Well, thank you, Claude Hilde, and good afternoon to everyone of you. I'm very happy to host this 2nd specialized workshop 2 years after the first one we organized on the insurance Activities of the Group of Credit Agricole Ece, which was held at Credit Agricole Assurance premises in Montparnasse. Now Thanks again to being Montrouge for those of you who, as Clotilde said, overcame all the obstacles, The weather and the strikes in Paris and of course welcome also to those who are on the webcast. Today's workshop is focusing on our CIB activities, as Clotilde said. These activities are alongside precisely the insurance activities, one of the 2 top contributors to CASAL's net profit.
And I will take the Opportunity of this introduction to explain a little bit how these CIB activities fit into our global model. Let me start just by a quick reminder of CASA and Credit Agricole Group main characteristics. The first one is that we are large. We are indeed 1 of the 10th largest banking group in the world. The second characteristic It's that we are robust.
We have a CET1 ratio, which is in excess of 15% at group level, And we have an external rating, which stands at A plus or even AA- with 1 of the 3 rating agencies. The third characteristic is that, of course, we are focused on French retail activities, where we rank by far Number 1, but we are actually a very universal diversified banking group, Mastering and this is clearly an objective that we continue to pursue, mastering all the aspects of the financial services industry with all our specialized activities Systematically, in the top players where they are indeed active. And obviously, in this global setup, CACIB or CIB activities Are a must in such a business model as long, of course, as they are designed in such a way that they fully fit into our global philosophy. And as you are going to see throughout this presentation later afternoon. Since the refocusing of CACIB's activity after the financial crisis, clearly, this is fully the case.
Firstly, I would say, CACIB is an important contributor to CASA's P and L. It's the case both at the level of the top line and at the level of the bottom line with around onefour of the revenues and even more than 1 quarter of the net profit of CASA coming from our CIB activities. And moreover, this contribution has been very regular in the last years. The second component of this contribution to CASA's P and L is that it enhances its resilience and its Diversification. And actually, indeed, CACIB is providing diversification benefits to CASA with A low degree of rate sensitivity, contrary, for example, to our retail banking activities.
And Also with a major part of its revenues coming from outside Europe and from outside the eurozone. So the first point I wanted to stress is here, CACIB is clearly enhancing CASA's profitability in terms both of level in absolute terms and resilience. Secondly, Clearly, CASA is fully integrated in CACIB is fully integrated in the group, in CASA, but also globally more globally in the group with, I think, 2 characteristics which you may want to keep in mind. The first one is that it provides its skills and its expertise to the rest of the group with, I would say, a virtuous circle in which CACIB is developing its SKYLE, its expertise is in the field of ALM, in the field of asset origination, in the field of Financing and funding on the market for the benefits of all the entities of the group. And then Based on this expertise accumulated in serving the group, it develops its own franchise And it then provides to the group its enhanced capacity, which has been developed on the basis of external customers.
So clearly, it's inside the group to provide its expertise and skills to the rest of the group with a virtuous circle with serving outside customers. And then the second point is that actually it enhances There's also the capacity of the group to serve its global clients and it participates fully in what we have Stressed in the medium plan as a key element fueling our growth going forward, which is the capacity of Generating additional revenue synergies by simply making 2 different business lines working together. And as you can see on the right hand side of this slide actually, CACIB is clearly a key contributor to these cross selling efforts that we permanently develop inside the group. So let me put it bluntly, CACIB is not a business which is On the side of the group's business model, it's clearly fully and integrated in the business model of the group. Lastly, CACIB is a key asset for the effective implementation Of one of the main priorities of our last MTP, which is to become the strategic partner to all the SMEs that are clients of 1 of our retail networks.
As you can see, both Credit Agricole, Regional Banks and LCL in France and Credit Agricole in Italy Have already developed a strong customer basis of SMEs and their intention is to better accompany these SMEs and small corporates in their international projects. And thus, CACIB provides It's international network. CACIB brings its specialized lending capacities and CACIB is even more investing in the development of dedicated IT solutions. So in order to fulfill even better its mission towards SMEs that are already clients of the retail banks of the group. CACIB is putting in place Dedicated organization, but Jacques Lepol and his team are going to provide In a few minutes, much more details and are going to describe much more in-depth today's CACIB and its role inside Credit Agricole Group.
So here, in a nutshell, were simply a few elements showing again how CACIB As it has been reshaped after 2,007 and 2,008 is a full and key component of the group's business model and strategy. And now it's my pleasure to pass the floor to Jacques and to his team. Thank you.
Thank you, Jerome, and good afternoon to all of you. Let me try if I can use this. There you go. So let me maybe just say a few words on the way we're going to organize the rest of this presentation. As you can see in the agenda, the idea is that I will I'll try to explain quickly what is the strategic positioning of Qasim, giving you a few hints on what is behind our business model.
And then we'll roll out a very classical agenda with client. It will be Didier Gaffinel, who Take the floor there. Then about financing with Jean Francois Valleil. Then you'll have markets with Pierre Gay. A few topics on transversal layers, including Anne Catherine Auperce, our Head of Human Resources and Olivier Belanger will finish on the financial Trajectory for 2022.
But let's kick off with my part, which is about the strategic positioning. And maybe before getting into that specific area, let's maybe try to have the global picture of what has been the commitment of CACIB within the PMT 2022. If you look at this slide, you have Maybe a few important words and a few important figures. I think that on the left side of the slide, The world which is important is homogeneous. Why?
Because if you look at what we have committed to deliver Going forward, you see that the growth is 3%, but it's mainly the same kind of growth in every area of the business, which means that fundamentally, One should not expect from us any kind of twist in the way our activities are being balanced. Maybe capital market activities are a bit Growing a bit higher than higher rate than the others, but it's just because there's a bit of a rebound in 2019. The rest of it is really homogeneous. And on the right side of the slide, if you look at it, there's a few important figures and it goes around return on equity and cost of income. It is interesting to see that when I speak with a certain number of investors, certain people outside CACIB, In all of cases, people don't realize those two figures.
We are a corporate investment bank with a return on equity, which is a 12%, we've decided to present it here at 10%, because we consider that 12% today, there is a component which is due to the cost of risk, which is Historically, very, very low. But even if you try to normalize this cost of risk, we're still a double digit return on equity, corporate investment bank. And this is something that we will maintain across the years till 2022. And on the cost of income, same thing. In a universe where a lot of cases you hear about much higher cost of income, it was important, I think, to mention that we have a cost of income, which is 57% in 2018, and if I'm not wrong, I think it was even 54% in September 2019.
So those are the main ideas in our PMT, keeping through growth A 10% return on equity, keeping our cost of income at a very low one. So now the question you probably asked yourself is, okay, but how Tom, that we are able to achieve a result which is a pretty solid one. I think that on that one, There are really 3 main ideas that I would like to detail with you today. There are 3 main strategic choices that explain Our positioning, the first one is that we have decided to focus more on corporate clients than financial institutions. The second big choice is that we are a bank which is more of financing activities than market activities.
And the 3rd very important pillar is the fact that we have decided to keep, grow And have well coordinated an international network. And you'll see that those 3 basic ideas, More corporate clients and financial institutions, more financing end market and a strong coordinated international network. They largely explain why we can reach a 12% or 10% return on equity and a cost of income, which is mid-50s. So why? Let me first start with the market activities.
When it goes to market and some of you know that this is my background, When it goes to market, we historically had 15 years ago and maybe in another world, we had activities which were able Generate very high return on equity with cost of income, which were, say, reasonable. Of course, there was some risk attached to it, but that was a business, which was a very interesting one. But I think that this has changed and that Clear Eco has one specific thing is that it realized This change and transform this business model probably 5, 10 years ago, well, certainly 5, 10 years ago and probably 5 years before some of our competitors. So what has changed in market activities? I mean, I guess you know it all.
The products that can be produced and sold in market I have moved from having a very nice margin due to complexity into products which are more and more very standard products with margin which are much lower. At the same moment, if you look at the cost of running those activities, It goes around regulation, best execution, compliance. You see that the costs have been blooming during the whole period. And 3rd level of this perfect storm, we are in a situation where it goes to market activities, where the capital requirements On a given transaction in Capital Market has also increased massively. So once you have those three elements, You end up with businesses which are very challenged because they end up with high cost of income and a return on equity, which is very often very challenged.
So the name of the game is not to have or don't have market activities. We have market activities. We're very happy with this. It's more what is the Size and what is the focus of market activities. In our case, 10 years ago, because of the crisis, we have decided to right size Our market activities.
And in the last 4 or 5 years, we've been pushing, organizing our market activities with Really one basic idea, they are here to service our clients. We're not creating products out of the blue and trying to sell it. We have clients. We have a very strong corporate franchise especially and we build market solution for our clients. And that is why we've escaped this kind of trap of market activities with high cost of income and lower return on equity.
But once you've said that, That doesn't explain why you have been able to generate a low cost to income and a high return on equity. And on that one, it's maybe a few minutes On characteristics of a financing activity, a classical financing activity is an activity where the cost of income is very low. Why? Because the cost of doing a business and financing activity is much lower in terms of systems, in terms of platform. And so you end up very quickly with a low cost of income.
But the issue with financing activities is that you can also be in another Kind of trap, which is having a low cost to income, but also low return on equity, because those activity, if they're too much about plain vanilla financing, then they can't generate a high return on equity. And that's where the very specific DNA Of CACIB, Entrance and Play. We are a bank who has been in the last 20, 40 years Really focusing financing activities with high margins, structured finance activities, And you know them all. We're probably top 3 in the world when it goes to aircraft financing, top 3 when it goes to rail, top 3 when it goes to Shipping was huge layer in securitization, project finance, infrastructure. And all those activities are certainly not plain vanilla activities with Lower Ari to the country, their activities where we can generate comfortable margins and especially high return on equity.
But on top of that, in order to reach that level of return on equity, we've added a certain number of boosters to our business. And it goes around the idea of the wide international footprint. Why? Because when you have A network in which you're able to do cross border transactions, you're able to accompany your clients when they acquire a gas Pipeline in Brazil, you're able to work with a Chinese client who is entering into a German car manufacturer. When you're able to generate all this Cross border business and that's where it's important to be wide, but also to be well coordinated and Didier will explain clearly how this works.
