Bnp Paribas Ord

Good afternoon, ladies and gentlemen, and welcome to the presentation of the BNP Paribas Third Quarter 2025 Results with Jean-Laurent Bonafé, Group Chief Executive Officer, and Lars Maschenil, Group Chief Financial Officer. Sandro Pieri, CEO of BNP Paribas Asset Management and AXA-IM, will present the AXA-IM strategic integration within the group. For your information, this conference call has been recorded. Supporting slides are available on BNP Paribas IR website, invest.bnpparibas.com. During today's presentation, you will be able to ask your question by pressing star and 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 Bonafé, Group Chief Executive Officer. Please go ahead, sir.

Thank you. Good afternoon, ladies and gentlemen. Before we move on to the quarter's results, I would like to just take a moment to share some context related to the decision issued by the civil court in the U.S. case and how we see things moving forward. So this morning, first we made a public statement which explained our position on this matter. This verdict is in connection with very old facts relating to banking services that BNP Paribas provided more than 15 years ago. We are highly confident that our planned appeal will demonstrate that this judgment was incorrect. U.S. law has allowed and the court has decided to apply Swiss law to this case. An evidence of such Swiss law has not been allowed to be presented. Misapplication of Swiss law has been confirmed by the Swiss government itself. The applicable laws don't lead to liability or causation in this case. The banking services that the bank provided didn't cause plaintiff's prejudice and no evidence has been brought to prove that it did. Because the verdict is fundamentally flawed, the bank will pursue its appeal and is confident that the verdict will ultimately be overturned. The appeal case will be reviewed by a panel of three professional judges. Now, we are aware that this case has prompted some speculation about the precedent it might set. So let me be very clear on this point. The damages awarded were specific to three individuals. Extrapolation is not permitted. The court has very clearly indicated that any future claims will be assessed on an individual basis. So given the ongoing nature of the litigation, we will not be commenting further on this topic today. BNP Paribas once again is confident in its legal arguments and that the verdict will be overturned on April. We look forward to focusing on our discussion today on this quarter's results. So if we move on slide four, our third quarter results are solid and allow us to confirm our target of over 12.2 billion euros of net profit for 2025. Our revenues are up 5.3% this quarter. Revenues of our operating divisions excluding AXA-IM are up 3.5% and a strong 4.9% at constant exchange rates. CRIB revenues posted another record year with 4.5 cross, 7 plus 7% at constant exchange rates, driven by global markets and security services. Global banking was resilient despite a more challenging context than last year. CPBS revenues have accelerated and are up 3.1% thanks to the strong performance of our Eurozone commercial banks with acceleration in net interest income up 4.5% and an improvement in specialized businesses. Personal finance is delivering on the strategic plan, we detailed in June, and Arval's organic growth is an elevated 9.3%. Finally, IPS consolidated XRIM for the first time, and I will comment on this later. IPS recorded 2.9% organic revenue growth with a robust performance for wealth management, insurance and asset management, also mitigated somewhat by real estate and IPS Invest. We remain committed to cost control and we have already implemented most of our targeted 600 million euro cost savings measures for this year. This results in a two-point Jaws effect for operating divisions excluding XIA. At 39 BIPs, our cost of risk remains within our guidance of less than 40 BIPs, despite a more challenging environment. Lars will elaborate on this later. All in all, our net profit was up 6.1%, meaning we are on track to achieve our target of more than 12.2 billion euros this year. Moving on to our CT1 ratio, at a very solid 12.5%. we have fully absorbed the impact of the AXA-IM acquisition of 35 BIPs. This strong quarterly performance, which Lars will elaborate on shortly, enables us to deliver beyond our pre-FRTB target of 12.3%. Let me pause briefly on this point. We are now concluding a four-year regulatory and supervisory cycle, characterized by the finalization of Basel and significant model updates, cycle which has been particularly heavy for BNP Paribas. This cycle has represented around 160 basis points or 12 billion euros equivalent to 3 billion per year. We are now entering a new cycle where risk-weight growth will primarily be driven by organic momentum estimated at less than 2% per year, based on recent historical trends. This is an important and positive message, as it naturally opens up new perspectives in terms of capital generation. Moving to slide five. Our third quarter performance demonstrates acceleration across our operating division, as well as the first-time integration of AXA-IM. Despite a particularly high FX impact this quarter, our operating divisions generated two percentage points chose effect, excluding AXA-IM, and posted an increase of profit before tax of 7.5%. The third quarter reaffirms our confidence that the growth trajectory we embarked on is delivering. Moving on to slide six. First, our scale CIB platform is a strong engine of growth, reaching excellent level of efficiency and profitability, as illustrated by its strong of 22.2%. We expect it to continue gaining market share while maintaining its proven capital discipline. Second, IPS already benefits from a high ROAM, 23.7%, which is expected to improve even further. We also maintain that IPS is said to reach 20% of the group's pre-tax profit in the coming years. We are creating a European leader in asset management at the core of our integrated model. The impact of the AXA-IM acquisition will be substantial. It will add more than 50 basis points to our group return on tangible equity as early as 28. And I will come back to this in a few minutes. Beyond asset management, we are developing our European Wealth Management Platform, and IPS will also benefit from both external and organic growth at BNP Paribas Cardiff, as well as from its strategic partnerships. Finally, CPBS. The Eurozone commercial banks are starting to benefit from a supportive interest rate environment, as evidenced by this quarter's performance, and we are improving the profitability of each business line when needed. Today, we are announcing a deep dive in the first half of 26 to present the financial trajectory of CPBB in Belgium. We intend to improve the ROAN from 13% in 24 to 20 in 28 and 23 in 30. Together with the plans we have already presented for CPBF and personal finance, this means we will improve profitability from 10% drawn to about 18% on a third of the risk weight or two-thirds of CPBF's risk weight. BNP Paiba Bank Posca will also host a capital market day on the 11th December. The plan that is coming to an end this year enabled us to implement BNP Paribas model in Poland and the new 2030 plan will bring Bank Polska profitability to the best standards of Polish banks. At Arval, the strong organic growth plus 9.3% in third quarter 25 will no longer suffer from the bad effect linked to used car prices. Overall, We will raise group return on tangible equity to 13% as early as 28 and reach a core equity tier 1 of 12.5% post-FRTB in 27. This marks the first two steps in the rollout of the future 2730 plan. Let me now outline on slide 7 the significant positive impact of the AXA acquisition on our financial trajectory. We expect to generate €550 million of revenues and cost synergies by 2019. Thanks to AXA-IM, IPS will see its contribution to group earnings rise to about 20% in the mid-term, and we expect our return on tangible equity to see an improvement of more than 40 basis points from this acquisition at group level. We expect as well our return on the €2.8 billion of invested capital to reach 18% in 28 and 20% in 29. This is post-tax. This is equivalent to more than 600 million euros of additional net earnings. We reaffirm on slide 8 our 26 trajectory, leading to an acceleration in shareholders' returns. I will now hand over to Sandro Pieri, CEO of BNP Paribas Asset Management, to discuss the AXA-IM project.

