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

I am Giulia Miotto. I am responsible for French and Benelux banks coverage, alongside fintech, of course. And I am joined today virtually by Frederic Oudea. Frederic, good afternoon.

Good afternoon, Giulia.

Thank you for being with us. So of course, Frederic, you can imagine, I have a lot of questions, mostly on Russia. But before we go into that, I want to leave you the floor for some introductory remarks.

Yes. Good afternoon to each and every one of you. First of all, all my apologies for not being able to be with you today. I would have loved to be back in London. But unfortunately, I contracted COVID a few days ago. I'm fine. But obviously, I have to stay at home and avoid any contact. So we will enter into a minute into the Q&A, and of course, in particular, regarding the dramatic situation in Ukraine and the conflict with Russia. I will answer these questions in a minute. I just would like perhaps to say a few words and to put things, of course, in also perspective for us as a group. Clearly, we are monitoring very closely the situation, and we had immediate priorities, first, secure our staff in Ukraine. We have a small activity in Ukraine with our fleet management business, something like 60 people that, of course, we wanted to help and support. So far so good, but we keep a close monitoring of the situation. We also more generally wanted to accompany our clients in these difficult circumstances. The second priority, and it remains, of course, a priority is, of course, to implement everywhere, including in Russia, the international sanctions. As you know, they change by the day, and it's very important for us to be very disciplined. We are strictly enforcing all these sanctions. And third priority, of course, to manage in a very prudent way, our activities in Russia, reduce the risk, all the risks and, of course, preserve the capacity of our subsidiary to function independently on a stand-alone basis. But I just wanted to say beyond, again, answering your questions on this situation is beyond the management of the crisis, we keep the focus in 2022 on our major strategic projects and road map. You will remember that we had a very successful year in 2021 with very strong results across the board with the benefit of a strong credit portfolio, good capital ratios. And we've launched a certain number of very important strategic projects. 2022 is a critical year for the execution of these projects, and I would like just to highlight that we have made further progress in the very recent weeks regarding these projects. For example, if I take the French networks, the merger of our 2 networks, we've just signed with all our trade unions, it was unanimous, a second agreement regarding human Resource Management and voluntary departure. As you know, this year is a critical one to prepare for the IT migration, which will take place in the first half of next year and of course to prepare also for the implementation of the synergies. These synergies will happen, as you remember, for 80% of them in 2024 and then 2025 for the remaining part. But we will be able to secure them also in the first half of next year, and that's why it's also very important to work efficiently currently with our trade unions. It is the same regarding Boursorama. Boursorama is a strategic asset for us. And as you know, Boursorama has concurred 3.3 million clients at the end of 2021, is 1 year ahead of its growing development plan. And we are also -- we should be able to finalize the discussions with ING in the coming weeks which would be a way to further accelerate our growth in France. Regarding also a very important project, ALD/LeasePlan, the combination of these 2 companies in the mobility sector, let me say, same thing, we should be able to sign in the coming weeks the framework agreement. And as you know, we plan to close the transaction at year-end, latest beginning of next year and have all the regulatory agreement. And then eventually, of course, we pursue the road map of our Global Banking and Investment Solutions (sic) [ Global Banking and Investor Solutions ] business. We had a very successful 2021 year. We want to pursue, of course, the road map that we presented in May 2021. So that's what I wanted to say in a nutshell. I'm sure I will be able to answer your questions on these matters. Let's now turn to you, Giulia, for your questions.

Yes. Thank you. Thank you very much, Frederic, for this broad introduction that sets the scene very well. So let me then go back to the topic of the day. So Russia, you have given a very useful disclosure and as SocGen mentioned that the worst-case scenario. So let's start with the local exposure first, right? So the worst-case scenario there is 50 basis points. So I just want to follow up to that. So is that only in the case of exportation? Or would you consider walking away? Or would you consider recapitalizing maybe these subsidiaries? So is 50 basis points really the worst-case scenario? Or we could be looking at different scenarios as well? So that's my first question.

