Societe Generle Ord

Good morning, everyone. Thank you for joining us today. It has been an intense quarter, several important first steps in the execution of our strategic roadmap. As explained last September, we are, we shape our business model, make it simpler, more efficient, and more robust. In support of the strategy and the implementation of that strategy, we recently announced the planned disposals of our equipment finance and Moroccan activities, which will generate 40 basis points of capital in total at close. Those came after the announcement in February, the streamlining project of the French head office. We have also officially launched Bernstein on April 1st, which creates a new global leader in cash equities and research. At the same time, we have an operating performance which is improving in line with our trajectory. Revenues are stable compared to Q1-23 on the back of an overall robust commercial performance for most businesses, global banking and investment solutions in particular, and an improvement in French NII by the high deposit beta in France. Claire will go through the details in a few minutes. On costs, they are down 1.5 percent since last year. Note that we have already accounted this quarter for a large part of the transformation charge for the year. This leads to a reported cost-to-income ratio of 74.9 percent to 1. Cost of risk is in line with guidance at 27 basis points for the quarter. And overall, the group's income stands at €680 million in Q1, and the quarterly OTC is at 4.1%. On capital, the CET1 ratio is up by 10 basis points versus previous quarter, at 13.2% post-distribution provision. Claire will now comment on the quarter's financial performance. Claire?

