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

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

Good morning to all of you. Thanks for attending this conference call. The format is the same as the previous ones. With Claire, our CFO, I will present very briefly our results, and then you will have the opportunity to ask questions to our full management team, which is sitting with me. Hopefully, you have the presentation with you. Let's start immediately with the first slide, Slide 3. Well, needless to say, 2022 was a very intense year for us with many, many achievements, many things in parallel which were completed. Clearly, the timely execution of our different milestones for the merger in the French networks, this new bank is now up and running legally from the 1st of January. The last remaining important step is the IT migration, which will take place in the first half. The second, clearly, the great success with the development of Boursorama. You will see some figures. They are impressive. On top of that, we are also pursuing 2 very important projects to create a world leader, one, in the mobility sector, with the acquisition of the ALD; and more recently, we announced the creation of a joint venture in research -- equity research activities, named Bernstein. We will come back to that, too. At the same time, we pursued also our progress regarding ESG and the capacity to enshrine these objectives in the strategies of all our activities as well as pursue our digital transformation and improve our operational efficiency. And of course, let me just remind you, but you have that in mind, that we were able to quickly adapt to the Russian situation by efficiently divesting our Russian subsidiaries. So it meant, again, as I said, very, very demanding and intense year. If I look at the Slide 4, when you have our results. Well, it is also a very successful year, with a record level of underlying results of EUR 5.6 billion for the year, leading to underlying return on tangible equity at 9.6%. The reported result stands at EUR 2 billion, of course, including the impact of the sale of our Russian subsidiary in the second quarter. You will see that we have had a strong growth of our revenues, with record level of revenues for Financing & Advisory activities, for market activities as well as for ALD. Very strong performance in International Retail and Private Banking. And the French activities, we had a good level of revenues despite, as you know, and we will come back to that, the specificities of the French market in such a brutal scenario, brutal, and a quick increase of interest rates and inflation. We remain very disciplined on the cost. You will see that both for the fourth quarter and the full year, with the cost/income ratio, excluding the Single Resolution Fund contribution, standing at 61% for the year, well below the initial target that we had announced. The cost of risk stands at 28 basis points for the year as well as for the fourth quarter, with a low level of defaults at 17 basis points. You will see that the overall stock of provisions, S1/S2 provision, stands at EUR 3.8 billion, highest level ever, even above the peak of the COVID period. Regarding the distribution and capital, based on this very strong financial performance, better than anticipated, I must say the Board has decided for our [ share ] distribution level, which on one hand is -- was a need for a fair remuneration of our shareholders given the specific nature of 2022; and on the other hand, with a great opportunity to further strengthen the core Tier 1 ratio, and that led to a proposed distribution split between EUR 1.7 dividend per share paid in cash versus EUR 1.65 last year and a share buyback program of around EUR 440 million, equivalent to EUR 0.55 per share, i.e. half the one last year. We -- it leads also, as I said, with a strong capital generation [ sustained ] by the results to a very strong core Tier 1 ratio at the end of 2022, 13.5%, more than 420 basis points above the MDA. And needless to say, we confirm our target of 12% post-Basel IV at the end of 2025. I will be very quick on the Slide 5, 6, 7. Happy to answer your question. Again, ESG is a major objective for us. You have a series of slides, which illustrates, on one hand, all the new initiatives, the rate ambitions and the rating of the bank, which is, according to all the rating agencies, among the best in its sector. And actually, even ShareAction ranked us among the top 25 biggest banks regarding our policies and practice to fight deforestation, biodiversity conservation being also a new area of strong focus. Beyond this, we -- I would like to highlight that we really are putting our staff -- embarking our staff in this journey with a lot of training and, of course, developing adequate services and products for our clients. I will turn the floor now to Claire, who will go through more in detail our financial results. Claire, floor is yours.

