Good day, and thank you for standing by. Welcome to the Crédit Agricole Q1 Results 2021 conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and one on your telephone. If you require any further assistance, please press star zero. Please be advised that today's conference is being recorded. I would now like to the conference over to your CFO, Jérôme Grivet.
of you. I'm happy to present to you the results of the group and of Crédit Agricole S.A. for this first quarter of 2021. Let me go to the slideshow quite as rapidly as possible in order to leave you time for your questions. We can start on page four. You can see that the group is posting a net profit of EUR 1.75 billion, which is almost double as compared to Q1 2020. When restated from the traditional specific items, and I'll go back on this one just afterwards, the underlying net restate our contribution for the last five years, from 2016 to 2020, and this represents a positive one-off for the quote that we book on this quarter. That represents EUR 185 million for the group, and EUR 130 million for Crédit Agricole S.A. This element being, of course, non-recurring, it's restated, and it's not integrated in our underlying figures.
If I go a little bit down on the P&L of the group globally, what you can see is that these reserve, the cost of risk is down 42%. This is leading to this EUR 1.6 billion net profit at group level and to a solvency ratio, CET1 ratio, at 17.3%. If you go on the next page with CASA's figures, the same trends can be identified. A net income group share stated above EUR 1 billion for this first quarter. It's up 63%, 64%, this specific item that is restated and compared to Q4 2020. The cost base, excluding the contribution to the Single Resolution Fund, is flat, and it's even slightly down as compared to Q4 last year, -0.5%. The cost of risk is down 38% compared to Q1, and also -23% compared to Q4 2020.
I can go directly maybe on page eight. Just give you some elements on what happened during this first quarter of 2021. I think what is important to keep in mind is that back in 2020, the first quarter was still, for the biggest part of it, a quarter of normal activity. All the restrictions to the economic activity started only end of March. This first quarter of 2021 has been indeed earmarked with the continuation of some significant restrictions measures. Despite that, we've managed to continue to develop our activities across the board. You can see that we've succeeded in attracting new customers this quarter, significant number of new customer, 469,000 new retail banking customers in France and Italy. We've managed also to increase the main activity indicators, loans outstandings, customer assets, consumer credit outstandings, and also the number of non-life insurance policies.
It means that we've learned how to continue to operate under restrictions, and we've been quite active from this viewpoint. I go now on page nine, just to take a look on the way the revenue line has been built at CASA in this first quarter of 2021, you can see that all business lines contributed to this increase in the top line of our P&L. It's been very much the case for the asset gathering division and also for the large customers business division. You can see that also in the retail banking business division, we've managed to post an increase in the top line. It's only with the specialized financial services that we year-over-year. You can see that steadily year after year, we've managed to increase the level of revenues.
It's been also the case for the next quarters of the year in Q2, Q3, and Q4. We'll see if we manage to continue this trend for the rest of this year. If I take a look at the evolution of the cost base, I told you that the cost base was globally flat on Q1. If you exclude the contribution to the Single Resolution Fund, it's been more or less the case in every business division, with a slight increase in the asset gathering and large customers business divisions, which were the one that posted the highest increase in the evolution of their revenues when the cost base continues to decline in the specialized financial service division and in the retail banking division. You can see that, of course, the cost-to-income ratio continues to significantly decline. It's now at 58%, excluding the contribution to the Single Resolution Fund.
One last point on this issue of the Single Resolution Fund. I wanted to raise this quarter, as I said, we've booked one positive element, which is restated and not included in the underlying figures, and we've booked the traditional contribution, yearly contribution of EUR 510 million this year. This figure compares to a published and underlying figure of EUR 360 million in Q1 2020. Actually, in 2020, we have had to book a complement to this contribution in Q2 of EUR 79 million. Actually, the EUR 510 million that we've booked this quarter, which is going to represent the whole of the contribution for the full year, no complement is expected in Q2, has to be compared with actually a level for last year, which was globally EUR 439 million, but it was booked over Q1 and Q2.
On page 11, total coverage ratios continue to slightly improve, 72% for Crédit Agricole S.A. and 84.4% for the group globally. The quality of the loan books remains very, very solid. When it comes to the cost of risk itself on this quarter, what you can see is that both for the group and for the S.A., the cost of risk globally declined. You know that the cost of risk is made of two different elements. The first one is the additional provisions that we book regarding stage 1 and stage 2 loans. This quarter, you can see that this component of the cost of risk has decreased as compared to last year, be it Q1, be it Q4, or be it the average across the full year. It's simply because we've made a significant effort of provisioning performing loans last year.
