Crédit Agricole S.A. (ACA) Earnings Call Transcript & Summary

Good afternoon, good morning, everyone, and welcome to the Crédit Agricole S.A. Fixed Income Investor Call Fourth Quarter and Full Year 2024 Results. I am Romain Beillard, I'm heading the FI DCM in Paris. And I have the pleasure to have with us today 2 representatives, Cecile Mouton, she's heading the Investor Relations and Financial Communication for Crédit Agricole S.A.; and Olivier Belorgey, Deputy CEO and CFO for Crédit Agricole S.A. and is also heading the group funding and treasury for the group Crédit Agricole. So I think you are all familiar with this exercise. We will very shortly start with the update, and we will obviously, as usual, open the floor for Q&A at the end of the session. So Cecile, I'll leave you the floor.

Thank you. Good afternoon, everyone. I'm going to move directly to this slide to say that for this quarter and for the full year 2024, we have posted really excellent results. And you can see here on the first figure at the bottom of the slide, EUR 8.6 billion of net income for the group as a whole. This is not a record, but it's our second best after 2021 that had been boosted by some exceptional items. And excluding those items, in fact, and in fact, in underlying figures, it is a record of net annual result. It's true for Crédit Agricole Group, but it's also true for CASA. And moving to this slide, you can see that this very good performance that we had in 2024 allows us to say that all our financial targets that we had set for the strategic plan for 2025 are, in fact, exceeded in 2024 with a net income of EUR 7.2 billion for CASA, it's underlying figures with stated figures, it's 7.1%. So it's very close to this level and far above to the target that we have of EUR 6 billion, 20% above the target. I would like to highlight also the profitability and notably the return on tangible equity, which reached a level of 14% in 2024. So there also very far above the target that we had of 12% for Crédit Agricole S.A. Those very good performance, in fact, are really [ bailed ] by a very high level of revenues. It's true for the quarter, for the year for Crédit Agricole Group and for Crédit Agricole S.A. And to really show you this, I'm going to move directly to slide. Yes, it was this one, showing the evolution of the revenues of the group as a whole on the left-hand side with some historical depth and showing its evolution since 2017, and you see that with this level, EUR 38.1 billion of revenues for the group, we are reaching a very high level. So I was saying it's a record. Yes, it's a record even if you can see that in 2022, we were not far already from this level. But since 2023, maybe I have to remind that we have changed the accounting rules. And notably, we have moved to IFRS 17. And with IFRS 17, I'm going to do just a short precision, some of the expenses have to be accounted now as negative revenues. All the expenses, in fact, that are linked to the management and the distribution of insurance project. And for our group, it's quite significant because it represents roughly EUR 3 billion. So with this precision, definitely, we can say that it's a very high level of revenues for the group. On the right-hand side, it's also interesting to see that over the same period, we have really enhanced the diversification of those revenues, be it by business line and/or be it by geographies, and you see that. So since between 2017 and 2024, for example, we have decreased the level of revenues coming from retail banking and also the level of revenues coming from France in the group. I'm going to deep dive a little bit more into the quarter now. And I'm moving to -- so first is the activity. We can do it quite quick since, in fact, the trends are the same as the one that we had in the previous quarters. It's a strong activity and notably a solid performance in retail banking and consumer finance. And in particular, what I would like to stress here is the fact that the recovery in the home loan activity that we've been talking about in the previous quarter is here again during Q4. And you see this increase of the volumes that we have produced during Q4, plus 18% for the group Q4 over Q4 '23. It's also very dynamic for some of the business lines and notably for CIB, asset management and insurance, where we can talk about several records, a record level of premium in insurance, a record level -- a very high level of activity for asset management and a record level of assets under management since Amundi is now reaching EUR 2,240 billion of assets under management, and a record in terms of revenues for this quarter and for the full year for the CIB. This is leading to this high level of revenues that I have already mentioned. For the quarter, it's almost EUR 10 billion of revenues that we have seen and coming from all the business lines, very strong increase for asset gathering linked to what I've just said, so very good activity. Also some positive market effects, which are really driving the outstandings at the highest level. Very strong also for large customers, so I've already talked a little bit about the CIB, but I should mention also the fact that for asset servicing, we had a strong increase in revenues, almost 13% Q4 over Q4 for CACEIS and with no more scope effect for CACEIS. And it is also positive, slightly positive for the retail banking. And for the specialized financial services. For retail banking, it is really driven by an increase in fees and also the repricing of the loan stock that we are gradually seeing on this activity. And for Specialized Financial Services, what I would like to stress is the fact that for consumer finance, so this is CFM, Personal Finance & Mobility. The good news is that we are seeing a positive price effect this quarter and an improvement, in other words, of the margin on the loan stock for this activity. In terms of expenses, I'm going to do it also very quick. The interesting comment that we can do on this slide is, first, you can see the increase of plus 3.2% this quarter. But in fact, retreating from all the scope effect, the integration cost and other exceptional effect -- the increase of recurring expenses is only of plus 1.4%. So we are doing this analysis each quarter. And what is interesting is to see that we are seeing really a slowdown in the increase of expenses quarter after quarter, slowdown, which is completely consistent with the slowdown of inflation that we are seeing globally and in France notably. A word on the cost of risk. It's increasing a little bit, but with different components than what we had seen in the previous quarter. Since this quarter, it is essentially driven by allocations on performing loans with 2 main factors, I would say, some revisions on the model, update of the model. This concerns the CIB and also CAPFM. And we had also some reclassification of provisions between Stage 3 and Stage 1 and 2, it has no impact on the global amount of provisions on the cost of risk of the quarter. It's really just some move from Stage 3 to Stage 1 and 2, but it's quite significant this quarter and globally showing also an improvement of the asset quality of the portfolio. I should mention also that we took some legal provision this quarter and notably one at the level of Personal Finance & Mobility for EUR 30 million and most of it being linked with the situation in U.K. in the car loan -- car financing loan industry. My last word will be on Page 27. to show you, in a nutshell, what is all what I have just said is how it results in the evolution of the net income. And maybe looking at the right-hand side of the slide, again, what is interesting here is to see that this high level of net income, EUR 8.640 million and with an increase of almost plus 5% is driven by an increase of the gross operating income of plus 6.4%, so showing that this is really a quality increase that we had on this net income in 2024. And I leave you the floor.

