Amundi S.A. (AMUN) Earnings Call Transcript & Summary

Yes. Hello. Good morning to all of you. I would like to introduce the speakers today in the room with me Yves Perrier, CEO; Valérie Baudson, Head of CPR, [ and ETF ] and Third-party Distribution and Wealth; Nicolas Calcoen, Head of Finance, Strategy and Public Affairs; and Domenico Aiello, CFO. Yves, the floor is yours.

Thank you for this -- to attend this presentation. Anthony mentioned the title of Valérie. This title will evolute in the coming period, and I will come back to this. As usual, I will make a short introduction which will be in 2 parts. The first is where is Amundi in 2000 -- after the year 2020. And my second part is about the evolution of governance. First point, 2020. I would say that 2020 has been a very satisfactory year for different reasons. The first reason, it's our results. Net income of the year is only 4.5% down compared last year. And if we neutralize the market effect, you see that we are completely in the trajectory of our 3-years plan that we announced. That means that Amundi has continued its trajectory of growth and profitability. And when you look at the results of the last quarter, it's -- the highest results that we posted since the creation of Amundi, 5% up compared to last quarter and 22% up compared to the third quarter of the year. And with a good dynamic of inflows, EUR 45 billion for the year, EUR 15 million in the quarter. But in reality, when we put aside a specific situation in our joint venture with ABC, it's EUR 30 billion on the quarter. So same trends of growth with profitability. The second reason of -- to qualify them very satisfactory is the fact that despite this very exceptional year, impacted by the sanitary crisis, we have taken in 2020 major strategic initiatives which will fuel the future growth. We call them the renewal of the agreement with Société Générale for 5 years more. The acquisition of Sabadell Asset Management. I only can tell you that it's done. The integration is done with the transfer of operation and IT and the good momentum, net inflows. The creation of BOC in China. Bear in mind that we entered in the discussion with our partner in October 2018. At the beginning of -- 2019. At the beginning of last year, we signed with our partner. In September, we had the authorization of the Chinese regulator. And now this joint venture is operational and has launched its first funds in these networks. And last but not least, the creation of Amundi Technology, which is the business line which will be dedicated to the services that we provide with our IT platform to competitors or asset owners with an ambitious but realistic objective of EUR 150 million revenues in the next 5 years. Third reason, ESG. You know that ESG, for us, has never been marketing. It has been a conviction. In 2010, we put ESG to be responsible investor in the 4 pillars of the values of the company. 2018, we launched an ambitious plan. And I can tell you now that this plan is done. And specifically, all our daily open funds now will integrate an ESG process in addition to the traditional financial process. That means that, for us, to be a responsible investor is to be 100% responsible. So things are doing well. The strategy is clear, the sense in the creation of Amundi. Results are good. The engines of development are here. So I have considered that it was the right time now to pass the responsibility, the operational responsibility of Amundi to somebody who will be able, not only to continue, but to amplify the development of Amundi on a long-term perspective. And the choice which has been made, after a very comprehensive review of the bodies, of the Board of Amundi but also with the Board of Credit Agricole SA, which is our majority shareholders, the choice of Valérie. It's a choice which is -- which has 3 features. The first is competence. Valérie is somebody with a strong leadership, a lot of skills, experience in the industry. She has been working with Amundi since 14 years like me, she was even a bit before me. I joined Amundi because I know she was here. It was not Amundi, in fact. It was Credit Agricole Asset Management. She has successfully built from scratch our ETF business line. Then she managed very successfully our subsidiary, CPR AM, increasing the AUM by 50%. And she has been also very instrumental in the general management of the company. I am very happy, and also I can say this, very proud of this choice because this choice confirm that the way we have built the companies -- with this motto in Amundi, there is no star but Amundi itself, with a talented management team, very unified. And I would say that Valérie is the spearhead of the [ ice-breaking ] of the management of Amundi. And that's the reason why I'm saying it's a reason of proudness. Myself, I will become a Chairman of the Board. This evolution of governance will be implemented on the 10th of May after the Annual General Meeting, which will approve the accounts. That means that during this period until the 10th of May, we will be with Valérie, managing the company in tandem, in fact, and we have some files on the tables. And then she will have the full responsibility as a CEO. She will be executive, I won't be executive. I will be a Chairman which will organize this Board in the most efficient way. I will also try to consolidate or develop the relationship that we can have, especially internationally with our main partners. And that will continue to be on the debate of ideas, through the committee. I mean this is at our [ sync talk ] which deal with the question of ESG and more globally is a question of society of general interest. And of course, I will be permanently available to advise, to support Valérie when she would consider that it's useful and only when she would consider that it's useful. That's what I wanted to say, and I propose you that before passing the floor to Nicolas, that Valérie can say some words.

