Société Générale Société anonyme (GLE) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Société Générale conference call. I now hand over to Frédéric Oudéa, Chief Executive Officer. Sir, please go ahead.

Good morning to all of you. Thanks a lot for attending this call. As usual, with William, our CFO, I will make a brief presentation, and then we will enter into Q&A. So let's turn to Slide 4. I hope you have the document with you. Let me just highlight the few core items of this quarter, of course, which is the quarter of the lockdowns, and so we see the impact of the COVID crisis. What I'd like to highlight is the improvement in all activities since mid-May. You will see some charts, which, on a monthly basis, reflects these improvements. Overall, we see a drop of revenues with a contrast situation. I don't enter into the detail. William will go through that. A strong decrease of the cost of risk -- sorry, the cost, 9.6%, and we confirm that we are well on track to deliver our guidance for this year of EUR 16.5 billion. The cost of risk stands at EUR 1.279 billion, clearly much higher than last year, which was a low level. I'm sure we will comment a lot and answer your questions. As you can see, more than half is related to Stage 1 and Stage 2, which means forward-looking on one hand and also the impact of the downgrading of internal ratings. We've given a lot of information on that. I don't comment further. What is important, I think, that with more visibility for this year at the end of July, we say that we should converge towards the low end of our range, 70 basis points to 100 basis points, knowing that the cost of risk was 81 basis points for the first half. There is some -- maybe noise. Everybody, please go on mute, that would be good to avoid this noise. Let me just highlight as part of our results, we have 2 exceptional one-off noncash items. William will comment. It's around the goodwill and deferred tax asset related to the change of financial trajectory of our capital market activities. Last point, core Tier 1 at 12.5%. Same thing, we'll spend time on this. It's a very solid core Tier 1 ratio. All of the capital and liquidity ratios are strong. And same thing, we confirm that we will be at the high end of our range, 11.5% to 12%. Knowing that you know, we have already told you that we plan to have all our regulatory impacts, TRIM and divide this in the second half. We plan also for more capital on the operational risk, and nevertheless, would be at the high end of our range. Page 5, just one word on the product -- structured product activities. As you know, we suffered further in April and beginning of May of certain market dislocations, but we've seen since mid-May a progressive normalization. What we have done in the last 2 months is design a new range of products, balanced between the different products, which should, on one hand, reduce the risk if we were to face a similar situation like the one we experienced and reduced by half, maintain in terms of market share our franchise. Probably have an impact on revenues, given that the nature of the products are between EUR 200 million and EUR 250 million, that we will more than compensate with additional cost-reduction initiatives by EUR 450 million. Same thing, I'm sure we will comment further on this. And Page 6, before turning the floor to William, when they look at the bank and beyond the financial parameters, I think we -- first of all, we are there to accompany our clients. And it's very important because going forward, it's kind of capital on which we can build. It's very true with the French client with the guaranteed loans. We have allocated for EUR 19 billion of these guaranteed loans. We were there. It's true also for large corporates. When you look at our market share and league tables, we've maintained and sometimes gained market share. So I think it's positive for the future. For the retail clients, it's important we have signed a new partnership with Amundi, paving the way to an open architecture for our retail clients and providing the best of asset management products with a strong CSR component. And third, on the digital, further product -- progress, sorry, Boursorama actually made money in the second quarter with net marketing costs, more revenues on the execution on the market and gained 267,000 new clients in the first half. We made a nice acquisition of neobank that caters to entrepreneurs in France called Shine, and we've developed some nice things across the board. In ESG, which I want to be enshrined really in the strategy of all the business, we have a #1 position in midyear in terms of renewable energy financing, #1 in the world. We have further enhanced our policy to exit core financing, and we are developing our innovative offer with the ALD example. As well as beyond climate, I must say, ensuring that our company further develop diversity and fight against any kind of discrimination. And third pillar, efficiency, we'll come back to that. Of course, we know that we need to pursue the effort on the cost. I turn immediately the floor to William to give you more detail.