When you have this, you add also value to the picture. The second idea is that if you want to be able to generate those high return on equity, You can't be in the very old fashioned model in which you just use your balance sheet and stay and sit on it. Of course, like every bank today. We have created the organization that enables us to have a rotation of our balance sheet. And this is the distribute to originate model on which Jean Francois will give more details on the very strong performance that has been generated, especially in the last 2 years.
And last but not least, the market activities, again, they're the continuum of financing activities, which means that when you're, for example, working on a very sophisticated financing for an acquisition or for a project finance, when you're under the tent, It is much easier to say, you know what, you need a swap, you need a hedging for your ForEx. We're here also to provide you the service. And when you're under the tent, Definitely, you're in a better position than if you just ask for a price after the deal is public. And let me maybe end up that slide with one element, which is key also on why we're able to reach High levels of return on equity. And that goes around the EVA process.
Didier will explain in detail what we call EVA here. But what is very important in a way is process. We're not in a situation where we just look at things. We have a systematic approach of all our clients with dedicated teams, which are producing on a regular basis, photography of where we stand, what kind of capital we use and going forward, is it the best usage of the capital that
is being given to us.
3rd elements for strategic positioning is the risk profile of Qasebo. As you can see, there are a few components that explain what is a risk profile, which is notoriously a low risk profile. I think that first, it goes around framework. Every activity, every geography is embedded into a framework which is predefined In order to know before, what is exactly the kind of business that we do. We have invested a lot in forward looking of our risk in dynamic monitoring of underwriting and of course in rotation of the balance sheet, which is also a way to avoid issues.
Overall, as you can see, our portfolio is largely investment grade. We're talking of 87% investment grade. And one thing which is very important also to understand is that because we are financing a real economy, because we are financing real assets, Well, in a way, our cost of risk is very much linked to those assets and the structuring of those transactions. It's not the same to finance a corporate And to finance a ship, the ship of the same corporate. The kind of security that you have is much better when you're at the level of the asset.
And that's why you can see that on our real assets portfolio, we have levels of losses, which are really in basis points. Market risk, logically, as we really accompany our clients, we have a level of market risk, which is low. If you measure it through the VAR, You can see that we are at $7,000,000 versus an average, which is at least twice bigger for our peers. And operational risk, which is also something which is very important and can be painful. Well, as you can see, we've been pretty good in this area too.
And especially, as you know, we've exited last year of the DPA in the U. S. With no penalty and after the first step. And I'll conclude before passing the floor to Didier. Once explained those elements of our strategy In announcing just a few focuses that I'd like to emphasis on afterwards, which are around The group project and how do we fit in those group projects.
1 is about something which is one of the cornerstone of our business, which is Sustainable Banking and Green Financing. A second one, which is on digital and you'll see hopefully you'll consider that What we will say on digital is not just the usual message about we want to be digital and so far and so on. We try to be a bit more detailed in what we want to achieve. Anne Catherine will focus on the human project of Castile and then Olivier will speak of the financial trajectory. But now it's time to have Didier on the floor.
And Didier, it's green for go.
Thank you, Jacques. So my name is Didier Gaffinel, and I'm going to present you our client and international strategy with 2 main ambitions. 1, our client strategy is how to generate more business with our clients, Thanks to streamlined coverage on the Investment Banking organization and using 2 levels, I will insist on Client selectivity and profitability and sector expertise. And second, our international strategy obviously is still growing outside of France And I will make a focus on Asia Pac and more specifically on China where we want to achieve a superior growth. So maybe to start with just a quick overview of how we are organized here at CACIB.
We have already put in place for a long time now Dedicated corporate coverage organization independent from the business lines and we have reinforced This organization by adding FI and some real asset client driven and putting under the same in line, both the coverage and the Investment Banking. We have today on the ground 330 senior bankers across the geographies And we have 220 Investment Bankers and well IB Investment Banking definition at CACIB Includes Industry Groups, M and A, ECM, Telemed Solutions on non Distilled Equity and the JV on Equity Solutions with our Capital Markets activities. How our coverage works? Well, it works As a single entry points within the bank for the clients, it is product neutral and we are very agile and the allocation of our resources across the globe. How to generate more revenues with our clients?
Well, by first focusing on high value clients, which are the clients with whom we have a long standing relationship. And this is clearly in the DNA of CACIB to be a long term partner to our clients. And this is a way to capture the transaction be it a large acquisition, be it a major project finance or major swaps. Also by boosting client profitability and leveraging our sector expertise and well, let me detail how to We want and we achieve client profitability within CACIB. Our relationship For Coverage Banker, it's not only generating more revenues, it's equally being more profitable.
And for this, and as Jack has mentioned, we have In house sophisticated CRM tool, which I believe is very powerful and you have here On the slide, a real example of what is a dashboard of the monitoring of the performance of our clients. And you have On the right hand side, the business mix of these clients by product line, the speed by RWA and Equally also by our profitability indicator, which is designed as a kind of EVA. And you have here on the left hand side, this concrete example of how it is working. I mean, In our definition, EVA is the portion of NBI left after cost of capital based on our RWA, credit and operational RWAs, cost of maintenance and expected loss. And well, obviously, we are focusing on these high EVA clients And through a systematic process assessing this AVA from onboarding to continuous tracking And we ask to our senior bankers a 3 year business plan for each client and assessment of the EVA for every transaction so that we can have a discipline in client selection and the follow-up.
Obviously, when you have saw these High value EVA clients. Well, we push for doing more business and this good way to allocate our resources, which are And Odysse will come back on it. On the other hand, when we have low EVA or negative EVA clients, Well, we ask the coverage people with the product line to take some measures either to put in place payments, I would say, Specific action plans or even exit some clients and we do it and we intend to do more so that's well we can increase the overall profitability of our client base. The second lever It's sector expertise. We have also put in place some years ago a soft coverage, sectoral coverage organization, gathering coverage people with industry groups for Investment Banking teams and Structured Finance teams, so that these people can share information and the strategy around these clients.
And it has already given, I think, Very good results. And let me give you some recent example of what we have achieved. We have been advising, for example, LVMH at the beginning of the year in the acquisition of the luxury hotel chain Belmont. And this is, I think, a good combination of strong relationship with the clients and the real hotel and the real estate sector expertise. We have also been advising on the sell side of Cargill, the U.
S. Agribusiness in the divestment of the malt business in Europe. And this is a good combination of a strong relationship with the clients in the U. S. And a strong Agribusiness expertise.
And we have also been advising some of our important clients on some real assets divestment or acquisition. In one case, Divestment of Japanese clients on infra assets in the UK. Another one was on the buying side, advising Asian utility buying power assets in the U. S. And this is really the result of this sectoral coverage organization, but we want to do more.
And we have based on the criteria like client franchise and solid credentials and proximity also with obviously Claiacal Group, We have selected 8 secondtors, among which 5 are real asset driven sectors where CACIB has undisputed worldwide franchise and Jean Francois will develop on this, but also Agri Food, Insurance and Automotive, these sectors give us access to a large, what is size, EUR 40,000,000,000 only for IB and debt products. And these sectors as of today have generated about 45% of the total NBI of CACIB. On top of that, we also believe that our clients are moving. Their business model are moving and we need to adapt. So we also want to create some internal ecosystems to address Concept like energy transition, obviously, but not only smart mobility, smart city.
And we have also in mind that green, sustainability and digital are challenges that are also impacting both sectors and these ecosystems. And in that respect, we have already created an internal ecosystem for hydrogen, putting together some resources from our sustainable team, from our power and the infra team. And we are already engaging with some clients on the M and A advisory on these fronts. All in all, we expect that This 8 sector will deliver an above average growth over the mid term plan with annual growth of 5%. 2nd, our international strategy.
And as Jacque had mentioned, we are relying already on the strong and the global footprint. And as you can see, CACIB is already achieving 70% of its business activity outside of France, Well balanced across the geographies with 29% in Europe, 20% in the Americas, 3% in the Middle East and 80% in Asia Pac. I think what is important is to have in mind that we are Addressing more than 30 markets, which represents about 80% of the world's DGP, which means that Our international network is deep and very granular. And this, we are fertilizing this international network I mean, accompanying our clients all across the geographies. And as of today, We are achieving 25% of the total NBI of CACIB with the international subsidiaries of our clients.
And for example, we are working with a large French cosmetic clients in Russia or China or a large Japanese automaker in the U. S. Or even the larger Chinese corporate in the industry in Europe, for example. But we want to do more. And Olivier will give you the of our original growth over the midterm plan, but we have identified Asia Pac as A growth driver for the bank, probably the main one.
And based, I would say, on 3 dimensions. First, well, clients and deepening some FI relationships and growing the corporate client base, cross border transaction and also supporting the real economy. But if we move to China, which is, well, I would say where we'll pay more attention, Our strategy will rely on 3 pillars. The first one will be to selectively Increase our corporate client base by targeting the top 200 or 300 larger corporates and we are mostly working with SOEs and we'll only address some investment grade profile, sorry, clients. But also we need to invest in some of our business lines, obviously, market activity, especially to deepen our relationships with our FI clients.
We'll develop also a domestic cash management offer and Jean Francois will give some details on it later. And we also to grow our M and A advisories. Also, we need to build a solid and we have already a solid onshore structure and we are one of the only few international bank to have A strong local presence in China. But obviously to fuel this growth, we need more capital and we have recently done a capital increase on this. So all in all, we expect our revenue ambitions for Asia Pac to be of 6.4% annual growth over the mid term plan and of which An additional €100,000,000 revenues with China.
So to conclude, just a quick wrap up.
I believe that we have streamlined coverage on Investment Banking Organizations that will generate more revenues. We pay a lot of attention to client selectivity and profitability. And very important, we have the tools to monitor this selectivity and profitability. We are also strong believers in sectorial expertise and we also to Develop and invest more in 8 sectors to deliver superior growth. And thanks to our global footprint, Addressing 80% of the world's GDP, we'll pay specific attention to Asia Pac and China in particular.
Thank you, and I pass the floor to Jean Francois.