This quarter, we don't see any reason to strengthen or to make more severe our macroeconomic scenario. The additional stage 1 and stage 2 provisioning that we've booked are only related either to the natural evolution of our credit portfolios or to some additional prudential approaches on certain specific sectors. It's the same at the level of the group and at the level of Crédit Agricole S.A. The second element of the cost of risk is made of the provisioning of non-performing loans. What you can see is that, again, both for the group and for Crédit Agricole S.A., the S3 provisioning is significantly below what we booked in Q1 2020 and more or less stable as compared to Q4 2020. No sign of deterioration of the credit quality of our loan book again.
This is leading to a very positive evolution of the net income group share globally on page 13. It's the case business division by business division, where you can see that in each business division, we've managed to increase the bottom line quite significantly. The only exception being the corporate center, it's mainly and it's only due to a base effect in 2020. When you look differently across the P&L globally, what you can see is that the net profit increases by around EUR 280 million. It's fueled by a very significant increase in revenues, plus EUR 370 million, and a significant decrease in the cost of risk, minus EUR 240 million. The two negative elements are the increase in the contribution to the Single Resolution Fund, plus EUR 150 million, and the increase in corporate taxes and other elements, plus around EUR 180 million.
On page 14, maybe rapidly some elements on two events of the quarter. The first event is Amundi entering into exclusive negotiation to acquire Lyxor. This is going obviously not only to reinforce globally Amundi's positioning in the field of asset management in Europe, but it's also leading to a very strong improvement of its positioning in the European ETF market. The second element is the success of the tender offer that we have launched in Italy on Creval. It's been a success because we've managed to get more than 90% of the capital of Creval through this tender offer. This is going to enable us to delist Creval, and we have just reopened the offer in order to squeeze out the remaining shareholders and in order to own 100% of the capital of Creval, to facilitate the integration process later on.
Let me go now on page 16, just some elements regarding the mobilization of the group to support and to protect the economy during the crisis. I'm not going to comment in depth the process of state-guaranteed loans, because you're now quite familiar with that. Just to mention that it continued this quarter. We have granted an additional close to EUR 1 billion of additional state-guaranteed loans this quarter. When it comes to payment holidays, it's now coming to an end, and in most cases, in 98% of the cases, to a positive end because the payment is resuming completely normally. We remind here that we've been also active in protecting vulnerable customers. On page 17, what is important is what is now ahead of us. What is ahead of us is that the economy is picking up.
It's picking up in France, in Italy, in Europe, in the rest of the world. We absolutely must take part in that because all our competitors are active. We are working now on the next steps of this picking up of the economy. We're ready to participate massively in the PPR initiative in France, Prêt Participatif Relance, with our life insurance company being the biggest contributor to the fund that is put in place to finance these loans. Last point on page 18. During this period of time, we've continued to environmental and social preoccupation in our group project. We are accelerating on those elements. Let me now go rapidly through the different businesses, starting with the asset gathering and insurance business division.
Just to mention on page 20 that we've managed to grow quite significantly the volume of assets that we manage, and that the profit of this business division has significantly rebounded this quarter, plus 43.7%. When it comes to strictly insurance activities on page 21, what we can say is that we have had a very positive commercial activity in this beginning of the year. With an acceleration in March. We've seen that, especially in the inflows in life insurance policies. The leadership positioning of Crédit Agricole Assurances has been strengthened further last year on the French market, and it continues to be the case with the continuation of market share gains, in the non-life insurance activity. The net profit of this business increases by 45% this quarter as compared to Q1 2020. On page 22, Amundi. Amundi has published last week its results, so you know them perfectly.
I think two elements are worth mentioning. The first element is that, again, Amundi is reaching a record level of assets under management, EUR 1,755 billion. The second element is that Amundi is posting this quarter a record level of profit, an increase of 54.4% for the contribution of Amundi to our own P&L. On page 23, large customers division, so CACIB plus CACEIS. I think that what we can mention on page 23 is that globally, the activity was very dynamic. It's been notably the case at CACEIS, where we've seen a significant increase in assets under custody and assets under administration, and a significant increase in the contribution of CACEIS outside the Single Resolution Fund contribution.
When it comes to CACEIS on page 24, simply to illustrate the situation, this quarter, the first quarter of 2021, has been the second-best quarter in 5 years in terms of revenues for CACEIS. This performance has been reached both for capital market activities, where we see a significant increase, +13%, and for financing activities with a good level of the credit demand coming from customers. The cost base remains very much under control, excluding, again, an increase in the contribution to the Single Resolution Fund. The cost of risk significantly decreases, and thus the net income group share of CACEIS is growing by 37.6% this quarter. Specialized financial services division with the consumer credit business. We have had a good level of production of new loans this quarter. It's an increase of more than 4% Q1 on Q1.
