Hello, everyone. I hope we can meet again soon. I'm going to switch to French, but the presentation will be translated as we go along.
So thank you for coming In large numbers to this workshop, which now can be said to be traditional, this year's workshop is about the Consumer Finance and Jerome Rivier, who is the Deputy CEO, will be make a short Introduction. Thank you. Good day. I'm also very happy to welcome you for this workshop. It's the 3rd of its kind.
And this year, We decided to speak about consumer finance. So I have with me and they are the ones who will be mainly speaking. We have the Credit Agricole, consumer finance team that will be making the presentations. I will just make a few words of introduction. First of all, to talk [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] About the SFS operational department and services, which is one of the 4 Main business lines of Credit Agricole Inc or SAUC, it represents nearly 13% of our net income.
Now the second typical feature here is that it is at the heart of the creation of Synergies within Credit Agricole and within Credit Agricole Inc. As you can see, we Back from it, about 1 quarter of these very famous revenue synergies, which have been helping us since 2019 to grow our top line. On the next page, a few details. The business of consumer credit, CACF, which is Credit Agricole Consumer Finance, just a few short words about this. First of all, to tell you that this business is developing not only Its own business, which will be described at length, but at the same time is key in the support provided to the group's Retail banks to develop their business of consumer finance with their customers.
This is true for Credit Agricole, Cas and Credit Agricole, Italia in Italy. Secondly, as I said, and I'll come back because it's Key, this consumer finance is really at the heart of our synergies Between the various business lines within the group, let me mention the insurance business, which benefits hugely From the distribution capacity of CACF as well as the payments business line, as you know, obviously. Payments and consumer finance are intertwined. Thirdly, and there again, My colleagues will come back to it far more at length. The consumer finance is really at the heart of our Thinking and of our work in order to develop what we call our client or customer project, which is about the excellence [SPEAKER MARCO TRONCHETTI PROVERA:] In the client relation in order to develop innovation.
And you will see and hear many examples in this regard. So let me end with this Quick introduction. I am staying with you for the whole workshop. Therefore, I'll be able to answer, if necessary, to a number of questions, Which would be addressed more particularly to me later on and immediately let me turn it over to Stephane Priami, who is the Deputy CEO [SPEAKER FREDERICOLE HENRI PINAULT:] Of Credit Agricole Inc, in charge of the SFS division and CEO of Credit General Consumer Finance. Over to you, Stephane.
Good day to all of you. Very happy to be with you this afternoon and share with you CACF strategy and our ambition for the coming years will be with Valer Liventier, Jerome Boucher and Richard Boulignier And we'll be alternating this presentation. I joined in January this year, CEO of CF. [SPEAKER MARCO TRONCHETTI PROVERA:] It was a difficult year, you can suspect, of course, but it was so full of exciting things that we want to share with you this afternoon. I have a 35 year career in the group, Nearly in every business lines, guest regional marketing, general inspectorate, compliance, and I spent 5 years as the CEO of Sofanko.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] So I know quite well the business lines of consumer finance. So we will present the history of CACF Around several points. First of all, come back to CACS outline so that you get a good grasp and good information about [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Geographic locations in our business, then I'll come back around the 2019, 2014 or 2019 years, not to go back to the past, but we will see many interesting elements for the current period and for the coming period, and we'll See mainly the reasons behind the success of CACF and the key points that allow us to be confident about the future. And then we'll get an update about one key element this year, which was the COVID crisis. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And we will explain what we carried out so that you can see that the company is solid and was Quite resilient.
And then we'll be focusing on the coming years with truly for us The priority to growth and to development, we really want to develop CACF for the coming years. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] We'll be translating this because it's important into financial targets. And that will be the end of this presentation. But before your I will wrap it up. So coming back now to the presentation of CACFC, ACF or CAC Consumer Finance, we are present [SPEAKER JEAN FRANCOIS VAN
BOXMEER:] Where
we want to be, namely in places where growth and the functioning consumer finance seem to us interesting and also in areas Well, we can benefit from our major partnerships in order to ensure them a presence in the main countries, especially in Europe. [SPEAKER CARLOS GOMES DA SILVA:] Well, at CACF or Consumer Finance, there are 3 vessels, Sofanko Amoz [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And FCA Bank, which represent a major share of the business and there are other entities that are smaller, But which are holding up well in their market in countries that are significant for us such as Portugal, Spain, not long ago, by the way, Spain, Germany [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And outside, I would say, of Europe, we also have location in Morocco and another joint venture in China, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Which is an old joint venture with which we are very happy. And there are 2 other locations mentioned, one in [SPEAKER JEAN FRANCOIS VAN BOXMEER:] The Netherlands, but as you see, we decided now since September to leave from the Netherlands. And we have a location which does a lot of [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Consumer credit but not linked to CSCF, which is Credit Agricole Poland, but we mentioned this of course to be comprehensive about the [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Consumer Finance Business Licis, slide is interesting.
It shows what I was mentioning that is there are 3 entities that are significant in terms of Volume of business and contribution to profitability, Sofanko, Abbot and CFC Bank and we see that the other entities [SPEAKER JEAN FRANCOIS VAN
BOXMEER:] Profitable and active.
And we have as well one recent business, so you in Spain [SPEAKER
MARCO TRONCHETTI PROVERA:] And one
which is suffering a little bit from the market in Morocco. For the remainder, you will note that this year, [SPEAKER MARCO TRONCHETTI PROVERA:] With COVID, nearly in every entity, we gained market shares, and we'll come back to that. This is certainly due to the modernity, which is Specific to us, the digital element and the commitment of our staff, which helped us achieve these results. Now a graph now to show you that for us the choice is significant. We chose to be essentially in Europe Because the model is fine with us.
It's a model where we want to be in direct relation with the client. It's very much a model and we are present also where we can have direct relations with customers, which is the case in China. [SPEAKER JEAN FRANCOIS VAN
BOXMEER:] We've indicated this graph to
show you that in our choice criteria, the risk is a major element. We are not present in geographical regions, which [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Opted for a different growth risk balance. We are in Europe and you will see we are doing our business in Europe quite [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Decently, but in a region where we have the risk and the control, essentially because the share of the Renewable has reduced dramatically, especially in France. And because other businesses Such as credit cards is less developed in Europe. So CACF business is comprehensively or present in the range of the possible offers.
In terms of consumer Credit, it involves amortizable credit, a traditional one would adjust quite well to certain types Of properties, and of course, we also have the so called Credit Renewvlable, which produces A level which is still very important. And it's 2 elements also which are have been important, which is the buyback [SPEAKER CARLOS GOMES DA SILVA:] Of loans or credits, which has developed a lot when we talk about this, about buying debts, this might not sound [SPEAKER
JEAN FRANCOIS VAN BOXMEER:] To be in a very
good state, that's not the case. Most of this market is made up. I'll give you an example. Typically, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] The person who will be retiring in 1 or 2 years and who still has loans that are amortized and wants to spread out knowing that the [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Pension revenues will be down by 30% or 40%. So when they spread out their expenses, they make sure that their net are bought back.
So to spread this up with more maturities, but lower, this is very interesting very often. We also are present And the LOA, the leasing through joint venture in the automotive business with Agossofranco. And we also are those in business in the LOA, which is the leasing and purchasing. This is Something we put in place several years ago, a present also on technological goods, iPhone, iPad, etcetera. And there are 2 commercial activities that we manage, one which is key for us and for our customers in terms of insurance products.
And we have also a savings business outside of France in order to be able to ensure our self reliance. In terms of cash, the range and the
1st, a
wide present in nearly every country, as I just described. And saying this, we have 3 sales or distribution systems, and that's also very interesting if we want to understand where the challenges of our business. The first Distribution is the short circuit, the direct one, if you want, which allows us to have the end customer Face to face directly who contact us generally because they saw something on the web about us [SPEAKER PIERRE ANDRE DE CHALENDAR:] There were some targeting actions. We get back these customers and give them their consumer [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Credit, they turn out to be very interesting. And historically, we do a lot of cross sell and upsell.
This will be our growth Prongs in other circuits, but in the short circuit that anyway we do cross sell and upscale. That's when the customer is with Sofanko, [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] We have many data concerning him or her, so it's quite easy to give them to ask him to join us for other [SPEAKER JOSE ANTONIO ALVAREZ DE SOTO:] For insurance, maybe a ramp up in regard to the loans already acquired. The second distribution channel is quite significant for us. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] That's the partnership channels. They are numerous.
They are in the retail business, in the auto industry. They could be [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Also, businesses on the outskirts of cities who sooner or later need consumer credit to help their customers buy They are good. So they provide us these customers. This is why we call this long circuit. And this is a business which is quite significant [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And which has grown tremendously.
So the interesting here is to give out the first loan, which is important for us and possibly Insurance, if possible. But this is a progress we need to make, and we'll talk about this for the future. We need to improve In relation to what is done in the short, sir, we can make progress quite hugely with the cross sell and upsell. The 3rd business is the white label or service providing, will provide all of the added value which is necessary for Consumer credit, it could go from the scoring aspect through the Internet to the tool to key in cash [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Or with our partners until collection and everything we can do when you're involved in consumer Credit, historically, we do this very well for the LCL and Caisse Regional where we acquired such experience. We do this also abroad.
Agos, for example, works with me, Marco Popular di Milano and Crediagricole Italia, Where we provide that service with a range that is comprehensive. This is a major [SPEAKER JEAN FRANCOIS VAN BOXMEER:] That we want to further develop of providing across Europe because we believe that we have the right tools for that and because we feel it's the right moment. And as you can see as well, and I will prove this to you later on for the time being, just believe My words, so we have really grown tremendously in the digital and in data, in the digital ecosystem, not only in the On the web or in underwriting, but also in every ecosystem that helps drive customers onto our Internet [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Sites whether through listings or as I said before through targeting or retargeting. So this is certainly [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] A key factor and something that allowed us a very strong resilience during this crisis year. [SPEAKER PIERRE ANDRE DE CHALENDAR:] Now we will come back to the history between 20 2014 2019, Valerie will show you the very good performance of CACF during these 5 years of performance in terms of profitability, in terms of sales, in terms of business.
So what is the origin, as a matter of fact, Of that success story, well, we identified 6 or 7 of them. The first one is the customer base. We have a customer base that is Extremely powerful. I'll show you this soon. We have a partnership base.
Our partners in the long circuit are diversified very often, Prestigious and have a quality custom base, and we have that digital expertise that helps us
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] To deal with these customers, then
we have a joint venture model with FCA Bank and our Subsidiary in China, which is very profitable in the high performance, which has boosted our business there. And you will see with a degree of resilience to risk, which is very And then the insurance business regarding an entity with Sofanko, 20% of the net banking income comes from the insurance In fact, and also the commitment of our teams in moments such as those we are experiencing now all of us, As a manager of a company, I believe this is what matters the most. And in terms of commitment and involvement of Our staff, we have very good results, and I will show you this in a few minutes. And then we'll spend some time On the financial performance on the base of customers, 14,000,000 customers, usually their data are very well enhanced.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:]
We have many elements on these customers, so it's a working base, which is significant, in addition to being not fixed because each year [SPEAKER JEAN FRANCOIS VAN BOXMEER:] We have major acquisition actions. You can see entity that what comes from the Schott's [SPEAKER JEAN
FRANCOIS VAN BOXMEER:] Circuit, the direct customers
and what comes from the long circuit and these figures are adding up mechanically in a way. And then To give you an example, we have about 300,000 customers who are cross sell on a regular basis. [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] So this customer base has led us has been coming through our partnerships and through the short circuit. We have diversified [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Partners in every sector of the economy and generally quite prestigious. Of course, the direct Distribution that is the Credit Agricole brands or the brands of our partnership, Fasalas, for example, in Morocco.
