Crédit Agricole S.A. ($ACA)

Good afternoon. This is the conference operator. Welcome, and thank you for joining the Crédit Agricole First Quarter 2026 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Clotilde L’Angevin, Deputy General Manager of Crédit Agricole. Please go ahead, madam.

Thank you. Thank you very much. Hello, everybody. I'm conscious that this is a very busy day for you, so I'm going to try to be short. And so starting on Page 4 to tell you that we have solid results this quarter for Crédit Agricole S.A., EUR 1.7 billion despite the turbulent environment. All of the Q1 2025 figures here are presented in pro forma. So for the Q1 2026, we don't change anything. But to compare it with the past, we consider that in the past, Banco BPM had been equity accounted at 20.1%. Now net income, therefore, increased by 1.8 percentage points sorry, pro forma, thanks to an increase in revenues to EUR 7 billion, supported by sustained activity, ongoing digitalization and strong client capture. We also have strong operational efficiency. The cost-to-income ratio improved by 0.6 percentage points quarter-on-quarter in CASA. And we have well-controlled risks with cautious provisioning on this quarter in the context of the conflicts in the Middle East. And all of this leads to a strong profitability, and we're posting a high ROTE at 13.7%. CET1 ratio is at 11.4%, well above the 11% target, which is impacted notably by M&A operations. We increased our position this quarter in Banco BPM Capital, now reaching 22.9% since we decided to seize the opportunity of a dip in the share price in March to continue to build up our stake, but no change in our strategy. The group continues to develop. We announced this quarter the acquisition of a small Ukrainian bank, Lviv in the west of the country that will allow Crédit Agricole Ukraine to strengthen its positions with SMEs and with corporates in the agri sector. And we launched a couple of weeks ago, the European digital platform, Crédit Agricole Savings in Germany, only 5 months after it was announced in our Medium-term Plan Act 2028. On the next slide, you see the key figures. We have a good performance of the group Crédit Agricole, with a strong increase in net income, 5.5% driven by revenues, 2.8%, which reached this quarter the record level of EUR 10 billion. In particular, this is thanks to the strong performance of regional banks revenues, 7.8%, which benefited from a spectacular upturn in net interest income by 34%. There is a cautious provisioning in all of the business lines in the context of geopolitical uncertainty, which leads to an increase in cost of risk on outstandings over 4 rolling quarters this quarter, but it remains under control. And of course, we maintain a strong position in terms of solvency and liquidity. So I talked to you about the impact of Banco BPM. We also have unfavorable market effects on insurance OCIs and on market RWAs for the CET1 of CASA. And we also have a front-loading of the consumption of [indiscernible] RWAs in order to accompany their customers. We can come to that a little bit later on when we talk about solvency. Now moving to Slide 7, Activity. Activity was sustained across all of the business lines this quarter. This supported, in fact, the revenues. So what we can note this quarter is a strong customer capture, 600,000 new customers this quarter, 450,000 in France in retail banking. And what's important is that it also benefited from increased digital acquisition in France and in Italy. So we had client capture that was boosted by digital acquisition, in particular, for LCL with the launch of by LCL Pro, which explains the increase in customer capture for the professionals, 20% of capture on professionals was digital. Digital acquisition also explains 40% of client capture for Crédit Agricole Italia. And we're launching several 100% self-care digital solutions in France in home loans, in savings with the launch of full self-care securities accounts and share savings plans and with a new life insurance contract [indiscernible] . And in the regional bank, we're going to launch a full digital onboarding in a couple of days. Now if I move business by business to activity, in retail banking in France, credit production was strong, even though this performance was mainly driven by regional banks production in a very competitive market. Corporate and professionals loan growth was 7%. And in Italy, we had a very dynamic loan production for the corporates times 2 quarter-on-quarter in the context of a competitive market. And production is very dynamic in Poland, in particular for individuals and in Egypt. The loans outstanding in the on-balance sheet assets continued to grow in France and in Italy, also the off-balance sheet assets. And so therefore, asset gathering division posted a very dynamic quarter. Thanks to insurance, where we have an increase in premium income on all of the activities, savings and retirement, personal insurance, P&C. We had a record net inflows of EUR 5.7 billion, of which EUR 1.5 billion, thanks to the [ Avient ] solution, and we reached EUR 18 million contracts in P&C this quarter. We have a weather-related effect impact, but activity is still very strong. For Amundi, we have very strong net inflows and growing AUM. The medium- to long-term inflows are strong, in particular, thanks to ETFs and index-based solutions and activity is dynamic in the third-party distributions and retirement solutions. And finally, in Wealth Management, the AUMs are increasing, and you can note the fact that we finalized the acquisition of the wealth management customers of BNP in Monaco this quarter. For Personal Finance and Mobility, production increased year-on-year despite the unfavorable conditions in the car markets that weighed on our mobility activity and in particular, on remarketing, we had an increase in the stock of used cars this quarter, but production increased year-on-year for Personal Finance and Mobility. And finally, in Large Customers division, the CIB posted its second best quarter after the record level that it had reached in the first quarter of last year. And so excluding FX of that impact, CIB is stable at this level, thanks to an excellent performance of investment banking and despite the wait-and-see attitude of our corporate customers and financing activities and the fact that FICC was impacted by