Well, listen, it's really for me the worst-case scenario, and it's the kind of also scenario we will have in a walk-away scenario. Let me -- and it's probably, if I may, a relatively conservative calculation. We might be able to reduce this impact again, but it's, I think, better to have a conservative assumption at this stage. So it takes into account all the different elements behind such a scenario. In terms of capital and liquidity, let me highlight that this Rosbank has been organized and managed and following the premier event on a stand-alone basis. It has strong capital ratios, strong liquidity and self-funding with a loan-to-deposit ratio which is 80%, and that's why I was highlighting our willingness to maintain and preserve this capacity, and we certainly do not want to increase our exposure to the Russian risk in any case.

Perfect. And then if we maybe move to the offshore exposure, EUR 3.2 billion, right? So investors ask us, sell-side analysts, to run numbers for the worst-case scenario being a 100% write-off of this exposure. Is that assumption -- would you say the haircut should actually be lower? Or how do you think investors should think about that exposure?

Now, first, perhaps, let me come back a little bit on the local exposure, just to highlight it. Of course, the bulk of our Russian exposure, it's local. It's 85% denominated in rubles. It's 41% retail, mortgage, consumer credit, very significantly secured. And the rest is also with salaries of large corporates because you know there is -- it's a system which exists in Russia. So we feel pretty confident with this portfolio. Then we have 31% of our exposure which is with large companies, Russian companies, Tier 1 companies. And then the rest is with sovereign and very limited financial institutions exposure. So again, the idea is to decrease this exposure and monitor it very closely. Our offshore exposure is relatively limited, and I will try to elaborate on this and to show you that according to us, the risk is much lower. First, we have an exposure at default of EUR 3.2 billion offshore, out of which EUR 2.6 billion on the balance sheet. And the EUR 3.2 billion is on and off balance sheet. It is mainly operations, which are conducted by our global financing and banking business with top-tier counterparts in this sector of activity. Companies incorporated outside Russia represent 45% of this exposure, and Russian incorporated companies represent 55% of the total. These transactions are fundamentally structured and strongly secured. So let me elaborate. 26% of the total exposure is covered either by export credit agencies, guarantee or insurance. So that means roughly EUR 800 million. We also benefit from additional offshore pledged collection accounts to mitigate the risk, especially on pre-export finance, prepaid and prepayment exposure, such as pledge of commodities, ship mortgage, property mortgage and non-Russian corporate guarantees. And in addition, 20% are related to trade commodity finance with short-term maturities and with Tier 1 counterparts mainly based in Europe, and these transactions are fundamentally secured with physical and tangible assets. So when we look at the portfolio line by line, and we try, if you wish to estimate the amount of exposure at risk, we consider it is actually below EUR 1 billion. That's our best estimate to date. Out of this EUR 3.2 billion total exposure, our view is that, really, the exposure at risk is below EUR 1 billion. And can I say beyond this, of course, we did not experience at this stage any default on this portfolio.

That's very useful. And can I just -- a quick follow-up on this one. So you mentioned export credit agencies, guarantees and insurance. We understand that there might be some war exclusions there. In your understanding that these still hold on your portfolio?

Yes. We don't think there's an issue from a legal perspective there.

Excellent. And then if I can ask always a question related to Russia but more operational maybe. So we understand that Rosbank still has access to CBR liquidity. So is there any impact coming from the sanctions on the CBR-Rosbank relationship? And if we compare this to the 2014 playbook, would Rosbank still have access to any Central Bank support measures in Russia, should the need arise, in the same way that domestic banks do?

Now, first, let me again highlight that, actually, today, Rosbank has an excess of liquidity, an excess of funding, and so we don't need any funding from the CBR. And again, the whole strategy to develop also retail was precisely to maintain a diversity of origin of our deposits. And I think it's something, for us, which remains very important. If we had to access the CBR liquidity, I don't see why, as a systemic bank, we would not have access. But again, for the time being, it's certainly not needed. And the idea is, of course, as I said, to preserve this capacity to have a diversity pool of deposits. Let me say, Rosbank maintain professional contacts with the CBR as any local Russian bank. So that's where we stay. And I would say, from an operational point of view, things are functioning. And for example, Rosbank still deposit also some excess dollars to Société Générale Person Morale, the parent company.

