Societe Generle Ord

Ladies and gentlemen, welcome to the Societe Generale second quarter and half-year 2025 conference call. I now hand over to Mr. Slavomir Kupa, Chief Executive Officer. Sir, please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today for our H-1 results. I am delighted to present to you another strong set of results as well as an important new milestone in the execution of our strategic plan. Last quarter, we demonstrated that our continued improvement is sustainable, and we continue to perform ahead of our end-of-year targets. Through consistent organic capital generation, we have further strengthened our capital ratio. Our overall performance gives us the confidence to take two major steps forward in our commitments. We are upgrading our annual targets and we now expect a roti around 9% for 2025. And we are further improving shareholder return with today's announcement of our first ever exceptional distribution of a portion of our excess capital through an additional share buyback of 1 billion euro. This is an important first step. Additionally, we are introducing an interim dividend of 61 cents per share against the results of the first half of 2025. The unwavering dedication of our teams makes all this possible. We continue to execute our strategic roadmap with discipline and determination. And as a result, we are moving into the second phase of our three-year plan with equal confidence based on this year's first half results. Revenues increased by 8.6% versus H1-24, excluding asset disposals at a growth pace well above our initial target for 2025. Costs continue to decrease at a higher pace than initially planned. They are down 2.6% since the beginning of the year compared with last year, excluding asset disposals. This positive differential translates into a current group cost-to-income ratio of 64%, already below our initial annual target and roughly 7 percentage points better than last year. Asset quality remains strong, the cost of risks remains low, and below our annual guidance at 24 basis points for the first half. At this point, we see no signs of significant deterioration. And regardless, our assessment of the current environment keeps us prudent in terms of risk management. Together, all these factors contribute to a group ROTI of more than 10% at the end of the first half, with the group net income reaching €3.1 billion. This is well above our initial annual target. Ultimately, our capital ratio further increased by 10 basis points in Q2 2025, and the CET1 ratio now stands at 13.5% after accounting for the additional share buyback of €1 billion. Therefore, we have decided to upgrade our annual targets on cost-to-income and ROTI based on strong, positive jobs. Looking forward, we now expect a cost-to-income ratio below 65% in 2025 versus below 66% before, and as the cost-of-risk guidance remains unchanged, we now expect an annual ROTI around 9% in 2025. We're basing this decision to upgrade our targets in what we see in the numbers at the business level. We implemented our strategy through specific business initiatives, as you know, and which are delivering positive outcomes throughout the group. In French retail, private banking, and insurance, we are now pursuing a stronger strategic direction and renewed management practices, which leads to an increased commercial momentum and the opportunity to extract more synergies across the French retail businesses. This is boosting growth in mortgage origination, in fees, in private banking AUM, and in life insurance outstandings. At the same time, Boursaubanque has already reached 8 million clients 18 months ahead of our initial CMD target. It keeps delivering an improved financial performance which will accelerate next year. Our focus for the remainder of the year will be to maintain our current steady pace in terms of client acquisition. Overall, the RPVI RONI rose to 10.4% in H125 versus 3.3% in H124, and the cost-to-income ratio decreased to 67% versus 81% over the same periods. In global banking and investor solutions, we continue to deliver a high, consistent, stable, and predictable performance for the fifth year in a row within all our businesses, particularly within global markets. We have leading franchises in our global banking business that are well positioned across megatrends like infrastructure investments, energy transition, and defense. And overall, we continue to deliver leading profitability levels with a RONI of 17.7% in H125 post-Basel IV. In mobility, international retail banking, and financial services, profitability is up by more than two percentage points versus last year. Margin and synergies at events are also increasing. KB and BRD are performing very well and leverage a successful digital overhaul. At the same time, we continue to streamline our business portfolio with the closing of the disposal of our subsidiary in Burkina Faso and the announcement of the disposal of our subsidiary in Cameroon. Our CMD commitments were simple. Deliver value creation anchored in a strong capital position. We also committed to being good stewards of the capital of our shareholders. by being more efficient in terms of capital allocation across our businesses, by streamlining our portfolio through targeted disposals, and by improving, of course, our operating performance. The tight execution of this roadmap gives us today the ability to substantially enhance shareholder returns. In this first half, we brought our CET1 ratio to 13.8% at the end of June 2025 before excess capital distribution. and we are therefore announcing the first additional share buyback of €1 billion, which represents minus 25 basis points of CET1. And given that we have already received the ECB approval, it will be launched as soon as next Monday. As previously stated, we will continue to proactively manage our sustainable excess capital in the best interest of shareholders with a mix of exceptional distribution and profitable disciplined growth. We are also introducing an interim dividend from 2025 onwards, and we intend to distribute an interim cash dividend of 61 cents per share this year, representing 35 percent of the H-125 total distribution accrual. It will be paid on October 9th of this year. I now leave the floor to Leo, who is going to take you through our second quarter performance.