lower activity on primary markets. And finally, for [indiscernible] we had a high level of settlement and delivery volumes. It was boosted by market volatility. And of course, we continue to transform our business after the integration of the European activities of RBC. Now this feeds into revenues on the next slide that increased by 0.9% this quarter. If we read it on a like-for-like basis, i.e., if we exclude the Amundi U.S. deconsolidation for EUR 90 million in the first quarter of last year, and the impact of the first consolidation of ICG shares this quarter for EUR 68 million this quarter, revenues increased by 3.2%, sorry, Q1, Q1. Like-for-like, all of the business lines contributed positively to the growth in revenues, except for the large customers division, which is impacted by a EUR 69 million FX effect. Asset gathering revenues decreased due to the scope effect. But excluding these 2 scope effects, we have an increase of EUR 59 million. It's mainly thanks to higher management fees and performance fees at Amundi, which more than offset a slight decline in insurance revenues impacted by the weather-related events that I talked to you about, storms and floods in P&C and impacted by a deterioration of market conditions in savings and retirement that was mostly absorbed by the CSM, but we have a residual revenue impact. For large customers, I was telling you that we have a very high quarter, second best after the record level that it reached in Q1 2025. For SFS, we have a positive price effect, which was offset this quarter by a change in the residual values of the cars in Grivalia. Grivalia, as you know, is a subsidy of Crédit Agricole Alpha Bank. So this is why it has an impact on revenues. For retail banking, we had a very strong upturn in net interest income for LCL, plus 13% and a stability of net interest income in Italy. And we can see right now what we talked about in the medium-term plan for France, an increase in the net interest income, thanks to a reduction in the cost of resources, a normalization of the customer deposit mix and the rate effect and also the gradual repricing of loans and fees increased in all geographies. And finally, on the Corporate Center, we had favorable volatility effects. Now moving to expenses. We have, again, on a like-for-like basis, we have positive jaws, 1.7 percentage points. So we do have a few positive factors, in particular, the favorable FX impact on CIB costs and decreased provisions for variable compensation. But more importantly, operational efficiency is improving. We have this quarter, the full effect of the synergies for the [indiscernible] RBC operation, and therefore, we can confirm EUR 100 million additional income in 2026 linked to this operation. The group integration with Amundi is progressing also. We now have 40% of synergies that are realized. And Amundi and Crédit Agricole Italia are expecting cost savings in the subsequent quarters. We talked about that at the end of last year. And these positive jaws that we observe, we can observe them despite the fact that we continue to invest in our investments. We continue to invest in the transformation of LCL, as you can see here in retail banking. And we invest also in SFS for our Crédit Agricole savings and development platform in Germany, for which the total costs are expected to be below EUR 50 million in 2026. Now moving to cost of risk. Cost of risk, in fact, decreased this quarter compared to the Q4 2025, but increased by 32% compared to Q1 2025, mainly due to our prudent provisioning in the context of geopolitical and economic uncertainty. Because as you can see, most of the increase is due to Stage 1 and Stage 2 provisioning, about EUR 100 million, including scenario updates. We adjusted the weighting of the different scenarios. This is for about EUR 38 million. And we added overlays, geographic and sectorial overlays related to the conflict in the Middle East, around EUR 28 million. So we have about EUR 60 million provisioning due to the Middle East conflict. We have other provisions that include legal risk that represent EUR 39 million, and those include an adjustment of EUR 17 million for the U.K. card loan litigation after the FCA released the conclusions of their consultation that they had launched at the end of last year. And so as you can see, besides these elements, the Stage 3 incurred cost of risk is very close to the Q1 2025 levels after a significant increase in Q4 2025. And if we look at what happens by business line, half of Stage 3 and total cost of risk is explained by SFS with CAPSM being the main contributor, but the increase in cost of risk for CAPSM is mainly driven by these S1S2 additions. The Stage 3 provisions are relatively stable and they're even decreasing, in fact, due to successful sales of NPL portfolios. The increase in CIB is essentially due to Stage 1 and Stage 2 provisions linked to the Middle East conflict and the cost of risk remains broadly low with investment-grade customers mainly and a diversified and a balanced geopolitical risk. For French Retail Banking, the cost of risk is under control after a strong increase in the Q4. The default flow remains steady, both for LCL and the regional banks, and it's mainly driven by professionals and SMEs. So what we're doing is we're continuing to monitor quite closely the same sectors that we talked about last year, retail, distribution, automobile transportation for LCL and for the regional banks, real estate professionals, construction and farmers. And in Italy, cost of risk is decreasing and credit quality indicators are improving. So to conclude on this, there's no surge in loan loss provisions we have an annualized cost of risk on outstandings that decreased Q1, Q4 and our credit quality indicators remain at a very good level. We have the NPLs that are stable. We have coverage ratio for CASA and loan loss reserves that are increasing, which will allow us to absorb surges in Stage 3 cost of risk going forward. As you know, our provisioning is always prudent, and that's also why, as I said, we remain cautious, and we continue to monitor closely these sectors that I was talking about. Skipping Slide 11 to move on to the Slide 12 on income. In fact, we have a solid income in a volatile environment. I just wanted to make 2 comments, the fact that we have equity accounted entities that are increasing. We have a