Credit Agricole Sa

Ladies and gentlemen, thank you for standing by, and welcome to the Credit Agricole first quarter and full year 2020 results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone keypad. I must advise you that this conference is being recorded today. I would now like to hand the conference over to your speaker today. Mr. Jérôme Grivet, please go ahead.

Good afternoon, everyone. Indeed, 2020 has been a very peculiar year, and I'm happy to hand the floor over to Philippe Brassac with us today to introduce this results presentation. Well, thank you, Jérôme, and good afternoon, everyone. Philippe Brassac speaking, and of course, I'm so sorry not to be able to meet with you as we were used to do this in London. But naturally, I do hope this will be possible once again next year. Anyway, I'm really very, very pleased to present and to comment with Jerome our main figures, our main performance for 2020. And I would like to tell you that I'm especially pleased to report that We can both hugely commit to the economy, to our customers, to help them to pass over the crisis because this is our main mission, and in the same time to reach a high and regular high level of profitability since you probably saw that our return on tangible equity was at 9.3%. I guess we must be in the best benchmark in terms of return on tangible equity, at least probably within the French bank group. This is why the board decided this special mechanism in terms of dividends to prove our loyalty towards all our shareholders. because this is, of course, our first target in terms of relationship to our shareholders. And I think that we succeeded to conjugate optimization of the dividend and simplification of our financial organization, since you saw that we decided to completely unwind our switch mechanism The last decision was to unwind for 50 persons at the end of the current plan. And thanks to the level of our solvency, we decided to unwind towards 100 persons. And it's a pleasure for me to report that I'm sure that we are very useful to our economy, to our customers. then we can reach a high level of profitability, and then we can go back to our shareholders to thank them. And with this mechanism, being able to give you the highest level of dividends we could decide, and in the same time, simplifying the financial organization of the group. This is my main message for the introduction, and I immediately give the floor back to Jérôme. Thank you, Philippe. I will go back on page four to comment the main figures of the results of the group and of Credit Agricole SA for the last quarter and for the full year of 2020. Let me start with CASA on page four. Of course, you have in mind that in December, we had announced that we were going to impair partially and quite significantly, actually, the value of our stake in the capital of Crédit Agricole Italia. This is, of course, impacting the stated figure of our net profit for the quarter, but you know that it has no impact neither on our cash position nor on our solvency, so I will skip this element. So it means that in stated net income group share before this goodwill impairment, the net profit of CASA is above 900 million euros. And for the full year, it's close to 3.5 billion euros. If I restate those figures from the exceptional items that are described a little bit later on in this document in the appendix, we end up with an underlying net profit of close to €1 billion for the last quarter, and close to €3,850,000,000 for the full year. It's down only, quote-unquote, 16% as compared to the full year 2019. This is the result of a very solid combination of a top line that is growing above 2%, both on the quarter and on the full year, a cost line that is slightly down, showing again our agility, which is leading to a cost-to-income ratio which is now below 60%. I remind you that it was the target that we were aiming at for 2022, so it's been reached two years in advance. And this very solid set of operational figures leading to a gross operating income up close to 5% for the full year and even close to 8% for the single quarter absorbs quite nicely a strong increase in the cost of risk, which of course is in part and in significant part due to the provisioning of performing loans. In addition to those elements, I want to mention the solvency at CASA, which end of 2020 ends up at 13.1%, including our distribution policy that I will comment a little bit later on. And as Philippe said, we are posting a return on tangible equity, which is at 9.3%. It's, of course, down as compared to the close to 11% figures that we had posted last year, but part of this decrease is due, of course, to the decrease in the net profit, but part of this decrease is also due to the very strong capital base that we have this year, again, with this 13.1% solvency ratio that we are posting. You'll find on page five the corresponding figures for the group globally. Let me go directly to the underlying net income group share, €1.4 billion for the group in the last quarter of the year, and above €6.1 billion globally for the full year. And again, a nice combination of the top line that is growing, the cost line that is going down, so solid performance in terms of gross operating income, absorbing the cost of risk, That is multiplied by more than two over the full year, including a very strong provisioning of the performing loans. Solvency ends up at group level at 17.2%. It's a record level, an all-time record for Credit Agricole Group and probably one of the strongest figures among the space of European SIFI banks. I think we can skip page six because I think that Philippe mentioned most of the elements that are on this page, and we can go directly on page eight where we have some indication on the way we've been actually producing these financial performances. On the left-hand side of the page, upper part, you will see an indication of how the French economy evolved in the full year, month after month. What you can see on this chart is that actually, first, the second lockdown was less impacting than the first one. And second element, every time a lockdown ends, you see a very strong rebound in the level of activity. This is leading for us to globally across all our business lines to a very strong level of activity in the fourth quarter of the year. It's been the case for the insurance activities with a very strong rebound in the sale of new policies in P&C and protection. It's been the case also in asset management activities where we had a very strong level of net inflows. It's been the case also in retail banking activities, in consumer credit businesses, and also in the CIB. For the full year, and I think it's interesting to keep that in mind, we see in retail banking an evolution of the loan outstandings, which is very positive, plus 5%, excluding the state-guaranteed loans. we often have in mind the image that the networks have been spending most of their time in 2020 producing state guaranteed loans. It's not the case. They have been working also on home loans, consumer credit loans, or equipment loans for their professional and SME customers. In addition to that, I want to mention that globally, Three retail banks of the group in France and Italy attracted 1.5 million new customers for the full year of 2020. So it means that we've continued to focus on customer capture, which is, of course, a key for the future development of the group. Last point on the left-hand side, bottom part of the page. All in all, after this bumpy year, we've managed to post a level of production in the main activities of the group, which are very close to the high level that we had reached in 2019. For example, in home loans, the production of new home loans in France. we've managed to generate 96% of the production of the home loans that we had produced in 2019, so it's a very good performance overall. And it's the same, for example, in the sale of P&C insurance policies are close to the same for the production of new consumer loans. On page nine, some indications of some analysis of the evolution of our revenues in the last quarter and in the full year of 2020. Just maybe to put it in a nutshell, first, we benefit as a CASA from the diversification of our businesses. It means that when on a specific quarter some businesses are more impacted by the context, we know that maybe some other businesses are going to overperform, and it's been the case both in the quarter and in the full year. Second element that is important, three quarters of our revenues stem from a or policies or items that already sit in our balance sheet. So it means that we are not so much dependent on the new transactions of the year to generate revenues. And the third point, which is important, is that only 37% of our revenues directly come from net interest margin. which is quite important in the circumstances that we have crossed in 2020 where we've seen new lows in terms of interest rates. As far as expenses are concerned on page 10, what you can see is that we've been, again, quite agile and quite disciplined in the management of our cost base, which is down minus 1.1% on the quarter and minus 0.3% on the full year, thus leading to a very low level of cost-to-income ratio, 59.6%. It's already at the level of the medium plan target two years in advance. On page 11, some indication about the quality of our loan book. And what you can see is that globally for the group and for CASA, we have levels of NPS that continue to be low, 3.2% at CASA and even 2.4% at the group level. And in both cases, it's down 0.2% as compared to end of September. So it means