Thank you, Frédéric. So as you pointed out, the group delivered a very strong operating performance across businesses in 2022. At group level, the underlying gross operating income, which reached EUR 10.1 billion in 2022, is up 19% versus last year and 40% versus 2019. This strong performance was driven by positive jaws. Underlying revenues have increased in all our businesses compared to last year. At group level, they're up 9.3% versus 2021. At the same time, costs remain contained, with an increase of 4.5%, mainly explained by 3 items: first, the increase in contribution to the SRF for EUR 278 million, which accounts for more than 1/3 of the gross cost increase, around 1.6%; second, the impact of foreign exchange rate for more than EUR 200 million; and third, the increase in variable compensation in line with enhanced performance. Overall, the underlying cost/income ratio, excluding SRF, improved by more than 3 points versus 2021 at 61% in 2022. It's better than the last guidance we gave in Q3 and well below the initial one given in early 2022, which was between 66% and 68% for 2022. For 2023, we have decided to adopt a similar credit approach as last year given the uncertain macroeconomic context in terms of inflation, rates and GDP growth. Therefore, we are providing, at this stage, the same guidance as last year, namely an underlying cost/income ratio, excluding SRF, between 66% and 68% in 2023. Note that this guidance is notably based on normalized revenues in global markets. With regards to Q4, Slide 10, the group delivered another solid set of results like the 9 previous quarter, with a reported net income around EUR 1.2 billion in Q4. At EUR 2.2 billion, the underlying gross operating income is up by 15% versus last year and around 35% compared to 2019. Once again, jaws are strongly positive, thanks to another solid commercial performance by the businesses and continued disciplined cost management. Therefore, and despite the inflationary context, the underlying interest income ratio, excluding SRF, decreases to 65.4% in Q4, which means 0.5 percentage points lower than Q4 last year and 7 points lower than 2019. Turning to cost of risk, Slide 11. It remained contained in 2022 despite a more complex and uncertain environment. At group level, the cost of risk stands at 28 basis points, both in Q4 and in 2022. That's landing below the annual guidance of 30 to 35 basis points. Overall, the asset quality is sound. The NPL ratio stands at 2.8% at the end of 2022, and the gross coverage rate is around 48%. Adjusted for the state-guaranteed loans, the coverage ratio is above [ 51% ]. For 2023, we reiterate the same cautious guidance and expect the cost of risk to be between 30 and 35 basis points, given the quality of our credit portfolio. Let's turn to the next page, Slide 12. As illustrated in this chart, defaults remained broadly stable in 2022 versus last year, both in nominal terms and in basis points at around 17 basis points despite a tougher environment. Regarding the fourth quarter, which is traditionally impacted by seasonal effects, such as in 2019 and 2020, the amount of Stage 3 remained contained at 23 basis points despite the impact in France of a well-known specific corporate [ hike ]. At the same time, we maintained a prudent provisioning policy throughout the year by significantly increasing the precautionary provisions on Stage 1 and 2 assets, which represented around 40% of the total cost of risk in 2022. At the end of 2022, the total outstanding of Stage 1 and 2 provisions reached EUR 3.8 billion. A few words now on our Russian offshore exposure, Slide 13. As you can see, the exposure at default of this portfolio decreased sharply in 2022. It's down by 45% compared to the end of 2021, thanks to a continued sound level of repayment flows. While the residual exposure at default amounts to EUR 1.8 billion at the end of December, we now consider that the net exposure at risk is below EUR 600 million before provisioning. This residual risk is already highly covered by a total provision of EUR 427 million. With regard to Rosbank, the residual exposure is negligible and below EUR 100 million at the end of December. Let's now turn to capital and liquidity, Slide 14. At the end of 2022, the group posted a very solid regulatory core Tier 1 ratio at 13.5%. It's now around 420 basis points over the MDA. This significant increase in Q4 mostly results from strong portfolio organic capital generation of around 45 basis points [ post ] provision for the 2022 distribution, as presented in the introduction. Overall, the group can leverage on its solid balance sheet with all ratios comfortably above requirements. With regards to funding, the group took advantage of favorable market windows to further progress under good conditions in the 2023 funding program. At the present time, around 60% of this funding program has already been achieved. I will not come in Slide 15. And let's now turn to the business and start with the main 2022 achievements of the French retail activities, Slide 17. Thanks to the strong commitment of the team, the [indiscernible] steps have been reached in 2022 in the implementation of the strategic road map in France. Regarding the merger of the French retail networks, all the key milestones have been timely and successfully completed. Similarly, the deployment of the target operating model has progressed as planned. This is all the more satisfying as it has been made alongside the solid commercial performance with notably a rapid growth in fee-based revenues in line with our strategy. The level of fees recorded in 2022 has reached the highest in the last 4 years, up 8% versus 2019. The Private Banking division also had a very satisfactory year, achieving a record commercial performance while continuing the transfer of its operation to Azqore, with the first successful migration of the Swiss ITC and IT operations. Regarding Boursorama, Frédéric already mentioned the strong acceleration in the client acquisition growth, with 1.4 million new clients in a single year, positioning Boursorama as the definite leader in online banking in France. More specifically on the