decrease for SFS for leases related to losses on remarketing activity in the current automobile context, and we have an unfavorable base effect in China, but we have an up for asset gathering related to the ICG first consolidation impact. This is a one-off of EUR 85 million. And we also have a victory capital scope effect, which is the run contribution this quarter, thanks to synergies. So we now have ICG at 5.2%, and we plan to increase it to 9.9% over the rest of the year. And so next quarter, we're going to have a regular contribution in our equity account on ICG, but for this time, it's a one-off. And also, you have to recall that we're benefiting this quarter from the fact that we do not bear minority interest on [indiscernible] any longer compared to EUR 35 million per quarter in the Q1 2025. But most importantly, gross operating income is increasing on a like-for-like basis by 5.5%. We have 1.8% net income growth to EUR 1,676 million. So a very strong performance this quarter, thanks to strong activity and good operational efficiency. Solvency, now we have a very high level of capital this quarter, and the CET1 ratio is at 11.4%, which is still well above our target at 11%. Thanks to retained results, but we did have a decrease from 11.8% to 11.4% due to a certain number of elements. First, we have organic growth, 23 basis points. In particular, with an impact of CIB, which accounts for 14 basis points. Why? Because we have a couple of elements. We can come back to that afterwards, but we have, in particular, a market impact on the RWAs. And we also have a front-loading of the annual RWA budget in the first quarter for TAI in the context of strong activity in March to support the customers of [indiscernible] That's the first dimension. Second, we have an M&A impact, 17 basis points, out of which we have 14 basis points linked to the increase in our stake in Banco BPM to 22.9% that I was talking about. In fact, this gives me the opportunity to mention the fact that in our past acquisitions, we completed the analysis that we did at the end of last year that showed that we had met our ROI criteria. In addition to these figures, we computed the average return on capital. You have that in the annex, and it's around 18%. So a quite profitable M&A past acquisitions. So organic growth, M&A. Finally, we have a methodological impact with CRR 3 adjustments, and we have market effects on the insurance OCIs due to the rate spread and equity fluctuations by 4 basis points. So all in all, we remain at a very strong level of CET1 ratio for [indiscernible] 11.4%, which allows us to provision EUR 0.26 per share in terms of dividend. The RWAs are increasing also due to a foreign effect, foreign exchange impact for CACIB. This foreign exchange impact has no effect on the CET1 because, as you know, we immunize our CET1 ratio against adverse foreign exchange fluctuations on the dollar by neutralizing the impact on the numerator, but you do have that in the increase in the RWAs. Moving to the slide on the CET1 ratio of Group Crédit Agricole. We have very strong capital at this level. As you know, our objective is not to accumulate capital at the level of CASA. So the relevant figure for the group is that of group Crédit Agricole. We're very comfortably above our SREP requirement, which, as you know, has increased by 60 basis points this quarter due to the increase in the systemic buffer, but we're still very comfortable with 670 basis points above the requirement. And we have more or less the same impact that we had for CASA that I talked about. We have a little bit more limited impact of Banco BPM due to the exemption threshold that I was talking to you about last time. RWAs are increasing a little bit due to technical adjustments on the Basel IV impact on the corporate RWAs of the regional banks. And the leverage ratio is very comfortable as well as the TLAC and the MREL ratio. On liquidity on the next slide, very comfortable liquidity position, very high level of liquidity reserves, EUR 475 billion. The LCR and NSFR ratios are excellent. And just to tell you that almost 2/3 of our funding plan had already been completed during the first quarter. So we're very comfortable also in terms of funding plan. And as you can see here, we have stable customer deposits and very diversified and granular deposits. On the next slide, on transitions, we presented new targets in our Act 2028 plan. Our objective, as you know, is to be a leader in customer capture and technology and, of course, a leader in transition, and we reaffirmed our net zero commitments. And so we have new targets, which are the following: one, to reach a green ground ratio of 90 on 10. So we're well on track to reach this. Our second target is to reach EUR 240 billion in financing of environmental and social transition. The split today is 65% environment and 35% social. Again, we're well on track. And finally, [indiscernible] should reach EUR 1 billion in annual revenues from sustainable finance. And just note that on the 24th of April, Amundi announced that they would be the asset manager of the GGBI fund. So that's something we're proud as well. And so coming to the last slide that I'm going to comment on Slide 17, to conclude by saying that net income increased this quarter pro forma [indiscernible] in the group. Thanks to strong activity in all of the businesses in asset management, in insurance, thanks also to strong improvement in net interest income in France. We conquered customers. We accelerated digitalization. We rolled out -- started to roll out our medium-term plan with the launch of this European digital platform, CA Savings in Germany. We announced the acquisition this quarter with Small Ukrainian Bank. We increased our position in Banco BPM Capital that now reaches 22.9%. And so revenues increased to EUR 7 billion, thanks to this activity, digitalization and strong client capture. Operational efficiency is strong with favorable jobs and an improvement in cost-to-income ratio. Our risks are well controlled. We have cautious provisioning in the context of the conflict in the Middle East. And all of this leads to strong profitability. We're posting a high ROTE ratio at 13.7%. So these are very strong and solid results in an uncertain environment. I'm going to stop here. Thank you very much for your attention, and we can now open the floor to questions.