Very clear. If I can ask you now about derivatives. So another European bank has disclosed quite a sizable derivative exposure. And then other investment banks are talking about potential counterparty risk with Russian banks or known Russian entities but linked to Russia. So first of all, is it -- is this all included in your EAD disclosure? And is there any other comment you would like to make on the derivatives side of things related to Russia?

Yes, of course. Perhaps let me just highlight that if we had considered, generally speaking, the market risk as potentially significant, we would obviously have referred to it in our press release. And what we mentioned in a footnote that the counterparty risk on market operations was limited. But let's say -- let me give you a little bit more flavor on our derivative activities and market risk with Russian counterparts, generally speaking. It was relatively limited and before the crisis. What we did since the beginning of the crisis is to work hard to unwind offshore exposure with Russian counterparts. And I think we were successful in doing that. We were able to unwind most of them with really very limited impact. And today, I would say the cross-border exposure with Russian banks, as well as with corporates, is absolutely marginal. Regarding our local market exposure, it's also limited and manageable, and it's mainly with corporates. So we don't see a significant issue with any market exposure related to Russian counterparts today. And we will pursue in the coming days, this work of unwinding exposures.

If I can now move on to GBIS. So one could argue that the abrupt moves that we have seen in some of the markets is kind of the first live test, following the turnaround and the restructuring that you completed in that division post-COVID. So how resilient has this division been year-to-date? Is there anything on the equity derivatives side that we should be aware of? Yes. And then I have a follow-up question, but let's start on this.

Well, listen, it's not our policy to provide any statement in an [ interact or server ]. And of course, if we had anything significant, we would have communicated. What I can say is that, to date, market operations have been performing rather well across the board since the beginning of the year, and we had no impact of this crisis. I think, again, you remember that we had commented during our fourth quarter results that we have completed the job of derisking the structured product and equity derivative investment solution product with a dramatic reduction of the stress test divided by more than 3. And generally speaking, we are happy with the balance of our activity. So as I've said, so far, so good on the market activities.

Excellent. And beyond equities and structured products, if I look at Dealogic data, it's down quite materially year-to-date, and we also heard from American banks, trading down 10%, for example, or more year-on-year. Any comments there?

As I've said, generally speaking, market operations have been performing rather well. Of course, on the primary side since 3 weeks, there is less activity. It's normal, both on the equity and on the bond side. Let's see how things are developing. But really at this stage, I have nothing else to add.

Okay. Perfect. If I can now then move on to broader implication from this Russia-Ukraine conflict. So corporates risk, right, a lot of corporates will be disrupted in one way or another due to the supply chain links. So -- and SocGen, by your guidance for 2022 for cost of risk, is below 30 basis points. First of all, maybe can you remind us of how many COVID overlays do you still have? And do you think this guidance below 30 basis points could still hold, despite of all that's happening at the moment?

Listen, first of all, I think it's a little bit too soon to fully anticipate the consequences of this crisis, just because we don't know yet exactly the outcome of this crisis. And I think there's still a very high level of uncertainty, let's face it. Second, as you said, what we might still -- what we might see is, first, supply chain issues, not just actually because of the crisis. We see a little bit of that COVID issue also in China. And of course, beyond the -- but it's a longer-term effect, I would guess, this issue on the inflation and pressure on margins. We have in terms of economic outlook, at this stage, factored an impact overall, which might be of around 0.5% of GDP compared with previous assumptions, but we keep positive growth figures for advanced economy. So let's wait a little bit. It's a little bit premature, but these are the kind of consequences we have in mind. In terms of provisions, let me remind you that we kept the bulk of the provisioning that we had booked in 2020, and we have EUR 3.4 billion of statistical provisioning, S1, S2, and we wrote back very few in 2021. So that's something -- it's a kind of buffer potentially. And I can just say what we said during our press release, the minus 30 basis point was including, in practice, some potential impact of the Russian crisis. We will update that figure, knowing a little bit more about the development of this crisis with the first quarter results.

