Earnings Transcript for GLE.PA - Q1 Fiscal Year 2024

Slawomir Krupa: Thank you. Good morning everyone. Thank you for joining us today. It has been an intense quarter with several important first steps in the execution of our strategic road map. As explained last September we reshaped 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 the Moroccan activities, which will generate 40 basis points of capital in total 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 2023 on the back of an overall robust commercial performance for most businesses, global banking and investor solutions in particular and an improvement in French NII, despite the high deposit beta in France. Claire will go through the details in a few minutes. On costs they are down 1.5% 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% in Q1. Cost of risk is in line with guidance at 27 basis points for the quarter. And overall, the group net income stands at €680 million in Q1 and the quarterly ROTE 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?

Claire Dumas: Thank you, Slawomir. So turning on to slide 5 on Q1 2024, operating performance. In Q1, total revenue stood at €6.6 billion. In France retail, NII is up by 3% that is Q4 last year. It's down 3% versus last year, mostly due to the remaining impact of short-term hedges, as well as deposit beta in French market and outflows in savings products. At the same time, the pillar recorded elevated financing fees on the back of record AUM for both private banking and insurance. Regarding [indiscernible], it continues to require a high number of clients with around 160,000 small clients acquired during the quarter than last year, which weighed on service fees on a year-to-year comparison. On global banking and investor solutions with more than €2.6 billion revenues in Q1, the business has once again performed very well this quarter in a less conducive environment. Revenues are down by only €140 million, compared with a very strong performance in Q1 last year, particularly in global markets. Last, international retail banking contribution is solid and revenues increased by 8% in mobility and leasing services fast integration of LeasePlan, which represents €417 million additional revenues in Q1. On costs, operating expense is in light blue, €5 billion. They are down by minus 1.5%. That is Q1 last year with value one-offs in opposite directions. Excluding these items, the underlying cost base increased 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 in effect on the 1st April last year. Let's now move on the next slide on the cost of risk, slide 6. At group level, the cost of risk remains low at 27 basis points in line with guidance, despite the impact of specific market size in French retail. For the quarter, the cost of risk amounts to €400 million, of which €499 million in Stage 3 and a reversal of €99 million, Stage 1 and 2 mainly related to the decrease of the Russian exposure offshore. The NPL ratio remained low at 2.85% fast application of IFRS 5 and entities to sales. The net leverage ratio is high and slightly up at 82%. Last, provisions on Stage 1 and 2 assets remains elevated at €3.3 billion certification of IFRS five norm on assets classified as held for sale. Regarding capital Slide 7. The core Tier 1 ratio increased to 13.2% at the end of March. It's around 300 basis points above in state. The quarterly earnings generated 17 basis points of capital this quarter, before distribution and the organic RWA decreased this quarter for an equivalent of eight basis points in line with our strategy towards a more capital-light model. Regulatory impact accounts nine basis points this quarter. All in all, risk-weighted assets amount to €388 million at the end of March and the other capital ratio remain comfortably below requirements. I will now comment on Slide 8. We can now begin into the business performance starting with French Retail on Slide 10. Within SG network, loans outstanding decreased by 5% early last year. The activity with corporate remained good with loans up plus 1.2% versus Q4 last year. Excluding state grant loans, still driven by short-term loans. On individual home loan production is down to quarterly level doubling in Q1 compared to previous quarter for admittedly a low level. On deficit, 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 million 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 insurance, life insurance outstandings are up 6% versus last year to a record €141 billion. Growth is amounted to €6.1 billion which represents an increase of 68% compared with Q1 last year. On protection in ,France Premia increased by 4% versus last year, driven by P&C Premia. 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 €270 million of the short-term hedging, which will mature in Q2. Deposits are stable overall, but with a shift from five deposits to interest-bearing deposits and saving. Given the Q1 deposit beta and client favor, we are today at the lower range of our projections and guidance. At the same time, loans outstanding are down by around 1% versus Q4, mostly driven by home loans with overall slight increase in margin by minus 1.5 basis points. Moving on to next Slide 12. During the first quarter, BoursoBank continued to acquire new clients at a high pace, reaching 6.3 million clients at the end of March 2024 with a churn which remains low and which has decreased. In terms of client satisfaction, BoursoBank 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 plus 14% versus Q1 2023 at €8 billion thanks to a strong increase in deposits and a record organic growth collection in life insurance with a share of unit-linked products that remained