Thank you, Slavoj Mir, and good morning, everyone. Let us move on to the financial performance in Q2 2025. It is another strong quarter for the Group, which reports a Group net income of €1.5 billion, up 30.6% versus Q2 2024. This translates into a higher return on tangible equity of 9.7% versus the 7.4% that we had in Q2 2024. Going through Q2 2025's details, we can see a solid revenue growth of 7.1% versus Q2 2024, excluding disposals, driven by strong commercial performance across businesses, as we will see later. Reduced costs by minus 2.8 percent versus Q2-24, excluding the global employee ownership program and other disposals, showing our continued firm discipline on costs. Both movements translate into a further improvement in operational leverage, with a cost-to-income ratio of 63.8 percent in Q2-25, down by more than four percentage points versus Q2-24, achieved despite a one-off non-cash charge of €100 billion related to the launch of the Global Employee Share Ownership Programme in June 2025. As a quality-wise, the cost of risk continues to be low at 25 basis points, at the lower end of our guidance, between 25 and 30. In addition, as mentioned by Islam Amir, we continued to simplify our business portfolio with the closing of the disposal of sub-gen Burkina Faso and the announced sale of sub-gen Cameroon. Moving on with the presentation, on slide nine, we present the main drivers of our revenue growth in Q2-25. Disposed assets generated 342 million euros of revenues in Q2 last year, mainly Morocco, Madagascar, , and private banking in Switzerland and the U.K. Therefore, group revenues increased 1.6 percent versus Q2-24 on a reported basis, but 7.1 percent when adjusting for 2024's asset disposals. Revenues in French retail, private banking, and insurance increased by 10.7 percent, excluding disposals, and by 2.8 percent if we also restate the drug insurance in Q2.4. Revenues of global banking and investor solutions are up 0.7 percent versus their strong Q2.4 to reach a high level of 2.6 billion euros, driven by solid performance in fixed income, as well as in financial and advisory. Lastly, Revenues in mobility, international retail banking, and financial services grew by 7.3 percent versus Q2-24, excluding disposals, supported by the sustained growth of events, as we will see later. Continuing on the next slide, we can observe the ongoing improvement in our operating leverage. Total costs fall by 5.2 percent between Q2-24 and Q2-25, confirming our discipline on cost management. This is equivalent to a minus 2.8% reduction excluding both disposals on the charges related to GSOP launched in June 25 for an amount of 100 million euros. Discharge of GSOP is 100 million euros, is a non-cash item which therefore has no impact in CD1 nor on distributable net income as the P&L charge is upset by an equivalent positive impact in the equity. The decreasing cost is supported by 93 million euros of lower transformation charges, as expected, and net cost savings across the board representing 30 million euros. As a result, the operating leverage improved in all businesses, driven by both high revenues and decreasing costs, as shown on the right-hand side of the slide. Improvement is particularly relevant at FPBI, with a decrease of 12 percentage points from 77 percent last year to 65 percent in Q2-25. The group cost-to-income ratio falls 4 percentage points from 68 percent last year to the current 64 percent in Q2-25. Overall, we're very confident we will reach our new target of a cost-to-income ratio below 65 percent in 2025. Let us take a closer look at the ASA quality on slide 11. The cost of risk in Q2-25 remains low. of 25 basis points, which is at the lower end of our guidance, only two basis points higher than last quarter and minus one basis point below Q2-24. This quarter's cost of risk mainly comprises of Stage 3 provisions, which account for 390 million euros. In parallel, as you can see, total standing Stage 1 and Stage 2 provisions remain high at 3 billion euros, slightly down from Q1-25, mainly due to asset disposals and assets. Stage 2 provisions, in particular, represent 4.3% of the corresponding Stage 2 stock of loans. Asset quality is solid, with the MPL ratio at 2.77%, down 5 basis points from the previous quarter. And also, the net coverage ratio remains sound at 81% in Q2, down 1 percentage point from Q1, basically because of asset disposal. Let's now turn on to capital on the slide floor, where we can see our strong capital position evolution. This is the basis for the first distribution of excess capital, as mentioned earlier by Slavomir. The C2-1 ratio reached 13.5 percent of Q2-25. This is 330 basis points above MDA. This strong ratio is already net of the additional share by back of $1 billion, which corresponds to an impact of 25 basis points. All in all, we see the quarter a net increase of 35 basis points before the additional share buyback, or a net increase of 10 basis points after it, as explained from left to right in the slide. On the one hand, we can earnings contribute with 50 basis points, 15 basis points, after accruing a 50 percent payout. We have a positive impact from other proposals, not only related to the sale of Burkina Faso. some positive regulatory adjustments with an impact of eight basis points, and finally, other impacts which add two basis points. In addition, as you can see in the bottom right-hand side of the slide, all other capital ratios are comfortably above the regulatory requirements. We have the liquidity profile of the group on slide 13. Societe Generale maintains a strong liquidity profile with an LCR ratio at 148 percent at the end of Q2, and an NSVAR ratio at 117 percent, both well above regulatory requirements. Liquidity reserves stand at 313 billion euros in Q2, with a balanced mix between cash and securities. We've already executed around 80 percent of the long-term funding program, with good access to liquidity in all currencies, on the back of a strong long-term ratings from all agencies, including, as a novelty public quarter, the new stable outlook from Moody's. The deposit base remains strong, granular, and highly diversified. Overall, Loan 2 Depot stands at 77 percent for the group. In slide 14, we show a summary of the P&L of the group for Q2, which we will cover in more detail in the coming slides. Let's move now to the business performance on slide 16, starting with software network, private banking, and insurance. In Q2 25, loans outstanding decreased by 2 percent compared to last year. are flat when excluding state-guaranteed loans, while slightly up versus Q1-25. Home loan production continues to increase strongly in the quarter, thanks to a strong commercial momentum, and it is up by 175% versus Q2-24. As expected, volatile deposits are stabilizing, as well as the mix between site and term. They are slightly down 1% versus Q1-25. Linked to this deposit evolution, we can see that the strong momentum in asset gathering continues this quarter. On the one hand, we see AGM in private banking reaching 132 billion euros in Q2, increasing by 6% versus Q2 24, if we adjust for asset disposals, while outstandings are up by more than 2 billion when compared to Q1. On the other side, life insurance outstandings increased by 5% versus Q2 24, reaching a total of €150 billion. That also represents plus €2 billion versus Q1, thanks to continued strong interest. Moving now to BursaBank. Once again, in Q2, the bank maintained a high pace of acquisition, gathering 444,000 new clients. More importantly, it already reached the €8 million target in July. This is six quarters ahead of its December 26 objective. This growth is achieved together with the churn rate that remains below 4%. In terms of client service, Burjabank was recently recognized as the best digital bank in France by Euromoney. At the same time, asset standard administration improved further, reaching 70 billion euros. This shows that Burjabank as a gathering remains very strong, notably with deposits growing by 16% versus Q2 24. Similarly, life insurance outstanding increased by 7% versus Q2 24, with a high rate of unit-linked products, representing 48 percent of the total. Note also that Bursa Bank posted strong growth in market orders, plus 33 percent versus Q4-24, while finally, on the lending side, total loans outstanding grew by 10 percent versus Q2-24. Reviewing now the four pillar level for French retail, private banking, and insurance on slide 18, I would like to highlight once again the very positive evolution of the cost-to-income ratio, which falls more than 12 percentage points to 65.1 in the quarter. This is driven by the strong 10.7 percent increase in revenues, excluding disposals, and the strict cost discipline as demonstrated by the decrease in cost by minus 5.7 percent compared to Q2-24, again excluding disposals. Further down in the P&L, we see that the cost of risk came at 25 basis points, lower than the 29 that we had in Q2-24. Collectively, this results in a net income of €488 million in Q2-25, equivalent to a RONI of 11.2% of the quarter under Basel IV requirements, which compares to 5.7% last year under the previous Basel III. Turning now to global markets and investors' services on slide 19, Q2-25 total revenues for GMIS are stable versus Q2-24, which was particularly strong in our market businesses. Focusing on global markets, Q2-25 revenues increased slightly by 0.8 percent versus Q2-24, combining normalization in equity revenues and a reversed performance in FIC. On the equity revenue side, these were resilient in Q2-25, down by 2.9 versus Q2-24. Commercial activity remained sound in equity derivatives. It is very important to highlight the base effect in the comparative with Q2-24, where equities benefited from very high volumes across all activities. Indeed, Q2-24 was our best segment order since 2010 in this segment. TIC delivered a solid quarter with revenues increasing by 7.3 percent versus Q2.4, thanks to the robust performance in activities like flow and finance. We also benefited from strong commercial activity in a challenging economic environment where visibility and global micro prospects are uncertain. With that, TIC managed to mitigate the slowdown in derivatives. Lastly, in security services, revenues eased by 3.1 percent versus Q2.4, where the decrease in interest rates has impacted the steady commercial momentum in the quarter by SGSS. Let's move on to slide 20. Financial and advisory's total revenues are up by 1.3 percent versus Q2 24. Global banking and advisory continue to improve with revenues increasing by almost 4 percent. This good performance is largely driven by acquisition finance, fund financing, and infrastructure finance as well as a continued upward momentum in both originated and distributed volumes. In investment banking, ECM delivered a good performance in Q2-25, while ECM is showing encouraging signs of recovery in a market environment that is still challenging. Regarding transaction banking, revenues declined by 4.7% in Q2. Performance was impacted by the decrease in interest rates, offsetting the solid commercial activity with both corporate and institutional clients. Looking at the whole GBIS pillar on slide 21, we can see that overall GBIS maintains a solid performance with revenues reaching 2.6 billion euros in Q2 2025, slightly up versus, as mentioned, a very high Q2 2024. We keep up strong cost discipline with expenses down minus 1 percent in the quarter. The cost-to-income ratio decreased 1.1 percentage points from 62.7 percent in Q2 last year the current 61.6 percent. Cost of risk remained contained at 19 basis points in the quarter. As a result of all the previews, DBIS delivered net income contribution of 750 million euros in Q2-25, equivalent to a high RONI of 16.8 percent under Basel IV. Let's now move to international rating. Overall, revenues continue to increase this quarter. up by 2.7% compared to Q2-24 at constant exchange rate and perimeter. This is driven once again by the European businesses. In Europe, loans are up 7% while deposits remain stable versus Q2-24 at constant exchange rate and perimeter. Revenues, on the other hand, increased by 6% versus Q2-24, again at constant exchange rate and perimeter, supported by higher net income both in KB and BRD. In Africa, loans increased by 3 percent versus Q2-24 at constant exchange rate and perimeter. Given economic and political situations in certain countries, we observe a wait-and-see attitude in the corporate sector. On the other hand, deposits within the same perimeter grew 2 percent year-on-year. Revenues remained resilient, though, versus at high Q2-24, with an increase in net interest income of 3 percent versus Q2-24 at constant exchange rate and perimeter. Focusing now on mobility and financial services, the combined businesses posted a strong increase in revenues of 11.1 percent versus Q2 last year at constant exchange rates and perimeter. This is excluding, for example, the disposed gas. AVENS revenues improved externally by 10.6 percent. Margins increased to 550 basis points from 539 in Q2 last year. Revenues were supported by lower depreciation, and the UCS costs per unit are normalizing, but at still a slower pace than anticipated. They represented around €1,250 per vehicle versus the €1,480 per vehicle in Q2-24. Earning assets remain roughly stable at around €53 billion. On the back of proactive fleet management to favor profitability in core countries. On an underlying basis, excluding notably the fall in depreciation charges and Turkey hyperinflation adjustments, revenues fell by 3 percent versus Q2-24. Consumer finance performed very well this quarter, with revenues up by 12.6 percent versus Q2-24, benefiting from margin expansion and higher NII, mainly in France, as well as a minor positive impact from asset revaluation. We see positive growth jobs driven by higher revenues by 7.2 percent and decreasing costs down 4.2 percent versus Q2-24, both at constant perimeter and exchange rate, despite an inflationary context. These, once again, illustrate the strict cost discipline across the businesses. The cost of risk stands at 35 basis points, falling from the 45 basis points in Q2-24. So overall, the whole pillar of mobility, international retail banking, and financial services posted a net income of €404 million, up by 41% versus Q2-24, adjusting for the perimeter and exchange rates. Finally, the RONI improved four percentage points to 15.3% under Basel IV. To conclude now the financial performance, let's move to slide 25 with the corporate sentiment. NBI improved versus Q2-24, notably thanks to a proactive, efficient management of excess liquidity. Operating expenses include €100 billion related to the group employee share ownership program, which, as explained before, is a non-tax item and therefore does not affect CET1 nor shareholder distribution. In addition, Q2-25 includes notably the disposal of Burkina Faso, both in net profit or losses from other assets. It's not difficult to stop here.