Thank you, Didier. Good afternoon all. I'm Jean Francois Belay, and I will now to tell you how we're going to deliver growth with the financing activities, if it works. I'll start with Social Finance. Our teams are experts in financing real assets.
Jacques mentioned it, Didier mentioned it, Our teams are experts. They have a global footprint. When you have a sector knowledge and expertise. You need to be global and local. You need to understand the local environment.
You need to understand the different parameters. I won't go in describing what we have on the screen. You see on the slide the positioning, the ranking of the team. I mean, that's quite impressive. We're also quite well recognized by our peers and our clients.
That's a real set for the bank. If I give you some example, take a project finance. When we Project can be a power plant, can be financing motorway or rail concessions or even renewable assets. When the team are starting to consider a transaction, they're I'm not talking about financing. They look into the assets, what are the parameters with the clients.
What technology is going to be used? Is it tested? Does the client know where is the region? And that's how it starts. And then comes the financing.
Is it an asset which is producing on an availability or is it on the market, market driven? I mean, all of this is the assessment. I can and that's where in fact when you discuss with the clients In front of them, you start showing that you understand really the underlying asset. It makes a big difference when it comes to financing them. Another example, maybe shipping.
As you know, 80% of the goods Trade transaction goods, which are traded globally, are carried in fact through vessels. That's different maritime routes. And you've got then different types of ships. You've got containers, you've got dry bulk carriers, you've got Crews, you've got tankers. So it's all different.
And for each type of goods you're carrying, depending on the route they follow, you have different boats. And actually, the teams are well aware about that. That's very important when you make a financing to know as well the value of the underlying asset, The price of the daily projects, I mean, that's the important point. So, what's Our aim here is to continue to be leader in our worldwide leading position in structured finance. And naturally, it's very profitable.
We've got a good experience of throughout the crisis, we've seen different cycles. And therefore, we know, I mean, that's maybe we know what could be the evolution of the asset depending on the market. If I elaborate there, I would say the teams management of the teams, they've got an experience over 20 years. If you take the full teams, that's the interesting point. It's very attractive to young talents.
Young talents represents, if I take SFI Business, 25% of the global team. And it's well spread because we've got seniors and we've got juniors. So it shows that there is no issue about I mean, sorry, about succession plans. On another point as well on risks, the teams which are originating the transaction are the ones which are going to follow it during the whole life of the facility. That's what we call the first line of defense.
As I mentioned earlier, they've seen cycles. So they know during the crisis what how to deliver, how to restructure facilities. For instance, when you have a situation and you have to repossess an asset, To be processing a flight or a vessel, you need to be an expert as well. And then put it as well with another client or get it reemployed in other activities. So that's where we consider that structured finance is going to be still a key asset of our development.
During the medium term plan, we consider we can generate 3% growth over a period during the period. You may ask, why the 3A? What do you mean by getting growth with the 3A? I think that's quite easy. When you look at markets where there is ample liquidity, where our balance sheet is not a problem to provide facilities, How do we differentiate ourselves?
The first A, advisory. If I take the example of an acquisition Jacques mentioned the year and even rebrand transactions. You want to be under the tent. You want to be sitting next to the client. You can help If you're financing an acquisition, it can be an asset or a company, a target.
You want to give an advice on what's the proper level of equity for the transaction, What's the level of rate what rating you will get post acquisition? Which market you can tackle? Is it high yield? Is it U. S.
Market, European market? All of this, you can advise the clients. I mentioned Swiss Finance. When you work on the greenfield project, You can sit next to the clients and you tell them how you're going to finance these assets, which market again you're going to tackle, what pricing you will get, which investors you will tackle. Arranging now.
We set up a team 3 years ago to specifically work on corporate acquisition facilities, event driven facilities. This team is global. We have in excess of 20% right now. They are in several countries in Europe, in the U. S.
And also in Asia. Here, I mean, we come back to on addition to the advisory, we propose specific financing. And this team has really developed over the last 3 years. And we've got very good results. And we can't come, there is a clear, close relationship with the clients when you work with them on such Because once you don't want to disable transaction with clients, you get repeat mandates.
In fact, and it's known in the market and you're a reliable partner. Now, agency. Agency, you may ask why. Agency, when you arrange a syndicated facility, The agent is the 1st bank the client is going to talk if there is an event, be it weather, be it change in the structure of the facility, be it an acquisition, additional line. And therefore, here again, you are a close partner.
You are the 1, the first one the clients will talk to. So within these 3 As, we consider that with the corporate acquisition facilities and also the advisory, We can bring a 3% growth by year during the medium term plan. Now, Jacques mentioned earlier our DTO model, how it's important to have a strong and robust distribution team. If that's the case, I mean, this is a team we've developed regularly for the last few years. And as you can see on the slide, we've got impressive results in terms of primary distribution, secondary distribution.
The team is global and you have a unified distribution platform. Even I mentioned specialists on and expertise on the origination side, we've got similar teams in distribution. When you distribute Project Finance transaction, albeit LBO or an aviation transaction, you need to understand the asset. You need to talk to the investor. It's not like when you sell the transaction, where it's not necessary to give a bond, for a bond when you give a rating.
Here, you really need to spend some time, I explained the due diligence and really get the investors along to approve and get into the transaction. But we are distributing what we've developed. We developed several channels of distribution. So here I mentioned the primary one, the secondary one, which is in fact selling the asset in its loan format. But we have also developed other channels.
I will mention few examples. First one, in shipping, coming back to shipping. We so a few years ago, 5 years ago, we did set up with SMTV, which is a Japanese bank, A partnership to arrange a transaction together. SMTV is an Asian bank specialized in shipping transaction, but There were only specialized in Asia. So what we brought, we arranged some facilities, European market, U.
S. Market, And we brought them along. And we've got an agreement by which we take a portion of the facility to take a portion of the facility at the initial stage, and the rest we can distribute. 2nd example. We recently closed a transaction in Germany.
It was a rail concession. Here, we are renting the facility. We have already it's during the construction period, we are going to finance. We are already in agreement that when the construction is completed, we have an investor which has already committed to replace us. So here again, We financed during the initial period of the construction, which is where we bring our expenses.
We follow the development. And once it's done, we have an investor to take over the facility. Maybe a third example in aviation. Take airline company. We recently closed a transaction for them with a Japanese operating lease.
What did we do? We found a bank to fund the debt portion and we found a lessor to finance the equity portion. Here again, we arrange a facility for our clients. We get fees and no commitments on the balance sheet. And that's another way of distributing.
But that's not only what we're doing in terms of channels of distribution. We've also developed innovative solutions that goes to Synthetic securitization program that goes to a risk participation agreement. And we've got a specific team within the bank to develop those solutions, next to finance and next to DoD, which is our distribution arm. We Giving some examples, we've arranged some RPAs for the shipping portfolio. We've done 2 transaction For a total amount of $1,500,000,000 with 3 insurance companies.
So you see when it shows that when you know that shipping is Sometimes as a risky business because there is a lot of cycles. In fact, we know well our portfolio, we know well our clients And investors are really confident and trust us on the ability to select transaction and arrange transactions. Naturally, we want to continue to develop our underwriting capacities, but within also a very conservative risk framework. Transaction Banking. We want to develop our transaction banking.
What are we talking about when we mention transaction banking? As you can see on the slide, we're already financing suppliers, buyers. That's receivable discounting. That's supply chain finance. We're also very strong on import and exports.
But here on the International Trade Finance, we are, let's say, very strong in tailor made transaction. And as you can see on the right side of the slide, We've been regularly awarded by the market. And then cash management. This was mentioned earlier by Didier and Jacques. We want to develop our activity in cash management.
We want in selected countries to be local, but also regional to accompany our international clients. So what does it mean on the next slide? Our ambition in transaction banking. First one, supply chain solution. I mean, this is an area we started to develop, what, 18 months ago, and we have a lot of potential to grow.
The investment initial was done in Europe and we're also going to continue to develop in the U. S. And also in Asia. I'll come back to Asia. We consider we can multiply by 2 our revenues in supply chain finance during the plan.
International Trade. Here, we want to accompany the development of the market. More and more you see And here we need to accompany our clients and develop the flow business and also the digital transaction. To give you an example, we are one of the founders of the Comgo Platform, which is a blockchain platform to provide some financing for trade and community finance. We are among international banks and also some international players, clients.
And this will be a really efficient way to finance for imports and international activities. Here, we consider we can increase by 20% for revenues during the medium term plan. Now cash management. Cash management is something a bit more recent for us. I mean clearly, this is something we have started to develop 18 months ago.
We had some experiences in cash management. For instance, we are quite strong already in Russia. In Russia, our international clients do see us as a safe haven. With our rating, with the type of transaction we are doing, we mentioned earlier, Didier mentioned cosmetic group, international companies, They are very pleased to work with us there. We want to replicate this.
Cash management, we want to be local in France. We will continue to be local in Russia. We'll be local in India as well. Why India? Here again, there are a lot of foreign investments in India.
We developed the cash management earlier this year. After 9 months, we know that already we will our return on investment will be done within 2 years. We'll do the same in China. We mentioned how we want to develop in China. In China, we'll develop the ecommerce solution, but also the full fledged of the offering in cash management in 2021.
That's large investments, but we will clearly get some return. Just to give you I mean, to tell you how the potential is great for us, today, if we take our client base, only 1 out of 10 is using cash management. So it shows how we can go. Therefore, cash management, if we consider, we can increase by 1.7x our revenue during the Medium term plan. And globally, transaction commercial banks, banking activity will bring 25% of the growth we estimate for CACIB doing the medium term plan.
So that's where we see as well some growth. So now to wrap up, We want to continue, as I mentioned, to be a global leader in asset financing. We're financing real assets. We accompany our clients and we accompany as well the evolution of our clients. Mention Renewable, mention Transition in the Climate environment, we are at the forefront helping our clients.
We also want to create value with the 3As, advisory, agency and R and D. As I mentioned, that's also expertise we want to put as a service our clients. Distribution arm, we need to continue to develop to reinforce our activities there. We will develop the flow business, cash management and also supply chain finance. And we are pretty sure, very confident that we will bring growth with our ambitious target for 2022.