merger road map, Slide 18. It's still progressing as planned on all fronts. The legal merger has been effective since the 1st of January, and we have successfully launched the new bank in all regions. We are now fully focused on the next step to ensure once again timely deliveries in 2023, which is a key year for the merger. On the IT front, we're approaching with confidence the end of the preparatory work to ensure the success of the 2 IT mergers in the first semester. At the same time, from Q1 onwards, we will start the rebranding and the merger of our branches as well as the start of the employee mobility program. Alongside these strategic steps, we intend to maintain as in 2022 strong commercial momentum with, in particular, the ambition to further strengthen the client base in core segments and to maintain a high level of fees. Let's now look at the business performance in the French networks and Private Banking, Slide 19. On the credit side, momentum remained overall constructive this quarter in France despite a challenging environment on the retail side due to the impact of the usury rate. The total loan outstanding grew by 1.6% in Q4, that is last year, notably thanks to a 2% growth in corporate loans. The home loan outstanding is slightly up by 1%, which is consistent with the voluntary selective approach in production we adopted in H2 to limit the impact of the usury rate. On the deposit side, both sight and regulated deposits with retail clients continued to increase in Q4. On the contrary, and as expected in a rising rate environment, we have seen a decrease in corporate sight deposits, notably due to a shift towards in-house treasury products. Overall, deposits decreased by 2.6% versus Q4 last year. On savings, and despite negative mark-to-market impact on a yearly basis, we experienced resilient life insurance outstanding and Private Banking assets under management. In life insurance, gross inflows amounted to EUR 1.8 billion, and in Private Banking, asset gathering pace was 4% in 2022. Finally, premia in P&C were up by 4% in the quarter, and personal protection continued to rise at 3% in Q4. Let's turn to Boursorama, Slide 20. With 1.4 million new clients in just 1 year, 2022 was another record year in terms of client acquisition, thanks to both strong organic growth and successful onboarding of ING clients. In addition, the acquisition cost continued to decrease. Having reached more than 4.7 million clients at the end of 2022, we now expect the client base to be above 5.5 million by the end of 2023. In terms of commercial activity, Boursorama post another strong growth both in banking assets and savings. Loans outstanding are up 14% versus Q4 last year at EUR 16 billion. Deposits and financial savings increased, respectively, by 43% and 31% versus Q4 last year, bringing the combined outstanding close to EUR 49 billion. As illustrated by the continued significant increase of the day-to-day banking operations, which are up 44% versus Q4 last year, Boursorama is more than demonstrating that it's a [ real bank ] used as a primary bank by a high [indiscernible] of clients. In terms of P&L, Slide 21. Revenues are stable versus Q4 last year. Net interest margin and other is down by 1.8% versus Q4 last year. This is mostly due to the negative impact of both regulated savings and usury rate. Good impact has been partially compensated by TLTRO benefit. On the contrary, fees increased by 1.9%. Stripping out the impact of the client acquisition cost, the increase in service and financial fees is 5% on average. Regarding underlying costs, they are moderately up by 2.4%, but now they're down by 0.7% if we exclude the impact of the provision for exceptional compensation to employees, which was paid in January 2023. This contained evolution of cost in an inflationary environment perfectly illustrates the continued efforts made on the cost base. Overall, the underlying RONE comes to 11.6% in 2022 and 13.4%, excluding Boursorama. Before moving to -- before moving on to IBFS, a few words on the 2023 outlook for French retail. 2023 will clearly be a year of transition, with a negative trend in revenues despite expected continued solid commercial momentum for several specific reasons. First, the end of the TLTRO will result in a decrease in the 2023 revenue base by approximately EUR 0.3 billion compared to 2022. Second, the specific functioning of the French market, notably due to the regulated savings and usury rate. While the hedging policy implemented in previous uncertain times to hedge the net interest margin will deprive us in 2023 of the benefit of the replacement of deposits, these hedges will mature starting 2024 to 2025. Therefore, after an expected drop in revenues in 2023, we anticipate the first rebound in 2024, with revenues at least at the level of 2022 and then a complementary rise in 2025. Moving to IBFS, Slide 22. Overall, the various businesses have further reinforced their position in '22 and delivered strong commercial performance in line with the 2021 ambition, aiming at unlocking the potential of our leading subsidiaries in their respective markets. Several of our international banks have also been awarded for their excellence, both in Europe and Africa. With regards to our interest activities, we have further gained market share in life insurance, notably in France, and increased our penetration rate. On mobility, we successfully achieved major steps towards the creation of the leading global sustainable mobility player, which are detailed in the next slide. As you can see, Slide 23, the acquisition project is progressing well. ALD right issue has been completed with success in December for EUR 1.2 billion. Clearance from the ECB and the main antitrust authorities has been received. At this stage, we still expect the closing of the transaction by the end of Q1. Let's now have a look at the performances in International Retail Banking, Slide 24. Commercial activity continued to be well ramped across the region in Q4. In Europe, loans are up 5% versus last year, with good momentum in the corporate segment in Czech Republic. Deposits remained stable, thanks notably to robust