Thank you, Leo. Our economies and industries are facing multiple challenges in terms of technology, environment, and social change. And navigating these complex dynamics requires, in our view, perspective and anticipation. So we announced this quarter the final composition of our Scientific Advisory Council. It consists of eight members, world-leading scientists and experts, with complementary skills. No group is better equipped, in our view, to help us responsibly take advantage of the secular trends that will influence the entire world economy for decades to come. At the same time, we continue to craft innovative solutions. For instance, we recently participated in the United Nations Ocean Conference, and we acted as the exclusive advisor for the Maritime Upgrade Debt Fund. Through our REED subsidiary, Société Générale completed its ninth equity investment within the €1 billion envelope, which we dedicate to support leading emerging players in the energy transition. An upgraded rating at the last Sustainalytics Review puts us among the top banks worldwide, and we also received the World's Best Bank for ESG Award from Euromoney. As usual, let's finish simply by looking at the facts. Our track record shows that we consistently turn our commitments into actions and our actions into tangible results. We are on track to deliver on the upgraded targets for 2025 and to deliver our plan in 2026. Now, next year and for years to come, we will stay relentlessly committed to bringing costs down and increasing efficiency. This is crucial for us and will remain crucial for us in order to consistently deliver a sustainable value creation for all our stakeholders. Thank you very much, and let's now start the Q&A with our usual polite request to stick to two questions per person. The floor is yours.

