scenario would end up above the last year net result. This is quite obvious, as you said. And again, you can deduct that from the intrinsic, I would say, strengths of the first quarter. Again, if you correct from the base effect that is linked to the global macro situation within global market. Last year, it started at the beginning of 2022 and it lasted until the beginning of 2023. If you correct that, yes, we're growing at more than 3%. If you look at it that way, considering that the second half of the year should be more positive for BNP 5.5 because of the rate scenario, because of a kind of pickup of the Eurozone economy, and so on and so on. Yes, the central scenario is clearly above the 23-year net result, distributable. So, as you said, it helps, I would say, getting to the final stage Objective, that is the 25 objective. So, yes, you are correct. We are above that kind of minimum that is the 23 net result. Looking at AGEAS, well, buying, let's say, 9%, because AGEAS is the owner of 75% of AGI, the Belgium insurance company. it's like going from 25% to 36%, let's say, looking at the Belgium company. So we increase our, I would say, economic interest in the Belgium company. This is the first important aspect. The second one is that the remaining part of AGI is very much based off Asian joint ventures that are very, I would say, complementary in terms of portfolio countries to the one we have at Cardiff. So as an insurance company, it gives strong diversification risk profile. And again, all in all, this is also in terms of diversification nice because there is a lot of non-life insurance business within AGS compared to Cardiff. So it's a strong way to not only reinforce the partnerships, not only being more exposed to the local Belgian company that we know very well. We are the strategic partner at Ibuiste for years. And on top of that, you diversify the portfolio of Cardiff. So it's a very good economical investment. It will prove to be good also at the commercial level. It's strengthening the local agreement. And it's a very good financial investment. So this is what we can say, I would say, today.

Okay. If I can come back on the AGEAS. I mean, having a 9% stake, I don't see how that gives you better access to the partnerships or JV that AGEAS has in Asia or the non-life in UK and Portugal. I mean, unless I'm missing something. I mean, it's just 9% stake. I mean, clearly, financially, it's a great deal. But commercially, I don't see the link.

Now commercially, the link is in Belgium, but don't underestimate that we're having at Cardiff businesses within a number of locations, Japan, Taiwan, through the Bank of Beijing partnership, and AGS is having other type of businesses in a number of different countries, plus the strong JV in China. So this is a very wide portfolio. And you can imagine that you can have a better understanding of the global landscape in Asia for those businesses. This is it.

Okay. Thank you very much.

The next question is from Adzura Gwelfi with Citi. Please go ahead.

Hi, good morning. Two questions for me. One is on French retail. When we look at the revenue, the progression excluding the edges and the ECB action, it's actually strong, especially on the fees. But the volume on the lending side remains quite weak. So if you can give us some indication on where do you expect margin development for the NII and also this strong fee momentum to consolidate further. The second one would be to look at personal finance. When I look at the PDT of the division, it's around 150 million in this quarter. And if I understand correctly, that should be the level from which you will build up more in terms of revenue and keeping under control the cost of risk. Is that correct? And if I may, just a quick question on capital. You mentioned model impact for 15 basis points, if you can give us some color on that. Thank you.

Thank you for your questions. So indeed on French retail, indeed if you take out the inflation hedge, I remind you that the inflation hedge will taper off by the summer, and in any case, probably it will become again a hedge as of the end of the year. So if you look indeed through this, you clearly see that the top line is evolving well, and we anticipate that it will evolve even including the inflation hedge positively. What is important is that also the margining, so the pricing, is basically holding well. So the prices that are being put into the market work well, And then the volumes, yeah, we'll have to see. For the moment, the volumes, we'll have to see if they pick up. Given what we see in the market by the summer, they might pick up, and particularly if also the ECB, the rates would be lowering. But intrinsically, the margins hold well, and the evolutions are well as well. Can you rephrase your question on personal finance, Azura? I'm not sure I fully grasped it.

Yes, it's just to understand the trend from now, because the PBT is around 150 million, and if I understand well, revenue should drift, thanks also to better volume, and the cost of risk remain well under control. So if I understand well from this, it's a build-up onwards.