that we are not in the situation that some people like to describe where all the – The bank customers are getting worse and worse. And in addition to that, we've improved over the quarter the coverage ratio of these NPLs with our loan loss provisions. We have at CASA level coverage ratio, which is now at 71.5%, and at group level at 84%. It's 20 percentage points ahead of the average of European banks, as we have seen on the EBA semi-annual transparency exercise. The global amount of loan loss reserves that we have end of this year stands at 19.6% at group level and 9.6 billion Euro at CASA level. It's a little bit above what we had at the beginning of this year. So we've improved this year globally our capacity to absorb future losses. In terms of cost of risk itself on page 12, what you can see is that first, the level of additional provisioning in Q4 has decreased a little bit as compared to Q2 or Q3, both at CASA level and at group level. And the second key point, which is important to have in mind, is that over the full year, at CASA, almost three-quarters of the increase in the level of provisioning is due to performing loans. And at group level, it's even more. It's close to 100% of all the additional provisioning that is related to performing loans. So it means that clearly this year has been earmarked by significant efforts to completely coherent with the IFRS 9 regulation to cover future and potential losses and not occurred proven risks. If I go now to the analysis of the net income on page 13, what you can see is that the net The gross operating income, so the operational income, has increased by close to 500 million euros over 19, if I take out from this calculation, the supervisory costs, and the decrease in the net income between 2019 and 2020 is more than explained by the increase in supervisory costs, by the increase in the cost of risk, stage one and stage two, meaning the cost of the provisioning of performing laws. Page 14, the dividend. Philippe said it. the board of Credia Equal S.A. have decided to propose the General Assembly meeting that is going to take place in May to propose a dividend of 80 cents to our shareholders, 80 cents per share, with a script dividend option. And our majority shareholder, SIS Labo S.E., has announced its intention to take this script dividend option. This has enabled us to propose this level of dividend, which represents for all our shareholders a dividend yield of around 8% as compared to the current price of the share. This script dividend option that is going to be taken by our majority shareholder is clearly going to initially create a significant number of new shares, thus a certain level of dilution that is going to depend on the number of new shares that we are going to issue, so the actual reference price of these issuance next May. And this is to offset this potential initial dilution that we complement this dividend proposal with two additional mechanisms. The first one, Philippe mentioned it also, which is to enhance and modify our commitment of unwinding the switch mechanism. The initial commitment that we had made was to unwind 50% of the switch by end 2022. And we are now modifying this commitment in order to get to 100% of unwinding by end 2022. And the second element is that we also are going to launch an exceptional share buyback mechanism in order to fully offset this initial dilution. I'm sure that you will have some questions on these different elements of the dividend policy, so I propose to stay at this level of explanation now and we will probably go back on this during the Q&A session. Let me go now to some other and key elements of reporting about what we've been doing in 2020 because besides the financial figures, As Philippe mentioned, we've continued to deploy our group project, and we've continued to behave towards our customers in accordance to our DNA and also in accordance to our own best interests. This is why we've been very active in supporting our customers by granting state-guaranteed loans. And actually, indeed, we've provided to the French customers 27% of all the state-guaranteed loans attributed in France. We've been also very active in granting payment holidays on pre-existing loans. And at the peak of 2020, it was more than 550,000 payment holidays that had been granted in France for 4.2 billion euro of deferred maturities. around 80% of all these payment holidays have now ended, and in 98% of the cases, the payments have resumed completely normally. In addition to that, we've also been very active in granting direct support to our customers. It's been the case with Credit Agricole Assurance that it has provided support a very strong and extra-contractual support to its small business and self-employed professional policyholders in the second quarter. It's been also the case with different entities of the groups that altogether provided in excess of 70 million euros of solidarity donations and different kinds of support in 2020. We've continued to develop our global relationship model in 2020, and we've been, at the same time, improving our digital features, but also with continue to improve the quality, the efficiency, and the empowerment of all our staff that is facing customers in order to be compliant with our commitment to provide the best of digital and the best of human relation to all of our customers. We've continued to work alongside our commitments to support societal transitions, both in the direction of being an ESG leader, and it's been the case in the investment field of the group, Amundi and Crédit École Assurance, but also in the banking areas with CIB, with LCL, and with the network of the regional banks. And we've also been very active in our inclusivity commitment because we believe very much in our social role in terms of inclusivity. And we've been, for example, a very important employer when it comes to hiring young people or when it comes to proposing initiatives traineeships to students. We've continued to deploy our global strategy, and you know that the strategy of CASA is at the same time to permanently strengthen the intensity of its relationship with its customers, but also to offer the capacity to its specialized business line to deploy their activities on additional customer basis through different kinds of partnerships. And indeed, we've been very active, despite the difficulties of the year, in concluding new partnerships in Europe and in Asia in the different specialized business lines that we have in insurance, in asset management, in consumer credit, or in wealth management. Lastly, we've continued to dispose of non-core assets in order to keep permanently focused on our main strategic lines. Let me go now starting with page 22 on some additional comments on the performances of the different business divisions of the group, starting with the asset gathering and insurance activities on page 22. I think that what we have seen – across this year in the assets gathering and insurance business division is a very difficult start of the year with markets that were in perfect turmoil and a progressive recovery. And in Q3 as well as in Q4, we have had at the same time a recovery of the market valuation of our assets plus strong inflows And it's been, again, the case in Q4, both in the asset management and in the life insurance activities. So, overall, a good quarter, and overall, a quarter that is ending with a total contribution of the business division that is, of course, impacted by the very hard beginning of the year, but which is, all in all, very positive for the full year. If I drill down on the insurance activities, what we have seen in the last quarter of the year was a very strong rebound of the activity with, all in all, the net premium income, which is up 3% as compared to Q4-19, and up close to 20% between Q3 and Q4-20. And it's been especially the case in non-life activities, so P&C activities, and protection businesses, which actually continue to post year after year a significant increase and continue to represent a very sharp gain in market share in France and in the other countries where we are active. In terms of financial figures, This quarter was very solid with a top line of 3.5% and a cost line which helped by taxes is significantly down. You may see that the level of taxes is very significantly up. It's due to the fact that we've been booking some provisions on some assets that were not tax deductible. And the last point, but you have that in mind since Q3, is that we now book the cost of the 81 debt of credit equal assurance directly in the P&L and not against equity. So this is why you have now a minority interest or non-controlling interest line, which is negative by 34 million this quarter and 80 million for the full year. But actually, it has no impact in terms of earning per share. It's only a different type of accounting. And so, restated quote unquote from these elements, the net profit of the business division would have been close in 2020 to what it was in 2019. Amundi and asset management, I think we can summarize the quarter with this idea that it posted two records in Q4 2020. a record level in terms of assets under management above €1.7 trillion, and a record level in terms of net profit on a single quarter. So it's definitely been a very dynamic and positive quarter for Amundi, concluding a very good year. LCL on page 25, a very solid quarter and a very solid year indeed. This quarter, the activity was certainly impacted by the second lockdown, but much less than in Q2. And this explains how we've been able to post a significant increase in the level of