So thank you, Jean-Laurent, and good afternoon to everyone. Maybe just a quick intro. I'm Sandro Pieri. I've been the CEO of BNP Paribas Asset Management since September 21, but I spent all of my career, which is now 35 years in asset management, before joining BNP. I've been 13 years at Pioneer Investment, where the last three years I've been the CEO. So as we approach the XIM integration, and I think we can go to the slide 10, it's very important because this acquisition enabled us to reach scale in asset management, notably in long-term savings. It strengthened the growth momentum on our IPS franchise, but also gives us the critical mass and ambition to become a leading player. We will be, in fact, the third largest European asset manager with 1.6 trillion of AUM. And if we focus on long-term savings, we are the leader in European long-term savings with 850 billion AUM. We'll also be the leader in alternative assets in Europe by a significant margin with 300 billion of AUM, which we believe is going to be a very powerful differentiating factor, offering significant growth potential underpinned by our highly skilled and renowned teams. Clearly, the new scope of our asset management platform combined with the strength of our integrated model will unlock significant synergies and operational efficiencies. By the end of 2029, as Jean-Laurent has indicated, we expect 550 million of profit before taxes from revenue and cost synergies across the entire group. And AXIM is clearly a catalyst for our long-term growth ambitions, bringing many tangible benefits. First, clearly we will rely more strongly on internal capabilities of services, leveraging our internal expertise. A good example would be the CIB security services. Secondly, clearly we'll capitalize on the development of new partnership with insurers and pension funds. Thirdly, the acceleration of cross-selling within the group business. Fourthly, the expansion of the group originate to distribute model, which will connect our asset manager with asset origination business within CIB and CPBS. And finally, the strong acceleration of our alternative asset distribution, both internally and externally. Now, if we move on to the next slide, which is slide 11, this transaction is not only about scale, but it's clearly about growth. We believe we're very well positioned to capture growth opportunities in asset management, thanks to a number of distinctive competitive advantages. First, we have an unmatched breadth of offering in Europe at scale from ETF, money market, active, medium, long-term, and alternative. The second element is that our group integrated model provides exclusive access to permanent capital with the partnership we also have with Cardiff, origination in partnership with our CID franchise, and strong distribution capabilities, CPBS, and wealth. So the ability to leverage our OneBank model is clearly a key differentiating feature. From a business perspective, the combined AUM seems to be very balanced, as you can see in one of these charts, both across asset classes, but also across distribution network with both AXA and BNP Paribas channel, but also external distribution and external institutional client, and also a very strong footprint with our joint ventures, mostly in Asia. And lastly, in terms of competitive advantages, we need to flag our leading position in sustainability, which will contribute to long-term investment performance and will also help to better meet client expectation. So if we go into the next slide, it's really once we have elaborated on the key distinctive competitive advantages. we lay down a plan which we think is very clear and we have a commitment to executing as fast as we can. And the strategy is, in a way, quite simple. On one side, we want to maximize the potential of the two investment platforms, the alternative one and the liquid. In alternative assets, our growth potential builds on a solid and very consistent track record on the size of our blockbuster funds, a full range in coverage, which spans from real estate, alternative credit, infrastructure, private equity, which also includes secondary markets, and also on the prerequisite of having a full alignment of interest between AXA, Cardiff, and third party. On the liquid side, the combination of scale, strong performance culture, and results in active strategy, both equity and fixed income, as well as the renewed ambitions for our ETF platform, which year to date has been the fastest growing player in Europe on a relative basis, reaffirms our confidence that we're very well equipped to deliver on our growth ambitions. We have a very clear client focus to ensure that we provide the best in-class product and services. So the strategy then from a distribution perspective is really focused on institution and retail and wealth, As far as institutional clients are concerned, our goal is to be the go-to platform for insurers and pension funds, leveraging on our strategic partnership with AXA and BNP Paribas Cardiff. In retail and wealth management, we're unlocking the potential of alternatives, the so-called democratization of private assets, and we also aim to expand distribution partnership through innovative digital solutions. So that's as much as I can share at this stage on a very exciting project, and I look forward to seeing you at our deep dive in the first half of 2026, where we'll share more on our strategy and unique positioning among European asset managers to offer solutions across the full spectrum from liquid to liquid, thus leveraging scale, expertise, and innovation to serve all client segments. With that, let me now hand over to Lars, who will walk us through some of the key figures. Lars, on to you.

