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Credit Agricole Sa
2/5/2025
Good morning everyone. Thank you for the for attending our call very happy to present these results for 2024 and for the last quarter of 2024 which are absolutely excellent results Let me start directly on page 4 of the presentation and let me start by comparing our results for 24 with the targets that we had initially set for 2025 in the course of our latest medium term plan As we have stated several times since the beginning of last year We are indeed meeting as soon as 2024 all targets that we had Initially set for 2025 and I should say that it's the habit because it's the third time in a row That we manage to meet our Profitability targets one year ahead of schedule But actually we are talking about meeting the targets and I should also insist on the fact that we are by far Exceeding the different targets. It's the case for the net profit which is 20% above the target. It's the case for the return on tangible equity Which is two percentage points above the target and it's also the case for the cost-income ratio Which is far below the ceiling that we had set at 58% So it's definitely a very strong performance posted by the group globally But especially by credit agricultural essay for the quarter and for the full year 24 If we go now on page 5 we have some key messages regarding this set of results First message it's clearly a strong increase as compared to the previous Year and to the last quarter of 2023 it's also a level that is a record level in terms of Profit for the fourth quarter of any year and for a full year level of profitability It's also a result that has been reached and we will dig a little bit into that Especially thanks to a very high level of revenues The level of profitability is also very high because 14% is indeed the best return on tangible equity we've posted Solid the capital position and liquidity positions are very very strong and we are Proposing to the General Assembly meeting that is going to be held in May An increase of the dividend the cash dividend that is going to be at 1.1 euro Plus 5 percent as compared to the one we've paid on 2023 If I go on the following page We see all the figures for the group globally and for credit agricultural essay Specifically for the full year and the quarter What I can say is that for these stated figures all indicators are up Up for the revenues for the gross operating income and for the net profit up for the quarterly results and for the full year results and up for the group and for critical essay cost income ratio improves on both perimeters and The cost of risk continues to be very very low compared to historical standout Let me now switch to page eight Starting with actually the level of activity that we've had in all business lines in the last quarter of the year and in the full year At 2024 it's been a year again of very high level of activity across the board in every business and every entity of the group It's been very much the case for retail banking activities and all activities Directly oriented towards individual households with a specifically good news in France Which is the rebound of home loan activity in the last quarter? It's up in terms of production of new loans up 18 percent as compared to the last quarter of 2023 we continue to see an increase also in corporate loan production as well as in the level of Loan activity credit activity in international retail banks and When it comes to consumer finance, we see a level of activity which is stable and high As compared to the last two or three quarters So a good level of activity also in the consumer credit business Lastly, I want to commend the fact that we continue to see this Stabilization of the deposit mix in France, which is very important Going forward for the further future improvement of the net interest margin When it comes to CID asset management and insurance activities We are posting very high level of activity and sometimes records It's the case for the insurance activities where we have a record level of Outstandings in life activities and we have had also a record level in terms of net premium income in 2024 with a level of 43.6 billion of premium for the full year it's the case also for Amundi with a level of net inflows of 55 billion euros for the full year and Outstandings of a two trillion two hundred and forty billion euros of assets Under management and it's also been a year and a quarter of record level of revenues for cash If I dig a little bit more in the Analysis of the revenues that we've posted in the last quarter of 2024 you can see on page 9 that actually this sharp increase in the level of revenues plus 17.4 percent on a stated basis and plus 18.2 percent on an underlying basis this Increase sharp increase is spread Over almost all our business lines. It's the case very very much because in the asset gathering activities with a High level of activity overall plus also favorable best effect In the insurance activities you may remember that back in the fourth quarter of 23 we had a significant level of weather related claims which we do not have In the fourth quarter of 24 and we have also the benefit of the integration of the group better cam Which was not there back in 23, but nevertheless the level of revenues is high and increasing rapidly It's also the case in the large customers Division so Cassie plus Cassie's no scope effect But simply a very good performance of all activities in this business division in the Specialized financial services business division. The good news is that the revenue increase indeed by 35 million euros Which is the first time in 2024 and it's illustrating the fact that In ca pfm, so the consumer credit entity plus car leasing entity We are now seeing the positive effect of this increase in the margin for new loans Translating into a slight improvement of the margin on the outstanding Lastly on retail banking activities Stable level of revenues with some slight ups and downs between France Italy and the other international retail banks entities Lastly in the corporate center a sharp increase in the level of revenues that is partially driven by evaluation of Banco BPM shares that is Higher than the one we already had back in the fourth quarter of 2023 but nevertheless the other elements in this Business division or in this corporate center are also well oriented on the right hand side of the page you may see that the annual growth rate of the revenues in the last 10 years was Six and a half percent and it's been very regular So it's a very positive Elements that we are happy to to illustrate there On the following page we have some elements regarding the evolution of the cost basis so what you can see is that the increase plus five point six percent on a stated basis and plus four point four percent on an underlying basis is a Less dynamic than the one we had on