Yes, you might have seen that we have shown how indeed there was an evolution that we were gravitating on a yearly basis at 1.2 billion before and that we basically said that what we are restructuring in 2023, but we are on a trajectory that should bring us back rapidly to that level of the pre-crisis. And so, yes, the important thing is that on one hand, we geographically refocus, so we focus for a big part on the Eurozone market. Then we also focus a lot more on the collateralized kind of activities. the car leaving, and so on and so forth. And that's what we see, and that is why the cost of risk expressed in basis points over time will taper off, and that is the main evolution that we are having. On the question of the capital, so indeed the capital, what we have is that basically in anticipation of the CRR that will come, we typically have to update and independently, we have to update our models. And so we've updated the models with the anticipation of what the CRR tree will be. And so that's basically what left to that pickup in the RWAs. So those will be the answers Azura.

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

Yeah. Afternoon, everybody. So two from me. Just firstly, on costs in global markets, that came in, I guess, quite a bit lower than expected. So should we still be assuming the normal step down on costs in Q2 and Q3, sort of towards that €1.1 billion per quarter, or is the seasonal pattern changing at all for global markets costs? And then second, on B&L, credit costs still trending lower, coming in below expectations. What's driving that, and how close are you, do you think, to getting to a floor in cost of risks for B&L? I guess if you take a step back, for B&L, NIM is up quite a lot. Cost of risk is down quite a bit. Obviously, there's a sustainability question there, but does that change how you think about either how much capital you want to put to work in B&L versus other businesses or capital allocations? within BNL itself in terms of the mix of lending exposures. I know you touched a bit on this in the opening remarks, but I just wanted to hear your thoughts.

So, Chris, thank you for your question. So on global markets, intrinsically, you know, global markets has a set of costs which I call, quote-unquote, variable, yeah? And so if indeed that's basically how they evolved, And as I mentioned, of the 400 million that is to come, that is something that is to come going forward. So from that point of view, the rhythm at which we are doing the 400 million, the part that comes to CIB, we will clearly see it. BNL, listen, I'll start with that as a quick reminder. We basically decided to reorient BNL on activities that are less the local kind of activities and therefore can be impacted by the cost of risk. therefore the trend is of all the new businesses that we are doing we are seeing a cost of risk in basis points which is very similar to what we have in the other activities so what does that basically mean it means that yes we accept that there is some top line impact because the volumes are lower however in the bottom line that is compensated by the cost of risk tapering off And so that is something that we see. So overall, if you look at the yield of BNL, it is basically at levels, quote-unquote, that we haven't seen for years. So from that point of view, the return, the bottom line of the change that we have been putting in motion and that Elena is piloting with incredible dexterity is really piloting on the return that is very relevant and improving for BNL.

Okay. Thank you very much.

The next question is from Stefan Starman with Autonomous Research. Please go ahead.

Yes, good afternoon. I have two numbers questions, please. So the first one is on fixed income. Thank you very much for this very helpful disclosure of your geographic split. Would you also be able to give us a rough split by product? And I'm particularly interested in how much of your fixed income revenue last year was commodities, roughly? And the second question on Arval and the results from car sales. I imagine you don't want to give us the number, but if you look at the Q1 number in 2024, how does that look like on a long-term trend? Is it still elevated? Is it normal? How would you characterize this, please? Thank you.