growth in Romania, which offset the slowdown in Czech Republic. In Africa, the's rebound has definitely been robust for loans and deposits, which increased by 7% and 6%, respectively. Overall, International Retail Banking got once again solid revenues in Q4, which are up 8% versus last year. The satisfying performance is notably driven by higher net interest margin in Europe, 9%, but also by good momentum in Africa, both for net interest margin and commissions, which are both progressing nearly 10% versus last year. Regarding insurance and financial services, the performance remained strong, with an RONE above 30%. Insurance revenues are still solid, with an 11% increase versus last year. Net inflows in life insurance are positive, with a still high share of unit-linked products. Protection premia are up by 5% compared to last year, supported by an 8% increase in P&C premia compared to last year. For Financial Services, revenues increased by 38% in Q4, thanks to a continued strong contribution of ALD on the back of both good primary activity, with a continued increase in funded fleet by more than 3%, persistently strong contribution of used car sale results and an adjustment in the depreciation method in line with current higher car value. Overall, 2022 is a record year for ALD. A few words to conclude on IBFS. With overall profitability reaching 24.3% of underlying RONE, jaws are positive, with an increase in revenues of 17% has come from [ premia and ] interest rates that is last year. Despite the inflationary context and the impact of the preparation cost for the integration of LeasePlan, costs are trending at a significantly lower pace, which led to a further improvement of the cost/income ratio at 48%. Moving to GBIS, I'm going to succeed for the next -- for the rest of presentation, Slide 27. 2022 was an outstanding year, with strong performance across businesses, which generated more than EUR 10 billion in total revenues for the year. We are successfully deleveraging on all the -- delivering on all the strategic objectives listed on the slide that we presented to you in May 2021. As evidenced by the profitability achieved in 2022, with the RONE above 19%, excluding SRF, this cost execution of our road map is the foundation of -- that already generates sustainable value creation. Let's now spend a little bit of time on this great deal with AllianceBernstein, Slide 28. This transaction will allow us to create a leading global player in cash equity and research. This is a very well-matched partnership in terms of geographic mix, client base and products. Thanks to this combination, we will have global reach with more than 1,000 stocks covered worldwide and get access to more than 1,000 additional institutional investors with a highly relevant product mix. This transaction is value-creative, with a high potential of revenue synergies, both with institutional investors and corporate clients. It's totally consistent with the strategy of GBIS and its capital-light business with predictable fee-based revenues. Turning to GMIS, Slide 19. Total revenues are up 19% versus last year at EUR 1.2 billion. On a yearly basis, Global Markets posted a record revenue level at comparable business models post GFC, with a EUR 5.9 billion revenue contribution, which is up 17% versus 2021. Overall, equity activities performed well in 2022 in a contrasted environment. They posted their best results on record since [ 2009 ], with total revenues of EUR 3.3 billion. Last quarter, the activity remained solid, with a contribution above pre-COVID levels. On fixed income, this is also the best results on record, with a EUR 2.6 billion attribution, up by nearly 40% versus last year. In Q4, revenues are up 56% versus last year. The fixed income platform continues to benefit from a favorable environment, notably thanks to rate volatility. Last, with security services. Results were strong in Q4, partly due to the reevaluation of our holding in Euroclear for EUR 91 million, which [ ballooned ] from the EUR 77 million already recorded in H1. Excluding this one-off effect, security services NBI was up 14% in Q4, thanks to higher rates and good resiliency fees. Financing & Advisory, Slide 20, also delivered an excellent performance in Q4, with a record quarter and a record year for both Global Banking & Advisory and transaction banking. Revenues are up by 17% versus last year at EUR 956 million and by 15% on a yearly basis at EUR 3.4 billion. For Global Banking & Advisory, dynamics remained strong in asset finance, natural resources and asset-backed products, combined with strong risk management performance. On the contrary and in line with fees, investment banking is still negatively impacted by the significant decrease in volume in certain market. Overall, this is a remarkable performance given the context for capital markets. On transaction banking, the performance continues to be excellent across all activities and geographies, which translates into a significant revenue growth of plus 68% compared to last year. Overall, Slide 31, GBA delivered once again an excellent quarter with strong positive jaws, resulting in a significant 5-basis-point decrease of the underlying cost/income ratio, excluding SRF, to 61.1%. The performance is driven by a solid revenue growth of more than 14%, [ came in ] with a strong cost discipline. In terms of profitability, GBA delivered a strong underlying RONE of 16.3% and above 19%, excluding SRF. On the corporate center, Slide 32. Revenues are impacted this quarter by the fair value of the hedging instrument performed on the equity of our subsidiaries. In addition, there is a base effect compared to Q4 last year related to the reevaluation of EUR 117 million made last year on 1 asset. These 2 factors mostly explain the year-on-year change in both the quarterly growth operating income, which stands at minus EUR 0.5 billion in Q4, and the net results. Over the full year, the corporate center net result is impacted by the transformation charges for EUR 639 million but, above all, by the impact of the sale in Q2 of our Russian subsidiaries. I will hand the floor to Frédéric for the conclusion.