the first nine months of the year. So there is clearly slowing down of the evolution of the cost base it's perfectly coherent with the the evolution of the inflation in most countries in which we operate especially in France and this is also illustrated by The right hand side graph of this page in which you can see that the recurring expenses Increased by a mere three percent on this quarter Which compares quite favorably to the same calculation we did for the first three quarters of the year Which were more in the region of four to five percent Beginning of this year. So definitely of course we continue to invest we continue to Remunerate our staff but There is a slowing down in line with the evolution of the inflation on page 11 some elements regarding the cost of risk. So there is an apparent Increase in the level of the cost of risk be it compared to the fourth quarter of 23 or to the third quarter of 24 On the perimeter of critical essay But what you can see immediately is that actually this increases driven mainly and essentially by IFRS 9 provisions so as stage one and stage two provisions and if you really dig into the numbers and look at only the Stage three provisions they are down as compared to both The third quarter of 24 and the fourth quarter of 23 and this increase in stage one and stage two provisions come from both Revision of certain IFRS 9 models in certain entities it's especially the case in the consumer credit business and also at Cassie but and there is also a positive migration of certain counterparts from s 3 to s 2 so from a doubtful loan to on the Sensitive loans I would say which is positive definitely and of course the provisions Attached these loans migrate in the same direction Overall what we can see is that the net the non-performing loans ratios both on the group and on Casa are Slightly down in Q4 24 as compared to Q3 24 and the coverage ratios continue to improve On the following page you have some more precise information regarding the cost of risk in the different business lines So maybe just to highlight two of them in the financing activities of Cassie There is apparently a significant increase but first point it is And it continues to be very low seven Bips Is definitely a very low level and the second point is that this level is only made of stage one and state? Stage two provisioning so in terms of cost and incurred risk it continues to be around zero and Within ca PFM there is apparently also a sharp increase But actually this is triggered by two specific elements. I wanted to mention First element it's a 50 million Provision that is booked With regards to revision of IFRS 9 models as I mentioned earlier, so it's a one-step Increase in the level of provision and of course the model is going to evolve going forward but it's only the the updating of the of the outstanding reserve in face of this provision of this provisioning model and then the third a second element, it's a Reserve that has been set aside of 30 million euros in regards with legal risks including of course this Issue in In UK in the UK with car loans you perfectly know about this story Which is a story for the whole banking sector in which we represent only a very modest one to two percent of market share On the following page you have an analysis of the evolution of the Net profit on the quarterly basis by business line and what you can see is that for this quarter the contribution of asset gathering business division and retail banking business division improve Quite significantly it is stable for the large customers division Because of this increase in the level of provisioning at Cassie, but again at a very low level And it's also slightly down at the SFS business division again in connection with the cost of risk I was mentioning which is a made of amongst other elements of two significant one-offs On the right hand side of the page a breakdown of the evolution of the net profit on a yearly basis by Lines of the PNL and what you can see is that All in all the sharp increase in the net profit plus eleven point six percent on a stated basis and even plus 21.1 percent on an underlying basis is Mainly driven by the increase in the level of revenues plus two billion only 750 million euros of increase in the in the cost base Then a slight increase in the cost of risk for the full year Of course a sharp increase in the level of taxes and a decrease of the other line In which you have the equity accounted entities because of some modification in our perimeter, but Definitely the increase in the level of net profit is driven by the evolution of the revenues and by the evolution of the gross operating income on the following page some elements regarding the solvency ratio at CASA the target continues to be 11 percent and We are stable at eleven point seven percent There is a high level of retained earnings after the distribution reserve There is also a certain Dynamic in the evolution of the business line Organic growth of RWAs which is partially driven by some rating migrations and then we have some bits and pieces Which are gathered with M&A effect regulatory effects and so on and so forth but the main point there is the fact that we have started now in the fourth quarter of 24 to Credentially consolidate the leading activity which is one of the the the provisions of battle for And so this is leading to a one-off cost in terms of solvency of 12 bips Over the full year the the the solvency ratio decreased by 10 bips Despite the sharp organic growth of our activities despite also some technical elements like the one I just mentioned in the leading and despite also some M&A operations that were closed in the course of the year. So definitely Wide margin of maneuver in terms of solvency considering the target of 11 percent and This of course takes place in the context of a group that continues to be to have a very high margin above any regulatory requirement 17.2 percent of a CT1 ratio for the group plus 740 bips of margin above a step requirement. So definitely no Issue regarding the solvency of the group the same effect on the solvency in the quarter with a slightly different overall Impact which is of course perfectly connected to the high level of solvency of the group with such a high level every Additional billion of RWA needs a higher level of capital to be covered If you want to maintain the ratio In terms of other solvency ratio beat leverage, TILAC, MRAIL, no Issue and always a significant margin above all the requirements that apply to the group On the following page page 16 some elements regarding the liquidity of the group Nothing significant to signal reserves continue to increase slightly over the quarter Customer deposits have also increased a little bit over the quarter and the breakdown of these customer deposits Continue to be very stable after the sharp shift that we've seen when The the increase in rates started now. It