Listen, if you look at Arval, so let's not forget, Arval and particularly BNP Paribas, the way it's structured, We have three streams of revenues. So on one hand, there is all the servicing fees that we charge. You know, you get your car, but you get a bike in the weekend, whatever it is. So that's basically a third. Then there is a third basically from the financing of the new vehicles. And then the last part is indeed the resale value of that car. So that are those three. So the servicing fee, that is basically one that we step up because we step up the services. And the other two, they are a bit complementary in the sense that when we saw that in 2020 there was a shortage of the new financing of new cars, of course, the used car vehicle price went up. And now that the production is returning, the volumes are going up. Whereas the resale value is going down. So those typically go a bit in opposite trends. Now there's two things on that. The first one is that the resale value of the used car is quote-unquote at fair market. So you basically look at the fleet of the cars that you have and you take that value now. Whereas the financing, accounting-wise, is accrued. So those two elements, even if they technically compensate, they move a bit at different trends. So that is basically what we see and what we will continue. But then on your pragmatic question, if you look at the car sales, listen, we don't share the share price because this is something also competitive information. But yes, we are still, let's say, what we call at high levels. So yes, they are still today at levels that are higher than what it was before. So technically, it could taper further off. But that will, over time, will be compensated by the financing. But intrinsically, over the next kind of quarters, the top line of Arval could somewhat be under pressure as we have seen now. If you look at it again in the specialized financing, so yes, there is a bit of pressure on the top line of Arval, which is basically compensated by personal finance rebounding faster. So that is a bit the dynamics of Arval on one hand, and then the overall dynamics in the specialized services.

Great. Thank you. And the fixed income mix?

Don't get me wrong. That is also that kind of breakdown on what we do and what we offer is we consider that to be in the commercial competitive domain, and that is why we don't disclose it. But you can imagine that intrinsically the C in FIC is not necessarily the dominant part.

Okay. Thank you very much, Vaz.

The next question is from Anke Rennegan with RBC.

Please go ahead. Yeah, thank you. Good afternoon. I'm Anke Rennegan from RBC. Two questions, please. The first is on the revenues where you very helpfully gave us like the above 2% and the 3% base case, which would put the revenues, I guess, at around 48 billion with RBC. 12.5% in Q1, that implies around 12 billion for the average quarter for the rest of the year. I mean, considering that probably Q1 was quite strong in the markets business because of seasonality and strength in Q1, is it fair to assume that the rest of the businesses should be running broadly flat in your assumption? And would that be conservative considering your comment you made about the more favorable environment in the second half you can give us a bit more commentary around the trajectory. And then secondly, on the cost flexibility, the additional 400 million of cost savings, which I guess are relatively material and are coming in faster. I just wonder how you or where you found or identified the 400 million and should we see this as a reflection of your flexibility to deliver more cost savings if needed or is there It's more like a one-off. Thank you very much.

Anke, I start with the cost savings. So to me, the cost savings, I mean, the 400 million that we talked about. So as a reminder, the 400 million is something that we do to basically fight inflation. So inflation would lift that. That's what we do. And that is basically to come. We crystallized it in the second quarter, and therefore... the impact is to come. So what you see, what will we do? We'll do basically more of the things that work well. So I remind you that over the Plan GTS25, we have put in place initiatives. We have putting in place by pooling activities, nearshoring activities, industrializing activities. And so what we see is that several of these things work very well. Moreover, if you look at, for example, AI with the arrival of Gen AI and whatever, we see that we can do a bit more. And so that is basically what we do. The things that work well, we do more of them and we boost them given the recent evolutions. And so that is the 400 million, and intrinsically that 400 million is to come, and that 400 million will be recurring. So that is why we stepped up the overall savings to 2.7 billion. And on your question on the top line, listen, if you look at the slides, it basically says it, yeah? I mean, if you take away the high base of a year ago, you see that kind of 3% increase, and you see how that increase is basically distributed over our divisions. And you can imagine that intrinsically, That is the rhythm that you go for. So that's basically it.

Okay. But the second half of variable environment that compares year over year or that compares quota over quota?

No, in total what we said is that it's comparing year on year. So year on year we said the results would be up 2%. And so if you then again compare the quarters, what you see is that indeed the quarters might be different, but that is different rather in the global market activities. In the other one, it is much more a logical consequence of that. So you shouldn't read anything in it. It's just on a year basis we see that we will structurally improve.

Thank you very much. The next question is from Giulia Miotto with Morgan Stanley. Please go ahead.

Yes, hi, good afternoon. Two questions for me as well. Belgian retail was particularly weak, and we know why, because of the Belgian bond and the taxes. But I'm wondering what actions are you planning to enact in this division to make sure that pre-provision operating profit is not negative in the future? Sure. So that's on Belgian-rated. And then secondly, perhaps more strategically, on slide 20, I found this slide very interesting. And I'm curious to understand, you know, this 28% to 51% penetration of European corporates, it's quite an increase. What do you think makes BNP unique in their offering to corporates and therefore so successful in this increase? Thank you.

