Credit Agricole Sa

Good afternoon, everyone. It's a pleasure for me to present the results that we've published this morning. Let me go directly to page four of the presentation. I think these results that we're publishing today really illustrate another time and, once again, the strength of the model that has been built by Credit Agricole Group and Credit Agricole SA over time. These results show a certain number of characteristics that we find almost every quarter. A high level of results and profitability, that's the first point. The second point is that, again, we are generating additional capital that is fueling our growth, both internal and external. We continue to have a very solid asset quality and a very good liquidity profile, despite the strengthening of the monetary policy by the ECB. And last point, we continue to be very involved in helping the energy transition. And I want to mention the fact that we are going to have a dedicated workshop on December 14 this year on additional topics regarding net zero convergence and all our efforts in this energy transition. If I go to page 5 with the main figures for Credit Agricole SA, what we can see on this page and some elements I will comment a little bit more in detail later on, but first highlight it's the very high dynamic for revenues, which are up 13.4% on the quarter and 13.1% on the nine months. The second point is that we continue to be very efficient in terms of monitoring our cost basis, thus allowing a very strong Jaws effect, almost five to six points on the quarter and on the nine months. The third point is that the cost of risk is indeed increasing, but very modestly, actually, considering the evolution of the overall activity. And the last point is that we are having a very high level of results, 1.5 billion underlying, 1.75 billion stated on the third quarter, and 4.6 billion and 5 billion on the nine months. This is leading to a return on tangible equity for the nine months, which is at 13.5%. On the following page, you have the figures for the group globally, where you find more or less the same trends, a little bit amortized as compared to Credit Agricole SA. But despite this amortization, we still have a sharp increase in the top line, plus 7.5% on the quarter, plus 6% on nine months. A positive Jaws effect both on the quarter and on nine months. Very moderate increase in the cost of risk and a high level of profit up both on underlying and stated basis and both on the quarter and on the nine months. If I go a little bit further in the document, page 8, some elements on the activity that is leading to these financial results, I think that what we can assess on this page is the fact that, yes, indeed, we have a slowdown in the production of new loans in retail banking activities in France. But this is more than offset by the overall good performance in all our business lines. which is indeed again illustrating the strength of the model. We continue to develop the customer basis with a strong increase in the number of new customers, plus 445,000 new customers in all our retail banks in Europe. We continue to increase the equipment of those customers with our different products and services, And in addition to that, we continue to develop the business that is directly targeting large customers, be it for CASIB, for CASEIS, and for the institutional investors, which are the customers of Amundi. On the following page, you have a wrap-up, I would say, of the different strategic operations that we've conducted in the last three years. which is an interesting summary of what we've been able to seize in terms of opportunities and to integrate in our different business lines, in our different specialized platforms, all these operations being self-financed by our capital generation capacity. And we've provided two interesting figures on the right-hand side of this page. The first one is that, all in all, these different acquisitions are going to lead to an additional €1.9 billion of NBI. We've estimated that for 2025. Of course, part of this NBI is already in our accounts, but part is not at all, and part is still to be materialized. And the second point, which is interesting, is that after the materialization of the cost synergies, the incremental cost income ratio of the additional business generated by those operations is going to be exactly in line with the targets that we have set for the medium term plan, which is 58%. On the following page, some reminders of the activities of the new business line Crédit Agricole Transition Énergie that was launched this year. We have had a dedicated presentation earlier in October of these activities, but just for you to keep in mind that the credit transition energy is going to be a 50-50 JV between CASA and the regional banks, and it's going to deploy its activities around two business lines. The first one is to be able to produce renewable energies and to distribute it locally. And the second business line is to provide advisory solutions for the different categories of customers that we have across the board. On page 11, some additional precisions regarding the revenue generation at CASA in the quarter and on the nine months. I think that what you can see on this page is first element that the revenue increase has been very sharp, both on the quarter and on the nine months, plus 13% on an underlying basis, and even plus 19 and 15 and a half, close to 16% on a stated basis. The second element which is interesting is that all business lines participated in this sharp increase in revenues. And the third point, which is also very important to keep in mind, is the fact that even if we restate those figures from the scope effect, you know that we've integrated some activities in the course of the first nine months of the year with the integration, the full integration of Crédit Agricole Autobank with the