Thank you, Sandro. Let's move to slide 13 with respect to the numbers underlying this transaction. And as mentioned by Jean-Laurent, this acquisition will generate over 50 bps to the group's ROT in 2028. Now, the transaction itself will have a return on invested capital of over 18% in 2028 and 22% by 2029. How do we get to this return? First, by maintaining strong discipline and efficiency in building this combined asset management platform at scale, as mentioned by Sandro. So we will generate 400 million of cost savings, representing approximately 18% of the combined cost base. These cost savings will be generated as we merge the three asset management platforms, so AXA-IM, BNP Paribas Asset Management, and BNP Paribas RIME, with a streamlined product offering a single from-to-back system and a unified workforce we will of course optimize our organization our real estate footprint and our external spending and is leveraging the size of the group and the scale that we can reach so we expect to achieve full realization of the synergies by 2029 with two-thirds by the end of 2017. So that's on the cost. Secondly, we are committed to unlocking the full potential of revenue synergies. We will generate 150 million of these top-line synergies, and they come in two types. First of all, there is the internalization of operations. For example, with the broader use of CIB security services for custodian services across the platform or by leveraging the new asset management platform to better serve internal group clients like Cardiff and wealth management and support their growth. Secondly, on the revenues, through an accelerated commercial development, thanks to our competitive offering as detailed also by Sandro. of those revenue synergies, 50% will be activated by 2027 with a full run at 2029. A few additional elements to understand this full impact. We expect to have 690 million of integration charges. The majority of this will be booked in 2025, and in particular 2026, with a more limited part in 2027 and 2028. Finally, as you know, a significant portion of the purchase price comes from the value of the partnership, and this generates an annual amortization of the so-called prepaid expense of around 100 million euros booked in AXA-IM. This integration is a catalyst for our strategic ambitions and a turning point for IPS creating a powerful investment platform for the future. So this is the complementary insights on AXA-IM and let's now go back to the group results and let me take you through the operating efficiency that you can see on slide 17. You'll note that our costs are up a limited 1% if you exclude the impact of AXA-IM. Our operating divisions generated positive JOLs of 2 points, with CIB and IPS generating over 3 points in JOLs and CPBS 0.7 as a result of, on one hand, accelerating NBI as we managed before, and secondly, reducing the drag from car sales revenues at Armal. If we did, I can ask you to go to slide 18, where we show our regular improvement in the cost-income ratio as we expect to maintain our trajectory in the years to come. So this was the cost. Let's now turn to the cost of risk, and let's turn to slide 19 and 20. So on slide 19, our cost of risk this quarter reached 39 basis points in line with our guidance to be below the 40 basis points, which is the average of the cycle, and we maintain our guidance for the full year. Compared with last year, there were fewer releases in the so-called stage one and stage two provisions. So the cost of risk at group level, excluding these writebacks, is stable. If you look at slide 20, you see by division that cost of risk is stable or down, including at personal finance, in line with our trajectory. Europe Mediterranean is the exception, with the normalization from a low level of cost of risk last year, due to the higher cost of risk in Turkey on households in a context of high inflation. Cost of risk, they are also stable at CIB. with global banking close to zero, and we have increased our provisions in global markets because of a specific file which happens every so many years and should not be considered to be recurring. In particular, and it is to be considered as a fraud case and moreover it is nothing to do with the private credit environment. So before I move on to capital, let me say a word on the corporate center. The quarter, the revenues were impacted by two elements. On one hand, the impact of DVA generating a negative 110 billion swing. And I don't have to remind you that DVA should be zero over the life cycle of the derivative, but can be volatile from one quarter to another. There are also the lower rates also weighed on the returns of our own equity being redeployed. So with this, let me now conclude on the capital with slide 21. We are pleased to confirm our stable common equity T1 at a solid 12.5% this quarter, highlighting our capacity to absorb the 35 basis points impact of the XIM acquisition, thanks to our capital generation. We also benefited this quarter from a positive modeling impact, as mentioned by Jean Laurent, and as you can see in the bottom left, in the last four years, we have been significantly impacted by prudential and supervisory requirements equivalent to 160 basis points over that period of four years, or 40 basis points, ergo 3 billion in euros per year. So what drives this impact? As mentioned, it's the regulatory and supervisory inflation. Let me shed some light on this by giving an example. As a reminder, I mean, monitoring risk had been prepared by Don in a very detailed manner, and it is core to our setup. Doing so allows us to you to have all the data available to use advanced models to successfully track evolutions and reflect this in the related risk-weighted assets. I don't need to remind you that this advanced modeling is de facto constrained by the new regulation. Whilst we cannot predict precisely the impact going forward, We expect our capital generation to be much less constrained in the future, therefore providing us with a lot more flexibility, as you can see, with like 10 basis points organic capital creation in a quarter, which is the typical run we have on a quarterly basis. From now on, one can assume that the growth of our RWAs will be primarily driven by organic RWA growth, so estimated to be around 2% per year based on recent historical trends. So we will obviously continue to contain this organic RWA growth as we did in the past. So this is the strong point. So that the inflation is behind us, we generate 10 basis points per quarter. And let me illustrate the case of CIB, which is particularly telling. So as you know, we've successfully grown the platform at twice the pace of the market, and we've done so at marginally cost. So notably by reducing our cost income from 72% to 60%. At the same time, we've kept organic RWE growth very well contained, averaging to around 0.4% per year over the period 2016 to 2024. So overall, we are comfortably on track to reach our common equity T1 target of 12.5% post-FRTB in 2027. From here on, I'll let you read for yourself slide 25 to 30 on the key elements of the quarter, as well as the growth drivers of our three operating divisions. With this, I'll hand it back to Jean-Laurent.