This is protecting more or less the level of loans outstanding at CACF end of March as compared to end of March 2020. The NBI is more or less stable, excluding scope effect. The scope effect being the deconsolidation of CACF NL, which is under the process of being sold. The cost of risk at CACF is declining quite significantly, leading to a strong improvement of the contribution to CACF to the profit of the group. It's more or less the same story for the leasing and factoring activities, with a good level of commercial activity in the quarter, a good level of revenues too, a significant decrease in the cost of risk, and a doubling of the contribution to our profit. Retail banking activities, starting with LCL. LCL, despite the restrictions, managed to grow its customer base and grow its loans and deposit outstandings.
The revenues is quite resilient with an increase of close to 2%. The cost base continues to decline by around 2% and the cost of risk is also significantly declining. It is spread more or less evenly between S1 and S2 provision and S3 provisions. In this context, the lockdowns in 2020, and so the comparison in terms of activity between Q1 2021 and Q1 2020 shows a very significant increase in the level of activity and in the number and the amount of products sold to our customers. In this context, the top line is increasing quite significantly. The cost line is stable, and the cost of risk declined by around 14%. The net contribution of Crédit Agricole Italia is up quite significantly, plus 76.6%.
For the rest of the international retail banking activities, the lowest point in terms of revenues was reached in Q2 last year. It means that the comparison Q1 on Q1 is still challenging. Nevertheless, as we've managed to control the cost base and also to decrease a little bit the cost of risk, the evolution of the net profit is only slightly down, -13%, and will have been stable without a Forex effect. It's a resilient quarter for this activity. I'll finish with the corporate center. The structural improvement of the costs of the corporate center continues to operate. There is a base effect, which is quite challenging because you remember that in Q1 2020, we have had very significant intra-group restatements that generated within the corporate center EUR 175 million of revenues, which we don't have any longer this quarter.
Restated from this element, the improvement is very solid. Just maybe one additional comment. In the corporate center, since the beginning of this year, we are now booking the contribution of BforBank, which is now held with a stake of 50% plus one share by Crédit Agricole S.A. It's equity accounted, and it's generating a loss this quarter of EUR 5 million, and we expect this to continue in the coming quarters and probably for some years before we reach the break even. You'll have now to take that into account. On page 31, the regional banks of Crédit Agricole, they have had a very good beginning of the year with good levels of activity, good customer attraction too, and a net level of revenues that was also boosted by the effect of the improvement in the market on their portfolio of assets.
The cost base is stable. The cost of risk declines significantly, the contribution of the regional banks to the net profit of the group is doubled as compared to Q1 2020, which was much more difficult. Let me go now to the solvency, starting with the level of Crédit Agricole S.A. There is a significant increase in the level of RWA this quarter, plus around EUR 12 billion, but actually EUR 5 billion is explained by the dismantling of an additional 15% of the switch mechanism on the quarter. We have had around EUR 5 billion or EUR 6 billion of increase in the level of RWAs that are due either to Forex effect or rating migration or TRIM. The real organic increase in RWAs is much more moderate. The CET1 ratio of Crédit Agricole S.A. stands at 12.7%, which is, of course, very significantly above any requirement.
At the level of the group, the ratio stands at 17.3%. It's above the set level by 8.4 percentage points, and it's up 10 bps this quarter, EUR 152 billion of TLTRO, which are allocated to the different businesses of the group, and the liquidity reserves are at their highest level. Last point regarding the financial management of the group. The advancement of the market funding program is completely on track. Maybe just one other element we can mention is that we've announced just two days ago the call of an AT1, which is going to take place in June, and which is going to produce its effect in terms of AT1 coupons starting in Q3 this year. I think I can stop here in order now to try to answer to your questions.
As a reminder, to ask a question, you will need to press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, if you wish to ask a question, please press star and one. Your first question comes from the line of Jacques-Henri Gaulard from Kepler. Your line's open. Please ask your question.
Yes. Good afternoon, Jérôme. Two questions. The first one would be on Creval, maybe. Can you confirm that the synergies that were mentioned in the offer document will remain more or less the same, there's no particular change? In that document, what was maybe a little bit surprising was the amount of restructuring charges, which were actually quite high. If you can comment, that would be lovely. The second question would be on the perimeter of the group, who've been super active with tons of initiatives.
Thank you, Jacques-Henri. Creval, you know that for the time being, we've based our assumptions and every element that was in the tender offer document only on publicly available information, because obviously this was a listed entity, and we couldn't, of course, access to some private data. We have no reason, because of the offer has been successful, to change our assumptions. Of course, we'll have to fine-tune those assumptions, and it's also the case for the cost of the restructuring. Once we have will vote to be changed, in accordance with the new shareholding of the company, and we will, of course, conduct some audits within Creval in order to, again, fine-tune the capacity of generating cost and revenue synergies and to fine-tune the cost of putting in place those restructurings.