And after that, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] They are the retail banks in the group that distribute our consumer loans or credits, and we have [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And automotive share, which is significant, such as GAC in China and Fiat Constellation with FCM, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] But we also have brands where we are major actors like Suzuki, Fiat Duo, Fiat and you will note as well [SPEAKER
JEAN FRANCOIS VAN
BOXMEER:] And it is prestigious brands such as Ferrari and Maserati. It's not inconsistent with the consumer credit. In France, the Maserati business It's financed through consumer loans, now a distributor of consumer goods or properties. This is a long circuit that is more traditional with beautiful snack, dark tea, Ikea, Roche, You can read that risk each time. These are customers who are fine with us that we like.
They present degrees of risk that we control [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Quite well that we can manage and then that present customers who often are of good quality, what is lacking in this list, but The Apple brand, which we haven't mentioned, then their institutions, this is a key factor. It will be [SPEAKER JEAN FRANCOIS VAN BOXMEER:] One of our growth drivers, we already work today outside of the banks of the group of our partners. We work for institutional [SPEAKER
JEAN FRANCOIS VAN BOXMEER:] Such as EMF in
France, and this is a major development driver for us. Maybe now to show you the power of The partnerships that we have, especially in difficult peers such as the one now, there's a short video that was prepared for you with Enrique
Simon, in a few seconds, we should move for our pure player world. So we try to accelerate our performance in online to compensate the figures on Stores and the partners, in particular, CSCF, they help us to accelerate all the financing in online, in particular, for The credit cards and the oil concerning for the contract was quite helped to accelerate the performance in online. After confinement, what's happened was magic. 1,000 of customers come back to the stores. They were waiting for their store open again.
We mobilized all the teams and forces. And with CSF, we decided to move our commercial planning, in particular to the extra 2 month delay for the first payment. And that help us all to catch new customers for the figures. What is important to know is we re signed a new partner, a new long term with the UCSF for the next 10 years. And in this partnership, what is important is We count on this contract to create new figures, new business, thanks to the credit facilities.
So there's a lot of work to do to move on the Figures that we expect around 10% penetration rate, where it's a huge challenge for everybody. But we believe that everything we will put in place In terms of technology, commercial planning, support, etcetera, to manage to that. So we believe on this movement. We believe on this The mobilization for the teams that we count a lot for the next 13 years with this meaningful partnership between Fnac D'Archie and CSF.
So you have here a good example of a Successful partnership, which should be lasting for at least 10 years. Of course, this is Based on lots of engagement, dedication and skills, but also lots of digital technology. Digital customer journeys involve 3 things. They involve, 1st, digital journeys to be accessed directly by the end customer. This is of great importance.
Number 2, Digital customer journeys that can be incorporated into the customer journeys of our own partners, always a bit complicated to fit Within an existing management system, but it's very successfully done. And another important factor is that digital technology for us It's instrumental for us to work from home, work from a distance, especially After the lockdowns and commercially, right from the beginning of the lockdown measures in France and elsewhere, We gradually were able to work from a distance, work from home with these tools, including with our And customers through these tools basically use an ecosystem because, of course, they are Blind with other tools, we have 2 sources to capture customers and new business to cross sell And trade with our 15,000,000 existing clients. The first is what we call the call data, that is a data lake With queries and lots of cross referencing of data to identify the right points of contact, the right marketing moments Adright channels, very useful in marketing terms, but very useful also in risk measurement, risk assessment to calibrate The risk and credit scoring. And then you have the hot data, which are the most valuable in marketing time in marketing terms.
And thanks to Data management platforms and good and well targeted marketing actions, you target the shoppers And customers, when they serve the Internet and all this is of importance, we consider that we've reached a good level of digital maturity And in passing, we believe that we have less to invest in those tools [SPEAKER
MARCO TRONCHETTI PROVERA:] To disseminate them, of
course, capitalize on them, but not to invest in developing them. And this was the result of an ecosystem, which Was developed based on the right ideas, on the smart ideas from employees. And we have Labs, for example, in Sofenco, where some employees with great ideas Help develop solutions. 1 employee in Sofanko, as an example, rather than asking Customer with payment hours rather than sending their checks Like in the old time to authorize and enable customers to repay their loan installments by credit Got it. This didn't come from outside consultants or top managers, but from the bottom up from Employees, and we have a second vector for generating innovations around our partnership with Google, With YouTube and other large corporations, and we have very close collaboration with universities now.
Speaking about it is one thing, demonstrating it is another. So you have here Listing, which was done for France for Sovanko, which gives you the rating The bank across a number of criteria, usability, fluidity, efficiency, support and SoftBank comes out As the financial website, which combines the greatest number of these attributes, the easiest to Trade for customers. So the next slide Basically brings us to another environment. And we will Now show you the performance of our automotive joint ventures from 2014 to 2019, which accelerated the growth Of Credit Agricole Consumer Finance. Thank you, Stephane.
It is Very nice to be able to present the results in the Automotive Business. As you can see, we've showed Robust performance. And the performance and efficiency of our JVs was outstanding in late 2019. Outstandings It was close to €43,000,000,000 that is €42,700,000,000 including €33,200,000,000 originating in our automotive Joint ventures showing an improvement of automotive outstandings by more than 62% Yes. In the last 5 years, and this was driven by the momentum and dynamics in our joint ventures, Up 85% in outstandings in the same period.
All this built upon very robust the fundamentals, which are showed here on the right hand side, NBI at 4.3 percent, revenues on outstandings cost of risk, which remain very robust, very resilient costincome ratio, 30 basis point of cost of risk, but not increasing by More in 2020. And pretax net results with contribution improving By 18% on average contribution by the automotive joint ventures, improving their contribution 18% per annum In the last few years, you are here focusing on the ecosystem, which has been Successfully operating the Automotive ecosystem. We have one gem. We have one golden nugget for which we wanted To zoom in, this is leases. This is the long term rental company for the FCA Bank Group.
This gem is meeting the needs and trends of the market, meeting the needs And the changes in needs, which basically have shifted from owning a car to using a car, Providing supports to the new types of car, To electric car and electrified car. So leases operates on its core business of long term rental Business with developing new types of solutions, short term rental services, car sharing, car subscriptions, Including new services to support the acquisition of electric vehicles. And you have the example of My Dream Garage, Which basically is a dedicated offer, making it possible for electric car Renters to use another car than the electric car for 60 days per Yes. So making it possible to for shoppers to buy electric cars or rent electric cars. So leases, [SPEAKER MARCO TRONCHETTI PROVERA:] With its very flexible range of products and services, has turned from a longer term rental company To a fully flexible rental company from a few hours to a whole lifetime.
And you have on the right hand side The contribution to FCA Bank's growth, with FCA Bank's growth being 11% on average. Well, leases has been contributing double this rate. That is 22% of contribution. So a gem and a very successful one. So I suggest we go to Rome, Italy, at the head office of This is to hear Giacomo Carrelli, the CEO of CA Bank, who will tell us more.
We see that the consumer preferences are definitely moving towards the new engines and the new technologies. And we think that the rented economy will be prevailing in the years to come. And that's why we developed this Business line at Absa Bank called Lizzie's. We created a large network of Lizzie's mobility stores. We won through the Lizzie's mobility Stores develop innovative way of promoting FCA and other brands vehicles to the market.
Today, every leases mobility store is fully electrified, so customer can experience 100% electrifying mobility At our stores and you can find them pretty much everywhere in the country. We have them in Italy and in France. Certainly, The new trends of usage versus ownership along with the electrification of the fleet Are the key and most important elements of innovation of our product offering.
So as you can see, This performance makes us extremely proud of this Lease his company and the joint venture business. Now I will give the floor to Jerome Montbourge, who will tell us About the insurance part of the business. Thank you, Stephane. Insurance business is a source Of diversification in our business model, it's a second business line in the Credit Agricole consumer finance, building upon Robust base starting from its diversification. And you have here the product mix Built around creditor protection insurance, protection of financing, protection of property and people.
It is a business which has posted more than 5% of collected premiums Per year, it is performance, which builds upon the demultiplication of best practice inside consumer finance, building upon the insurance operating division In the Credit Agricole Group and tapping into the best possible practices and initiatives in the various geographies to capture the needs and expectations of our customers. So our goal is to reach €1,200,000,000 in insurance Premiums and these dynamics and momentum building upon a more balanced product mix And a business model, which we've wanted to have more balanced sources of revenues with fees on the one hand and Profit sharing, on the other hand, to manage the economic cycles. And Also, we build upon the engagement and commitments of the teams on innovation in services, and our Business line is very much focused on innovation in the field of insurance and in the field of additional Services, and we'll tell you more about it. Now I would like to focus on one point of great importance to me. Until a few years ago, It was a bit difficult to quantify.
That is the commitment and engagement of employees. It's become more easy to Measure after the engagement and recommendation indices were introduced. So for consumer finance, We've had a long history in these ERI surveys. 81% It is our ERI score, much above the average in Europe in the Financial Services, and we are extremely proud of this score because in the question items, which are asked are questions on trust in corporate strategy, Understanding the strategy, commitment and engagements in the company, these are fundamental parameters which have enabled us To weather the crisis, another source for boosting employee engagement is that We commit even more to develop the community or society pillar. You know that's Credit Agricole has 3 pillars, including the society pillar with one long standing Theme of inclusion, banking inclusion, financial inclusion, including, of course, consumer credit for us with lots of education To explain to the future prospective loan takers what Consumer loans are about how they work, and it is an opportunity for us to reducing excess debt Over indebtedness in the countries where we operate.
The second area where we had a long standing presence in society commitments is The fact that every business entity chooses its own areas for assisting and supporting. During the crisis, We invested more than €1,000,000,000 to help the old people's home, nursing homes, the Red Cross and other NGOs and Relief organizations and the consumer finance teams have been working hard via a number of charities and Humanitarian activities to be present in society, not just to give money, but to give time as well. One innovative Area is in the middle. That is impact on climate. We want to play a leading role to improve things In two ways.
Number 1, to improve the way we operate with, assess the carbon footprint of each one of our entity and unit To reduce it, and number 2, we offer consumer credit. That is we need to help jointly with our partners, of course, The consumers to consume as responsibly as possible so that consumption is as beneficial to the planet. This is what we do While trying to develop so called circular economy, trying to come up with Actions and measures jointly with our partners to use and consume our tools in as sustainable a manner as possible. With respect to the next I will call Valerie Lechen, who you have seen the 4 speakers. [SPEAKER MARCO TRONCHETTI PROVERA:] And Valerie will review the financial results and the financial results of the strategy from 2014 to 2019 With a key point, basically, financial robustness is what counted in early 2020 when we had to face up to this Thank you very much, Stephane.