Thank you, sir. Ladies and gentlemen, if you wish to ask a question, please press star and 1 on your telephone keypad. The first question comes from Tariq El-Majad of Bank of America.

Hi, good morning, everyone. Sorry for my voice. Well done for those strong set of results for the whole team. So first question on capital, please. You had a strong capital building Q2 with a strong beat, 30 bps even pre the buyback. This will be ending the year on 13.6 if we add Cameroon proceeds, 6 bps, and we add the share issuance for employees of five bips, you are way, way above your minimum requirement. First of all, can you confirm what's the moving parts in the second half this year in terms of capital? If I'm missing something there beyond Cameroon, share issuance and organic generation. And also you mentioned a few times that you don't want to build much capital excess above 13. Is it realistic to expect more share buyback in the second half of this year? If you start yours on August next week, Given the liquidity, you can probably finish it in the next three months. By the way, do you have a deadline on when you want to complete it? And you mentioned a few times in the slides in the call that this is your first exceptional. So would you be planning to do one? Is it realistic? Have you accessed the ECB for another one? That's my first question. Second one is on the targets. 25 new targets upgrade is welcomed and I think remains on the cautious side. But my question is more on 26, where now it's very close to 25 targets, given that we expect some acceleration from many fronts, growth in France, cost synergies, and so on. So what makes you think that 10% is the max you can deliver in 26? And when is actually your next CMD? Is it something early next year? Thank you.

Thank you, Tarek. It feels like 10 questions, but... I'll try and answer. So on capital, let's keep it simple. We do have a high capital ratio. We did say very clearly that we do not intend to accumulate capital above our target. And we can only acknowledge that we are creating organic capital further. And so we most likely be regularly for the foreseeable future in a position to have to make decisions on how to use excess capital. We have said in the past that we will use this by being very rigorous in analyzing the opportunities between additional return to shareholders, in particular in the form of buybacks, which still has a high ROI, although decreasing, which is good news, obviously, and organic growth opportunities, which are substantial in our businesses and which carry, as you know as well, usually very high marginal rates of return on employed employees. capital and then theoretically at least inorganic opportunities. So we will continue to do this and I can only acknowledge that we're in a position which will lead us to have to make these decisions regularly. We don't comment on what we file with the ECB or when we file with the ECB. Just look at our track record and what I just said. In terms of Your second question, the 2026 guidance is not changed at this point because we don't change intra-year, longer-term targets. We will, as always, comment very precisely on them at Q4. and giving our indications for the 2026 performance. Again, it is true that if you look at the underlying performance, so if you adjust for the exceptional positive items that we had in H1, we are running slightly above 9% in terms of group row T. So once again, I can only acknowledge the fact, but the guidance at this point is unchanged. But rest assured that we will do our best in a given environment to deliver the best possible results. And in terms of CMD, Same thing, I don't have anything particular to announce, but we are committed to transparency. We are committed to open, precise, fact-based dialogue with our shareholders, and so it is fair to expect that we will clearly discuss the forward-looking plan at some point. next year, but no decision was made as to when, how, and that's it. Thank you. Thank you.

The next question is from Flora Bokahou of Barclays.

Yes, thank you. I wanted to ask you a question on French retail banking revenues specifically. Simply, you know, asking why you're not providing us with a guidance on the revenue outlook there for this year. You know, we have a scope that is clean now in this division, post Q2. We are past the half-year mark. We have visibility on delivery rate, what's going to happen actually tomorrow. So why don't you want to provide us with a guidance on French retail revenues? And maybe, can I ask in that direction, Should we expect a pickup, both in NII and fees, from here? So compared to the Q2 base in French retail, that is then further emphasized by the Boursorama's strategic change on the customer acquisition in 2026. Thank you.