Thank you, Cecile. Hi, everyone. So concerning capital and liquidity, first of all, our capital position. And at 17.2%, our CET1 ratio clearly reflects our very strong capital position. I remind you, we are -- we have the biggest -- the highest CET1 ratio among European G-SIB. Since last quarter and despite our large amount of retained earnings, it has decreased by 17 basis points. And this decrease is linked to 3 factors, in fact. First one was already announced in our previous communication. It's linked to the implementation of Basel IV. We have to consolidate our leasing activity and ECB mandatory asked us to do it in '24 in advance of '25. So this is a one-off, 12 basis points above the -- among the decrease of 17. The other 2 factors come from the increase of the RWA. First one is, in fact, a positive one because it's clearly linked to the very dynamic business that we had at the end of the year, mainly at the CIB level and linked with the very good results that Cecile has disclosed and presented to you. The other one is more linked to some headwinds that we are facing right now in the macroeconomic environment that we know, meaning some rating downgrades, an average downgrade of our -- the rating of our portfolio. This is a slight downgrade, nothing very different than what we can expect in the macroeconomic environment that we know today. So that's it for the capital at group level, which once again is at 17.2% very, very high and comply with our commitment to remain above 17%. Next slide, I won't comment much the CET1 of Crédit Agricole S.A. because the story of the evolution is the same, same drivers. And at Crédit Agricole S.A., the CET1 remained stable, 11.7%, once again, clearly above the 11% commitment that we have towards you guys for Crédit Agricole S.A. In terms of buffers versus distribution restriction, perhaps some comments on this slide. First of all, to highlight the fact that our buffers remain at very high level, either at group level, where they are clearly top most versus competitors, all above EUR 40 billion and even also at Crédit Agricole S.A. level, where due to the issuance of AT1 that we made last October in '24, we come back to a situation where more or less we optimize the capital structure with a buffer of the Tier 1 ratio, very close to the buffer of the CET1 ratio. Perhaps 1 or 2 more words on this slide. You can observe that the systemic buffer or so-called systemic buffer because it's the way the Italian authorities manage it. They have increased the systemic buffer, which, in a sense, is more economically contracyclical buffer. It has increased from 0% to 0.5%. And due to the weight of our activities in Italy, it means that it has grown from 1 basis point to 5 basis points at group level, 1 basis point to 9 basis points at Crédit Agricole S.A. level. This buffer, if Italian authorities complies to what they have already said, will once again increase 3rd of June '25. So this impact will be double. Anyway, it's not an issue. And as mentioned, our buffers remain very high. Another element in terms of evolution, the G-SIB buffer, you have clearly noticed that Crédit Agricole Group will change in terms of bucket for G-SIB. So we will pass from 1% to 1.5%. This will apply in '26, 1st of Jan '26. And we will part of the 15 G-SIB that are above 1% in terms of G-SIB buffer. Last element, the Pillar 2R at Crédit Agricole Group level [indiscernible] pass from 1.75% to 1.80% 1st of Jan this year. So it's not included in what we show there because the figures are at end of '24. But everything equal, it will -- we will have an impact of 5 basis points, first of Jan for Crédit Agricole Ag Group, not for Crédit Agricole S.A. Crédit Agricole S.A. Pillar 2R remains the same. So once again, group level, no issue for any buffer at group level. So this was -- that was all what I wanted to tell you about what will be the evolution of the requirement for Crédit Agricole Group and Crédit Agricole S.A. Next slide. This is a story of our capital structure and the strategy that we have. Nothing has changed since many years now. So I will be very quick on it. First of all, very strong CET1 ratio at group level and a commitment to be above 11% at Crédit Agricole S.A. because Crédit Agricole S.A. benefit from all the internal support mechanism and also operates anyway under the umbrella of the group, and we have demonstrated capacity to move capital between different entities and within the group, meaning regional banks and Crédit Agricole S.A., if needed. Then for the Tier 1, as we have a large excess of CET1 at group level, of course, we do not manage the AT1 bucket at group level because at the regional banks level, they have retained earnings, I would say, for free in terms of capital. So they do not need to issue AT1. So we manage the AT1 bucket at Crédit Agricole S.A. level. It's more or less fulfilled at the moment. And then in terms of leverage ratio, once again, given our