Thank you, Sébastien. So, turning on slide five on Q1-24 operating performance. In Q1, total revenues stood at 6.6 billion euros. In French retail, NIA is up by 3 percent, that is Q4 last year. It's down 3 percent versus last year, mostly due to the remaining impact of short-term hedges, as well as deposit beta in French markets and outflows in savings products. At the same time, the pillar recorded elevated financial fees on the back of record AUM for both private banking and interest. Regarding Orsobon, it continues to acquire a high number of clients with around 160,000 more clients acquired during the quarter than last year, which weighs on service fees on year-to-year comparison. On global banking and investor solutions, With more than 2.6 billion revenues in Q1, the businesses once again performed very well this quarter in a less conducive environment. Revenues are down by only 140 million euros compared with a very strong performance in Q1 last year, particularly in global markets. Last, international retail banking contribution is solid. and revenue increased by 8% on mobility and living services, plus integration of Lisplon, which represents €417 million additional revenues in Q1. On costs, operating expenses land below €5 billion. They are down by minus 1.5%, that is Q1 last year, with various one-offs in opposite directions. Excluding these items, the underlying growth base increases by a moderate plus 3.4% versus last year, a level well below inflation. This rise is mostly related to the increase in compensation, notably due to the salary increase validated in 2022, which came into effect on the 1st April last year. Let's now move on the next slide on the cost of risk, slide six. At group level, The cost of risk remains low at 27 basis points, in line with guidance, despite the impact of specific market highs in France this year. For the quarter, the cost of risk amounts to €400 million, of which €499 million in Stage 3, and a reversal of €99 million in Stage 1 and 2, mainly related to the decrease of the Russian exposure offshore. The NTL ratio remains low at 2.85%, fast application of IFRS 5 on entities for sale. The net coverage ratio is high and slightly up at 82%. Last, provisions on stage 1 and 2 assets remain elevated at 3.3 billion euros, fast application of IFRS 5 norm on assets classified as healthy sales. Regarding capital, slide seven. The core tier one ratio increases to 13.2% at the end of March. It's around 300 basis points above MDA. The quarterly earnings generate 17 basis points of capital this quarter before distribution, and the organic RWA decrease this quarter for an equivalent of eight basis points in line with our strategy towards a more capitalized model. Regulatory impact accounts nine basis points this quarter. All in all, risk-weighted assets amount to 388 billion euros at the end of March, and the other capital ratios remain some relatively low requirements. I will not comment. Slide eight. We can now begin into the business performance. starting with French retail on slide 10. Within SG network, loans outstanding decreased by 5% compared with last year. The activity with corporate remained good with loans up plus 1.2% as is true for last year, excluding state grant loans still driven by short-term loans. On individual, home loan production is rebounded to quarterly levels doubling in Q1 compared to the previous quarter, for admittedly a low level. On deposits, outstanding are stable versus Q4, but with a continued shift from site deposits to both interest-bearing deposits and financial savings. In private banking, AUM reached a record level of €149 billion at the end of March, assets are up 6% compared with last year, thanks to robust inflows of €2.1 billion in the first quarter. On interest, life insurance outstanding are up 6% as of last year, to a record €141 billion. Growth inflows amounting to €6.1 billion, which represents an increase of 68% compared with Q1 last year. On protection interest, Premier increased by 4% versus last year, driven by P&C Premier. Let's now have an update on the evolution of the NII in French retail, slide 11. As expected, the NII has further increased by 3% in Q1 compared to previous quarter, with still an impact of €217 million of the short-term hedging, which will mature in Q2. Deposits are stable overall, but with a shift from side deposits to interest-bearing deposits and savings. Given the Q1 deposit beta and client behavior, we are today at a lower range of our projections and guidance. At the same time, loans and spending are down by around 1% versus Q4, mostly driven by home loans, with overall a slight increase in margins by minus 1.5 basis points. Moving on to next slide, 12. During the first quarter, Borsogon continued to acquire new clients at high pace, reaching 6.3 million clients at the end of March 24, with a term which remains low and which is decreasing. In terms of client satisfaction, Borsogon remains number one in France for the fifth consecutive year with the highest net promoter score. On the commercial front, assets under administration further improved by just 14,000 versus 2,123 at 68 billion euros, thanks to a strong increase in deposits and a record organic growth correction in life instance with a share of unit-linked products that remains very high at 46%. With regard to loans, like in LG Network, we note a rebound in production, both in home loans and consumer loans, but also from low points. Let's now move to the financial performance on price routine. Total revenues are down minus 3.5%, as if you won last year, and costs are around minus 6%, including around €80 million of transformation charges. At 247 billion euros, the cost of risk is impacted this quarter by the comfort to default of specific market signs. Excluding those signs, the cost of risk in France would have been around 27 basis points into one. Overall, the reported group net income in the pillar amounts to 27 billion euros into 1.24. Turning to global markets, and investor services slide 14. Starting with global market, it was a solid quarter with revenue at €1.6 billion, down minus 7% in comparison to a high Q1 last year. Equity activities performed very well in Q1, with revenues up 3% at €870 million, benefiting notably from supportive rise in equity markets. In addition, The demand in derivative products remained strong in Q1. On fixed income, revenues landed at €733 million in Q1, down compared with last year, which was the record first quarter for fixed income for the last 10 years. Q1 performance is solid in absolute terms, as this is around 9% of the average performance between 2019 and 2023 for the first quarter. Momentum is still positive in investment solutions, while flow and hedging were impacted by lower volatility on rates. Security services revenues are decreasing by 23% on a reported basis, but only by 5% if we exclude the exceptional items in Q1 2023, notably linked to the rate valuation of our holding in Euroclear. Regarding financing and advisories by the team, This is the best first quarter ever with a strong performance in both global banking and advisory and transaction banking. Revenues are at 3% at €859 million. In details, global banking and advisory posted once again a solid performance with an increase by 2% in revenues. The activity benefited from very strong momentum in asset-backed products and a good level of activity in natural results here. In investment banking, it's a mixed-fact performance with a strong contribution of debt-capped markets, while volumes remain low in M&A and equity capital markets. In transaction banking, the performance remains strong with revenues up just 8% thanks to both still favorable market conditions and a very active commercial activity. Overall, GBA has delivered once again an excellent quarter, slide 16. Revenue stands at €2.6 billion into one, down only minus 5% compared with last year, while costs decreased by 15% at €1.8 billion. These translates were reported customer ratio of 67%, customer rates being positive this quarter, notably due to the further reversal of provisions of the Russian exposure, GBIS delivered overall a very small quarter with an error of a new close of 19%. Let's now turn to international retail banking on slide 17. Business dynamics remain solid in both regions. In Europe, loans were up by 6% versus 2% last year, had constant change in perimeters, and deposited by 9%. In Africa, performance remains dynamic across regions, with a 5% increase in loans and deposits overall. We can, for instance, highlight a 15% growth in loans in Ivory Coast, or the increase is comprised between 15% and 20% of loans and deposits in both Algeria and Senegal. Overall, international retail banking delivered a solid level of revenues in Q1, up by 3% compared with last year, at constant change and perinatal. Turning now to mobility and leasing services, and in particular on havens. Revenues are up by 14% just last year, following the integration of Lisplon, which is progressing as planned with, for instance, the first revenue synergies crystallizing for a total amount of 20 million euros into one. Contrary to last year, the revenue base is impacted by a limited impact on free trade valuation and reduction in depreciation costs, while they accounted for 174 million euros of revenue in Q1 last year. From a commercial standpoint, margins are stabilised and even slightly up compared to Q4 23 at 522 base points. These are the initial benefits of the actions we initiated to improve margins over time. Regarding fuel car sales, we are still expecting a normalization of the market in line with our guidance. In Q1, the reserve per unit remained high at 1,661 euros on average, excluding the impact of reduction in depreciation costs, 28. When it comes to consumer finance, commercial performance remain subdued due to the inflationary and uncertain economic context. Fees are improving, whereas margin is still negatively impacted from by the impact of the back of the usual rate on the loans granted until the second half of 2023. Last, despite a good commercial performance, revenue in equipment finance slightly decreased by 2%, that is to one last year. Overall, on slide 19, the international retail mobility and living services contributed to the group net income for €272 million with a cash income ratio of 62.9%, including around €70 million of transformation charges. And to conclude on the financial performance, let's now move on to slide 20. This quarter, the Corporate Centre is impacted by two main specific items. First, the accounting of transformation charges for a certain amount of around €50 million. Second, a negative impact of €84 million in net profit or losses from other assets, mostly linked to the announcement of the sale of the American activities. Overall, the net contribution in Q1 for the Corporate Centre is around 300 million, minus 300 million euros. I will now let the floor, for ESG and then inclusion.