loans, outstandings, our customer assets. From a financial viewpoint, again, this quarter and for the full year, a very positive job effect leading to an increase in the gross operating income, of course, an increase in the cost of risk led by the provisioning of performing loans, of course, like in all other business divisions, and all in all, a very positive and resilient year for LCL in the context. In Italy, the beginning of the year was probably harder impacted by the lockdown than in France. And this explains why the activity was subdued in Q1 and Q2. It started to rebound in Q3, and the rebound continued actually in Q4. And in Q4, for the first quarter of the year, we've managed to post an increase in the top line in Crédit Agricole Italia. In addition to that, we've been booking some additional provisions of course but thanks to a very significant sale of a an npl portfolio we've continued to improve the level of npl which is down and the coverage ratio which is up this quarter so very resilient a quarter for critical italia all in all in italy You have the different figures that we usually post about all our Italian activities on page 27. What I can note is that globally in Italy for the full year, we've managed to keep a level of profitability which is very high, 571 million Euro of underlying net income group share for the full year, which is only down 11% as compared to the same figure in 2019. Maybe in addition to that, a few elements on the Creval operation, which is going its way perfectly online with the initial schedule. We've announced the offer on November the 23rd. We've finalized all the filings mid-December. We have received the final approval of the European Union in terms of antitrust authorities beginning of February. We have also received the approval of the Italian authorities, so we now have to wait for the ECB approval, and then we can file the offer file with the CONSOB in order to launch effectively the offer, so we are perfectly in our scheduled timetable. The rest of the international banking activities on page 28, clearly it's been a difficult year because in most countries where we are active, we have had two adverse elements. The first one was a significant decrease in interest rates as an answer of the monetary authorities to the crisis. And this has put a very significant pressure on the revenues. And in addition to that, we have had to book a significant additional provision. But we are now progressively recovering. The coverage ratio of our non-performing loans in all these business divisions is above 100%. And in addition to that, we have announced beginning of January that we have signed the disposal of our banking activity in Romania, which was for sale since quite a long time. In the specialized financial services division, so consumer credit, car financing, leasing, and factoring activities, Again, the last quarter of the year was earmarked with a strong rebound in the level of activity. And as an illustration to that, we can say that at CACF, the best month of the year was December, which is not usually the case. So this helped. to contain the decrease in the global loans outstanding to around minus 1.3%. Of course, this was not completely enough to preserve the top line. But I think that what is remarkable is the capacity of this business division to really adjust the cost base in order to try and preserve as much as possible the profitability. So on the last quarter of the year alone, the cost-to-income ratio is below 49%. So it's a very reactive approach. The cost of risk on the quarter is up as compared to Q4 2019, but slightly down as compared to Q3 2020. So clearly, we are not, again, in this business division in the situation of a massive deterioration in the credit quality. Going now to the large customer division, what we can note is that the last quarter was a little bit less buoyant than Q2 and Q3, but nevertheless, it's been a very good level of activity as compared to Q4-19 because we are up globally in terms of revenues a little bit more than 1%. In the asset servicing activities, we are now in a situation where we progressively benefit from the integration of Santander security services in the perimeter of CASEIS. And so we are going to progressively compensate the minority interest that we recognized for our minority shareholder Santander. If I drill down on CASEIS now on page 31, we have had this quarter a stability of the top line, which is actually due to a forex effect because we stated from this forex effect the revenues would have been slightly up. But what is interesting to note is that for the full year, we are posting revenues up close to 9%. And thanks to very good cost control, the gross operating income in this business is up close to 15%. So despite a very sharp increase in the cost of risk, it's a multiplication by five for the full year. But keep in mind that in H1-19, we were still in a situation of loan loss provision reversal. So we've been able to absorb very significantly this increase in the cost of risk with keeping a very high level of profitability for the CIB division, close to 1.2 billion euros for the full year. And again, I want to note the very attractive cost-to-income ratio at CACIB. Corporate centers. We continue to improve structurally the corporate center. Seems that in Q420 we were a little bit down as compared to Q3, but actually it's mainly due to a tax effect. If I zoom on the revenue line or on the cost line, the improvement continues to be here quite significantly this quarter again. Regional banks of Credit Agricole, of course, we will find more or less the same trends as the one we have seen at LCL, a very dynamic level of activity in Q4. Very good cost control. Of course, there's an increase in the cost of risk, but if you see the performance for the full year, you will note that again for this perimeter, the whole of the regional banks of Crédit Agricole, The contribution to the net profit of the group is down only 14% despite a multiplication by more than two in the cost of risk. So again, this very strong robustness of the upper part of the P&L has been able to absorb most of the increase in the cost of risk. And again, this increase in the cost of risk was mainly made of provisioning of performing loads. For the full year, the regional banks of Credit Agricole managed to attract more than 1.1 million new customers, so very significant customer attractivity. If I go now on page 36, it's the financial strength and the solvency at CASA level. You will see that in terms of RWA evolution, we've been very prudent this quarter, and indeed the overall RWA evolution is slightly down, let's say stable between end of September and end of December. It's the combination of a reduction in the business line's contribution, a slight increase in the insurance contribution because of the net profit that is not paid under the form of a dividend to CASA yet, and then some methodological and regulatory effects, which represent all in all an increase of a little bit more than 5 billion RWAs. This is leading to a solvency ratio that increases significantly between end of September and end of December. It's the result, of course, of the good level of profitability, plus the fact that our dividend policy is going to represent a smaller impact on the solvency than the one we had provisioned and accrued end of September. So there is a positive effect of the distribution this quarter, which is a little bit counterintuitive. The RWA evolution, considering what I've said, is positive, too. And then you have some technical, methodological, and regulatory effects that bite a little bit the solvency ratio. But we end up the year at 13.1%. If I already deduct from this level the impact of the decision that has been announced that 15% of the switch mechanism will be unwound end of March, it will nevertheless leave us with a solvency of 12.9%, so well above any regulatory requirement. At group level, also a very high level of solvency with more or less the same elements, a very flattish evolution of the RWA basis, plus $2 billion across the quarter, very good level of results that is integrated in the solvency, and all the other technical elements that do not play a significant role. So, all in all, 17.2% CET1 ratio, which, of course, triggers also a very high level of TLAC and MREL ratio, as well as a high level of leverage ratio. Liquidity is definitely not an issue. Our reserves, our LCR ratio, All our indicators are at their highest levels ever. It's just interesting to note on this page that in terms of TLTA growth growing, we end up the year with a total outstanding of 133 billion euros of growing for the group globally. on page 39, definitely the 2020 program has been completed under very good conditions, and we have announced a program for 2021 that is going to be reduced, considering the ample liquidity that we have, and that is going to be concentrated on TLAC-eligible debt and not on senior I think we can now stop the presentation, and I'm more than happy to answer to your questions, of course, with the help of Philippe, if you want to address directly some questions to him.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star 1 on your telephone keyboard and wait for your name to be announced. Please stand by while we compile the Q&A query. This will only take a few moments. If you wish to cancel your request, please press the ask key. Once again, it's star 1 if you wish to ask a question. Thank you. And our first question comes from the line of Giulia Miotto from Morgan Stanley. Please ask your question. Your line is open.