Hello. Good morning, everyone. So I suggest we go to Page 8 with a traditional overview on the group performance. To begin with, the net income for -- group net income adjusted for exceptional noncash items is positive this quarter at EUR 70 million, 7-0, with the published net income, including the 2 exceptional factors [indiscernible] is negative at minus EUR 1.264 billion. What are we talking about? As Frédéric mentioned, we have some impairment of goodwill for EUR 684 million, revolving around the entities that encompasses market activities and securities custody, as well as an impairment of deferred tax assets for EUR 650 million. I'd like to take the opportunity to mention that as you're aware, this is not unique to Société Générale and these type of impairments, particularly this quarter. But just to remind everyone that we have a fairly low goodwill in percentage terms relative to our shareholder equity. That's about 7% that positions us at the bottom of comparables in terms of percentage. And same with DTAs, we have approximately 9%, that will be slightly down, given what I've just said. And that's pretty much at the low end of the comparable. So this is not a big issue for us. It's obviously a noncash item. And this has absolutely no impact on capital, very marginal issue in terms of capital. So when you look now with a concurred view of businesses, you have pretty much the same pattern, which we're going to comment more in detail upon. First of all, you have a performance on revenues that have been very impacted by the COVID crisis until mid-May in French retail, with a fairly strong recovery ever since. At the same time, we increased quite significantly our provision for risk, essentially forward-looking as far as French retail is concerned. And we have a very strong discipline on cost, minus 8.5%. So that translates into a group net income for French retail at EUR 60 million, 6-0. You would say something very similar for international retail banking, where you have a decrease in revenues of about 9%, which is a combination of the confinements impact on production with the interest rate cuts in Czech Republic, Romania and Russia. We see a clear rebound in June and ever since mid-May for those who have been confined before, while loan production is much higher than Q2 '19 monthly average. There again, increasing cost of risk, particularly pertaining to forward-looking. And strict cost discipline is minus 3% to 2.9% (sic) [ minus 2.9% ], to be precise. Net income positive at EUR 83 million. Financial services show resilience. As usual, insurance is very resilient, minus 5%. Equipment Finance has even a gross operating income up in the quarter. ALD, ex some provisions, we've taken related to car sale results is effectively quite resilient as well. Cost decreased 5%, 4.4%. Net income stands at EUR 138 million. GBIS is on the loss, EUR 67 million. There, we have reduced the loss with a contrasted performance across businesses, very strong fit, as you have seen with others, and a very good financing advisory as well as private banking. Obviously, equity is on a recovery mode. With the months of June, I'll come back to that, which is back to a normal months that you would see in equities. So GBIS costs are also a silver lining here, minus 9.2%. On the Corporate Centre, nothing much to mention. Apart from the 2 exceptionals, the rest is pretty much back to normal. So the important message we wanted to pass -- one of the important messages we wanted to pass is on the next page, Page 9. It's on the cost side. You have to start with where we were a few years ago, 2018. The cost base was EUR 17.6 billion. We started to decrease in absolute term that cost base in 2019, minus 1.1%. And we committed to decrease it to 2020 to EUR 16.5 billion, EUR 16.5 billion by the end of 2020. That's obviously a very strong commitment we make. But we are confident that we can achieve that. You see that in H1 2020, we are close to 6%, down relative to H1 2019, close to 10%, down in Q2 relative to the same period of last year, despite the fact that we incur, like others, the increase of regulatory cost. Let me remind everyone that the charge relating to the single reduction fund is up 25% this year over last year. For the same quarter of Q2 2020, this is an additional EUR 50 million to the bill. We also have COVID-related cost, operational cost for the second quarter, it's EUR 53 million. So that give you -- put in context the commitments and the achievement. And obviously, we continue a strategic set to work on additional cost measures. We want to decrease the cost base beyond 2020 further down. Cost of risk, Page 10. Much have been said already. We have a very strong increase in cost of risk. This has annualized numbers as far as the basis points are concerned. 81 basis points cost of risk for the first half of 2020 relative to 25 for the whole year 2019. What is very important, and I'll come back to that on the next slide, is they have in mind that this is primarily revolving around forward-looking and ratings migration of 51% as a total. On Stage 3, we have some fines -- no new fines, just additional provisions of things we had. It is very important to look at the approach we take. We approach -- we take an approach where we go beyond 2020 as our scenarios are concerned. We have probably a slightly more conservative assumption than the average for '21, '22. And obviously, we smooth the impact over the period. And also, we probably have a weighting of the central scenario that is lower than some peers that translate into quite hefty additional provision for the forward-looking provisioning, which we think is a cautious approach given the uncertainties in the market. So in any way, if things go better, this is shareholders' money. Let me point you to the NPL ratio, which is very stable and fairly low and compared to peers on the European basis at 3.2%. That's combined with a 54% coverage rate, which is one of the highest that you would find in Europe. An important point is that we continue to be very active in the management of the NPL in the midst of the crisis, being able to offload some of these NPLs in good conditions to third parties. And also, let me take the opportunity to stress what we think is the quality of our assets. You find a lot of disclosures in our appendices. We have done some comparisons of parameters for own use for internal modeling, pertaining to corporates, for example, and find that if should you look at probability of defaults for corporates, we probably ranked amongst the more cautious peers in Europe. So the next page then, I would not comment too much. You have the detail, [ you get ] for questions, but let's give you a detail in terms of staging of our provisions. We know that it is something that you're particularly focused on. And as you can see, we have a strong increase in forward-looking provisioning in Q2 based on the implementation of the IFRS 9 scenarios relative to Q1. I have to stress that this is what you should find with everyone, an increase in Q2 versus Q1, given the implementation of scenarios. There may be a few outliers, but that's a normal pattern one should find in Q2 2020. Capital, that's another area where we feel confident about. We want to put the company capital as far as the balance sheet is concerned, this capital and liquidity on the very safe side. We've made the effort, and I hope you will find it useful as far as capital is concerned to differentiate what are the -- not only the organic impact versus the nonorganic impact. But this time around, to differentiate what are the permanent impact relative to the transitory impact. We are in a period where there are many things happening that are new such as provision of state-guaranteed loans and the treatment may differ from one country to another. You have obviously some -- the so-called quick-fix measures by the ECB. Some of them are permanent, some of them are temporary. So we want to make sure that it is very clear, what is temporary and will vanish before the end of the year versus what is permanent. And if you look at this, you'll find that effectively, our ratio is fairly stable, 12.6%, Q1 2020; 12.6% pro forma, the announced transaction of EasyFinance in Q2 2020. And should you adjust for the temporary effect, you'll find that actually the ratio is up, which is a very important performance in the context where, obviously, we didn't have much creation of capital through own funds, given what I've described before. Going ahead, as you know, we commit to be at the higher end of the range. We had stated earlier in the year, 12.5% to 12% -- 11.5% -- sorry, 11.5% to 12%. And we're quite confident on that one, given that the main headwinds we may have in H2 pertain to regulatory. Nothing new there. This is very consistent with what we had said. If you remember that we had said that TRIM would happen, and effectively, the ECB has recently said that it will happen. Other ratios are very strong and our leverage ratio is up. Actually, it's 4.4% if you take into account the announced quick-fix arrangement by ECB. Total capital, TLAC, well above requirements this time around. Balance sheet on the liquidity side is very strong. The LCR stands at 180% at the end of the quarter. The liquidity set buffer is EUR 227 billion. This is EUR 30 billion, 3-0, more than at the beginning at the end of last year. I don't comment traditionally Page 13, leave it for questions. It is a more detailed page. And then maybe I'll go quicker on the results per pillar to give the opportunity for questions. As Frédéric said, what we would like to focus on here is the trend really of what we see and how it has developed through time. When you look at French retail, I will focus on the upper end of the page, you see clearly and we've just given here some indicators because we would have to choose others, that we are back to normal in June 2020 for retail activities or flow activities. We could have said the same for mortgages, for example, in consumer lending as well. You see that on the corporate side, midsized corporates, which is a key area of focus for our French Retail Banking networks, we are actually more than the average in terms of production of 2019, with a high portion of state-guaranteed loan, but also a very dynamic increase in the medium-term corporate loan outspending, you see plus 17%. So that area is an area where we've been very focused both on small corporate and a large corporate. I will talk about that later because we think it's a core franchise for us. We have B2B house, and we want to maintain and increase our market share. You see that on the, for example, state-guaranteed loan, we have maintained market share, maybe a little above of what would be our natural market share. We continue to make progress on digital. You see Boursorama had a record quarter. It's profitable and profitable. When I say that, its published number is profitable. Adjusted number for variable marketing cost is also very satisfactory. We had given you an indication in a deep dive a few quarters ago. That was 14% for the quarter. The equivalent of the adjusted profitability is 25%. Brokerage accounts, obviously, brokerage worked very nicely this quarter. But you see in private banking, we have been able to increase net inflows in France. P&C penetration was helped. So in context, when you have confinement, that means that we have been focused on the key clients. And the results, which you will find on the next page, you'll find what we had mentioned, pressure on revenues given the pattern on production. Strong effort on the cost, increase of forward-looking provisioning and cost of risk. Maybe on the revenues, I would like to point you to net interest margin. This is down 6% in Q2 relative to the same period of last year, actually minus 2.4% in H1. In the context where you have a surge of deposits, less volumes on the credit side, I would say it's an okay performance, certainly relative to peers. Same with commission, you have to take the number, excluding the adjustment on commission-related taxes in Q2 2019, you'll find 7.6% down. Actually, the financial fees are increasing at plus 8%. And the net income is positive, although low positive at EUR 60 million, 6-0. So you'll find the same type of pattern for production on International Retail Banking across areas, Europe, as you know, in Czech Republic, Romania, and consumer lending we have in Western Europe, primarily. And there, you find revenues pretty much in line with French Retail Banking, minus 9%, minus 10%. But you see this pattern of strong improvement ever since May and particularly in June, back to the production level precrisis. Still, the loan and deposits are ascending, increasing. Russia is fairly stable. You see that despite very strong strict consignment in the country, revenues are only down 3%. And there again, we see this pattern of going back to normal in June. Strong sales in online sales. Russia was already best-in-class, but close to 40% of the sales are done directly online. Africa is a tale of different stories. The revenues look down at 10%. In fact, Sub-Saharan Africa is up at close to 5%, it's 4.6%. There, we have the impact of moratoria in Tunisia, which is very specific low where we have to forego the interest for EUR 31 million impact. So absent that impact, this is 2.7% decrease for the whole of Africa and Mediterranean Basin. So I would say it's fairly resilient. Financial services, an interest have already commented upon. Very resilient, down, of course, but it's very resilient across the board, insurance, leasing as well as ALD. ALD, more affected by some depreciation pertaining to used car sale for impairment of stocks, particularly in future margin. But that's, I would say, sort of equivalent of what you would find in terms of forward-looking cost of risk. So to me, that's a cautious approach to have. Nevertheless, as you can see, when you look at the total of the IBFS, you would find certainly a decrease in the net income, thanks to strong cost discipline. You'll find that overall, for H1, you have a net contribution for the group net income at EUR 591 million and a return on normative equity for the first half at 11.6%, close to 12%. Global markets and investor services is an area where there again have a constructed performance, but the same message, things do improve over time. So you see FIC. As you have seen with other peers, this is a record quarter at EUR 700 million, plus 38%. Maybe what is a bit unique as far as we are concerned is the fact that -- and I remember that we had some debate at some point, we are a company that has largely restructured its FIC activities last year. And so there was a question as to whether we would damage the franchise or keep the franchise going on. And as you can see, the franchise is intact and is performing well in the market. So fixed again at the requirements. Equities is improving. It's strong across the board in flow equities, very strong for listed products. Particularly, we are very happy with the EMC integration, which delivers well. And you see the improving pattern month-by-month as far as structured equity is concerned. The month of June is back to a normal quarter. Financing & Advisory, Asset and Wealth Management. This is an area where you are in positive territories as far as revenues are concerned, plus 2% for Financing & Advisory, plus 7% of private banking. Let me highlight that if you look specifically at structured finance, DCM, ECM, CIB and finance, you would find the growth is close to 5%. So that's a very satisfactory performance, given the fact that, as you know, we are, I think, pretty cautious on the risk side and also we constrain our businesses in terms of scarce resources. And finally, so what I've already mentioned, given the performance on the equity side, given the increase in cost of risk and despite the fact that we have a very strong discipline on cost, minus 9% again this quarter for global banking and investor solutions, you are in negative territory also at a much lower level than the previous quarter. Corporate Centre, that would be my last word, not much comments. The key issue elements are the 2 exceptional noncash items I commented already upon. The rest, I have to say, is very normal cost in check and nothing to mention, particularly elsewhere. I hand over to Frédéric for the conclusion.