Thank you, Claire. A few words on ESG before concluding. It is an important central part of our strategic roadmap. Once again, we are here delivering on our agenda. We continue to decarbonize our portfolios with another target Today, on the aviation sector, using the Pegasus guideline methodology, we co-launched by General in support of the transformation of this sector. We continue to work in partnerships selected by clients for our capacity to deliver expertise and technical value in milestone transactions, such as North Pole's $5 billion project finance to mass-produce the world's greenest batteries. We have also closed the landmark synthetic risk transfer transaction in Romania, part of the IFC agreement, cooperation agreement that we signed earlier this year, freeing up the capital to reallocate on projects with strong developmental impact. Lastly, and a testament to our ESG leadership and capacity to transform, we continue to be recognized across the board by new awards, including as Best Bank Sustainability and best plan for transition strategy. Last, you will find on slide 23 our now recurring slide showing our progress towards our 2026 financial targets. And I suggest we now launch the Q&A. And please stick to our usual rule of two questions per person. The floor is yours.

Ladies and gentlemen, if you wish to ask a question, please press star and 1 on your phone keypad. Please ask your question in English. The first question is from Tariq Al-Majad, Bank of America. Please go ahead.

Hi, good morning, everyone. Just a couple of questions from my side. First of all, on the capital build and the disposals, can you please update us now where you are? I mean, you have announced two deals. Now we can see kind of What is the rationale, for example, to sell Morocco and keep the rest of the businesses? Can you explain us what's the dynamics there? What's the strategy of having the other markets there? And then also discussions about other businesses in Central Europe. So just really to understand what's the rational synergies to keep those businesses at this stage. And secondly, as on French retail, So in slide 11, you mentioned the increase of 3% NII at the lower end of the range of projected scenarios. I mean, do you commit still to 24 NII, at least equal to 22? And what do you see in the rest of the year in terms of moving parts on liability margin, asset spreads, and volumes? Thank you very much.

Thank you. Good morning. I'll take the first one. I let Claire take the second one in terms of the capital and the disposals and strategies. So, we have said that we will constantly, continuously review our business portfolio to make sure that it matches not only on a spot basis, at a particular review time, but also continuously the strategic agenda of the group in terms of market positioning, in terms of ROE, in terms of ROE versus cost of equity, in terms of pay risk, and in terms of synergy. And so it's a process which is going to last forever, so to speak, and where we will continuously reassess the performance of our entire portfolio. And then when we make decisions about a particular asset that we believe will be a better asset somewhere else than within our portfolio, we carry out discussions. And then when we reach an agreement which makes sense for everybody, for us, for the buyer, for the team, for the clients of these businesses, then we move forward. So, you should not now try to infer from what we haven't done to date what we would like to do, right? I hope my point here is clear. So, we have done these two things, ASCOT, a very clear strategy that I think we talked about many times, and we'll continue to do our Our job, right, the job of any manager to consider performance of the business portfolio. And right now, nothing to be inferred from what we haven't done. In terms of the French retail and AI guidance and the moving parts, etc. Claire, please.

So there were two questions in your question. One related to the outstanding and trends. The other related to the guidance. And so as previously indicated, I'm sorry, last quarter, customer behaviour is still evolving in France. And we see a continued shift from sites to interest-bearing deposits for off-balance financial savings. In addition, loan outstanding slightly decreased at 624 minus 0.9%, mostly on home loans, with an overall slight decrease in margin minus 1.5 basis points. Regarding the strength, we see a rebound in production in notably home load with for sure a lag effect on margin considering the cap we had in the back book regarding usury rate. This being said, given the Q1 deficit beta and client behavior, we are today at the lower range of our projection and have a lot of guidance.