Thank you, Lars. So to conclude on slide 32, our third quarter performance, driven by the acceleration of operating divisions, is fully aligned with our trajectory. Our priority remains the successful execution of the AXIM integration, which represents a strategic transformation level for the group thanks to its integrated model. While our growth drivers are firmly established within CIB and IPS, we are pursuing disciplined actions to improve the profitability of each business line when needed within CPBS. This year, we started with CPBF and personal finance, and we are now continuing with CPBB and Polska. Finally, our co-equity tier 1 ratio of 12.5% provides us with additional flexibility, and the new phase we are entering paves the way for enhanced capital generation. This concludes our presentation. We would now be happy to take your questions.

Ladies and gentlemen, if you would like to ask a question, please press star and one on your telephone keypad. Please lift your handset, ensure that the mute function is on your phone, is switched off, and that you are in a quiet area to maximize audio quality. I would like to remind you that this Q&A session is dedicated to our third quarter results and AXA-IM integration. I also would like to remind you to please limit yourself to a maximum of two questions. We will take questions as many as time permits. Again, please press star and one to ask a question. First question is from Tariq El-Majad, Bank of America.

Hi, good morning. Good afternoon. Sorry, everyone. It's unfortunate we can't ask a question about Sudan because I think We all wanted to hear how you can frame your potential loss, and we are still in the billions kind of area in terms of settlements. But I respect your decision. So two questions from my side. First on the capital, which is very important here for you. I think it's your main kind of way to reassure the market of your capital absorption in the context of the Sudan-related litigation situation. You had a good quarter build, capital build in the quarter, 12.5. First, I want to understand what is structural there, where it's one-off. And I was wondering why you don't change your medium term or your at least 25 target of 12.3. I noticed that you don't mention that anymore. But should you expect to end the year at a higher level? And if you do, the to Roland your comments about 10 bps per quarter if I take 9 quarters till end of 27 and adjust for the 40 bps for FRTB I'm already at 13% so what I'm missing there what could be the headwind that will set you back to 12.5 and then the second question is on the so it's still rates on the capital is what other actions you can do to actually fast track the capital but beyond organically And if you would consider some non-organic footprint optimization or something to reassure the markets on your capital absorption. And then the question on the draws. In slide five in Q2, you were very specific about your draws in the second half. And in your plan, you target more than 1.5 percentage points for every year of the plan. Do you still stick to this guidance and how are you comfortable to reach this target? with the AXA-IAM integration in the coming years. Thank you.