Well, thank you very much, William. I will be very brief. We turn a first day with this first half, which, of course, as we've seen some impact of the crisis clearly. But at the same time, we keep a robust balance sheet. We can build going forward. So for us, short-term priority is to confirm the capacity to rebound in H2. We've given some clear guidance with this higher visibility. And of course, in the longer term, further built on client centricity. I think it's very clear that this industry will carry on changing. Client expectations are -- have changed in these crisis and will further change. So we have to further adapt our service offering. Second, CSR, as I said, which is going to grow in importance, in particular in Europe, but I don't think that it will be just in Europe. And of course, make further progress in efficiency and cost reduction with also technology helping, in particular, in that process. So we are now ready to answer your question. [Operator Instructions] And the floor is yours.

[Operator Instructions] Your first question comes from Delphine Lee from JPMorgan.

So my first question would be on capital. Just wanted to go back to your guidance of around just below -- or at 12% by year-end. Just wondering if you could give us more details around the headwinds that we're going to see in the second half. Because if I'm not wrong, you're already at 12.8% as your pro forma of the benefit from the state-guaranteed loans, which are going to reverse in Q3. So if you could just maybe give us how much you expect from ratings migration. Do we have more than the 8 basis points we've seen? And also the operational risk you mentioned that you haven't taken yet. My second question is on cost of risk. Your 70 basis points guidance, which I recall is around EUR 3.5 billion, implies only a very small increase in Stage 3 provisions in the second half. So if you could just give us maybe a little bit of color around why that is. And then also, do you expect provisions to remain elevated in 2021? Any color on what we should expect for next year?

Yes. Delphine, I will leave the floor first to William on your question on the capital and then to Diony Lebot on the cost of risk, the perspective of the 3, the quality of the portfolio, et cetera. So first of all, William.

Thank you, Delphine, for your questions. So we feel very confident with the guidance because effectively, we don't see many headwinds that are not known. First of all, the main headwinds you would see in H2, if we are correct, is related to regulatory. And in the order of magnitude, we had already said we had said around 50 for TRIM. We had said 10, maybe a bit north of 10 for operational risk as new competition. And the rest is pretty already there in terms of organic capital. Yes, we may see some further ratings migration. But this is like the cost of risk. You have seen a lot happening in Q1 and Q2. So don't expect much to happen in the rest of the year. We won't see the normalization of market RWA before maybe even 2021. Maybe we are a bit cautious there, but that will happen. So that's essentially what is behind our guidance. We'd rather be cautious on any guidance we make. But effectively, we are very confident about the upper end of the range.

Diony, what do you expect in H2, please?

Yes. So as we said, we are confident on our guidance, the low end of our guidance for 70 to 100 basis points, which would be rather EUR 3.7 billion, given the increase of exposures for the low end of the range. The reason why we are confident is that based on our scenario and all the parameters already integrated in our IFRS line provisions, we have already taken a significant part in our Stage 1, Stage 2 provisions, as you saw for this quarter is more than 50% of total provisions, EUR 654 million, of which EUR 490 million only for the forward-looking. So based on the accumulated amount of provisions for the first half, which is EUR 2 billion, 81 basis points. And based on our guidance, as you can see, we believe that this is the peak quarter, again, based on our scenario, which is a combination of scenarios, quite conservative, we believe, because the accumulated impact of these scenarios is a quite sharp decrease of GDP with a delayed impact, but still a significant impact in terms of bankruptcy. So in summary, we are quite confident on our guidance, given the conservative approach we took in building the Stage 1, Stage 2 provisions.

And for 2021, we have a lower cost of risk next year. We've not changed our guidance, still higher than in mid-cycles, clearly, but lower than 2020.

The next question comes from Jacques Gaulard from Kepler Cheuvreux.

Sorry to dig on the capital guidance because I think it's quite important. Indeed, 12.75% roughly would be everything all inclusive. You mentioned 50 basis points because of TRIM, 10 bps for operational risk. You're still left with something that looks to be higher than 12%. So the question is -- and since you just mentioned that you're not expecting any rating migration, does that mean you want to give yourself a leeway for, for example, the cost of realizing the cost savings of your next plan? And that leads me to my second question, which is, how can I appreciate the time difference you mentioned between the EUR 200 million, EUR 250 million revenue loss on your structured product activity and a corresponding EUR 450 million, I would say, cost-reduction program you have there.

Jacques-Henri, again, I will leave the floor maybe to William, and then to Séverin on the second part of the question. Please, William.

