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Thank you for holding. The conference will start shortly. © transcript Emily Beynon Thank you for watching! Ladies and gentlemen, we are currently on hold for the presentation of BNP Paribas second quarter 2026 results, hosted by Jean-Laurent Bonnafe, Group Chief Executive Officer, and Lars Machenil, Group Chief Financial Officer. If you would like to participate to the Q&A session, please limit your questions to a maximum of two in order to ensure that all attendants are able to participate. Thank you for holding. The conference will start shortly. © transcript Emily Beynon © BF-WATCH TV 2021 Ladies and gentlemen, we are currently on hold for the presentation of BNP Paribas Second Quarter 2026 results hosted by Jean-Laurent Bonnafe, Group Chief Executive Officer, and Lars Machenil, Group Chief Financial Officer. If you would like to participate to the Q&A session, please limit your questions to a maximum of two in order to ensure that all attendants are able to participate. Thank you for holding. The conference will start shortly. Edited and Directed by Michel Cantigneaux Ladies and gentlemen, we are currently on hold for the presentation of BNP Paribas second quarter 2026 results hosted by Jean-Laurent Bonnafe, Group Chief Executive Officer and and Lars Machenil, Group Chief Financial Officer. If you would like to participate to the Q&A session, please limit your questions to a maximum of two in order to ensure that all attendants are able to participate. Thank you for holding. The conference will start shortly. Thank you for watching! A film by Jean-Laurent Bonnafe Thank you for watching! Good afternoon ladies and gentlemen and welcome to the presentation of the BNP Paribas second quarter 2026 results with Jean-Laurent Bonnafe, Group Chief Executive Officer and Lars Machenil, Group Chief Financial Officer 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 questions by pressing star 1 on your telephone keypad. I would like now to hand the call over to Jean-Laurent Bonnafe, Group Chief Executive Officer Please go ahead, sir.