And yes, hi, good morning. Can you hear me?

Yes, perfectly.

Okay, fantastic. So then let's go back to the 80 cents dividend, if possible. Could you perhaps just clarify the steps, sorry, the timeline of the steps? So the share buyback, if I understand it correctly, is going to happen in Q4, not earlier. Yes. And then secondly, the 20 basis points of capital limit imposed by the ECB, how does this announcement fit in to that? So that's my first question. And then the second question, we have seen some changes in the competitive landscape in France. and I was wondering if that has any implication for CREDAG or if the group is considering you know any senior movement.

Thank you. Okay on the dividend and to be precise the share buyback is going to be done in two steps. The first step can be done before the ending of the present recommendation of the ECB because it's It's part of the dividend policy that we have announced to the ECB. Let me try to explain it this way. The ECB has granted us the authorization to pay this dividend with the idea that the majority shareholder is going to take the script dividend option as well as the mutual fund of the employees. So let's say 60% of the dividend is going to be paid under the form of shares. And the conservative assumption, which is coherent with the 20 BIPs CT1 impact at group level, is that the rest of the dividend is going to be paid in cash. So the rest of the dividend, i.e. 40%. If a certain proportion of the minority shareholders choose the script option rather than the cash, it's going to create additional shares and additional capital in excess of, I would say, the conservative assumption that is made by us with the ECB. And all these shares created in excess of this conservative assumption can be bought back and destroyed before the ending of the recommendation. So I don't know exactly what will be the magnitude of this first layer of the buyback, because by definition I don't know what is going to be the take-up of the minority shareholder. It's probably not going to be zero. for sure, and historically it's always been in the region of two thirds, but I don't know exactly what it will be this time. And the only thing I know is that all these shares can be bought back before end of September. Then we will conduct a second buyback operation, which has to wait until the ending of the recommendation of the ECB, which will require a specific authorization from the ECB, so it's not going to take place any time before end of September whatsoever. And this second operation will be dimensioned in order to completely offset the last element of dilution that could remain after the unwinding of the switch and after the first layer of buyback. So this is why it's very difficult for us to exactly calibrate the amount of the buyback. So we've said that it can go up to a maximum of 5% of the capital, but it fully depends first on the price of the shares that we will issue in May, and second on the take-up of the minority shareholders. So I don't know if I'm completely clear. I hope so, but I think that I have also answered your second question regarding the dividend, which is that the assumption of zero take-up by the minority shareholders, and so the assumption that 40% of the dividend is going to be paid in cash is the indicator that is coherent with this 20 bps impact of CET1 ratio at group level. As far as the competitive landscape in France is concerned, well, we've always been in a very competitive market in France, that's for sure, and we've proven the regional banks of Crédit Agricole on the one hand and LCL on the other hand, but also CACIB for the wholesale banking activities that we know how to evolve in a competitive landscape and we know how to try and gain market shares and gain customers. We haven't seen any significant changes in the competitive landscape in France, especially in 2020. We've been focused on first adapting our setup to the environment and to the COVID crisis, and second, try and continue to develop our activities. But clearly, the landscape was competitive, remains competitive, and we don't expect it to be less competitive going forward.

Thank you.

Thank you.

Thank you. Our next question comes from the line of . Please ask your question. Your line is open.

Yes. Good afternoon, gentlemen. So two questions coming back on the 80 cents. The question is twofold. First, I want to make sure that all that setup is really specific to 2020, obviously, distribution. And then if that's the case, is there Are you going to update a little bit how you're going to break down the excess capital between acquisitions, capital returns, minimum CC1 requirement? Is that changing on the back from your 2022 plan on the back of what you have announced? That's the first series of questions. And the second one, it's amazing how this setup is really showing how your alignment of interest within the group between mutualists, between clients, between shareholders have really come to its peak efficiency here. Is it something you could have done five, six years ago? Or do you have the feeling that it's only now, in the way the group is organized, that it's something that could effectively be done? Thank you.

Thank you for your question, Jacques-Henri. I think that I will wrap up my answer to all the aspects of your question in one, because actually what we are doing this year is specific. We are in a specific situation, which is a situation created by the constraints of the ECB. We are in a specific situation because we have this remaining 50% of the switch mechanism that was to be unwound at a certain point in time, and we have now the opportunity, and we are certainly in a specific situation that is going to last because it's part of our DNA, which is that we have this majority shareholder. So indeed, we are taking specific measures to address the specific situation of this year, taking advantage of the specific organization of the group, but we are not going to repeat going forward this specific set up of elements because we don't want to, what we are aiming at is as Claudia equally said, towards its shareholders is to behave like an investor-friendly vehicle. So we find it relevant this year to address the specific situation by this specific setup of measures. But going forward, we will go back to a normal cash dividend payout, hoping that these constraints is not going to be repeated in the future. So what are we going to do to catch up with the rest of the dividend that has not been paid in 2019? We will see. The idea is that clearly we think that we will end up after all these operations with an excess of capital that will continue to be significant. Again, it depends on the price at which at which the new shares will be issued. And so the number of new shares, but probably after all these operations, we will end up close to 12% in terms of solvency, which is far above our 11% target. So we'll have some when, but probably when the situation is clearer as to reassess and update our capital trajectory. And this is something we will probably do in the course of this year.

Fantastic. Thank you. Thank you.

Thank you. Our next question comes from the line of Jean-Louis from Goldman Sachs. Please ask a question. Your line is open.

Good afternoon. So I would have to continue a little bit on the dividends. So the question I'm asking is very simple. Is it 80 cents? As far as I look in the past, it's a bigger number than the dividends of the regular, so to speak. years of when it was supposed to be and i just wondered whether so you just alluded that you could be the next after that after 2020 because you have some access from 2019 remaining but i just wanted to understand whether in your opinion and that you have said this 80 cents so to speak of precedent whether you think it's from here if you have to drop it down again. You see, a lot of companies don't like to give it and go back down unless they call it a special dividend. So I just wanted to understand your thinking for the slightly more forward-looking part of the DPS, which is important for income funds. And the second thing I wanted to ask is, just this year on asset gathering and your strategy of plugging your product factories into networks. So, for example, now you're doing this also with potentially the acquisition of Creval. But, for example, we saw that the renewal of the agreement with certain banks has led them to choose open architecture, which to an extent weakens, you could argue, the competitive position of the exclusivity of some of your product factories. I wanted to understand what you think is going forward, in particular, if the European banking landscape consolidates. whether you think you need to go faster in acquiring networks or bolting them on, or whether you think you have more opportunities to strike new partnerships to offset the ones where maybe they weaken slightly going forward. Thank you.