Thank you very much, Claire. Just a few words of conclusion. This fourth quarter is actually the 10th quarter in a row of strong performances of all our businesses. When we look at the full 2022 year, despite the impact of the disposal of our subsidiary, it's a year of value creation. You can see on the slide that we have now a tangible net asset per share of EUR 62.3, up compared with last year and, of course, 2019. It's my last yearly result presentation. When I look at our 2022 results entering into 2023, I'm convinced that we have built very solid foundations for our group. And I'm convinced that the group will reap the fruits in the coming years of our different strategic projects, which are ongoing and about to be completed. We confirm, as such and as we said, our financial objectives for 2025 presented last year in August. In an environment with still a lot of uncertainty from a geopolitical, economic and financial point of view, 2023 will obviously be a year of transition for the group from a governance perspective. First of all, Slawomir Krupa will take over as CEO at the end of May, and Slawomir and myself, we've been working to ensure the smoothest and most efficient transition as possible. It works very well. Transition too, of course, because we have this year to complete a certain number of key projects. And from a financial perspective, we've, as commented by Claire on one hand, the remaining negative impact that we expect on our French retail market with a new bank, which would benefit from a rebound of its revenues in 2024, 2025. And on top of that, of course, the benefit of the merger in the coming years. And on the other hand, it would be under my tenure that we will pay the last contribution to the constitution of the European Single Resolution Fund, which has been a drag, as you know, on our profitability for several years. We'll be happy to turn this page. That's it. Now we are ready to answer your questions. As usual, if you could stick to this good discipline of 2 questions per person. Floor is yours.