Jacques-Henri, thanks for your question. Before I go to the guidance per se, let me maybe clarify something that was obviously not clear enough on my side. I didn't say there would not -- or I did not intend to say that there would not be impact of rating migration going forward. Just saying that don't -- a large portion of what had to be done is already in the capital and maybe there will be some as time goes by. But in other words, effectively, you're right, on the organic side, the mixture of production, ratings migration, gradual normalization on the market risk side and redemption of outstanding means that probably, effectively, this is not a major impact that we expect relative to the first half. And effectively, we confirm the regulatory impact that we said should be a bit slightly higher on the operational risk. So in a nutshell, that means that we want to make sure that we achieve that target, and we don't want to give a target that would be too tight. That's the way I would summarize the approach.

Séverin?

Yes. Jacques-Henri, thank you for your question. Regarding the revenue, first, it's fair to say that we have already observed a reduction in terms of revenue generation because we have limited the production just to adjust the risk profile of our current exposure. So it's fair to say that the risk and the reduction of our risk profile [indiscernible] impact on the revenue earlier. In terms of costs, as we did last year, you saw that last year, we announced a cost-reduction plan and we delivered it finally completely now. So it is 18 months later on. So we will have this cost reduction more observed in 2022 and 2023. And we have also to have in mind that we have seen some remediation costs, which will protect us during this period of time. So the full year, it would be seen only in 2023. But it's fair to have in mind that the cost -- the risk profile and the risk appetite would have been decreased earlier also, which is the explanation of -- for next year, for example, on the revenue impact.

The next question comes from Jon Peace from Crédit Suisse.

So my first question is on capital. In the capital roll forward slides you had in the first quarter, you did illustrate the possibility of a catch-up dividend. And I just wondered how you're thinking about that. Is it still a possibility? Or would you rather run with a higher capital level given the uncertain environment? My second question relates to Slide 35, where you've given us your macro scenarios. And I just wondered how does that relate to the 70 to 100 basis points? Does your base case form the 70 basis points and the weighted average is the midpoint of 70 to 100? Or how do we think about that?

Jon, I will leave Diony answer your second question. On the dividend, let me say, we took notice of the recommendation of the FFM. The Board did not make any decision on that question. I think we will wait for your end. Who knows? Things might evolve. And certainly, we keep the same policy, which is to provision for 50% of our underlying net profit. So of course, not taking into account any exceptionals like the one we booked this quarter of potential, whatever, additional exceptional items. So let's wait. But there's no significance in the fact that we just confirm there's no difference of message, if you wish, in the confirmation of our guidance. Diony, could you answer that -- the second part of the question?

Yes. Our range is based on the scenarios base and prolonged but takes also into account the fact that for the first half, we have applied the multi-scenario approach. And so in our disclosure, the probability-weighted scenarios, which in applying the methodology relies on higher weighting of the adverse scenarios than we usually do. It's almost double compared to last year.

The next question comes from Tarik El Mejjad from Bank of America.

Just a couple of questions, please, and one clarification. First, on the clarification, I mean, the Q1, you said the strategic plan will be 2021 to '25, and now you seem to suggest that only the plan will go to '23. Just curious to know why the timing difference? And is there anything behind that? And then on the cost of risk, in your scenario, do you factor in the potential deterioration of your exposures, especially when the government guarantee scheme will start to unwind in the autumn and the reaction from some corporates not to keep some staff and so on. So just to know how you capture that in your updated guidance of the lower end of the range. And then lastly, on CIB. So just to know if there is any restructuring costs attached to the derisking that you've just announced? Would that be disclosed later on? And in terms of timing, so the EUR 200 million to EUR 250 million revenues loss, is that a loss that will come in 2022 or so? Or is it just revenues that you already lost that are not coming back, given where the level of revenues you are in equities?

Tarik, on the clarification, let me be very, very clear. We will project the financial perspective of the group as usual on the next 3 years and not go beyond 2023. At the same time, we might give for certain businesses further strategic direction. Maybe we'll see it's premature. I -- we will comment on that first half of next year. Some further perspective in terms of long-term transformation. So there's nothing changed. I mean, so really, the full set of figures for the group will be like usual for 3 years. Perhaps, Séverin, on the question of the provisioning. And then again, Diony, on the cost of risk.

Yes. Yes, sorry. On the revenue, I have to be clearer than I was probably. When we speak about EUR 200 million, EUR 250 million in terms of impact on the revenue, it's clearly a structural impact in a normalized environment in our global market activity. So you can take the figure we had before the shock of the COVID. And so it's actually taking less than 5% of the global market revenue we were speaking about. So in a structural environment -- if I may, a normalized environment, it's fair to say that during the period or the transition period before being at that target in terms of business and product mix, we will have lower production, of course, just not to reinforce the current product mix we don't want to have anymore. So it's something that you have to have in mind. In terms of cost, your question is premature, Tarik, sorry for that. So we will come back later on, on this on this first question.

Diony?

So indeed, we are taking into account the fact that when a moratoria will expire and despite the rebound, we are going to have materialization of the defaults. And our scenario, actually, the way it is taking into account in the forward looking and IFRS 9 parameters, actually, results in considering that all the government measures delay the bankruptcies' default versus fully emulating then. And so this is the reason why we have such an important component this quarter of Stage 1 and Stage 2 and forward-looking because we consider that all these measures, government guarantees, loan moratoria will not eliminate defaults, but delay them. So indeed, our guidance takes into account a materialization of the risks.

The next question comes from Giulia Aurora Miotto from Morgan Stanley.

A couple of questions from my side as well. So the first one is quite straightforward. On costs, I appreciate the clear commitment to EUR 16.5 billion for 2020. Can we expect lower cost in absolute amount in absolute euro billion also for 2021 and 2022? So that's my first question. And then I wanted to ask you about NIM margins. So if I look actually across divisions, you had loan growth, but NIM was down quite materially, and in particular in, for example, Czech Republic or in ALD. So can you guide us through how you expect the NIM to develop across the different products?

Giulia, I will let, when we talk about NIM, mainly Philippe Aymerich to answer on the French Retail and Philippe Heim on ALD and the international retail. On the cost, it's premature to comment on 2021, 2022. What we've said is that we have, again, this commitment to, beyond 2020, improve the efficiency of the group. Some costs, some savings this year, as we've said, which are related to travel, et cetera, might go up next year. We will go a little bit more in more normal function month, but some will be consolidated. And much beyond, we will jot down step-by-step other costs working structurally. And we, again -- well, capital markets is one example, but we will go beyond. So it's a bit premature to give you any figure. It's part of the budget process that we have just started. Perhaps the NIM, Philippe Aymerich first on the French Retail.

Yes. So I would say that the story, it's pretty much the same. But what we said during the previous quarter, I mean, the big impact is still on the net interest margin for deposits. You have seen that during this quarter, we have impact -- we have been impacted by a strong increase in deposits, especially on site deposits. And so of the increase, it's plus 19%. And most of these amounts, it's replaced at a very short term in this very low rate environment. So that's the main explanation of what happened on the net interest margin. Regarding net interest margin related to credit, I think it's well under control. Of course, the production has been reduced notably for individuals this quarter. But the new projection is still at a good margin. And so we don't expect any bad news on this aspect.