Next question.

The next question is from Julia Mioto, Morgan Stanley. Please go ahead.

Yes, hi. Thank you for taking my questions. I'll go back to French for my first question. Just to make sure that we fully understand, to be at the low end of the projected scenarios, in my understanding, would mean being at 2022 level. Is my understanding correct? And then the second question would be on dividend at the moment and, you know, buyback. Subgen is provisioning 0.32, which is equal to 50%. And I think part of the plan was to start at 40 or, you know, the low end of the guidance and then move up to 50%. I'm wondering, are you provisioning at 50 because these are the rules you need to provision at the high end of the guidance as ECB mandates or given that this went quite well and you might be ahead of schedule on CT1, you could consider already doing 50 as of 2024. I appreciate it's only Q1, but we care. Thank you.

Thank you. Thank you very much. Hi. I'll let Claire... And on the distribution, so very clearly, we're provisioning 50 percent because this is a regulatory requirement. When you have a range as part of your distribution policy, you have to provision during the year until the final decision is made by the Board, I'm sorry, at the higher end of your range. And strategically, the distribution policy is unchanged, and so it's indeed 40 to 50 percent, and it's going to be based on the decision. It's going to be a Board decision, obviously, early 2025, and the Board will consider all the facts at the time, both for 2024 and in terms of forward-looking trajectory in terms of capital. So more to come, but in January, Claire?

Yes, so indeed, the guidance was rebound and at or above level of 22. So given the Q1 deposit data, client behavior, I did already comment, we are today at a lower range of this guidance and of our projections.

The next question is from Guillaume Thibergian, BMP Paribas. Please go ahead.

Yes, good morning. Two questions on my side. Number one is on the cost in French retail, excluding resolution fund, excluding IFRIC and excluding CTA. If my math is correct, they look at 4% year-on-year, which seems quite high given that we're meant to have the synergies from credit. So I just wanted to check my math and maybe if you can tell us what to expect at your end. The second one is on Bursa Bank. I know you don't give the revenues, but maybe can you give us a feel as to what to expect on the fee line growth in 25 versus 24 to reflect the fact that Bursorama is chasing customers a bit less? And then a tiny one on RWA development. If I may, you say you created 8 bits. Is that from lower volumes, or are you buying CDS, or are you doing securitization? Can you do a lot more on that front? Thank you.

So, thank you very much. Hi. It looks like three questions, but we're going to make a little exception here. Thank you. So, Claire on... Costs in French retail and RWA. And Philippe, on Coursobanque. Claire?

Yeah, so regarding costs from the French retail, you're marked out for key. The increase is mainly driven by the salary increase. As a reminder, the salary increase in 2021-2024 is related to the salary increases we granted one year ago at the end of 2022, which were slightly in line with the 5%. So as a whole, compared to this salary increase granted end of 2022, the cost base increases lower than this salary base. And by the end of the year, year and year, we are at a low digit increase. Exactly.

So the main reason for the

in organic air delivery in Q1 are twofold. First, the implementation of our strategy towards more asset-like models. And notably, we put in place various mechanisms, such as asset distribution, hedging solutions, or risk transfer transactions. Second, we have a nonlinear consumption of businesses, which could lead to temporary underconsumption, which is the case within one, notably on GLBA and French retail. So for the guidance, for the, regarding the guidance and for 24, we keep an unchanged guidance, which is a limited organic RWA growth, which is below 1% versus 23.

Philippe Boursobon.

Yes, good morning. So regarding the evolution of of the fees in the first quarter, 24 compared to 23, and excluding the acquisition cost, the fees are up by 10% and mostly driven by the service commissions.

Sorry, you said 10% year-on-year for French retail and Boursorama? I don't know.

It's for Boursorama. I'm sorry, it's It's also long.

So the question was French retail. I'm trying to understand what tailwind on feed growth we will get from Boursorama stopping to chase new customers next year.

Okay. So year on year, the the service fees excluding Boursorama for RPDIs are flat. Okay. Next question.

The next question is from Delphin Lee, JP Morgan. Please go ahead.

Hi. Good morning. Thanks for taking my questions. I just wanted to check two things. On your capital, just to confirm the headwinds that are still to come, in terms of trim, and obviously there's the impact of the disposals, but also checking on the ECB inspection, on-site inspection, if you have more visibility on if there is going to be any kind of impact from that. And my second question is on global markets. Is the guidance still... 5.1 billion of revenues for global markets. And I would assume that does not include Bernstein, if you could just clarify that. Thank you.