And maybe my last question related to the recent press release. So SocGen committed to paying the dividend, but there was no mention of the EUR 915 million share buyback. So why was there no mention of the buyback? How is the conversation with the ECB going with respect to that?

First, again, let me say, and we've been including this kind of stress scenario that we had described, what we've said is there's no change in our distribution policy. There's no change in the dividend, and the dividend will be paid. Regarding the share buyback, first, as you know, there is an approval, which is requested with the ECB, and we have on our side to get some authorizations from our AGM. We have effectively to wait for end of May, beginning of June to be able to proceed, and so we will get the authorization in due course. There is nothing changed regarding this, and the provisioning for distribution, as you know, has been deducted from our core Tier 1 ratio. And if you bear with me, I will open to my kid the door. Unfortunately, I have this issue being at home, but just 10 seconds, I open the door for him.

No problem. We will be here waiting.

I'm back. Sorry about this.

No problem.

I'm sure that some of you have experienced the similar constraints.

Yes, yes. So we were discussing the buyback.

Yes. As I said, for me, nothing has changed. But it's again, a little bit -- it's postponed because, by definition, we have in mind to launch it end of May, beginning of June because we need some new authorizations of our shareholder meeting.

Okay. Perfect. Very good. So if I can now move maybe to your strategic initiatives. You mentioned at the very beginning of our discussion Boursorama and the fact that they are ahead of schedule. And potentially with ING, they could get their -- they could get to their higher than 4 million customers target much earlier. So can they also get to profitability 1 year earlier? That's the first part of the question. And then secondly, how do you see Boursorama competing versus new banks but also versus your established branch network? So is there any cannibalization coming from it?

Well, first, we will update you on the financial road map of Boursorama. Of course, it's good to be 1 year ahead. And as we said, we will be above 4 million at the end of this year. With a very strong dynamic of Boursorama at the end of 2021, you will remember that we [ concurred ] just in December more than 100,000 clients. So the success is increasing. Strategically, first, let me highlight, I think it's very different from most of the neobanks. The neobanks are concentrating usually on 1 or 2 services, mainly payments. Here, it's a fully-fledged bank with a balance sheet now of close to EUR 40 billion. It's a EUR 15,000 deposit average per client. It's a young client base. For me, it's the bank -- it's a bank of the future, let's face it. It's, of course, just dealing with individual clients, not corporates, not self-employed professionals, but it's a very young, I would say, more mass-affluent client base, people who are independent from a digital point of view. It's the cheapest bank in France. So the positioning, of course, is to make the client benefit from a very efficient setup. Of course, a little bit more than 800 people are managing 3.3 million clients. And we just had to add 8 people to manage an additional 800,000 clients, so there is a scale capacity there. And I think it really functions very well with a Net Promoter Score which is very high; an app, which is rated at the top. So I really believe in the quality of these assets. So it concurs clients from all banks coming from Société Générale and Credit du Nord but according to our market share and many clients come to this bank from other networks. I have accepted the idea of cannibalization more than 8 years ago because I felt if we were not doing that ourselves, someone else could do it. So I was -- I prefer to do it to ourselves. And I think we are going to offer in 2025 a unique offering to the French client base, a new bank, organized in a different way than Société Générale, very -- I think very efficient with the same presence but with the benefit of synergies on the branches, on the staff, on the head office, on the IT, just one IT system, which will deal with corporates, which will deal with certain professionals and still with clients will want to access someone in a branch. And on the savings side, still for some time, at least, let's face it, people will want and be happy to pay for that. And we have had a very good dynamic of the private banking business. And then Boursorama, which is an alternative offering for people, who might never have an experience in a branch, will be very happy with the service, which is a full-fledged bank, cheap, efficient, but with effectively not an access to someone beyond phone, if needed, but not in a branch. I think it's really a winning model, and that's why we are so motivated to implement the 2 according to our time frame.