So after this quick review of the key assets in consumer finance and its pillars, I will now review the key financial performance indicators. As Stephane put it, we have approached the health crisis With very robust financial parameters. Number 1, we had very buoyant business activity in late 2019, more than 92 €1,000,000,000 in AUMs and loan origination, close to €45,000,000,000 With good contribution and good net income, as Richard said, this growth was Largely driven by the insurance business and the automotive industry with insurance accounting for 17% of NBI and the automotive JVs with Good growth of 18% per annum, which Richard mentioned, has been contributing to the bottom line with respect to the equity line to 2 €92,000,000 Above this, we have very robust ratio. Costincome ratio At 49.3 percent and cost of risk on outstandings, following the turnover of Argos at a low level of 128 basis Point in late 2019. So all in all, our financial performance has been very satisfactory with a net income group share of EUR 644,000,000 Growth
that I would
call exciting, Anne Arouni, R O N D, of 17.7 Percent. So this has been one of the key factor for improving profitability, that is our control of risk. [SPEAKER MARCO TRONCHETTI PROVERA:] We showed here the change in our ratios since the last crisis from 2012 to 2019, cost of risk, Which is shown here on the left hand side in the economic picture with a joint venture integration went from 4 10 basis points Down to 100 basis points in 2019 with a spectacular turnover for Aegos with cost of risk of 110 basis points. This Structural improvement can be seen in our NPL ratio, which went down by more than 5 points over the same period. So this success we owe to a number of structural measures, both with Eagles and the rest of the group Throughout the cycle, starting with a credit granting, with stricter scoring all the way to debt collection, which is a Key part in consumer finance with a very steady receivable assignment policy, which Cleaned our stock of nonperforming loans, and we benefited from a better balanced product mix with a share of revolving loans Going down by 8 points over our total AUMs.
These structural improvements can be seen when we compare with our direct peers. And you have here, once again, the economic performance with the line by line joint venture view. And when we compare with Bank 1 with a similar profile as ours and Bank 2, which is more focusing On JV on automotive, NBI on AUMs, our ratio is satisfactory close to Bank 1 with respect to costincome Ratio,
one of
the key assets for consumer finance. We are much below Bank 1, but we come closer to Bank 2, which benefits From a costincome ratio of 30% on the Automotive business and the same goes for Cost of risk on outstanding. So the control of our financial ratios are fundamental factors in financial performance.
Thank you, Valerie. End of 2017, early 2020, as
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] From the 1st
January, we had to manage the 1st COVID crisis in China. And after that, it unfolded Continuously throughout the year, as was the case for everybody. Now some highlights regarding CACF. The first one, This ability nearly during the 1st day to manage massive Remote working, it was very efficient and commercial, it was able to continue and the staff could continue To deal with customers remotely, it's important I showed you the digital ranking, for example, of Sofranco. [SPEAKER PIERRE ANDRE DE CHALENDAR:] So behind us, there are traditional competitors.
There are some Fintechs as well. But the reality is that [SPEAKER JEAN FRANCOIS VAN BOXMEER:] In such a crisis, you must be able to muster TMCACF, its 10,000 employees. We managed to do this massively by redistributing The functions depending on the needs, especially in March April where commercial activity was not great. We managed proactively [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And in a very specific and serious with our customers' moratoria, nearly 400,000 moratoria were handled. [SPEAKER MARCO TRONCHETTI PROVERA:]
This allowed customers, 1st of
all, to weather the storm or the wave or it enabled a contribution to the economy. And then also, We handled very professionally this moratoria will help us and it helped us by the way To break out of it in a quite favorable way. It led also to customer satisfaction [SPEAKER CARLOS ALBERTO PEREZ DE SOLAY:] Rising strongly, we were with our customers during the hardships and we were close to our partners and to our customers [SPEAKER MARCO TRONCHETTI PROVERA:] During the recovery when there were some improvement periods and this translate into a referral index [SPEAKER MARCO TRONCHETTI PROVERA:] Going upward and all of this has encouraged our people in having a very positive opinion [SPEAKER CARLOS GOMES DA SILVA:] About the action of their company in relation to themselves, to the customers and towards the society at large and the economy. As you know, This period commercially was hard. So what did it give rise to commercially?
Then I'll ask Marie so that she presents [SPEAKER JEAN FRANCOIS VAN BOXMEER:] The impact in terms of risk now, commercially in terms of sales, in other words, next slide, yes, before that, by the way, there's a video I want to share with you, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Which builds on 2 messages from the group's HR managers from CACF, which show the commitment Hello, everyone. The heart of the project is to serve The customer project shortened the time trace. Our goal is to propose to all our customers and to put in front of them An employee who is to serve them and to respond to their demand as quickly as possible. We structured a human Project with all the group's entities around 3 pillars. The first one is to make sure our managers [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Are not standing still and make sure they are empowered in order to take the responsibilities we give them.
And finally, we have to consider our organizations, modernize them, make sure they are flat. One of the strengths in this is a commitment of our people. The latest study tells us survey [SPEAKER JEAN FRANCOIS VAN BOXMEER:] It tells us 81% of our employees say they are involved or very involved or committed for the group that's 7 points more than last year in a period. [SPEAKER CARLOS GOMES DA SILVA:] And we know the context. 91% of our people tell us they are proud to work for the group CACF.
That's 8 points more Then the standards of financials, standards in France, Etienne and Peter, the HR manager of 1 of the largest entities of the group of Sofranco, To give you further details in the deployment for Solvayco, the human project is to support the customer project, especially [SPEAKER MARCO TRONCHETTI PROVERA:]
In the time to yes, which
is a formidable weapon to gain market share. Well, three points to be at the heart of the project. First one, first of all, is to train our managers to have more powerful managerial posture, Make sure we instill confidence in them, self reliance and empower them. We will coach top management And we will train 500 managers in France on this first item. The second item now, you can be the best French manager [SPEAKER JEAN FRANCOIS
VAN BOXMEER:]
If you have above you 6 or 7 managerial layers, you will be stifled. So the second lever is to Simplify our organization charts by cutting the number of layers. That's the second point. Thirdly, is to reconsider, revisit The patterns of decision making and of delegation, making sure that our decisions are taken [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Faster and taken by the people who are directly connected with the customer to move faster and therefore improve the time to yes. [SPEAKER
MARCO TRONCHETTI PROVERA:]
So being close to our Customers, this is what we attempted to do each time the recovery periods where possible. What we will show you Now on the left hand side, it does illustrate that, obviously, as everyone did, we had 2 months that were Tough April was extremely tough and half of March and half of May were also complicated. On the other hand, as from the beginning of the lockdown, we were already preparing with the sales Teams, partners, the moments for the recovery, anyway, We tried to prepare ourselves in terms of communication, etcetera. The effect appeared very quickly and as [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] From June, we find again levels of production and new money which are quite strong. Well, initially, [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] People thought that it was due just to bounce back or to dead cats bounce, but you can see then that again we are in a period [SPEAKER MARCO TRONCHETTI PROVERA:] Of normal production or new money, which is active as well.
Well, it's normal and active, yes and no. But in June, we're still 85% of Our staff working remotely, which shows again to what extent the digital capacity and the modernity of CACF has allowed To manage issues. Now again, if we isolate the Q3, which is even More market as you see, because apart from Argos, Wafes, Salaf, and FSA Bank, which I will tackle a few minutes, everyone is making progress compared to last year. So in relation to a year without any COVID, and I would like perhaps [SPEAKER JOSE MARIA ALVAREZ
PALLETE:] To specify two things for FCA Bank.
So the minus 4 is not huge. And by the way, There's some catch up there. And Wafaa Salaf, as you know, the situation of lockdown and COVID management was difficult, more than in other countries. So what Salaf is suffering from this directly and for Agosta minus 13% of business It's mainly in the short circuit. And despite all of this, with stabilization of agos market shares, So no worries, Agros, really was in sync with the market.
Another recent piece of information now on Sofanko, The wave of lockdown in November didn't have the same impact compared to April. You see the business in number of cases So Pfizer in April was minus 65% in April, right from the 1st days of the lockdown. In the 2nd wave, we are around 10%. [SPEAKER CARLOS ALBERTO PEREZ DE SOLAY:] And by the way, the business has been up and running now for 10 days in a very strong way, including compared
to last year. [SPEAKER JEAN
FRANCOIS VAN BOXMEER:] Now these elements, of course, are significant. They're about the company, the way it's organized, how we manage our Sales in a period which is going in a choppy way with different steps, lockdown, end of lockdown, etcetera. It's important to look [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] At the impact of the COVID on risks of CACF for 2020, I'll turn it over again to Valerie. [SPEAKER
MARCO TRONCHETTI PROVERA:]
Of course, our cost of risk in 2020 increased compared to 2019 to multiply by 1.5 at the end of September to reach A ratio of 188 basis points. Now essentially that rise is related to the normative provisions that we took [SPEAKER CARLOS GOMES DA SILVA:] On sound and non performing outstandings based on IFRS, it includes notably the forward looking that is [SPEAKER JEAN FRANCOIS VAN BOXMEER:] For anticipating deterioration of the economy, we have 76% of the hedging At the same time, and it was mentioned by Stephane, we massively rallied around our customers to support Individual people and professionals, especially auto dealers, so we granted more than €1,500,000,000 of moratoria. Having said this, we see in our operational indicators and thanks to the effectiveness of our collection teams [SPEAKER MARCO TRONCHETTI PROVERA:] That the Morataria are refunded on time. At the end of September, there were 75% that were coming and 98
[SPEAKER JEAN FRANCOIS
VAN BOXMEER:] Percent were reimbursed. So this major rallying was made possible, especially thanks to abundant cash. It is one of our strength, as you know, our ability to self financing, which has risen markedly around 59% in 2014, Up until close to 90% now and still 84% at the highest level of the crisis. We reached that self financing, Thanks to refinancing sources, a highly diversified policy. Certainly, we are present in the markets, especially we are one of the leaders [SPEAKER CARLOS GOMES DA SILVA:] In the European market of securitization, and you can see the ranking of 2019, but we also are involved in [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Collecting deposits from our retail customers and the institutionals, mainly in Germany, we collected more than €9,300,000,000 [SPEAKER JEAN FRANCOIS VAN BOXMEER:] These deposits, as you see in the slide, it eroded slightly during this crisis, which is still very resilient.
We did it on Purposely because these resources are more expensive than the market resources. So both the control of our risk [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And the control of our cash enables us to be very confident about the end of the sanitary crisis.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] So
at this stage, we moved to a company from 2014 to 2019, Structured itself, acquired lots of robustness, profitability levels turned out to be quite high and above all [SPEAKER CARLOS GOMES DA SILVA:] With 2 modernity elements, the human factor and the digital factor, these elements, as we are showing you, To weather the crisis in a fairly adequate way, and this is a starting point which is very good for us as from [SPEAKER MARCO TRONCHETTI PROVERA:] 2021 to make sure we have strong growth prospects. So what are these ambitions about our future growth? I will Yield to Valerie and speak about the financials in a while. But in of course, about this growth, we will push forward In our medium term plan, we will provide some acceleration points to our medium Term plan. Now in terms of digitizing, on the digitalization, essentially, we will circulate all our good digital practices To all of the CACF and all the business lines of CACF, we wish to reinforce Our activity in the cross sell of the long circuit, I told you before that unlike the short sell the [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Upsell and the cross sell on the we have a potential of progression, which is very strong.
On the Automotive, we want to amplify and develop what we do with our joint ventures, but at the same time, because that's a reality, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] There's a need to work much more on the automotive market in the business units such as AGO, Credit Plus and Sofanko, in reality, outside of the joint ventures [SPEAKER MARCO TRONCHETTI PROVERA:] And of our subsidiary in Portugal, the CACF entities don't have their natural market share in the automotive sector. We will take major initiatives
[SPEAKER MARCO TRONCHETTI PROVERA:]
To find again or find at all these market shares, a third prong which is very important is servicing. Servicing, well, we used to do it. I've shown you before our activity. It is very strong in the regional guests in [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] LCL very strong in Italy, it's also very strong in many places. We are used to servicing and we believe that today We are at the point of focus of 2 central elements.