Thank you. Good afternoon, ladies and gentlemen. We are proud to present very strong second quarter results, which further strengthens our conviction that we will beat our 26th trajectory. We are well on track towards our 28th target of double-digit earnings growth, CAGR over 2528, something that is not yet fully reflected by consensus. Our CT1 is now a target paving the way for accelerated distribution in the future. I will first start with a summary of our results on slide 4. Q2 amplified the solid positive trend we showed in the previous quarter. Revenue rose at a very strong rate of 12%, a level we have seen for a decade. Joe's effect was just shy of 3.7 points at constant scope and exchange rate and is at 1.6 points on a reported basis reflecting largely the impact of the XI integration. Cost of risk was stable at 39 BIPs including 95 million of addition to S2 provisions for geopolitical environment and remains within our guidance of less than 40 BIPs which we observe through the cycle. All in all, this means that operating income was up nearly 16%. Below the operating income line, we obviously also have the AGEAS-AGEIN transaction, which means that net profit was up by one-third. Beyond our very strong earnings, we also continue to deliver on capital. Our CT1 reached 13%, up 20 basis points, meaning that We have already reached our target, previously set out for 27, end of 27. We'll come back to our distribution outlook in a few minutes, but let me mention that we'll be paying an interim dividend of 3.23 euro, equivalent to 50% of our first half 26 EPS. Obviously, having reached the milestone of 13% was important, but we intend to continue and Bill Capitole. If we focus on our revenues, they have up 12% with well-balanced growth between the businesses. More than two-thirds of our businesses generated revenue growth in excess of 9%. CREBI revenues accelerated sharply, up 13%, driven by global markets and security services. Global banking pivoted this quarter and we see a strong momentum moving forward into the second half of this year. CPBS revenues maintain a very positive upward trend, up 5%, helped by strong NII and commercial momentum illustrated by increased financial fees. CPB was particularly impressive with revenues up 9%. Finally, IPS grew 27% or more than 8% at constant scope supported by market effect and organic growth in all divisions. Let's now move to slide five, which highlights the positive momentum in the red sensitive part of CPBS, namely our commercial banks in the Eurozone and personal finance. The second quarter accelerated further with revenues up 8.2%. This very strong top line growth reflects the strong momentum We expect it to translate into a sharp profitability increase. Our deposit mix remains stable, enabling the reinvestment of our non-remunerated site deposits on the mid- to long-term end of the curve. Based on the current economic outlook, we expect this favorable environment to extend well into our next strategic plan, taking us through to 2030. CPBS profitability We will also improve substantially thanks to the strategic plans that are already well underway. This is well illustrated on slide 6. After a strong first half of the year, we confidently reconfirm both our 26 and 28 trajectories. Given the strong progress we have already made towards exceeding our 26 targets, who are fully focused on accelerating EPS growth and delivering our double-digit growth target over 2025-2028. We expect our return on tangible equity to exceed 13% in 2028 and this will be driven by strong revenue momentum, very well illustrated in the second quarter, but also tight costs and risk-weight discipline. We will come back to this later. As you see on the right, we are already well advanced in the execution of our strategic plans. We recently presented Belgium and will present BNL in Italy on 18th of November. Aval will follow in the first half 27 once the Athlon acquisition is underway. These plans cover most of CPBS and close to half of the group's risk weight. They all contribute to our return on tangible equity trajectory and share a very ambitious cost income ratio improvement as well as discipline risk weight growth. Overall, we expect our cost-income ratio to fall below 56% in 2028, with a lot more improvement to come by 2030. Finally, our CT1 at 13% already meets our target and we'll consider excess capital for distribution on an annual basis. On slide 7, allow us to remind you of our key targets, double-digit earnings and EPS growth for 2025-2028, and minimum 60% policy from 27. On slide 8, we summarized our equity story ahead of our strategic plan that will be announced on our fourth quarter results on 2nd February 27. Our business model is in fact simple. We have a very well balanced model, both by activity and by geography. It's uniquely powered by cross-selling across business lines accounting for one-third of our revenues. And importantly, each of our three main divisions is on a clear profitability improvement path. In CRB, we have built a division at scale with strong positions across products and regions. Our originate and distribute model is well positioned to benefit from the savings and investment union, supporting further market share gains in the context of the looming investment super cycle. In CPBS, were accelerating profitability through self-help NII tailwinds and strategic initiatives aimed at improving platform efficiency while maintaining disciplined capital management. Finally, in IPS, we are building a leading asset gathering platform supported in particular by the significant scale we have now achieved following the XRIM acquisition. Let's now move to efficiency improvement on slide nine. Earlier in the year, We announce a comprehensive review of our support functions with a view to sharply amplify the annual savings from 700 million annually to 1 billion. We will pool and streamline our application portfolio, amplify the use of AI, and simplify organization, optimizing processes and reducing silos. All divisions, geographies, and functions will be impacted by our actions with and addressable cost base of 15 billion. Focusing on IT support functions, which account for roughly half of the addressable cost base, we have already identified around 80% of the savings targeted by 2030. Importantly, we expect approximately 25% of these savings to be delivered as early as 2027. We will hit the ground running in our next plan. This provides a good illustration of how advanced our preparation work already is. It also gives us confidence that the improvement in our cost-income ratio can accelerate to around 2 points per year from 2027 onwards. We will announce our 2030 targets early next year, but we clearly see a path towards a cost-income ratio of around 50% over the time. Before handing over to Lars, let me say a few words on AI on slide 10. Of course, AI represents a significant opportunity for us to enhance value creation across the Group and will accelerate its deployment in an industrial manner. To support this ambition, I'd share the Group AI Strategy Committee, ensuring strong governance and clear priorities. We'll focus on high-impact use cases with return on equity, on investment with cost control and cyber risk at the heart of our approach. We'll share more details with you when we'll publish our strategic plan early next year. Beyond what we can achieve with AI internally, we also see a significant revenue opportunity from the investment super cycle. Capturing this opportunity will require origination and distribution capabilities as well as investment vehicles to finance future projects. Our integrated business model is well positioned to benefit from this. Let me now hand over to Lars, who will present our second quarter results on slide 12.