Listen, well, corporate banking is one of the core businesses at BNP Paribas. It's a business that belongs to CIB, domestic markets, specialized businesses. If we were to mention only one business, corporate banking is all over the BNP Paribas universe. We started that story more than 20 years ago, merging BNP and Paribas. The number you have looking at market penetration used to be below 20% at the very beginning, so you can see the trend over 20 years. It's a completely integrated, comprehensive platform. We're a leading bank in all the different services. We can look at factoring, leasing, trade finance, financing the supply chain, global cash management, local payments. financing, fixed income, to some extent equities, we are a leader all over the European space. And we build those factories over 20 years. And it gives you strength. It gives you the ability to fit global needs throughout Europe. And this is the trend. And it's a machine that's engaging market share every year. Like Arval is gaining market share every year. If you look at the net promoter score at Arval, you can see the difference between Arval and competitors who are gaining market shares. You can say the same in a number of other dimensions. So there is nothing new. It's just a machine that is being built as a global platform throughout Europe, built upon specialized businesses, specialized factories, quality of service, and a kind of integrated platform I would say, fit, ability to answer global, I would say, needs coming from global corporates. If I take an example, looking at Italy and the BNL, the point was raised a couple of minutes ago. If you look at the BNL we bought in 2006, it was basically a saving and loan company and kind of popular bank. The mass retail, we kept it. This is basically Rome and central Italy. It's fine. The very small corporate business, we get rid of it. We deliver more than 95% of those businesses. We moved the bank in Milan, the corporate bank, and now we're having in Italy something that is in terms of quality very close to the French platform. These are large mid-caps, innovative SMEs and so on. This is an ideal fit for BNP Fibre. It also explains why cost of risk is becoming low because the quality of those companies is great. It's part of the global pan-European franchise of the corporate bank of BNP Fibre. It's just the same. You can see, for example, in the CAB business, in the BNL business, the impact of that global platform. Away from that global platform, you could not have been able to get rid of of that book that was not of the highest quality. So well, so corporate banking, again, it's all over the place. It's a kind of unique proposition. It's covering UK, going to Poland, the Nordics, southern Italy, southern Spain. So this is a global pan-European factory, and it's quite powerful. There is nothing new. We're telling you every year, this is the way it moves. So it will continue to move that way.

On Belgium, Julien, there's several things that we are doing. So one of the things that we're doing, we're stepping up further cross-selling. We're stepping up clients. We're streaming up clients from Nickel and Hello Bank. And there's also B-Post, which is really taking in at full. So we are doing all that. We're also attending the cost, as you know. And of course, we're preparing for the return of of the deposits that are at the national bank that should come back after the summer. So that's all the kind of things that we do.

Thanks.

The next question is from Joseph Dickerson with Jefferies. Please go ahead.

Hi. Thank you for taking my question. I've got two questions. When I go back and I look at the full year, it's on capital allocation, firstly. When I look at the full year slides, you've talked about the CIB market share gains without impacting capital allocation. And when I look on slide four of the Q1 slides, you talk about CIB market share gains while retaining a balanced allocation of capital. Is this because there's quite a strong amount of momentum in the CIB whereby it's just going to follow cyclical moves and in some instances take more capital, or is it similar kind of guidance that's just worded differently this time? So that's question one. And then number two, if I just look at the commercial and personal banking in France, you've got a high share of current accounts, 52%. I suppose that's a blessing in terms of funding stability, but also can be a curse in terms of margins when loans aren't growing. You know, I guess at 52% of deposit balances and having fallen about 5% quarter on quarter, I guess, how do you see the mix of current accounts panning out over the course of the year? Thanks.