large excess of capital and CET1, we follow the leverage ratio, but we do not steer it very actively because we are largely above any regulatory requirements. It's a backstop ratio for us. This one is once again a very classic slide that we provide every quarter. Just to remind you that in terms of TLAC, as we have a very strong CET1 ratio, we manage the TLAC without gold plating it, so more or less in line with competitors, around 27%. Our commitment anyway is to remain above 26%. So we are today at 26.9%. So very close to our management target. And in terms of subordinated MREL, same story and total MREL, given the structure of the group, the liquidity structure of the group by structure, by design, in fact, our total MREL ratio is largely above regulatory requirements. So that's not something that, once again, we steer very actively. It's a consequence of our balance sheet structure. Then perhaps some we -- sorry, then we have tried to revamp the liquidity section of our credit update in order to simplify the description of our liquidity structure and also to be more pedagogic on our funding plan. So I hope you will enjoy this new presentation. Don't hesitate when we have some one-on-one to make some feedback on it. To start with our liquidity reserves, which are, of course, part of our strong liquidity position at EUR 473 billion, they increased versus last quarter by EUR 7 billion. We have gathered all our collateral, which is eligible to Central Bank and already pledged to Central Bank, EUR 138 billion. This is something which allow us to get liquidity from Central Bank overnight. This amount versus September has decreased a little. It's clearly due to a technical effect, I would say, meaning the fact that ECB after TLTRO reimbursement -- full reimbursement has canceled the eligibility of the loans -- corporate loans to -- as a collateral. Then we have the bulk of securities, mainly HQLA securities in our case. As you can see, this amount has increased versus September due to 2 effects. First one is a marginal effect a little bit less Central Bank deposit, a little bit more securities. It's due to the fact that given the level of the asset swap right now, it was more interesting for us to invest a little bit more in securities versus deposit at central banks. And the other effect is more technical, which is linked to the fact that we have recalibrated the [indiscernible] and adjusted them more economically to their value at Central Bank. So all in all, our reserves have increased. In terms of LCR ratio, around 130% CASA and group level, a decrease versus last quarter. But anyway, our commitment is to remain above 110%. And we have a management target to be in line with competitors. Once again, we do not want to gold plate this regulatory ratio. And competition is more in the 130% area, and this was our target in terms of management. So we manage it. In terms of -- if we look right-hand side of this slide, in terms of evolution of customer deposits, first of all, they have increased a little bit, plus 2% versus last quarter. And what is very interesting also is to see that there has been a stabilization in the breakdown of the deposits, meaning the site deposit proportion have remained stable. So no more flows from site deposits to term deposits, which are more costly, which means that it will help our net interest margin to recover in 2025. Then our, I would say, classic slide about our balance sheet liquidity structure. Once again, it's a very strong balance sheet with a surplus of stable funding versus client or client-related assets. This surplus has decreased a little bit versus last quarter. But anyway, we are largely above our management target, which is to be between EUR 110 billion and EUR 130 billion, which was the management target that we provided for this MTP. And at EUR 177 billion, you can see it's a coincidence, to be honest, but you can see that it allows us to fully finance our security portfolio. And also perhaps last element, which is written on the slide, our liquidity reserve. So you remember, EUR 473 billion covers more than twice, in fact, almost 3x what we can call our net short-term debt, meaning the short-term debt, EUR 177 billion minus treasury assets, which also are very liquid and that we can get rid if necessary. So this is a very strong liquidity position. In terms of breakdown of our medium- and long-term debt, if we look at our -- at the evolution versus what was communicated and disclosed in September and the figure we disclosed right now, it's an evolution of almost -- or a little bit more than EUR 40 billion, EUR 42 billion. In fact, this EUR 40 billion can be explained in 2 steps. First one by the fact that we have reshaped the way we present it. And we have now aggregated as medium- and long-term debt -- unsecured medium- and long-term debt, all the debt that we distribute in our network, it's bonds. It's distributed in our networks. Formally, we were