- [Operator Instructions] The first question is from Giulia Miotto, Morgan Stanley.

I have 2. So first of all, on Vamil, you have increased the stake to 22.9%, but you have room to increase more to 29%. So how should we think about this one? Shall we assume that whenever there is a dip, you are interested to increase this? And also, in the past, you have stated that your preferred outcome would be a merger. Is that still how you're thinking about that? So that's the first question. The second one is instead on the launch in Germany, you said it's a couple of weeks old. Can you perhaps share some stats on how that is going, how you launched, what type of clients you are attracting, that would be super interesting. And then -- sorry, I actually have a final one, a number -- question on SFS. Revenues were down quarter-on-quarter. Costs were up. Any comment on the evolution of this business?

All right. Thank you, Giulio, for your questions. So first, on Banco BPM. So first of all, maybe to explain a little bit, we have an authorization by the ECB to cross the 20% threshold and therefore, exercise significant influence without taking control. So we see the opportunity of a dip in the stock price of Banco BPM to go beyond our 20.1% stake. And we did this for market reasons, we're not changing our long-term strategy. And our long-term strategy is really to be able to contribute to the value creation of Banco BPM. And so that's why we submitted our own list of candidates for the directors of Banco BPM as well as our own list of candidates for the statutory audit rules in order to offer a positive contribution to government, holding more than 20% of capital. So our objective was to promote the creation of long-term value by presenting candidates with very solid and relevant expertise, and we had 4 directors that were selected at the end of the AGM, which corresponds, in fact, to our stake of 22.9%. So we're not ruling ever going out beyond, but you have to bear in mind that the authorization that we requested from the ECB was to cross the 20.1% threshold and therefore, exercise significant influence without taking control. On your question regarding the different scenarios, as always, there's a lot of scenarios that are possible. Most of them don't depend on us. They're positive for us because we have a strong position. We want to position ourselves as a long-term partner of Banco BPM. And I just want to remind you of the fact that our strategy has not changed in Italy. We have this partnership with Banco BPM, but we really want to develop our universal banking model in the long term, in particular, with Crédit Agricole Italia for which we want to develop digitalization synergies with the other businesses. And we also want to develop these businesses, which are all present in Italy. So no change in this strategy, but our strong position allows us to be comfortable and as a long-term partner of Banco BPM. That's on your first question. On your second question, yes, indeed, it's a couple of weeks old, but we're confident as to the success of this savings platform in Germany. So just to recall, in the medium-term plan, we said that we wanted to target 2 million customers. We're now at 1 million customers. We have EUR 15 billion in on-balance sheet savings, which we want to double in Germany. So the savings platform is going to help us do that. In fact, it's relatively simple because we already have the legal entity, Crédit Agricole, what we're doing is we're building with a very low cost, in fact, it's less than EUR 10 million. This savings platform that will be turned into an app at the end of the year in order to provide also day-to-day banking. And what we consider to be our competitive edge is the fact that compared to a lot of competitors who have a limited number of on-balance sheet solutions. We have 7 offers in terms of on-balance sheet savings. So this is going to be interesting for the targets that we have, which are mass affluent and affluent customers. And then down the line, what we want to do is we want to expand by plugging onto that the off-balance sheet solutions, i.e., Amundi, Crédit Agricole to really expand on the offer. But even with these 7 products that we have, we consider that we already have a competitive edge. So that was on Germany. Now on SFS. maybe if we look on SFS, maybe a little bit more widely because we have a certain number of drivers for SFS. We have consumer finance per se for which we have strong positive price effects. And then we have a revenue impact of the second dimension, which is mobility. Now how is this working in terms of mobility? Now remember, in the Q4, we had talked about the reviewal of remarketing values of the vehicles for leases. Leases is equity accounted, but we also have leasing activity in Crédit Agricole Bank, which represents revenues for us. And so what happened in the Q1 was that in the first quarter, we have, as you know, an automobile market that is still slowing down, and this has impacted some of our partners, particularly in electronic electric cars. And so what we did for Crédit Agricole Bank was to adjust the residual value of our vehicles portfolio, in particular, in the U.K. and in Italy. But production is increasing for Crédit Agricole Bank, both compared to Q1 2025 and compared to Q4 2025. So we have a production that is increasing, but we have a. negative impact of this revision of residual values at Gvalia. And we also have an impact at [indiscernible] which is due most here now to a decrease in car retail performance due to the increase in the stock of used vehicles. So we have to kind of sum it up, we have an automobile market that is depressed and in particular, with a certain number of players with which we have strong commercial activity ties who have had observed an increase in the stock of used cars. This has an impact on the residual value and the marketing value of our vehicles. But down the line, we're developing the drivers of profitability for mobility generally. Value-driven pricing, diversification of distribution channels, the improvement of remarketing processes with IT tools, efficiency. So of course, the evolution of the market is going to be key. And of course, there is a sensitivity. There is sensitivity of the residual values that every quarter have to be adjusted. But we have these drivers going forward, which allow us to be confident on the, in particular, the restoration of profitability for leases.

The next question is from Jacques-Henri Gaulard, Kepler.

If I may come back on SFS for a minute, I think the issue I have with it is the fact that it's sort of supposed to actually improve, and it seems the improvement really takes a lot of time. So it's more about getting a sense of where you think this business is going to turn around both at revenue level, but also on the equity accounted side. And when can you say, okay, we've definitely turned the page of that, and we're going to be able to actually look forward to, I don't know, second half of this year of 2027. That's the first question. The second is on capital. I mean, really, it happens that you had the consolidation of BPM. It's more the fact that everything being equal, do you think that we can proxy the CET1 towards the end of the year as being more or less now the retained earnings times 3, whatever that is? And are you expecting any sort of turbulence that could actually derail from that?