Up to now, no reason to change these figures, but we'll have to fine-tune them, and we'll have to do that in the process of purchase price allocation, which is going, probably, to be made into two steps, one very rapidly, but very rough, and very conservative, and probably a second step before year-end with more precise figures. When it comes to the perimeter of the group, you know that we've always said that the strategy of the group is not based on M&A. It's not based on acquisitions that we would target well in advance and that we would try to realize in order to reach our strategic goals. The strategy of the group is really an organic one, but we have said that with some very precise financial criteria, we would be ready to take advantage of opportunities if they arise.
It's been the case lately, and you were referring to two important transactions that were announced more or less at the same time in the last few months, Lyxor and Creval. We may perfectly live several quarters in a row without announcing anything. It's not a must.
Thank you.
Thank you.
Your next question comes from the line of Delphine Lee from JP Morgan.
Yes. Good afternoon. Thanks for taking my questions, Jérôme. The first one, I would like to ask on the payout ratio. Just trying to understand a little bit, your 50% policy, which you said you would top up with a little bit of the full year 2019 dividends, I think you mentioned EUR 0.40. I just wondered how quickly we could see those extra, let's say, dividends, and would they come in the form of specials, or would they be part of your normal dividend policy? More broadly speaking, you're still targeting 11% CET1, I assume. Just wondering how you get there and given level of capital you have now, and would you consider accelerating a little bit the switch to reimbursement in that context?
The second question is on cost of risk. I think you still mentioned that cost of risk is supposed to come down this year. The question is a debate, how much given the start of the year, and you've booked in the 37 basis points some Stage 1, Stage 2 provisions as well. Should we expect more of those Stage 1, Stage 2 provisioning again in the next few quarters? Or should that normalize and would you have a guidance for us for 2021? Thank you.
Well, I'll start with the dividend. You're quite in a hurry to have some information. We are still in the process of building 2021 result, we'll assess by year end what is the normal dividend coming from the normal 50% cash payout policy and what kind of top-up we can think of. This is going to be an issue that we'll address only in Q4. Please, do not urge too much on this question. We still have to pay the 2020 dividend that is going to be voted by the general assembly meeting next week. We'll have time to think of this year dividend policy a little bit later on. Definitely we continue to have 11% as a target. Of course, considering the 12.7% ratio where we stand now, the margin is quite wide.
Please take into consideration that we will have to finance somehow the Creval acquisition, which is going to represent maybe close to 20 bps, the Lyxor acquisition, which is going to represent maybe 15 bps of ratio for Crédit Agricole S.A. We still have some, probably four or five billion EUR of TRIM RWA to take this year, which is also going to represent a significant impact on our CET1 ratio. We have, as you said rightly, the remaining 50% of the switch to unwind before end 2022. Definitely, this is a commitment that we've taken, and this commitment will be fulfilled whatsoever. This is all the main moving pieces that will take place regarding our capital and impacting, of course, definitely our dividend policy.
Regarding the cost of risk, it's very difficult to tell in advance where we are going to stand in terms of cost of risk for the full year. What I can tell you is that this quarter we've seen a significant decrease in the additional S1 and S2 provisions, as I explained. What I can tell you is that also this remaining S1 and S2 additional provisions that we've booked this quarter were linked to, I would say, additional prudence, i.e., either sectorial provisions that are taken either by LCL or by CACEIS on certain sectors, or simply the pure result of the natural evolution and modification of the breakdown of our assets between S1 and S2.
It's really very tiny, and we don't expect to have to modify the macroeconomic scenario this year, which would be the main driver of a significant movement on the S1 and S2 provisioning. We are very prudent in terms of provision. This is demonstrated, I would say, by the level of provisioning that we have in our books. We have close to EUR 20 billion provision at group level and close to EUR 10 billion at CASA level. Inside those provisions, we have EUR 2.7 billion of Stage 1 and Stage 2 provisioning at CASA level and close to EUR 7 billion S1 and S2 provisioning at group level. We don't intend to write back those amounts of provision going forward, and they are here just to attest and to confirm our very prudent approach in terms of cost of risk.
Definitely what we see in the macroeconomic environment is not showing any sign of deterioration in the credit environment as of now.
Great. Thank you very much.
Thank you.
Your next question comes from the line of Jean Neuez from Goldman Sachs.
Hi there. Hi, Jérôme. Good afternoon. I just wanted to ask about the French retail revenues and the Italian retail revenues, because compared to the domestic Italian peers that have reported up until now, and also in France compared to BNP and Soc Gen, your revenue seem to be doing quite a fair bit better. I noticed in some securities gain in Italy, but nonetheless, up 5% year-over-year is a big number because I don't think you have many trading revenues, I don't think in there. The same in France. I remember you unwind some swaps back in a few years back, but I just wanted to try to understand, firstly, in Italy, what was your net interest income trends? Also what you attribute the resilience on net interest margins to in those businesses.