[Operator Instructions] First question is from Flora Bocahut of Jefferies.

The first question is regarding the capital trajectory from here. Could you just remind us of all the impacts that we should expect from here? I have in mind that you have previously guided for regulatory headwinds from TRIM of 13 basis points. I think there's the LeasePlan acquisition due in Q1 for 40 basis points, obviously, the Bernstein acquisition in Q4 for 10 bps. And I think IFRS 17 is expected to be close to 0 impact. So if you could just update this and let me know if I forgot any in here. The second question is regarding the French Retail Banking revenue outlook for '23 and also for '24. Maybe you provide us with some of the moving parts for '23, but you used to give us a percent decline or percent growth. So is that something you would be ready to do for '23 and for '24? I think you just said, Claire, in you are introducing remarks that you think '24 revenues will be about the same as '22, so not above. So if you could just clarify this.

Yes. Hello, Flora. I will turn the floor to Claire for your first question on capital and then to Sébastien for your question on French retail. Claire?

Flora, so regarding capital, I think that you have most of the moving parts. For 2023, we anticipate, as you said, regulatory impact related to TRIM and IRB repair about 40 basis points, 4-0. We also anticipate M&A in that. We have, as you said, LeasePlan, which is around 40 basis points. We confirm the guidance. And regarding Bernstein around 10 basis points. And for the year after, we still have the Basel IV impact. So that's all.

Thank you. Sébastien?

Yes. Flora, so coming back on the revenue for the French retail, as Claire explained, I mean, 2023 will be this transition year in terms of revenues with the French retail activities impacted by the specificities of the French market and especially regulated savings rates. We had a strong increase in regulated savings rates in 2022. The rate for the [ RWA ] was multiplied by 4 in 2022 and another increase in February 2023, depending on inflation and rate movement. So we could expect another increase during 2023. So it puts a lot of pressure on the margin on deposits. If you add how specific in the French market in terms of repricing of loans both on outstanding and on credit production, you understand, again, why we will have this pressure on the NIM in 2023, keeping in mind that, as Claire said, we will not have the benefit of the TLTRO anymore and we have this hedging policy, which will mature progressively between 2024 and 2025. Having said that, I will not give a magic number for 2023. We'll get back to you during the year, especially at the end of the first quarter. And I confirm that 2024 will be at least at 2022 level. So I'm saying at this and potentially above with another rebound in 2025.

The next question, sir, is from Delphine Lee of JPMorgan.

I just wanted to follow up on Flora's question on French retail. So I'm just wondering -- it just feels like if you have 2022 level for 2024 in French retail revenue, it sounds like you don't get much impact from rates, which is a bit surprising because you do have sensitivity to rates. So just trying to understand a little bit the contribution we should expect from the move we've seen in the market on rates. So where should that come through? And how much of the year can we expect? I think some of your peers have given a bit more quantified guidance. So if you could help us on this. And my second question is on the payout ratio. There's been some press articles talking about the ECB inviting banks to kind of caution and prudent payout. Is that reduction in the payout ratio to 37% sort of coming from the ECB? Or -- I just wanted to get some color on this. And is -- what can you tell us about your commitment for future years? Is that still 50%? And in terms of mix, do you still prioritize dividends over buyback?

Yes. Delphine, again, I will let perhaps Claire comment. But again, I understand there is, first of all, a series of parameters which play, volumes, credit production, deposit volumes, et cetera, a series of assumptions as Sébastien commented. But clearly, we have some big impact in 2023, as Sébastien said. And with, I think, a very reasonable assumption and we'll see maturing of the hedging policy, we are comfortable to say, yes, decline of revenues this year. And again, the rebound in 2024. Happy to, again, further elaborate. We can't say more because we need, as Sébastien said, a little bit more visibility on certain of these parameters to be a bit more precise. Regarding the distribution, listen, again, it was, of course, a subject of a reflection for the Board at year-end, as we've said previously. Given the specificity of this year, where again strong, very strong underlying but, at the end of the day, still an impact of the Russian subsidiary. And in your transition, I decided to prepare the bank as well as possible with the most robust foundations to enter into 2023. There was the feeling that probably the best option was, again, to decide at the end of the day, a relatively limited reduction of the share buyback to compensate actually more or less for the impact of the capital -- on the capital ratio of the sale of Rosbank, 20 basis points, to be able to have a 13.5% of Tier 1 ratio at year-end, much above, I think, the expectations of the market and give full confidence of the trajectory going forward. And we've still a good remuneration for our shareholders, EUR 1.7 in cash, EUR 440 million of share buyback. The policy is unchanged, and the Board does not change the policy, but took into account, I would say, the specificity of this transition movement and also the specificity [ of the year ] to adjust a little bit the distribution. Again, going forward, we stick to 50% of underlying profit, same thing in terms of share buyback. I hope that step by step, the share price will go up. It's clear that the benefit of the share buyback still remains. That's why also we are very happy to be able to complete the share buyback program last year in good condition, and the idea is to maintain this. There's no change in our policy. That was really the specificity of the year.