All right. Thank you, Jacques Henry. So in terms of inflection, we have to be very cautious because we do depend on the automobile market. And we do have, as I was saying, a strong sensitivity of the remarketing value of our automobiles to the stock of the vehicles of the used car vehicles. And the stock of the used car vehicles also depends on the capacity, the production capacity of a lot of our partners. So for example, we're confident, for example, that Tesla is going to pick up. [indiscernible] which is our partner in China, also, there are more difficulties for [ Stellantis ], but this is something that really depends on the market. Now profitability will pick up over the year, but it's true that we will have an effect of, in particular, the revision of remarketing value of the used cars in the Q4. We will going to carry a little bit of that effect from the next quarters because it does have an impact on the price that we're going to resell our cars at. So there will be an impact that will continue in 2026, but we are in a reversal, of course, compared to the Q4 of 2025. Now in terms of CET1, maybe to just take the opportunity of your question to really come back a little bit to the different elements that can explain the evolution that we have here in terms of the capital for CASA. So you're talking about what we can see by the end of the year. The guidance that I can give you for the end of the year is more that for the medium-term plan. For the medium-term plan, we're still -- we talked to you about the fact that we would have strategic flexibility of 150 basis points by the end of 2028 that could be used for M&A or for an exceptional dividend if we did not use that type of M&A. This quarter, we have used about 16 basis points, 16, 17 basis points for M&A. And so excluding that, we're still very comfortable with our strategic flexibility at the end of the plan. And we're very comfortable also with the CET1 ratio that should remain comfortable by the end of 2026. Now why is that is that we're going to have indeed retained earnings. And what's also interesting is that a part of the impact of the RWAs of CACIB this quarter is, in particular, due to market activities, about EUR 3.1 billion in terms of market activities, as you can see on the CET1 slide. And we can say that roughly 2/3 of that are potentially reversible if the markets normalize. We have a volatility effect on the SAR of the trading portfolio. We have a trading book counterparty risk. These 2 effects are effects that could be reversible. So that's maybe -- if we break down the RWAs of CAFI, I guess we can say we have 3 dimensions. One is an FX effect, EUR 1 billion linked to the appreciation of the dollar between the Q4 and the Q1. Two is this effect linked to the market activities of which 2/3 are potentially reversible. And the rest is a front-loading of organic growth. We often have a front-loading of organic growth for the CIB in the first half of the year. And so we expect they're going to have the impact on income on revenue of that also by the end of the year. But again, all in all, we're comfortable with our CET1 ratio end of the year and 2028 and more importantly, with the strategic flexibility we were talking about in the medium-term plan.

The next question is from Delphine Lee, JPMorgan

So first one is just double checking the guidance on net interest income that for LCL remains high single digit because obviously, that would imply a slowdown compared to Q1. And also what do you factor in for [indiscernible] in your guidance? And also secondly, on [indiscernible] , I think you previously guided to for the year to have a bit of pressure on NII. Is that still the case? And is it something we should expect for the coming quarters? And then my last question is just to come back on Banco BPM. Just wanted to have a little bit of your thoughts around sort of the M&A scenarios. I know you mentioned they're not in your control. It looks like discussions have moved from Cariparma to now Monte Paschi. So just trying to understand a little bit sort of what you think could be possible for the group in terms of defending partnerships?

All right. Thank you, Delphine, for your questions. So maybe first on net interest income for LCL, there is no change in our high single-digit guidance for 2026. Even though it's true that the rate scenario, in fact, you still have these 3 effects that I was talking to you about before. On the asset side, you have a repricing. And the marginal increase in the rate scenario is favorable in this respect. Long-term rate increase is favorable for this repricing. It depends on the competitive capacity of LCL to reprice, but the rates are increasing in LCL and the regional banks. First point. Then you have on the liability side, you have the short-term rate where you can have a slight increase that can decrease the positive impact because you know that for the liabilities, the positive effect is when the cost of resources decreases. But we're well hedged against any increase in short-term rates because this time around, we don't have a real shock to the net interest to the rates. And so we should not have any significant shift in the liabilities mix. And also our macro hedging is quite strong, in particular for inflation. So things are relatively positive. We have no change in this high digit single -- high single-digit guidance for 2026, even though we have to always be careful as to the repricing capacity in a competitive market. Now for Libre for Libre, we usually have a tendency to hedge the Libre. So we do -- we could consider that we have, for example, a EUR 90 billion impact for the regional banks, EUR 90 billion pre-centralization of Libre for the regional banks. You have about EUR 18 billion for SCI pre-centralization. So you could consider an impact of the decrease in Libre on that, which you can calculate, which is going to be a couple of hundred million, but this would be before hedging, and we have a tendency to hedge. So the impact on Libre for us is relatively neutral. For your question on Crédit Agricole Italia. Now we have a very competitive housing market in Italy. We have, in particular, renegotiations, which have an impact. And in fact, they did have an impact this quarter on the loan outstanding for the home loans, which was -- which decreased in Crédit Agricole this quarter. I talked about a very strong increase in corporate loan production. But in housing, we have a market which is very competitive. But despite this, we were quite happy to have the stabilization of net interest income. We're still prudent in terms of our guidance. So no change in our guidance in this respect, i.e., maybe just below 0, around 0 this year before picking up afterwards in the coming years. M&A for Banco BPM. All right. So well, in fact, for M&A for Banco BPM, even though there's lots of -- there's been lots of noise, rumors, et cetera, regarding Banco BPM. For us, things have not really changed except the fact that since we are now -- we now have 4 seats at the Board, we will participate in the analysis of any scenarios that could present themselves to Banco BPM. And so we would participate in any decision regarding these different scenarios. That's all I can tell you for now. We're now -- we now have seats on the Board, and so we're going to be a player. We are at the table. We are a player in these different scenarios. But to tell you the truth, as I was saying before, a lot of these scenarios do not depend on us, but I think most of them are positive. Because as I was saying, we are a long-term player in Italy. We have many ways that we can develop in Italy, for example, organically through CAI organically through our businesses. So all of this is positive.