Thank you very much, Yves. And so of course, it's an honor for me to be appointed Chief Executive Officer of Amundi and succeed Yves Perrier who has been the European leader and the global leader in asset management. And I know I can rely on his support. I had the opportunity to thank the Board of Directors of Amundi as well as the executives of Credit Agricole Group for the confidence they have placed in me. As Yves was mentioning, I've been dedicated to the development of Amundi for 14 years now. And I look forward, together with the talented management team as well as all Amundi teams around the world, to continuing to develop the company. This will be done in line with the strategy that has made Amundi so successful since its creation. So the keyword will be continuity. Thank you very much.

Nicolas, so speak of the figures now.

Back to the numbers.

Back to the numbers, that's right.

Thank you very much. Good morning to all. Maybe a quick word on the context in which we operate before entering into the specifics of Amundi. I think you had access to the presentation that was prepared, I'm on Page 15 of this presentation. So first of all, in terms of market context, I will [ not go through everything ], but it's important to remind that after the major shock in the market in March, we saw recovery during the year. And this recovery continued on the [ stock ] market, but also to remind that despite this recovery, the level of the market on the fourth quarter remain lower than what it was at the same period in 2019. So up compared to, for example, the third quarter, but still down by 5% if you look at the European equity market compared to last year, important when you consider the net flow of revenues. Second element of context, the industry itself. And here also, fourth quarter, see the confirmation of the recovery of the European asset management market. As measured here on the slide, Page 16, by the inflows on European open-ended funds. And you can see that, in October and November, we saw on the European market more than 260 -- sorry, EUR 230 billion of inflows with a strong component in long-term assets, so confirmation of the recovery that started during the second quarter of the year. In that context, Amundi performed well since -- and I am on Page 18. For asset under management, at the end of the year, reached EUR 1,729 billion, so up by 4% compared to the end of the third quarter. And this growth is linked to a positive market effect of a bit more than EUR 50 billion but also net inflows of EUR 14.4 billion. These inflows were particularly robust if you look at the activity, excluding the joint ventures, and I'm on page 19. EUR 30 billion on the third quarter excluding JVs with a noticeable improvement in medium-long-term inflows, a bit more than EUR 12 billion improvement over the quarter, so continued improvement during all the year. And flows in treasury products, that remained high at a bit more than EUR 17 billion. On the JV side, we had a good momentum in long-term assets but some outflows on low-margin products. Going a bit more in detail. Regarding the retail segment, Page 20, as I indicated, inflows continue to recover. They reached a bit more than EUR 8 billion over the quarter, EUR 6.4 billion excluding treasury funds, so a very positive quarter driven by all segments. The networks, both French and international networks, see a -- saw a significant recovery and are positive, especially in France, Italy or in Austria, thanks in particular to the development of unit-linked as well as discretionary portfolio management. And third-party distributors continue to show positive momentum, EUR 3.7 billion across most of our geographies in Europe and Asia. On the institutionals side, Page 21, significant thing to notice is the very strong rebound in inflows on the long-term assets, a bit more around EUR 7 billion, while at the same time, we continue to see positive inflows, robust inflows in treasury products, a bit more than EUR 15 billion, concentrated in corporate clients. And finally, Page 22, joint venture. As I already indicated, robust activity in high-margin products but outflows on low-margin products. So what are these outflows? First of all, in China, outflows on what is called channel business. So historic activity that is subject to regulatory scrutiny and is seeing outflows of EUR 16 billion in the quarter. And second element, in India, some outflows on some institutional clients. But in both cases, it's at very low margins. And on other activities, in particular, mutual funds which have much higher margins, the business momentum remains strong both in India and in China and totaling on the quarter EUR 6 billion. Income results, Page 22 -- 23, sorry. On this fourth quarter, we posted a net income -- adjusted net income of EUR 288 million, which is up by a bit more than 20% compared to the last quarter and by 5% compared to the fourth quarter. And also, it's important to notice, it's the highest quarterly income since Amundi was created. So we can see clearly on this graph the fact that 2020 was a very particular year. We saw on the first quarter, in the midst of the crisis, the lowest result since the IPO, since the acquisition of Pioneer, but also in fourth quarter after all good recovery in the highest