Thank you. On the first question, I mean, we have not been providing this guidance, you know, to my recollection, at least I'm certain not under my management. I think at some point, I mean, I'll be very honest with you and very direct, you know, at some point, you know, these things can only be estimated and then they carry on. an ordinate amount of, let's say, emotions, and I think it's more important to discuss the substance, right? So the substance, and it's a little bit your second question, but the substance is we have indeed a clean slate now, and we have dynamics in the French market which are basically volumes, both in terms of deposits and loans in absolute terms, should be zero plus in the current environment, although we had a technical beat on French GDP yesterday, but we remain confident confident that it's a resilient economy with a strong corporate structure across the entire country, etc. But we clearly do not expect at this point anything explosive. So on volumes, something which would be zero plus. In terms of margins, we see a slight improvement, especially driven by the stabilization, which we discussed in the past many times in terms of the deposit mix. So lower costs of deposits because of the lowering a regulatory savings rate and coupled with the stabilization, especially in terms of the site deposits. And so this will be a feature which you understand is going to be slightly supportive, right? So we're constructive on NII based on what I just said and also remember We have a progressive repricing of the back book, which in the French retail market is obviously heavily weighted towards mortgages and long-dated fixed rate mortgages. And that back book is slowly, slowly repriced up. And so that's also something which is slightly supportive. So overall, you see, we're fairly constructive. And that's what I can say on NII. On fees, as you've seen, we're up quarter on quarter and the first half of last year. And for technical reasons, flat versus Q1 2025 has to do with campaigns, dynamics, marketing campaigns on specific products, etc., But here again, without expecting something that would be in the very high single digits in terms of growth, we are constructive as well as we support a better increased momentum, more focus on origination in the retail network, and as you've seen, pretty strong dynamics across Boursorama, Boursobank, private banking, and of course the life insurance products where we have leading market performances. So that's the color I can give you on the revenue outlook. In terms of 26 and going forward, basically it's all the same ingredients. that everything else being equal, so in that environment in terms of GDP, you will see that steady increase, again, everything else being equal based on the exact same ingredients that I just described.

Thank you.

Thank you.

The next question, sir, is from Matthew Clark of Mediobanca.

Good morning. A couple of questions on the CIB, please. Firstly, could you talk about sequential GTPS revenues, second quarter versus first quarter? When I try to impute what they've done, it looks like they came down quite a lot. So just to understand what the drivers are there, if that's the correct interpretation, and whether you see the first quarter or second quarter as more of a run rate for GTPS after the tremendous growth for the last few years. And then the second question is on the Bernstein joint venture in the U.S. I just thought it should have been a very strong quarter for that business. But looking at the associate line within GBIS, it's actually got slightly worse. So just to understand, is that joint venture going to plan? And why aren't we seeing any impact from that in the associate line of GBIS yet? Thank you.

Thank you. So on GTPS, it's very simple. It's volume slightly up, rates significantly down. And this is one of these businesses that we have in the mix, which is directly correlated to rates, which had significant tailwinds in the last few years. And this quarter, again, was experiencing these headwinds from a rates perspective. So it's indeed down a few percentage points versus Q2 24. You're right in that assumption. And again, it's a matter only of price effect in terms of commercial dynamic and volume growth and client acquisition. We're still growing substantially in this business. And we have invested a lot of money over the last five years, and we continue to invest in this business. In terms of Bernstein, you have one particular technical fact, which is Bernstein America, so our US business, USJV, is not consolidated, so you don't see it in the revenue numbers. So the quarter was logically good at that unit, but we're not reporting it in the NBI line because of the structure of the JV at this point. It might change in the future. gradually to something more standard, but today this is why you don't see this. It's purely technical, but indeed from an overall perspective in terms of revenues and integration, team dynamics, we are very happy with how it works, and obviously we would have liked to have more volumes on the primary markets in the world, but this has, for all kinds of reasons which you know perfectly well, was subdued, but it will be another supporting factor in the future.

Can I just follow up? I guess, why don't we see it in the associate line, so below the operating profits? line, presumably that's where the net profit or your share of the net profit gets booked. So I'm just curious why we're not seeing a modest tens of millions impact there from that business. And then secondly, just coming back to GDPS, have you now digested the recent rate moves within that second quarter revenue number or do you maturity intermediate there, in which case we've still got kind of a lag to drag to come through? as a kind of replicating portfolio rolls over.

I mean, so on Burstein, again, the current structure of the JV is such that the ultimate bottom line in a business which, as you know, has a high cost-to-income ratio anyway, is more limited than what it will be down the road. So the share of the bottom line that we get from the U.S. businesses is lower than what it will be in the future at this point. So this is just the technical way that JV was set up at its inception. In terms of GTPS, most of the rates action happened. And then it's just a matter which, frankly, I don't have in my head of the average duration of some of the products, et cetera, et cetera. But philosophically, this is cash management and transaction banking. So most of the adjustments happen on a very short-term basis. So the answer to your question is most of it is behind us. And again, just to give you a sense in terms of the volumes, we're talking about high double-digit increases in terms of the volumes at this business level. Thank you. Thanks very much.

The next question is from Delcine Lee of J.P. Morgan.

Yes, good morning. Thanks for taking my questions. My first one is on the cost management in general. You've done really well so far, minus almost 2.5% in the first half. I was just wondering, for 26, is it specific to this year, or can we expect also a reduction in 26 as well? And then the second question is on capital. I mean, you're at 13.5% at the end of June, and clearly you're going to have a bit more capital generation, the second half. I mean, you talk about 13%, but there's clearly still a bit of buffer. I was just wondering, is the intention to have, you know, to get closer at some point to the 13 and step up the buybacks, or is it, you know, to have a little bit of room above the 13%? Thank you.