presenting it as part of client deposit. Of course, it's client money. Anyway, it's bonds. It's probably [indiscernible] with any other bonds that you guys are buying. So we have aggregated it here. It's more consistent with what you can compute on Bloomberg, to be honest. Same thing for senior secured, where we also have included here the bonds and/or loans that we get from sovereign agencies like EBI in order to be more consistent with what we can call as long-term secured funding. So this accounts for roughly EUR 30 billion. The other EUR 10 billion is -- comes from the fact that we have consolidated our consumer finance business. And formerly, it was only -- the debt at this level was only accounted for 50%. Now it's 100%. It accounts for EUR 7.5 billion. So the last EUR 10 billion, part of it is just due to a consolidation effect and the remaining part is due to what we have issued versus what has matured. So overall, except this technical effect, presentation and/or consolidation, it's a stability of our total medium- and long-term funding. Then in terms of funding plan, once again, we have tried to be more pedagogic here, and I hope you will enjoy it. So on this slide, first message about our 2025 funding plan. I guess you are very keen to see it. So EUR 20 billion and roughly like last year, 50% should be issued with senior secured or senior preferred format. We do not split and give indication between these 2 formats because we want to remain flexible and to take market opportunities where they are and 50% in terms of senior nonpreferred and Tier 2. Once again, we do not provide a specific split between both. Once again, we want to take market opportunities when they are. So roughly 50%, 50%. Right-hand side at the bottom, you can see that this EUR 20 billion funding plan for 2025 is the lowest over the last 3 years because we provide here the historical data of our funding plan over the last 3 years. And then on the left-hand side, you have a more detailed view of what we have done in '24 with a split per type of liabilities, type of bond per currency. And you can see that we have issued a lot of non-euro bonds when we talk about senior nonpreferred and senior preferred and Tier 2, so except covered bonds, so large diversification, which is our -- key in our strategy in terms of funding. And we also provide you, of course, you can calculate it, but it's more obvious if we provide you directly the information, the tenure and the spread -- average tenure and average paid for each type of liabilities. Then we provide you the split per legal issuing entity. The first part of the slide with the blue, light blue or light green color is related to all Crédit Agricole S.A. entities. So Crédit Agricole S.A. itself and also the covered bond issuing entities. And we provide once again the split of what each legal entity has issued. It's a detail of the previous slide. Then we also provide you the view of all issuing entities at group level. So it's also a way to remind you who are issuing and for what purpose. So Crédit Agricole Insurance is an issuing entity of the group. First of all, it was in order to improve our S&P rating. It was the first driver of allowing our insurance company to issue directly in the market. After that, as we have a strategy, once again, not to make one-off, but to be consistent, to provide you liquidity for each format that we issue, we have continued and the strategy now is to replace all the subordinated debt issued by our insurance company in the public market. Then for the 2 legal entities, Crédit Agricole Autobank and the ABS vehicles, which relates to our consumer finance business, this is also issuing entities because we want strategically our consumer finance business to be self-funded about around 80%. Then we have Crédit Agricole Italia. The issue only covered bonds. Crédit Agricole Italia, it's an Italian bank. They are over liquid by design. But nevertheless, they issue in the market in order to refinance some other entities and businesses that we have in Italy in order to limit the transfrontier flows between France and Italy. And [ CA Indosuez Bank ], it's our bank in Switzerland. They issue Swiss franc in order to refinance their balance sheet. It's a small issuing entity. Nevertheless, very important in terms of, I would say, strategy of being responsible of your funding when you are an entity which is not in euro. Then we provide you for the AT1 issuances, all the -- all our issuances still alive in the market. The breakdown of the call, next call, I would say, doesn't mean that we will call everything, but at least you have the maturity of all our further call. And right-hand side, we provide the -- we try to illustrate the fact that we manage, of course, to remain in each regulatory requirements above the 250 basis points versus mandatory distribution restriction. So I think I will stop there to let you time for questions. Thank you very much.