Thank you. Good morning. I'll take the global markets question and leave Claire with the first one on capital and headwinds, revenue headwinds. So on global markets, so the guidance is 4.7, 5.3, including Bernstein, with the structuring of the Bernstein transaction, final structuring of the Bernstein transaction, it's roughly 100 million more in terms of that initial interval, if you will. So this strategic long-term guidance remains unchanged. For 2024, we don't adjust the guidance. Let's say that given the performance of Q1, everything else being equal, but as you know, it's a lot to say, but everything else being equal, obviously with the advance that we made in Q1, you know, we're seeing this thing land close to the higher end of the guidance. Claire?

So, regarding regulatory impacts on the capital, this quarter we have nine basis points impact. This being said, and regarding the guidance, as demonstrated in 23, where we had a 15 basis points impact, that is the 15 basis points guided, and as we reminded in 2.4, estimating a potential regulatory impact is in session. both in terms of timing and amounts. So we now prefer to stick to end-of-year guidance, which is for this year around 13.1 ratio, and to stick to this target rather than guiding a notably regulatory moving path.

Next question.

Next question is from Sarath Kumar, Deutsche Bank. Please go ahead.

Good morning. Thank you for taking my question. So I have two, please. So firstly, on global market cost, again, if I exclude bank taxes and restructuring costs, I see underlying costs about 2% lower. So can we expect this strong momentum to sustain or should we expect some sort of a catch-up in the last quarter given variable cost provisioning? So that's the first one. Second one is on cost of risk. We saw a minor uptick to 27 basis points, essentially coming from French retail, and we saw some news on specific French files in the press. So do you expect this to be an ongoing exercise, or how confident are you of remaining in the 25 to 30 basis points guidance this year as well as going forward? Thank you.

Thank you. Thank you very much. Good morning. I'll take the first one on global markets costs. And Stéphane Landon, our chief risk officer, is going to give you a call on your second one. So on the first one, you're right. And the very simple answer is there is no particular, you know, material change in terms of trends to expect. in GBIS like in the other all of the parts of the group investing to continue to decrease the structural cost base but let's say there's no particular strong dynamic to expect other than the one you see.

Thank you. Well, as you explained, the cost of risk, the uptick in cost of risk is mainly coming from a few specific files in the French market. Overall, we do not see any degradation of our portfolio, and we expect the cost of risk for the year to remain in the range between 25 basis points and 30 basis points. Next question.

The next question is from Matt Clark, Mediobanca. Please go ahead.

Good morning. A couple of questions, please. Firstly, on the French retail banking net interest income, I'm sorry if I've missed it. Could you give us the number for the fourth quarter short-term hedge impact, so the comparable number to the $275 million for the first quarter that you gave? And then secondly, with respect to all the disposals that have been announced, you've given us the CET1 impact of those, but I don't think you've given us the foregone earnings impact. So could you give us the foregone earnings impact of those announced disposals and also maybe talk about how you will use the capital that's been released or when you expect to communicate on how that released capital will be used? Thank you.

So, I'll take the second one, and I'll leave the floor to Claire for the first one. In terms of the disposals, I mean, the part about how we're going to use the capital, and Claire is going to give you the details on revenues, but in terms of how we're going to use the capital, basically think about it in very simple terms. We have a guidance in terms of where we want to land, and both for 2024, but also in 2026 post Basel IV. And this is what matters. And in terms of the capital that will be generated at closing by these disposals, it will be part, as we said, of the CMD of the capital buildup. and making sure that we have also ample, ample buffer. This is the whole strategic underlying thinking about it, ample buffer to deal with all kinds of headwinds. And of course, at some point, if we reach levels that are higher than our targets, we'll by then communicate on what we would do with this extra capital should we end up with extra capital for our targets. Claire, on both the French retail, but also the foregone revenues, earnings of the disposal.

So, a lot of figures on my side. So, regarding the impact of the disposal on the top line, regarding Congo and Chad, it was very limited. Last year, for example, it was 20 million euros. For the six subsidiaries that are also on the African side, it's also very limited. For example, for the full year, it was 166 million euros. Regarding equipment finance, revenues in 23, it was around 0.4 billion euros. And regarding barotrope, in terms of revenues, it was around 0.5. Regarding SORT, it was 0.2 and 0.3 for equipment finance and marital. This is for the figures. Regarding the impact of the short-term hedges, so your question was related to Q4-23. The impact was 400, exactly 404 million euros. In Q1, the impact is 270, exactly 265. And we still are expecting an impact now. So Q2, we're guiding on. And after, it's over.