seems that we have reached the level which is again very very stable and The Solvency the liquidity ratios the LCR ratios continue to be very Significantly above the target of 110% 131 for 3D I call SA and 127% for the group global Let me now spend some Rapidly some time on on the following pages on page 18 you have an update of our transition plan and The strategy that we develop in order to accompany our customers in their own energy transition with the acceleration of the development of the financing of renewable and low-carbon energy sources the second point which is all We provide to our customers to help them Transition and then the third point which is a consequence of the first two which is the progressive Reduction and and Targeting the exit from the financing of carbon based energy Going forward and and what we can tell on this point is that we are far ahead of the curve in terms of reaching our medium term targets and This is translated on the following page page 19. You can see that the breakdown of The financing that you we provide to Energy production has very significantly shifted between 2020 and 2024 and now every time we Free four euros of Fossil fuel financing we are able to allocate 14 euros to low-carbon energy financing Some Elements regarding the the rollover of our medium term plan besides of course the fact that we've reached the target one year ahead of Schedule what is interesting to note on page 21 is that we continue to increase Our market shares in most of the business lines in which we're engaged and this is the perfect rollout of the Organic part of the development plan of the group And we continue to gain customers 1.9 million new customers in our retail banks per year since the Inception of the present medium term plan So definitely the the organic growth trajectory of the group continues to work exactly the same way according to its DNA and this is complemented on page 22 by The inorganic growth initiatives that we have taken we felt it was interesting to Look a little bit backwards in all on all the transactions that we've Concluded and closed in the last four or five years We've invested a significant amount of capital in those transactions This amount was definitely self financed be it by our capital or earnings Generation capacity and also Thanks to some disposals and these Operations are representing a significant complement to the level of revenues If you add up the transactions that we've concluded in the 2019-2021 period which we consider as fully integrated and the ones that we've concluded more recently All in all this is going to represent close to four and a half billion revenues in 2025 with a Level an average level of cost-income ratio, which is very close to the one that we are targeting in average so a very positive Lesson that we can take of all these initiatives of Inorganic operations On page 23 and 24 some elements regarding the trajectory that we've been able to follow in the last 10 years Overall, we've managed to grow the top line steadily year after year and in average by a very high 5.6 percent ratio every year so it's a very high rhythm of increase of our top line and in the meanwhile, we've improved the cost-income ratio at casa by 15 15 percentage points over the last 10 years, so with a very very steady very linear trajectory On page 24 again with the same level of Historical data the trajectory of return on tangible equity Actually, we should have started in 16 in 2016 not in 2015 because 2016 was the year of completion of the Eureka transaction through which we Reorganized the group completely and so we started with the level of return on tangible equity around eight and a half percent We are now reaching 14 percent and we've been permanently above 10 percent with the exception of 2020 Which was the year of kovid? But definitely even in this year we've managed to post a return on tangible equity which was above nine percent and in the same period of time we've multiplied the dividend per share in cash by more than three three point one to be very precise reaching this level of one point Ten Euro per share so I will stop here I think this is the relevant conclusion for this Presentation and now leaving you the floor for the questions
Thank you, sir. This is a conference operator. We will now begin the question and answer session Anyone who wishes to ask a question may press star and one on the touchstone telephone To remove yourself from the question queue, please press star and two Please pick up the receiver when asking questions The first question comes from Julia Aurora Miyoto of Morgan Stanley
I Follow Julia
miss me Otto. Maybe your line is in mute
He'll in mute Maybe we can take this next one and we'll go back to Julia afterwards
Certainly, sir. The next question is from Tariq El-Majad of Bank of America
Hi morning morning, Jerome Congress is excellent results really great quality So I want to ask you again as I usually do on are you reviewing your guidance up? I think we'll have all to wait for another few months, but still related to that I mean you've been delivering record high ROTE so 14% for the full year 24 and it seems that you are not yet firing on all cylinders So do you think the bank has structurally shifted to materially higher ROTE versus previous plans? If I remember the last few plans you basically increase your ROTE by 50 to 100 basis points ROTE plan after plan now we are way above the previous plan target So is this a structural shift or there are some elements that flutter a bit? your Your ROTE for example, I'm thinking of the CT1 ratio of 11% But you seem to be adamant this is the right level for you And then related to that still on the capital market union You wrote a very detailed article a few weeks ago on the securitization the benefits of it Europe linkage or the drug report Should we expect in your new plan after a result that maybe there's a new plan where you are more Trying to leverage on the European working together a securitization Within the CMU one of your competitors yesterday Start to embed the same even within the medium term outlook for their profitability Are you in the same situation? And then the last question? I mean, I have to ask it Let's see how much you can say on that but on Italy I know the situation remains very fluid, but I wanted to see where is your position in here You often present it more as defending your interest. There was few headlines this morning again But but I think It's quite opposite. I think you have a big opportunity here to leverage on your stake So can you in Burmese can you maybe data on where you sit there and what kind of? Timeline we should watch. Thank you