In Italy, as you said, in the top-line evolution, you have a one-off that we've mentioned. We have also a very good behavior of what is called the managed savings for the account of our customers that generate a significant volume of fees this quarter. Of course, the level of fees can be on a floating rate. They don't renegotiate the rate, but they renegotiate the spread. We feel a real pressure on net interest revenues in Italy as well as in France. We manage, thanks to the volume effect and thanks to the development of the fees to offset that and to have a dynamic evolution of the top line. In France also, we always say the same. We have the volume effect that is positive, and that has helped indeed by the decrease in interest rates.
We have the development of fees and commissions. We have, I would say, the will that we have to continue to attract new customers in order to develop our customer base. The P&L of LCL is a very simple one because it's a pure retail bank in France. It has no other activities. It has no other gimmicks in its P&L. I think that it's quite straightforward.
Okay. It's just that it's slightly different compared to the peers. I mean.
Maybe you should ask the peers.
We asked them, too. Today is your call. Anyway.
Thank you, Costa.
Thanks, Jérôme. Today is your call.
Your next question comes from the line of Giulia Aurora Miotto from Morgan Stanley. Your line is open. Please ask your question.
Hi. Good afternoon.
Yes.
My first question is about deposits and the fact that they keep growing more than loans. I was wondering, what are you seeing on the ground, and do you think there is potential for an acceleration of a move from deposits onto investment products, especially on your retail networks? What's the potential from this revenue opportunity? That would be my first question. The second question goes back to the EUR 5 billion 2022 guidance for net income group share. I was wondering if you have any updates for us on that one, and whether it would include also the recent acquisitions. Thank you.
Well, thank you. It's true that the customer deposit is evolving very rapidly. Actually, it's been the case at LCL. It's also the case within the regional banks of a wish to keep big liquidity buffers, everyone at his or at her level. Of course, once the situation is going to be completely clarified, once the pandemic will be considered completely under control, all these people, be it the household or the businesses, are going probably to make decisions regarding their cash position. These decisions can take different directions. We think, we expect, and to be frank, we wish, that a significant part of the savings accumulated by the household on their side deposits are going to be transformed into consumption, because this is going to help significantly the pickup in the economic activity, and this is going to be good overall for the country.
We are not going to try and induce them, I would say, against their will to transform these savings or these deposits into long-term investment products. Of course, if part of this cash is relevant to be invested long-term, we are here and we are ready to do so and to help our clients to find a solution because we precisely have the whole range of solutions. We have the life insurance solution, we have the asset management solution, we have also the real estate proposition. We have the capacity to propose our customers the whole range of long-term investments if they wish.
Clearly, we are not going to actively try to force them to go into this direction rather than consuming if they wish to do so, when they will consider that the confidence is here and the stability of the environment allows them to consume more. It's more or less the same for businesses. Your second question was about our EUR 5 billion of net profit target for 2022. What we've seen in Q1 2021, of course, Q1 is not making the full year, what we've seen in Q1 2021 is not discouraging us to continue to target this level of profit for next year. Let me put it this way.
Great. Thank you.
Thank you.
Next question comes from the line of Guillaume Tiberghien from Exane BNP Paribas. Your line is open. Please ask your question.
Yes, good afternoon. I've got some questions on the CIB. In your medium-term targets, you had a cost income ratio of below 55%. We are now at 50%. You're not going to give a new target, presumably before the end of 2022. Can you just give us a feel as to whether you think you can continue to operate around 50%, and therefore the previous target was a little bit optimistic, or you think you're over-earning a little bit at the moment in CIB? The second one relates to the CIB RWA in financing activities. They've gone up quite a lot. What is the outlook for that, please? The last one is on the capital target.
You have not changed the target since CRD V, Article 104A. Does it mean you won't change the target, and therefore you're not taking benefit of this opportunity, or that you wait before cutting it to 10%, you wait until the environment has improved? Thank you.
Thank you, Guillaume. First, the cost-to-income ratio at the CIB. We have always thought that having a low cost-to-income ratio in the CIB activities is a key element in the stability of the CIB. When you have a high cost-to-income ratio in this business, you more or less induced to take the risks, whatever they are, in order to generate revenues, and this is the moment when you take the bad risks. Clearly, we have designed our CIB to be operated with a low cost-to-income ratio. 55 is the target, and we think that 55 is already very competitive as compared to most of the other CIBs operating in Europe and in the world. It happens that this quarter, we managed to go below 55, and we are around 50, which is all the best, of course.
We are not going to change for the time being the target. We have to reassess that in a steady exercise when we will reframe our medium-term plan and so on and so forth. We are happy to be below the target for the time being, no doubts about it. RWA in the financing activities, well, it's always a little bit volatile because if I take a series back last year, we started at EUR 74 billion in Q1. We went up to close EUR 75 billion in Q2. We went down to EUR 72 billion in Q3, and we are now at EUR 78 billion, including Forex effect and including the effect of negative migration and partially the effect of CRR II. Many pieces that were not linked to, I would say, the organic growth of the portfolio.