Perfect. And so if I stay on French retail then, but I talk about the merger, how -- so how is the IT integration or the preparation for the IT integration progressing? And are there already some initiatives that you can see that are benefiting from the merger that you have launched?

As you know, it's a progress. It's a step-by-step progress. What is very positive is, as I've said, that all the trade unions have signed the social agreement. So I think there's an understanding of what is at stake. As you know, we have built this new business model with the teams on the ground. We pursue the capacity for the 2 teams to interact. We mix the people. So way to prepare, if I may, the legal merger, which will take place beginning of next year. And as I've said, this year is intense in terms of IT preparation. But here, we enter into technicalities. There is nothing spectacular to report. It's about preparing the data migration. It's about the testing, et cetera. There's nothing behind schedule so far. It's intense in terms of delivery to us to execute, but really, things are on track.

Perfect. And if I move to the other big project of yours, so ALD/LeasePlan, namely, it's clearly early days, but maybe could you share with us some feedback that you have received from ALD's customers and how you are assessing the risk to revenues coming from customers having to diversify away or potential antitrust issues?

Listen, first of all, very positive feedback from customers, both from ALD and LeasePlan, and also from the staff perspective on both sides. We are in the process of the consultation with trade unions. I think this project is, in itself, very motivating for both parties actually, to create a world leader in mobility. And this sector is so, if you wish, part of our daily experience, the daily lives of people, the change of usage of cars. Every day, you speak about new way of using a car, new cars, et cetera. So I think there's really the feeling that we are participating, and everybody will participate to a formidable project. And regarding revenue attrition, we are -- as we've said, nothing has changed compared with what we said. We said that the antitrust impact, in our view, will be manageable given the overall size of the operation, the competitive landscape, and we are going to address that. So nothing has changed compared with our initial announcement, and things are progressing. And as I've said, we should be able to sign in the coming weeks the framework agreement, which will be an additional milestone in the project. So same thing. Things are moving ahead on time, in line with our objectives.

Perfect. If I can ask you a question on ESG. So how do you assess SocGen's exposure to climate risk? Also, you've got some exposure to Africa, for example, which might be particularly impacted. And what are you proactively doing to steer the bank towards a more sustainable business model?