Philippe Heim on ALD and international retail, please?

Yes. So on ALD, what you need to understand is that revenues are driven mainly by the volumes we originate. The activity was pretty weak. And during this period of time during COVID, what we did was to extend the contract, but also counting some rebates on the contract themselves. The service margins remained pretty resilient during this period of time. And then on new car sales results, we have to take into consideration, let's say, 2 effects. First, we have to reset, let's say, our value, let's say, the way we reset the residual values and the gaps between the contractual as you -- as we conduct on the, let's say, quarterly basis. And then we have also take into consideration that due to the COVID and that market was virtually stopped, we have seen marginally the stock of the IPOs increasing, and we took a specific project on that. If I have to expand the, let's say, landscape to International Retail Banking, let's say, 2 things in short because I don't want it to be too long. In Eastern Europe, namely Czech Republic, Romania and Russia, those 2 countries were impacted by decreasing interest rates. And I remind you that the Czech Republic between January and June, interest rates were cut from 2.25 to 0.25, just an example, while the activity in Africa was still very good. And you have -- it was mentioned by William, revenues increased by roughly 5% in this part of the world.

The next question comes from Jean-Francois Neuez from Goldman Sachs.

I just wanted to ask firstly, on the CIB. So I remember a slide last year in May, the deep dive, where you showed that about half of your Global Markets business was flow business, which made less than 5% ROE. And then half the rest -- the other half of the business, which was financing and structured, which made 10% to 15%. And the strategy at the time was to increase the capital allocation towards structured and deemphasize a bit of flow to the extent it wouldn't impact the leading franchises and protect their returns. And obviously, this looks to have changed. I just wanted to understand what the new return you think you can achieve in Global Markets before you take into account the additional cost savings of EUR 450 million that are mentioned in the slides? Because I assume that the cost savings in this envelope, if you want, are probably going to have to be allocated to different businesses across CIB beyond the structured credit -- sorry, the structured products. And if you could then elaborate as to where they fall, which businesses you think can be impacted and what you can do differently in order also to preserve the revenues in the other areas where the cost savings will fall. And my second question was I thought that the cost management, as per William's recent call, was outstanding. And as with other banks also, we've seen strong cost decline this quarter. I just wanted to understand what you think -- what you learned, what you can -- what you did better and how much of this you think you can take forward. So I'm just trying to understand in staff count or salary reduction or real estate and other expense reduction.

Yes. Thank you, Jean-Francois. First, perhaps, Séverin?

Yes. Thank you, Jean-Francois, for your question. The fact that last year, we had before this crisis the view that the flow business, which has been 45% today of our Global Market activity will have clearly a long-run revenue return in the plan. The cost reduction plan will remain, and we are -- and we will still increase, if I may say, in the long run, will lead to have higher than 5% the revenue, return on equity on the long run in this activity. It's fair to say that it could be difficult, in my view, personal view, to have above 10% in the flow activity for the long run. So it's more -- it could be a bit below this figure on the long run, clearly. And for the rest, it's still valid. The question we have today that in such market condition environment. And we have seen that in the last 2 years that the structure on the investment solution activity has been really much, if I must say, under pressure due to market dislocation and market situation we have. So the way we are dealing with the question, as I said, is to reduce the risk profile and to reduce the sensitivity of this exposure to some market parameter. And so it will have a negative impact on the return structure early but we are compensating that on the long run by the cost reduction, additional cost reduction I mentioned. On the financing activity, it has been, if I may, during this period of time, the most profitable activity we had of above 15% also during this period of time. So having said that, beyond the current crisis situation where we are, we will have booked in a type of similar situation we had expected last year when we presented to you, was probably due to the low revenue, also slightly pressure on the return that -- which will be addressed in the long run.

And Jean-Francois, perhaps, on your second question, I think there are very different things. First, it is fair to say like probably most banks, as we've said, we've been able to save money on travel events, all external contractors, discretionary expenses in a pretty unique way of functioning. So as we've said, some of that will be consolidated by new way of working. I tend to think we will be able to save, for example, structurally on trips. And again, on the real estate, for example, you do not yet see the potential benefit of developing more structurally a different balance between working on premises and from home, and that's something we want to implement. So certainly more on that front step by step. But beyond, I think the improvement of efficiency will come regarding our group. First of all, on the end of the remediation because we have -- and we've maintained that to avoid any delay in the remediation process. We've kept exactly the same effort regarding certain remediation with the bulk of it, which should be completed end 2021. And of course, more structural changes, which can be related to automation, digital technology, offshoring, it's a trend. There are levers that we want to further develop. So it's a really mixed bag. And I think, again, the priority on cost will remain very strong for us in the coming 2 to 3 years.

Maybe, Frédéric, one can add what's the simplicity for European banks at lease, which is the charge to the SRF. So that's one thing that we commit upon in our trajectory. But you should be aware that for us, this is approximately EUR 470 million. And for the market activities, which you referred to earlier in your question to Séverin, this is EUR 240 million. If you strip out that EUR 240 million, you add back 2 percentage return to the activity, so to the 10% that Séverin was alluding to, that's from 2024 onwards.

The next question comes from Anke Reingen, RBC Capital Markets.

Actually I had a follow-up question on the Slide 5 on the structured product review. Just to understand it correctly, so the revenue loss as well as the cost savings, they compared to in 2019 rather than what we've seen so far. And should this then mean the EUR 450 million cost savings, if I compare to the EUR 6.8 billion you talked about before for 2020, can we take off...

Sorry?

Can you hear me?

Anke, yes. Sorry, we had just a technical problem. I'm sorry. Could you please repeat your question? We did not hear you. Sorry about this.

Okay. No problem. Thank you very much for pointing it out. But my question is basically going to Slide 5. I just want to make sure I understand correctly the revenue loss and the cost reduction. So should I basically take 2019 and assume the revenues going off the 2019 number and the same with the costs there of 2019 numbers, although, obviously, that would suggest the business was never profitable because obviously there's more -- I mean, the costs are higher than the revenues? And also the EUR 450 million, is that an additional step down from the EUR 6.8 billion cost for GBIS you talked for 2020? And then lastly, just on the capital. I understand it's early days on the dividend, and you said it's a 50% payout ratio. But obviously, a capital ratio would suggest you could pay more out than the 50% payout ratio would suggest. So would you consider going into an absolute level? Or is it just really too premature to comment?

Really, Anke, I will leave the floor to Séverin on the dividend. It's really too early. Let's wait the year-end what the system is seeing, et cetera, and ourselves, we will build a trajectory. So sorry about this, but I think we cannot comment more. William -- Séverin, sorry.