a lot of questions I Never the less. I'll try to answer as quickly as possible those questions first one guidance. It's clear There is a new CEO that is going to to be in charge mid-may He has started indeed to work on on a future medium term plan But of course it will take a little time so do not expect a new medium term plan before Probably the fourth quarter of this year and we will update the targets and we will give a new target for probably 2028 so nevertheless 2025 has to to go its way and and and what I can tell you regarding 2025 is first We do not forget The initial targets of the last medium term plan so we continue to target a return on tangible equity for 2025 that should be above the 12 percent Threshold of the previous medium term plan we continue of course to target a Cost-income ratio which should be below 58 percent and possibly significantly below And in terms of net profit, you know that in 2025 we are going to face the tailwinds and Headwinds as some of our competitors are stating But all in all what we feel is that we have the capacity to to repeat the same more or less the same type of performance as the one we've been able to publish regarding 2024 I would say on a structural basis. So definitely We all understand that You would prefer to have an update of our targets as soon as now But we are in a transition period which is not a brutal transition It's going to be very fluid and we need a little time. Excuse me before we are able to post new new targets In terms of return on tangible equity, this will be part of this new medium term plan. Of course, we are taking into account Modification of the breakdown of our businesses the fact that we have embedded in our scope of businesses some low levels of capital requirement there is also the necessity to fully take into account the impact of Basel for which are not For the time being completely taken into account In the latest figures we've published because it continues to be deployed So It's clear that we we are well positioned regarding the return and tangible equity. We do not want to to to To abandon this this Good position, but again, this will be part of the new medium-time plan Securitization it's clear that it's an important possible development of the the activities of the group in several areas it Certainly is the case for Cassie but Cassie is already using these tools in order to monitor And to fine-tune its capital consumption. So Cassie is and will continue to use these Securitization operation with different categories of investors in order again to monitor its capital consumption It's also of course a possible target for for Amundi to develop activities regarding all this Credit funds so it's definitely something that we are going to look at closely in the course of the next medium-time plan and then Italy what we are saying is that The evolution of the situation is it in Italy is not going to be decided by credit recall itself critical is a Has an important setup in Italy We behave as much as possible as a good Italian citizen when we operate in Italy And we think that we have a good image in this country But what we're seeing is that at the end of the day the reshaping of the banking landscape in Italy is not going to be decided by us and what we want to be to be in a position where We have the capacity to defend our interest again to use this expression Which doesn't mean that we are passive, but we are actively defending our interest
That's it
Excuse me sir.
No. No, I was Asking if we're going back to Julia.
Yes. We are the next question is from Julia Aurora. Me also of Morgan Stanley
Yes, I good morning Jerome. Can you hear me now?
Okay
Wonderful. Thank you. I'm sorry. I don't know what happened earlier with my phone and so two questions from me as well and slide 22 Shows how you create value Via, you know bolt-ons. I think it's a it's a nice slide. You are currently ahead the 11% CT one target and they hear of course this buzzer coming but What are you most focused on With your excess capital at the moment at the margin what sort of business or geographies? Are you looking to deploy that? That's and and would this be mostly a bolt-on or could it be a larger deal? That's the first question and then second question in terms of you mentioned risk migration on our WAs and Is there something that we should start to worry about perhaps with respect to France in terms of asset quality deterioration or Or not really what are you seeing there? Thank you
Let me start directly with the second question no, it's it's technical and even in the case where an asset is upgraded from a default to A Sensitive it happens that there is an increase in the level of our WAs So really, it's the consequence of All the migrations that we've seen but what is the most important is that in terms of actual? Cost of if there is no sign of deterioration. So always the same areas that are sensitive it's the case for many many small businesses that are for example connected to the car making business It's also the case for all the SMEs In the building contracting sector we all And we see those sectors as being sensitive since now many quarters But there is no overall sign of deterioration and no worry on our side But simply we have to acknowledge that all the regulation is sometime having some Volatility effects on the capital consumption because of the the models that we have and all these elements This is what happened with a very moderate Magnitude definitely on the on the fourth quarter of this year. The second point is regarding the usage of the excess of capital We do not decide in advance where we are going to be able to make acquisitions because an acquisition is a matter of availability of Opportunities and so we cannot decide in advance what we know for sure is that we continue to look at Bolton acquisitions much more than you know Transformation all the acquisitions because I think the success of the past acquisitions was clearly linked the fact that these was easy to integrate Operations and I think it's very important if you want to make sure That we take advantage of those operations and that we that it's a good usage of the capital that we're able to generate We must make sure that the integration is going to go smoothly and the best way to see Smooth integration to see a smooth integration is to make the acquisition of entities that are Coherent with what we're doing now and that are easy to integrate
Thank you very much The next question is from Delphine Lee as JP Morgan
Yes Thanks for taking my questions your own just true. I mean Maybe just to Follow up a little bit more and sort of on strategy in general and Italy So I get your point on that you don't decide on the landscape in Italy But you know sort of what is the what will be the best scenario for you and for a Monday in general like what's your? What's on your wish list? And then a second question also also on M&A I mean you've been very successful on bolt-ons and Completely agree that is easier to integrate But like if you were to look at Opportunities that are slightly bigger, you know, what countries would you focus on first in your view?