First of all, let me say, I think I was proud to have Société Générale being acknowledged, Sustainable Bank of the Year by IFR, which I think it might be the most prestigious award of the industry. So that shows that we have really -- we are moving forward in terms of putting ESG, enshrining the strategy of all our activities. First ESG is, of course, climate, but it's not just climate. I will come back to that. On climate, it's, of course, an industrial revolution. It's to accompany the economies. And clearly, you mentioned Africa. We have a starting point which is different. Africa will not have access to nuclear. Africa will probably, for some time, need fossil energy. We'll, of course, switch to renewable, and you see good progress in countries like Morocco, for example, but I think it's also part of ESG to think that if we want to have a local development in Africa. And needless to say that, if we don't, the stability of Europe will be at stake. And of course, the security of the population because Africa is the only continent with a positive demography, and you will have 2 billion inhabitants in Africa in 2050. In Nigeria, you will have enough -- you will have just in Nigeria more people than in the whole Europe. So I think that if you take that dimension, the development of Africa is key. And I think there's also a role for us to play to accompany these economies, whether it's in the energy or beyond, in the financing and infrastructure, to ensure the economy. So if you wish on climate, we accompany all our clients in our different economies to pivot. And as you know, we are one of the champions of renewable, much ahead of our objectives in terms of financing of renewables, both from balance sheet to bonds, but also in terms of, generally speaking, reflecting on their business model. The fleet management business is going to be a fantastic opportunity for us also to transition the car fleet from the car, which are existing today to, of course, electrical vehicles and new usage of cars. So I think you have -- you are going to have big parts of the business which will be contributing very, very directly. In retail, it's not just about climate. It's also, of course, around accompanying the clients. May I say that everything that we have been doing in the crisis and all the banks were there was part of ESG, I think, to accompany the clients to save jobs, alongside the public authorities. And I think we did a good job there. Beyond, I think, it's to provide the financing, whether, for example, it's to renovate buildings or more generally to invest. And of course, digital transformation being, for example, an important element in that process. And so the social element, I think it should not be forgetting, it's also for us as a company in terms of diversity, the way we work together, the values. And I think we are making progress. We need to remain very humble there. Let's face it. There is more to be done. We are certainly not perfect in every dimension, but there is a clear willingness to move ahead. And then governance should not be forgotten. Maybe it's a little bit less a priority sometimes of public comments. But I think that it's part of an important element of a company. It's a balance of powers. It's, of course, compliance of all kinds. And as you know, we've made very good progress last year, and we stick to a very strong discipline and compliance in terms of regulations, but also client protection. So again, in that field, I will always remain on board. It will never be finished to a certain extent, but I think it's something that people have -- every one, every employee has to understand and embrace and of course which has to be at the core part of the strategy. Regarding strategic risk, et cetera, you will probably have the communication of the ECB in midyear on the global stress test. And these are -- it's the first attempt, if I may say. I think here, again, we have time to transition the portfolio. We are active in that. We were among the first banks to reduce our -- the commitment to reduce, short term, our oil and fossil energy portfolio. We will perhaps comment in due course, but I think we are well positioned. As I've said, the starting point is robust and up to us now to move at the right pace going forward.

Perfect. Then I have a couple of questions going back in terms of the short-term discussion. And one is on loan growth and the other one is on inflation. So loan growth, we have seen the economists cutting the GDP estimates. So as a bank analyst, the first thing you should do is cut your loan growth forecast as well. Is that something that you are seeing already or that you expect to see in the coming weeks and months?

A little bit difficult at this stage to comment. As I said, we might have some slower GDP at this stage. As I've said, not that significant compared with previous forecast, but let's wait. Let's remain also prudent depending on the outcome of the crisis, which can go in one direction or another. Longer term, I think it's fair to say we have a scenario where, in Europe, in particular, the growth rate would go back to the kind of levels we had, structural growth rate of around 1.5%, 1.6%, which means also actually for rates potentially after a very significant increase and maybe for some time an increase, both on the short-term and long-term rate, but perhaps going forward, in 2 or 3 years' time, not so much high levels of rates. On inflation, same thing. I think there are different scenarios. Clearly, it might be higher and for longer than just 3, 4 months ago. A question mark is the kind of GDP assumption that you have in mind. It might also go down step-by-step if the activity is slowing down or enter even into a stagflation scenario. It can happen. So again, uncertainty. And I think it's fair to say probably companies might become a little bit more prudent. We've seen also corrections of values. So people will also probably take care compared with what we have seen in the last period, in the last 6 to 12 months.

But on the inflation side, are you seeing it through your cost line already? Are you seeing some pressure? Or not at this stage?

No. Listen, what I said, and I think it's consistent, I'm confident for 2022. Of course, it's more for 2023. Depending on the inflation, we will see what it means on certain costs, on the wages. At this stage, we've been able to control our cost base.

Okay. Perfect. That's very clear. So with that, perhaps I can open it up to 1 or 2 questions, if -- okay, here. It's coming.

Thank you for presenting with COVID. It's [ James Chappell ]. You're going to update us, I think, during the second quarter in terms of your plan. And it seems that the ECB might finally actually put up interest rates in Europe after many years of waiting. I mean, do you think SocGen can deliver a double-digit return from its business, considering what you've got coming through in the French retail business and also with the LeasePlan transaction as well?