very high at 46%. With regards to like in [indiscernible] we note a rebound production both in home loans and consumer loans, but also from [indiscernible]. Let's turn to the financial performance on Slide 13. Total revenues are down minus 3.5% versus Q1 last year and costs are around minus 6% including around €80 million of transformation charges. At €247 million, the cost of risk is impacted this quarter by the concert to default of specific market line. Excluding those five, the cost of risk in France would have been around 27 basis points in Q1. Overall, the reported [indiscernible] net in the pillar amounts to €27 million in Q1 2024. Turning to Global Markets and Investor Services Slide 14. Starting with Global Markets 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 the equity markets. In addition the demand in derivative products remained strong in Q1. On fixed income, revenues land at €733 million in Q1, down compared with last year, which was a record first quarter for fixed income for the last 10 years. Q1 performance is solid in absolute terms as this is around 9% above average performance between 2019 and 2023 for the first quarter. Momentum is still positive in the investment solutions, while flow and hedging were impacted by lower volatility on rates. Securities Services revenues are decreasing by 23% on a reported basis certainly by 5% if we exclude the exceptional items in Q1 2023, notably linked to the revaluation of our holding in Europe. Regarding financing and advisory Slide 15. This is the best first quarter ever with a strong performance in both Global Banking and Advisory and Transaction Banking. Revenues are up 3% at €859 million in Q1. In Retail, 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 actual results. In investment banking, it's a mixed bag performance with a strong contribution of debt capital market, while volumes remain low in M&A and equity capital markets. In Transaction Banking, the performance remained strong with revenue up plus 8% thanks to both still favorable market conditions and a very active commercial activity. Overall, GBA delivered once again an excellent quarter. Slide 16 revenues. Stand at €2.6 billion in Q1, down only minus 5% compared with last year, while costs decreased by 15% at €1.8 billion. This translates to a reported cost income ratio of 67%, contributing positively this quarter notably due to the further reversal of the Russian exposure, TBIS delivered overall a very strong quarter with [indiscernible] 19%. Let's now turn to International Retail Banking on Slide 17. These dynamics remained solid in both regions. In Europe, loans were up by 6% versus Q1 last year at constant change in perimeter and deposits by 9%. In Africa, performance remains dynamic across the region with a 5% increase in loans and deposits overall. We can -- for instance highlight 15% gross loan [indiscernible] or the increases comprised between 15% and 20% of loans and deposits in both Algeria and Senegal. Overall, International Retail Banking delivered solid level of revenues in Q1, up by 3% compared with last year at constant change in perimeter. Turning now to mobility and leasing services and in particular on Ayvens. Revenues are up by 14% versus last year, following the integration of LeasePlan which is progressing as planned with for instance, the first revenue synergies crystallizing for a total amount of €20 million in Q1. Compared to last year, the revenue base is impacted by a limited impact on fleet revaluation and reduction in depreciation costs, while they accounted for €174 million of revenue in Q1 last year. From a commercial standpoint, margins are stabilized and even slightly up compared to Q4 2023 at 520 basis points. These are the initial benefit of the actions we initiated to improve margins overtime. Regarding used car sales we are still expecting a normalization of the market in line with our guidance. In Q1, the results per unit remained high at €1,661 on average, excluding the impact of reduction in depreciation cost in and PPA. When it comes to consumer finance, commercial performance remains subdued, due to the inflationary and uncertain economic context. Fees are improving whereas margin is still negatively impacted strong by the impact of the back -- of the usual rate on the loan confidence to the second half of 2023. Last, despite a good commercial performance revenues in equipment finance slightly decreased by 2% versus Q1 last year. Overall on Slide 19, International Retail, Mobility and Leasing Services contributed to the group net income for €272 million in Q1 with a cost-income ratio of 62.9%, including around €70 million of transformation charges. I would like to conclude on the financial performance. Let's move now to Slide 20. This quarter the Corporate Centre is impacted by two main specific items

Slawomir Krupa: Thank you, Claire. A few words on ESG before concluding as 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 Guidelines methodology with co-launched base Société Générale 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 the milestone transaction such as Northvolt $5 billion project finance group mass produced to world's greenest battery. We have also closed the landmark Synthetic Risk Transfer transaction in Romania part of the IFC agreement, corporation agreement that we signed earlier this year, freeing up the capital to reallocate from projects' strong developmental impact. Lastly and a testament to our ESG leadership and ability to transform, we continue to be recognized across the board by new awards including as Best Bank Sustainability and Best Bank 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.