Thank you. Thank you. Hi. On cost management overall, well, let me say it this way, right? The keeping with my promise not to change the guidance for 2026, but I will give you color referring you to some of the comments I made in my presentation and which I make very often, which is efficiency and cost structure of the bank is the number one focus of the management team because this is the heart of of our specific idiosyncratic challenge. We are very good, and I explained this very clearly at the CMD as well, we are structurally, historically, through the cycle, very good at generating gross margin, defined as NBI on RWA, across virtually all our businesses if you look through the cycle. But, yes, with a cost structure which was inefficient, and which is getting better, but there's room to go further down. It must be an intense focus for the management. It has been, you're seeing it, and it will remain so. So based on this comment, you can expect us to continue to try to do our best to decrease structurally and continue to decrease for the years to come structurally the inefficiencies throughout the company. Let me leave it at that. And it's a very, very serious, strong commitment of ours. In terms of the capital, thanks for the very precise question. Listen. While, as we said, we will not run the show at 13.01, that's for sure. It's a matter of just being serious about an important topic for any bank. But on the other hand, we will converge in terms of using the excess capital to something which is close to 13. Right? I mean, there's no buffer on top of the buffer. At 13%, we have enough buffer to handle our destiny well in terms of whatever headwinds we may face. So the answer clearly is over time. Over time. I'm not saying it's going to happen in Q3. But over time, strategically, the direction is to converge to something very close to 13.1, not being one basis point above. So hopefully that gives you some clarity. But again, it's a mix, like dealing with the excess capital is a mix of intentions between shareholder return and investment in the business, which we will carry out very transparently, very openly, and with a very high regard to high marginal returns if invested in organic growth.

Great, thank you very much. Next question is from Giulia Miotto of Morgan Stanley.

Yes, good morning. Thank you for taking my questions. So first one on Burso Bank, the target is for 300 million net income next year, but given that you're so much ahead of target in terms of customer acquisition, how is the profitability of that business at the moment? Could you share some numbers on that? And then secondly, I noticed quite a big drop in loans in GBIS in slide 39, and I was wondering what is driving that. Thanks.

Thank you. So on Bursa Bank first, and then I'll let Leo answer the second question, which, as you will see, is a fairly technical matter. On Bursa Bank... So yes, we are ahead and so the average number of clients in 2026 and their average tenure with the bank will be higher than initially expected. The one thing that is lower than initially expected, obviously, are the rates. And remember, in the way, you know, Boursaumont generates its income, it is heavily, heavily weighted towards NII. And so this is why, at this point, even if we were upgrading or discussing targets for 2026, which we are not, But even if we were, we would have to take this into account. And at this point, frankly, we would not, in this hypothetical discussion that we're not having, we would not upgrade that number because of what I just described. And in terms of P&L drivers at Boursaubon, without going into the details because we're not disclosing them, but you should think about this. It's NII stemming a lot from deposits, from the deposit base, and a certain amount of fees across a very vast product offer, but also with a USP which is based on a fairly competitive rate on all the basic products, right? So it is highly competitive. rate dependent. And then on the negative side, which is actually booked as negative NBI, you have the acquisition costs, which are all accounted for entirely the minute they happen. So at this point in time, nothing's capitalized there. So you have the entirety of the cost of acquisition being deducted from the NBI when the acquisition of the new client happens. So that's the color. Leo, on the loans?

Sure, thank you for the question. So basically the loans go down by 15 billion this quarter versus Q125, and it's basically driven by two impacts. One of them is technical and explains nine of the 15, and this is basically an overnight loan to Bank of France, which was booked as a loan until Q125, and now it's accounted as cash. And the second one, which accounts for almost 5 billion euros, 4.8 billion euros, it's driven by the forex effect in the quarter.

Very clear. Thank you. Just to follow up, if I can, you know, Zlavomir, you talk about the dependence on level of rates, etc. I keep thinking that some good NII disclosure with the sensitivities, hedges, ALM, etc. would be helpful. Just something to keep in mind for the future. Thank you.

Thank you.

The next question is from Joseph Dickerson of Jefferies.

Hi, thank you for taking my question. Could you just give us an update on the RWA trajectory? Because I think you've talked about 24 to 26 growth of 1%. We're currently flat at the moment. I guess, you know, how do we think about deploying those organically in priority, order of priority? Is it Avins, you know, Borso Bank, and then the IB? And just Just to follow up on Borso Bank, more specifically on the point that you've reached 8 million clients, last year you ran about 245 million euros of customer acquisition costs, as you pointed out, as a contra revenue. I guess, do you start to dial that back next year and the second half this year? I guess, what's the optimal level now of clients? Do you intend to grow it meaningfully beyond 8 million or do you intend to grow inorganically like you did in the past with ING? I guess a little bit of color on Borso there because it's clearly inflecting in a big potential lever next year irrespective of rates.

Absolutely. Thank you. On the first question, I think I want to say a few things. First, we do have room in terms of organic capital allocation to business growth within that CMD guidance like you just implied. So I'm just confirming that. and that's the spirit with which we operate. But remember, in a management framework which we have quite drastically changed and in which we have a very, very big focus on optimizing capital allocation and on trying to do our best with every penny that we invest organically. So you see here both the opportunity, because there is room to deploy this capital across the businesses. I'll go into the second part of the question in a second. But on the other hand, I will not change the management stance on the quality and rigor with which the capital is allocated. So again, while there is capital available and will be made available, is made available to businesses for organic growth, the standards of deploying it unchanged so don't expect everything else being equal anything explosive once again from a growth perspective there but do expect us to to increase seriously rigorously the allocation to the businesses which ones I think if I gave you today the list I would tell you First, the IB and F&A business, but once again with a big focus on the asset rotation and on being aware of the fact that the macro context, resilient, right, clearly resilient with some uncertainties kind of abating recently, but remains potentially challenging, so with a pretty strong focus on risk management as well. So growth opportunity, but again, rigorously executed. And then I would tell you events, but events within, here again, a very clear mandate, which is not one of destroying value through a growth which is unhealthy. If you look at our performance and contrast it with the market, you will see that we have a very specific focus on making sure that our GOI generation there remains healthy and that we... focus, right, on the balance between the margin dynamics, risks taken, and growth opportunities. It's very easy, as you know, in our businesses to generate unhealthy growth, and this is not what we're going to do. And then it's a little bit across all the businesses. I mean, KBBRD do well and have room to grow in markets which are sound and exhibit healthy growth. On the retail side, I mean the need for RWA today because of the backdrop that I gave you on the retail in France side, because of the macro backdrop, I mean the need there is not very significant. So that's for the RWAs. And in terms of the Boursaubanque dynamics, first, we will not slow down the pace in 2025 in terms of acquisition. It's a market which is a highly competitive market. It's a market which is, if anything, competition is increasing in this market. maintaining our leadership, leading the market in terms of acquisition, and almost more importantly in terms of client feedback and client quality. We're still number one in that regard in France with Boursaubanque in terms of client satisfaction. And so we will continue to make these investments. And I do believe that going forward, what we need to do is to find the right path for continued growth with more balance between the costs of acquisition, which are already decreasing and have been decreasing for a while, a focus on generating higher NBI per client at the same time as the clients mature, if you will, in the client base, but maintaining some of the competitive edge we have. And that's basically the equation that we will have to solve for and which we will in the next few months. And inorganic, listen, inorganic since you brought up, I mean, I don't see right now any inorganic opportunities that would make sense at this point, but obviously if they were to come, we would look at them, but again, with a lot of rigor and conservatism. Thank you.