Hello, James. Nice to speak to you. And again, sorry for not being here. Again, we will update the market on that. I'm confident if you wish, that -- putting aside again Russia, which is, of course, a very dramatic situation, but I think that we can monitor absolutely with limited at the end of the day impact. What we are going to do will deliver an acceptable profitability on the level of capital that we will communicate also. We had discussions in the fourth quarter on that. It is kind of a standard apparently in the market of 12% post-Basel IV. We are certainly working on that. And my message today was to say, again, why we are, of course, dealing with the crisis, we are also keeping the strong focus on delivering. And so far, everything has moved ahead exactly in line, exactly according to the schedule we had in mind and our objectives. So if I may, I feel very comfortable to be able to pursue the 2 things and of course, hopefully, put behind for the sake of everybody this situation which has been so dramatic and so brutal. So that's where we stand, and we will communicate again to the market in due course on what we can achieve in the midterm.

The lady on third line, third row.

On Russia, it's clear that you are derisking. You're not going to inject more capital. But are you still committed to that market? Or will you have to exit at some point due to potentially client pressure or other market pressure?

Listen, what I can say, clearly, the strategic perspective of Russia has changed dramatically, I would say, both the perspective of the market, and of course, the relationship with the Western world. But if I may, the priority for me at this stage is really on a daily basis, as I've said, to ensure, first, security of the staff; implementation of sanctions; and as I've said, reduction of risk. This is the best way, I think, going forward to remain flexible, but that's currently our priority.

Yes. There is a question over here in the third line.

Simon Poncet from JPMorgan Asset Management. My question, if you were to look at your earnings on a 2-year view going forward, what would you say the biggest risk to your earnings is beyond -- sorry, excluding Russia, of course? And are you particularly concerned about what's happening to energy prices when it comes to asset quality and recessionary scenarios going forward? Or do you think in Europe, governments are doing -- I've asked a similar question to one of your competitors, governments doing enough to try and subsidize the poorest part of the population, some SMEs who are going to struggle with that. It could potentially have a significant impact on asset quality and on GDP growth. Is that -- do you share that view? Or do you have a bigger concern than that, actually?

No. Simon, hello. I think we need always to try to make a difference between the short-term impact, and we saw effectively a very strong increase but then decrease also of the commodity prices. And of course, dislocation, for example, of the gas market in Europe but with also Europe which is going to try to adapt. So if I answer your question, 2, 3 years ahead, I think, yes, you can have probably a lower growth. As I said, at this stage, our economists stick to something like a 1.5% GDP for 2023 in countries like France and Germany. A little bit, of course, less dynamic activity than experienced, pressure on margins for certain sectors. But as you said, probably tailored interventions, at least in the short term, to mitigate the impact of oil price increases that we saw in France, for example, just a kind of EUR 0.15 rebate per liter. So I don't have an extreme scenario in mind, provided, of course, on the geopolitical side, things remain also under the control. And I think that the economies will, of course, bring to adapt. It might mean an accelerated shift towards new source of energy. France, as you know, has changed radically its posture regarding nuclear. It's relatively spectacular in just 2 years what has happened, and of course, the need to build more at the European level. So more complex situation, but at this stage, we don't have in mind extreme scenarios. And for us, if I may, the strategic directions and the need to move ahead is more than ever justified, on one hand, to put more capital on profitable businesses, such as mobility, growing businesses. And at the same time, dealing with businesses like French retail, where, again, we might not have inflation on tariffs, but that's where we have to work on cost. So cost monitoring will, of course, remain a key element. And as we've said, it might be more complex with an inflation of 3% to 4% at year-end. But of course, we have to make further progress there. And our commitment to this project is intact, and the relevance is intact.

Okay. With that, we have run out of time, unfortunately. But Frederic, thank you so much for being with us despite COVID.

Well, again, it has been a pleasure to shake hands with a lot of you. I hope to be able to do it next time, but it was really great to do it, even through video. And sorry for the small interruption.

Thank you.

Have a good afternoon to everybody. Thank you. Thank you very much. Bye-bye.

Bye.

Bye-bye.