Thank you for your questions. If I start... with the RWAs on CIB. So, indeed, well, typically in the first quarter, there is always a bit of a step up in activity, also with everything that is market related. So, there is a bit of a step up in the RWAs. Another element that you should know is that there are some temporary effects in CIB that weigh on it. I don't want to drown you with it. but we have some elements, for example, on CCPs, like let's take CCPs in India, which are basically evolving and that need further information sharing and setup, and which have temporarily a step-up in RWA. So the RWA is in CIB. On one hand, it is a typical Q1 one, and then there are some temporary ones that should taper off by the end of the year, by the summer, actually. And then if we look in France, if we look at the deposit mix, what we basically see is that when you look at the deposits for individuals, the mix is basically stable. So there were some moves a year ago, but today what I see is that it's stable.

Just to clarify on the CIB capital allocation, there's no change in terms of the – appetite and proportion of the group.

This kind of overall balance in the long run of a third, a third, a third, it's a bit silly, but that's basically what it is. And then, as I mentioned, in one quarter, it can be a bit more than another one, or it could be that an acquisition is done in the other. And so it's basically something that we have been having over years that has been that equilibrium. So we'll stick to that equilibrium. Thanks.

The next question is from Delphine Lee with JP Morgan. Please go ahead.

Good afternoon. Thank you for taking my questions. My first question is on net interest income in domestic markets, France and Belgium in particular. So when we look at the evolution year on year, even excluding the impact of ECB mandatory reserves or the Belgium bond, NII was still down almost 2% in Belgium and stable in France. So I'm just trying to think about, like, your additional guidance, you know, your guidance of the additional $1 billion of impact from higher rates and how we should think about, you know, sort of that recovery, the timing of that recovery. Is that mostly majority geared to 25 or just thinking, you know, when we are seeing that change and then is that – is Deported Pass through the main reason why NII is not growing? And my second question is on going back to a GS, I'm sorry. I mean, strategically, it makes sense. Financially, it looks like, you know, the Danish compromise makes it really cheap to invest. So the question is, why wouldn't you be interested in, you know, given the efficiency on capital in a larger stake in a GS than just 9%? Thank you.

About AGEAS, the situation we're in is very much linked to the fact that Fosun was exiting AGEAS. So it's very simple. They were exiting AGEAS. They were having 9% and they were looking for someone, I would say, able to invest the same amount without a discount, let's say. We were the only one to be able to replace AGS without a discount. It's obvious because we are close to the local company, the Belgium one, where we know those people, we know their business model, and so on and so on. So this is the point. This is the story. I mean, Fosun was trying to exit, and we were there, and we were the natural, let's say... She ordered to replace Fosun. This is the move. And again, there are two different, I would say, dimensions that are key. The first one is we were having economically 25%. Now we have one-third. So we are moving from one-fourth to one-third, which is nice. We know that company very well. It's great. We continue to grow, the local one. And financially, it's a good return, extremely good return. And on top of that, this is diversification as an investment for Cardiff. So this is it. It's nothing more, nothing less. Nothing more, nothing less. Looking at Belgium and France, you know that there are fixed rate balance sheets because of the mortgage business. So the trend is going to be better today. Short-term rates are going to be below long-term rates. This is going to come quite soon. So you will see the evolution in between 24 and 25. This is really the story. It has been postponed for a number of reasons. The central bank stayed the way it was for a certain period of time, a longer period of time we were expecting, but at a certain point in time in the cycle, and it's soon now, it will start in June, probably, or July. you will see short-term rates progressively going down and long-term rates potentially going up slightly. This is coming. And when those rates are going to be normalized, then those businesses in terms of NII will be much more, will be better positioned because this is the natural situation for those banks. Short-term rates that are below long-term rates steepness of the red curve, and back to normal. So we were, I would say, for two, three years, trapped in something that was quite abnormal to some extent with those balance sheets. So now we are back to normal, and it will take place 25, and it will continue in 26. And you know that beyond 26, there will still be an additional impact. By 26, we will have only got maybe half of the impact. because these are long-term exposures. These are not mid-term, they are long-term exposures. So the rebalancing is going to start second part of that year, accelerate in 25, accelerate again in 26, and then we will continue to have a second half of the impact looking ahead in the term plan for 2030.