The first one is that we have tools that are digital. We have the expertise in this field, the ability to propose innovative solutions to the market. And secondly, we believe [SPEAKER CARLOS GOMES DA SILVA:] That all the reorganization that is taking place in the financial or banking or insurance market in Europe can create [SPEAKER CARLOS GOMES DA SILVA:] Can develop third activities of consumer finance and we can they can count on us [SPEAKER JEAN FRANCOIS VAN BOXMEER:] As a service provider, we can do this in a very relevant way. So we want to push this forward. In our medium term plan, we talked about [SPEAKER CARLOS GOMES DA SILVA:] Title commitment and we talked about green financing, we materialize a little bit further this and we quantified it.
I will turn it over So the digital, how will it make it possible for us to speed up and drive the growth Presented by Stephane. So we invested in the past in digital tools, which are at the heart of the intensification of our client Relish by combining the human with the most modern tools. Digitizing means journeys. Thanks to digital tools. We want to improve customer experience, make it as simple and smooth as possible.
And for this, we have worked [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Well, prompted by our partners, you saw this. We have a few pure players and companies considered as the most modern in terms of Customer experience, especially those based in California, thanks to them, we learned and we are pushing the overhaul of our customer The journey is to make it as sound and fluid. We also thinking about this renovation of our client Journey, we want to root it around mobile first. And for several years, we considered the mobile as being [SPEAKER JEAN FRANCOIS VAN BOXMEER:] The interface tool that is central in the relationship we have with our customers on a daily basis, it's in the pocket. This mobile first strategy will pursue it and strengthen, upgrade the omni channels, create a relationship and interaction and contact From a branch through the phone and through the web, all of this, make sure it is seamless and make sure it is the most Modern way as seen by the customer.
So you can have fluid and simplified experiences with customers
[SPEAKER JEAN
FRANCOIS VAN BOXMEER:] Only if we work on ourselves and we have some macro processes that will deliver our services on 2 major processes [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Seen by customers as being a source of progress and where we need to intensify the relation we can have with them, we decide to work On fully overhauling the onboarding, that's very important, and of awarding so that we can reduce not only The waiting period and also the we have started actions on this. We have ambitions [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] That's a very strong. In the long circuit with the partners, we want to have a time to yes of under 15 minutes, 1:5 [SPEAKER JEAN FRANCOIS VAN BOXMEER:] And on the short circuit and in the automotive, the time to yes, below 48 hours, we believe it's a major differentiating factor with regard to experience [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Of customers, if you do our work well, if we work on our processes by simplifying and automating logically, we create [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] Customer satisfaction, and this is a satisfaction we want to measure it. We have already where we listen to our customers in want to enhance it, not to understand better through Verba team what customers perceive and better understand through The Verbitim, what the customers would like to have and work and improve.
So we are in a circle, which is virtuous. Now the Goals associated with the digital ambition is that which we want to have by 2021, 70% oh, sorry, 70% of digitized production. We're already at 63% at year end 2019 [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And have 15 less than 15 minutes time to less in the short circuit and 48 hours or less on the short circuit. And as Stefan said, An asserted ambition and driven by all the managers of the CACFP, number 1
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] In
terms of the strategy across all our markets.
Now digitizing the business. As I said, you have here a process flowchart being For the loan granting process for the automotive business, this process came out In the voice of customer surveys, came out as cumbersome, lengthy. [SPEAKER MARCO TRONCHETTI PROVERA:] And we asked our employees, as part of the bottom up process, to work jointly with our customers To improve it, and Joham on the rest, on the right hand side, the resulting process with fewer FTEs working on Additional creation of value, we have more satisfaction. We have time to yes, Less than 48 hours for this process. So this was a question of automating our processes and engaging our employees [SPEAKER MARCO TRONCHETTI PROVERA:] To provide high customer satisfaction.
As you know, one key component in our business model is partnerships And partnerships to generate new business and cross selling these customers It's a key source of our performance. We want to keep supporting this model by finding new partners, retaining them in a pan European manner, Building upon our strong geographical presence and our strong expertise and know how, we organized this new business acquisition To do that, by building upon our modern and robust tools and experience in digital tools, And we'll be working on increasing the offer payment and consumer loan convergence because The point of sale, be it physical or online point of sale, are key touch points for customers To open new solutions for personal loans, for services, for support, for additional options. And we are Jointly developing this with our partners to increase the diversification and differentiation. And we'll be working on Two areas, allocation, rental, rental services and subscription, Which is a key innovation for providing new types of use and additional services. [SPEAKER MARCO TRONCHETTI PROVERA:] So all this takes on more purpose and meaning if after new business acquisition, the expanding of the range, digitization of If we can cross sell via the data management tools we've developed, we can Today, build upon data intelligence and data management tools to better understand how to cross sell and how to Better organize the support we can provide to customers to meet their needs, how to best protect them, how To best anticipate and develop the solutions.
And I suggest we Illustrate our point. Thanks to our digital tools, thanks to our data lake and data labs, our Key data management expertise and a close collection and collaboration they have with sales and marketing tools, we've developed a tool which is highly symbolic of what We at CACF offer. It's a common joint tool for all employees from The CEO down to the account officer providing us with the best possible cross sell tool, Best possible performance management tool. So I suggest we have Richard now tell us about the Automotive business. Thank you, Jerome.
Now to go on with the Automotive business. We told you how powerful our joint venture we're operating. We want to Accelerate the expansion in our business units and our development goal is to focus On the universe of mobility, and there are 2 main areas. The first is to boost our range of products and services In existence, and the second will be to build upon our partnerships and to support our partners with respect To boosting our range of products and services, To demonstrate the point when we told you that leases was a gem, a golden nugget, We will be adapting to mobility trends, shifting from owning a vehicle to using it by Our long term leasing solutions that we are creating a specific Organization dedicated to long term rental, which will be called CA Rent, a credit you call rent, to support these new trends And to amplify the range and robustness Our credit solutions, 2 hybrid, 2 electric and rechargeable vehicles for both Personal and Corporate Lines. So it will be a big source of growth and development for next year.
We will be accelerating Our business in the secondhand markets via online business development, we have one very nice Fine. Best practice in one of our business units, which is focusing on the secondhand Market, which is Credibom in Portugal, we've launched a marketplace, which is specifically dedicated to secondhand Cars, which is called Pisca Pisca, and one of our source of growth will be to internationalize this marketplace [SPEAKER MARCO TRONCHETTI PROVERA:] Across all our operations, across all our countries. Finally, we'll be expanding the range of services in support of our products By creating the largest possible range of services across the 3 possible layers and level of services covering financing, of course, Including creditor protection insurance or borrowers protection as well as flexibility, services extending The terms, maturities, why not? Also services. On financing property, we are focused on cars, of course, But conventional financing, extending warranties, managing tires, for example, Financing servicing.
And in the past, I would have told you about managing fuels, but I'll tell you about Managing energy and, of course, protecting People and financing to people and supporting our partners is the critical move. Our partners first, the carmakers Our first partners by serving them as a true captive, it is important so that Our partner carmakers have a captive, without having their own bank, building upon The digitizing of the customer journeys via our innovative tools and our best example is the partnership we have established with Tesla, Well, we are full digital in our services. And Larry mentioned it before. It was important for us to support The dealers' networks of the car brands, and we used innovative tools to do that, To support the dealerships, and we did that from the beginning of the crisis, and we hope to take them through The end of the crisis, and we'll be providing lots of support and assistance to all of our distributor and retailer [SPEAKER PIERRE ANDRE DE CHALENDAR:] Partners with whom we are trading already and with whom we'll be trading by supporting their sales networks And tools, but also by providing tools for them to help retain their shoppers and customers.
And thanks to our Innovative tools and to our customer centric culture will play a key role in transforming The act of buying a car, no doubt a car is no longer bought as it was before the crisis. In fact, you don't By the same types of cars today, they are more electrified or more electric than in the past. And we won't be delivering the car in the same manner. So we have a role to play In this shift, thanks to our new tools, innovative tools, electronic signature and Digital tools for both retail and commercial customers. Jerome, over to you for servicing.
Thank you. You have understood it well that We've gained experience with the retail banks in France and Italy. On the back of years of cooperation, collaboration, we've acquired special [SPEAKER PIERRE ANDRE DE CHALENDAR:] Knowledge, know how and expertise, which we want to disseminate across all our operations outside of France [SPEAKER MARCO TRONCHETTI PROVERA:] To capture more partnerships, including financial and banking institutions. So we have a value chain with a number of components, and all of these components, [SPEAKER MARCO TRONCHETTI PROVERA:] We want to disseminate. And this experience, in fact, accounts for some €21,000,000,000 in AUMs.
And we got to ask you to do that by setting up a group level team To work on developing the offer, on developing the distribution model, on developing an acquisition plan, a new business plan. And these offers Currently being deployed on the back of our innovation, and we'll be focusing on meeting the needs and specifics of the various countries while deploying Our powerful sales and marketing forces around the our insurance product and services as well. In the context of these banking partnerships, Our key differentiator is for these banks and financial institutions to accelerate New business on consumer loans and on the back of our solutions, which are sources of further growth, which we'll be providing special support and assistance. Our goal is very ambitious to acquire more than 10 new banking partners by 20 22. And for the retail banks in the group to generate 1 additional market share 1 additional percentage point, sorry, Of market share versus 2018.
So we have a high level of ambition as well to fuel our growth going forward, Focusing on community and society and needs and requirements, as Stephane said, we want to play a key leading role Around green finance, green financing, I won't tell you how important and how buoyant and strong and vibrant this business It is around the world. Now how will we do it? Why should we do it? We are fully legitimate as we already have existing Business operations around private wind farms, wind energy and other types of business. It will have 2 main areas.
1, on Automotive, as Richard mentioned, what we'll be doing, providing support To develop new trends around new types of user needs and the so called clean cars or clean vehicles, We want to play a leading role in financing these vehicles with our joint ventures, with our partner brands, With our distribution channels and independent retailers and agents in Europe, the so called hybrid Electric or thermal engines, low consumption engines. The second area will be to work with private individuals to support their Energy transition, their energy renovation, home renovation, where through all products to contribute to improving their homes, we want to be a key player And supporting them via our financing and credit solutions, saying it is important, doing it is more important, Communicating it is also very important. This is why we signed in the early part of this year with the French public authority a so called charter called FAIR, Translating into English as to do or doing, and we have lots of initiatives in France and elsewhere showing the fact that we want to be a key player on Personal energy transition, and we'll be And we have ambitious goals. On the other €1,000,000,000 a year of Loans generated by Green Finance 2022 now focusing on our ambition for 2022, starting with France with Sofenco.
Our goal at Safenco is to generate organic growth around 3 drivers. The first of these drivers Will be to increase synergy within the Credit Agricole Group, retail banks, building upon our tools, our modern The systems facilitating customer journeys across retail banks with a tool called DG CONSOL, the insurance business, As Jerome said earlier, which is a key component, we are a key an important distribution distributor Of insurance products, Sofinco needs to improve its costincome ratio and reduce its cost, and we want to prioritize Our partnerships as part of our business model, that is to expand the business base to cross sell as a tool for economic performance. Aegos in Italy, pursuing organic growth, building upon 2 areas. The first is the short distribution Building upon the Internet channel, to go online and to support the shift To align, via partners in our direct business and the long distribution channel on servicing, leasing On financing in the automotive markets, as Richard said, we have spaces for further growth and development. A great theme across These business activities will be insurance product and servicing where we have high ambition jointly with Eagles.