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

Just 2 questions, please. First of all, on the cost/income guidance for this year. I think Claire said that the -- this is based on normalized Global Markets revenues. Can you please clarify what do you mean by that? Do you think that this peaked in '22 and we need to go back to something more normalized and lower? And then the second question is on the French retail. You mentioned, Frédéric, that there are a few assumptions. But I didn't hear your comments on the lending growth in France, what the assumptions you have baked in, in your '23 guidance. And do you see room for positive surprise on that front, given potentially better sentiment from households on the macro and so on, given as things getting slightly better? And yes, that's it, and thank you, Frédéric, for these years and good luck for the rest.

Thank you very much, Tarik. Thanks a lot. I will leave the floor to Slawomir to explain how you think about normalized revenue and in the budget process in particular. And then a Sébastien -- keep in mind, and you will see that in 2022, we were very disciplined in the production of loans with the potentially negative margin, in particular, in mortgage. And so I think it makes sense to be -- first of all, Slawomir.

Very simple, we gave guidance through the cycle at this stage for Global Markets revenues, ranging from EUR 4.7 billion to EUR 5.3 billion. And after the previous year at EUR 5.9 billion, we do expect, at this stage, things can change, of course, a normalization. So you should look to the guidance as the guidance for what normalization means, basically. And then, of course, depending on the market trends, et cetera, if there are opportunities to be captured, we will obviously capture them, and we will also be resilient should things be more choppy. At this point in time, we think things have normalized, and they remain reasonably uncertain and we remain cautious but not pessimistic.

Thank you. Sébastien?

Tarik, so regarding the credit in terms of outstanding and production. So maybe 2022 was, in terms of loans outstanding, a year with a solid growth, plus 1.6% and above [ 2.8%, ] excluding PGE. But as you know, the production of credit was impacted in 2022 by the different specificities of the French market, as we already said. And especially for home loans in Q4, production declined by 64% compared to Q4 2021. So regarding 2023, if I take the different segments. Regarding corporate credit production, we aim obviously at keeping our good commercial dynamism, and production margin should progressively improve during the year. Regarding home loans, we believe that even if usually when it is now calculated on a monthly basis, it will remain a constraint during at least the first half of the year and a better level of production and production margin -- volumes and production margin could be reached in H2. And regarding consumer finance, production was roughly stable in 2022 compared to 2021. And we intend to slightly improve both volumes and margin in 2023. But please remind that consumer finances are also impacted by the usury rate specificity of the French market.

The next question is from Guillaume Tiberghien of BNP Paribas Exane.

I have 2 questions. The first one is on Boursorama, and the second one is on capital. So on Boursorama, if I remember well, the idea was to go from minus 100 to plus 200 at the net level. And so I was wondering whether that translates into plus EUR 500 million at the revenue line, give or take. And if so, what's the pace of it? How much do we get in '23 and then '24 and then '25? The second question is on capital. You seem very comfortable with your current buffer above MDA. So when you list all the headwinds, you're still only at about 11.3% under Basel IV, and your change of policy on dividend shows that you're a bit tight. And so how do you expect to reach 12% in 2 years under Basel IV? What does that mean for your RWA growth?

I will let Philippe answer your question on Boursorama, but I can tell you, I'm so disappointed on your capital -- question on capital. I would have thought that with an additional 50 basis points, you would have been happy with it. Well, listen, I know -- seriously, I mean, we have now again 13.5%, 420 basis points. We are going to generate capital, by the way, every year. This year, particularly, it was very good. But we are confident in the capital generation. If you do your math, we are able to finance a very adequate organic growth to our businesses and more than meet the 12% core Tier 1 at the end of 2025 for post Basel IV. So really happy to enter more in detail in the math, but -- and sticking to this policy. I would have expected no question from you on this, but I turn to Slawomir. We will -- you will have to deal with that even more. But I think the idea, to be frank, of the Board in the distribution decision was really to put the capital at a good level to put aside any questions going forward.