Okay, these are quite difficult questions, but let me start with the wishlist The wishlist is actually quite simple to design because the wishlist would be clearly to be able to Develop all the partnerships that we have presently to conclude new partnerships and at the same time to develop the network of The retail bank that we have in Italy, so that's very simple we want to develop So we have two ways of developing our activities directly Through our own network and indirectly through the partnerships So the wishlist would be to be able to develop at the same time on those two in those two directions and and With the same I would say magnitude M&A which country again, I think that the starting point would be Because if we want to integrate What we are acquiring it means that we need to acquire entities to acquire objects that Are in connection with activities we already have so it means that by definition either we make acquisitions in business lines that we already have and possibly this could lead us to complement the Geographical footprint of some businesses It's been the case for example when the case is made the acquisition of cash bank in the Netherlands this gave cases an improvement of its footprint in the Netherlands or when Cases made the acquisition of Santander security services in Spain There was a complement to the setup of cases in this country where cases was not really present so that first geographical approach and of course from a pure retail banking point of view Where we can make acquisitions the countries where we have already some activities because Setting a new franchise of retail bank in a new country not ruling completely out such a Strategy, but it's not really what we have in mind nowadays And what we know? Best to do is clearly to to integrate some additional Setups where we have already some activities
Great thank you very much The next question is from Kiri Vijay Raja of HSBC
Yes, Kiri
Yes, good morning to a couple of questions from my side So firstly on the interim dividend or rather the lack of it I have to say I'm a bit surprised because I know when we talked in the past you've sounded quite amenable to the idea I know you're you mentioned your big shareholder would probably be in favor of it as well So what's the rationale for not following what your peer announced yesterday with regards to the interim dividend? And then just more a technical question on the exchange rate effects in Cib or a slide 14 the 2.7 billion of RWAs presumably that's from a stronger US dollar So I guess I'm a bit surprised you're not better hedged But is it fair to assume that there's more of that to come through in q1 given what's been happening with the euro dollar Exchange rate -to-date. So just yeah guidance on the non-euro denominated RWAs, please. Thank you
Let me start with the second point because it's it's quite straightforward Actually, we are not hedging the RWAs What we're trying to hedge is the impact of rate evolutions on the solvency ratio so it means that we try as much as possible to have the same proportion of dollar denominated for example capital components as the proportion of dollar denominated asset proportion in order to to immunize as much as possible the Solvency ratio, but there is no specific hedging of the assets. We prefer to hedge the asset and liability elements Alongside in order to again immunize the ratio as much as possible When it comes to the interim dividend Well, we are swift we're able to react rapidly but asking us to react today to Something that was announced by one of our competitor yesterday is maybe a little bit Is a little too too quick. So I have no I would say religion regarding this interim dividend issue because in itself Paying the dividend twice a year or once a year is not creating any Euro of additional value. It's a technicality. So I have no Inprincipled position and I have no in principle. I would say inclination to do so We are going to see what the competitors do. I think you note that one of the big French banking competitors has stated that it was going to do so We'll see what we we can do we want to do we we deem reasonable to do and Will act accordingly, but again, this is not creating a single euro of additional value in itself
Okay, that's very clear thank you, Joe
The next question is from Flora Bocahut of Barclays
Yes,
yes. Yes. Good morning, Joe So two questions from me as well I'd like to go back to dividend but more to discuss the payout here because obviously you have excess capital there are Moving parts in Italy. There is you know, Bolton M&A that you do here and there I know there is Basel 4 also coming but yeah What's your appetite here to potentially look into the payout again or they're absolutely known? No, no, no will from your side to to change the 50% payout And then the second question is actually regarding the announcement today from the regional banks that they're going to buy up to 500 million euros of teleagric or essay shares And that they have no intention to go be beyond 65 percent ownership And I know I should ask them rather than you but you know, you're also part of the group More generally, so I'd be interested in your view on a few things there first why that 65% limit If you could explain that would be helpful and then obviously they continue to pile up excess capital in the regional bank. So What is the view? You know once they are at 65 percent. Are you considering within the group? Changes to the capital structure or there is absolutely no discussion there. You think it's optimal as it is. Thank you
Let me start with the second question again 65 it's not a magical figure. It simply was the figure they stated when they issued their first operation of Share revolution capital revolution in the capital of critical essay and I think but again You had it right They are better placed by myself to comment I think that they want to stick to what they've said back two years ago and it seems reasonable Is there any any Change to force see in the capital structure of the group. There's absolutely no discussion regarding that Presently within the group that I can tell you And I From my point of view no specific reason why we should Want to change this capital structure, which which proves to be efficient which? provides the group a vehicle that is that is very very Capital efficient and that is delivering high return on tangible equities Where at the same time you have the regional banks that do not look that much to their own return on equity they look to their Level of profit which is very important of course, but when it comes to Profitability in terms of return. It's not so important for them and They want to continue to accumulate capital in order to continue to develop their activities locally and also to contribute to the most efficient Coverage of all the capital structure requirements that we have at group level because again They're very high level of solvency allows us to cover Our different ratios be the key lack of well, for example with the the most efficient Set of elements, you know subordinated debt and tier one and tier two debt At casa but mostly CT one capital at the level of the regional banks thus leading to a very robust and very cost efficient capital structure for the group So no reason to change anything from this point of view and when it comes to the dividend and payout policy Of course, this is an element. We are going to reassess In the medium term plan as every time but between you and me I doubt very much that we are going to change our stance. It's again. It's proven to be efficient in the last medium term plan Efficient meaning that we've been able to deliver a very good shareholder return and At the same time we've been able to seize opportunities to accelerate our growth So we think even if it's not very scientific that this 5050 Breakdown between dividend and capital that we retain for the development is relevant