level. There are 3 elements explaining this good result. First one, the revenues, Page 24. They are up by close to 2% compared to last year with, in particular, a good recovery on net management fees, up by close to 1% and a very good level of performance fees over this quarter. We posted EUR 94 million revenues on performance fees, thanks to the market recovery, but also thanks to the good quality of our investment teams that made a good choice in terms of allocation during this period. So first element, revenue. Second element, costs, Page 25. They are clearly -- they are still clearly under control. You can see that if you exclude the scope effect linked to, firstly, there were the consolidation of Sabadell; and second, the startup costs linked to the creation of the new subsidiary in China, with BOC, that became operational in October. In fact, our costs are still down by 1.7% compared to the last quarter of 2019. And as a consequence, our cost/income ratio remained very close to 50%, 50.7%, to be exact, which is as before, one of the lowest [ in the history ]. Third element to be noticed, the contribution of our joint venture. I indicated we saw some outflow but on low-margin products. Activity on higher-margin product is still positive, and it has been so for the fourth quarter. As a consequence, we have a good contribution of our joint ventures, EUR 20 million on this quarter, up by 20% compared to last year. If I come now to the full year, but giving a bit perspective on this result at the end of the year. Clearly, what we can say is that Amundi during the year continued its profitable course. First of all, in terms of activity, Page 28, with overall EUR 45 billion of net inflows. And what is particularly noticeable is that we are back to 2 halves of the year, as every year, but very different pattern, with the first half of the year which was strongly impacted by the crisis. Despite the crisis, we had some outflows, but limited outflows of only EUR 4 billion. And a strong recovery on the second half of the year with overall EUR 49 million in the second half. So a good level of activity and that compare well with previous years, if you accept the exceptional element that was accounted in 2019. You remember, we posted more than EUR 100 billion of inflows, but including around EUR 70 billion on specific mandates in India, from our JV. So a good momentum maintained in spite of the crisis, and this is particularly true both for retail and institutionals business, Page 29. You can see that, excluding JVs, we posted in total EUR 40 billion. In retail, net inflows were around EUR 11 billion, so up compared to 2019 with, in particular, good momentum in third-party distributors and the French networks, thanks to development of unit-linked. On the institutionals side, very strong inflows on treasury products coming from corporates clients in the second half of the year. On the medium-long-term side, positive development despite the crisis on, I would say, external clients, whether institutionals, sovereigns, and so on but negative outflows or some of the outflows coming from the group insurance company, outflows that are completely linked to the fact that there were outflows in the market on traditional euro-contract life insurance. And in fact, you can see, if you look at this page, the counter effect of the outflows on the mandate from the group insurance, compensated by positive flows in French retail, in particular, in unit-linked, with of course the favorable impact in terms of revenues and margins for us. Regarding the joint ventures, Page 30, steady net inflows overall during the year despite these outflows on channel business. If you exclude this channel business, close to EUR 17 billion inflows across the year, with a continued development, in particular, in India. And our JV in India in 2020 became the first asset manager on the Indian market. This growth has been -- and this good business momentum has been nurtured by the success of our growth drivers and products that meet well the needs of the market. First element, passive management, where we continue to post the very strong inflows, EUR 22 billion inflows, both in ETF and the index, mandates and funds, with several innovations planned during the year, the gold ETF, for example, or several ESG products. Real assets, that also continue to contribute positively to the aspect -- to the business with more than EUR 4 billion inflows, in real estate but also in private equity and private debt. And last element, which is noticeable, active equities, where we posted positive inflows, a bit more than EUR 3 billion. Thanks to the success of our thematic offering managed by CPR. This growth, these inflows have, of course, also been nurtured by solid, I would say, steady investment performance. They are illustrated by 30 -- Page 32. You can see that more than 70% of our funds are classified as the first or second quartile over a long-term period. In terms of results now 2020, as I said, it is also a confirmation of our growth trajectory. Despite the impact of the crisis on our revenues, we posted a net result of EUR 962 million which is down, I would say, only by 4.7% compared to last year and which is almost -- which is basically stable, if you exclude the direct impact on