Thank you. Now I'll pass on to Pierre.
So good afternoon to everyone. So my name is Pierre Gay. I'm in charge of the Global Market division. So maybe to start with, as Jacques said in his introduction, actually, Our activity of globally of global market is under massive pressure. We've got some headwinds.
I'm not going to mention it too much, but coming from regulation, coming from the pressure on margin coming from the low level of interest rate coming from also New Joiner, being the fintech, being all these type of actors, which are basically putting pressure and all that. So what I'm going to explain you is why, first, this model was resilient from the past and why we because of the strategies and the payment, why for the medium term plan for 2022, our activity is going to be an increase of revenue for the 4 years to come. So the first thing is To explain and to focus on what are the strengths of the group, in fact, what are the key elements, what are the differentiator that The global market activity is using in front of our competitors. We identify in fact 5 which are basically a differentiator for us when we are in front of client. The first one is around the balance sheet.
The Group has a strong balance sheet and this is definitely something when you're in front of a client that the bank already put a couple of 1,000,000 on the table. It's easier to have a discussion with them about whether they want to do in terms of hedging, what they want to do in terms of hedging on the FX, what they want to do in the hedging on the rates when they if they want to issue some bonds or what type. So this is something that we capitalize on the strength of the group, which is basically By providing cash to these clients, we are able to be closer to them and to increase the intimacy that we have with them. 2nd element of strength is our rating. Being a double A bank today, something that not many of our competitors has.
And when you want to do a cross currency swap for 20 years, having a AA bank in front of you is something which is a strong differentiator and will help you. Of course, you need to have a good price, you need to have a good services. But in terms of discussion, it's something that at the end of the day is going to give you some elements in your favor. 3rd element, so these 2 sorry, to start with, these 2 first elements are veiling to, I would say, structural strengths of the group. Balance sheet rating is something that has nothing to do too much with the capital market activity.
The third one is more about Tesfib and the 4th one is more about the with the expertise that we have. So the third one is about the network. Network is something very important for us. Why? Because When you have a client in Europe who want to do a hedge in Taiwan, who want to do a hedge in Korea, having someone on the ground, which is the case, We are perfectly aware of what's going on in the market, who are the buyer on the FX.
Is it Central Bank? Is it Dash Fund? Is it Real Money Accor. It gives you some elements of information that you can provide to your clients. And when it comes time to the discussion, Because of that, you are able to get the trade and you are able to increase the footprint that you have within.
2nd element of differentiator is that when you talk to the local clients, we are French bank, we are big in euros. So you are able For these local clients, when they want to do a transaction, being on the Eurobonds, being on the swap in euro, being on the repo, because there is And this is the 4th point on the Euromarket, we are able to get this business with these local customers. So how your network brings you as 2 forces, the first one being able to bring our clients to these different countries and second one, bringing these clients locally into the your markets. 4th point of strength is our expertise in all type of innovation products. We just have been rewarded by Risk Magazine about the investment product of the year.
This is something which is in our day and that we're pushing as a solution for a client. Doesn't mean on that part that we are the one providing with a very sophisticated type of product. We are more, I would say, on the tailor made, which means that Because of the intimacy that we have the client and this is something very important I want to insist is that as Didier and Jean Francois said, Because of the close relationship we have with the client from the beginning, on our side in GMV, we are able to understand more what are their needs, being on the hedging side, being on the investment side. And we're able to provide them with the best solution. So one more time, it doesn't have to be very sophisticated, But it's answer to the need of the client, which is something that I think when we discuss with the client, it's a very strong differentiator for us in terms of activities.
Now if you look on the left part about the split of our revenue from different customers, so you see 40% of our revenues are coming from corporates, 10% are coming from the group. And in fact, we have the rate coming from financial So we split a bit the financial situation to 3 parts. The first one is the one where we consider typically in France company that they are In terms of behavior, very close to the corporate. The way they want to hedge the balance sheet for an insurance company is very much Align with what the corporate is doing. So we almost consider them as corporate.
Another one, when you have a corporate who is issuing a bond, You need to have the investors who are going to buy the bond, right? And it cannot be another corporate. So you need to have this relationship with final institution who are able to give you the capacity of distribute the bond that you just have issued. So this part is very much linked to a corporate. And even the rest, it's also very linked because when you do swap, if your corporate want to hedge its balance sheet by paying the fixed, You need you cannot keep the position in your book forever, right?
So you need to have the financial decision whereby you can do the opposite projection and Square your position. So very much focused on the corporate business because of the knowledge of our clients and because of the nature of our business. So I was talking at the beginning about the fact that our business is resilient. So we can see it from the past. And as Jack said at the beginning, after the crisis in 20 82012, We refilled and we downsized the global market activity quite significantly.
And from, I would say, the last 4 years, we are restarting to rebuild Credibility on that activity. And year after year, we can see that this element Market is increasing in terms of revenue. So from 1.6% in 2014, we moved to roughly 1.8% in 'nineteen. And putting the objective of 2,000 for 2022 seems to be aligned with what we have done before, right? There's no magic.
There's no suddenly we did not The Golden Mine, which is going to give us a lot of new revenue and opportunities, is a continuum of what has been done before. And so the way we're looking at it In terms of increase of revenue, if we move from 1.7 percent, which was the result in 2018 to the 2,000 percent, which is the medium term plan, We have split it into different elements of growth. First one is, as you know, 2018 was a difficult year, On the credit side, right, so as there was a massive drop, particularly on the Q4 of the result of the activity, so we have I decided to put a kind of a plug for 2019, which is basically putting the level activity of where it should have been. So the €75,000,000 On the what we call the revolving credit is basically the to compensate the decrease in 'eighteen on this activity. Euros 100,000,000 on repo, so this is something very important.
And this is something where as of today, a lot of activity has to do with financing of bonds, financing of GOVIZ, of the activity. Where we're pushing and where we're developing more activity is definitely on the collateral management side, being on the collateral upgrade, collateral degrade, The all the pressure on the forward bonds, all the operation on the sector funding, which is basically not costing us any balance sheet, But which are a lot of development and which allow us to grow this activity for the years to come. Development in Asia, it has been mentioned before. We have €100,000,000 of gross of revenue, which has been scheduled in China, Half of it will come from our Global Markets division. Synergy with the Credit Agricole Group is basically All the development that we're going to do with the all the SME business and together with the Care Sessional, with LCL, We are putting in place the organization to make sure we will push and develop this activity.
In terms of organization, and one more time, this is to really because something I think you need to have in mind is that Our business model for the Global Market division is quite different from the other bank. In a sense, that is very well integrated into what the bank is doing. And this is why we did This kind of presentation with a puzzle to say that we've got a switch of finance commercial banks. And from that, We integrate to the financing and funding solution, which is one of the part of the Global Market Vision. Why?
Because when some customers, they need some cash, They can go to their bank and have some loan. But sometimes they need to go to the market, right? And this is where we can provide them the liquidity by using the DCM Viti. Another part of activity is all the securitization, right? The customers want to do some securitization.
We have to in a kind of sense, the continuum of the activity, we can provide them the securitization business. And when they do that, they have to hedge Because when you issue a bond in dollar, maybe you need to have euros. So we are able to provide them with a cross currency swap. If they want to do a fixed rate on the DCM. We can provide them the swap to hedge a position in rates.
So this is really to demonstrate that this is a continuum and that There is nothing there is no per se developmental activity on the Global Market division, which are really dedicated to one specific It's a global offer that we have. A quick element on the different pillars. So on the Financing and Financial Solutions, so what we have basically is 2 types of activity. We have the securitization business where we are pretty strong And we will stay strong, particularly in Europe. We are very strong in front of captive automotive, the energy business, The telecom business, so strong position on that one.
We have operation securitization in Europe, being in France and Italy and also in the U. S, where we have the strongest strong activities. On the GCN side, so the target is to stay on the top 5 in Eurovision in the Euro business And to continue to develop with a bit more sophisticated type of approach, pushing the solution in terms of the decision activity. Then to help and to, I would say, to continue the activity, we have Digium Investment Solution based on FX, Investment Products and Secur Funding, which is basically one more time here to complete the offer to our clients. We know, and as I start with that, that the market is under pressure, and we need to do something.
And if we feel like we are, we will suffer in the years So we have not stopped to think about what's going to be next. We continuously improve our setup, make some changes to make sure that in the years come in with me, continue to be profitable. The first thing is that we adjust the setup. We are moving into On the financing solution to our setup, which is more of what we call the tradition, which is basically to make sure that we have an alignment between all The different element of this collection being the credit rating, being the sales and being the DCM. We want to make sure that We are doing the right business in front of our customers to make sure that it's completely aligned.
The front to accounting value chain, something also very important to make sure that From the back office to the back office, everything is aligned and that we are able to optimize the setup and to reduce the cost. 3rd point, adapt the sales force. We know that in some of the activity, electrification is more and more one of the key element. So you don't need to have, as we used to have, sales everywhere, centralization of particularly on the flow product is something very important and we are pushing in the direction in order one more time to Rationalize the setup, optimize our cost. 2nd element, so this was more to go with the organization.
2nd element also very important is that we need at 1 stage also to be disruptive. We in some of the activity, we know that competition is strong. Talking about the fintech, we know that some of the fintech, particularly on the flow business, are very aggressive in terms of pricing, very aggressive in terms of setup. So They are able to give very good pricing to the clients. So instead of fighting with them, at one stage, we need to integrate the fact that we have new joiner in our business.
And we don't want to stop the activity because we need to have this activity to serve a client. But in some of the case, we will need to find some partnership and with Fintech, without the bank or to make some what is currently a reflection with some others to create a pool of bank where we will be able to offer physical services, but with a cheaper cost. All these initiatives are well already thought in 2019 and will be Some of them will be put in place in 2020. So all of this is linked to us into 2 objectives. The first one is to keep our investment capability in the near future to be able to invest in the area where we are strong, we're not on the 5 pillars because the electrification, because of regulation, we will need to have some investments.