So if I come back to the previous part I made already, Anke. In fact, I mentioned the fact that I consider a normalized environment, saying that you have the market primaries, which are more stable and you have a normalized environment. We can consider that our global market revenue in the past, in a normalized environment, was around EUR 4.5 billion a year. So when I mentioned the EUR 200 million and EUR 250 million, it's obviously baked into, starting from this normalized environment first. And then when we had to say that the EUR 450 million is, if I'm saying in addition to what we've already done and what we said last year, clearly, to be below EUR 6.8 billion, globally speaking, for GBIS with a significant part with March. So you have to take those views that would be -- the cost base would be lower than what we said last year by this order of magnitude.

The next question comes from Stefan-Michael Stalmann from Autonomous Research.

I have 2, please. The first one regarding your agreement with Amundi, which you have just extended. Could you maybe talk a little bit about, first, what the direct financial impact could be? I understand that the retrocession rates have gone up somewhat. And the second point, maybe more broadly, you do have a bit more freedom under the new agreement in terms of nonexclusive distribution capabilities. What do you think you can do with better degrees of freedom under this agreement? And the second question, a bit of an accounting question, I'm afraid. But looking at your level 3 assets, your trading derivatives that are held under level 3 have doubled year-to-date. And you also had very big moves in your P&L from level 3 assets, a pretty big gain on level 3 derivatives, but also a pretty big loss on level 3 structured notes. So all of these amounts are quite big. And I was just wondering whether you have taken any particular provisions in your P&L to account for the rising uncertainty on how to value these positions and whether these valuation allowances are part of the problems that you have faced in equities in the first half. If you could add a bit more color on that would be very helpful.

Stefan, William will answer your questions. On the Amundi, I will leave the floor immediately to Philippe Aymerich. I just would like to insist that I must say, my perspective is that going forward, the longer-term trend should be towards more open architecture for retail clients. And at least for us, it was a good opportunity, on one hand, to consolidate strong partnerships with a strong asset management firm, but at the same time, broaden the range of products to be sold, trying to really provide the best in our view and the most competitive product offering, as I said, including with a strong ESG component. So it is really the purpose of that agreement. Philippe, can you elaborate on the potential financial consequences?

Yes. Honestly, we had worked on the financials of this new agreement. What we need to stress is that we do consider as a total cost of savings is really more strategic labor. And that's really at the heart of the strategy for the coming years with the individuals. So as you know, we have invested quite a lot. We have completely redesigned setup in this area, not only on-prem banking, but also on all the matter [indiscernible]. The renegotiation of this agreement is part of its overall strategy. As you know, recently, we had this quasi-exclusiveness agreement. What we want to do is really to enlarge our first branch so to be able to sell more products, more subsidies to these clients. So now it's possible. So what we are going to do is really to enlarge these motor products. We are going to sign agreements with other partners. And overall, yes, we do think that all these actions are going to help us to better satisfy your clients but also to improve our [indiscernible].

Thank you. William?

Listen, there are 2 components in your question. The one is pertaining to the balance sheet, and effectively, this is a balance sheet item. And the other one, maybe I misunderstood. But on the movement of the P&L, which I don't fully catch is with what we do. But anyway, I'll...

Could you maybe clarify, if you like? It's from the same note on level 1 to 3 disclosures where you also have basically a flow table that shows how much of the changes in balance sheet values went through the P&L. And there was actually a EUR 1.5 billion positive effect from level 3 assets on trading derivatives in the first half, but there was also a EUR 5.5 billion loss on level 3 structured notes going through P&L.

Okay. So [indiscernible] so that's the same stuff. First of all, you're right to point out that there are some changes, particularly on the asset side of the balance sheet pertaining to level 3. We've changed the methodology. And we know we think slightly more conservative, in a sense, that no case of severability of parameters, which is a key element, account for [indiscernible] 2 and others on a more granular level was more [indiscernible]. No longer at the cluster of parameters that we take, but we will take it on a more granular level. That means also an increase of level 3 assets on the asset side. On the liability side, we're not that comparable, I have to say, with peers and then everyone maybe have this approach, but we are clearly more conservative in speaking because we don't really split the accounting between the bond part and everybody's part. So that's different. I'd say the main thing that has changed for us is what is the assessment or the significance of an observable input? And what is the granularity that you have to take in the assessment of severability. The real, for me, P&L impact that we are talking about and then how much do we have to reserve for by day 1 here, and it is true that the day 1 reserve has increased in this quarter by about EUR 100 million. We have a very high level of reserve. I mean, some people may say that maybe putting those on the contract is conservative side. That are the 2 comments we have made, methodological refinements to put ourselves in the best, more conservative approach here. It is an impact of the [indiscernible] and we're making day 1 provisioning. The rest, I would say, you're perfectly right that it's part of the normal accounting for trading assets and ups and downs depending upon the valuation. And that's diagnostic specific, I would say. And overall, you'd see that the balance sheet anyway decreased in Q2 relative to the beginning of the year. So it's very much in check.

The next question comes from Flora Bocahut from Jefferies.

I have just one question really on revenues because at the end, you guided us on the cost, you guide on the provision. So if we trust your guidance there, revenues are likely to be the main swing factor in terms of expectations. And obviously, if I think about revenues, Q2 was clearly a special quarter on that front, with the effect of the lockdowns. So what I'd like to understand is how we should think about the outlook for revenues from here and especially in French retail and in Africa and retail. So in French retail, the question I wanted to ask is, how much of a positive contribution could we see from Q3 onwards from the TLTRO III, if you disclose the takeup maybe? And how quickly do you think we're going to see a rebound in the service fees, which you said in the slide pack decreased strongly in Q2. And in Africa, regarding the comment you made, William, on the Tunisian moratoria, was this a one-off? Or could that continue into Q3?

Flora, just a general comment before leaving the floor to Philippe Aymerich on certain specific items. Why don't we give any guidance on the revenue? There is more uncertainty. We have less control than on the cost, obviously. And even now, I would say, on the cost of risk, given the development that we see. Because if we were to go back to a lockdown in October, November, I don't think it's our central scenario. Actually, the government cannot afford to go back to what we experienced in March and April or May. But I think who knows. And so we did not want to give any guidance. As what we've said is the rebound that we saw from mid-May or June, depending on the geographies, it is across the board. People again are able now to consume banking services more normally. But again, we remain a little bit prudent. So our confidence we see an improvement, as we've mentioned, compared with Q2, clearly, but we did not give any guidance. Perhaps, Philippe, some more detail? William, also.

Yes. If I look item by item, yes, the first one is that we foresee a recovery on service fees. What we have said is that, yes, April and the beginning of May, we're at a very low level of activity, activity generated by the clients, less usage of credit or credit cards, less transfer, less ForEx, less payment incidence. And the second point was, of course, the commercial activity was very low, including less account of it. So what we have seen during the second part of the quarter is definitely a rebound, especially in June. And we do consider that unless bad news from a [ health ] standpoint, this rebound will continue. Regarding financial fees, actually, as we said, they are -- they were quite high with this quarter. And probably, they will come back to more normal level in H2. Regarding the net interest margin on deposits. It will continue to drag on the net interest margin. But probably, we see more usage of the cash by the corporate. And so maybe we'll have some relief on this side. And finally, regarding the net interest margin for credit. I guess, we'll have a positive contribution of the PGE, including some effect from the TLTRO. But still, these credits are less positive than the classical medium channels.