the market. So confirms the trajectory that was announced a few years ago, with almost a doubling of our net results compared to the time of the IPO. Also worth to notice is that on the second half, less impacted by the crisis of the year, our net result was EUR 523 million, so very much in line with the overall objective of EUR 1,050 million for the full year for 2020 announced following the integration of Pioneer. This result is the consequence of opposite effects. First, on the revenue side, a decrease in revenues by around 4% due to the crisis; management fees that were down by a bit more than 2% due to the negative average market effect and a decrease in the average margin. Financial revenues are also strongly impacted by the crisis due to the negative mark-to-market impact on the value of our portfolio. But to be noticed, on the revenue side, positive financial -- positive evolution of performance fees with EUR 200 million of performance fees over the year. It's up by 17% compared to 2019, which was already a good year. This negative evolution due to the crisis on the revenue was largely compensated by 2 elements: first, our costs, that remain very much under control, decreased by 2.6% compared to last year. And even if you exclude the scope effect into Sabadell and to BOC, a decrease by 4% at [ a constant scope ] compared to last year. And last element, as for the last quarter, a positive development from our joint venture, which are illustrated by Page 35 with, in particular, a significant increase of the contribution from both the Indian joint venture and the Chinese joint venture [ this year ]. These good results contributed to reinforce again our financial structure. And you can see Page 36, that we still continue to benefit from a very robust financial structure, with a EUR 3.2 billion tangible equity at the end of the year and a core equity Tier 1 ratio of 20%, so significantly above the regulatory requirement. This robust position allowed us to resume our dividend policy. You remember that we were not in a position last year to distribute a dividend due to the recommendation of the ECB. We now are in a position to resume this policy with a distribution of 65% of our 2020 net earnings. And we will propose at the next general meeting, on the 10th of May, a dividend of EUR 2.9 per share. So it represents probably 4.5% of yield based on a -- that base market capitalization. So this is for the -- I would say, the financial element of the year. But as Yves indicated, this year has been very remarkable in terms of the growth initiatives that have been launched during this year or confirmed during this year. Yves already mentioned them, I will just go over quickly over them. First of all, it's the renewal of the partnership with Société Générale for 5 years, so until the end of 2029, that allow us to confirm of our positioning in France and in retail in France. Second initiative, Page 40, the new partnership with Banco Sabadell in Spain for -- signed for 10 years, associated with the acquisition and the integration of Sabadell AM. During the last quarter, we can confirm that both -- the partnership is starting well. We posted EUR 300 million of net inflows with the Sabadell network in the second half of the year. And the integration of Sabadell AM is also well in place since the IT migration, in particular, on our ALTO platform already took place during the fourth quarter. So clearly, it confirms the potential for value creation associated with this operation. Third, a significant operation, the creation of the -- a new -- our new subsidiary in China, partnership with BOC, one of the fourth leading banks in China. Yves reminded us about the short delays in which this project has been conducted and, in particular, during the fourth quarter. At the beginning of the quarter, the new subsidiary became operational, and it was able to launch its first product in the BOC network in December. So here again, an operation that is well on track and give us a unique position on the Chinese market. Last initiative that we launched on which we thought it was useful to give a bit of color today is the creation of Amundi Technology, Page 43, on the following one. You know that technology and our IT platform is one of the strong assets of Amundi since its creation. And that would be true that we consider that it was an asset that -- on which we could also leverage to create a new business with external clients. It started a few years ago, and now we are in a position to make this business, we call it Amundi Technology, a fully fledged new business line with ambitious targets. We can set ambitious targets because we think that there's a market potential, which is important. And Page 44, we evaluate the addressable market, mainly in Europe and some extent in Asia at EUR 1.5 billion. And we consider it should be growing because many players in the financial industry are facing structural challenge and are trying to refocus our activity on core business and considering outsourcing their IT or technology services, which create a potential for us. Considering our technology platform, Page 45, which we can characterize as being very performing, high level, thanks to the resource we have dedicated to this platform with, in particular, 700 IT