Then we have Credit Plus in Germany. Credit Plus It's a challenger in its market. You've seen the market share. It's a challenger for whom we have great ambitions with respect to business development [SPEAKER PIERRE ANDRE DE CHALENDAR:] By gaining market share and also by building upon the knowledge and expertise and know how of the group, sharing best practice In terms of servicing, Jean Clie with the German Financial Institutions and by expanding the range of Credit Plus Services, including Revolving solutions. In the Iberian Peninsula, we want to maintain and reinforce our leadership In the car market, in the new and in the secondhand car market with the Pishka Pishka operation we heard about [SPEAKER MARCO TRONCHETTI PROVERA:] And to diversify our business through new partnerships across the 2 automotive joint ventures with FCA Bank, we want to enhance The value of this strategic partnership, and we've written that was a strategic partnership, building upon leases, which is our golden nugget, Which is a true modern, innovative new tool for China, which is an impressive market by Essence.
We want to develop new offerings, including Leasing Solutions. Thank you, Jerome. And to illustrate how consistent our Business development plan is across our business units, and to focus more specifically on servicing, Let us hear Bergin Rodak, who is the CEO of Credit Plus Bank in Germany.
Hello, everybody. It's a pleasure for me to talk about our white label solution. At Credit Plus, we have a diversified and well balanced business model. 50% is long channel and 50% is short channel. This is our strength.
In the long channel, we offer customers white label solutions for big partners. In these partnerships, Our partners use our best in class digital front end and benefit from our innovative technological solutions. In the automotive sector, for example, we have partnerships with Piaggio and Suzuki. Our solution for Suzuki is called Suzuki Finance, service of Credit Plus Bank. We are very happy that we are winning new partners.
And in November, We will start an exclusive partnership with Peugeot Motorcycles in Germany. We also offer our white label solutions for banking partners. Here, for example, we work together with BW Bank, a significant player and well known bank in Germany. BW Bank use our consumer loan services and our front end with its own branding. In 2019, we realized almost 40,000,000 new business and over 5,000,000 net banking revenue with them.
Due to our high customer And partner orientation, we are also able to renew partners such as Exobank, who has chosen to work with us. And we have a strong promising pipeline. What do we offer our partners in the white label sector? We offer them all our digital services. That means functions such as stock up, Which our partners can upload and send documents in seconds or digital signature, which enables Paperless contract conclusion at the retailer.
Why do partners use white label solutions? I think branding is a driver here. Our partners want to accompany their customers with their own brand in the financing environment, but they lack the technology, Expertise and know how. And here, we come into play as experts. We help our partners to increase their sales And gives our customers a perfect customer journey.
For Credit Plus, we also get valuable customers and customer data. This in turn allows us to introduce these customers to our short channel to cross sell and accompany those customers for further financial needs.
Well, I will now turn it over to Valerie again
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So that we
hear the financial outlook for this development plan. Over to you. [SPEAKER CARLOS ALBERTO PEREZ DE SOLAY:] After having seen all the development levers considered over the medium term, how they now let's see how they
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Translate into goals over the medium term. We have still 3
year goals. We want to reach them for 20 23 with 1 year of difference compared to our 2022 medium plan, especially regarding the outstanding since we have in 2020 A problem due to the health crisis, thanks to initiatives that were presented to you now, thanks [SPEAKER JEAN FRANCOIS VAN BOXMEER:] To a strategic project based not only on growth, but also controlling our fundamental ratios, we want to reach as from 2022 Our targets, this is our assumption of the cost of risk. And we have it we want to have it under control in our profitability, which we want to reach [SPEAKER JEAN FRANCOIS VAN BOXMEER:] At 15% in 2022, well, certainly there are many uncertainties. The environment is complex, but let's see now [SPEAKER JEAN FRANCOIS VAN BOXMEER:] How our capacity to control these goals play out. Let me start with Our revenue, our net margin of risk, we have seen 2 periods.
The first one, I have already explained it, from 20 40 to 20 [SPEAKER JEAN FRANCOIS VAN BOXMEER:] 2017, the structural improvement was there. And the 2nd period more recently is characterized by rate related
[SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:]
Drops and volatility. And in this environment of lower rates and with strong competitive pressure, we Our planning is small erosion of our margins, but strong resilience, especially I draw your attention to the September 2020. [SPEAKER CARLOS ALBERTO PEREZ DE SOLAY:] The dotted line curve represents our margin restated from the impact of the COVID. So we ambition a margin [SPEAKER
CARLOS GOMES DA SILVA:] At 4.5
percent economically, and we believe we should stay around those lands in the future, thanks to revenue Diversification mentioned by my colleagues and also continuing the optimization of our financing. Let's go now to We have a program in terms of operational effectiveness called NEST and which aims both to improve the quality [SPEAKER JOSE
ANTONIO ALVAREZ PALLETE:] In relation
to our customers, the Time 2 years improvement is an example that was illustrated, but also significant savings regarding our expenses. There are several families of actions presented here. Of course, controlling external expenses, challenging demand, [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] Putting our supplies on competition, for example, shared services [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] And also regrouping our tools, especially the IT ones whenever that is possible. This cross cutting program comes along with [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] Proactive program country by country in order to move to our cost efficiency ratio, which is 46%, especially at Sofanco where we ambition [SPEAKER MARCO TRONCHETTI PROVERA:] To bring down by from 54% to 50% this cost income ratio, our Automotive Business is at 30% in terms of cost income ratio and should remain there and all with all these actions. We Have the ambition of reaching an economic cost income around 40% over 3 years.
Now in terms of the cost of risk, we are continuing Our structural actions, firstly, improving our customer knowledge with mainly here [SPEAKER JEAN FRANCOIS VAN BOXMEER:] The uses of tools, automating also things that should allow us to continue to fight against fraud [SPEAKER CARLOS GOMES DA SILVA:] With automatic ID controls, for example, here you can see the savings at Sofanko in France should be €6,000,000 in this field of [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Fight against the fraud
in 2022.
Now we want to enhance and modernize our scoring tools. We are speeding up and transforming this With, for example, the diversification of the data we use for scoring via open backing, thanks to aggregators, [SPEAKER CARLOS GOMES DA SILVA:] Or by using data coming from social networks and also techniques of artificial intelligence machine learning, for example, to use all these data. And [SPEAKER CARLOS GOMES DA SILVA:] Thirdly, optimizing our collection, nervous efficient collection, especially in regard to early connection, Take better segmentation of our customers, which should allow us to have savings, for example, here in France, [SPEAKER FABIENNE LECORVAISIER:] 7,000,000 to €20,000,000 over 3 years in regard to collection. I yield now to Stefan for the conclusion.
[SPEAKER CARLOS ALBERTO PEREIRA DE
OLIVEIRA:] Well, for the conclusion, you will find a summary in writing. What I want to convey here is a conviction From 20.40 to 2019, I think we built a solid group with CACF, profitable, a powerful [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Leader in the European
market and well balanced, well structured.
We also have and what It's very important. We have driven modernity on 2 social aspects on managing our people and our [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] Personnel and on the digital, anything related to data and innovation ecosystems. [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] Now the crisis that has just unfolded was weathered satisfactorily by CACF with a starting [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] Point interesting in 2021, because the crisis showed also three things. First of all, the importance of what is digital secondly, the importance [SPEAKER CARLOS
ALBERTO PEREZ DE SOLAY:] Of the
commitment of our staff. And thirdly, the consumer finance market is still bullish and consumers need [SPEAKER CARLOS GOMES DA SILVA:] This and we've seen it at each reopening, even partly of the economy, consumer loans or credits picked up again, Now more modern probably, closer to our customers, driven by committed employees at any rate. [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] We are confident about the fact that CACF is quite well equipped to face that future. Clotilde, now over to you. Thank you, Stefan, very much.
Thank you for this presentation. Now let's move to the Q and A session. Let's start with questions over the phone by analysts. You may ask questions in English or in French as you wish. There are 3 questions.
And the first one I have three questions. The first one, I would like to understand better, industrially speaking, The reason between the gap of the gap between the short and the long circuit in terms of the acceptance rate, how Marc, there's such a difference between 15 minutes 48 hours or 2 days. Could you explain further the reasons About such a differential, why such a gap? Is the scoring different? So could you explain a bit better that Difference.
Secondly, regarding your ambitions about The automotive business, I didn't understand the structural difference between leasing and CRM. CRM is different from leasing. I don't see exactly what the difference is. And I'd like to know also Because when you have Arval or such monsters who are very large, what is your ambition In terms of number of cars that would be leased or rented, lastly, SCA, Which is has been traditionally aligned with the Fiat group, Fiat, I mean, As you know, there's a link up project between Peugeot and Fiat. I'd like to know if such a link up or tie up is a source of opportunity Or a threat or doesn't represent anything?
Thank you. Thank you for these questions. So the difference in terms of the acceptance time limit depends on processes. Is it synchronous or asynchronous? For example, The IKEA one is synchronous.
However, when you are in a with a car dealer very often, it's asynchronous, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Which accounts for the difference you have to reduce this to its minimum. The target for synchronous processes is 15 minutes on Asynchronous, 2 days it's decent sometimes we are widely above it and this is what we need to correct, especially by Cross cutting our best practices, for example, the IKEA solution or the guest Tesla solution, we need to generalize this to our other partners. The second question was about leases, if I recall, or leases. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] I will turn it over to Richard in a few seconds. The difference might sound a bit complex.
It's very simple. Look, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] We are shareholders at the rate of 50% of FCA Bank with FCA, which is our partner. And within FCA Bank, there are Consumer credit activities in every European Fiat dealership and FCA Bank has developed [SPEAKER JEAN FRANCOIS VAN BOXMEER:] An activity, first of all, of LOLD, of leasing and then mobility via an entity called leases, which distributes across Europe, Mobility tools for rentals or leases, when we talk about CR Rent, it's different. CR Rent It's an entity that will be managing LLDO leases for the entities such as Safranco, Argos, [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] First of all, we start with France next year. And we are distributing this to all [SPEAKER CARLOS GOMES DA SILVA:] Our channels, for example, for Sof and Co could be Sof and Co itself and the Sof and Co brand or we already At Sofanko, €1,000,000,000 to the automotive business.
We don't have any long term leases, but on Sofanko, we'll be able [SPEAKER JEAN FRANCOIS VAN BOXMEER:] To distribute CRM, but perhaps also as you know, we have a product, as Gilotour, that enables the Regional banks to distribute cars in their network. So we are developing this. We will be able to add or plug into this [SPEAKER JEAN FRANCOIS VAN BOXMEER:] The possibility of coming along with long term leasing. So, I see it is something different from say our rent, [SPEAKER PIERRE ANDRE DE CHALENDAR:] Even though we want to rely on the expertise of EASIS to do that, I'll yield to Richard now [SPEAKER CARLOS ALBERTO PEREIRA DE
OLIVEIRA:] For the goals, our targets,
Stefan has said so many things just to specify that in the world of Long term rentals, there are 2 main types of players. This is part of 1 Of the 2 categories, and Arrent will be part of the Adde category. The first types of place are the long term Rental companies, Easeas is the captive one of the group. So you see, L'OCCESSION is a long term player for Renault CRM will be part of the 2nd category in the same way as Arval or ALD, but Arval was created [SPEAKER JEAN FRANCOIS VAN BOXMEER:] 31 years ago, and ALD was created 22 years ago. So in other words, in the long term, Rental companies, multi brands, independent CRM will be in that category.