Understood. Thank you
The next question is from Pierre Chedeville of CIC
Yes, hello Jerome One question regarding insurance I remember that when you launched the previous plan Philip Brassac was very optimistic regarding the development with SME customers And I remember at that time that I was a little bit skeptical Considering the fact that these types of clients were very targeted by AXA for instance or over a pure player in insurance and And when I look at your beautiful slide 21 I can see that your PNC business in terms of market share is quite stable and I wanted to have a view maybe and the development and SMEs was it as a As it good as a Philippe thought at that time first question my second question relates to ASEA We have seen yesterday that I'm the is performing very well in Asia and not only in the GVs With more than 400 billion euros of assets and their management X GVs in Asia and I wanted to know if you can Link this development with other part of your business Especially Cassie and if you have seen this last day these last years during the plan a significant increase of your revenues in Asia And do you see a link between? Amundi and other parts of your business in a year and last question is Regarding L cell could you come back a little bit on the impact of micro aging this quarter? I did not really understand why this quarter your margin is decreasing and Could you confirm that in 2025 regarding the evolution of rates this margin should increase? Thank you,
okay insurance and and the development of PNC insurance for SME clients You know, we are patient and it and it takes time to really install the development of a new business line alongside between the insurance entities and the case regional or LCL and so it has started indeed with some regional banks, which are quite active It's not at this stage very massive in terms of global figures but this is not so much our worry because we we perfectly know that Even when we started the life insurance business or the PNC interest business for the for the household and the individuals it took a little time before it was completely I would say a part of the DNA and part of the -to-day behavior of all our commercial Staff on the territory. So we I don't have any precise figure to give you right away on this business it's developing correctly compared to what we had in mind and it's going to to continue to be an area of future development for for critical assurance and for the group Asia is clearly a very important area Geographical area for Amundi you stated it well because Amundi has decided to focus on Europe Middle East and Asia and we will close in the coming weeks or months The deal with victory capital in the US through which Amundi is going to change its setup in the US Gaining 26% of the capital of victory capital in exchange for the contribution of its own US setup so it means that on a purely autonomous basis Amundi is really focusing on Europe Middle East and Asia and it's of course developing well in Asia And it's developing also in terms of cooperation between all the entities that are present in Asia can give you an example because I remember back Some years ago now when I was heading the insurance activities we have a small life and protection insurance business in Japan and The development of this business was only made possible by the support of Casib on the one hand and Amundi on the other hand so it's clearly a Policy that we have in every country in which we have several subsidiaries of branches of our Large global business lines. It's key that we organize things In such a way that they work together and that they try to help each other to develop their activities locally So it's the case in Asia between Amundi and Casib
definitely And have you seen the revenues progress During the plan during the plan,
okay, I don't have the breakdown of the revenue geographical breakdown of the revenue that Casib we can Give you maybe some more precise numbers later on but it's always difficult in CID activities you perfectly know that to Tell exactly where the revenues come from because you can allocate the revenues either In the country of the client in the country of the commercial team in the country in which you book the asset So you have different? possibilities and it's a little bit complicated, you know to allocate and to break down completely the Topline of Casib between the different countries but Casib is developing in Asia. That's clear That was the target of the previous medium-term plan and I can guess that it's going to be a target for the next medium-term plan for Casib And again for the same reason which is that the largest players are US They are based in the US and so the US market is very difficult for European banks be it in CID activities or be it in asset management activities and it's Clearly why we try to develop as much as possible in other regions Where the domestic players are not so not so dominant
Okay,
then LCL macroedging why this decrease in the Nii in the in the fourth quarter and what do we expect for 2025? You know that the macroedging globally is a series of swap in which we Pay the long fixed rate and we get The short-term rate and what happened In 2024 and what continues to happen in 2025 is that the the short Rates are decreasing rapidly alongside with the decision of the ECB So this is what happened in in the fourth quarter and it's absolutely not Unexpected but what we foresee in 2025 is that thanks to the continuation of the decrease of the Weighted average cost of the customer liabilities Thanks to the reduction of the cost of the market refinancing that we need to provide to LCL and thanks to the progressive repricing of the of the loan book With the acceleration hopefully of the production of new home loans and even if the macroedging will continue to See its contribution reducing we will see the stabilization and the increase of the net interest interest Margin at LCL and also at the level of the regional banks In in 2025
But not an increase the significant increase not a significant increase
We foresee a slight increase to be frank.