specialists, which -- of which most of them are internal and the investments that are made to develop this platform to a platform which is performing, which is very efficient. You know that the cost of the IT for Amundi represent roughly 1 basis point compared to assets, between 6% and 7% of our revenues, so at much lower level than the average of the industry, which makes it an asset when you want to promote it. And third element, thanks, in particular, to the integration of many [ initiatives ], in particular, Pioneer in the last 2 years. We have a very strong experience in managing projects and synchronizing new operations, new investment platforms on this IT platform. And that allow us to start to promote this offer to some of our clients. And today, we already have 24 external clients, representing last year, around EUR 25 million. So the time has come for new development, leveraging of the distancing advantage of the platform. I was already mentioning a very performing technology, thanks to higher research and development. Our partnership culture, which is very important to have an offer which is relevant for many different clients. And this partnership culture is illustrated by partnerships with particular major custodians such as CACEIS or, more recently, BNY Mellon, which was announced a few days ago. Strong experienced and international teams with 2 hubs, in Paris and Dublin. And a technology platform, which is both open, connected to many -- for example, many custodians, many distribution platform, many partners and also at high capacity to treat a very high volume. Based on this advantage, the offer we can propose to our clients have several components, covering the -- I would say, the value chain of the savings industry. So first component, probably the most important one, is ALTO investment, which is the portfolio management module that we can propose to asset managers or asset owners. But there's also what we call asset -- Alto Wealth and Distribution, which is more dedicated to distributors, to wealth management, covering in particular discretionary portfolio management and advisory services. And we can have also a more dedicated offer, for example, towards employee and retirement savings platform. This is more of a French market, but an important one, on which we can leverage on the capacity and our experience in employee savings plans. Based on the assets, we consider that it's time to accelerate the development of services, make it a full business line for Amundi with ambitious target. And we consider that from EUR 25 million of revenues in 2020, we should reach EUR 150 million in a 5-year time in 2025. Last element before opening the floor for questions. Yves also -- Yves said a word in the introduction. ESG, where Amundi has a leading position since inception -- remember that Amundi made of -- ESG, one of the founding pillars when it was created, with new ambitious target set in 2018 with, in particular, the need to deploy in all the investment platform, where it's possible, integration of ESG criteria in the performance and ambitious target in terms of new initiatives. And the good news is that today, we are in a position to say that these commitments are met, on Page 51. A little bit in advance with the target, which was set for 2021. Since from now on, 100% of our open-ended funds will integrate the ESG approach and will have yet this score, which is higher than the one of its benchmark. And second, I would say, big commitment. We said in 2018 that we had the objective to double from EUR 10 billion to EUR 20 billion the AUM on the specific initiatives dedicated to the environment or social initiatives. And in fact, at the end of 2020, we are already at EUR 22 billion on this initiative, thanks to the many new solutions and initiatives that were launched over the recent years. They are -- some of them are illustrated in Page 52. I won't go across all of them. But some elements are particularly being noticeable. The partnership with the Asian Infrastructure Investment Bank, for example, to design a new climate change investment framework to build a new portfolio on this basis for the launch of mainly funds dedicated to -- based on the Paris Aligned Benchmark or dedicated to the social impact of corporates in which [ deals ]. Thanks to the [ penetration ] of this plan. Thanks to this numerous initiatives and new solutions, we can say that Amundi, at the end of the day, more and more recognized as a key player in this field. It is illustrated by a few elements. For example, according to Broadridge, we are #1 in Europe in terms of ESG, [ certain elements in ] open-ended fund. The last figure, assessment of the PRI last year lead to -- for Amundi to have the highest score of A+ across all categories. And maybe last illustration, one of you -- one of the brokers that follow, in particular, ESG trends, selected Amundi among the 10 stocks, recommended stocks at a global level, and Amundi is only one in the financial sector to have been selected. So without coming back to the governance evolution that has been developed by Yves and Valérie, clearly, a very positive year for Amundi, consolidation of the growth momentum, new initiatives that will nurture future growth and confirmation of our leadership in the ESG field.