Thank you, Olivier. Thank you, Cecile. So I think we are receiving some questions. So don't hesitate to send your question on the platform, and we'll try to answer all of them.

The first one is a test. So the test is okay.

So maybe I'm taking the next one. When might the new PMT be expected? So as I mentioned, so we have actually a PMT live ending 2025. But as we announced during the results yesterday, we have exceeded all the targets that we had set for this MTP. So the idea is, yes, we're going to have a new one soon, quite soon. But as you may know, we are in a transition period in terms of governance since we are going to have a new CEO starting in May with the departure and retirement of Philippe Brassac and arrival of Olivier Gavalda, which will be in May. So we need some time. And of course, Olivier needs some time to prepare this properly and to work on it with all the business lines. He wants it to be really constructive and to build it with everybody. So what we are saying. We are not giving a precise date, but most probably, we should be able to have a Capital Market Day by the end of this year, probably during Q4. And we will have new targets at that time. And most probably, this is also what Jerome mentioned yesterday with an end date at maybe 2028. This is the idea.

So second question, I think, is also for you, Cecile.

So how is your net interest margin situation evolving? And where do you expect it to be in 2025? So it's evolving -- it's roughly stable, I would say, this quarter and in 2024 compared to previous quarter and 2023. Why? Because -- so I was talking about the repricing of the loan stock, which is really ongoing, and you have some figures in our slides showing that, for example, for the last year, it has increased by 18 basis points for LCL and 16 basis points for the Regional Banks. So it's improving. But it takes time. It takes time because it's all the inertia of the stock and also it takes time because the volumes were not that big this year, even if I was talking about this rebound that we've seen since Q1, Q1 was really the very low point in terms of production on home loan. But at that time, we're still not at the levels that we used to see in the previous years. So it takes time, but we have good news also ahead of us because we might have also a decrease in the cost of the resources and notably the customer resources with the decrease of the rate on the regulated saving accounts, for example, Livret A. So that is going to be good news. Good news will also come from the decrease in the cost of financial resources with lower rates that we are experiencing. But at the same time, we have also still a very high contribution of the macro hedging policy that we have implemented, but it might decrease a little bit. Anyway, what it shows also is that we are not too much sensitive and less sensitive probably than our peers to rates, and this is good news. But on the net interest margin specifically, we might not expect a strong increase next year. We are expecting a slight decrease, but not a very strong one. Anyway globally, as we -- what we saw just before and the revenues globally of the group are increasing. They have been increasing over the past years strongly and regularly. And even, of course, net interest income is important. It's not the only component of our revenues. We have also fees and commissions, which are very strong in our group, a very good diversification. I was saying that the outstandings of the asset gathering is at its highest level. So this will be also a tailwind for next year. And we have also the insurance developing very well, P&C, et cetera. So globally, of course, we are expecting an increase in revenues for next year. Kind of long answer.