Okay, thank you for your question. So, if you look precisely at what took place since the beginning of the year. So, we said at the end of 24, commenting the yearly result of 24, we said that in 25, we will generate roughly 30 bps of capital. And we will suffer, let's say, 10 bps in terms of supervision. So the net would have been 20 bps, plus 20 bps. So capital generation, we delivered 10 bps in the first quarter. We delivered additional 10 bps in the second quarter through SRT. Once again, we delivered 10 bps this quarter. So all in all, as of today, we have already delivered the 30 bps. Then if you look at the supervisory dimension, we lost 10 bps in the first quarter. We lost 10 bps in the second quarter. And then we got plus 25 in the third quarter. In the third quarter, that 25 is, I would say, based upon two very different dimensions. One is a kind of I would say, regularly evolution. It can be considered as a normal evolution. The other one that is in the range of 15 bps, 1.5, is more, I would say, an exceptional evolution. This is the end of a long story of rebasing a quite important model. So these 15 bps, 1.5, are an exceptional. They are back. They are given to us on their shoulders, and that's it. So now if you look at the beginning of the year, so we lost 10 in the first. We lost an additional 10 in the second. We're having plus 10 in the second, in the third. So if you look at the surplus side, I would say the regular one, we're at minus 10 at the end of the third quarter. so again since the beginning of the year we built up 30 bps in terms of capital generation we suffered 10 bps of supervisory i would say burden and we got a positive 15 bps one off and this one office is done this is over and looking ahead at this fourth quarter We're not expecting anything significant. So again, since the beginning of the year, we built every quarter 10 bps in terms of capital generation, one way or the other. We suffered 10 bps of, let's say, supervisory burden. And we got a positive one-off of plus 15 in the supervisory burden. dimension. So this explains why we're already at 2.5 after having absorbed AXA-EM and we're having 20 bps above the 12.3 pre-FRTB target that was supposed to be the target by your end. So we are very much, I would say, confident that that 2.5% is the level we will deliver by your end. So it's not a question of changing the target for your end, but we're already at 12.5 and we do not see anything that would push us down to 12.3%. What we have to understand about the FRTB is that It was supposed to take place beginning of 25. It was postponed one year, beginning of 26, and now it's postponed again a second year, beginning of 27. And you know, and probably you know, that there are conversations at the level of the European Commission just to neutralize this FRTB for probably a period of three years. This is not done, but there is a certain probability, probably more than 50%, that one way or the other, that FRTB is going to be neutralized for a certain period of time. But for the time being, we consider we have to be prepared, and this is why we keep those 30 BIPs. Looking ahead, we said recently, it was in September, I guess, in the Bank of America conference, conference, we said that mechanically, considering the, I would say, the additional profitability of the group, by 27, the CT1 post-FRTB will reach naturally mechanically 2.5%. So this is again what we said in the presentation. The reality, as you said, is that we're going to exit 25 at a high level. This is a fact. Not only the return on tangible equity of the company is moving up, so we are generating more rapidly equity, capital, but on top of that, as Lars mentioned it, we're exiting a cycle, a phase that has been very, I would say, negative for BNP Piper. Once again, We paid, over the last four years, the tribute of 160 bps if you add the completion of Basel and supervisory, I would say, approach, basically, model updates. This is 2.5 times, I would say, average benchmark. So the peer group was, on average, in the range of 60 bps, and we were at around 160 BIPs. And on top of that, we're going to pay potentially for that FRTB. In total, what to build up? 15, 1.5 billion of euros in those four years. And now, if you look closely at the evolution of the risk weight at BNP Paiba over the past four years, we're only at 2% average by year. So, in fact, the model is not extremely high in terms of risk-weight consumption. And looking at it, because we're exiting that very adverse, I would say, cycle, considering the situation of BNP Paribas, looking at it, now the risk-weight will, I would say, progress very much in line with the operational risk-weights, which is, compared to the last period, at a much lower level. And once again, what we suffered is not linked because we had poor models or an approach that was not relevant, just because the new supervision, the new regulation was very adverse to advanced modeling. So this is one very important point. So we're exiting 25 with, I would say, an additional 20 bps compared to the 12.3. By 27 will be at 12.5 because of the company generating more, I would say, profits. On top of that, we're exiting a cycle that was quite negative, adverse to BNP Paribas. And the future is going to be very much along the operational risk-weight, I would say, evolution. All in all... You are telling us 13 bps, 13%. Why not? I mean, this is just a rapid computation. But this is the situation. Not only the company is going faster in terms of profits, but we're exiting a cycle that was very negative. And on top of that, we're exiting 25 at a high level. And to be confirmed, CT1 consumption for AXIM is 35 bps full stop. which also gives some, I would say, additional good news. So this is the equity. The equity, to some extent, capital absorption. Looking at the JAWS, you notice that we suffered in the third quarter of the FX, 1.3% in terms of total revenue. And the swing in the DVA, plus 60 last year, minus 55 this year. So this is a swing of roughly 0.9%. So in total, we suffered 2.2%. 2.2% and 2.4% are 4.6%. So this is very much what makes the difference in between the consensus that was at around 4.1%. And we said the top line, we provided only 2.4. But because of two headwinds, one was the FX, one was the DVA. So looking ahead, probably in the last quarter, we will suffer the same, I would say, FX headwind. Why? Because this is the result of the US dollar on the yearly evolution. And second, the Turkish lower basically in the third quarter. So half half. That was the result of the of these two evolutions. Looking ahead in the fourth quarter, it's going to be very much the same. But we're not going to suffer the DVA. This fourth quarter normally is going to be close to null. And the bad effect used to be negative. So it's very different from the situation in the third quarter. And then Ultimately, in the fourth quarter, we have not anymore any base effect based upon the Arval used car business. So this is in the range of 100 billion. So if you get rid of 0.9 that are the DVA in the third quarter, and if you get rid of the base effect in the fourth quarter, you get an additional 0.8. So in the fourth quarter, waiving 1.7, that is going to more than rebalance the FX effect. So this is why the fourth quarter ultimately, to some extent, is going to be slightly easier than the third quarter. Looking at the Jaws effect, if you look precisely at the operational division, which are basically I would say the dimension that is providing the group with the Jaws effect. We are doing the short quarter at 2%. So we are moving up, comparing this Jaws effect to the first half of that year. And this is very much linked to the acceleration you are seeing within CPBS, especially domestic market and personal finance. And this is going to continue. So you will see in the fourth quarter an additional, I would say, evolution in the positive direction. So at the end of the day, the 2.5 for the second half is our target and it remains our target. But again, the fourth quarter and the third quarter in terms of, I would say, impacts to some extent, external impacts, impacts that are not linked to the operational division. They are very different. The third one is quite negative, and the fourth one is quite neutral. So this is my answer for the jewels.

Thank you.

Next question is from Julia Miyoto, Morgan Stanley.

Hi, morning, afternoon, rather. Thanks for taking my questions. I have two. The first one is on AXA-IM. So how will the structure work? Will BMP asset management be consolidated within Cardiff then? Yeah, because I thought XAM was being bought by Cardiff, but then it's getting consolidated into BMP asset management. So I would be interested to understand that structure. And then separately, I have a question on your Stage 3 coverage ratios. which is going down from 70% to 66.6. 70% it was in March. Should we read anything into that? And perhaps to expand on the question, what are you seeing in terms of alpha quality deterioration in France? Is there any early warning? Thank you.