And secondly, to reduce the cost of our market activity and particularly, we have committed that on the direct costs, We will have a decrease of 10% of direct costs by 2022. So to sum up, The first point, very important, is that we have a resilient fixed income model, which is based on the strength of the group and the strength of CACIB. And one more time, it's very strong link with our clients. The market activity is integrated in our financing and transaction activity To serve our clients, it's a continuum of what has been done in the other area. And third point is that we will streamline and in order to invest in the area where we have strengths and where we want to push and develop activity.
So I think now it's time for a coffee break for 10 minutes. Thank you.
Okay. I think that we're all back now after this little coffee break. So let's have a few moments on the transversal levers, then financial targets for 2022, Quick conclusion and then the Q and A session. So let me start with one of the cornerstone of our DNA and our business, which is sustainable banking. It's kind of a Tough slide to present because everyone today is green.
Everyone is doing sustainable banking. And if I just tell you that We are the leading bank in sustainable banking. You're probably going to shake head and say that you've heard that already 20 times. Well, it's the reality. And I think that you.
We have been because it's also cardiac or we're a bit of a special bank. We have been in this field for at least 10 years, Day after day, at a moment of time where it was not that trendy today in sustainable banking and in green financing. And when it goes to rankings, we took the widest one, all green social sustainability bond, all currency. And as you can see, There's not always a French bank, which is number 1 worldwide. We've been number 1 in 2017, in 2018, and we're still in 2019, the 1st bank in this field.
And logically, our market share is almost twice as our natural twice as big as our natural market share in this field. Of course, we finance the economy, global economy and global economy is also a carbon economy. But in our case, for example, 64% Our electricity generation portfolio, for example, today is already a renewable one. We have implemented a certain number of new things In order to boost this kind of business, one is the green liquidity factor, which is kind of an add on that we give, kind of a little sponsorship that we give on rates in order to favor those investments. And we are really now having some great credentials.
But it's not only just this, It's also trying to make this sustainable banking and the innovation joint forces. And that's how you can see on the right side of the slide. We're also at the forefront of every new product, Which is innovative product. It can be the 1st ever bond issuance of sustainability development goal. It was done with Enel, we're the book runner.
It's the transition bond that we did sorry, transition private placement we did recently with AXA and a couple of Example of this, as you can see, we mentioned that 70% of our business is outside France. Well, in Hong Kong, for example, Is doing this scenario of green bond and they choose 2 banks in the world. They choose Credit Agricole as one of the 2 banks to bring them to the market. And the same way, it's not only issuance, sophisticated issuance, it's also product link. We have, for example, what we call the double Green products that we sell in our networks where there's the funding, which is green and there's the indexation, which is green too.
So you see, green is not just looking backwards. It's also looking at all the new things that can happen. But overall, we're the number one in this field. Our ambition is not only to stay at least in top 5, but also to go much further because we feel that this is Nothing like marketing. This is really a very serious issue that we will face and that the next generation will face.
Very strong on this. And we want as a bank, as citizen, my team, we want to be active in this field. And so We have committed to really respect the sustainable development scenario in line with the Paris Cup. We took in every sector, we looked at what was the impact of the sectors with regards to those goals. And we took in some cases some tough decision.
I mean the one which is the most well known now is our attitude vis a vis thermal coal, which we think It's a real issue on which we'll probably get into more details during the Q and A, but we've decided to be very strict in this. And not just looking because that's in a way too easy, just looking at the photography because once again, the economy is a carbon economy today, but also Bringing inside our system a notation, a transition notation, which is a way to say to a certain number of our clients, listen, This is the picture you start with, and we're going to measure what is the direction. We're going to measure what are the things that you're changing In order to make your energy model evolve, and we're going to have a relationship and a dialogue with our clients, which is not only based on the photography, but also on that transition note that we implement. And we have also, as you can see here, very precise commitments, especially a big one, which is to double the size of the green room portfolio between now 2022. 2nd lever 2nd transversal lever I wanted to speak of, it's the one on Data.
And again, a bit like green, how can we show that this is really something Very concrete. And I hope that you've seen that on the beginning of this presentation. We're very pragmatic back. And when it goes to digital, It's not about words. It's about concrete actions.
And if I may just insist quickly on that one. The fundamental belief that we have is that today we start like almost every flyer with IT organization where everything is bundled. While you have a big bundling between the legacy systems and the data, which are the underlying resources of those legacy systems. If we want to be digital, we have a twin stage to first get into kind of a tedious, long, painful exercise, which is really to map and separate legacy systems and data. And this we have engaged in, it's going to be a 3, 4 year Journee.
But gradually, we make sure that our legacy systems and our data are in a way isolated. And what is the rationale behind? The rationale is that legacy systems are fantastic to do the lifecycle of the product, the Settlement of bonds or whatever you want to do with them, but they're not the right way to get into the new world where you have Risk management, which is becoming more and more based on the data that you have, where the client needs, suppose that you have artificial intelligence on what they're doing on regulatory requests that are more and more asking you to have a huge data set ready and available. So the data will be used for agile development and the legacy systems will be used mainly for lifecycle of products. Once we will have achieved that, definitely, we will have the ability to develop Much faster.
The time to market is going to be much faster. New solutions for our clients. We will have, Obviously, costs which will also be reduced because there's less reconciliation, because all the process are going to be much more seamless. It's going to be great also in terms of innovation because once you have those data available, then sky is the limit. And of course, each time that there is a new regulation, you won't have to transform our systems.
We will just have to plug in new ways to get into the data and find What a regulator is asking us to do. So that's the big thing about the digital. We are going to be the best or one of the best digital bank because we're going to do first this journey of really having an architecture for IT systems. 2nd thing, which is very important is when it goes to innovation, Again, let's be very concrete here. My personal feeling as the CEO of this bank is that big organization are resilient because they're good at killing innovation.
In a way, they try to avoid any attempt to make them change. So a lot of people consider and I think it's true that if you want to really foster innovation, whether you buy some startups because they've been able to create innovation outside big organization Or and maybe we'll do that from time to time, O'Kasner. Or the other way is to make sure that your innovation team is not Embedded somewhere in your organization and is not systematically censored or arbitrated when it goes to budget, when it goes to priorities. And so the idea is to when I arrive is to create an innovation team made of roughly 15 to 20 people reporting directly into me, which means that those people when they want to create disruptive projects, when they want to have a data strategy, when they want to have MarketWatch or new tools, they come to me and I'm the one who is deciding if this is a priority or not. And it's because this innovation team It's really plugged into the CEO at the highest level of the company, the CEO and the COMEX, that it really is able to generate innovation for CECIBBE.
Those were the main things I wanted to show you on those things. And now let me I'll pass the floor to Anne Katrin, who is going to talk about a very important topic for us, which is the human project. Anne Katrin?
Thank you, Jacques. Well, you may think it's quite unusual to see an HR addressing investors. But we believe in Credit Agricole, in CACIB that our people are our strength. And when we say that, We mean that not only they are our assets, but they are our lever to reach out ambition and performance. While you can see our people roadmap behind me, which is on three dimension, I would like to focus on 4 items of this roadmap, which will allow us to answer the needs of all our stakeholders.
I mean by our stakeholders, our clients, our regulators, our investors, our society and of course our collaborators. The first dimension, building the future. Jean Francois Balaji, Didier Gaffinell have mentioned all across their presentation that we have very strong expertise within this company. We have built it throughout the time and we have been able to construct it. We are continuously investing on their training and are making sure we keep it Extremely engaged.
But we also need to build up new generation. And for this, we are continuously investigating the market on a very selective manner to pick and choose the right competency we need for our future and also to onboard juniors and new generation. I would like you also to notice how much we have been cautious to contain our workforce, allowing us To engage our future, our people on a midterm, allowing our people to project themselves in an organization which has not been going through many stop and goes. You know how damaging could be social plan for our company, especially in France when it's volunteering. You lose competency.
You lose your best people. Well, here we have chosen to engage them and to invest on them. On the 2nd, it leads me to the 2nd dimension of our people roadmap, which is engaging our staff. We have described a very strong organization Worldwide based reaching out to many different type of clients offering a lot of experience sharing and possible way to develop themselves to our staff, Well, we need to continue to make sure we enhance this cross selling and that we bet on our cross fertilization, allowing everyone to use its talents. And it's very important for us to tell you that we are clearly going to focus also on fostering further diversity into our workforce, allowing us to answer all our clients' expectations.
On the 3rd dimension, Which is fostering a new deal, a new deal with the society, a new deal with our collaborators. We want to make sure that we enhance our ability to welcome New Way of Working and allowing as well our collaborators to explore New Way of Working. To give you an example, we are standing regularly With our startup mission project, some of our collaborators to startup for 4 weeks to 6 weeks for them to Embed the way of working differently and to bring it back into our organization. In the same time, we are going to welcome freelancers on IT developers in order to work on very agile manner on different projects that we have. So all this, Mixing our DNA will also ensure the resilience of our organization.
Last but not least, while we have Strongly invested on impeccable conduct of our staff and trained them. I would like you to look at one number. Having impeccable conduct is a must. Having 73% of engaged staff in the company is not a given. And clearly, we want to be proud of this number Because this is showing this figure is demonstrating that our people are clearly a differentiating one of our differentiating factor and will allow us
Thank you, Anne Catherine. Good afternoon, everybody. I am Olivier Belanger, CACIB's CFO. All my colleagues have made wonderful teasers and let's now talk about what you are all waiting for figures And financial targets. Well, our financial targets are ambitious, ambitious despite headwinds, Headwinds coming either from microeconomic uncertainties like low GDP growth, like low rate environment, Like potential trade war with impact on ForEx rates.
Fortunately, CACIB is not sensitive to the Absolute level of the interest rates. Our portfolio are at variable rates, so we don't care about long term rates. And on short term rates, we operate worldwide, including regions where short term rates remain positive. In Eurozone, we tried term deposits with large corporate at negative rates, while side deposit remained flawed. But market practices have evolved and as introduced on the asset side, the floor on the Euribor Index, which almost mitigates completely The impact of the floor on the liability side.