So I think I will take the next one. So considering CACIB's excellent results, what strategic direction is the CIB division set to pursue next? So first of all, thank you for mentioning that the CIB had excellent results. To answer this question, I will tell you what we mentioned to our Board when we presented the budget, meaning that we don't believe in magic ones in CIB. So what provides the performance, the development of the CIB is rigor, continuity, consistency and the fact you -- that you invest gradually and consistently in your businesses. So first of all, the strategy is continuity, continue to develop what we are doing, what -- to continue to leverage on our strengths. For more details and for further push, wait for the next MTP. Do you expect further RWA increase due to the economic situation in Europe? As part of it anyway comes from CIB? I will also take this one. I would say, yes. Of course, I do not have any crystal ball, and I can be wrong. But due to the fact that our economists do not foresee a great improvement in terms of economic situation in Europe, most probably, this headwind of a little or a slight deterioration in the average rating of our portfolio is what we have, I would say, included in our budget. We do not forecast, I would say, dramatic changes or dramatic evolution, but we have forecasted a slight impact of ratings on our RWA.

Do you want to...

You take the next one.

We don't see [indiscernible] maybe but it's clearly linked to -- so the question is, we don't see an increase in your NPLs or cost of risk in Q4. What do you expect for 2025? It's more globally a question on asset quality. I would...

Yes, perhaps there is another question which is linked to this one -- perhaps linked to this one. How do you get Stage 2 and Stage 3 exposure falling around Stage 2 and Stage 3 meaning Cecile explained that there was...

Stage 3 falling, Stage 2 increasing.

Stage 3 was falling and Stage 2 was increasing. In fact, it's essentially linked to one specific file in France. I guess you can [ hear ] the name, which was in default at the beginning or during the last -- the first 3 quarters of '24 and exited from default in -- during the fourth quarter. And when a name fall in default, of course, you have to provision it. But in terms of RWA, the calculation of RWA is not exactly the same. So when a name exits from default, once again, you come back to the normal calculation of RWA. So there is more RWA -- yes, there is more RWA, which is part of the increase of the RWA. But in terms of provision, as Cecile was mentioning, the total provision is not changing because we keep it in the bucket 2 area. So it's just a transfer. So it's not -- this evolution to be -- to make it short, is not representative of the whole evolution of our portfolio is very linked to one specific file.

But maybe coming back to the previous one. So in terms of cost of risk, I'm not going to give any guidance on it, but maybe the question could be also, do you see any area of deterioration in your asset quality? And the answer is no. So of course, yes, as you mentioned for the RWA, the economic situation, the macro situation of Europe is something that we are monitoring closely and that can impact the cost of risk. But -- as a whole, I would say. But are there any areas where we see deterioration? The answer is no. We still have the same areas that we are looking at more closely. It's professional, smaller than SMEs. It's also some specific sector linked to construction. But globally, nothing new in this -- on this topic.

Legal provision?

Yes, the legal provision for CAPFM for EUR 30 million is partly linked, so as I was saying, to the situation in U.K. and the fact that there was a court decision, so not for us, for some of our peers, but there was a court decision linked to the fact that some of our peers had not disclosed the commissions they were paying to their intermediaries on the car financing market. So we are not concerned that there might be some contagion. So being prudent and very prudent because we are only at the very early stage of this file. We had -- we were able to justify and to take this provision. So for EUR 30 million, EUR 30 million is not completely for this situation in U.K., but most of it, I would say. And maybe I should add that we are a very small actor in the U.K. We have 1% or 2% of market share. So we are not the most concerned about this topic. And most of the outstanding that we have in the U.K. are linked to the business that we used to have with Stellantis within FCA Bank, so the JV we had with FCA, in fact. And even if -- so it has become CA Auto Bank, CA Auto Bank has no more business with Stellantis. The business we have with Stellantis now is through the JV called Leases. But we have still in CA Auto Bank the outstanding of the previous business we had with FCA. And this is mainly on those outstandings that we might be at risk. And -- but if ever there was something happening, contractually, we would share it with Stellantis.