The next question comes from Guillaume Tiberghien from Exane.

I've got 2. The first one relates to the cost. So you've got EUR 16.5 billion commitment, but then you didn't seem very sure whether there will be or not a restructuring charge. So should we allow for a restructuring charge already this year or next year? And the second one is more about your long-term aspiration in the CIB division because with EUR 15 billion of capital allocated and maybe even more after TRIM, if you wanted to make just 10% ROE, that would probably require, if I put a normalized cost of risk, about EUR 2.2 billion to EUR 2.5 billion of pre-provision profit. The last time -- I mean, you've been below EUR 2 billion since 2017. And actually, at the moment, you're below EUR 1 billion on the run rate. And I do sympathize that equity derivative is not great, but fixed income is booming and corporate banking is actually very healthy. So actually, I don't find your revenue generation particularly weak at the moment. So my question is, is it reasonable to aspire to 10% ROE? If so, in what sort of time frame do you think? And if not, then should you just consider giving up on the whole business line?

Guillaume, on the cost, the EUR 16.5 billion do not include any provisioning. It's absolutely premature to comment on this.

Frédéric, it's not included and do not require because [indiscernible] for all initiatives. For the beyond, that's another story.

And again, on the CIB, William? Séverin, sorry.

Sorry, sorry. Thank you here for the prospective question. And it's not the time, if I may say, to present you the plan we will present you for the long period of time. But let me share with you some view we have already. The long run, the EUR 15 billion capital allocation to GBIS, it will be a question we present to you in our next strategic plan. But the way to allocate, if we take this EUR 15 billion as a given today, there is clearly a trend where we are committed to is to reduce the capital allocation to our global market activity and to increase the capital allocation to the business where we think there is real profitable opportunity. And today, I can mention 2 of those, which are very, very benefiting from the current situation, and we think it will continue for the next years. The first is what we call the global banking advisory side. And it's fair to say that during this quarter, we had to put in place some treasury lines for all our large corporates. We were not really profitable activities, what we call commercial banking. But if you had a look on the investment bank activity during this quarter, we think that for a long period of time, the opportunities in Europe for us and for banks in Europe during that front. So we can't allocate more capital in global banking and advisory with higher return than in average for global GBIS. And the second area where I think and we took market share over the last year and is continuing to do that is in our global -- in the transaction banking, which is a low capital-intense activity business. And we have demonstrated to very recently that we got capacity to take market share. So all in all, I don't -- will tell you now. I will not tell you now what will be the target in terms of return on the global banking. But I really think that they will not fail. I'm really convinced that there is a way to deliver higher return and then cost of equity in this activity. The franchise we have is a corporate franchise and the financial institution franchise. This business is serving a core franchise for Société Générale and it's also irrigating all the other business lines. I can mention with Africa for example. Today, we are making more than EUR 100 million in terms of pure GBIS activity with African clients, and there is some opportunity there to continue to do. So for me, it will be at the heart of the business, obviously, for a long period of time.

And if I may, Guillaume, just don't forget between 2017 and now after the single resolution of fund, which is going down to the net profit and probably -- and we will -- can check with the global figures, it's probably around EUR 300 million net on the GBIS division. So this, of course, we can consider that that's our point, it will go.

We can hope. We can hope.

Yes, yes, hopefully.

The next question comes from Kiri Vijayarajah from HSBC.

So firstly, just a clarification. So William, did you say you've increased the stock of revenue reserves you've taken against level 3 assets in the quarter? And if you could just quantify that, please. And presumably, that's all in Global Markets rather than in the Corporate Centre? And then second question is on French retail and this issue of deposits growing faster than loans not hurting your net interest margin. I just wondered, do you think that buildup of cash deposits on your balance sheet, is that continuing through into the second half, do you think? Or is it more just towards a blip because of the crisis? And so that sort of drag on net interest margin slowly unwinds as that sort of excess liquidity kind of grips feed -- grip feeds off your balance sheet as we head into the end of the year?

Kiri, William will answer the first element. I think on the deposit, it's a bit difficult to predict. It was a pretty -- I mean, you have households and corporates. Corporates, they certainly wanted to secure liquidity. They might reimburse some of the facilities in the field now when they started to feel more comfortable in the environment. And therefore, they should consume a little bit more. Now it's also fair to say when you look at France, people are a little bit worried about the future. And we tend to think that savings should remain relatively high, the selling rate. So hopefully, we will also advice to invest in other products. But that's the point also of the saving focus. Perhaps, Philippe Aymerich, just to comment...

Frédéric, I think regarding corporates, yes, our assumption is that we would use this cash at some point. But there will, of course, the need for the operations. So we are going to have also some uncertainties. And regarding individuals, I think they will continue to sell money, better challenge. As I just mentioned before, we need to make sure that we are able to redirect part of the savings in financial costs that will be good for the clients and also good for us.

William?

Kiri, sorry if I was not clear. Again, level 3 is not a P&L item, just not P&L item. It's a balance sheet. What I said is that in the way we classify trading assets or banking assets, we narrow them according to their own characteristics. And to the extent of unobservable parameters, we would classify them in level 3 or level 1 is just [ unobservable ] parameters as set in the features. So what I said is we become more conservative in as much we decided to look the parameter's [ unobservability ] for the very granularity basis on a 5-year parameter basis. So that basically means we have translated some assets, also liabilities from level 2 to level 3. That's why it has a difference. Now in fact, [indiscernible] and P&L, the way you have to look at it. Again, the foundation is right now the reserving of future revenues or future margin generated through those assets. So day 1 reserve, which I refer to. In fact, this quarter, it just cost us a bit through that reserve in terms of P&L, the fact that we have classified more assets on the street. Again, I want to be very clear, and sorry if I was not clear enough. This is a balance sheet item.

The next question comes from Azzurra Guelfi from Citi.

One is on the business portfolio, you clearly made a huge effort last year reviewing your businesses. But post the crisis, do you think you can expand or divest across and review other divisions, not just the CEB. And if you can give us some color, if possible. The second one is on Boursorama. You showed significant growth year-on-year there. Can you give us some color on like the -- where are you taking the clients? How active are these clients? Ideally, some indication on the profitability of clients comparing year-on-year. And if -- without the record brokerage activities that has been shown, would we still have a positive contribution to the group in terms of net income?

Yes. Azzurra, I will let Philippe Aymerich answer on your question on Boursorama. On the refocusing, I think we are done with the [indiscernible] financial services, and we have -- this also can be equipment finance business. So we are done there fundamentally, but we think we will effectively complete our refocusing program in the coming months, as soon as things are normalizing. Philippe?