Thank you, Jean-Laurent. Good afternoon all. I will not spend time on slide 12, as in the meantime you know all our numbers, but zoom on slide 13, where I want to highlight the significant capital gain we booked on the AGI-AGS transaction for 858 million euros. We are particularly pleased with it, not only because of the capital gain, but as it contributes directly to increasing our common equity T1. It also improves distribution to shareholders to the tune of 50 cents per share, and it will add 40 million of annual recurring earnings starting next year. So if you now go back to the business and let's look at slide 14. So you see our revenues are up 12%. or 10.4% at constant scope and exchange rates. So let's first look at CIB. So CIB had an excellent quarter with revenues up 13%. Let's look at the three businesses. First, global banking. So global banking pivoted in the second quarter as FX and rates headwinds that we saw before eased. So we maintained our number one position in EMEA investment in banking amongst European banks. This quarter, we also rank number three in M&A, and we see a strong pipeline for the second half of the year. So that's global banking. If we turn to global markets, which was particularly strong, up 17%, including if you look at equity and prime services, which was up 43%, when we look at FIC, revenues matching those. So EPS is matching those of FICC. FICC was stable compared to a high base last year. Remember, there was a lot of volatility a year ago in April. The third division is security services. It grew by 17%, taking advantage of high market levels, volatility, but also improved margins and client onboarding, of course. If we move to CPBS, up 5%. And as Jean-Laurent explained earlier, Our Eurozone commercial banks are enjoying very strong top-line growth and double-digit net interest income growth on the back of an interest rate environment that is quite favorable to us now and to come. Moreover, client activity was strong, as illustrated by the healthy uptick in financial fees. If you then look at the specialized businesses, they benefited from improved volumes and margins at personal finance. Arval recorded double-digit organic growth, but obviously the geopolitical environment and rising gas prices continue to impact used car sale results. We now turn to the third one, IPS. They reported 27% revenue growth, which reflects the successful integration of AXA-IM. Having said this, the division reported about 8% organic growth, even at constant scope, Thanks to strong business momentum in each of the three divisions. Assets under management were boosted by, on one hand, strong inflows and also market performance. So we've looked at the top line. Let's now move to slide 15 and let's look at the costs. On this slide 15, if you look at the top left, you can see that our jaws reached 1.6% or 3.7% at constant scope and exchange rate. So all in all, At Constant Scope, costs grew around 6%, of which about half variable costs that are linked to the strong revenues, 2% for development, and about 1% inflation, particularly in Europe Mediterranean. If we look at the group level, we keep on track for substantial cost-income ratio improvements, still expecting it to be below 56% in 2028, laying a firm foundation for our next strategic plan ramping up to 2030. As you also see now on the opposite side to the bottom right, a significant portion of the restructuring charges for AXA-IEM integration will be booked this year. So that's one of the drivers between the Jaws effect and the Jaws effect at Constant Scope. So let's now, we've looked at the top line, we looked at the costs, let's now look at the asset quality. And we do this on slide 16 to 18. So on 16, you see the cost of risk reached 39 basis points this quarter in line with the first quarter. The intrinsic cost of risk is stable year on year, and we reinforced our forward-looking provisions by 95 million. We booked that in the corporate center, so you see that in the divisions, cost of risk is stable, and that 95 additional million is to reflect the geopolitical environment. So bar unforeseen step up in these geopolitical tensions, we anticipate a cost of risk to be below 40 basis points over the year 2026. In particular, as I mentioned, on the divisions stable, if you look in particularly on stage three provisions, they show no deterioration and we remain comfortable with the quality of our portfolio. So let me emphasize once again that we are very diversified with little reliance on French economy. I remind you that we have less than 10% of our profit before tax in France. I will not comment on the review per business as I basically synthesized it, but you'll find the details on page 17. So if we can move to slide 18, where we provided an overview of the strong risk culture through the cycle. Indeed, our portfolio offers significant sector diversification and high exposure to investment-grade counterparts. This enables us to reduce the volatility of our cost of risk. We also want to remind you of our selective approach to all credits, but private credits in particular, and private credit which accounts for, let's say, 3% of our loan book, and 90% of that 3% is basically senior portfolio financing. Moreover, this segment has no NPLs and is built on conservative standards with moderate loan-to-values, high diversification, and exposure to the strongest private credit players, so providing further collateral. So having said that, let's now look at the regulatory metrics on slide 19. So as mentioned by Jean-Laurent, common equity 1 reached 13%, so up 20 basis points over the quarter, delivering our target that we had the ambition to be at 13% in 2027. We reached it 18 months earlier. And this shows our commitment to building capital and positions the group for accelerated distribution in the next strategic plan. And so the improvement this quarter, it basically stems on one hand from the very solid results. So that solid results with contained risk-weighted asset growth generates 30 basis points of common equity tier one. Two-thirds of that goes back to the investors. So there's 20 basis points that is accrued for distribution. And then there is 10 basis points parameter, which is basically the AGI-AGS deal. And so note that in the second half of this year, The impact of the acquisition of Atlon, which is coming in the third quarter, will consume around 13 basis points, but this should be offset in the fourth quarter by the divestments of BMCI in Morocco. So that's the capital, but it's not only the capital that is doing well, it's also the liquidity. So we reported a very high LCR at 149% this quarter, So up from 125% a quarter ago. And so these highlights are a strong ability to manage our balance sheet. As a reminder on slide 20, we wanted to give the overview of our SRT and our credit insurance programs, which we have discussed before. As of today, just to look at the impact, we have a cumulative risk-related asset benefit of around 65 billion, which is equivalent to 90 basis points of common equity. So our priority is to diversify SRT so that it's not all happening in one moment and on one sector. And as you can see, we are doing that very well. And we also complement it with credit insurance in order to optimize here the setup. So this gives me the opportunity to update you on the progress also on the Save and Invest Union, which you can see on slide 21. And in particular, from what we understand, in the second half of the year, the European Trilog should be completed. So it's started. So it's the Commission, the Council and the Parliament that basically paved the way for the first phase of SIU implementation in 2027. So this SIU represents a significant opportunity for Europe, but in particular for our CIB originate and distribute model, but also for our IPS asset gathering platform, further strengthened by BNP Paribas as a new and leading alternative assets capabilities. Moreover, so it's good for CIB, it's good for IPS, and also in the meantime, CPBS will be well placed to increase its financing in the real economy. So let me now conclude. We've covered the divisions. We've covered the prudential metrics. Let me conclude on slide 30 with the corporate center. So the corporate center, we are adjusting our trajectory after first half performance that was better than anticipated. While we acknowledge that the corporate center can be volatile from one quarter to another, We now expect a better outcome for the full year than previously thought and guided on. We are therefore adjusting our gross operating loss trajectory from 1.4 billion to 1.2 billion, very much in line with the consensus. Let's not forget this is a sizable amount, but it includes for 800 million of restructuring charges, half of which are related to the integration of AXA-IM. So this is basically the view. I'll now hand it back to Jean-Laurent, who will offer some final remarks and conclude the presentation.