Moreover, we will benefit from the tiering of the ECB. Concerning ForEx sensitivity, if the Euro dollar parity moves from $1.10 to $1.20 for example. Our NBI on an annual basis will lose 1.2%, which is measurable. But in the same time, our expenses will decrease and our RWA will decrease as well, meaning that at the end of the day, the sensitivity of our return on normative equity is really minimum. In fact, like For the European CIB, the main challenge for CACIB comes from regulatory headwinds.
Across The period of the plan either coming from already transport, Beta 3 recommendation on securitization, which will account for €5,000,000,000 of increase of our RWA 1st Jan next year or other recommendation on input flow on operational risk. All coming from the internal model review conducted by ECB or the TRIM exercise, the total amount Of the impact or regulatory impact, we represent €21,000,000,000 almost 20% of our RWA basis, which means that in order to keep a very high level of profitability, we need absolutely to have a very tight management of our scarce resources, RWA. And to manage it, we have identified 3 levers. First one has been described by Didier and concerns strategic client selection. Through the very systematic process, EVA calculation, filtering any transaction and clients that Didier has described, we aim at Reducing the allocation of RWA to our client with a long lasting low profitability by approximately EUR 4,000,000,000 We also, and Jean Francois, I'll describe it, enhance our capacity to improve the rotation of the balance sheet.
And we have identified assets that either through synthetic securitization, either through tailor made Solution that we can offer to our to real money investors, we can save assets with relative impact. On top of that, we have we will foster the unwarranted the optimization of our unwarranted RWA like accounting to risk gaps. But managing scarce resources means also managing liquidity. And for sustainability reasons, we want to limit the reliance on institutional investors, either on medium and long term funding. And we intend to stabilize our loan to deposit ratio, meaning that any new funding requirements will have to be covered with new deposits and as well on the short term funding where we have a liquidity management where we do not rely on money market.
And for example, our CLIA or liquidity coverage ratio in dollar has been constantly positive over the last 2 years, even without the contribution of Money Market Fund. Concerning the management of the RWA, all these actions will contribute to improve On a pro form a basis, that is without model changes, our profitability on RWA by 70 basis points. In this context, macroeconomic uncertainties, but with limited sensitivity forecasted on interest rate and ForEx And the scarce resources constraints, our ambition in terms of NBI trajectory are realistic with a 3% annual growth rate. 3% is in line with the worldwide GDP growth expected during the period of the plan. They are realistic and also aligned With the strategy described by my colleagues in terms of geographical analysis, Meaning that the main part of our growth will come from Asia, where we have historical presence and strength And where the GDP growth is expected to be higher than in some of the regions.
Middle East will also contribute for sure with a lower starting point, but will contribute very efficiently as well. This strategy is also well balanced and Jack has said that the growth will be spread homogeneously across our business line. And as you can see, our financing solution activities, which currently represent 75% of our NBI. We'll also contribute 75% to the overall growth by 2022. As you can see as well, the achievement rate is in good shape.
We are ahead of schedule, which was partially at least partially anticipated due to the rebound effects Pierre has mentioned. Let's now, if you allow me, let's now have a look on the costincome ratio and let me insist on the costincome ratio. Jacques has mentioned in its first presentation that the cost income ratio of the CIB It's highly dependent on its business model. Our integrated business model of expertise As has managed to deliver over the last 3 years, the cost income ratio around 55%, which is clearly below the average cost income ratio of our French peers, even below the Cost income yield ratio of their pure financing activities. So this is really a very good achievement.
And our challenge for this plan is to keep and maintain this costincome ratio at this level, which is a challenge because over the course of the plan, We need also to invest. This has been mentioned by my colleague. So to invest and to control costs. And concerning cost, we have adopted a very pragmatic approach. First of all, we have taken into account what we call the organic trends, meaning inflation and the increase in IT maintenance costs Due to the very high level investments we've made these last 2, 3 years, especially for regulatory reasons, MiFID, Madmar, compliance and so on.
Then to cover this evolution and these organic trends, we have even identified selling costs And that we have divided into 3 categories. 1st, around innovative solution, codification and agile development in order to improve the productivity of IT department itself or artificial intelligence on robotics in order to improve the productivity of our business and support function. 2nd category, process optimization, The front to accounting front the systematic front to accounting review, Pierre mentioned, is part of it and also a review of all our setup. And the last one being more traditional about sourcing and organizational improvement, including Offshoring. And in order to achieve all these cost saving, we have created a cost efficiency unit, which is in charge of challenging every business, every organization, every process In order to be able to improve our cost efficiency and which is also in charge of steering and coordinating all these actions.
This Unit reports directly to general management in Comex. All this action allow us to keep room for investment In order to move our investment, more or less split with a balanced manner between IT Investment and Business Development with and keeping an average growth rate of our expenses at 1.3 St. Concerning the cost of risk, our expert teams Over the period 2012, 2018, I've been able to deliver a cost of risk, an average cost of risk of 21 basis points. 2018 was clearly atypical with Positive cost of risk, net reversal of $61,000,000,000 This is not repeatable year after year, of course. And over the course of the plan, we have adopted, I would say, a neutral approach, and we have made the hypothesis that the cost of risk We'll progressively converge to the expected loss of our Basel II model.
At the end of September, The cost of risk, €101,000,000, oneten of the cumulative hypothesis of cost of risk we've made over the period of the plan. To summarize our financial through Target. How can we qualify them? For me, they are ambitious, realistic and well balanced. Realistic and well balanced concerning our NBI trajectory.
3% growth rate is in line with expectation of GDP growth, worldwide GDP growth, well balanced because homogeneously split between all our business lines. Ambitious and realistic in terms of cost control, keeping a costincome ratio It is below the inflation anticipation of inflation over the period is ambitious. It's nevertheless realistic because we have ring fenced Rule and amount for investment for the future. Neutral in terms of cost of risk with a gradual convergence towards The expected loss of our portfolio. Ambitious and realistic concerning RWA, EUR 10,000,000 of increase of RWA between September 'nineteen and End of 'twenty two represents 50% of the regulatory impact that we will face during the period And definitely ambitious in terms of return on normative equity with the intention to keep a return of equity above 10%, our organic growth, mitigating and compensating the regulatory headwinds.
As a wrap up, I would say that Our plan, our business model and our plan are resilient versus headwinds. This plan aims in its financial target at absorbing regulatory and model changes for our and preserving our profitability And our ambitious, realistic and well balanced financial targets are perfectly in line with our integrated business model of EPIR teams, which are our strengths. Thank you very much.
So time comes for me to make a conclusion. Thank you, Olivier, for I think a few figures at the end of presentation after us just doing the teaser. What can I say as a conclusion before we go to the Q and A? You. 1 year after joining this company, what strikes me It's first the level of expertise, which is inside CACIB.
It's really a bank where in all the you. The amount of expertise that we have is just amazing. I think also it's a company in which We work as one team. And that's why it was so important to have most of the executive committee today on the floor, because it's not a one man show. This is just about Making people work together and it works.
But I also think that the fact that we have A good level of profitability and a very sound strategy based on good balance and a good articulation between market activities and financing activity. It does not describe fully the structure. I think that CACIB is a company with kind of a special touch. Is it linked to our DNA? Is it linked to the very long term view that we have on products, on clients, on employees?
Is it our attachment to sustainable banking? I think that this company has really a special touch, and I'm very proud to be the CEO. Thank you very much and happy to take any questions from the floor and from the web. Maybe let me ask just the Exco to come with me.
Don't leave me alone.
Hi. It's Omar Fall from Barclays. And three questions, if I may. So the first one is just on the revenue growth targets of 3%. That's kind of well ahead of the origination of about €5,000,000,000 of risk weighted assets.
So Could you just put a bit more meat on why you should grow the top line so far meaningfully ahead of Net RWA growth, particularly given that if you look at your originated distributed model, A lot of those gains have already been done. And even in your targets, I think you have it flat at 40% or so. The second question is just on the €100,000,000 revenue benefit from repos. I didn't really quite understand that. If you could put a bit more color on that point.
And maybe just give Color generally on the repo market and what you're seeing, given that it leads to a lot of volatility to French Bank Balance sheets and some regulatory changes around window dressing. And I know that You've specifically given your leverage ratio on an intra quarter basis since the beginning of the year. So I guess you agree there's changes coming there? And then, sorry, last question is just you mentioned the benefit of tiering. My understanding was that tiering at group level It wasn't very meaningful because you'd be sharing the benefits with the CAS and then at CASES as well.
So maybe if you could put some figures on that. Thank you.
Yes. Thank you. No? It works now. So So maybe what I would suggest is on the repo that Pierre you take that question.
On the tiering, it's going to be more on Olivier. Can you just elaborate more on the first one? Because I was not sure to understand and want to answer precisely. So what you're saying is that How do we explain the fact that we have 3% growth of our revenues versus the growth of our overall risk weighted asset?
Correct. So if you look at the I think you had it up at Slide 51. You've only got
5,000,000,000
RWAs increasing increase from your originations, so like 1% a year This is 3% revenue growth. So just wondering.
Okay. So let's start with maybe you Olivier. Thank you.
So perhaps part of the answer is related to your second question, in fact, because repo activities consume Almost no RWA or very little amount of RWA. So, part of our growth anyway is, I would If I simplify RWA3. 2nd, on market activities, Pierre will perhaps also elaborate on it. We intend to develop flow business on ForEx in the emerging market and so on that does not consume a lot of RWA as well. Then, as I mentioned, we have some levers in order to free RWA.
And these levers are relative. When we want to decrease the allocation of RWA to clients with long lasting low Clearly, these clients are dilutive. So, getting rid of this improve anyway the profit a bit of our RWA. When we make synthetic securitization, when we elaborate tailor made solutions for Real Money Investors, once again, we only do that when this is relative in terms of RWA consumption. And we have effectively made a kind of clearance or look at this kind of clearance of course And improving and what we have calculated is that improving Our increasing our origination by around 10%, 15% and in the same time, Gating or improving also the intimacy with the clients through all the initiatives Didi has mentioned We'll allow us to increase our underwriting without increasing the final take, meaning also that we will Improved the rotation of our balance sheet without impact of the RWA.
All these elements Effectively, let us confident that we will achieve that kind of target in terms of NBI without increasing
You want to take the one on the repo?