Every time we have some strengthening of the regulatory requirement in terms of RWA calculation, we try then after to optimize and to stabilize the level of RWA. I prefer to have a CIB with this level of RWA and this level of cost-to-income ratio than trying to be too aggressive in terms of taking market risks, for example, and taking risks that are not completely taken into account by RWAs. I think we have a stable CIB, and this is exactly what we want to have. Last point on the capital target. We perfectly have in mind, and that Article 104a is allowing us to reduce our target, all things being equal.
The calculation that you can make as well as I can do that would lead us to somewhere around 10.5% rather than 11%, all things being equal. As we are presently at 12.7%, I don't really see the point in really modifying the official target. You've seen that we still have ahead of us a significant number of elements that may impact our CET1 ratio. I think it's a little bit early to modify formally the target, but we haven't forgotten about Article 104a.
Thank you.
Thank you.
Your next question comes from the line of Omar Fall from Barclays. Your line is open. Please ask your question.
Hi, good afternoon.
Good afternoon.
Just firstly, on insurance, you normally tell us to only look at the net profits and not the rest of the P&L. Is this EUR 300 million a normalized base after the pandemic disruptions last year? I ask because you quoted a lower C3S social contribution charge, and I can't tell if that's a one-off or not and how that's accounted. In other words, usually, it used to be the Q1 for insurance is the lowest quarter, and net profit improves throughout the year. Is that kind of what we should still expect now? Second question is on LCL. If I look at loan growth X the guaranteed loans, in the last three quarters, that's been +5%, +4%, and +3% this quarter. Why should that improve when the economy reopens?
Businesses have tons of liquidity, and will spend time getting rid of the guaranteed loans. Mortgages aren't elastic to reopening if we look at other countries, and consumer credit is small in the net.
Been quite a satisfying quarter in terms of profit generation. Let me start with two technical elements that are going to impact, going forward, the profitability of the insurance business. The first one, which is a negative one, is that, as you know, since the middle of last year, we book the RT1 coupons in the P&L and no longer against equity, and this represents around EUR 20 million a quarter of cost, which is accounted for in the non-controlling interest line. The second, LMU2, before the next step of unwinding the switch mechanism, which is supposed to take place before end 2022. You have the normal course of business. Q1 2020 was weak because of market effects. Q1 2021 is good.
It's not exceptionally high, but it's good in terms of volumes of premium, and it's good in terms of market evolution that is leading to a preservation of the value of our assets. Of course there is going to be some volatility, but I guess that this quarterly level is not completely irrelevant. LCL, the evolution of the credit demand and the loan outstandings at LCL. Well, what we know for sure is that many of our business customers have the intention to invest and to launch projects as soon as the sanitary situation is stabilized. For some of them, they have at least partially the cash on their accounts because they've secured the cash. For some of them, they are going to need to borrow money from their bank.
We are ready to do so, and this is going to be the case for the SMEs and also for the self. Financial stability has put in place some constraints that may refrain some household to access to a home loan. The appetite of the household to buy their homes continues to be significant in the present period of time, and clearly we've seen a good level of activity for home loans again this quarter. I don't see any reason why we should see a negative evolution of the loan. It's about 30 months.
Got it. Perfect. Thank you.
Thank you.
Next question comes to the line of Tarik El Mejjad from Bank of America. Your line is open. Please ask your question.
Hi. Good afternoon, Jérôme. Just two questions, please. First of all, follow up on the review of minimum capital. Do you think that running a bank with such a large balance sheet would be acceptable to run the bank at below 11%? I know there is requirement ratios, but also, what's the acceptable to run the bank at and comfortable? At the time, we were talking all about 10%, which became 11 and 12. Let's just have your view on that. When you revise and apply the Article 104a, would you probably just put it in connection with Basel IV and basically give a new target under Basel IV, which will be then 10.5, absorbing Basel IV? Would that be some kind of logic you would have?
Then second question, maybe it's too early, but what's your take on the discussion on this Single Resolution Fund contribution? As a large bank, again, it impacts you materially. So what's the latest on that and what do you think? A few banks are definitely lobbying on have it stopped by end of 2023, but what's your take on that? Thank you.
Thank you, Tarik. First question, we don't intend to steer a large balance sheet as ours, as you say, at 10.5 or 11, and there's no reason why we shouldn't continue to build up the capital robustness of the Group globally. CASA is inside the Group, benefits from the high solvency of the regional banks, and do not need to be steered at such a high capital level. This is precisely, I would say, the attractive feature of the structure of the Group that is really helping us to generate and to deliver a good return on equity for CASA's minority investors, whilst being on the safe side globally in terms of solvency, thanks to the Group solvency.