Thank you. Could you just give us a single figure for the net profit contribution of all the disposals that have been announced so far? When you add it all up, what does it come to? in terms of the profit contribution that you lose.

So, what I just told you is that, regarding equipment finance, the figures were 0.4 revenues, 0.2 costs, 0.1 net income, and to give you the full picture, 8.2 regarding the RWE. Regarding Morocco, NBI 0.5, SOS 0.3, DOI 0.2, net income 60 million euros, 6-0, past minority interest, and NWA 8. Okay. Is that okay?

Thank you.

The next question is from Azzurra Guelphi City. Please go ahead.

Hi, good morning. I have two questions. One is on the mobility division. It seems that we have turned the corner there and there was no additional negative surprise. Is it fair to assume that from this division we will have one of the highest revenue growth in the coming quarter, in addition to French retail, of course, and that from the current profit of around 140 million, we will build up on this in the coming quarter, if you can elaborate a little bit on that? And the second one is on the provisioning, the stage two and stage one that you showed. They went down quarter on quarter. I don't know if most of it is related to perimeter changes, so if you can give us some color on that. Thank you.

So I'll take the second one because it's a very simple one, and I'll let Pierre Palmyry talk about mobility. In terms of the provisioning S1 and S2, it is only related to the perimeter change.

Yeah. Concerning the mobility sector, especially Avon, we see that our results are in line with the guidance in terms of, first of all, the margin that is slightly picking up compared to Q4, so the stabilization of the margin. And second, in terms of the used car sales, we're given a range in 1,600, and we are at 1,661. Therefore, at the high end of the range we're given. So we consider that we can maintain guidance that was given by Avon. for 2024, which means an increase – includes an increase in the net earning assets and therefore an allocation of RWA, as was mentioned during the CMD where AVENS was one of the business units that would benefit from an increase of RWA.

On the S1S2, just to be very precise, there's limited also impact in terms of the Russia exposure, which obviously is going down, and without any surprises, it's 25 million on Russia. That's the other impact. But other than that, it's permanent. Next question.

The next question is from Jacques-Henri Goullard, a Kepler-Chevreux. Please go ahead.

Yes, good morning, everyone. Obviously, too. First one on the hedges. Claire, could you actually sign us a piece of paper according to which we're going to be done after the second quarter? More seriously, the question would be more in terms of guidance, I think, at least in my numbers. I was not expecting that much. So what went wrong there? in the guidance versus what you gave us at the end of last year and the fact that this is still carrying on by quite a big amount. And basically, are you nonetheless quite comfortable about generally your NII guidance in France? That's the first question. The second question, like my colleague and friend Guillaume, I've done some calculation as well but not on the cost, on the revenue. If you maintain your higher than 5% or 5% revenue growth, That would mean that for the rest of the year, your revenues will have at group level to kick in at about 6.65 billion, which is high, which is what you reported this quarter with a good investment bank, Tailwind, and also what you've reported in Q1. But are we nonetheless comfortable that we'll be able to actually get there those remaining quarters? Thank you.

So I'll leave some of the answer to Claire, but I have to admit I'm not 100% sure about the beginning of your question, right? Was your guidance question about NII in general or about the hedging?

Well, obviously, the two are linked. So it was more about the hedge first. And then as a result, you know, I understand. I appreciate what you're saying about the lower end of the guidance and all that. It's completely different. It's more confidence about the sense of travel more than being very precise. Thank you. All right.

All right. And on the revenues as well.

No, I'm still comfortable with the guidance we gave by the end of last year. I think we gave for sure rounded figures to 0. something billion euros and we stick to it. Once again, 265 for Q1 and the rest for Q2. At least no surprise, neither on our side nor regarding the guidance.

And on the revenues, yeah, we do maintain this guidance. It's, again, partly, you know, largely actually mechanical because of the improvement in the French retail because of the expiry, so to speak, of the hedges' drag. And, yes, we have this guidance at this point, knowing that, again, overall, markets should also land at the higher ends of the guidance, as I said earlier. Thank you. Next question?

The next question is from Chris Hallam, Goldman Sachs. Please go ahead.

Yes. So, in French retail, I know it's a bit of a follow-up to what Jacques-Henri just asked. So if I work through what you said for the first quarter and the second quarter on the short-term hedges, we're going to be a little bit above $400 million in the first half at the capital markets day. You said $300 million. I know there's a lot of rounding in here, but just should we be penciling in some tailwinds in the second half on the short-term hedges? And then in markets, so obviously cost performance is pretty good in Q1. Cost-to-income ratio is 68%, I think. So just how do we think about that through the second year? Sorry, through the rest of the year. And just a very short clarification. I think in the answer to Delphine's question earlier, you said the guidance range for markets was 4.7 to 5.3. But I think at the CMD, you said it was 4.9 to 5.5 on slide 37. So I'm just checking what I've got mixed up between those two data points.