So we are coming in a market of long term Rental is very mature when it comes to companies because 31 years ago. However, the good piece of news is that we are coming while the trains are still in the stations with With regard to long term rental for personal, for private people, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] This is ramping up really in the case by the way of the COVID crisis with the support Of acquiring new technology vehicles, the hybrid ones, electric Cars where customers feel more comfortable with these rental formulas. So the good piece of news, we are totally on time when it comes to The launch of that activity for personal people, for private people. Now with regard to our targets, [SPEAKER CARLOS GOMES DA SILVA:] Look, we are working now on the creation of that 100 percent critical organization, 100% dedicated to long term Leases and do this probably at the end of the first half of twenty twenty one, and I think we'll come back to you. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] We will certainly write down the next stage of our story about this.
Now On the creation of Stifentes, obviously, we are very positive about the recruitment of 2 beautiful European brands. Look, we have been working for many years with FCA. And in relation to your question, it's not topical because our agreements with FCA Last until 2024, so we have enough time to see how it plays out. There are 2 things to add here. First of all, you saw it's a partnership that is Efficient, profitable, and I think that CACF has played perfectly well The role as partners during the crisis, you saw the amount of moratoria that were granted to dealers especially May a good part for CA Bank dealers, we were proud to contribute to their support.
So we were right there. And secondly, I'd like to add that we are shareholders. It's It's not just a simple commercial contract. We are shareholders with FCA, that is Fiat, [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] In FCA Bank on a basis of 50%, 50%, you've seen the structure of the company. [SPEAKER CARLOS GOMES DA SILVA:] So the financial mobility that is required to bring about some moves.
So this is not Something on our radar right now or special. I thank you very much for that. Next question, John Wade from Goldman Sachs. Over to you, sir. Thank you for the presentations.
I'd like to ask you a question about your growth strategies. Starting now, we saw that there were growth of assets under management in line with historical Trends in the presentation that summarizes the financial targets. I'd like to know what you think you can succeed [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] In terms of split between the joint ventures relative to what you manage on your own. And above all, I'd like to know, For example, when you see tie ups of banks, as we saw in Spain, Where you started a joint venture, what do you think about starting new joint ventures in the future, especially in Spain, Where consumer finance was more highly penetrated than in other continental European countries. So what you consider in terms of your joint ventures and geographically, regionally in terms of new markets, what do you intend to do?
My second question is in terms of your cost of risk, I'd like to know what you are able to see in terms of checks or controls, In terms of joint ventures versus what you plan in terms of in house did you have Control problems or some takeaways during the COVID crisis. I will answer to the first Question in the way I understood it well. Today at CACF, we don't have any growth will in Other countries than those where we have already entities, I give you the reasons again. First of all, because we feel that today we are present in markets [SPEAKER CARLOS GOMES DA SILVA:] Which are profitable, that we can control in terms of cost of risk. And secondly, which also have a quality, which is to be Within our model of distribution in terms of consumer distribution, we also [SPEAKER JEAN
FRANCOIS VAN BOXMEER:] Look at the impact on
our partners who are present in different European countries. So going beyond those countries is not part of our planning. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] So there are different kinds also of partnerships. The first partnership is traditional partnership in the distribution like with the Fnac D'Artien, the retail business that [SPEAKER JEAN FRANCOIS VAN BOXMEER:] We could have in other countries where we are doing business. So we are working on this, no concern with that.
We are ready [SPEAKER CARLOS GOMES DA SILVA:] To be extremely active there. Now the second type of partnership, those we mentioned, which are major Focus for us, which are the partnerships where we can sell our service [SPEAKER CARLOS GOMES DA SILVA:] To banks or to other financial institutions such as insurance companies and be paid for that and make sure we provide good quality of service [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And the professional tools we have, this is our focus where we are focusing the most, by the way. And there's a third Focus, which is joint ventures now in the countries where we are, we have joint ventures, which often are exclusive. So there you have partially the answer to your question. And let me add to this that our plan is [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Focused rather on organic growth.
But within that organic growth, we are adding these partnerships In white label, which we want to commercialize. Now for the risk, I will turn it over to Valerie.
On cost of risk, I would say there is a difference with the Automotive joint ventures in a structural manner. Automotive joint ventures are asset based with respect to debt collection. You have differences depending on countries, but you have the possibility Repossessing the cars and selling it, structural difference, as I mentioned. So during the health crisis, What we've done in a conventional manner, we've shared and pooled our risk management approaches, our reporting systems and our strategies across Our business, Unis and Aetitis and Joint Ventures, have been part of the process. During the health crisis, we took a number of very strong measures.
We increased The debt collection forces and resources, we very strongly engaged all of the employees to face up to the increase in moratoria with Shared and disseminated best practice in as quick a manner as possible, thanks to this Collective habit of sharing best practice in our group, and we worked on updating all of our debt collection policies. So there's a fundamental difference between The asset base, I. E, automotive business and the non asset base, but generally speaking, the joint venture Business units are fully incorporated into our risk management system, and this was proven during the health crisis. Thank you very much. The next question is from Delphine Leid from JPMorgan.
Please ask your question. Yes. Hello, everyone. Thank you for your presentation. Well, I have 3 questions, in fact.
I'll be brief, though. The first is To come back to Egos to try and understand something. We heard that The crisis had a more significant impact on the outstandings this year. Can you give us some substance on how The business activities faring during the 2nd lockdown period, are you expecting an upswing next year? Or and can you give us some updated information on discussions you are having with the BEG BPM Group On the potential IPO upcoming or the equity stake.
My second question is about Italy on Kreval. To try and understand, What is your angle? What is your take on this acquisition? What does it mean tangibly for the consumer Finance business activities of the group. My last question relates to what you mentioned on the market share For the Automotive business, market share being slightly below the natural market share, which should be yours Across the board, can you quantify your goals in this respect over the medium term?
Well, let me answer the last question, says Stephane Priemie. On the market share, Well, basically, we stand between 12.5% to 14%. If you take CAGROS and Softfinco in the aggregate on the whole Automotive, the market share is between 8% 10%. We still have leeway in France, €1,000,000,000 in new business. I would like us to get closer to the €2,000,000,000 mark within the next 2 to 3 years.
So this Gives you the direction and the goals we have for ourselves. With respect to the Prevail side of the business, as we have Jerome with us, Jerome will answer you, Jerome Greve. With respect to Crayval, Delphine says Jerome, Greve. As we said when we presented the project, our ambition is to make Creval 1 of our operation in retail services in Italy, Which will be distributing all of the specialty services. And this already is the case For life insurance products and services.
But when there are existing contracts between Creval and some outside Parties, we will see how the end life of these contracts will be managed, but our goal is that This should be an opportunity to extend our distribution capacity in Italy, And the acquisition and integration of Creval will certainly be an opportunity to extend the distribution [SPEAKER
MARCO TRONCHETTI PROVERA:] Capability of Eagles in Italy. With respect
to Eagles, I will give the floor to Jerome Hamburg. To make sure I understand well, your question was on the Level of business activity of AGOS. Now let me say that AGOS, like many Italian businesses, in fact, took a big hit under the COVID crisis, which was quite harsh, Especially with the short distribution channel, Eagles has a bit more than 230 sales outlets And branches and banking branches, so a very closely connected retail network with customers, And the lockdown has a big impact on that. Quite quickly, Aegon shifted its sales and marketing forces where it was needed. That is [SPEAKER PIERRE ANDRE DE CHALENDAR:] In to debt collection, to support the management, the handling of customer requests [SPEAKER MARCO TRONCHETTI PROVERA:] With respect to reschedule of payments, but also, and this showed its agility, shifted its forces to e commerce to online business, but our Italian Business partners have websites, and they were able to shift part of the sales and marketing forces to work In business development and maintaining business activity levels, not offsetting impact of the crisis, making it possible to maintain, to sustain the business and even take new positions, providing a new differentiator.
We went from 1 to 8, the sales and marketing forces dedicated to online business who are Trained and qualified in supporting long term relationships with remote setting with our clients. For the future Sources of Business Development, EGOs, will deploy its forces in the automotive business, especially in the secondhand business, in the insurance business, where EGOs was able to business where Aegos was able to actively respond to the EVAS Reform a few years ago. So we have a distribution capacity to provide insurance Products and services to provide a coverage for Protection of people, of property and Eagles developed new services. And in the area of Long distribution channels. Well, we are in the acquisition phase last year, this year and again next year.
We got a partner like IKEA, so these major client acquisitions boost our sales and marketing Activities. So we've reinforced our business development capacity with the digital journey capacity With our partners, on the premises of our partners and in the short distribution channel and new acquisitions With the largest range of services across all our products and services. And there was a question on Banco BPM, and Gerald We'll take it. Yes, as you know, we have an agreement in place following the shared share loan agreement, which was signed last year, re signed last year with Banco PPA, Which had a number of milestone. This milestone was a pushback based on common agreements, and The date for this was pushed back, and we will get back to you As to how we deepen and shore up our relationship with Banco BPM in the near future.
Thank you very much. Thank you. The next question will be asked by Laurent Corre from UBS. Do ask your question, madame. Yes, thank you.
And thank you for this presentation. I have three questions, in fact. The first is to know whether you can Give us your analysis on the competitive landscape, especially following the COVID crisis. My second question is to know with respect to green finance. If someone wants to buy an electric car, What would be the lowest is a green loan less expensive than for the same type of loan for A diesel or a petrol engine car and whether the cost of resources, I believe you issue green bonds, right?
And whether the cost Of these, issuances are less costly than conventional issuances. And I Understand that you will be maintaining your current margins based on the successful diversification of revenues. Should we expect lower margins in 2021 to facilitate and anticipate a turnaround in 2023? Or are you [SPEAKER PIERRE ANDRE DE CHALENDAR:] That you'll be having and maintaining stable margins across the period that is all the way to 2023. With respect to your last question, Says Stephane Pujami.
We presented to you and explained to you this 3 year plan of ours, so I won't Tell you more about that. And now as to the previous question, I think that Jerome and Berger can answer it. With respect to the market, thank you for your question, says Jerome. You know that the consumer finance market in Europe, let me focus on Europe here, It's based on 2 special models. The model we have for ours with BPA and Centre M of long distribution Channel as universal as possible and a differentiating model very much focused on the automotive market, these two Big models and all competitors took an impact with the COVID crisis.
I won't say whether they do better or less. It will be your Q2 say, what I can tell you is that we've maintained our market shares. We've maintained our market shares. We've even gained market share in France. We've gained market share in Germany.
So we are against these competitors. We are building upon A very strong differentiator, which is customer servicing and close connections with our customers. And Stephane said it earlier, Versus our competitors, competition will be won by way of customer service, customer support Rather than lower rates, lower prices. Our customers want partners. And what's new after this crisis Is the demonstration of closer bonding, closer connections, seeing that the best performing partners are those who offer the ability to listen Two customers offering quick services, fluid services with the most innovative range of products and services and largest possible A range of products and services with new purchasing experiences, and this will be the differentiator.