Next question is from Sharath Kumar, Deutsche Bank.

Firstly, on asset quality, your Middle East exposure at $21 billion seems higher than peers. Can you elaborate on the nature and risks in case of a prolonged conflict in the Middle East? And more broadly on asset quality, what risks do you see if oil prices remain well above $100 a barrel for a prolonged period? Then a couple of clarifications. Firstly, on the capital consumption for Banco BPM, when you increased the stake in 2025, the CET1 consumption was proportionately smaller commensurate with the stake increase versus the minus 14 basis points impact you have now. So if you can clarify on that? And lastly, again, a follow-up on Specialized Financial Services. Can you quantify the used car sales contribution maybe in '25 and first quarter, just to see where -- how much is the delta? And on equity accounted entities, previously, you said double-digit contribution from leases for 2026. Do you stick to this view?

All right. Okay. Thank you. Now if I look at your question on loan loss reserves, if I move to Page 47 in the annex, you have this level of loan loss reserves, which is at EUR 22.6 billion for Group Crédit Agricole and EUR 9.7 billion for Crédit Agricole S.A. And as you can see here, you have -- and you could do that if you have even longer period, you can see that prudent provisioning for us is in our DNA. In fact, we are provisioning, but we have always been doing so in the face of uncertainties, geopolitical uncertainties. And so this is also why we have this very high level of loan loss reserves, even though as you know, the impaired loans ratio, as you can see on Page 47, is stable. And this is also why we have this very high coverage ratio of 82.6% at the level of the group. We have with our Stage 1 and 2 outstanding loan loss reserves, EUR 9.3 billion. We have about 3 years of cost of risk. And for CASA, with EUR 3.4 billion, we have about 1.5 years of cost of risk. But this is, in fact, a structural policy that we have, which is always to provision in a very prudent manner, the risks, and this is what we did this quarter. But of course, this is something that can, therefore, absorb any surge in Stage 3 cost of risk going forward. In terms of capital consumption, so I don't want to go back to the very technical discussion that we had in the Q4 regarding the first consolidation of Banco BPM. But just to tell you a little bit how things are working when you have these 14 basis points for the CET1 is that, in fact, when we increased our share price from 20% -- 20.1% to 22.9% in fact, we're increasing it based upon an equity accounted value, which we have integrated around EUR 10. So we have a goodwill now based upon that. Any additional purchase of shares of Banco BPM has to be done with a goodwill. So you have a goodwill impact that is directly deducted, right? And because last year, when we did the first consolidation, we didn't have any goodwill because we consolidated at cost. And so we had badwill, right? So now you have a goodwill impact first, around EUR 120 million. And you also have an RWA impact, which is different from CASA between CASA and Group [indiscernible] , because for CASA, as you know, we have saturated the exemption of French for the more than 10% participation, but we have not done that EUR 5 million. So that's why the impact for CASA is 14 basis points, whereas the impact for the group is 5 basis points. And then your last question on the used cars. In fact, we have a couple of dozen impacts of the residual value of cars for Gevalia that compensate for a favorable price effect for SFS on revenues. So you have just about, let's say, around EUR 30 million impact on -- positive impact on price effect and around EUR 30 million impact this quarter for Gevalia of the residual value of used cars. And for leasing, we have, of course, a remarketing issue. And what I can tell you about that is that we're having a situation where we're just about breakeven for leases, and we still confirm the guidance that I gave you at the -- in the Q4 call, which was a single-digit contribution for 2026.

The next question is from Stefan Stalmann, Autonomous Research.

I have 2 questions, please. So the first one is on your organic risk-weighted asset growth that you highlighted. It seems that you have actually seen a very major expansion of your exposure to nonbank financial institutions, so NBFI, which obviously receives quite a lot of market scrutiny these days. Can you maybe add a little bit of color on why you have grown this portfolio so rapidly in the first quarter? And the second point goes back to your ROIC disclosure. That's very helpful. It looks like you spent EUR 12.5 billion on your acquisitions over this time horizon, but your regulatory capital requirements were about EUR 4 billion lower. Can you maybe explain what exactly drove that discount and which transactions, in particular, required so much less regulatory capital than what you spend on these deals?

All right. So first, the question on our exposure. As you can see on Page 50 in the annex, we have our exposure to other nonbinding financial nonbanking sorry, financial activities that have not changed significantly. This figure is something that takes into account a lot of elements that are not only, for example, hedge funds, but you have securitization vehicles, you have monetary funds, you have hedge funds, you have broker-dealers, investments, you have all of the insurance banks outside of the EU. So this figure, for example, when you have securitization by CAI for its customers, it's our NBFI and it's a figure that, in fact, adds up a lot of bits and pieces and that's difficult to interpret. What I want to tell you regarding the fact that the issue that has worried maybe a lot of observers recently is regarding our debt fund exposure and so on private debt. Our exposure as of end of March is EUR 2.9 billion, very low, 0.2% of our commercial lending. And as you can see on Page 49, we gave you a certain number of elements regarding the LBO exposure, which is very low, commercial real estate, which is again low with a lot of investment grade. And of course, our Middle East exposure, which is, in fact, mainly on the sovereign and state-owned exposures. Now thank you, Stephan, for highlighting, in fact, the work we did, the team's work to calculate, in fact, the return on capital of these operations these operations, the EUR 12.5 billion that I was talking about, in fact, we look at the operations that it is possible to calculate an ROIC on. So you have on big operations, you're going to have a lot of Amundi operations. You have Pioneer, for example, you have Lixor, you have Sabadell Asset Management. We have also Austria operations with the group. We have [indiscernible] for example, for Santander. So we have a lot of different operations. Of course, the buyback of the Santander Securities Service share in [indiscernible] So all of these operations have different figures in terms of regulated capital. And what I wanted to stress about was the fact that to calculate this return on invested capital, what we take into account is we take the net income group share. And on the denominator, we take the effect of the minority interest, the goodwill, badwill, and we suppose that we have 11% of RWAs. So all in all, the calculations are different for each of these types of operations that I talked about, but they have very different maturities. The ROI is different according to the timing. The ROIC is different according to the timing. And this is a picture of these operations as of 2025. But really what we wanted to insist upon was the fact that we have the very strict financial criteria that we talked about in the medium-term plan, ROI accretive. This is a figure that shows you that we have this accretive nature of our activity, but also the integration capacity and the alignment with our strategy. So this is what we wanted to insist upon on -- and insisting upon the fact that the 18% figure is quite strong.