acquisitions that CACF has made in the leasing business across Europe and with also the integration of RBC by CASEIS beginning of Q3. So if we restate the revenue growth from the effect of those acquisitions of the period, we continue to post a very sharp increase in the revenues. The organic growth is 7.7% on the quarter and even plus 10.2% on the first nine months of the year. And this is taking place after several years earmarked with exactly the same capacity of generating additional revenues. This is illustrated on page 12. You see that quarter after quarter, we have been able to increase the top line at CASA very, very regularly. And overall, in the course of the last six years, we've increased more or less the revenue generation capacity at Casa by around one-third. On page 13, a few additional elements on an issue that has raised a lot of questions lately, especially regarding French banks, which is the evolution of the net interest income. It is absolutely true that for French retail activities, the increase in rates that we have had since the beginning of 2022 is initially putting some pressure on the net interest income. You perfectly know why, because on the asset side of our balance sheet, we have a vast majority of fixed rate loans, especially home loans. So the yield of the asset side is adjusting very slowly. Whereas at the same time, the cost of the liabilities increase quite rapidly because we have a significant proportion of our liabilities that are directly repricing with the increase in market rate, like regulated savings accounts and also the proportion of the balance sheet, which is financed through the market. But we have also hedges. and hedges are efficient. So this is leading overall to a situation where the net interest income at LCL, which is the French retail banking operation of Casa, has decreased by only 9% between Q1 2022, which is probably the last quarter of the zero rate era that we've known lately. and Q3 23, which is the last quarter of the period. So minus 9%. But at the same time, international retail banking activity increased quite significantly their net interest income in average for CASA by around 48% over the same period. and combined with the other activities of CASA that post part of their revenues under the form of net interest income, this is all in all leading to a situation where the net interest income at CASA has increased by around 24% between Q1 2022 and Q3 2023. Let me go now on page 14 on the cost side of our activities. The cost base has increased by around 8% on the quarter and 6.6% on the first nine months on an underlying basis. But on the quarter, two-thirds of this increase is directly coming from the scope effect. And on the nine months, it's 40% of the increase that is coming from the scope effect. So it means that definitely we continue to manage very efficiently the organic evolution of our cost basis. On page 15, some elements regarding the gross operating income. It's growing very rapidly, plus 20% on the three months, on the quarter, and plus 34% on the first nine months of the year. This increase is spread over all business lines, and of course, this is this increase that explains the increase in the net income. The other components of the P&L, cost of risk, equity account identities, are increasing and the tax, the corporate tax is also stable or slightly increasing. So clearly this is the gross operating income that is explaining all of the increase in the net profit. Last point, maybe an additional comment on the cost income that we are posting. So 53.4% on the first nine months of the year and 54.5% if we include the contribution to the single resolution fund in order to compare ourselves with the sample of European banks. And we continue to be massively more efficient than this sample of European banks. On page 16, some elements regarding the evolution in the cost of risk, it is indeed increasing a little bit, plus 19% for Credit Agricole SA and plus 9% for the group globally, but the levels that we've reached continue to be very moderate, and the cost of risk in terms of BIPs their outstandings continue to be very moderate, 33 bps for CASA, which is definitely significantly below the assumptions that we've made for the medium term plan, 40 bps, and 24 bps for the group globally. Again, it's a very moderate level. If we want to dig a little bit more on the origin of the cost of risk, you can see in addition that it is concentrated on consumer credit small businesses and professional, which means that for the two big categories of loans that we have in our loan books, corporate on the one hand and home loans on the other hand, it continues to be very, very low. On page 17, some additional elements on the provisions that we have in our books. close to 10 billion provisions in Casa's books and close to 21 billion in Credit Agricole Group books globally. And we continue to have a low level of non-performing loans, 2.7% for Casa and 2.2% for the group globally. So this is leading to a very high coverage ratio. On page 18, the traditional comparison of the the group and CASA with other European banks in terms of coverage and NPL ratios. And we continue to be, I would say, on the safe side and even very safe side of the sample as usual. And on the right-hand side of the page, again, this illustration that the biggest part of our loan books, home loans and corporate loans, represent the vast majority of our loan books with a very low cost of risk. All in all, this is leading on page 19 to the evolution of the net profit. Again, a sharp increase in the net profit, plus 23% on the quarter and plus 29% on the first nine months of the year. And again, this increase is very well spread over all business lines, all contributing to the increase in the bottom line of our P&L. In terms of solvency and financial strength, on page 20, you can see that