Now you have new entrants. You have new players On very specific areas, affinity players like LaValle or More digital players, more digital pure players who want to expand into our territory. Irrespective of the new entrants in this market in Europe, Their tendency is to be a universal player, playing along the same rules as we do with sharing, best practice And offering the most universal range of products and services to the broadest possible customer base. So Differentiator will be the servicing. And remember that our consumer finance model is that of Credit Agricole of having the most comprehensive model, Being very good at digital technology, we showed you that that's something called.
We are good performers in digital technology, and we want to add
The
close customer connections, we've done 380 [SPEAKER MARCO TRONCHETTI PROVERA:] Thousand
Moratoria, you don't do
that when you don't have fully engaged and very close customers. This is the only viable, only sustainable model, we believe. There was another question on green finance and green loans. Almost forgot it. Let me answer here.
With respect to the terms and conditions, when we issue terms and conditions on green loans, there are several options. Either The conditions and terms are provided on interest rates or on ancillary services or options like A service being offered free of charge to facilitate the green loan Under green purchase. So when we go towards lower rates or ancillary services, we do that jointly with our partner. So it is really a tandem offer, trying to come up with the best possible solution to have the customer buy the car [SPEAKER MARCO TRONCHETTI PROVERA:] With the right most appropriate loan, but it's a package. There's no mechanism for special refinancing for green products that Credit Agricole Consumer Finance, the green bond part of things, you will see this with Credit Agricole Inc, how they manage that, how we manage that, but the Consumer Finance plays its role in this.
Our role is to play with our partners to best To sell the product and the credit to push and promote green finance as much as possible. Thank you very much for your answers. Next question, we do not have any more questions in French, but we have a question in English.
Your question from the English line comes from Giulio Miotto from Morgan Stanley. Please go ahead.
Hi. So a couple of questions from me as well. The first one, I'm interested to understand What sort of data do you collect from your customers that help you understand Basically, their needs beforehand. And how does open banking help you? And for example, are you able to see which customers are on unemployment support And therefore, could be most at risk should the government withdraw the stimulus?
So that's my first question. Then the second question, on cost of risk. So I understand your guidance for the 3 year outlook, but in if we look forward 12 months, Can we say that 2020 was the peak? Or do you expect potentially higher cost of risk next year
[SPEAKER PIERRE ANDRE DE CHALENDAR:] I will take this question, says let us answer in French. Thank you for your question. On the type of data we collect to explain what type of data we collect to understand our infrastructure and our philosophy. At Consumer Finance, we invest In data and data collection and when we can use it, it is fundamental. We don't collect data if there's no Need, client need or our own internal need to manage the business for cross selling, we use data intelligence, structured data intelligence To enhance the type of management and the type of intelligence we get from handling the data.
Now with respect to data and data management and data collection, we have business tools we use, a core banking system, which generates structured data. This structured data, we feed it into our algorithms, into our engines to do either The an anticipation of the customer needs to go for targeting, to go for segmentation, and we have DMPs, data management platforms, or Or anticipating contacts and contact points, whether they are weak or strong signals with a prospective client or existing clients on the way they have
[SPEAKER MARCO TRONCHETTI PROVERA:] They want to structure their project.
This data is being collected, being turned into structured data and feeds into an enhanced knowledge of Customers, our customer journeys, across distribution channels, points of sales, mobile first, as I said earlier, it can also be In the branches, it can be via forms. All these data is being reinjected into the processes and systems along with The business applications that enhance our business knowledge, they serve enhanced customer knowledge, and they serve our Ability to manage internally. So the data we collect are double types of data. These are Business related and service and project related data and the data we retrieve from outside, having captured By way of our tools, by way of our partners, having captured data, which give us knowledge on the intent, the motives of the customers, Strong and weak signals since you have data, which is cold or hot data, as Stephane mentioned. All this is fed into the data labs, data lake, which [SPEAKER MARCO TRONCHETTI PROVERA:] We've presented to you, which make it possible, to work on origination for the data delay or for researching and creating innovation to enhance Customer knowledge, which is the data lab.
Have I answered your question?
Is it possible, for example, for you to know whether someone is on an unemployment support scheme? So do you collect that type of data or not really?
Sorry,
Yes, we collect all kinds of data that help better understand who's the customer, What's their pathway and their behavior relative to a purchasing A situation, who they are as individuals, as an element of a segmentation And what they do, how they do it. So what is their pathway? We have digital touch points, so called economic Data and behavioral data and other data, the interaction we have, which creates data, these three dimensions, Economic, behavioral and business line are combined algorithmically and predictably And are used internally to better serve the management of our customer knowledge to draw Parallel with your question on risk, we have many data scientists at CACF in the various business units and also In the corporate center, in the head office and their usefulness is in looking at the data With 2 aims. The first one is a marketing aim and the second aim is about drawing up a scoring and High performance awarding conditions. This is so how do we Do our job.
So 1 or 2 figures first, when you contact a Sofanko customer, for example, there's 70% Odds that it be accepted and 30% that it be turned down if you're on the web where it's on a fifty-fifty basis. Therefore, we refuse Many, many files or cases. We don't want to have our customers take risk or be in [SPEAKER JEAN FRANCOIS VAN BOXMEER:] We believe it's not reasonable for them. So we are very demanding about the quality of the loans and credits We might take out and even more because we are part of the Credit Agricole than other institutions. So then what can we say for this year In this regard, 1st of all, as indicated by Valerie, we've taken a charge or provision for Sound outstandings or loans.
So if there's a deterioration that comes along, so we should be able to Face up in the cost of risk this year, it's we have included this second figure I want to Share with you is as of today, nothing leads us to think that there would be a risk deterioration. Every advanced forward looking indicators are green, 2 of them. With regard to our goals, for example, it's true in Italy and in Germany as well. It's since September, the collection entry rate is down By 11% compared to last year, 11% fewer people who are part of collection and 5% [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] More of people who move out of collection. So we have forward looking or advanced indicators that are good Then the future being uncertain, we are in a period that is complex.
But as of today, nothing leads us to say that The risk is worsening, not at all. And in relation to unemployment, remember that in most European countries, Those in which we have a business, currently there are some unemployment Incentives, if there are dismissals or in most countries in Europe, This is in place. So in addition, we are equipped to manage this kind of issue in normal periods. There are €450,000,000 of cost of risk, that's what we had in 2019, 2018. We are Used to managing risk, it's part of our model at any rate.
What I would like to stress here is that as of today, we have no advanced risk indicator that Would make us think that we would deteriorate the cost of risk. Thank you for this very interesting presentation. I have three questions. First of all, On Slide 56, to come back to a previous question. [SPEAKER MARCO TRONCHETTI PROVERA:] With the reversal of provisions in the Q3, you get the impression that there is no provision surpluses due to the COVID crisis.
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] What matters is the training of Stage 3. So of all the forecasts [SPEAKER MARCO TRONCHETTI PROVERA:] About unemployment next year being what they are, don't you think that the cost of risk should be rising? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Why would that connection with the unemployment rate that would deteriorate next year not work? Now on Automotive Partnerships, so to understand The major size that you have in Europe, what is the strategic interest for Safranco Apart from cross selling, sorry, the Intertek does not hear everything. It's spotty now.
And finally, on Slide 46, Correct me if I'm mistaken. I don't understand why you show us the margin. I think the most important variable was competition and interest rates. Do you think that the pressure on your margin in France is worse than for your competitors now? For the past 3 years, we see that pressure, And it's difficult to compare the differences.
Sorry, it was Marty for the translation. I will let Valerie answer your first and third question. Now regarding China, it's a question of point of view. We have a historical old partnership, which is unholding quite well, which is profitable and allows us [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] To benefit from the Chinese growth and as you saw, we have growth potential for servicing
[SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] As well there, so in my
view, this is something which is great for us. Valerie, On the cost of risk, the slide again, please. Thank you. On this slide, you see the changes on a quarterly basis. I will not go over the details now.
In relation to your question in the 3rd quarter, minus €100,000,000 I did not mention that during that period, We move we put in place the new definition of defaults. So as a matter of fact, beyond the provision effect, [SPEAKER
MARCO TRONCHETTI PROVERA:] There's a transfer
bucket effect which is related to that. But if you look now at the cost of risk in the Q3 2020 at 1 27, it is close to the Q3 of 2019 at 1.21. If we put Aside this scope effect with the new default implementation, we see that the operational indicators are good. And we have a wave of an increase in increased risk, which is in the second quarter During the health crisis and at this stage, we are at the end of the moratoria. We have a good Return to 98% across all the moratoria that were granted.
Hopefully, it answers your question now on the margin. We've shown to show [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] The decline in rates, it's the OAT curve. We could have chosen another one. We are saying that in the last 2 years, 2019, 2020, there's a sharp decline in rates To which we are exposed like the other major players, but with our resilient and diversified model, [SPEAKER JEAN FRANCOIS VAN BOXMEER:] This decline in rates, it's very much softened and we still have solid margins despite that lower rates environment. [SPEAKER CARLOS ALBERTO PEREIRA DE OLIVEIRA:] Certainly, there's a competitive environment, which is much stronger due to these rates, which is important in France, Especially and on the business side in terms of diversification of our sources of revenues, And it has an impact by optimizing our refinancing costs.
We want to be able to absorb that shock or dampen that shock. Anke Rinke The World Bank Canada.
Presentation and taking my questions. And apologies that I will be asking in English. Just firstly, coming back on a question earlier on from Lorraine about your 2023 targets. To be honest, I'm a bit surprised that they're pushed out in time given all the initiatives that are targeting sort of like 22, Where are you running at the 9 month stage? And I mean, you mentioned volume growth is lower, but are there any other factors Why the profitability of the business slows down before it improves again in 2023?
And then secondly, on the digital model, you said above 70% by the end of 'twenty one. I just wonder, given the current circumstances, do you think we will be looking at a much higher rate 2022 or the legal or procedural barriers that it might increase as digital Percentage increases materially. And then just out of interest, what's your rejection rate for digital application relative
Your first question. As I mentioned, there's a difference of 1 year, especially on the outstandings, which is related to the COVID crisis, so we're keeping up our 3 year growth of €20,000,000,000 growth. It's the essential element in terms of the differential. Now with respect to profitability, our goal is to maintain it [SPEAKER MARCO TRONCHETTI PROVERA:] Through different actions, especially offset that this eroding outstandings through other levers. We've talked About insurance in this regard, about servicing to other banks and The long term leases, etcetera, and we are continuing and we are very efficient about this.
We've shown it to you [SPEAKER MARCO TRONCHETTI PROVERA:] During the previous period, due to the cost income ratio, controlling our expenses. And [SPEAKER CARLOS GOMES DA SILVA:] We were able to adjust very quickly to a change of the environment to adapt our structure and expenses during the crisis. And we control The risk, the cost of the risk, this is why we have 3 year ambitions, which are quite our goals, which are very ambitious, On the digital, if I understood your question, how to explain for such And that 15% growth and see if the differential wasn't done to technical or legal barriers. Let me tell you where we Come from and where we got there. Now 4.5 years ago, we were about 15% or 17% at the end of 2019, we're nearly at 40% and we want to be at 75% of digitized environment.
Well, We broadened up as much as possible the digital element in a customer journey. Regardless of the entry or exit in this Omni channel, our customers go to the branch or they end through the phone or on a website whenever we can. We Try to introduce an element, the digital element to simplify the process, simplify the journey and make the experience smoother. But as you understood, we have physical journeys of our customers. In that case, They don't want to have a digital experience, and we respect that.