Thank you, Lars. So second quarter results are a very clear illustration of our acceleration. We're delivering strong, balanced, and resilient earnings growth, with group revenues of 12% and positive momentum across all divisions. Our 28 Return on Tangible Equity trajectories on the fast track supported by strategic levers that are already being executed. Costs remain tightly controlled. We are making strong progress on the program to overhaul our support function, which will start to deliver benefits as early as next year. We expect our cost-income ratio to fall below 56% by 2028. Our earnings growth is accelerating towards the category of more than 10% over 2025-2028, and with our CT1 now at target, we'll consider additional distribution on an annual basis. On February 2, 2017, We'll announce the main targets of our next strategic plan taking us to 2030. While well advanced in our preparation, with top-down and bottom-up processes nearly fully aligned now. We'll provide you with our divisional trajectory and we'll continue throughout 27 our series of deep dives, notably CIB. These deep dives provide you with insight about our strategy, action plans, and financial ambitions. Both externally and internally, these deep dives get significant recognition. This concludes our presentation. We would now be happy to take any questions.

Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad. I would like to remind you to please limit yourself to a maximum of two questions to ensure that all attendants are able to participate. Again, please press star 1 to ask a question. First question is from Tariq El-Majad, Bank of America.

Hi, good morning. Good afternoon, everyone. Thanks for taking my questions. I have two, please. First, on the global markets, I want to understand how the Q2, actually, strong performance, how much of it is sustainable. Can you Tell us in the equities which part is derivatives, which part is client demand versus pure volatility actually benefits. And would you qualify it as a super exceptional quarter or a quarter that could be actually largely repeated if the current geopolitical and macro environment persists? And then on global banking, you had other ways of 5% quarter on quarter. I know it can be lumpy. Should we expect some more optimization through different tools to bring down RWAs there? Because the revenues has not really showed up yet in the quarter despite the big RWA increase. So that's my question on CAB. And then on distribution, I mean, I think in the slide you removed in 26 results the 60% payout confirmed that you had in previous slides. I mean, would you consider if let's say you do a buyback in Q4 calendar and then to start the higher than 60% payout already with 26 earnings into 27 calendar or is it clear that it would be really from 27 earnings that you would pay more than 60% thank you On CIB and looking at global market this very strong performance derives from in particular equities and what we are