The next question comes from Sharaf Kumar of Deutsche Bank. Mr. Kumar, your line is open, sir.

Sorry, I was in mute. Good morning. Thank you for taking my question. Firstly, a follow-up to the very last comment that you made on inorganic opportunities. Given that you're tracking well above 13% CET1, one of AVEN's shareholders is in the midst of selling their stake. Is there appetite to opportunistically increase the stake here, given your view of this business to be strategic? The second one, not a question, but more a request on Bursa Bank. I think it would be useful to have better disclosures to see the contribution from Bursa Bank separately. Is this something that you're willing to consider? Thank you.

Thank you very much for your question. Hi. Starting with the second one, we're willing to consider anything that investors or the market community yourselves are putting on the table. For now, we're not planning on discussing anything further now, but as we go into 2026, we have a very clear commitment in terms of bottom-line contribution. And so, you know, we definitely will be giving you more color, at least at that horizon. And what I can tell you today is that for H1, after 2024, where Bourse Bank was profitable, H125 is profitable, profitability being defined as above zero in terms of net-to-income, and when I say above zero, it's a number which is not material at the group level, but it's obviously quite a bit higher than zero, which evidences, and that's I think the important point, that while the CMD We made a very clear statement in terms of strategic vision for this business, which is clearly growth, right? For 100 clients that we acquire in the French market at Boursaubon, 10 of them roughly come from Soggen, and 90 of them come from our competitors. So I like these maths very much. And so from this perspective, this was the statement. And we had said that we would invest $150 million of negative GOI. This was the metric that we had discussed at the time at the CMD. But of course, like with everything else, we tried to do better, right? We tried to do better. And as we saw a path to optimize both the acquisition costs and revenue generation, At Boursaubanque, we were able, actually, throughout the plan, and this is going to remain the case for the remainder of the year, to actually not spend that GUI. And we actually made money throughout the cycle. So saving... substantially more over the period, saving substantially more than $150 million. So that's that, right? That's all I can say at this point. On the inorganic opportunities, it's important to, again, look at this as You have capital that needs to have a return that is healthy and that you can justify versus the other opportunities that you have. Today, we have on the return to shareholders in the form of buyback a certain level of ROI, which is high. In terms of organic growth, we have marginal returns which are very high, again, because of virtually unlimited operating leverage. And the opportunity of reinvesting in a portion of the minority stakes in havens is one which obviously exists theoretically. At this point, we have not decided to do it.

Thank you.

Thank you.

The next question is from Alberto Artoni of Intesa San Paolo.

Hello, thank you very much for taking my questions. Just two from my side. The first is more strategic and is are you comfortable with the current assets of Sargent as of today or are you willing to consider if you're not the best owner of everything as you said in the past or you think that the journey is pretty much done? And the second question is just a little bit more color on the cost of risk, given the uncertainty that we see at the geopolitical level, the macroeconomic level. I think your remarks were quite constructive, but if you can just give a little bit more color on the numbers that actually are pretty strong on that front. Thank you.

Thank you. Hi, thank you for your question. On the portfolio of assets, well, after what we've done, we feel today reasonably comfortable that we're a decent, if not the best, but very decent shareholder of most of the businesses that we either own or run within the mother company. Now, what we committed to at the CMD, which is to keep a very close eye on the performance and on the strategic equation of all businesses remains true. So we will continue every single day, so to speak, to monitor the performance and the changes in competitive dynamics and strategic dynamics in our assets. And we will make sure that if the parameters that I very often commented upon in this call, which are headline ROE, ROE versus cost of equity, amount of synergies, tail risk, et cetera, all these criteria, if a business were to fall outside of, let's say, what we target from this perspective, it will be instantly put in a situation where we would review our strategic options. But clearly, at this point in time, we are very much towards the end of this adjustment process in terms of this portfolio. In terms of cost of risk, giving you a little bit more color, Listen, today, within an environment which was of resilient growth worldwide, lots of uncertainty and lots of clients, issuers and corporates, etc., being in a wait-and-see mode, we have not seen material deterioration. in the asset quality or in the, let's say, the macro outlooks for the asset quality of our portfolio for all kinds of reasons. I mean, we do run from the perspective of very rigorous risk management apparatus and strategy, so origination quality is one factor, but also I mean, clients have had opportunities through the inflation cycle to rebuild somehow or increase their margins. They have had also access to liquidity, albeit a little more expensive, but they have had access to liquidity as well. So overall, the parameters are still, frankly, we see them as very constructively across our entire portfolio, including in France, which shows good resilience. Now, while uncertainties have abated a little bit these past literally 10 days in terms of the whole tariff saga and the likes, we are still in a world where the risk of significant disruptions to international trade, to supply chain, because in the tariffs, the supply chain aspect is almost more important than the straight trade considerations. We remain in an environment where the uncertainty, while lower than three weeks ago, is still high. So from this perspective, I do expect some more prudent attitude, maybe a little less latency, but still some of that happening, which I also see as a stability factor in terms of the portfolio. So at this point in time, across the entire business portfolio that we have, retail, wholesale, we still are very constructive.