this quarter the CET1 ratio of CASA increased by around 20 bps. It's the combination of different elements. The first element, of course, is the fact that with this good level of results and despite an increase, a further increase in the dividend provision, which has reached 76 cents a share by the end of September. We have retained 20 bps of capital in terms of retained results. The organic growth of the business lines is consuming only 15 bps of capital. This quarter, we have a one-off, which is a permanent one-off, which is a change in the way we account for the goodwill of the insurance business. in accordance with an answer of the EBA to a question that was asked a long time ago, actually, and the restatement of the treatment of the goodwill in the insurance business is leading to an increase of our CET1 ratio by 15 bps. The M&A operation this quarter represents only a hit of 4 bps. Actually, it's the combination of 13 bps of cost for the acquisitions of RBC and AL Daily's plan operations, and the benefit of a synthetic securitization that was concluded in connection with Crédit Agricole Autobank loans that was concluded a little bit earlier this year. So all in all, CET1 ratio for CASA at 11.8%, far above the target of 11% that we have set in the medium-term plan. For the group globally, it's a slight decrease actually from 17.6% to 17.5%, but this is clearly the combination of two different elements. The first one is that all The elements that played positively for Casa are playing in the same direction for the group. So this is leading to an increase of the CET1 of the group. But you may remember that in the course of the third quarter, actually in the beginning of the third quarter, SAS Club OSC, which is our main shareholder, representing the shareholding of all regional banks, have announced that it has decided to launch a new acquisition for 1 billion euros of CASA shares. And the impact of this acquisition is, of course, taken in the CET1 ratio of the group as soon as this quarter, even if the operation is not concluded yet. So this is leading to a 17 bps hit. and so this explains why this quarter specifically the evolution of the ct1 ratio at the group level is slightly negative nevertheless we continue to have at the level of the group the highest distance to threat amongst all european gcbs 820 bps and you can see also that critical essay which is not a gcb and which is a part of the group globally, is posting a distance to FREP of 360 bits, which compares very favorably to some European standalone GSIBs. On page 22, some elements with which you are now very familiar regarding the customer deposits in our books. The first element is that you can see that in the course of the third quarter, the overall level of customer deposits increased by around 18 billion euros plus 1.7%. And the second point is that these customer bases continue to have the same features, which is to be very diversified and which is to benefit from different categories of guarantees for around and even above half of the total amount. In terms of liquidity reserves and liquidity management globally on page 23, we have increased over the quarter the level of liquidity reserves, which are now reaching close to 420 billion euros with different categories, central banks, deposits, HQLS securities, and other categories of assets eligible to the refinancing of the central banks. categories of claims. The second point is that we continue to have LCA ratios at levels which are very high compared to our targets. The target is still 110% and the figure is around 150% on the last 12 months in average. and above 140% for the end of the period, despite the fact that we've again repaid some TLTRO amounts in the course of the third quarter. And maybe the last element on this page is that we've increased, we've announced it three months ago, we have increased the market funding program of CASA by around one quarter in the middle of this year, because we wanted to take an opportunity of good market windows to increase our medium to long-term funding. And this new market funding has already been completed by the end of the third quarter, so it's now completed 100% with the new level of around 25 billion euros. So I'm going to stop here for the presentation, just for me to conclude that, again, this is an excellent quarter for CASA and for the group. And again, this is illustrating the strength of our model that is really adapting very well in the different contexts And the context in which we are now, characterized by the sharp increase in rates and by a significant slowdown in the economy, is not slowing down our capacity to grow and to generate profitability. Thanks very much. And now we can go directly to your questions.

Thank you, Sarah. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. To remove yourself in a question queue, please press star and two. Please pick up the receiver when asking questions. The first question comes from Tariq El-Majad of Bank of America.

Hi, good morning. Just two quick questions, please. The first one is on the macro hedges in the French retail. Could you tell us how sustainable are these and what has been the contribution per quarter in the last year or so? Secondly, your strategy to grow your product factories has proved very strong and good, and you can see the momentum in growth and revenues in these highly profitable divisions. Well done. But my question is on the funding to grow these further. You mentioned in the previous quarter that half of it was funded through disposals. I want you to understand what are the levers you still have to fund this continued growth through Bolton. what are the areas that you would think are non-core, obviously not specifying any specific entity, but divisions, and also how much you can do more in terms of synthetic securitization and optimization of RWAs. Thank you.