So from the first point, I would say, Cardiff bought AXA-EM. And BNP Paribas was merged into Cardiff. So in fact, the merger in between BNP Paribas asset management and AXA-IM is done under the Cardiff umbrella. So the new asset management platform belongs to the insurance company.

Okay, Kadeer.

And on the second question, when it comes to the doubtful loans over the gross outstanding or your stage three coverage ratio, so it evolved from 68 to 66.6. The main thing what you see here is that there are new entries, as happens often, which have low provisioning level given the high collateralization. So that's the kind of elements that you see. You can see it's the same in the doubtful loans versus the gross outstanding. But that is the typical evolutions that you have and then when these things are worked out, there is compensation when it has the effect of stage one and two. So intrinsically, that's how you should see it.

Thank you.

Next question is from Delphine Lee, JP Morgan. Yes, good afternoon.

Thank you for taking my questions. The first one is Just to understand on the revenue side, because if we look at in retail, in Eurozone, CPB in the Eurozone, I think your guidance is more than 3%, but so far I think the trend is trending a bit close to 2%. So what are you expecting in Q4 and where is the kind of acceleration coming from? It doesn't seem to be BNL, but is there something in Belgium or do you see at the moment an improvement in France which could lead to more than 3% for the whole year? And then my second question is just very quick clarifications. I don't know if you can say anything on the provisions and the one-off elements that you took this quarter. whether that's the provisions in global markets or the gain you had in BNL, what was that related to? Or in the corporate center, just to explain a little bit more kind of like outside of the DVA impact, what was the impact from rates and funding costs of access? Just so we understand a little bit like how to forecast for future years. Thank you very much.

On the revenue side for the domestic banks within the Eurozone, we set a target of 3% for 2025. And we keep that target. So for 2025, we very much believe we are going to deliver those 3%. And if you look at the profile of those divisions all together, they are moving up. in particular because Belgium and France are accelerating so yes we stick to the three percent target for 25 for those eurozone commercial banks on the global market provision This is a specific situation. This has nothing to do with any other situation that occurred recently in the US with regional banks, private credit, and so on. This is totally different. It happens, unfortunately, from time to time. We tend to say at BNP Paribas, every four or five years, you would get something at the global market. If you take that out of the third quarter, our third quarter is very much aligned with the first half of 2025. So basically, in the third quarter, at BNP Paribas, away from that very specific situation, Nothing happened compared to the first half of 2015.

And Delphine, two other questions. So with respect to BNL, what we have is basically a re-evaluation of a participation. And as you know, we from time to time have these things, and it basically helps us to compensate in the bottom line the impact of restructuring. We typically said we have like 400 million kind of restructuring costs, and we aim to have capital gains realized or re-evaluations in order to compensate that. So that's basically this. And then when you talk about the general account where you have a question, if you look at the general account specifically in the third quarter, so as mentioned, there is the DVA, which is 50 million negative, whereas it was 50 million positive last year. Then if you look at AXA-IM, there is like the 60 million of restructuring costs, which was basically zero last year. And then you also had the impact on funds, which the redeployment happens in lower rates. So that's a bit those kind of effects. Let me remind you our overall guidance on the corporate center over the full year. So intrinsically, we say that over the year, our NBI is zero. When I mean zero, that means it can be between minus 100 and plus 100. And you basically see that's where we are in particularly what we guided that in the fourth quarter, we think it will gravitate around zero. When you look at cost, the run of the mill cost corporate center are basically 400. And on top of that comes the restructuring cost. In a normal situation, basically, that will also be gravitating around 400. What we now basically say is that also given the overall restructuring we have with AXA-AM, it's going to be around 600 million in 2025, and it's going to be around 800 million in 2026. And then it should taper back to where it was before. So that's basically Delphine on the general account.

Thank you very much. Next question is from Stefan Staumann, Autonomous Research.

Yes, good afternoon. I would like to come back to the credit quality issue in global markets and the increase in stage, or actually in doubtful loans, as you label them. We had this increase of almost 1.5 billion in doubtful loans during the quarter, and It happened at a time when you actually described the credit quality situation and basically all of your operating businesses is very stable. So is it fair to assume that this increase largely relates to global markets and largely relates to this one case that created the provisions? And is it then fair to assume that you have basically provisioned a fairly large lumpy exposure at around 10% to 15%? And if that's all correct roughly, I think you hinted in an interview that there may be some context with payments or payment companies or payment counterparties. I'm struggling a bit to see how that would fit into a global market context. Is there anything else that you can add in terms of color about the counterparty here? That would be great. And then the second question on AXA investment management is, I'm curious whether you could maybe give us the share of passive and ETF AUM in the $1.6 trillion. Thank you very much.

I'll take, Stéphane, I'll take your question on credit quality. So, indeed, part of the impact that you see is indeed related to that file. But generically, it's the evolution that in the current environment to new entries that we have seen which are collateralized have low collateralization. So, when it comes to the file, you know, we don't give names and the likes, but what we said, it is not the usual suspects. And the field in which you should basically see it, which is a global market field, is in the domain of receivables financing. So that is the domain. That is why it is part of global markets. And that is the domain. But we leave it to this, Stéphane. I'm not going to give you more insights on that.

Thank you. What was the question on ETF? Sorry, if you can... If you can say it again.

I was just curious roughly what proportion of the 1.6 trillion is actually in passive and ETFs.