The thing is both the result of a certain level of volatility, market that was expanding, but also a strategy of continuous investments, especially in structured products. Structured products, for example, in the U.S., domestic were number four today. In APAC, we are just the same with roughly 9% market share. Yann Gerardin, Philippe Mairek Those risk weights are very much linked to the ramp up during the second quarter. And this is very much a phenomenon that took place at the end of the quarter. And those 5% growth for risk weight is not, I would say, represent the evolution of the second quarter. But it gives an idea of what is coming for the second part of the year. So this division is having a very good, strong prospect for the second half. And to some extent, the risk-weight evolution is an early signal of this upcoming evolution. On distribution, well, as of today, the policy for the 26th plan is 60%, 50% being the dividend and 10% being the buyback. Yes, it could happen that the 10% might be, I would say, enforced in the fourth quarter, like last year. This is a possibility. We have not decided. It's a possibility. And then, when you are saying that above 10%, we will have to take a decision in terms of additional distribution, It's difficult to say if it's linked to the 26th year or the 27th. We are going to close the yearly accounts end of January 2027. And at that moment, probably, or in between that moment and the General Assembly, we will make a decision on the, let's say, excess. So this is coming in 27, and you can say it comes from the 26, I would say, results. So it's something that can be read in the two dimensions. So this is the way it is. 13% is our target. Good enough. We are at 13%. Anything that is above will be considered for additional distribution, additional investment to be decided by the board. And this comes on top of the 60% policy. Of course, for the next plan, we will have to set a new policy in terms of, I would say, distribution and buybacks. This is going to be... A piece of the new term plan. And clearly it's going to be higher than the one in the current plan because the company is more profitable.

Thank you very much.

Next question is from Stefan Stallman, Autonomous Research.

Good afternoon. Thank you very much for taking my questions. I wanted to ask about the LCR ratio, which saw this spike in the second quarter. Was there any particular reason to that, or was it a bit of a random number at quarter end? And regarding Arval, I guess back of the envelope, the business has probably lost around about 200 million on the sale of used cars in the first half of the year. Can you give us any indication of whether this is going to get worse before it gets better or what we should expect to see maybe through the end of the year? And is there any need to revisit your residual value more fundamentally? Thank you very much.

So for the LCR, I mean, we are having this quarter 149 percentage points. We're going to integrate Arval on the 3rd of August. So we have to prepare for that. You need to have the liquidity up front. And Atlon is roughly 12-14% transport. And we want to operate at 135. Thank you very much. No difficulty upgrading or pushing up the liquidity ratio if needed. And here there was something particularly linked to Asselin, so we went up at that level. On Arval, well, the business, as you know, was hit in the beginning of March because of the war in the Gulf. This environment remains very much volatile. So it's difficult to understand exactly what's going to be the future, but we are, I would say, quite conservative. So we are having norms and accounting approach that are quite conservative. So we tend to adapt upfront. I would say the residual values of the cars we are having. This has an impact on the top line beyond the day-to-day business. It's not a loss that is being made on cars we are selling. We are not I would say posting losses in that domain, but we're anticipating something that could be slightly below former, I would say, provisions. So we're doing that in a quite conservative way. It has an impact and it's moving because the environment is volatile. If you look at the consensus, looking at the consensus for the second half of this year, The consensus is still too high by 100 million. If you look at the consensus for the second half of this year, we still have something that is a gap of around 100. But you have so many other businesses that are delivering better results, in particular the The commercial banks in the euro area, thanks to in particular the red scenario with the steepening of the curve that is even higher than anticipated, that, well, this is going to be compensated in the company one way or the other. So this is just an information on Aval, but doesn't change the global outlook.

Because intrinsically, Aval is doing very well. If you look at the fleet, it's growing by 5%. And given the fact that we not only finance, but also sell other services, The next question is from Giulia Aurora Miotto, Morgan Stanley.

Hi, good morning, and good afternoon, rather. Thank you for taking my questions. I have two. So you are providing a very useful slide on SRTs, and you are 90 bps at the moment. What is the go-to level here on SRTs? Is 100 bps a good level? Could you do more, perhaps? And could things change with the securitization reform? So that's my first question. And then secondly, Jean-Laurent, I heard much more conviction on costs and the path to 50% cost income. What makes you confident? How quickly can you get there? Yeah, I would be curious. Perhaps you learned something new on AI. So I would be curious on your take on the cost trajectory.

Julia, I'll start with the SRT and then Jean-Laurent will continue clarifying. So on the SRT, as you mentioned, it's an important part. If I express it in basis points, we have a gain of 90 basis points. So as I mentioned, we do this over time. So we don't have it all in one go. So on average of the instruments of the past, there is like 10 basis points falling over. So we do an additional 20 basis points every year. So if you look at it, Jean-Laurent, on costs?