Operator: [Operator Instructions] The first question is from Tarik El Mejjad, Bank of America. Please go ahead.

Tarik El Mejjad: Hi. Good morning everyone. Just a couple of questions from my side, first of all on the capital build and the disposals, can you just update us now where you are? I mean you have announced two deals. Now we can see kind of direction. 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 rationale and synergies to keep those businesses at this stage? And secondly, on French Retail. So in Slide 11 you mentioned the increase of 3% NII and at the lower end of the range of projected scenarios. I mean do you commit still to 2024 NII at least equal to 2022? 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.

Slawomir Krupa: Thank you. Good morning. I'll take the first one, and I'll let Claire take the second one. And 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 continue to reassess the performance of our entire portfolio. And then when we make decisions about the particular assets that we believe will be better assets somewhere else than within the power portfolio. We carry out discussions. And then when we reach agreements, which makes sense for everybody, for us, for the buyer, for the teams, 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 as part of a very clear strategy that they think we talked about many times and we will continue to do 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, NII guidance and the moving parts et cetera, Claire, please.

Claire Dumas: So there were two questions in your question. One related to the outstanding and trends. The other related to the guidance. So as previously indicated, I'm sorry last quarter, customer behavior is still evolving in France. And we see a continual shift from site to interest-bearing deficit or of there it's financial savings. In addition, loan outstanding slight decrease at Q4 minus 0.9%, mostly on home loans with an overall slight decrease in margin minus 1.5 basis points. Regarding this trend, we see a rebound in production in notably home loan with a show lag effect on margin considering the cap we have in the fact we had that includes regarding the usual rate. This being said, given the Q1 deficit beta and client pay view, we are today at a lower range of our projections and our guidance.

Slawomir Krupa: Next question?

Operator: The next question is from Giulia Miotto, Morgan Stanley. Please go ahead.

Giulia Miotto: Yes, hi. Thank you for taking my questions. I'll go back to French Retail 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, it would mean being at 2022 level. Is my understanding correct? And then the second question would be on dividend at the moment and buyback. SocGen is provisioning 0.32, which is equal to 50%. And I think part of the plan was to start at 40% or at the lower 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 each of the mandates? Or given that quite well and you might be ahead of schedule on CET1 you could consider already doing 50% as of 2024. I appreciate it's only Q1 but we care. Thank you.

Slawomir Krupa: Thank you. Thank you very much. I'll let Claire take the French retail question. And on the distribution. So very clearly we're provisioning 50% 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 am sorry, at the higher end of your range. And strategically the distribution policy is unchanged. And so it's indeed 40%, 50% and it's going to be based -- the decision is 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?

Claire Dumas: Yes. So indeed the guidance was a rebound and at or above the level of 2022. So given the Q1 deposit EBITDA fine behavior it's already commenced we are today at the lower range of this guidance kind of our projections.

Operator: The next question is from Guillaume Tiberghien, BNP Paribas. Please go ahead.

Guillaume Tiberghien: 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 are meant to have the synergies from Société Générale. 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 BoursoBank 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 2025 versus 2024 to reflect the fact that Boursorama is taking customers a bit less. And then a tiny one on RWA development if I may, you say you created 8 bps. 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.

Slawomir Krupa: So thank you very much. Hi. It looks like three questions, but we're going to make a little exception here. Hand over to Claire on pass in French Retail and RWA and Philippe on BoursoBank. Claire?

Claire Dumas: Yes. So regarding cost from the French Retail your mass strategy. The increase is mainly driven by the salary increase. As a reminder, the salary increase in Q1 2024 is related to the salary increases we granted one year ago at the end of 2022 which were slightly in line with 5% as a whole compared to this salary increase granted end of 2022. The cost base increase is lower than these salary base. And by the end of the year year-on-year we are at a low digit increase.

Slawomir Krupa: RWA Claire so the decrease in the organic?