Yes. So on the repo, what we have what we are pushing in terms of development, As I've seen in the presentation, a lot of what we were doing was more plain vanilla type of repo, which is financing, whereby we are pushing now towards more the type of transaction Like forward bonds, like collateral grade, collateral degrade, which has the advantage to be in the term of balance sheet, could be net at the level of the balance sheet. So which means that The overall overlap of increase that has been allowed because we are working in the constraint on the repo side has been maintained. And so we do not expect any big [SPEAKER JEAN MICHEL RENE GAULT:] Significant growth of the balance sheet for this activity despite revenue which are basically €100,000,000 higher for 2022 compared to what it is today.
The last one is on Thierry, Olivier?
Yes. Concerning Thierry, I won't speak. Throughout the group, it has been decided that each entity will Manage its steering and benefit or not from it. It's equivalent with the presentation of our results by Business line and big business lines. For CACIB, as long as we keep the floor On-site deposit for clients, which cost us some money.
There is no No matter and no reason for giving the benefit of the tiering to the client. In fact, we already give them for 4 years. So, the implementation and the introduction of the tiering Right now by ECB, we'll effectively at CACIB level be positive.
Next question.
Thank you. Guillaume Tivergin, Exane BNP Paribas. The first question relates to your Slide 20, where you talk about the EVA per client and you charge cost of So I was curious to know how much cost of equity you charge and also how you calculate what is exactly the maintenance cost? So is it like A fraction of the overall cost. The second question, when you talk about 10% ROE, obviously, you're only allocating 9.5%, But the group needs 11%.
So, actually, it's near our 8.5% ROE on the normal capital allocation. And also, I was wondering whether the ROE includes or is before the AT1 coupon? And then a third question relates to the originate to distribute. Is there a glass ceiling about how much you can actually reduce The RWA, could you not become in 10 years a bank that actually doesn't have RWA? I'm exaggerating a bit, but This is the question.
And final question, when you say you wanted to cut the market activities direct costs by 10%, What is direct cost? What proportion of the overall cost of market activities is that? Thank you.
Okay. I'm not sure we're going to be able to answer all the things in detail because we don't necessarily disclose at that level, but let's try to do it. Maybe first on the first one, which It's the EVA. I don't think Olivier will disclose the rate that we use on the cost of our capital And Tony, but we can I
don't know if we can
do it? No, I don't think we disclose it, but it's clear entries market practices.
And let me say that it's I can think that the answer is a bit too vague. But In a way, it's not really the issue. The real issue with the EZA is to shift culturally the bankers from looking at revenues Into looking at something which is revenue minus cost of capital. Then you can say, okay, it's 10%, 9%. You can take whatever you want as cost of capital.
But the mere That you say. Okay, in RCF, okay, it's good money, you make some revenues. No, in reality, in RCF, you destroy EVM. This just cultural change changes completely the dynamic of the relation between the banker and its clients, regardless of the level Of the cost of capital that you put. 2nd question is on the maintenance cost.
There are many ways and you've seen that we have put it I'm blank on that one because we think that it's a bit of an internal recipe that we don't want to necessarily to give to our competitors. But let me just say fundamentally that you have 2 ways of looking into those maintenance costs. The first one is you look into the marginal cost of a client, Which is fundamentally I look at, okay, how does that what does it cost to add just one client or to reduce our portfolio by one client? And fundamentally, we all have in mind that the cost base is in a way is not very elastic. And the second way is to look at The average cost per client, so you take the whole cost base and you divide by the number of clients.
In reality, there's nothing right or wrong. There's 2 But one is a philosophy in which you create growth because you take a marginal cost. So you encourage the bankers When they have a plant with whom they make €300, €400, €500, €500, you encourage them to move to €1,000,000 or to €2,000,000 And the other one is the one which is in a way punitive because you start by a cost base of whatever, dollars 1,000,000 per client. And in that case, you can encourage the bankers, to say, you know what, I'm making $500,000 It's not profitable. Instead of fighting to get above the threshold, I'm going to abandon the game.
So it's a real philosophy of although there's no right and wrong on that one. Second thing is the Return on equity, what kind of level of capital that you put? Once again, it's very standard. Today, the way the group calculates it It's 9.5%, if I'm correct, Olivier. You can just make the math if you use 10% or 11%.
It just changes. Does it change fundamentally the equation? I don't think so because today, for example, we have 12% return on equity. If you take whatever 11% of capital in front of your Risk weighted asset, you're going to go down to 10.5%. You're still a double digit bank, corporate investment bank in the current environment.
One question was direct costs maybe, but I'm not sure we disclosed that, Pierre.
I don't think we'll do.
I'm not going to disclose the amount of direct cost for GMV. Yes. And it's to
be honest, it's Why do we keep that KPI? Because we want to really have people who have levers on what they should achieve So for front office, the first direct thing that you could do is your direct cost. And of course, after at the level of Pierre, it's about also making sure that when we run new projects, when we make new investment, the indirect costs are under control. That's why we take this KPI, although we don't disclose The percentage it represents. Maybe Jean Francois, on the can we be Can you be more furloughed?
And can we be a bank with almost no risk weighted assets?
The question was not no weighted assets. I mean, this It was glass ceiling. Weighted asset, first of all, I mean, there are several ways maybe to answer. The first one, we implemented the DTO model a few years ago. And since we implemented the DTO model, we Continuously increased revenue, our range facilities, I mentioned earlier that we developed different channels of distribution.
And notably the ones where we are just arranging facilities and putting in relation investors and clients. I would also add that when you look at when you are arranging transactions, they don't have an infinite validity. And we perfectly know what the average life for Corporate facilities and also structured finance facilities, you can have a project, let's say, with a maturity of 20 years, but they never stay 20 years. They're normally refinanced in a very short term because there are additional CapEx because it's changed from one end to another, Because they are refinanced, especially on projects which are investment grade, they are refinanced in a very short time From with the bond markets for its capital issuance can be project bond and so on. So there are plenty of ways to monitor this rotation of the assets.
And in fact, what we're following, we're following our clients who provide financing solutions. And as it's mentioned, we also Olivier mentioned as well that we are developing strategic securitization. There are plenty of ways Which we are still developing. So glass ceiling, I hope not. I don't think so.
Yes. And maybe if I can just add one point. The beauty of the model is that because we focus on real asset and corporate, we're able to originate Loans and transaction with a good yield. And the positive thing is that on the other side of the fence for financial institutions, they're currently Desperate for yield. So anyway, they're very interested in doing business with us because we have this angle in which we originate Transaction with a good yield.
So there's a kind of a virtuous circle, which could, as you were mentioning, at one stage, help us further to reduce risk weighted assets. Another question from the floor?
Matt Clark, Mediobanca. Can Can I ask a question about your regulatory impact on risk weighted assets? I think you had a 12,000,000,000 Euro from memory, increase there, which seems quite low given you've got both TRIM on low default portfolio to come. And then considering the impact studies that has been done Europe wide tend to have quite high impacts from market risk, Which I'm assuming is mostly going to be in CACIB and then also on CVA impacts. So Perhaps you could just shed a bit more light on why that €12,000,000,000 figure is so low and what assumptions you've made in terms of CVA exemptions and that kind of Things that might be helping you out there.
Olivier, on the 12 and 12 plus 9.
So, we have effectively Taking into account the fact that the CV exemption will go on. After that, you have in fact, You have to analyze it, not only the €12,000,000,000 but the €12,000,000,000 plus €9,000,000,000 because in a sense, the internal review the Internal model review by ECB is front running some of the Basel For so called Basel IV regulatory impact, if we don't have any model review from ECB, the regulatory impact would be higher. So in a sense, it has to be analyzed in a common way. Just to be
clear then, so for you TRIM is within the model changes Bucket there rather than the regulatory changes.
Bucket. Yes, because it's not exactly the same. It's a way to classify it. Either the impact will come through the internal review that are conducted by And we classify it in the model change. Either after that, it will come through Application of Basel Committee recommendation and we classify that as regulatory impact.
If we have if we add no impact or no ECB review, the The strict application of Basel recommendation would be higher. So it has to be analyzed
in an aggregated way, to be honest. And then also on operational risk, if you assume the ILME course 1 or any of those things?
Well, we don't disclose the exact Number of operational risk, but it's a small impact. It has an impact or it will have an impact, but rather limited. And on top of that, you should have in mind that our market activities have very low risk consumption. So, the impact on our market activities of all these evolution is rather limited to compare to many competitors. At the end, if you take all the evolutions, €21,000,000,000 almost 20% of our RWA It's more or less in line with what is expected for European banks.
Thank you very much.
Jean Pierre Lambert from KBW. I was wondering if you could help us a bit with What I could call the real big cube, which is the interrelationship between CIB and the rest of the group. So you told us that 50% of CIB Revenues come from 1100 customers out of the 4,000 and they are Slide 5. And on the other hand, we know the regional banks approximately account for 10% of the revenues. So, what is the return On the Caisse de Gernalda Roni, what kind of arm's length relationship you have?
And secondly, if you share these Customers, are you left with low margin vanilla products and someone else in the group like the regional banks offer Payment services, which are lucrative and so on. So, you're kind of loss leader. I'm taking an extreme example. The second question is related to the RoNE again, but for capital markets. So, we know it's about 5% to 6 Same, depending when you take 9.5% or 11% or whatever.
But do you see an improvement? I didn't see this in the presentation, but do you expect an improvement? And also what is the R and E on the repo activities, the new ones, you kind of expanding to more exotic versions? Thank you.
So let me answer the first one
and maybe I'll let Pierre answer
on the second one. On the first one, First, I think that the slide might be a bit misleading. What we're seeing here is that our clients are not just clients of CACIB. In most of the cases, our clients are also having touching points with the rest of the group. So it can be that we can have We can bank, for example, a big retailer in France.
And this retailer will also be a client of the Caisse de Genard. We can bank with an agribusiness company and also have a presence in Egypt and the rest of the group. So it can be small, it can be big. But what we're saying here is that 50% of our clients are also having another touching point in the group. And to be honest, I think that we should improve that.