In the current plan, we are having every year an additional 700 million of additional efficiency. The initial target used to be 600. Two parts. One was the, let's say, the infrastructure of the company, the functions, 300 per year. And the second half, I would say the interface in between the bank and customers, 400. We grow and invested quite a lot in the current plan and also in the previous one. And when you are investing a lot, increasing the level of diversification, increasing the momentum in a number of domains like CIB, asset management, wealth management and so on, insurance, when you are pushing quite far in terms of digitalization in the commercial banks, it's slightly more tricky to also, I would say, completely leverage that part that is the infrastructure of the company. So most of this is done. So we can now tackle those domains. This represents basically 15 billion. Out of it, we will cumulatively extract 2.4 billion over the period. So we will extract basically 15% of this. And the 300 that were coming every year from that part is going to be pushed up at 600. On top of that, we will continue on a yearly basis to deliver the 400. So this, in addition, is going to be 1 billion per year. So roughly the next plan is pushing the 700 up to 1 billion and the 300 within the 700 up to 600. So this is the story. We are very well advanced. We are looking at this situation since August 25. So now we are one year later. And bottom-up, top-down approach now are close to the conclusion. And more than 80% of those 2.5 billion over the period of 600 per year are now clearly identified and we are having plans and actions. So we are quite confident in our ability to deliver.

Thank you.

Next question is from Pierre Chedeville CIC Market Solutions.

Yes, good afternoon. First question regarding asset management in Q2. The net inflows were only 6 billion euros compared to 15 in Q1, if I'm correct. And I wanted to know if you consider this figure a little bit disappointing and if there is any reason, specific reason. My second question is relating to the likely operation in Germany that we all have in mind. And I wanted to know if you consider that it's a game changer, first from your ambitions in Germany regarding the Mittelstand customers, but also from a more global view on the European banking landscape. What do you think of the potential birth of a new giant at the European level? Thank you.

I'll start on asset management. Between quarters, you can have some difference in volatility and demand. If you look at the overall evolution, we've guided for 4% growth. We are a tad above that. So there is nothing else to read into this.

On Germany, tendentially... This is an operation that is very much around private individuals, SMEs, and this is not typically the domain in which we are really operating in Germany. We are very much an investment bank, global bank in Germany, wealth management, asset manager, catholic financing. Specialized Consumer Lending, which is not typically a business competing with commerce. We are not in the SME domain, so for us in Germany, it's neutral. We have nothing that can come from this transaction, nor in a negative or positive way, if I understand well the point.

But anyway, I mean, if you look at it intrinsically, as you know, there are many banks in Germany. So the trend for consolidation is logical. But for us, it is not in our space.

Next question is from Delphine Lee, JP Morgan.

Yes, good afternoon. Thank you for taking my questions. Just two quick ones. I just wanted to come back on capital. So you target 13% CT1 ratio in your new plant. I'm just trying to think a little bit about your approach on distribution. Would you want to distribute all the excess above 13% or keep some kind of buffer? or, you know, set some capital aside for investment. Just if you could share a little bit your thoughts about, you know, just the general approach. And also related to capital, is the intention still to deliver the 20 to 30 basis points of capital benefit from disposals by 27? And then my second question is on BNL. Why NII is still... Thank you very much. 13% is 13%. It's not 13.2 or 13.3 or 13.4. It's 13%. So above 13% starts at above 13%. So this is very simple. And

BIPs are coming from organic generation of equity or disposal or both, but they're just equity. So we do not make a difference in between additional equity coming from investments or additional equity coming from, I would say, organic generation. So once a year, The board will have to take a decision having in front of the ice a certain level that is going to be above 13 and we'll have to decide which amount they will distribute on top of the regular distribution. Once again for the next plan this could be different meaning higher than in the current plan so we could say a Thank you very much. Additional dividends or buybacks. So still to be understood. On BNL, the balance sheet is very much a fixed rate balance sheet because the strategy of the bank, which is a big difference compared to the market, is to distribute fixed rate mortgages. It had some advantage in the previous cycle. It's a major complexity in the current cycle. This is the way it goes in banking. You have cycles. And in the next plan that will be disclosed in November, you will see that BNL will target a 20% return on national liquidity. I would say... This is the program. You have a number of domains in which BNL can make and deliver good progress. The cost base, grabbing market share, additional cross-sells. This is the point. 20% is not as high as the Belgian bank that gave 26% in 2030. But if you look at the evolution, it's basically just the same. So this is for BNL.

Maybe if I can have one compliment is even that given the fact that we have been repricing the deposits, you should see a pivot in that line for the second half. That's the one thing. And also, let's not forget that it, BNL, is just part of what we have in Italy. So that's one of the other things we will do during the dive in November, show that there is adjacent to that a similar activity that is complementary to what BNL is.

Great, thank you very much.

Next question is from Chris Hallam, Goldman Sachs.