Could I just follow up on this, please? I mean the common denominator here on the slide seems to be that from a regulatory capital perspective, you need a lot less capital than what you actually spent on the acquisitions. And I'm just curious about why this gap is there. Is there anything that you -- any color that you could add there? I

Think what it really depends on the nature of the operation and the nature of the businesses that made these acquisitions, Amundi, Cat, and Suez. And so when we look at the denominator of CET1, the way we look at it is that we take off the impact of goodwill, badwills, minority interest, and we consider that we have 11% of RWAs, which is, in fact, a way that we transpose the targets that we have for CET1 to the different businesses. So it's de facto an internal allocation of RWAs between our businesses. So this is the way we look at the profitability of these operations business by business, comparing them to the target we have, which is 11% of CET1.

The next question is from Benoit Valleaux, ODDO BHF.

Two short questions on my side on insurance. The first one in P&C. You have an increase of common ratio of 2.5 percentage points versus last year. You mentioned a very high level of nat cat losses in Q1. I'd just like to know if you can quantify in absolute terms this level of nat cat Q1 this year versus -- and the change versus Q1 last year just to see how revenues in P&C will have evolved without this nat cat event. And the second question on the Life side. So very strong activity in Q1. Nevertheless, the CSM decreased by 1.9 percentage points due to negative market impact. I'd just like to know what would have been the increase without this market impact into the..

. Thank you, Benoit, for your questions. They are very -- always very interesting on insurance. So regarding the weather-related claims, in fact, the growth impact is just above EUR 200 million this quarter. It's a growth impact linked to storms on the Atlantic front to floods. And so this impact is quite close to -- if you do a rule of thumb to what we could expect with the market share of P&C Pacifica, which is about 12% market share for this type of insurance. And so this is the growth impact. And thanks to a certain number of absorbing mechanisms, thanks to reversals of provisions, what we can say is that the impact in terms of variation Q1 of this weather-related claims is below EUR 50 million. That's the first point. The second point is that indeed, we always look now for insurance at the CSM. And what's important for us is always to say, and this is what we say this quarter, that we have a new business contribution that is higher than the CSM allocation. But you're right to point out the fact that we had a decrease in March compared to December due to these market effects. We have market effect on revenues in Credit Restaurant due to the equity I mentioned, but we also have and that's the most -- the majority of it, the market effect in insurance feed into the CSM. Now if we did not have this market impact, we -- I can say we would have about plus 8% impact, 1% growth of the CSM between December and March, which is quite logical if you look at the very strong and record net inflows this quarter of insurance, which was, as you can see, EUR 5.7 billion this quarter. So this is reflected in the growth, excluding market effects of the CSM, which remains at a very high level, EUR 27 billion.

The next question is from Tarik El Mejjad, Bank of America.

Just a very quick 2 questions, please. First one is on the capital treatment of future growth or provisioning. If that goes both ways? And how often you will adjust basically that provisioning? Is it every quarter? Or is it your own judgment? And secondly, on...

Can you repeat the question, sorry, the capital provision on what, sorry?

On growth, the growth you have on your capital trajectory in the quarter that you took upfront.

Okay. The front loading of RWAs and C, that's what you're talking about, right?

Correct. And sorry, a bit long there. And then the -- on CASA -- sorry, on the -- yes, CASA, I mean, Creditrico's EUR 800 million investments in CASA. I mean, I know you say as Creditrico, but I mean, the liquidity now is getting even lower. And what do you think the rationale and the end game there?

All right. Thank you, Tarik, for your questions. It's been a long day. I know for all of you guys. So thank you for listening to all of these elements that are oftentimes technical, but which reflect the diversity of our group. So this front loading, the front-loading that we have of CACI is, in fact, relatively -- of the RWA of CACI, sorry, is in fact, not that special because we do have a tendency to front-load the RWAs in order to front-load the effect that we're going to have in revenues. This time, we front-loaded the organic growth to take advantage of the active markets in March. So this dimension is not per se reversible. It's the front loading. What's reversible is the 2/3 that I was talking about of the impact on RWAs of the market activities, the volatility impact and the counterparty issuer spreads for the trading book counterparty risk. So here, this -- so if you take that off, if you take off the FX effect, the rest of the growth of CI, you're going to have between EUR 1 billion and EUR 2 billion, that's the front-loaded organic growth. You have a little bit which is related, by the way, to rating downgrades in line with increased provisions, but the rating downgrades when it's not, it's difficult to say. But I would not say that the front loading is reversible. I would say that the front loading, we hope to see the impact on results in the coming quarters of this front loading. Now the SAS, as you know, we are [indiscernible] which is our today, 63.5% shareholder. So we are, as you know, the daughter, they are the mother. So I cannot comment on what they're saying. But what I can tell you is that they are a very sophisticated investor that knows us very well. And so this program, as you know, they said that they would remain below 65%. They reiterated that, that they had said before. This program is a way for our regional bank, the mother to really take stock of the fact that we have strong profitability and it is a good idea to invest in Crédit Agricole S.A. for the future. They have -- they trust very much our medium-term plan, which is based on customer capture, which is based on transformation, which will provide strong profitability, EUR 8.8 billion in net income at the end of the medium-term plan. And this is very much aligned with their objectives, which is to develop customer capture, to develop performance profitability to develop capital liquidity at the level of the group. So all of this is very consistent. There is no change in any form of end game from what -- as much as I know of. But for us, it's really the fact that they're investing in a very profitable state, which is CA...