Sure. So today, ETF and index is approximately 55 billion. So the percentage is close to 7%, more or less, sorry, to 3.5%, 3.5%. Clearly, it was a bigger percentage on a BNP-PAM standalone, because AXA-EM, they only recently started an active ETF business. So clearly, the percentage has been diluted by the acquisition. But I can also confirm that as part of the plan, ETF is a renewed ambition. We clearly have significant ambitions, which we'll be happy to to detail more in the deep dive in the first half of next year to, as a minimum, you know, bring it back to the percentage that we had before the dilution coming from the XIM transaction.

Great. Thank you very much.

Next question is from Sarat Kumar, Deutsche Bank.

Thank you. Good afternoon. Thank you for taking my questions. I have two. Firstly, a clarification on the 2025 revenue guidance. I noticed that you achieved only 2% in the third quarter versus your guidance of plus 5% for the second half, which is excluding the contribution from AXA-IM. I acknowledge bulk of the risk was driven by corporate center, but can you reconfirm this guidance? That's the first one. And the second one is on R1. How can we draw comfort on the residual value risk for R1? I ask this in the context of the high organic growth seen in R1. in the last several quarters versus a more cautious approach by your main competitor. Related to this, can you give an indication of the current EV mix within your fleet? Thank you.

Listen, I think we guided on the revenue. Jean-Laurent has broken it down. What is the impact? Why did the April divisions? It is a tad lower. So it's basically the impact of Forex and the impact of DVA. So I'm not going to come back to that, is what you see. On Arval, so on Arval, there has been the impact, when you compare the results with last year, of the residual value of the cars. So there was... a lift that was still available in the first nine months, and that's basically coming to an end. The remaining contribution in the fourth quarter a year ago was 50 million, so it's basically non-material on that. For the rest, the growth in the fleet that we continue to see, again, which is balanced between, on one hand, EV and ICE, that growth that we see is the intrinsic demand we see in the market, and we feel comfortable with it. Thank you.

Next question is from Andrew Combs, CT.

Good afternoon. If I could follow up on Axel IM and then perhaps touch upon banking. So in Axel IM, you talked in depth about the cost synergies, the revenue synergies. Could you just touch upon whether there are any dis-synergies anywhere across the combination of the businesses And separate to that, can you just provide the phasing of the 690 restructuring costs? Separate that on banking, down 4% Q&Q, down 3% year-on-year. I appreciate that transaction banking is included within that and that you're going to be impacted by rates and FX, but it looks like your factor markets activity was perhaps slightly light compared to the U.S. peers. I think you talked about buyers being flat year on year. Is there anything you can say on why you might have underperformed the peers? Is it just a regional bias? Anything you can add? Thank you.

Maybe I'll take the first one on the synergies. If I understood well the questions on the XIM, it's a pretty quick answer. We don't foresee any synergies out of the transaction.

Yes, and when it comes to global banking, so there is the effect of the tariffs, there is the effect of the rates, and there is the effect of Forex. So that's what you see. So if you look through the Forex, it's basically stable. And then there is indeed a different dynamic. there is the dynamic which continues to grow in the U.S. dollar, and there is a wait-and-see attitude in Europe. So the pipeline is there, but there is a wait-and-see how these things will crystallize. So that's basically how to read global banking.

Just to give some additional color, I mean, if you look at the global banking platform and if you isolate the U.S. part at BNP Piper, This one is up by 21%, which is very much in line with US banking platforms. Unfortunately, in EMEA and continental Europe, we are not having that same kind of evolution. So it's very much linked to the in-between situation in Europe. A lot of companies are postponing transactions and the pipe is there again. But still to be seen. So this is the only business, if you look closely at BNP5, that third quarter that is below expectations, slightly below expectations. Instead of being plus 4.5, it's below minus 2.6. So this is the only one that is slightly, I would say, behind the curve for obvious reasons. And again, it's not a question of competitiveness throughout the platform.

That's very helpful, Carlo. It's just the regional mix, which is what I thought it might be. I'm just following up on the 690 restructuring charge phasing.

Can you repeat the question? Sorry, because I lost it.

Yeah, of course. Sorry, you flagged 690 million of restructuring charges to deliver the synergies in XLIM, GOOG. because you just provide the phasing of the restructuring charges. You provide the split of the timing of the synergies, but not the restructuring charges, as far as I can see.

No, listen, we cannot give the total detail, but the big chunk will be this year and next year. That's what you should assume. And the biggest part will be next year. And so what we basically said, if you want the roughly, listen, the cost, they will fall how they fall. But you could assume there is like 100 million this year, 400 million the year thereafter, and then 100 million the year thereafter. But that is roughly how you should see it.

Thank you.

Next question is from Jacques-Henri Goulard, Kepler-Schöpfer.

Yes, good afternoon. Two questions for me. You've announced actually a very interesting partnership with Unicredit on security services. I think in the course of the quarter, to have a little bit of off-color on that would be great. And Unicredit has just announced as we speak that they were taking off all the money from From Amundi, by mid-2017, would you be interested in that new investment management concept to effectively pitch for that? That's the first question. And the second question is on slide seven, where you've announced when you bring back your increase in ROT. I think it's the first time I saw the Belgium and Polska plans. Is it something that you've added afterwards to enable you to actually get to that 13% ROT 28 or is it on the other end something that could enable you to increase further that 13% ROT 28 and ROT 30? Thank you.