Yeah, good morning, afternoon, everybody. Just two quick ones. First, on restructuring, is 800 million still the right number for this year? I expected it to be up a bit, quarter on quarter, but it was down slightly. So I just wondered if we're going to finish the year below the 800 level you talked to earlier. or whether we should be expecting sort of 250 to 300 million per quarter in the second half of this year. And then another one again on capital. You mentioned several times in the prepared remarks RWA and capital efficiency. You've already got to the 13% target CT1 level. You've sort of ruled out any major acquisitions. So if I think about 2027, RWA Growth mirroring the discipline you've seen this year. Maybe you'll eat up 25 basis points or so from RWA Growth, but that puts you in a position to distribute 80-90% of earnings a year from 2027 onwards before any M&A tailwinds or headwinds. Is that logical or am I missing something there? I think it chimes along with what you just said about maybe thinking about 70 plus as the right run rates for 2027 onwards.

Chris, thank you for your questions. Now, on the restructuring, we stick to 800 million. That's what you see on slide 30. I mean, those restructuring costs, they are not linear. They can fall in different periods because you have to decommission systems and what have you. So we stick to 800 million. When you look at the 70 basis points on the common equity tier 1, listen, as we mentioned, we typically have, with the growth of the earnings and the risk-weighted assets that you see, we on average have a touch high of 10 basis points. That we generate a quarter. So that could go up a little bit. So let's say that that could be 40 basis points. And then I don't know if getting to the 70, you add the whatever the disposal of 25. But in the run rate, it is rather 10 basis points that those other ways with the earnings would generate on a given quarter.

Just on 70, I meant 70% payouts. And I think you should have said a 70% to be like 80 to 90.

So then rephrase your question because then I probably misunderstood. Can you rephrase?

Yeah, I think next year, if you were to do relatively disciplined RWA growth, there's no major acquisitions. The RWA growth maybe consumes 25 basis points. If I just think about your payout potential as a percentage of earnings, that puts you closer to 80 or 90% payout as a sort of structure from 2027 onwards, which I think chimes with what you just said earlier of 70% or more. I just wanted to double check on that.

That's right. So I misunderstood your question. So indeed, in the natural generation that we have, and then if we will look once a year what the excess is and decide that we return it, it would indeed get you to a ratio of something around what you mentioned.

Super clear. Thank you.

Thanks a lot.

Operator, any more questions?

Next question is from Sarat Kumar, Deutsche Bank.

Good afternoon. Thank you for taking my questions. I have two questions, both on R1. Firstly, on the fleet growth, given that it's been growing by 5% annually for several quarters, so what can you say reassuring about the residual value risks in light of all of the used car price pressure that we have seen? and from an accounting point of view, do you also take prospective depreciation adjustments in anticipation of weaker residual value? So is that already included within your used car sales? And then can you provide a mix of electric vehicles versus ICE vehicles in your overall fleet? So that's the first one. The second is on Athlon. Given the pressures seen in used car markets, what gives you the confidence that the Athlon acquisition is still on target to achieve 18% ROIC and can you quantify the P&L impact assuming that we have an August integration and any integration costs to be aware of for this year? Thank you.

So first, so on the fleet growth, so what is, as you mentioned, we see continues the 5% that we see on the fleet. As a reminder on the distribution between ICE and EVs, so at a stock today, we have like 20%, which is EVs. Thierry Laborde, Jean-Laurent Bonnafe, Philippe Mairek EVs, which have a higher price, which is good. They have ICE, which have a lower price. But given the fact that we have 80% ICE, 20% EVs, that is what weighs on the resale value. And listen, I will not give more on that, Jean-Laurent mentioned, compared to what is the consensus, what we see in our stance to be So when it comes to ATLON, indeed, we intend to basically have a closing beginning of August. Remember that one of the things that we mentioned on ATLON is that it consumes capital, but that capital will be compensated by the sale of BMCI. And I remind you what we said. The capital consumed by BMCI was generating 30 million net profit. Whereas with Adlon, after integration, we anticipate that it generates on a yearly basis 200 million. And on the valuations, We are confident. So there was not, if you look at what is the public data, Atlon did not revalue much during COVID. And with all of the due diligence we have done, we don't anticipate that situation to be that different. And moreover, Atlon has a higher fraction of EVs versus other. And I remind you by putting it together, we really make a champion that now has material value Thank you for taking my questions. Just a couple, flipping around some of the previous questions actually.