Okay. Okay. Thank you very clear. Thank you very much
The next question is from Alberto Artoni of Intesa San Paulo
Good morning, thank you for taking my questions. I have two questions on the Asset gathering business the first is You expect a lower rate to continue to support this business momentum particularly life insurance management Well management and the second question is more general there has been a debate around the active fixed income funds and products and Some people say that going forward we should expect the same level of competition that we've seen in active equities Other people say that given the difference between fixed income and equity market competition will not be as tough and active fixed income products and Much brighter future compared to the active active traditional products. So what's your take on that debate? Thank you
On your second question, you are talking about asset management or Yeah,
yeah asset management, but that also fits into life insurance products Directly wealth management indirectly also.
Okay, so Well lower rates have an effect on The valuation of outstanding especially if you have a large fixed income business in in in Asset management activities as well as in insurance activities and you know that in in the insurance portfolio of assets you have a large proportion of fixed income assets, so It's a mix because at the same time Decreasing rates is Generating a positive valuation effect But at the same time going forward the new assets that you can buy are yielding less So it's a mix and I think that at the end of the day what is important is to be able to adapt to any type of rate context and we've proven that it was the case for us both for a Life insurance activities and also for asset management activities. So what is important is the commercial demand in terms of savings product and saving support but as long as our clients Want to invest their savings into different categories of savings products? We have the full range of products and we are able to serve them then when it comes to competition it's fierce it's Getting fiercer and fiercer in all categories of businesses beat equities big beat fixed income products and what is important is to be as as much as possible a low-cost producer and size of course if you manage In a clever manner your size size is a good Advantage if you want to be a low-cost producer and we have the size and we have this habit of being a low-cost producer it's the case for us for a movie where they have a average cost on their assets under management Which is probably one of the lowest in the market and it's also very much the case that credit record assurance
Okay, thank you very much
As a reminder if you wish to register for a question, please press star and one on your telephone The next question is from Matthew Rosso of RBC
Yes, good morning. Thanks. Take my question morning Just a couple on the most finance So face on the just what your assumptions on the provisions you've taken Do you make an assumption on the Supreme Court really coming up in the UK? I've been secondly read to that Are there anywhere else any other things in Europe in other parts of business where you'd expect some more access to be taken By European regulators in terms of discretionary commissions Thank you very much
Well in the UK it's clear that it's a very preliminary stage of the of the of the case because What we've seen is that the number of claims that we've actually received is very limited that for the time being The second point is that we've seen that the the the UK Minister of Finance is now putting some pressure on the on the regulator in order to be moderate In terms of setting the framework of potential indemnification Especially of course taking into consideration the the potential impacts on UK banks But also willing to frame a scheme in which there would be no windfall profit for some Of the customers so which we deemed perfectly reasonable so all in all It's a preliminary provision We do not know exactly if and when we are going to need to look additional provisions But what I can tell you is that first point we will continue to have provisions According to our respective size on the market, which is very limited again 1 to 2 percent of market share So it's a it's a very very limited proportion of what is going to be grouped by UK players second point most of these activities were Performed at a time where a critical Autobank was FCA bank and was a jay-vee between FCA and ourselves, which means that at the end of the day there is a loss sharing a scheme with Stellantis and then the the the third point is that To the best of our knowledge Every time there has been in the last 10 years Precision given by the authorities on the way these activities Must be developed those New provisions were directly implemented by our Set up our operations there. So what we think is that We've been behaving as Accurately as possible in this market In the UK so so All in all this is leading us to be very Confident that this is not going to be a major issue for for us But of course, we have to monitor the situation closely and then for the last aspect of your question Do we foresee other areas of such difficulties such? Disputes we do not see Any other areas of such a case being opened and of course We disclose all the risk elements regarding our set of businesses in the in the in the risk part of the the presentations and and so there's some pages in the appendix and of course in the in the registration document we update regularly also On our risk factors
Thank you very much
The next question sir is from sharath kumar of deutsch bank
Okay Thank you jaram for taking my question. So I still have a couple so firstly coming back to french retail Again expanding a bit on pier's question. So I would say it was encouraging to see My mortgage loan production pick up. Where do you think is the current appetite for a further improvement in the current political climate? I know the bcb lending surveys are just at some softness the first quarter This is the prior quarter. So any comments there would be appreciated Second one is on personal finance. Um again encouraging to see a good sequential recovery Although I note some one-off elements, but nevertheless the underlying growth is still encouraging So where do you see the development of margins and volumes in the wake of lower interest rates in 2025? Thank you.