I don't see any reason why we shouldn't translate Article 104a exactly as it should, thus leading to a reduction by around 50 basis points of the official target of CASA. As long as CASA continues to be part of Crédit Agricole Group. It's true that going forward, there is another important moving piece, which is Basel IV. This is also, you're right, another reason why we are in no hurry to modify formally our target, because we don't know exactly how and when Basel IV is going to be transposed. What we've heard is that we should access to potentially a draft directive somewhere after the summer. We'll see at that moment exactly how to handle that. Your second question was, excuse me, Oh, the Single Resolution Fund, excuse me. Yes.
Well, officially, the Single Resolution Fund will be completely ramped up end of 2023. After that, we should only contribute to maintain the Single Resolution Fund amount to this level of 1% of the covered deposit. Normally, this is what is going to happen. It's too early to tell if this is really going to be the case, but you can count us amongst the bank that will try to, I would say.
Thank you.
Next question comes on the line, Pierre Chédeville from CIC. Your line is open. Please ask your question.
Yes. Good afternoon, Jérôme. One question regarding perfy at Amundi. It seems that it was quite important this way, this quarter. I know that there is a reform which is prepared by the ESMA regarding the calculation of perfys, not on one year, but on five years, and I wanted to know if you had any idea of the impact that could have on Amundi revenues in the coming years if this reform is applied. First question. Second question, we have seen some articles recently regarding, I don't know the term in English, fragmented payment. [Foreign language].
Mm-hmm. [Foreign language].
[Foreign language] I wanted to know, what is the view of CACF regarding this business? Are you present in this business? If not, would you like to be? My last question is regarding shipping, and as one of the major player in the world, could you give us any color regarding shipping, not only from the point of view of risk, but also from the point of view of revenues. Thank you, Jérôme.
Thank you. Starting with Amundi and the performance fees, we are perfectly aware, of course, of this potential modification of the regulation regarding performance fees calculation. Amundi is already quite significantly in line with the new requirements of this regulation. This may have a negative impact going forward, but quite moderate and really phased in across five years. It's not something which is going to significantly modify things regarding performance fees. Performance fees are much more exposed simply to the volatility of the market, because between Q1 2020 and Q1 2021, the evolution of performance fees explains EUR 70 million of difference in terms of revenues at Amundi. It's around 40% of the revenue increase at Amundi. It's very significant, and it's by definition volatile because it's linked to the performance achieved by the portfolio managers at Amundi.
CACF and the fractioned payments, it's clear that it's a developing trend on the market, and that more and more consumer credit operators are proposing this to their customers, their customers being not only the final customer, but also the retail partners. CACF is definitely working on that. I'm not able to tell exactly where they stand in terms of development of the offer, they're perfectly aware of that and they're working on it. Well, shipping, you know that it's one of the businesses in which CACEIS is very active. It's a business that has had last year some significant downs. Prices on the shipping market are very significantly up since several months, with not only the global pickup in the economic activity, but also you know that this incident in the Suez Canal has triggered a very sharp increase in the pricing of shipping.
It's a business in which we have a significant exposure. It's around EUR 12 billion-13 billion of exposure at default. It's important, it's significant, it's not massive, and it's one of the several sectors of activity in which CACEIS is active, and it's a component of the balanced business model at CACEIS. Inside the shipping activity, we are exposed to several sub-segments, be it leisure shipping, be it all the categories of carriers plus also the ship makers and so on and so forth. It's a very diversified exposure that we have.
Regarding leisure and carriers, are you worried about the situation?
Well, within globally the shipping, you know that the commercial shipping segments are performing very well. It's true that the leisure segment is almost completely on halt, but it's not going to last forever.
Hopefully. Thank you, Jérôme.
Thank you.
Next question comes from the line of Kiri Vijayarajah from HSBC. Your line's open to ask your question.
Yes, good afternoon, Jérôme.
Good afternoon.
First question on capital. Just very quickly, I wanted to clarify if any of the negative effects that you're flagging this quarter potentially unwind in the coming quarters. It feels like they're all pretty permanent on that slide, but just wanted to check that I wasn't missing anything there. Turning to the second question on those government-backed quasi-equity loans in the pipeline. Because you own a large insurance company, you've also got Amundi, I just wondered if your eventual exposure to that vehicle is going to be bigger than, say, your natural market share, your natural banking market share in France because of the way that particular fund is being structured. Just some guidance on where you think your aggregate exposure might eventually end up, taking account of all the various entities within the wider Crédit Agricole Group. Thank you.
Starting with the capital headwind that we have had this quarter, as I said, the increase in RWAs was around EUR 12 billion, out of which we have had EUR 5 billion linked to the switch dismantling. This is here to last. We have had close to EUR 2 billion of Forex effect. This is perfectly revertible, it's going to vary across time. We have had EUR 1.2 billion of negative rating migration of some counterparts at CACEIS, it's only a part of the EUR 5 billion that we have had on the last four or five quarters. This is definitely a trend for the time being. If the economic recovery is operating as we expect it, this is going to revert progressively. We have had this TRIM effect that represented close to EUR 3 billion of negative evolution of RWAs.