Thank you, Nicolas. So now we are ready to answer your questions.

[Operator Instructions] And our first question comes from the line of Jacques-Henri from Kepler Cheuvreux.

It's Jacques-Henri from Kepler Cheuvreux. Congratulations on the 2 of you for your appointments. It's an amazing story and looking forward for the next 15 years, obviously, or more. A question for you, Yves. And man, I'm going to miss you. Anyway, what type of Chairman, are you going to be? Are you going to be a hands-on Chairman, more like an executive one or are you going to remain in a more traditional role? And basically tell us a little bit about the transition you are hinting at at the very beginning, that's the first question. And the second is more on what happened on the channel business in China, which is responsible for some outflows. If we could have a little bit more color maybe on the type of product it is. And Yves, you assume that this is going to be a one-off outflow or something that might recur and if that had any sort of impact on your financial trajectory on the new BOC joint venture? Probably not because it's only new products there, but just to make sure.

Okay. So the question about the Chairman. Before saying again what I have said in the introduction in detail, I want to tell you my spirit in the present period. I have always, as you know, conducted my life with 2 drivers: One is to build, the second is to transmit. So that's also why I consider it was the right time, the building of Amundi is done. I don't come back again. Now it's the time of transmission. That means that I won't be -- I will not be an Executive Chairman. I will be Chairman, which has this responsibility towards all shareholders in order to validate the strategy, to follow its implementation. Of course, in this role, I will also consolidate the company about my -- the relationship that I can develop with our main partners. My influence also on the economic or financial debate. But for the rest, Valérie will be the Executive CEO with the full responsibility on the operational side. Of course, I will be available for her every time she will consider it necessary. But now is the time, in fact, to Valérie to be hands on. And I will appreciate this new time to be more relaxed. Second point, channel business. We have often the discussion with Nicolas and Domenico definition. I will simplify. And it's -- these funds, once they are the equivalent of monetary funds, which was in a context where Chinese bank under the constraint of capital and so on, externalize of balance sheet -- due to balance sheet product to off balance sheet. And the change their mind make the regulation evolute. That explain the outflows of this year. It will continue next year. They remain about remain about, Nicolas, EUR 12 billion of gross -- maybe there will be other product in substitution, but we can anticipate next year additional outflows on these products, but without any significant impact on the results because it's -- there are products with very low margins.

And no impact for the new subsidiaries with BOC since we, by nature, don't have this product, and we are managing other products that fit the new regulations put in place by the authorities.

Our next question comes from the line of Haley Tam from Crédit Suisse.

If I can just quickly add my congratulations to Monsieur Perrier and a very warm welcome to Valérie as well. Some very quick questions for me. So firstly, just in terms of your capital on Slide 36. Could you remind us, please, what your minimum CET1 ratio level is that you would like to keep at? And so therefore, some idea of the surplus. And I guess, given the change in management, coupled with perhaps the completion of integration at Sabadell, I just wondered whether M&A is still very much part of the Amundi story. And I noticed this morning there's some speculation in the press about BBVA Asset Management. So any comments you can give there would be great. Second question just on the Amundi Technology. Just to confirm, you're not expecting to incur any incremental investment costs associated with the build-out to EUR 150 million of revenue target. And just in terms of that target, how should we think about that in terms of new clients versus the increased penetration with the existing 24 that you have who are generating the current EUR 25 million?

Nicolas, you take the question about capital, and I will take the two other questions.

So on capital, we had a core equity Tier 1 of 20%, where the minimum regulatory requirement is around 17% and our managerial target is around 10%. We need to keep a buffer compared to the minimum requirement, which means that we have an excess capital compared to this managerial target of around EUR 1.2 billion.

So the question of the consolidation. First, for Sabadell, Nicolas mentioned to you that things are doing -- the integration is doing very well with the transfer done in October or November, all the operation of Sabadell have been transferred on IT platform, ALTO, and the dynamic of flows is here. And so we confirm that we will realize the level of synergy announced at the minimum. Second question about technology. Firstly, I want to add what Nicolas said. It's not something which is new. We have begun and with this amount of revenues is limited, EUR 25 million, but it has been done. Have in mind that what we have done, in fact, we are in a context where nearly all our software now are proprietary. Second point, 75% of our IT platform, our people, which is based, Paris and Dublin, are internal, which is not the case in the industry. And so what we are creating, in fact, it -- we're creating a sort of IT company which, in 5 years, will be one of the company of reference for software, not only for asset management, but also for the management of all the savings. For example, for discretionary asset management tools to help advisers and so on. Of course, to go from EUR 25 million to EUR 150 million, it will be mainly new clients. But I can tell you that yesterday, but I can -- it's not official. It will be official in some, let's say, in the coming months. We have signed an agreement with a major French asset management and also an agreement with another company. That things are going well. And of course, to be able to serve more and more clients, we will have to add additional people to make it. But the bulk of investment have been made, the investment, they are on softwares. And you know that in the industry, except one big competitor which has been a pioneer on this, BlackRock, nobody has the equivalent in terms of software.

That's very clear. Can I just quickly follow up, if I may? With the integration of Sabadell Asset Management having gone so well, are you now comfortable with the level of your presence in Spain? Or is there some where you would still look to extend the scope of your distribution?