Okay, thank you very much.

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

Hi. Good afternoon. Thanks for taking my questions. I've got two. Hopefully that's okay. So firstly, I just wanted to come back on a statement you made at the start of the call, and you made it again in the Q&A, that 2H24 is expected to be a better environment for BNP. I'm just wondering how reliant on rate cuts that statement is, you know, You've got other levers such as cost savings, winning mandates, fees recovering, your efforts from the Bankwest proceeds starting to come through. So just trying to work out how important rate cuts are to your guidance and trajectory or if it's just one element of it. And then secondly, a strategic question. Hopefully that's okay on your non-core question. retail banking positions. So in the quarter, you reconsolidated Ukraine, you sold 6% of your Polish business, and you've adjusted Turkey for hyperinflation. So across the sector, while we're seeing a bit more discussion on M&A and also disposals, just wondering what your kind of long-term thinking on your retail banking footprint is. Thank you.

I will basically start on the second half of the year. So let's be fair. I mean, if you look at it, We already articulated our confirmation of having a result over the year above last year. We already announced that in February. So that was basically that at that stage, we assumed that we would have the costs under control, that we work on fees, and that there is debate that is going on. And so now on top of, there is this rate environment that has been announced by the ECB in the last couple of days. So that is just a part of one of the elements. So it basically provides further comfort. And your strategic question on Europe Mediterranean?

If you look at the domestic markets, we are very much a pan-European bank with, let's say, France, Italy, Belgium, Luxembourg, Germany to some extent with a consortium bank. Poland, even if it's not part of the Eurozone. And relatively to that, the Turkish bank is relatively small. It's very much focused on the, I would say, upper affluent customers. It's not typically a retail bank. It's a good quality mid-caps. So the domestic, I would say, bank universe is very much Europe. This is it. We don't believe, if you look at Africa, we exited 20 countries out of 22 in 10 years. We still have Morocco and Nigeria, but they are very small operations also. It's very simple. We are waving the Eurozone as a natural, I would say, universe, Poland, and a bit of Turkey as well. are very satisfied with those banks. There are a lot of synergies going on with the asset management, Cardiff, consumer lending, Arval, specialized businesses globally, CIB. So, you know, again, if you look at Italy, because sometimes we are told, I don't know, BNL is too small or whatever. I mean, if you look at the rate of Italy at BNP, BNL is only half BNL is only half of the franchise of BNP 5i in Italy. In total, we have in excess of 5 billion total turnover, and the cost income is extremely good. And why? Because through BNL, we have a platform. We can cross-sell. We can diversify. I mean, this is the situation we are having, and we don't believe we are going to change this approach who are satisfied with those businesses, those regions, those countries. The difficulty adding on a new country, for example, the domestic way, is that unfortunately in Europe, cross-border acquisition doesn't deliver enough cost-cutting synergies. And it's a fact. You know that better than me. It's linked to a number of factors. So cross-border, I would say, acquisition in terms of cost synergy are not very powerful. So looking at the cost of doing banking because of the equity, because of the equity requirements, liquidity requirements, and so on and so on. If you cannot deliver enough cost synergies, becoming rapidly a risky move so this is why we tend to stay the way we are and to grow the platform in a more pan-European platform and in between those businesses and those different domestic businesses we are having I would say in payments savings mobility and so on and so on a lot of synergy that are growing on top of the local businesses So basically this is the idea, and you never know what can happen one day. But as of today, we stay the way we are, and probably the profile we are having at BNP by looking at the setup, the regions, is the one we are going to keep for some time.

Thank you.

The next question is from Kumar Sarath with Deutsche Bank. Please go ahead.

Kumar has disappeared.

Sorry, I was on mute. Am I audible now? Sorry. Sorry for that. Hello. So thank you for taking my question. So I have a couple. So one on asset management and one on Italy NII. So firstly on asset management, the performance overall continues to be impacted by real estate and maybe some investments in principal investments. So when can we expect this to end given market developments? When do we start seeing year-on-year growth at the revenue level? So that's one on asset management on Italy. NII, you spoke about the NII performance by deposits from corporate and private banking, so I wanted to know the stickiness of these deposits and, in a sense, the sustainability of NII at these levels. Thank you.