So at the same time, we provide support to the needs of the customers. There's a highly pushy element from us. And whenever we can add some digital element, but there's still places We're the customer for different reasons. We want to have a more traditional approach and we expect that if we can do more, we'll do more. If we can do more, we'll do more.
That's the message you should take away.
And the acceptance rate from a personal application?
The digital acceptance rate, I don't know if was it before or afterwards? I'm not sure I understood your question exactly.
Basically, how are you what's the difference? And are more loans rejected if they are Requested by a digital channel or if it's going by a personal approach.
As Stephane said, Through the distribution channel, we have differentiated approaches, and this is what should be taken away in the explanation we can give you today. In other words, we pay attention depending on the channels that we have based on our experience to have the right scoring Models so that the awarding is as secure as possible. You will find differences physically or digitally or on the phone or full web. Differences are related mainly to the customer segmentation. It may influence the digital, but once again, No, awarding scoring or the fraud scoring are put upstream to be able to justify and have the best Onboarding with the customer, there are differences, as Stephane said, between the physical and the digital.
Thank you very much. Your next question comes from
Stefan Stellman.
So does this More retail or more dealer orientated. And the second point relates To your overall managed loan book, I'm not sure if I missed that information in the presentation, but could you give a rough indication of how much of your managed Loan book is actually funding dealers versus retail borrowers. And the third question Goes back to your insurance business. There are various numbers in various places of the Presentation, you mentioned 1 is €1,200,000,000 insurance premiums. There's about almost €600,000,000 Premiums in Credit Agricole Acci Homes.
And I can back out that in CACF, it's 17% of revenue. So that's Almost €400,000,000 But how do all these things add up to each other? And is there maybe a gap? And related to this, if you're generating €1,200,000,000 of insurance premium in a banking business, Which excluding insurance is probably around €2,400,000,000 of banking revenue, essentially NII and fees. That seems like a very large cross selling ratio, lots of insurance revenue relative to the banking business.
Can you talk a little bit about what Insurance products you sell predominantly and whether the client typically separately signs these insurance contracts or whether they are Part of, let's say, rep products, where he pays just for one product that includes an insurance component that may not be so visible. Thank you.
I'll take the first question on China. The Chinese operation is totally self financed. The group CSF does not intervene on Safranco, so it finances itself in the market with securitization, with great success, With conventional means, inter banking and the like, Richard takes over. Now Gagsof and Co As the 2 wholesale and retail financing activities, the business activity is mainly focused on retail Financing, more than 2,200 dealers that is being served that are being served by Gagsofranco in China. This is the 1st automotive market in the world.
Forecast is more than 22,000,000 cars Being financed for next year. Let me also take the opportunity to say that this is the number one market in the world for electric vehicles. Half Of the electric vehicles sold in the world are sold in China. So to us, this is a way To learn, it's a great learning curve for the with this type of financing. Now the Chinese market still is predominantly An OEM market that is a new car market, which means that the retail share of this New retail business will keep increasing with new sources for growth, like the secondhand car model, which doesn't exist yet.
So the more we go from a new car market to a second a renewal market or secondhand car market, the more secondhand business Will be a source of renewed growth in China. And the more services [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] To retain, for example, to service and to retain customers will grow as a component in the business model. Let me take over, says Jerome, for the insurance part of your question and some educational information on Insurance mechanisms. We distribute a bit more than 2,000,000 insurance products. So we collect EUR 1,200,000,000 in premiums and the split there's a split between what is done with The Credit Agricole internal insurance units, and next to that, you have Revenues, revenues you capture and you keep.
So it's basically a funnel approach. We have €1,200,000,000 in premiums. And basically, you have a bit less than €600,000,000 MBI for and we capture revenues On the back of that, which shores up the NBI for the credit we call consumer finance. With respect to the diversification and development of products, we have conventional insurance products. We have The creditor protection insurance, CPI, we had 80% of our revenues originating In this product, now in order to support the needs and requirements of our partners and customers, we want to move into protecting people, Protecting people, protecting property and goods, extending warranties in a car, Services offered or insurance services offered in order to use a new smartphone, for example, After 24 months, after 18 months, this is an expanded range of services, which is being Built up by other internal sectors of the group or by partners of the group, moving away from the niche markets, which basically Boosts the sources of income by way of so called The penetration rate, that is how many insurance products and services can be sold to existing customers.
And basically, in order for that, we benefited from the fact that we are multichannel, multiple channel. You can approach and touch Customers by way of several distribution channels, which means we can expect to increase the penetration rate in the future And reach the level that Valerie presented to you.
No further questions on the call.
We do have questions in writing, and Clotilde will read them out. Now we have the first question in writing from Adia Gerboure from Alliance. The question is, where Do you stand in your partnership with Bankia? And the second question is that you've been emphasizing the Component of partnerships in your presentation, but are you lacking a source of growth inside the group? Why go for partnership While you could be growing organically or internally.
As to your first question, says Stephane Priami, remember that Credit Agricole consumer finance wants to have a strong presence in Spain for the two reasons we mentioned. Number 1, profitability [SPEAKER MARCO TRONCHETTI PROVERA:] And the Spanish model of consumer finance, which is good to us, and we want to have a presence in large territories if we want to Respond to international calls for tenders. We are very happy with this partnership with Bankia. It didn't start off at the Best moment, of course, you will remember, but we delivered more than honorable results. Sometimes Bankia Approached Caixa and made a clear announcement that they didn't want to Be part of our Sohu partnership.
Well, starting from that, we affirmed our need and desire to have a presence in Spain, and there are 3 options On the table, not anyone would put on the table. The first option is that we put we handle Soyuz in runoff mode if we can't find the right solution. The second option is to continue with Sohyo on a stand alone basis without The BANKIA partner and making sure we grow and develop the business standalone. The 3rd option [SPEAKER MARCO TRONCHETTI PROVERA:] To find another partner, and we are looking at the 3 options, knowing that in parallel, we are getting organized to Find the best ways and means of exiting of having Bankia exit the platform so much for where we stand today With Bankia. The second question, can you repeat it on partnerships?
Why would you go for partners, whereas you have a potential for growth internally? [SPEAKER MARCO TRONCHETTI PROVERA:] Well, partnership is the answer, provide immediate purchasing. When purchasing generates consumer loans, it generates upfront benefits And a huge upside. Let me take a simple example. You have a car dealer.
If the car dealer offers The consumer loan, you're almost certain to get it. If you let the customer go home and shop for the consumer loan, You're almost certain that the customer will base his decision based on the existing market share. So it is in our benefit to have the greatest number of partners because the partners make it possible for us to take advantage of the moment of purchasing So that our consumer loan product is chosen. We have two questions from Jacques Henri Golar from Kepler. One is to Jerome, I think.
Thank you for this presentation, which was very comprehensive, said Jean Henri. He said that the Medium term plans for 2022 were pushed by, by 20 To 2023, is it reasonable to believe that all of these strategic medium term plan goals will be pushed back for the whole of Credit Agricole Will we push back to 2023? Answer by Jerome Greve. Okay. Jerome Greve will Thank you for this.
Well, indeed, the goals of Credit Agricole Consumer Finance Partly, as Valerie explained, partly pushed back to 2023 Instead of the scheduled 2022. And the goal which is being pushed back is a goal relative to volumes, that is the outstandings, The level of outstandings, knowing that the profitability goals and targets will be maintained. So we'll be delivering those by 20 So as you can see, the impact of the crisis in 2020 has not been Massive earned Credit Agricole Consumer Finance, despite the hard work and the hard efforts we had To undergo, to weather this very difficult time. So at the level of Credit Agricole Group, There's no plan or no idea that we would be pushing back our goals as they were announced For 2022, of course, we regularly review our financial Landing and forecast. And if at some point, we believe there's a need to update investor communication and market communication, we'll do so.
But today, we believe that the targets and goals which were published in June of 2019 remain current. Thank you, Jerome, for this. We have a second question by Jacques Henri, which goes as follows. I am very impressed by the way you've been handling hot and cold data. What about Your use of privacy regulations in the way you handle data, which will be a key issue for the next 5 years, It is of great importance for us because we are part of the Credit Agricole Group of Companies and ethics and Respect for the rules and regulations is mandatory.
The Credit Agricole Group Published a charter for using data, which is very specific and binding as A code. It doesn't prevent us from conducting our business because we have lots of leeway to do lots of authorized things, especially When you get the consent of our customers, which is the case when we take action within this charter. But you're right, the rules and regulations are Continually changing and society and societies are continually changing, require and demanding more transparency and openness in the way personal data is used. But it's important in customer servicing to find always the best way and means to keep operating while respecting the needs and requirements of customers And abiding by regulations, if I may add to what you said, Stephane. We got structured in consumer finance On data governance mechanisms, which involves complying with GDPR rules, Abiding by the customer roles and the internal customer roles because we have internal data and external data.
[SPEAKER MARCO TRONCHETTI PROVERA:] So we have a business line with data managers, very clear rules of the game and operating framework. And we have our data protection officer, who is standing next to me and to illustrate this point and to illustrate the point that it doesn't prevent us from conducting our business while conducting a modern way of doing business. Stephane Mentioned that we are the 1st financial institution by web protocol measurements by Google and outside rating [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] To reconcile the offline and online customer journeys in full anonymity. So when we're able to combine the right level of professional standards And the right data management tools, we can move forward in increasing the knowledge of the customer journeys while respecting the clients, as Stephane said. Another question By Guillaume Tiburon at Exane.
He'd like to know if you could explain your vision for Margins in the next 2 years with a balance between pressure due to low rates and on the other hand the improvement Thanks to insurance and servicing. Could we get an idea the compared value of these two effects? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Yes. Obviously, it's theoretical, but very close to reality roughly, schematically, These loans that can be amortized, I mean, in general, these Loans have the lowest margins and then the kinds of loans that have good profitability such as Long term leases or short term car leases, then systems of The revolving and you have 3x CBO where profitability is not bad. Now The challenge is that we can leverage that mix of products and then we direct our customers.
For example, this is why up Sale is important, someone who has something that is amortized. If we can offer him a 3 times or long term leases Or a revolving because they need some flexibility, we should do so. Now The other challenge in terms of profitability is the equipment, especially insurance equipment. The figure for Sofia and Co, 20% of the net banking income comes from the insurance. Therefore, The insurance is very important.
It shows the margin effect, which is not so strong, then especially if you spread it out
[SPEAKER CARLOS ALBERTO PEREZ DE SOLAY:] Over the 4 or 5
categories that I shared with you and on which we can play a bit. Now the very last question by our CBC on servicing. What is the kind of Fees that you get, Jerome, on servicing, the chain of value, I will not describe it fully. We can do service providing where we manage on behalf of a third party, which we do. We pay through fees.
And at the other end of the chain of value is that we
can carry these outstandings, which we do already,
where we carry them Standings, which we do already, where we carry that and then we get all the associated remuneration such as financing or the insurance equipment or the The insurance equipment or the equipment products presented by Stefan earlier. So we're both on commissioning When we just manage the outstandings and provide expertise, especially for white labels, all the way to the traditional Remuneration with some in betweens. So it's on a variable geometry Basis, it's we can we listen to the needs of the partners really to carry this out. Since the questions are over now, very honestly, frankly, I would like To thank you for spending this time with us, hopefully, we have been able to share with you the elements that are important for you and for your business. We have been very happy to be able to present the strategy of this company.
We believe in it. We are very confident about consumer as the crisis has shown to what extent it was a modern tool to support the economy and households, and we are confident about Our ability of being one of the leaders. Thank you very much for attending.