Maybe one if I may, maybe one more comment, Slawomir speaking. Think about it as balance. I think Frédéric explained this very well saying the Board seeks balance in the year, which was very specific, I'm sure you have noticed, and in which the performance ended up also the underlying performance is very strong. I think in this context, the Board seeks to find a balance between all of the various items, so to speak, in the performance that had nothing to do with tightness in terms of capital trajectory.

Okay. But what RWA growth do you model? Because in Q4, you actually released accrual for dividend because you had EUR 2 billion at Q3 and then you only say EUR 1.8 billion. So in Q4, the capital was helped by some release, that's why. What RWA growth do you model for '25 per year?

We've not disclosed that figure. We will have in mind, if you wish something progressive in terms of organic growth with a better evolution of the economic activity and also see certain of our businesses. But we have something very -- for this year overall, pretty similar to what we had historically, nothing more, and as I said, in an environment where credit growth should not be that spectacular. And then an acceleration going forward, but again, Slawomir will also look at this when he will take over and look at that in detail. But that's nothing very different, if I may, and we are able to finance our organic growth pretty decently. So your question on the revenues of Boursorama, I mean, how it's [indiscernible], but net profit, we can search for all the idea, the trajectory and then how does this translate in NBI. Philippe?

Yes. Thanks for the question. As you know, our strategy with Boursorama, I would say, 3 axes. The first one is to continue to take advantage of the good client acquisition momentum, which was obviously very strong in 2022. The second one, of course, is to develop, increase the profitability per client. And one of the very important metric this year, for example, is the increase of the assets under management, an additional EUR 14 billion in the balance sheet of Boursorama. So this is a very important number. And I could also mention over important metrics for us, the number of products sold, the number of cash transactions, the number of insurance contracts. And the third important point is to continue to reduce the acquisition cost by client. And as you can see on the slide, it has been reduced by 2 since 2016. And between 2022 and 2021, it has been reduced by 20%. So all these components, of course, we act positively on the revenues, on the cost basis of Boursorama. And again, we confirm the guidance, profitability in 2024, EUR 200 million net profit in 2025, with a return on equity above 25%.

The next question is from Amit Goel of Barclays.

So just a follow-up and a couple of questions on the capital and then on some of the top line French retail pressures. So in terms of the capital return policy, and if I'm thinking about the dividend for 2023, are you looking for kind of steady growth from the kind of EUR 1.70 level, I guess, given there aren't any other incremental capital headwinds? And then secondly, in terms of the top line pressures, I mean, is there -- is that still a little bit better now versus what you were thinking at the end of last year with some changes to usury rates? Or is that basically just as strong as what you are previously anticipating?

Yes. Brief answer to your question. The idea is by definition to avoid any negative evolution of the dividend, and it was factored in the reflection. And again, the EUR 1.70 is in progress versus last year. The decision for 2023 will be taken by the Board. Of course, we had 2023 also in mind. In terms of the pressure, I think it's similar. I think there's no change. I have always said, usury rate, a little bit adapted in the calculation. But as Sébastien said, the benefit might be more in the second half than in the first half. So ] is a little bit lower than what the maximum which would have, but we talk about 30 basis points. It's still a very big increase, and we expect further increase in 1st of August. So issue is all this was already there, and of course, then the rate inflation is something where we will look at and we will see where it stands, but no big change. And as I said, we are disciplined in terms of credit origination because going forward, if you generate low margin, you can say, for long-term mortgage. So I think we have the right policy, and we do as much as we can, as we've said, to be dynamic from a commercial perspective, in particular, fees. Private Banking has done remarkably well. By the way, I think I would like to highlight this, and we want to pursue. But at the same time, being disciplined in terms of credit origination, still with complex equation for at least the next first half.

Got it. Just more follow-up. But then is there any TLTRO-hedged unwind costs as well in the first half of this year?

We adjust the hedging, as we said. Some, we will have the opportunity to adapt the hedging with the TLTRO. It is factored also in our forecast overall. But again, no comment specifically on this. The hedging is part of, if you wish, the projection because we have a policy to hedge. And again, some of the swaps will, of course, mature progressively in 2024 and 2025, and that will help the rebound.

The next question is from Kiri Vijayarajah of HSBC.