Yes. Thank you for the question. It was a very interesting quarter for Boursorama. And I think that really all the metrics are pretty well aligned. As we said, the acquisition of client, yes, is slightly down compared to the second quarter of 2019. It's still quite big [ roles ]. We have acquired 125 clients during the quarter. And overall, during the first semester, we are [indiscernible] the first semester of 2019. So today, Boursorama has approximately 2.4 million clients, which is an increase of 24% compared to last year. And what is really interesting is to mention also that at the same time, we have a plus 2% regarding the equities, plus 23% regarding mortgages. Regarding the additional cost is actually down. And all the costs are still very well monitored. In addition to that, that's true that we had a kind of boost on the revenues due to the stock market orders times 4 compared to last year. And also to mention an interesting thing is that we have opened a lot of account for market orders in [indiscernible] compared to last year. So again, a kind of boost during this quarter. And more complementary, this quarter demonstrates that the business model of Boursorama works, and we still to consider that it's very important to continue to be discussed on the [indiscernible].

Your next question comes from Jean Sassus from ODDO BHF.

Two questions, if I may. The first one is very basically regarding the TLTRO. What kind of impact should we expect in H2? Is it significant? Is it something which could support really the net interest income? Second question regarding the goodwill impairment and [ CTA ], I think, you charged in Q2. Could you share with us the assumptions in terms of future profitability you used as an input for those impairments?

Jean, I will let William answer your 2 questions.

Yes. Jean, the second part of the question is the easiest one. Obviously, we do not share our business plans because we don't have guidance beyond 2020. What we are talking here is our business plan. But methodologically, what you have to look at is the fact that you take a 3-year horizon and then you extrapolate. So the 3-year horizon again is not something that we detail. And then you also have to take into account some weighting the different scenarios. That's a judgment call [indiscernible] impairment of [indiscernible]. On TLTRO, I'll start with the balance sheet. Again, we have so far drawn for the amount for about 30 -- EUR 46 billion to EUR 47 billion of TLTRO. If I combine the Société Générale [indiscernible], we have capacity, which is in excess of EUR 60 billion. We have not gone all capacities we have. Clearly, it has some impracticality [indiscernible]. The weighted average [ pros ] you can think of taking a different period of time, at least through June 2021, it's about minus 67. Now you have to look at it in a very [indiscernible] way when we make a new acquisition, it is really a positive for us. But it also helps finance assets such as the stake relating to those, which grew as a substitute, sometimes to production we may not otherwise and profitable production means usually good projects as well.

The next question comes from Lorraine Quoirez from UBS.

Just a quick follow-up. Do you exclude booking new restructuring costs by year-end? Sorry, it's not entirely clear to me. And I was wondering whether you could give us the date when you intend to unveil your new strategic initiative for the next coming 3, 4 years?

Lorraine, we plan to comment on the new plan in first half of 2021. We are, again, as I've said, working on this, but in terms of communication to the market. As I said, it's premature to comment on any restructuring cost. Can I say even if we were to do that, it would not be included in the calculation of our dividend policy. We always calculate an underlying net profit. It's again premature. So I can't say more than that on this topic.

The next question comes from Omar Fall from Barclays.

I'm very sorry to come back to structured products. I didn't hear Séverin's answer to some of the questions as the line is a bit bad. So just -- I just wanted to clarify the EUR 450 million of savings, it's not just the costs associated to all the costs. And it's a broader target for more cost savings, even from businesses not directly affected by this derisking. So where are these costs going to come from in terms of their nature? Because you've already done so much on the expense base since CIB. I mean, you took out EUR 500 million as recently as the last year. So how can we be comfortable this doesn't have even more of an impact on revenues in other businesses beyond the EUR 200 million to EUR 250 million revenue losses you've highlighted? And then is there an opportunity to sell some of the impacted portfolios to competitors to accelerate things? Some of your peers have done this in the past. And then if you could give us what the risk-weighted assets associated with the perimeter being looked at, that would be helpful. And then the second question is just on loans and moratorium. Could you just give us a bit more detail on these programs? I know this kind of spread out a bit across the presentations, but how they're performing at the end of that grace period. And also whether you expect these balances to reduce meaningfully from here, that would be helpful.

Omar, I will first leave the floor to Séverin.

Thank you, and thank you, Omar. Taking the last point you made, we will consider any opportunity, any feasibility to derisk the portfolio we don't want to keep. So if there is possibility to sell, as you mentioned, yes, we will consider it. The [indiscernible] portfolio are not easy to sell, as you know, because these are not so many counterparts in a position to buy it. But if there were some interest, we will look at that. Regarding the risk-weighted assets, there will be a slight positive impact on the risk-weighted assets of this new adjustment of our product portfolio. It's a bit -- in this business, there are a lot of netting impact when you are starting one effect, but you are increasing another part. So you don't have to expect a significant impact on the risk-weighted assets due to this product adjustment. There will be slight negative -- positive one, reduced one. And coming back to your question on cost. It's fair to say that we made a significant part of our cost reduction last year, and we consider that we're going to -- we can go beyond without impacting the revenue beyond the EUR 250 million we mentioned during this call. And why? The first thing we did last year, as you know, in the Global Market activity was what I call the Agile @ Scale initiative, putting, for example, together, our IT and operation by business lines. Now we can consider that we have to go further, including the, what we call, central function and the control function in this front-to-back view, which we have not done yet. So there is some, if I may, additional capability in terms of efficiency. If we have the pure front-to-back view, not from the front office, until the accounting part, if I may say, we didn't completely address yet. Second point. Very important, the risk profile of this portfolio will be lower. So we have also to adjust, and the product mix will be lower. So we have also to take into account the fact that we could sort of, if I may, simplification in our process with a lower risk profile on the business. Third, on IT. On IT, we are still very [indiscernible], in my view, and we have already -- and we can go further in terms of IT cost efficiency. And we will have, clearly, in that area some cloud initiative, which are further than what we go today -- we have done today. We could also have further offering capability, what we have already done today. So all that means, in my view, give me my comfort in terms of capability we have to go further in our cost reduction without impacting the EUR 250 million on the revenue.

Thank you. And on the moratorium, I must say, and I speak under the control of 2 Philippe. I'm not sure actually that we have seen any and of the moratorium that have just been put in place for overall 6 months, so I guess, not for most of the countries. But briefly, Philippe Aymerich and Philippe Heim.

Well, yes, we see in France, there are 2 aspects. The first one, corporate and provisional as true as it has been automatic for many clients. So it has 6 months moratorium. And as disclosed in the financial statements, [indiscernible] is making approximately to EUR 20 billion of outstandings under the moratorium. And regarding individuals, actually, the number are quite low. It was not automatic at all. It was really specific decisions client by client. And of course, I remind you that, yes, the [indiscernible] is postponed but the interests are all due.

Thank you. Philippe Heim?

Yes. So on IBFS side, we said that we have a very timeless landscape. So we have more going on from 3 to 6 or 9 months. Just to give you an example, in Czech Republic, [indiscernible] retail semi-incorporates between 3 to 6 months. In Romania, 9 months. In Russia, it's been [indiscernible] to individuals having a 30% decrease in [indiscernible] and allowing a 6-month straight moratorium. We have also contemplated such a system at [ art ] gallery in Africa. And as indicated already by William, there is only one situation in Tunisia, where they've been, let's say, [ 4 ] business was running an interest and in fact has started [indiscernible].

We don't have any more question.

Okay. Well, thank you very much for attending the call, and have a very nice afternoon. Thank you, and a nice good day. Thank you very much. Bye-bye.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.