Thank you, Jean-François, for your question. Let me go back on your first question. It's way too early to tell what we are going to do after 2021. It's clear that In our mind, we are going to pay 80 cents of dividend on the basis of... A total intended dividend, I would say, that was 70 cents for 2019 and probably around 50 cents for 2020. So it means that we will have paid around 80 cents out of 1.2 euro of dividend that could be accrued on the basis of our 2019 and 2020 results. So we think that we have the capacity to continue in the coming two to three years to somehow complement our normal traditional dividend policy for our shareholders. But having said that, I... I am not in a position to tell anything precise on what level, how it's going to be spread, how it's going to translate in terms of commitment, and so on and so forth. It's way too early. I leave you make your hypothesis and your assumptions. It's just that if you take a look back, the math of the ones that I've just explained We would have paid, after all these operations, 80 cents out of 1.2 euro. In terms of asset gathering activities and how we can continue to develop our capacity to distribute going forward, I think that... And you have seen that. We've been doing that in 2020 despite the difficulties of the year. The idea is clearly to continue to conclude partnerships. And sometimes we are going to conclude partnerships with banks that are going to change their mind or be part of the merger, of a merger that will put an end to the cooperation with us. But the idea is that We have the capacity regularly to conclude new partnerships because our business lines, our specialized business lines in the asset management, in the insurance business, but also in consumer credit and so on and so forth are strong. They are attractive, and they can provide our partners the capacity to enhance their offer towards their customers. So if some of our partners decide to put an end to a partnership or to enter into a more open architecture, well, so be it. Again, we have the capacity and we have proven it again in 2020 to continue to pile up new partnerships in order to continue to develop the distribution capacity of all our business lines.

Okay, so it doesn't make buying banks more attractive compared to the past in order to secure better.

No, no, no, no. Clearly, the operation that we have launched on Creval is very specific, and it directly links to the fact that we are already a retail bank in Italy, so we have the capacity to generate cost synergies, revenue synergies, by merging Creval and Crédit Agricole Italia. But we don't have the need to grab the control on additional distribution capacity. We clearly think that for banks that are successful in their banking business, in their core business, but need to enhance the quality and the variety of their product offer, it's attractive for them to enter into partnerships with our business lines.

Okay, excellent. Super clear. Thank you.

Thank you. Our next question comes from the line of Omar Fall from Barclays. Please ask your question. Your line is open.

Good afternoon. Can you hear me? Yes, somehow. Brilliant. So just a couple of questions for me. So if I reverse the 800 million or so of stage one and two provisions, you're basically hitting your 11% ROTI target under the MTP without really doing anything else and bearing in mind you're carrying more capital than your target. Are you still happy with that 11% target? Because I guess for most banks, it's a struggle to make a double-digit return. Assuming the macro environment continues as expected, what other headwinds should we think about for you not to hit that number? Is it just normalization of capital markets revenue? Is You know, I don't expect you to tell me that, you know, you're going to be your target or not, but I'm just trying to think, you know, what are the potential headwinds? And then just a higher-level question, but, you know, looking through your presentation, I don't really see much mention of the topic of potential transformation of all the excess retail deposits from individuals because of the pandemic, you know, the potential to shift these into... unit link products, mutual funds, you know, I would have thought this trend would be a key one for you of all the banks. Is that because you don't see signs of it yet, or you think these excess savings are just gonna sit in side deposits and leave it out? Thanks.

Well, on your first question, it's true that we have reached close to 11% return on tangible equity back in 2019. This year, we have had this additional Stage 1 and Stage 2 provisioning, and this is part of all the elements that explain that we are down back to 9.3%. Nevertheless, 9.3% for this year, it's a very good and very performing level. We continue to target to be at 11%. we see what will be the positive and negative elements that are going to help us and to preclude us from reaching this level. I'm sure that there are still lots of uncertainties going forward, and so I'm sure that we will have to struggle to reach, again, this 11 percent level. And I'm not in a position to tell that, of course, we are going to rise this target because We have been close to reaching it this year if we restate the figures, again, from the S1 and S2 provisioning. So there can be headwinds. There can be tailwinds going forward. I think that our idea and our commitment is to try and reach the target with almost any kind of combination of headwinds and tailwinds. The transformation of side deposits and livrea into longer-term savings products may, going forward, it may represent an additional source of business for our insurance activities and for our asset management activities. We haven't seen, in 2020, a very strong trend towards that type of move by our customers. And what we have seen, on the contrary, is the permanently growing level of side deposits and Livre R and Pell and whatever, because there has been some, I would say, attentism from our customers. And I think this is not going to change before the sanitary situation is a little bit settled, which we expect to take place probably middle of this year, not before. So, of course, we are ready, Amundi is ready, Crédit Agricole Assurance is ready to make offers to the customers that would want to invest longer these amounts as soon as they have more clarity on their own future. But for the time being, it's not really what we see. But we are ready to, of course, to be here if and when the customers will want to make longer-term decisions with their savings.

Great. And just a cheeky follow-up, but just the NII at LCL, very briefly, you know, there's a big jump there that you mentioned is driven by favorable outcomes. refi conditions. Sorry if I missed that. Is that TLTRO? I thought you did most of the allocation.

It's a combination of elements at LCL. The NII increases by around 30 million Q3 to Q4 and close to 50 million, if I remember correctly, Q4 and Q4. The improvement is due to a volume effect. By definition, loans' outstandings are growing, and it's helping. It's also due to the refinancing conditions, and the TLTRO is clearly part of it. And there's also, we've mentioned that LCL, and again, it's a benefit of the global group in which we are, LCL has sold down a portfolio of loans to Crédit Agricole Assurance. Crédit Agricole Assurance is looking for assets that are at the same time safe and more rewarding than sovereign bonds, and LCL is keen to not to consume too much liquidity, and so LCL has sold a home loan portfolio of around 400 million euros of loans to Predica in the last quarter, and it managed to lock a small but significant at the scale of the evolution of the NII, capital gain on this sale. So, this is part of the improvement of the NII in this quarter.

Thanks, Jeroen.

Thanks.

Thank you. Our next question comes from the line of Guillaume Tibeguine from XM. Please ask your question. Your line is open.

Yes, good afternoon. The first question relates to Basel IV. Can you update us about the impact and, if possible, to give a bit of details on the timing and the areas where that will impact? The second question relates to a partnership in consumer credit excluding the 89 million dispute on FCA Bank. is only 50 million. We were used to 70 or 80 million per quarter. And so from the 51 of Q4, what would be a sort of new normal if you want? And then the final one, if I may, your current equity tier one target was announced pre-CRD5 Article 104. So are you going to reduce it? And if so, is it going to be the story of the next strategic plan? or the story in one year? Thank you.

Basel IV seems to be the never-ending story. It's been postponed, so now the timetable is that it's due to enter into force in 2023, and we are still waiting for the draft proposal of the directive from the European Commission. And it's going to phase in progressively up to probably 2027 or 2028 with the full ramp-up of the output floor mechanism. So it's definitely a long shot. And we don't have full clarity as of now of the fine-tuning of the different elements. we'll be able to assess more precisely the impacts when we have the draft proposal of the European Commission. But I remind you that when we published the medium-term plan, we said that this would represent a 60-bps impact on the CET1 of CASR when entering into force. So, for the time being, we keep this in mind. order of magnitude in mind, but we will fine-tune better and better assess this impact when we will have the draft directive of the Commission, which is expected probably for this spring. Nevertheless, I think that, and this is also relating to your last question, I said earlier that we were going to update our capital planning going forward. We'll be able to do that with integrating the Basel IV impact and with also taking full account of this Article 104A that has a positive impact, actually, on the CT1 requirement, considering the fact that part of the PILAR II requirement can be covered with subordinated debt. may lead to the conclusion that you have in mind. The different JVs in the car financing business, in the consumer credit and car financing business, well, I think that the reduction in the level of contribution this quarter is mainly due to the fact that besides the positive one-off effect on the FCA dispute, All these entities have booked, like is the case directly at CACF, additional provisions in the last two or three quarters. So this has triggered a slight decrease in the equity account contribution, but the production of the car financing entities has been very good in the last period of the year, both in China and in Europe. And the other entities... accounted for on this line are starting to recover also. So I expect that this level you were mentioning is a little bit low point that we are going to be able to recover going forward. Thank you. Thank you, Guillaume.