All right. So I'll take the global markets and let Claire comment on the first question. On the global markets, so the strategic – you're right, so I'll clarify. I referred to the historical guidance on global markets being 4.7 to 5.3, which indeed we upgraded at the CMD with mostly the way we were looking at the integration of Bernstein down the road. But as we restructured the way the firm works with two separate subsidiaries, one of them being integrated, the other one which is not directly integrated, this translates into something which is, let's say, closer to 4.8 to 5.4. And that's what I had in mind and with, as I said, something which, again, everything else being equal looks like a of the guidance for this year. Claire?

So, regarding short-term hedges, by the end of the Q4, we have gated, indeed, on €0.4 billion, and the breakdown per quarter is the one provided, I think, in this slide, NII, which is 265 exactly in Q1 this quarter, and still 150 expected in Q2. And after that, it's over.

Okay, thanks. That's really helpful. Next question?

The next question is from with RBC. Please go ahead.

Yeah, thank you very much for taking my question. The first is just on the disposals again. Can you confirm the earnings impact was included in the guidance for 2026 at the capital market stage? Because from memory, you were saying that already makes assumptions on disposals. And then secondly, on your core tier one ratio guidance for year end, the 13%. I mean, obviously, there are a number of moving parts, but does that make any assumptions on additional disposals in order to understand what could be upside and downside scenario. Thank you very much.

Thank you. I'll let Claire answer both questions. Thank you.

So regarding the zero to two percent guidance on revenue, we had explained at the Capital Market Day that, yes, it did impart assumptions related to disposals. This is for your first question. For your second question, our end-of-year Quartier 1 guidance is our best estimate right now regarding our Quartier 1. Considering the fact that the disposal has an impact on Quartier 1 at closing, we have no by-construction additional disposal assumption, and that is the end of your quota on top of the one already announced.

Thank you.

Next question.

The next question is from Sam . Please go ahead.

Hi. Thanks for taking my questions. Please, both on revenue. So on French retail in other income, I appreciate there's a lot going on on that line. Looking back, it doesn't seem to be any recognisable pattern to those results over the last eight quarters. So should we continue to expect this to be around 200 million on a four-year basis? Or is it different? Just anything you could provide to help us model that number would be helpful. And then on global markets and the impact on the group, I appreciate this is a small follow-up to Chris's question, but you've, in the quarter, reiterated your more than 5% revenue growth for the year. Last quarter, you said that was based on global markets revenues of 5.1 billion. Is that still the case in that assumption, based on your kind of slight change to the guidance? Thanks very much.

I'll leave the first question to Philippe. On the global markets, if I understood you well, but please, the line wasn't great, so if you want me to follow up, please ask. So, again, the guidance was the one we gave, and we are tracking higher than the guidance for the year, even just for seasonality. And this is why we expect, again, everything else being equal to reach the higher end of the guidance, which would be 5.4. Is that answering your question?

Yeah, just perhaps a small follow-up. I'm just trying to understand if, so in the Q4 slide, you said that your 5% revenue growth at group level in 2024 was based on global markets revenues of 5.1. If you're now saying that they should be at the higher end, so more like 5.4, appreciate your guidance is for more than 5%. Should we feed that through directly or are there other things offsetting like other divisions where you're now expecting less revenues, I guess, is the question. Thank you.

Yeah, yeah. So, yeah, it was indeed very clear. Thanks. It was indeed 5.1. And, yeah, as you can see in this particular quarter as well, you do have a contrasted performance between the businesses for the reasons that we described. And so, yes, down the road, part of what the global markets are going to, again, everything else being equal are going to deliver in terms of over-performance versus that initial guidance is going to be offsetting some of the under-performance, some of the headwinds. Philippe?

Yes. So, regarding over-income in RPDI, so these revenues are mostly composed of NDI related to specialized subsidies or investment, investment in private equity, property leasing, or real estate. So the decrease between the first quarter of last year and the first quarter of this year, it's mostly explained by two components. The first one is the base effect linked to the merger of the two networks, Société Générale and Crédit du Nord. It occurred in the first quarter of last year, so it was positive last year, so it's a negative base effect for this year. And the second component is the seasonality effect from some volatility in the contribution of the subsidiaries. So it is a low point, but it is absolutely not .