Excuse me. Your second question was relying to which business precisely
personal finance or Okay
So french retail An appetite of the customers to engage into home loans. I think the appetite of our clients to buy their homes has never weakened What has weakened is their effective capacity to borrow in the context of the sharp increase in interest rates that we've seen In 22 23 up to the beginning of 24 so Definitely the willingness of french consumers to be able to to become homeowners Hasn't changed what is changing and improving is their effective capacity to borrow and to buy their homes Uh, and to this extent the political uncertainties in france do not have any impact Because Whether there's going to be a budget or not is not really having an impact on Your willingness to to to buy your house to buy your home. So definitely It doesn't change a lot at least for you know, the vast majority of the population Of course for the higher end of the population the the person who invest in real estate and who buy Uh properties to rent them uh, then of course they are going to hesitate a little bit and to see whether there is going to be a An additional tax burden on this business, but for the vast majority of the home loans but we grant it For people that want to borrow their home and so there's no there's no Impact of the of the political uncertainties. So what is going to be important is to see how the the the Rate uh, uh evolution is going to continue in my opinion Considering the level of customer rates as of today and considering the the cost of refinancing We should see a stabilization of the customer rate Which is coherent with the market rate and which is coherent also with the capacity of our clients to borrow So we expect to see a develop a further development of the of the the the home loan market in france and and and in our network both lcl and and and the regional banks And then in consumer credit the good news that we've seen in the fourth quarter of this year was the fact that The the progressive improvement in in margins at inception inception of new loans Started to translate into an improvement of the overall margin on the outstanding which was the again the good news because We had seen a very sharp decrease of the margins with the increase of refinancing rates back two and two and a half years ago And we were expecting this moment where the the price effect was going to to start to invert It's now the case so we expect a lot from 2025 going forward on this business
Thank
you, thank
you
The final question sir is from matthew clark of medial banka
um, hi Two questions, please one going back to the macro hedging in lcl Sorry if I missed it. I just wanted to confirm is this macro hedging on the the mortgage portfolio? Um, and then second and if not, what is the macro hedging on specifically in terms of uh, Products and then second question is just on the tax rate. Can you give us a guide for the for the year ahead, please? Thank you
The macro hedging is not specifically on one part or the other of the balance sheet what we do when we when we Define and implement the macro hedging policy is that we start by assessing all the the elements coming from the customer in the balance sheet So we have on the asset side the fixed rate loans, especially home loans We have on the liability side different categories of customer deposits. We have Side deposits which is considered as a fixed rate Liability with a zero rate cost we have also all the Regulated savings accounts in which there is a component in the rate which is Connected to market rate and there is another component which is linked to inflation And then we have also the term deposits in which there is a rate that is set And that depends on the duration of the of the deposit and then what we do is that we aggregate all these position regarding their rate Components and then there is a gap between the assets and the liabilities and we cover the gap and generally the gap is uh, uh, in a in a sense in Has a sign in which we need to complement Uh, uh, and to book some swaps in which we pay the fixed rate So it means that we we complement the the liabilities bearing a fixed rate The customer liabilities by these swaps in order to match as much as possible The level of rates that we receive the level of rates that we have to pay And in order to leave only a marginal gap between both of them. So this is a macro hedging As opposed to what would be a micro edging in which we would hedge every element of the balance sheet individually and so this is this situation in which we are in which we have a significant portfolio of swaps in which in aggregate We pay a fixed rate which is known and we receive the short term rate Which is varying every every quarter or even every day Understood. Thank you Okay, and when it comes to the tax rate and this additional tax So it seems now that we have the final answer only this afternoon that the government is not Going to receive a non-confidence vote in france So it means that the finance bill is going to be passed and in this finance bill there is an additional Corporate tax surcharge that has that will have to be paid by large french corporates as we are in 2025 so it's clear that the level of corporate tax that we pay is going to increase in 2025 And we do not see exactly where this is going to lead us in terms of amount but what you can tell is that More or less, it looks a little bit like the one we already had to pay back in 2017 With the same type of mechanism Which is leading to a charge that would be that could be possibly for the group between let's say 200 and 300 million euros and then there is a Repartition of this burden between Casa the listed entity and the regional banks, which is not completely set because we are in the same tax integration group So it's it's way too early to tell exactly what it's going to represent. It's clear that we will have in 2025 An additional corporate tax surcharge and that hopefully is going to be a one-off
Understood, thank you
I Understand it was the last question. So again, thank you for attending the call and looking forward to discuss with you