Thank you. Our next question comes from the line of Tariq El-Majad from Bank of America. Please ask your question. Your line is open.

Hi, good afternoon. Just a couple of questions, please. So to come back on the dividend, I mean, that needed some engineering, but that's welcome. I'm just wondering why you didn't just pay the limit you had to pay on ECB until end of September and then do a big amount, big payment after that? Because, I mean, question is I'm wrong, but... So the way you will do it is that the ownership from the SIS or the labor will raise a bit, you know, because even if you have the buyback, would that offset completely the shared issues? Maybe you can just correct me here. And certainly on the, still on the capital, so the switch to repayments, do you think would that trigger any lower Pillar 2 guidance or SREP, or there was no concern from the ECB or any add-on in regards to that? And last one, cost of risk. I know we ask you all the time, but could you give us an indication of 2021 level of cost of risk? How will it be versus through the cycle cost of risk guidance of 40 basis points? Thank you.

Thank you, Thierry, for your question. First question, why didn't we simply wait for September and then pay an additional amount in the last quarter? Well, to be frank, this is what we had in mind for last year. we had in mind last year that we will wait for Q4, and in Q4 we will be able to pay something. And actually what happened is that for some reasons that we can understand, it was not made possible. So clearly this year we've decided that as we had the capacity with some engineering to immediately offer the optionality to our shareholders, we thought it was better and more assured for our minority shareholders to be afford this optionality one-off directly in May as a normal year. And then it's our task to make sure that at a certain point in time, we are able to do this share by back that we have in mind in order to fully offset the dilution. So this is why we thought this was relevant to put in place this engineering you are referring to. This may indeed lead to a certain relation of the SIS-LABO-SC in the capital of Casa, that's true, but it's going to be minor, nevertheless, and keep in mind that regularly, year after year, with these capital increases that are reserved to the employees, the SIS is diluted somehow. All in all, there are movements and the SISWAC has always been and is always going to be in this region of 55 plus up to 57, 58 percent, whatever. It doesn't change a lot the structure of the capital of the group. And it was not a big drawback considering all the advantages that we are offering to our minority shareholders with this security and this optionality that we are proposing to them directly. Is the switch dismantlement going to lead to a modification in the Pillar 2 guidance? I don't know. I am absolutely not in a position to tell. And we'll see going forward, once it will be performed and completed, how the ECB is going to react to that. But it's not been part of our reasoning. Then cost of risk, it's a very difficult question. If we are right, i.e., if our analysis of the crisis is right, if our analysis of the fact that the public policies put in place to react to the crisis are right, and up to now they have been right, then the pandemic is going to be monitored and kept under control somewhere in the middle of this year. And if the different public supports are not lifted too rapidly, we think that the improvement of the economic backdrop may be very sharp and even sharper than what most observers think. And so, clearly, we think that this should lead to a situation where the cost of risk in 2021 is going to be below the one that we had in 2020. But again, the main word in this environment is uncertainty, and especially uncertainty on the timetable. In my opinion, a certain certainty on the fact that at a certain point in time, the pandemic is going to be put under control and it's going to be over. There is an uncertainty about the timetable, the precise timetable, and that's important to have in mind.

Thank you very much. Thank you.

Thank you. Our next question comes from the line of Azura Welphy from Citi. Please ask your question. Your line is open.

Hi. Good afternoon. Two questions for me. One is on volume and demand in the coming months because there have been some restrictions still in place. And how would this affect demand, especially if we look at the corporate demand that has been, if you want, more stable in the fourth quarter versus the third one? and any color that you can give us on the state guarantee loans there. The other question is on the large corporate and the SIC revenue. They've been a bit soft compared to your usual run rate and also compared to peers. Can you explain us if there has been any peculiarity or any trend that you need to take into consideration?

Sure, Anzora. Let me start with your last question because it's quite straightforward, actually. It's true that in some areas, the FIC activities have performed well in Q4. But it happens that in those areas, we are not very present. And which are those areas? It's the commodities markets, and we are not active in the commodities markets. It's the hedge fund markets. segment of customers, and we are not active towards hedge funds, and especially it's the US-based activities, and we are smaller in the US than most of our competitors, direct competitors. So this explains why. it can seem that we've been a little bit underperforming this quarter. But really, if you drill down a little bit in the different activities that performed well as compared to the one that were subdued, not only for us, but globally on the market, you will note that actually what happened in Q4 is perfectly natural and doesn't show any kind of, you know, dysfunctioning of our activities. So I'm very confident, on the contrary, that we've improved globally our positioning in the field of CIB in 2020, and that this is going to be consolidated going forward. Let me go now to your question about credit demand volumes and so on and so forth. It's difficult to tell, of course. What I can tell you is that we continue to be active, and our networks continue to be active, and we continue to have a certain demand for new state-guaranteed loans. You know that the mechanism has been extended. in France considering the fact that the business restrictions continue to be applied and we continue to see a certain level of credit demand and you know that with this extension of the TLTRO benefits that we may claim from June 21 to June 22, we have now to follow the evolution of eligible loans between the beginning of October 20 up to December 21. This is the new reference to be eligible to the extension of the premium. And up to now, I can tell you that volumes, since this date of beginning of October, continue to be up on this perimeter in France. Okay?

Thank you. And the next question comes from the line of Pierre Chevalier from CMCAC. Please ask your question. Your line is open.

Yes, good afternoon. You can hear me?

Yes, Pierre, perfectly.

Okay. First question is regarding insurance. And more specifically, I wanted to know if you have mentioned a lot the partnerships you want to develop to grow. generally but I wanted to focus on insurance and wanted to know if except Italy you had any expansion project in other countries and I was thinking for instance to develop a creditor insurance through your significant presence in consumer credit or other types of insurance products internationally because in France you're number one And in Italy, you're already number six. First question. Second question, as most of us, we are trying to understand the magic behind the very good figures in LCL. And I was wondering where you are regarding the private bank activity inside LCL, because we don't see a lot of figures regarding this aspect of the question inside the sale and we know that your main competitors are focusing a lot on private bank in their retail network. And my last question is regarding the TLTRO. One of your competitors explained to us that he didn't take any bonification in his account regarding the TLTRO because as you probably know, you have some regarding the way we account for the TLTRO as long as we don't use it. And it seems that you have a more aggressive stance on this accounting point, and I wanted to know why. Thank you.