This is here to stay until we've found some ways of optimizing the RWA calculation, which is regularly the case. You see there that, I don't know what can be qualified as steady and what must be qualified as volatile, but here are the main elements explaining the evolution of the RWAs. We have had a reduction linked to the increase in interest rates, triggering a decrease in the value of the equity stake in our insurance operation. This can also vary across time depending on market parameters. Definitely, we are absolutely not worried at all by this movement on the quarter, where usually there is always a depletion in the CET1 ratio because generally Q1 is a quarter where we book significant regulatory effects, negative regulatory effects, and Q1 is also the quarter of IFRIC 21.
It's a quarter where we generate less results than a normal quarter. The equity loans that you were referring to, part of the new mechanism put in place by the French government, it's true that we are going to represent a significant part of the investors within the fund that is going to fund these loans, EUR 2.25 billion that is going to be invested by Crédit Agricole Assurances in the fund. At the same time, Amundi is going to be the fund manager operating with another French bank. What is important for us is that we are going to work hard in order to make sure that our bank networks are going to originate a significant proportion of these equity loans for their and for our customers.
When we are talking about the EUR 2.25 billion that Crédit is going to invest in that, it's the, I would say, the liability side of the fund. What is important is the asset side of the fund, who is providing loans, these equity loans, and we are going to be very active in order to make sure that we provide a significant part of them. At the end of the day, in terms of risks, as you know, there is a 30% government guarantee on these loans, which is really protecting the investors.
Great. Thank you, Jérôme.
Thank you.
Once again, if you wish to ask a question, please press star.
Hey, good afternoon. A couple of questions, please. Firstly, could I just come back to the insurance division and the top line? Should we read anything into the level of revenues compared to the insurance assets under management there, which seem to be a bit lower than they have been in the past? Is that a red herring, and we should be looking at some other metric in order to gauge the revenue power of that division? Any guidance or thoughts there would be appreciated. Second question is just on cost of risk and that maybe there would be a chance for them to drop down to zero, and you just see the defaults come through only stage 3 provisions for here. Why are you still taking them, and will you keep taking them in coming quarters? Thanks.
Integrating insurance revenues into the P&L of a banking group is always quite complicated, actually. The top line in the insurance activities is always somehow hard to read across through the lens of a banking group. Nevertheless, what we've seen this quarter in the top line of the insurance activities is partially the reflection of a good level of activity and a good level of risk in the non-life activities. In the life activities, some positive effects coming from the recovery in the valuation of certain assets that we had to provision in Q1 2020 because of market movements and that we could ride back, I would say, in Q1 2021. This is the combination of those elements. What is important in the life insurance business is the capacity of continuing to generate the level of profit that we target.
This clearly has been the case this quarter. What is also important in the life insurance activity is the capacity of maintaining for the Euro part of the book. By the way, you may have seen that we've continued to increase the unit link part of the book. For the Euro part of the book, what is important is the capacity of continuing between the yield of the asset book that we manage and the profit-sharing rate that we intend to pay to our customers. This quarter, the yield continues to be quite significant between both. It's a little bit less than 100 basis points, which is very reassuring.
This allowed us not only to generate the level of profit that we post here, but also to continue to increase this provision that we've progressively booked in order to protect our capacity to pay the profit-sharing rate to of the outstanding in EUR of Predica. This is the situation of the insurance activity. In the cost of risk, as I've said, the additional provisions in S1 and S2 can be justified by different reasons. It can be justified by a strengthening of the macroeconomic scenario if we deem it necessary. It's not the case, and we've not modified the macroeconomic scenario because we are confident with what we've embedded into it. It can be justified by the evolution of the loan portfolio that we have.
Either we have an increase in new loans, this is increasing the S1 category, this requires some ECL, one-year ECL, it's a very tiny amount. We have migration between S1 and S2, this needs an increase in provisioning because the level of provisioning when a loan goes from S1 bucket to S2 bucket, needs an increase in provisioning. It's not been very much the case this quarter either. The last reason, which is very important because of our, I would say, DNA, is the prudence that we add up. The top-up on the provisions that we regularly book because LCL, because the regional banks, because Crédit Agricole deems it necessary to book an additional provision on a specific sector or locally. This is not the result of the central forward-looking scenario that we've embedded in our models.
Okay. Thank you.
There are no further question at this time. Please continue.
Well, thanks very much all of you for attending this meeting, and hope to meet you in person someday. Take care in the meanwhile. Bye-bye.
This concludes today's conference call. Thank you for participating. You may now disconnect.