Now we are #4 in Spain. I recall you were #1 in France, #3 or #2 with -- except Generali in Italy, #2 in Austria and the Czech Republic. We are the second foreign asset manager in Germany. So we have a strong footprint. After we permanently -- firstly, we want to grow organically in each of the country where we are. And frankly speaking, I consider that there is not a country where we can grow organically and gain market share. Secondly, after it's a question of possibility of acquisition. But you know, for acquisition, you need a buyer, but you need also a seller. it will depend on the opportunities.

Our next question comes from the line of Arnaud Giblat from Exane.

I've got 3 questions, please. Firstly, on the -- to come back on the technology. I was wondering if you could give us a bit more on the road map. I mean, how many clients do you need to get -- to achieve EUR 150 million of revenues? Maybe from a client's perspective, can you talk about the sales pitch you're coming up to when you see the clients? Are you selling a big savings to them? Or is it just a world without technology, you'll achieve a better functionality? Maybe both? Is there any competition? I mean I'm thinking about Aladdin and [ Corp ]. Charles River. They typically operate at a very large end in the asset management space. So I assume you're not competing against them. Or is it just a case of you competing versus their internal systems? And I also wanted to come back on the JVs. Clearly, you've stepped up in profitability to EUR 20 million a quarter. Are there any one-offs to think of there? For instance, I'm thinking, particularly, are there any large performance fees I should be thinking about or -- and as well, you were guiding -- I mean you've launched your BOC JV. So have the start-up costs come through in Q4?

Nicolas, you take the two last questions, and I will answer about technology.

So the -- sorry the...

On the JV, are there -- the increase in the results, do they benefit from one-off or not? The [ REIT ], no, no one-off.

No, no [ CET income ]. That was a negative last year in China due to the bond that the JV had to acquire. But most of the increase is, I would say, organic, linked to the increase in revenues and profitability.

Very often, you were asking about growth in AUM and then a growth which was not at the same level of net income. In fact, it was normal at the beginning, there was a delay between the growth of AUM and net income. And so for the future, this joint venture will see the result in the dynamic of growth. About technology, why we launch this business. Firstly, because we have the tools, we have all the software that we have developed. It's ALTO investment, which is, let's say, the portfolio management for asset management. ALTO wealth and distribution, which is to support the advisers in private banks. And we have what we call [ Norway ] as the [ Norway Arch ], which is the software for employee saving schemes. Which are the competitors? Effectively, not so many competitors. Aladdin of BlackRock, of course. You have SimCorp for portfolio management. For -- and [indiscernible] you have some Charles Rivers (sic) [ Charles River ] and so on. But the good news that there are not so many competitors, and the market is huge because many, many competitors have to face this technology challenge. Personally, I think that not only in asset management, but in the financial services industry, there will be those who are able to manage the digitalization, the global digitalization, they will make their IT evolute, and those who won't be able. But to do see, you need to have invest a lot to have our teams and so on. And we have a real competitive edge because when you implement -- and in my career, I've managed a big project like this and Valérie also. You have 2 parameters: One the functionality of the software; second, the capacity to implement. And when -- and this -- when you look at ALTO, firstly, Pioneer was using Aladdin. And we merged, we transfer all operations from Aladdin to ALTO. And the investment managers of Pioneer look -- were able to compare. And frankly speaking, I have never heard an investment manager of Pioneer saying that it was better with Aladdin. Second, the capacity of implementation. But we have done this with Pioneer. We have done this with Sabadell. We have done this with [indiscernible]. We have done this with [ BSC ]. We have implemented in the new joint venture, ALTO, and we have begun to do this with other companies. And I think that we have something which is a really unique about this and the reason why we are very confident with the objective, which is announced. But what I propose for you, Nicolas and Valérie, is that one day, you make with Guillaume Lesage, with the Head of this division, a dedicated session to explain this. Final point. We have, in January, signed a technology cooperation agreement with Bank of New York to combine the offer in custody of Bank of New York and the offer of Amundi ALTO investment management to have a solution which goes from front to back.

I think there was also a question from Arnaud on the cost of the new company in China with BOC. So the cost in the quarter was EUR 10 million versus start-up costs, plus the recurring costs linked to the fact that the company are now fully operational with 45 people in the company. So EUR 10 million.

Our next question comes from the line of Bruce Hamilton from Morgan Stanley.