Thanks for your question. First, regarding insurance activities, It's not exactly true that we stick only to Italy in the development of our partnerships because you may know that we have concluded a partnership in Spain in order to develop a business of PNC insurance, and we have also increased and actually pushed it up to 100% our stake in the capital of Novo Banco insurance in Portugal. So definitely, we are not sticking only to Italy, and we deem reasonable and possible to expand our footprint in insurance in other European countries. In addition to that, I want to mention that actually our creditor insurance business is accompanying our consumer credit business across Europe. And actually, we have a creditor insurance company that is based in Dublin in Ireland that is proposing its products all across Europe with the European passport. alongside with our consumer credit activities. And so, actually, we are active in creditor insurance and we develop the sales of creditor insurance products across Europe simply by accompanying our consumer credit business. At LCL, well, I think LCL is performing well globally. LCL has made choices in terms of focusing its development in certain areas in terms of being very customer-centric and customer-oriented. If I take the figures of the assets managed by LCL Banque Privée, the figure was 46 billion end of 2018. And it's now $54 billion. So it's a strong increase, actually, in two years' time. At the same time, at industrial wealth management, so the dedicated sector, private banking entity that we have, assets under management, which are higher in terms of volumes, were a little bit in decrease because of the refocusing of the business that we've undertaken. So, clearly, the development of the private banking at LCL is quite dynamic, and this translates into the increase in the fees that LCL gets from this activity. So this is another element of explanation of the good performance of LCL.

And regarding the TLTRO?

And regarding the TLTRO, excuse me, we have directly accounted and accrued the benefit of the first premium, the one that is going from June 20 to June 21, we accrue it as time passes by on the basis of this period of one year, simply because we have already reached the condition that has to be satisfied to get the premium. So we didn't see why we should accrue this premium over three years when the condition was already met. And what we have seen when studying the publication of all our competitors is that we were not the only one to do so. We've seen that another competitor is accruing it over three years, I don't know exactly why, but for us it's very clear that considering the fact that the condition was met, the accrual over one year was the only reasonable accounting treatment, and actually it's been perfectly validated by our auditors.

No problem.

Thank you. Thank you. Thank you. Our next question comes from the line of Tom from Credit Suisse. Please ask a question. Your line is open.

Thank you. Hi, Jerome. Can I ask Tarek's question on cost of risk in a slightly different way, which is that a couple of your Frenelux peers have now suggested that the cost of risk will only be a little bit above the through the cycle rate in 2021. And if the economic conditions were suitable that they can actually deliver on that, given your strong coverage, your superior coverage, would you expect to be any different in trend to those peers? And then my second question is just on the switch. How quickly do you intend to retire the other 50% after we go past the first quarter of 2021? Should it be linear or back-end loaded with retained earnings? Given you've made the decision to retire the switch, could we read into that that you don't anticipate any bigger M&A over two years, just bolt-on deals? Thanks.

Well, good questions again. First, on the cost of risk, it's true that we have a higher coverage ratio than most of our peers. but it's clearly part of our DNA. So it doesn't mean that we are here just to, you know, reduce this coverage ratio if the risk raises. So we are going to navigate over time with structurally high coverage ratio because it's clearly part of our DNA, and we are going to accompany the evolution of the economic landscape, and we are going to book the provisions that are necessary going forward. So I don't know exactly what the cost of risk is going to be. I say that it should be, if our assumptions are right, in 2021 below what it has been in 2020. Over a cycle or across a cycle, the assumptions that we had made were that at the level of CASI, it should be around 40 bps, and at the level of the group globally, it should be around 25 bps. We were respectively at 62 and 38 last year, so there is a certain space between those two figures, and again, our business is more to realize performances rather than to forecast them. So we are going to continue to focus on delivering rather than on fine-tuning our forecast, if you allow us. On the switch, I don't know now exactly what the timetable will be. Of course, we are still, again, in a quite uncertain environment, so We thought the most, I would say, the swiftest way to express our commitment was to say we were committed to unwind 50% of the mechanism by end 2022. We modify simply the level of the commitment. We say we are going to unwind 100% by 2022. I will not try to give you clues on which date and so on. I don't know. We'll see. All this is quite recent, actually, because since December 15, which is the date at which the ECB issued its recommendation We have had discussion with the ECB in order to make sure that our setup of dividend was acceptable for it. And we haven't had a lot of time to fine-tune the timetable of the unwinding of the switch mechanism. So, we'll see. But the commitment is to have completed it before year-end 2022. And your last question, John, was on – excuse me – Well, the idea for us, you know, is not to pile up excess of capital in order to be ready for M&A. So we want to navigate with a level of capital that is compliant with all our constraints, that is as close as possible to the target that we have set. We are far above this level. It's not because we are making reserves for M&A. of all the constraints that you have noted in the last 18 months or 12 months. And so it happens that we have a higher level of solvency, and it's not designed in order to build the reserve for M&A. So there's two different things. The monitoring of the evolution of our solvency in the normal course of business, and then if there is an M&A that is attractive enough to justify the fact that we can raise equity to finance it, then, of course, we will have to make the proof that it's worth the case, and we'll do so. But the idea is clearly not to keep excess of capital just in case there is a good M&A opportunity.

Okay? Thank you. Thank you.

Thank you. Our next question comes from the line of Delphine Lee from JP Morgan. Please ask your question. Your line is open.

Good afternoon. Thanks for taking my questions. I just have two very quick ones on capital, if I may. The first one is just to go back on buybacks. Historically, I think as a group, you tended to have a preference for dividends over buybacks, and clearly this one that you're starting for 2020 has a purpose of compensating for the dilution of the script but I was just wondering going forward in terms of return of excess capital if you still have a preference for dividends or buybacks is going to become a bigger component of capital distribution and are you concerned about the level free float or you don't really mind because that doesn't really affect your decision-making process, just checking. Second question is on the capital headwinds that we still should expect. So you mentioned Basel IV and on Trim, just checking that beyond the 20 basis points for Trim, you've taken into four. How much is there still coming, if any? in 21 and maybe also long longer term i think one of your peers has started estimating a bit the impact of rfs 17 so just wondering if you you know if you have any indication to give us at this point thank you very much okay um first share buyback as i said we have

put in place an exceptional answer to exceptional circumstances. So this share buyback operation that we intend to conduct in the course of this year is really an exceptional answer to exceptional circumstances. And so it's not something we intend to continue going forward. The free float is, of course, it's not a concern. Of course, it's an element that we keep in mind. We think that a free float of more than... between 40% and 45% on the capital of Gaza, considering the magnitude of the market cap is really ample. But, of course, we wouldn't enter into a process of progressive and permanent reduction of the free float. It wouldn't make sense, actually. We are very careful about progress. the interests of the minority shareholders and the free float is one of their interests. Another element of interest for them is the structure of the capital of their company. And we clearly think that in the global combination that we are proposing to them, the complete unwinding of the switch, i.e. the normalization of the capital structure of Caldwell is a very positive element. Going forward, headwinds regarding the capital links to trim, we've still several billion euros of additional RWAs to take, probably around 8 billion of additional RWA between 2021 and 2022. So the precise timetable is not completely certain because of the fact that we need to wait for the trim inspections to be completed, the letters to be received, the answers to be sent. and so on and so forth, but this is our best guess. Of course, it's going to be concentrated on the CIB, clearly. But this is what we have in mind. This is what we have in mind. IFRS 17, of course, it's an issue on which we're working. It's a very complex issue, technically. We're working on that with our colleagues from the insurance activities. I think it's too early to give precise indication of what could be the impact because there are still many, many moving pieces, including our priorities in terms of monitoring the transition to IFRS 17, because you know that we have several options to take, and we haven't made up our mind regarding these options. So too early, but at a certain point in time, we'll have to discuss about it.