Thank you for your questions. So first, if I take asset management, so indeed within asset management, intrinsic activity is doing well, But then we indeed have lodged in there a division called real estate. So I remind you that division real estate is not a portfolio of like commercial real estate books and what have you. It's really a business activity that is into advisory, promotion, and the likes. And so what we basically see is in the countries where we are present, basically in continental Europe, we see a tremendous dry up in this demand. And so that basically means that that drought doesn't trigger any cost of risk, right? It's not an exposure that we have that leads to a cost of risk. What we do see is that the demand is materially lower, and therefore that's an impact in the top line. So the top line is lower. And that is something that started last year. At this stage, the demand is indeed still low, and that will take some time before that picks back up. So you should assume this year and probably still a bit next year that you have this impact on foregone revenues on the real estate. And then when you look at BNL, BNL, again, what you see on the deposits, we consider it quite sticky. Why? Because there is this kind of environment, and BNL has this reputation as basically all of the activities do of BNP Paribas. And so we have this, quote, unquote, fly-to quality. So what we basically see or what we anticipate is that that would stick. So those will be the two answers to your questions tomorrow.

The next question is from Kiri Vijaraja with HSBC. Please go ahead.

Yes, good afternoon, everyone. A couple of questions from my side. First, I'm afraid, coming back to Belgium and specifically the NII there, because the things you flag in terms of, you know, the Belgian government bond and the remuneration on monetary reserves, the thing is that they should all already have been captured by in the 4Q NII run rates in Belgium. So could you just drill down a bit more in terms of what drove that quarter-on-quarter decline in Belgium NII? Were there more kind of deposit mix shifts or asset margin pressure we need to be aware of? And then second question, more just quick clarification. I think it was something you said in response to Azura's question earlier. Am I correct to understand that the inflation hedges become a positive tailwind for French retail investors NII in 2025? And if so, what kind of magnitude could that be next year? And have you included any benefit at all in what you refer to as your central scenario for budgeting? Or is that something that could kind of come on top, if you like? So just some clarification on that. Inflation hedge is pleasing to next year. Thank you.

On this inflation hedge, I don't want to make it too long, but just that we see that we are all on the same page, right? So this inflation hedge, what this inflation hedge was basically to put in place because we had deposits which were linked to inflation. Therefore, we also onboarded assets that are linked to inflation and that allowed us accounting-wise to hedge the two. Then basically a decision was taken by the French authorities to fix the rate on that deposit, so not have it inflation-linked. So therefore, the hedge was no longer working. And so we have that inflation. With inflation coming down, that is the impact that we see. So that effect started in the third quarter of 2023. And so that basically means we have it for four quarters. So we will have it in the next two quarters. And so we assume the effects will be limited thereafter. And then we assume that at the end of the year, the deposit pricing will return to inflation. And so that is why we haven't broken that hedge because we assume that the deposits will be repriced end of the year into inflation. Therefore, the inflation hedge will again be working. So that's a bit the long answer. of what the inflation is. But again, independent, if you look at French top line, even with that impact of that inflation over the year, the top line will go up. And then when you look in Belgium, the impact that we talked about, they basically kicked in during the fourth quarter. And so that is why if you look at the first quarter of 2024, you have the effect. And when you compare it, which is a comparable base given the volatility of all the other elements, you clearly see the impact compared to a year ago. And so that is basically the elements. So Belgium, to some extent, has, when we talk about the headwinds, well, they basically have the local ones and they have the Frankfurt ones. And as again, as I said, the Belgian one, I anticipated to taper off that that money will come back over the time. So that's basically the impact on Belgium and on inflation for France, Kirik.

Great. Very helpful. Thank you.

Gentlemen, there are no more questions registered at this time.

No more questions?

So thank you very much for your patience and all the best with BNP Priva. Thank you.

Ladies and gentlemen, this concludes the call of BNP Paribas First Quarter 2024 results. Thank you for participating. You may now disconnect.