Claire Dumas: Exactly. So the main reason therefore is [indiscernible] in Q1 are two-fold. First the implementation of our strategy towards a more asset-light model. And notably we put in place various mechanisms such as asset distribution, hedging solutions or risk transfer transaction. Second, we have a non-linear consumption of businesses which could lead to temporary under consumption which is the case within, notably on GLBA and French Retail. So for the guidance for the -- regarding the guidance and for 2024, we keep an unchanged guidance, which is a limited organic RWA growth which is stay below 1% versus 2023.

Slawomir Krupa: Philippe, BoursoBank?

Philippe Aymerich: Yes. Good morning. So regarding the evolution of the fees in the first quarter, in fourth quarter 2023 and excluding the acquisition cost, the fees are up by 10% and mostly driven by the service commissions.

Guillaume Tiberghien: Sorry, you said 10% year-on-year for French Retail at Boursorama?

Philippe Aymerich: No, no, it's for Boursorama. I'm sorry, it's for Boursorama. So the question was for French retail.

Guillaume Tiberghien: I'm trying to understand what tailwind on fee growth we will get from Boursorama stopping to chase new customers next year?

Philippe Aymerich: Okay. So year-on-year -- the service fees, excluding Boursorama for [indiscernible].

Slawomir Krupa: Next question.

Operator: The next question is from Delphine Lee, JPMorgan. Please go ahead.

Delphine Lee: Hi. Good morning. Thank you for taking my question. 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 market. 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.

Slawomir Krupa: Thank you. Good morning. I'll take the Global Market question and leave Claire with the first one on capital headwinds, regulatory payment. So on Global Markets, so the guidance is 4.7 -- 5.3 excluding Bernstein, with the structuring of the Bernstein transaction -- final structuring of 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 H1, we're seeing this thing land at close to the higher end of the guidance. Claire?

Claire Dumas: So regarding regulatory impacts on the capital. This quarter, we have 9 basis points impact. This being said and regarding the guidance, as demonstrated in 2023, where we had a 15 basis points in part, that is the 50 basis points guided. And as we reminded in Q4, it's making a potential regulatory impact is uncertain, both in terms of timing and amount. So we now prefer to stick to end of your guidance, which is for this year around 13 core Tier 1 ratio and to stick to this target rather than guiding a notably regulatory moving part.

Slawomir Krupa: Next question.

Operator: The next question is from Sharath Kumar, Deutsche Bank. Please go ahead.

Sharath Kumar: Good morning. Thank you for taking my question. I have two, please. So firstly, on global market cost, again, if I exclude bank taxes and restructuring costs, I see underlying cost 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 filed 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.

Slawomir Krupa: Thank you. Thanks very much. Good morning. I'll take the first one on Global Markets costs and Stephane Landon, our Chief Risk Officer is going to give you color on your second one. So on the first one, you're right and a very simple answer is there is no particular material change in terms of trends we expect. We are in GBIS other -- all of the parts of the group investing to continue to decrease the structural cost base. But, let's say, there is no particular strong dynamic to expect other than the one you see. Stephane?

Stephane Landon: Thank you. Well, as you explained the cost of risk -- the uptick on 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.

Slawomir Krupa: Next question?

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

Matt Clark: 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, I guess 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.

Slawomir Krupa: 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 the 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 4, 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 at the CMD of the capital buildup and making sure that we have also ample buffer. This is the whole strategic underlying thinking about it, ample buffer to deal with all kinds of headwinds. And of course, at point if we reach levels that are higher than our targets, we'll buy them, communicate on what we would do with the extra capital should we end up with extra capital with our target. Claire, on both the French Retail but also the foregone revenues earnings of the disposal.

Claire Dumas: So a lot of figures on my side. So, regarding the impact of the disposal on the top line. Regarding [indiscernible], it was very limited in Q1 last year, for example, it was €20 million. 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. Regarding equipment finance revenues in 2023, it was around €0.4 billion. And regarding Morocco in terms of revenues, it was around €0.5 billion. Regarding [indiscernible] it was 0.2 and 0.3 for Equipment Finance and Morocco. This is all the figures. Regarding the impact of the short-term hedges. So your question was related to Q4 2023, the impact was €404 [ph] million. In Q1, the impact is €270 million, exactly €265 million. And we still are expecting sorry and in part now for Q2, we're guiding one and after [indiscernible].