Great, thank you very much.

Thank you. Thank you. And the next question comes from the line of Kilir Yayaraya from HSBC. Please ask your question.

Yes. Yes, good afternoon, Jerome. A couple of questions on capital again. And the first one is really just clarification. I know there's lots of moving parts, but really, you know, once the script and then the buyback's all complete, are you saying that the share count should be flat on where it is today leaving aside, you know, the usual drip feed of employee share. So can you make that commitment for us, um, on the share count? And I guess the reason I kind of ask is, um, you know, is this such a, you know, clever, uh, over-engineered, um, way of distributing cash to your shareholders where actually, you know what, in 12 months time, we don't know what your share counts necessarily, uh, going to be given all the different moving parts there. And then, um, Just secondly, very quickly, in terms of the RWA decline you show under the business line contributions, just wondering if there are any special levers you've activated there, or is it mainly just a bit of positive ratings migration and a bit of seasonality kicking in, driving that favorable RWA movement in the fourth quarter? Thanks.

Okay. As far as the share count is concerned, I'm not able to give you a precise commitment on the future number of shares. What I can give you is a commitment first on the fact that in terms of earnings per share dilution, the combination of the switch unwinding plus the buyback is going to more than offset the EPS dilution. And of all our operations, the earnings per share, all things being equal, are to be higher than what they would have been without all these operations. And actually, the dimension of the buyback is going to target also the correction of the tangible book value per share dilution that we may have. So, of course, the precise amount is going to depend, again, on the price at which the new shares will be issued and on the price at which the new the shares can be bought back. So that's the moving pieces. But really the commitment is to more than offset the earnings per share dilution with the combination of the switch and the buyback and to correct the tangible book value per share dilutions. In terms of RWA evolution on the business lines, there's nothing very special. It's the combination of all the optimization efforts that we permanently do, plus the movement on the underlying portfolios, migrations, and so on and so forth. Plus also some forex effects, of course. And after that, of course, there is part of the trim impact that we had to withstand this quarter, but but this is specifically mentioned. So for the rest, it's migration plus regular optimization plus forex.

Great. Thanks, Jerome. That's helpful.

Thank you.

Thank you. Our last question comes from the line of Stefan Spallmann from Autonomous Research. Please ask your question.

Yes, Stefan. Yes, good afternoon, Jerome. Thanks for taking my questions. I have two, please. The first one goes back to TLTRO. Could you maybe remind us, if you have given this guidance before, roughly how much of the 133 billion group balance is attributable to CASA? And also whether you actually have more firepower to ramp up the TLTRO on outstandings this year. And then the second question goes also back to... the payout strategy for this year. I think if I add up the cash that will be paid to the Casa minorities and the cash that will be paid to the Amundi minorities, that combined is roughly worth 20 basis points of group risk-weighted assets. So that's basically the SSM guardrail, I guess. Does it mean that there's no room left for the regional banks to make their payouts or would that not be captured? Thank you very much.

I'll start with your last question because, of course, it's very important. As far as the regional banks payment are concerned, they are included in the calculation that we've discussed with the ECB. So, of course, we have provided room in our global assumptions for the regional banks to pay to their external shareholders, i.e., the CCA and CCA's holders. For the rest, they pay to the local banks, which are part of the group. So this is considered as internal payments. When it comes to CASA subsidiaries having minority shareholders, actually the cash that is paid outside is not part of the calculation because the minority interest, the capital minority interest of those subsidiaries are capped when we calculate the solvency ratios at CASA and at group level. So it means that the cash out that Amundi is going to pay, that Credit Agricole Italia is going to pay to its minority shareholders too, is not having any impact on the CT1 ratio of CASA and of the group. So it's not discounted in the overall assessment of our compliance with the ECB's recommendation. And again, this has been made very clear with the ECB, so there's no ambiguity on that. TLTRO, we haven't disclosed precisely the spread between ECBs. what is inside CASA and what goes to the regional banks. Just to give you some rough indication, of course, we are not very far from the origination of the loans that allow us to draw at the TLTO window. So by definition, it means that the regional banks are having a significant part of the total because They have originated a significant part of the loans, and they have also a significant part of the collateral that is needed to access to this window. Do we have more firepower? Actually, the additional firepower that we have as any bank is the fact that the ceiling is going to go up from 50% to 55% of the capacity of the eligible loans. So this is the additional firepower that we have. Great. Thank you very much for it. Thank you.

Thank you. And our final question comes from the line of Matthew Clark from Mediobanking. This is your question. Your line is open.

Hello. A couple of questions, please. So firstly, with respect to the TLTRO again, is this all booked in the retail banking divisions or is there any particular allocation ideology that you pursue like maybe booking the bonus effect in the corporate center or something like that. So any guidance there would be helpful. Second question is just to verify that the switch repayment doesn't need ECB approval. I guess, is that the right way to think about things? And then final question, just coming back to the ACB trim, risk-weighted assets you mentioned. Could you be a bit more specific about what those portfolios are and maybe what the portfolios that led to the fourth quarter trim impact were, just so we can reconcile those? Thank you.

Well, when it comes to the trim impact, it's the combination of many, many different elements, small elements. Some of them have impact as low as 100 or 200 millions. It's the probability of default on certain portfolio plus the loss given default on certain other portfolios plus whatever and so on and so forth. So it's really a combination of many, many small elements. There's nothing big. actually in this series. I think we have 10 or 15 different lines that account for what we had to book in the fourth quarter of this year. And when we assess what is going to happen in 21 and 22, the more or less 8 billion RWAs that we forecast, it's also a combination of probably 12 to 15 different items. So it's clearly nothing massive, but a series of elements that all go into the same direction, of course. Switch, it's clear that as any element that is going to impact the solvency of CAVA, even if the switch dismantling has no effect at group level, we will have to get the authorization of the ECB. But clearly, I don't expect any difficulty in this regard. So once we will think that it's the right time for us to proceed to the unwinding, we will, of course, do whatever we have to do with the ECB in terms of paperwork. But clearly, I don't expect any difficulty on this front. And TLTRO, I cannot add more than what I've said to Stefan in my previous answer. The allocation of the trim drawings is made internally inside the group, taking into account several elements, as I mentioned, and we are not going to disclose more precisely these elements. Okay, thank you very much. Thank you.

Thank you. We have no further questions at this time. Please go ahead.

Thanks very much. Thanks for your questions, always very stimulating. And thanks for attending this conference. Looking forward to talking to you next time. Bye-bye.

Ladies and gentlemen, that does conclude your conference for today. Thank you for participating. You may now all disconnect. Thank you.