The next question is from Alberto Artoni, Intesa Sanpaolo.

I have just 2 quick ones. The first is on capital. And I just noticed that there are 11 basis points of capital consumption this quarter, which relates to methodologies and model changes. And I was wondering if this 11 basis points can -- is on top or can be referred to the slide that you presented when the Act 28 plan was introduced in which you allowed for 40 basis point regulatory and methodology increases during the plan. So is this part of this 40, so it means that there are 29 left? Or is still 40 to go and this is on top?

All right. Thank you for your question. In fact, when we look at the medium-term plan, we look excluding CRR3 impact. And this 11 basis points impact is, in fact, an end of the year impact of CRR 3. So it is excluded from the 40 basis points of methodology because what we do in the medium-term plan is that we consider everything to be besides CRR3 impact because in the medium-term plan, if you recall, we had talked about the CRR3 impact, which was 50 basis points. And then we added on this 40 basis points, which was regulatory methodological impact, including FRTB, which is beyond CRR3. So what I think we can say is that this is kind of the end today of CRR3 impact mostly, mostly.

Okay. Very clear. And my second question, just a quick clarification on the Banco BPM stake. Is there -- do the regional banks have a direct stake in Banco BPM? So at the group level, what is the stake? Is it higher than 22.9% -- or is it 22.9%...

It's 22.9%... 22.9%... CASA stake.

Okay. Okay. So the group does not -- the regional banks do not hold any stake in Banco BPM. Indirectly, of...

No. Our stake is 22.9% of CASA.

The next question is from Chris Hallam, Goldman Sachs.

Just 2. The first is a bit of a follow-up to Jacques-Henri's question earlier on capital. Could you just maybe just remind us what you can already see coming on capital through the remaining 9 months of the year? Because if I look over the last 5 years or so, you typically haven't really seen an increase in the CET1 ratio through the second, third, fourth quarter for a variety of reasons, including M&A. But consensus as of today now has a 60 basis point increase from here to year-end. So any steer you could give on that would be super helpful. And then again, it's a bit of a follow-up to an earlier question. So not regarding the 14 basis points on BPM, but just how much capital is the whole BPM stake currently consuming? Or put another way, if you sold it today at the latest price, how much capital would be released?

All right. So it's difficult to tell you, Chris, for the capital. I prefer to give you guidance regarding the medium-term plan. For the medium-term plan, we're comfortable with our 11% target and our 150 basis point flexibility to which we take off the 16 basis points that we have today. That's all I can tell you, but I can tell you that we're not worried about capital going forward also because we always know that we can develop also the optimization, the securitizations that we can do in particular with SRTs because, as you know, our SRTs are lower than that of what our peers are doing today. Now for Banco BPM, for Banco BPM, we have a EUR 3 billion stake that we equity accounted at the end of last year. Now we have an increase in that, which we bought at the share price, of course. So you have to add to that the share price impact -- but in any case, this capital impact of the equity accounted value plus the impact of the increase in the share price, which represents about EUR 120 million in terms of goodwill. This is something that will generate in terms of equity accounted value. It will generate based upon, of course, the income of Banco BPM, something around EUR 100 million every quarter in terms of P&L impact.

The next question is a follow-up from Sharat Kumar, Deutsche Bank.

Apologies for following up. Just 2 quick ones. Firstly, on leases equity contribution, I think you said double-digit contribution during the fourth quarter earnings. Today, I heard you say single-digit contribution, if you can clarify. Secondly, on interim dividend, can you confirm if the policy is to pay 50% of the first half net profit in October?

All right. Thank you. Yes, for leases, what I'm telling you when I'm talking about double-digit contribution is talking about the year contribution for the year 2026. So here, we were just about breakeven in the first quarter. So you can see that that's going to pick up because what I'm confirming it's a double-digit contribution to nearly net income. And so yes, for the interim, what we're going to do is we're going to apply a 50% payout ratio on the 15th of October based upon the first half year net income. And so we're really adopting market practice in this respect.

There are no more questions registered at this time. I turn the conference back to you for any closing remarks.

All right. Thank you. Thank you very much, everybody. I'm really feeling for you in this very long day. I just wanted to tell you that we have our next meeting for you guys, which is the workshop that we're organizing for LCL, which is on the 26th of May, sorry. Thank you, Cecil. On the 26th of May, so we're going to be very happy to see you at that time. That's our next meeting. And of course, we have the general assembly just before that on the 20th of May in in Brittany, where we hope there's going to be a lot of sun. So looking forward to see you guys there and have a very relaxing weekend after this long week of earnings calls. Bye-bye, everyone.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.