Thank you. Next question.

The next question is from . Please go ahead.

Yes, good morning. I have one question regarding insurance business, which seems very, very dynamic this quarter. And when you see the dynamism of the business, I was a little bit surprised by the increase in terms of revenue. We could expect a better, I would say, translation of the economic performance in the banking, I know accountability, I know it's a little bit difficult in insurance, but if you could give us a little bit of color about that. And I wanted also to know if you would like, we see that you're good in protection. But I have seen some figures from your competitors, which are much higher. And I wanted to know if you were specifically developing this part of the business. I'm talking about individual and collective protection. And lastly, regarding insurance, could you give us the... Sorry, the combined ratio in PNC and the solvent-situ ratio. Thank you.

So, Philippe?

I'm sorry. So, regarding the first part of the question, Yes, it's a very good quarter regarding gross inflows, net inflows, and therefore increase of the outstanding. So the impact on the revenues will come in the coming quarter, in the coming month. It didn't happen immediately. So that's going to impact the revenue for the future because, of course, most of the fees are related to the outstanding. So that's the first part of the answer. The second part of the answer, yes, we are making progress in protection, but we are still lagging on this one. We have to increase our market share. We know that we have still, and to a certain extent, that's a good news, a growth potential on this area. So it's definitely at the heart of our insurance companies. So the goal is notably to increase the rate of client equipment for the clients in the retail network, and we have lots of action plans in progress. You know, make sure that we have the right offer, and I think that's the case, to continue to digitalize the client domain and to continue to train the sales force. Regarding the solvency ratio, It's about 200 percent, so slightly lower at the end of 2023, but still very high. And regarding the combined ratio, which is basically the sum of the claims and expenses by the premiums for everybody, but this is a ratio we don't communicate. we score well within the French market on this ratio.

Thank you very much.

Thank you. Next question.

Next question is from Joseph Dickerson, Jefferies. Please go ahead.

Hi. Thanks. Most of my questions have been answered, but could you just talk about in the, if I look at your, in the French business, retail, private banking, and insurance, if I look at the business net of the insurance, it lost money on a pre-tax basis because the cost of risk was $247 million, which was a step up. And I think you referenced in your commentary something about entry into default specific market files. I guess, how do we think about the run rate of that number? Is that more of a one-off that was unique to... to the first quarter or something that we should start to interpolate a little bit further in terms of cost of risk. Thanks. Thank you, Stéphane, our Chief Risk Officer.

Now, what we've seen is that normalization of the cost of risk overall on the French network and, in addition, some specific files will, on top of that, quite high level of risk of provision specifically on this time. So, yes, it is exceptional, but the overall cost of risk has normalized over the past.

Thank you. Great, thank you. Next question.

The last question is from , HSBC. Please go ahead.

Yes, good morning, everyone. Just a couple of questions on my side. So firstly, just coming back to the capital and the end 24 target of 13%, I appreciate you don't want to give guidance for every single quarter, but can we infer from what you're saying that all of the trim, all of the on-site inspections, all of that still dealt with this year, so 40 bits or so, I think, still to come. And then so for 2025, it's really just Basel IV we need to factor in in terms of the capital planning. So just some clarity there. And then second, given the trading incident you had in Hong Kong, I wonder if there's any consequences more broadly that we need to think about, maybe some sort of op risk or market risk add-on that might be there in the pipeline or maybe some sort of fine even. So just your preliminary thoughts on that, please. Thank you.

Hello, I'll take the second question and comment on the first one. So, I mean, no, not at all. I mean, it's an incident which had no impact on the group, no impact on clients. And it was identified by our control framework and it was dealt with swiftly and with the continuous improvement we're in generally speaking across the board on all our processes and controls etc we obviously have analyzed the incidents and made adjustments and improvements like we do all the times speak so no nothing nothing on that front and Claire on the first question

Yes, so regarding regulatory headwinds, as a reminder, we had guided on the 35 basis points in past data. On top of that, we have, as most of our peers, several on-site inspections on ongoing basis. So we stopped on regulatory guidance going forward, considering this uncertainty on the output. from these on-site inspections. We stick, once again, to our guidance of the 13% quarter one by the end of the year, on which we are comfortable. Regarding Basel IV, which is another topic regarding regulatory headwinds, we have guided on an 85 basis points impact, and we stick to this guidance, which remains unchanged.

Okay, thank you.

All right. Thank you very much. I think we have no more questions. So thank you very much for your time. Thank you for joining. And we will speak with you next quarter. Thank you very much. Bye-bye.