So firstly, a lot's been talked about the potential to increase the payout ratio next year, given where you already are on the core tier one ratio. Would you also consider increasing the 2% organic RWA guidance? Are there areas where you think you could deploy capital and you'd like to deploy capital, given where you've already reached on the capital position? And then second question, you got asked about Italy, any interest margin there, but on the flip side, France and Belgium were very strong. You've particularly called out the decline in term deposits, you've called out the reinvestment on the remuneration deposits, but was there anything one-off in nature this quarter, or anything you call out, or could we expect further margin expansion similar to what we've seen this quarter? Thank you.

So if you look at, so indeed Belgium and France, no, there was no one-off. So we've guided that the growth that we are having is basically that we take now the impact of the higher rates. On top of that, we have the cross-sell and that we step up. And if you look at that, so there is the impact, but then there is also, if you look at it, the deposits are going up, so the margins are kicking in, the volumes are going up, The overall pricing, particularly in Belgium, the margins versus the competitors are holding better. So those are all the elements that drive up and there's basically no one-off in it. Yann Gerardin, Philippe Mairek Exxon Onboard, The Prime Brokerage, and so on and so forth. And so now that is a complete system. You saw our second quarter results. So we have that platform. We are growing it in several regions. And so that's working very well. We've done with AXA-IM, we've basically done the same thing when it comes to IPS. So there also, we have the setup and within CPBS, within our networks, we have it as well.

So that is basically what I would say with respect to that.

Operator, would there be any other questions?

Yes, next question is from Anke Regen, RBC.

Thank you for taking my questions. I just have some small questions. On asset management, I'm a bit surprised to see the revenues down quarter on quarter given the strong growth in assets. Anything we need to consider here? And then a question on the corporate center. I know it's hard to estimate, but is the 77 negative adjusting for the 18 million gain, should we see this as a run rate, or is there anything in terms of updated guidance? And then, sorry, a sneaky question on capital. I apologize if I missed it. Is there still any guidance about model update headwinds that we should consider? Thank you.

Anke, I'm a bit confused. So can you, at least your question on the corporate center, can you rephrase so that I understand?

Any guidance on the run rate and revenues. Thank you.

Ah, yes. So the run rate, what we've guided for is basically zero over the year. You have seen that in the second quarter we have 200. And so I adjusted the overall charge of 1.4 to minus 1.2. So basically, the gain that we have taken this quarter, I've adjusted it. So that basically means I still, with whatever I see, I consider it will be zero for the rest of the year. Listen, there are many volatile elements. There can be, like here, there have been some elements on liquidity and also given the transactions that we have been doing, That basically gets accompanied by derivatives in that time that impact. So our overall guidance remains on zero. Can you also rephrase your third question on the capital gains?

No, in the past you've guided to regulatory headwinds. Is there anything we should consider?

Well, the headwinds we have been having in the past are indeed material. So there is the whole supervisory and regulatory changes that we have seen. At this stage, we have seen it coming down. If I can look at it, if you look at Europe and the legislator, They basically see that they have to find the right balance. So on one hand, the FRTB is pushed already to the end of the decade, and we'll see what they do. And if you look at the simplification document that has been published by Brussels last Friday, they are really looking and also reflecting on how the whole banking regulation can be coherent with banks supporting the economy. So that's a bit where it stands. Remember our guidance though, we have said that on average what we still expect is the impact of 10 basis points given regulatory supervisory kind of things. So we stick to that, we don't see anything else on the horizon.

Okay, thank you.

Operator, we're done.

We have no more questions registered at this time.

So again as a conclusion, As you can see, we delivered on the CT1. I guess we gave some additional clarification on anything that is going to take place now in terms of distribution, return to shareholders, and additional buybacks. 13% is a 10%, not more. We are very confident in our target that is earnings growing at a minimum of 10% on a yearly basis. We are well advanced in terms of preparing the next term plan, in particular for anything that is a support function, additional efficiency. Close enough... To confirm that so far we haven't found any, I would say, additional complexity or anything that could prevent targets we already, I would say, gave previously, that is to say, a 50% cost income ratio for 2030 and a return on tangible equity of 15%. So this is, in a nutshell, the situation we're in. Good strong quarter, good momentum and I would say a solid preparation of the next plan to come with those targets that we believe are more than a possibility for us looked at from the second quarter of this year. and the next plan will start in only half a year because in five months we'll be in the next plan. So we have to be confident and we are confident. Thank you so much. Take care.

Thank you. Have a good summer.

Ladies and gentlemen, this concludes the call of BNP Paribas second quarter 2026 results. Thank you for participating. You may now disconnect.