Matt Clark : 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'll lose?

Claire Dumas : So what I just told you is that regarding equipment finance, the figures were 0.4 revenues, 0.2 cost, 0.1 net income. And to give you the full picture, 8.2 regarding RWA. Regarding Morocco, NII 0.5, [indiscernible] 0.3, DOI is 0.2. Net income, €60 million, 6-0, plus minority interest; and RWA, 8. Is that okay?

Matt Clark : Thank you.

Operator: Next question is from Azzurra Guelfi, Citi. Please go ahead.

Azzurra Guelfi : 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 coming quarters, if you can elaborate a little bit on that? And the second one is on the provisioning of the Stage 2 and Stage 1 that you showed. It 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.

Slawomir Krupa : So I'll take the second one because it's a very simple one. And I'll let Philippe Aymerich talk about mobility. In terms of the provisioning as one is too, it is only related to the permit change.

Philippe Aymerich : Yes, concerning the mobility sector, especially Ayvens we see that our results are -- are in line with the guidance in terms of personal margin that is slightly picking up compared to Q4. So the stabilization of the margin. And second, in terms of the used car sales where given the range in €1,600, and we are at €1,661. Therefore, at the high range, end of the range is given. We consider that we can maintain guidance that was given by Ayvens 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 Ayvens when the business units that would benefit from an increase of RWA.

Slawomir Krupa : On the S1/S2 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 permit. Next question.

Operator: The next question next question is from Jacques-Henri Gaulard, Kepler Cheuvreux. Please go ahead.

Jacques-Henri Gaulard: Yes. Good morning everyone. I have obviously two. First of all, 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 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 higher, 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.

Slawomir Krupa: 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 hedge?

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

Slawomir Krupa: All right. All right. Claire, these and on the revenues as well.

Claire Dumas: No, I'm comfortable with the guidance we gave by the end of last year. I think that we gave pressure around these figures is to something zero-point something billion euro and we stick to it. Once again €265 million for Q1 and the rest for Q2 at least not price neither on our side nor regarding the guidance.

Slawomir Krupa: And on the revenues, yes, we do maintain this guidance. It's again partly -- largely actually mechanical because of the improvement in the French retail because of the expiries so to speak of the hedges they drive. And yes, we -- guidance at this point knowing that again, overall, markets should also land at the higher end of the guidance as I said earlier.

Jacques-Henri Gaulard: Thank you.

Slawomir Krupa: Next question?

Operator: The next question is from Chris Hallam of Goldman Sachs. Please go ahead.

Chris Hallam: Yes. So in French Retail, I know it's a bit of a follow-up to what Jacques-Henri just asked. But 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 was 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, it was sort of 4.9 to 5.5 on Slide 37. So I'm just checking, what I've got mixed up between those two data points.

Slawomir Krupa: All right. So, I'll take the Global Markets and then 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 this is why -- and that's what I had in mind. And with as I said something which again everything else being equal looks like a higher end of the guidance for this year. Claire?

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

Chris Hallam: Okay. Thanks. That’s very helpful.

Slawomir Krupa: Next question?

Operator: The next question is from Anke Reingen with RBC. Please go ahead.

Anke Reingen: 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 Markets Day, because from memory you are saying that already makes assumptions on disposals? And then secondly on your core Tier 1 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.

Slawomir Krupa: Thank you. I'll let Claire answer both questions. Thank you. Thank you.

Claire Dumas: So regarding the 0% to 2% guidance on revenue, we had explained at the Capital Market Day that, yes, it did impact assumptions related to disposals. This is for your first question. For your second question, our end of year, quarter one guidance is our business made right now regarding our core Tier 1. Considering the fact that the disposal has an impact on core Tier 1 at closing, we have no by construction additional disposal assumption embarked in the end of year quarter on top of the ones already announced.

Anke Reingen: Thank you.

Slawomir Krupa: Next question?

Operator: The next question is from Sam Moran-Smyth, Barclays. Please go ahead.

Sam Moran-Smyth: Hi, thanks for taking my questions. Two please both on revenues. So on French retail in other income, I appreciate there's a lot going on, on that line. But looking back it doesn't seem to be any recognizable pattern to those results over the last eight quarters. So should we continue to expect this to be around €200 million on a full 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' question. But you've in the quarter reiterated you're 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.