So about Unicredit, yes, we want the RFP for the security services business of Unicredit both in Italy and in germany with hvb uh there is some time to implement uh we'll see uh the effect in 27 there is one year to go to to say very very simply uh looking at the situation again with uni credit of course uh We're open to any kind of partnership with any kind of platforms, commercial bank, private bank, platforms that would need, I would say, highly quality assets, asset management. I would say it's the normal game. And obviously, we can provide Unicredit potentially with all products that would be, I would say, efficient of interest. That's it. So clearly, and I do not know again how Unicredit will move. I mean, they have recently, if I understand well, rebuilt in-house some capacity within the asset management space, but for sure there will be some room for new partners. I don't believe for a number of reasons, potentially, but I don't know that they They would consider, I would say, another global partner for everything. But probably there is room for some asset classes. And probably our new platform looking at the alternative universe could be very well positioned. So, yes, we're interested. and probably will compete and probably having a good relationship, we might have some. This is a normal business situation, nothing more, nothing less.

On your question on slide seven on the plans, so indeed in the 13.3% ROT that we've given by 2028, the evolutions of course of Belgium, Polska and AXA-IM are included. But these plants, they will continue well beyond, and that's basically the update that we will provide. And I understand that I didn't answer the question on the organic growth, so this is 10% that we have. That's two questions back. Would there be any remaining questions?

Next question is from Anke Rengen, RBC.

Thank you very much for taking my question. Just two small questions, please. Firstly, on the capital, you said that the regulatory headwinds are now coming to an end. I think previously you guided to a potential 20 basis points headwind in 2026. Is it best to assume at this stage that this will no longer be hitting your core tier one ratio? And then secondly, on Belgium, I would have expected NII to see a bit more of an uptick in Q3, or is it basically the benefit of the stronger recovery you only expect to start from Q4 onwards on NII in Belgium? Thank you very much.

Yeah, so if I take on the net interest income, indeed the net interest income, as you mentioned, we said there would be a phasing in pickup. So we announced that. in France it would happen in the second quarter you see it happening and that the pivot that would be start to be visible in Belgium so that's what we have and so the impact will continue and in particularly also in the fourth quarter on those two entities so when it comes to the headwinds so we basically said the majority of the headwinds are behind us And when we give a guidance going forward, we have like a kind of a placeholder. So we will wait and see. That is what we assumed that would happen. But here what we do see is we see these headwinds tailing off. And so it's rather a placeholder more than anything.

Okay, thank you. Next question is from Pierre Chedeville, CIC Market Solutions.

Yes, good afternoon. I had a question of methodology regarding the objective of ROTE at 12% in 2026. Because you don't say around 12% or above 12%, but in the meantime, you mentioned that your return on invested capital was increased by 4 points. You also mentioned that personal finance and the French retail will have an impact on the ROT above 0.5 point. You also mentioned that we will have a deep dive in Belgium and Polska and we We hope that you will announce probably that you try to do better than a post-tax loan below 10% and the cost of equity. So I was wondering that if you have all these intermediaries, objectives that are improving, why the global objective, the global group ROTE, remains at a fixed 12%. Another question which is related to that is regarding AXA-EM, regarding the synergins that you plan and the fact that probably BNP by barrel estate will improve one day or another for you. What would be, in your opinion, a decent cost income ratio regarding the size and the mix of this new entity? Thank you.

So, look, I'm... I'm going to take the questions on the cost income, reasonable level of cost income for that platform. Look, if I look at the business mix, including the fact that the starting point of BNP Paribas as I mentioned, there's a larger share of external distribution, which clearly comes with a higher cost. We plug all the different elements. I think the 60% costing is, I would say, on average, year in, year out, would be, I think, a realistic target to have in mind.

Thank you. And with respect to the impacts, the improvements, several of the improvements that we mentioned, you have to see the effect as being like in 28. So for example, when you look at personal finance and BCF, basically by 26, it will be half a point is the impact. The same is true for AXA. The impact comes over time by 28. So that is it. You should see the phasing of the impacts over time. by 26 and by 28 and then you get to those numbers.

So we have no hope to improve the 12% in 2026?

You can have hope in banking of course but the reality is that the trajectory and the commitment is to deliver 12% return on tangible equity in 2026 uh again uh personal finance and the french domestic bank we provide 50 bps in between 25 and 26 and again an additional 50 bps in 27 and 28. then xim because of the i would say Restricted costs in 26 basically is not going to improve the return on equity. 27 is going to be still a bit shy, and you will see full speed in 28 and even more in 29, and probably more looking at 30. So this is progressive. The Belgian bank started this year, will accept it next year, but this is 27, 28. And Polska remembered that We have to pay next year a level of tax that is slightly higher than this year. I mean, they pushed up the rate at, I don't know, 30 something from 18.

Yeah, so next year we're going to pay 50 to 100 million more in Polska. It will tape off again.

So all these levels are in place. uh 20 12 is the target from 26 if we can deliver better target we'll try we'll do our best but 12 is the target 20 28 we're having 13 this is the the target and 30 probably is going to be at 14 because as you as you remember i mean we're moving the the group up by two percentage point of return on tangible equity every midterm plan. This one is from 10 to 12. The previous one used to be from 8 to 10. And the previous one was to be from 6 to 8. And probably the next one is going to be about 12 to 14. You have to come back in 27.

Thank you very much.

Gentlemen, we have no more questions registered at this time.

So thank you, and we'll deliver. Thank you so much. Take care. Thank you. Bye. Thank you so much. Have a good day.

Ladies and gentlemen, thank you for joining. This concludes the call of BNP Paribas third quarter 2025 results. You may now disconnect.