So next question. S&P is expected to review France rating, AA- stable. Assuming they downgrade France outlook or rating, do you expect similar rating action for Crédit Agricole? So well, as I was a little bit surprised by the Moody's rating, Moody's action on rating one quarter ago, I will be cautious. But given what we know what S&P has published, if France is granted a negative outlook, it shouldn't have any impact on Crédit Agricole rating. That's for negative outlook. Then I don't know what can happen. But -- and it will, of course, depend on the situation and many factors that we cannot foresee for the moment. But at least for the near future, should France should be downgraded with a negative outlook. Normally, we do not expect any rating action for Crédit Agricole.

What is your view?

What is your view on depositor preference and the potential impact on the funding plan and the cost of funding? Well, my first view is that I hope this won't go to its end because once again, I repeat for me, it's something which is a potential element for a new crisis, meaning if there is no more [indiscernible] and if banks in poor shape can raise deposit or corporate deposit at the same price than us, I think it's something that can lead to some critical situation. But that being said, I will not decide and there will be -- there is a trend. Well, after that, we have managed over the last 2 years to increase our senior preferred stack of debt. And in its last publication, Moody's indicated that we are less sensitive to this evolution. So I let you conclude. But of course, once again, I cannot preclude what was -- will be the final conclusion of Moody's, but I'm not too worried about it.

Next one, could you elaborate on your M&A strategy in Italy? So our strategy in Italy, maybe more than our M&A strategy, but our strategy in Italy is a long-term strategy, something that we have built for the past 20 years, so in the long term, and we definitely want to continue to be a long-term player in Italy. What we have done in Italy so far? So we've built a retail franchise, starting with the acquisition of Cariparma. And after that with some other acquisitions, notably 3 regional banks, CreVal in 2021, et cetera. So this is the first point. And at the same time, we also have our other business lines, which are present in Italy. And some of them were even present before really the buildup of this retail franchise. And we have some more information in the slide, but CIB, asset management, insurance, consumer finance, I think I'm missing nobody. And those business lines, so are working, of course, with CA Italia, our retail bank network, but they can also have other partnerships with some other actors in Italy. And it was something that we have encouraged at the moment where our retail network was a bit small maybe. So notably, what we have in terms of partnerships is one important one between Amundi and UniCredit that was born with the acquisition of Pioneer by Amundi in 2017. And we have also different partnerships with Banco BPM, an old one that was renewed recently in 2018 or '19 on consumer finance through a JV called Agos and a new one that we have just announced one year ago in insurance for P&C and personal insurance. And the idea is really to continue to develop all those activities, and it's really important. We usually say that Italy is our second domestic market. And as of 2024, we realized EUR 1.2 billion of net income in Italy, and that represents 16% of our net income for Crédit Agricole. So really, that's important. Now what is the strategy at the moment? Because, of course, there have been some news in December, not only from us as we have announced that in Banco PPM, we already had a stake of 9.9% that we had built in 2022, and we have increased it not precisely [indiscernible] We have taken an additional position through financial derivatives in December for 5.2%, and this is what we had announced in December. What is the idea behind this is really to reinforce our partnerships and to defend our position in Italy. There are a lot of movements, and I'm not going to comment on all of that at the moment from all the actors. And our strategy is really only to defend our position because we want to continue to develop there.

A more technical question. You mentioned in previous calls to be potentially looking at a convertible AT1 structure. Where do you stand on that? Well, we continue to potentially look at it, to be honest. On the other side, as I am a very optimistic guy and due to the fact that we had some positive discussion with EBA, not yet conclusive, unfortunately, about contingent clause. Well, so we balance a little bit between creating a new feature like convertible versus potentially having more easy route with contingent clause. So we still are analyzing and balancing between both routes given our analysis of what will be the easiest and the quickest. Okay. So I think that we have a message here that there are no more questions. So I hope that we have fulfilled our expectation. Thank you. Romain, perhaps one word for the conclusion.

A final word, maybe just I would like to take this opportunity to congratulate you, Cecile, Olivier and the whole Crédit Agricole Group for the award you received, a very prestigious award from IFR yesterday as the best financial issuer for 2024. So congratulations for that. And just thanking everyone for connecting today, and have a very good day. Thank you.

Thank you very much. Thank you, Romain.