Thank you very much. Excuse me, Sarah.

The next question is from Anke Renken of RBC.

Yeah, thank you very much. I just have two small questions first. The first is on the mix of your distribution of the 50%. Is the cash distribution in the first half a good indication for the mix between cash and buybacks for the full year? And then secondly, on your capital path, you show the eight basis points benefit in the capital ratio from regulatory Is there anything more we should be expecting? Thank you.

Thank you. On the regulatory first, you know the drill. The entire industry in Europe is subject constantly to all kinds of reviews by the regulators across all of the businesses. And in the past, it resulted in a number of headwinds for the industry in terms of add-ons and et cetera. But in essence, these add-ons are meant to be temporary. So temporality with the regulator is not exactly the same as with normal human beings. So things tend to take a lot of time, especially when it's on the removal of temporary add-on side. But listen, this time around, we got that the right way. And so you should not see these as substantial flows. Things will happen both ways. but these will not be substantial impacts to the overall equation either way. So that's for that. If I got your question, because I had trouble hearing the beginning of your question, but if your question was 35% versus, you know, why don't you take that, Leo?

sure so that regard basically we want it to be it's uh conservative on this front now and we want to have an interim dividend which is lower than the final cash given at your end dividend policy has not changed about regard and we have you know balance mix between cash dividend and share buyback the only thing that we did in q1 it's to be conservative on the interim dividend, and that's why it was 35 percent, so that the year-end final cash dividend should be higher than the interim one. But we have not changed our policy in that regard, I mean, with regards to the mix of cash and Chevrolet bike, which remain the same, and it's balanced.

Okay. Thank you.

Thank you.

The next question is from Chris Hallam of Goldman Sachs.

Hi, I just have two left, two short ones. I guess on the buyback, when did you apply for approval? I thought that was happening after the FRTB question was settled, which I guess would mean that the approval was super quick. So I guess is that correct, and did you learn anything from that process? And then second, slightly tangential, but we have the stress test results tomorrow night. Anything you think we should look out for or consider for SOC Gen in particular, or for the sector more broadly considering your EDF role.

Thank you. So on the first question, I can't comment on the particulars, obviously. But we try to be very precise in our communication. And what you described of our communication is a fact. Let me leave it at that. So on the stress test results, I mean, same thing. We can't comment. It's going to come out tomorrow. But listen, I mean, considering just the helicopter view, I mean, normally, right, in an environment which, as we discussed throughout the call, remains resilient, not extraordinarily supportive, but resilient, and with, I assume, the overall progress that the industry makes under the leadership of its supervisor, you know, I would expect things to improve, right, not to deteriorate. That's all I can say, right? But it's a theoretical comment. Appreciate that. Thank you.

The final question, sir, is from Pierre Chereville of CIC Market Solutions.

Yes, thank you. Two questions. First question regarding securitization operation. One of your competitors insists on the fact that it's a very useful tool to manage capital and I wanted to know where do you stand regarding this type of operation, if you have any program, any policy regarding that. Second question is regarding consumer credit. You mentioned that it is better but at the end of the day it remains quite small and not very profitable compared to your main competitors in France or in Europe and I wanted to know if you have somewhere here a plan to develop organically or by external growth this business, which seems to be in a better shape. And maybe as I am the final one, last question, do you have any equipment rate in mind regarding protection products in your French retail banking? Thank you.

Thank you. Thank you. So on the securitization of the SRTs, So very simple and clear answer. In our case, we use these techniques virtually only for risk management purposes, which is another way of saying that it does not have a material impact on our capital trajectory and is not intended to have one. We believe that for all kinds of reasons, overusing these tools in terms of capital management is tricky, right? And we don't want to engage in this, and so we are not engaging in this. So that's for the securitization piece. On consumer credit, listen, it's a matter of business mix. The performance improves. It's a business which has been challenged, obviously, in France by the whole usury rate issues, et cetera, compressing margins, and at times where Post-COVID, actually, in the high inflation environment, the cost of risk has risen in the market. And through normal adjustments, both in terms of origination criteria, better margins, no longer usually rate issues, the business is both growing at a very decent pace, but also generating better margins. and better returns and we have had a very good history in terms of profitability for this business in terms of ROE and while obviously there was a compression in the context they just described, it is now slowly converging back to the historical level so we're very comfortable with that business from this perspective. And today, we do not have any plans to increase its size within our business mix. It's a good business when well run. We're happy with it. It's not on our exit list and has never been, but it's not also an area of focus for anything inorganic in particular. Last question. I mean, we do not disclose these equipment rates, but as you know, and I'm sure everyone I'm sure this is also why you're asking the question. It is a product which historically was, you know, we were later to the game, so to speak, on the protection products, and we are focusing on the growth. But we are in terms of market rate below the best competitors that we have in France, which we see as an opportunity for further growth in terms of fees and revenues in the French retail. Thank you.

Sir, there are no more questions registered at this time. Back to you for any closing remarks, please.

So thank you very much. Thank you for your time. I know you're very busy, so thank you very much for making the time. And listen, I wish you a nice summer, especially if you're taking a break. And I do look forward to speaking with you again for Q3. Thank you very much again, and take care.

Ladies and gentlemen, this concludes today's Societe Generale conference call. Thank you for your participation. You may now disconnect.