Slawomir Krupa: 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, but again everything else being equal to reach the higher end of the guidance, which would be 5.4%. Does that answer your question?

Sam Moran-Smyth: 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 are there other divisions where you are now expecting less revenues I guess is the question. Thank you.

Slawomir Krupa: Yeah, yeah. So yeah it was indeed very clear. It was indeed 5.1% and 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 overperformance versus that initial guidance is going to be offsetting some of the underperformance, some of the headwind sales. Yes. Philippe?

Philippe Aymerich: Yes. So, regarding other income in PPI. So these revenues are mostly composed of NBI related to specialized subsidiaries or investments and investments in private property, property leasing or real estate. So the decrease between the first quarter of last year, and the first quarter of this year, is mostly explained by two components. The first one is the best effect linked to the merger of the two networks. So, tenant on Crédit du Nord in the first quarter of last year, it was positive last year. So it's a negative base effect for this year. And the second component is, a seasonality effect from some volatility in the contribution of the subsidiaries. So it is a low point, but it is absolutely not [indiscernible].

Slawomir Krupa: Thank you. Our next question

Operator: The next question is from Pierre Chedeville of CIC. Please go ahead.

Q – Pierre Chedeville: Yes. Good morning. I have one question regarding insurance business, which seems a 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 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 and the -- in P&C and the Solvency II ratio. Thank you.

Slawomir Krupa: So, Philippe?

Philippe Aymerich: I'm, sorry. So regarding the first half 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 quarters in the coming months, 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 is, yes, we are making progress in protection, but we are still lagging on this one and 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, with other clients in the retail network and we have a lot of action plans in progress, make sure that we have the right offer. And I think that's the case to continue to digitalize the Crédit du Nord [ph] and to continue to train the sales force. Regarding the solvency ratio, it's above 200% so slightly lower at the end of 2023, but still very high. And regarding the combined ratio, which is basically the sum of the plans on expenses sided by the premiums for everybody, but this is a ratio we don't communicate. But it goes well within the French market on this ratio.

Q – Pierre Chedeville: Okay. Thank you very much.

Slawomir Krupa: Thank you. Next question.

Operator: Next question is from Joseph Dickerson of Jefferies. Please go ahead.

Joseph Dickerson: Hi. Since 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 lost money on a pretax 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 of 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 the first quarter or something that we should start to interpolate a little bit further in terms of cost of risk? Thanks.

Slawomir Krupa: Thank you. Stephane, our Chief Risk Officer.

Stephane Landon: Yeah. Now what we've seen is that normalization of the cost of risk overall on French network. And in addition, some specific file we on top of that a quite high level of provision specifically on this front. So yes, it is exceptional. But the overall cost of risk is -- has normalized over the quarter.

Slawomir Krupa: Thank you.

Joseph Dickerson: Thank you.

Slawomir Krupa: Next question.

Operator: The last question is from Kiri Vijayarajah, HSBC. Please go ahead.

Kiri Vijayarajah: Yes. Good morning, everyone. Just a couple of questions on my side. So firstly, just coming back to the capital and the end 2024 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 bps 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.

Slawomir Krupa: Hello. I'll take the second question and Claire can comment the first one. So I mean no not at all. I mean it's an incident which had impact on the group, no impact on clients and which was identified by our control framework and it was dealt with swiftly. And like it was the continuous improvement wherein generally speaking across the board on all our process, business controls et cetera. We obviously have analyzed the incident and made adjustments and improvements like we do all the time so to speak. So nothing on that front. And Claire on the first question?

Claire Dumas: Yeah. So regarding regulatory headwinds. As a reminder, we had keyed on the 35 basis points impact this year. On top of that, we have as most of ours peers several on-site inspections on ongoing basis. So we stopped guiding on regulatory guidance going forward considering this uncertainty from -- on the output from these unsatisfactions. Regarding day end, we stick once again to our guidance of 13% core Tier 1 by the end of the year on which we are comfortable. Regarding Basel IV which is another topic regarding with regulatory headwinds, we have guided on an 85 basis points in past. And we stick to this guidance which is -- which remains unchanged.

Kiri Vijayarajah: Okay. Thank you.

Slawomir Krupa: 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.