We should be in a situation where apart from people who just have to dealing with CACIB that each time we have a CACIB client, We make sure that the rest of the group is also able to sell them consumer credit for people who are distributing products Or leasing for people who are in need of leasing or asset management with Amundi and so far and so on. So that's the first thing. That's why we say we have half of our plan, Which also have touching point. With regards to the relation with the Cast Reginald and are we leaving on their side the juicy business and keeping only the low margin? I would really want you to have this question to the consumer because they tell me exactly the opposite.
They say, listen, you leave me with the bad luck, the loans and you take the juicy business. I think that there's an equilibrium in our relation. But fundamentally, no one is really losing there. In some cases, they have the Products such as you described, the payments, for example, which are going to be done locally. In other cases, we're going to do the M and A, we're going to do the structuring.
It's a pretty balanced business. But what is very important is that there is probably a nice potential there. Because if you think about it, we have 30% -ish of the market in France. We have a presence in Italy and especially in the north of Italy, which is the richest part of Italy, which is incredibly granular. And on that one, if we're really able to build stronger and stronger bridges between this deep network and the product offering that we have on our side.
It will be fantastic for the rest of the group. It will be also great for us because when I see roughly 5 clients per week, I see 200 clients per year. When I go and see a private equity fund, for example, they love the idea that through Credit Agricole, we are able to give them primary deals Of small and medium sized company in the network where because of our case regional, we know the company, We know the CEO. We know that he wants or she wants to retire. We know the kind of price range, the sector and so far and so on.
So there's a lot of Synergies that can be generated. And trust me, we're not leaving the Juicy business on one side or the other. It's really it's a teamwork there.
So the I think this is something very important and quite different from the others. We are not looking at the business and not looking at the oil for the repo business because we strongly believe and this is really the key message is that if we're doing repo is that we know that this is something that serve our clients. And when we use that as a leverage to do something else, how we use that to sell the client in front of everything. So, we're looking at the ROE globally. We're looking at the way we put our customers, but we don't want to have I will never ever do a repo transaction just because that's in Q2C, just for our client that the bank is not serving.
This is very important that we're looking at the business as being thinking about the repo as a business which is serving the rest of the client of CACIB. This is true actually for the full setup on GMD, which is here not to develop and to try to extract some value from the market, but really to support The client base of the team and the group.
And if I can just add one thing. There is one thing which is interesting in the On the cost to income, where we compare, I think, the cost to income our cost to income, which is 50 ish and one of our peers. And we don't compare it just with our peers. We compare also within our peers between the financing and the market activity. And it's interesting because even if you compare With the financing activity of peers, well much below.
And that shows that so in our case, you. It can be frustrating. You can say, hey, but why don't you separate market and financing? It will be clearer. No, it's one Team in front of the client.
And when you have this, you're even below than just the pure financing activities of some of our competitors. I think that's where you really show That it's the blending that creates the competitive advantage. Another question?
Yes. Two clarifications and two questions. Clarification regarding Slide 15. When you talk about senior bankers and investment bankers With only one point of entry, do you mean that investment bankers are in charge institutional giants and senior bankers In Charge, corporate. What exactly does it mean?
I don't see the difference between what we call senior bankers and investment bankers. Regarding Slide 32, could you give us a clarification or an example about What we were thinking about when you talk about banking pool and new solution of partnership, Can you give us just an example just to give us an idea of what you mean? Regarding question, I would like to know with your new eyes on the company, you are quite new. After the restructuring, regarding the equity business, Which has been more or less sold. What do you think of that now a few years later?
And do you think it's something that is missing in your global setup for your customers? Regarding IT platforms, we know that Societe Generale or BNP, for instance, are promoting a lot There are IT tools like Cortex, for instance, or Asia markets. Where do you stand from this point of view in terms of IT tools to delocalize to customers. And my last question is regarding NEA. You talk a lot of Asia,
but it seems
To envisage a better growth in EMEA. In what countries? What is the basis? Is it a small basis? That's what the growth is high.
What are exactly your ambitions there? Thank you.
Okay. Maybe to answer your first question about the difference between a senior banker and investment banker. The senior banker of CACIB It's expected to deliver and to sell to the clients the overall product of the bank, which means financing, Market activities and advisory. Investment bankers are mainly, as I mentioned, Industry Groups, Non Sector bankers, M and A and ECM bankers. And so, these bankers are more, I would say, transactional driven And they are really, I mean, with this new organization, closer and closer to the senior banker to help them Typically to elevate the strategic dialogue with the senior maker.
So, the senior makers are, I mean, the client franchise of the bank is both corporate and FI and we have senior bankers for corporates And senior bankers for FIs, for banks, insurance and SSA mainly.
They are not exactly subordinated. We
have one single reporting line for sure. But then they are Collaborating, they are I mean, that dealmaker is the main and the single entry point within the client organization. Having said that, I mean, there is a balance, you know, and actually most of the senior bankers and investment bankers, especially when dealing with the strategic, I would say, transaction, I would say, well, going together to see the clients.
You want to answer also on the EMEA? Well, on the EMEA,
as Olivier mentioned, well, we have an ambition of delivering plus 7.5% The midterm plan, we have a long standing presence in the region. The development will be mainly based and focused on some Well, 2 sectors, energy and infrastructure. There is a lot to do and we have these structured finance teams specialized in these sectors. In terms of client approach on SSA, you have a lot of well, wealthy sovereign funds that we know well. And the second, I would say, growth driver will be well to effectively increase our footprint to better serve the Many MEA, I would say, clients of the regions for the outbound, I would say, needs typically investments, for example, in Europe On
the partnership, the idea is to say in some of our business, We see some new joiner, very agile. We're able to provide technology which is very efficient. And I strongly believe that instead of trying to fight against this guy, doing partnership to do some part of what we're doing today, Trying to integrate the model and what they're doing into our system is a way to globally reduce our cost to be able to, What I was saying to give more room to invest in other products where we have some strength and differentiator. And for some of the products whereby It's typically flow business with very low return, very low margin. It's better to find a partnership than to stop the activity because stopping activities is always very manageable in terms Relationship with the client in terms of image of what you give in front of your competitors and the staff also.
So, Doing some partnership in some business where we know that technology, where we know that the margin are very low and it's very difficult to stay competitive, It's a way for us to continue to give the service to our clients in an efficient manner.
Let me As we're talking of partnership, let me answer the question on the IT tools. To be honest, I don't know exactly what is the strategy Our competitors when it goes to not outsourcing, but selling outside their IT tool and some of their products. There's no good and bad strategy. There's a strategy which is adapted to who you are. I think that in our case, I wouldn't feel comfortable in In a way, having an IT service business within CACIB, in which I would sell a IT tool and I would maintain this IT And I will do the marketing of it.
It is very different to have a tool for yourself and to set it to 1, 2, 3, 100 clients. Today, it is not our priority. As you have seen today, we have so many things in which we can generate growth. There are so many clients, geography products That opening a line of business, which would be to sell our IT tools is not our priority. But if some are more advanced on that, good for them.
When it goes to the Equity business, it's interesting because you say, is this something which is missing in your And your remit. First, it's not missing in the sense that we have today an equity and an equity derivative business. We offer, for example, for clients corporate clients who have stakes in companies or shareholding or whatever, we offer them solution, we adapt our products. This works. But also in terms of investment, we have a capacity to produce and structure transaction.
What is important is the size of what you have and can you focus on the real area of interest. You. My background is equity derivatives. And of course, a lot of people were expecting me to develop this and this is not my intention for a very basic reason. If you look, for example, at the Investment products in equity derivative.
There is the clients and then there is the network and then there is the person who is structuring and then there is the Engine of performance, the trader that goes into the risk. Where is the margin? The margin is mostly on the client side, on the distribution side, on the structuring side and a little bit on the trading side. Today, We're much more comfortable in maximizing our efforts in inventing products, in structuring things and being able to have a good connection with the network, Incredibly strong networks of Credit Agricole of Wizamundi. And we don't necessarily need to have huge books on Equity Derivatives because we will always find in the market people who are ready to take this risk with a margin, but which I consider is a small one and Keep during 10 years, correlation products or risk.
So you see, it's not missing. It's just that we focus on areas of the value chain Where we can have a real impact and a very strong return on equity. And this, we don't have intention to change. But there's growth there. We're still Plenty of things we can do and just focusing on that.
Hi. Tarek Le Mejjad from Bank of America. Two questions, please. First on competition, it's a very good opportunity to have all you guys around. And can you tell us about How do you feel competition from the large U.
S. Banks in constraints of Europe? Both probably we know about global markets, but more on the financing bit as well From the pricing aspect, but also balance sheet commitments, given that they probably have less constraints as European banks have at the moment. And second question is on ROE, again, on the CIB division. I mean, if you assume 9.5%, okay, target 10%, that's Probably just covering cost of equity.
We can debate what's cost equity, but let's say it covers cost equity. I mean, when you look at the group level or CASA level, Well, other divisions deliver much higher returns. So what's the discussion you have with the CEO in terms of I'll be asking you to do more efforts on costs, on growth, or you can say, look, this is what
it is. This is a business.
This is maximum that the business can deliver. But from analytical point of view, because of synergies, this is actually what you really deliver. So what's the discussion actually? Because I mean, around having a business and balance sheet commitment to business that dilute the overall possibilities is conservative. Thank you.
So maybe Jean Francois
on the competition of U. S. Banks and maybe Pierre also on the market side.
Naturally, I mean, first of all, I mean, we're evolving in a very competitive market and this competition is not coming only from U. S. Banks. If we mention our event driven transaction, corporate transaction, U. S.
Banks are very present like other banks there, And it's very competitive. However, you've seen our audit tables in loan syndication and you We are in the top ranking. So we resist to competition. The second point maybe is what type of financing we are arranging. I mean, I mentioned earlier on all the real asset financing we're organizing and you need experts there and you cannot invent yourself an expert.
And that's where an area where U. S. Banks are not that present. So, the competition is more here, I would say, On between European banks and other banks, not so much U. S.
Banks. But we get competition of U. S. Banks, not only in Europe. We've got them in U.
S. As well, but also in Asia. When we play in U. S, we play on our niche markets because we are not competing with U. S.
Banks, We are achieving 80%, 90% of the market. Where do we play there? We play with project finance. But here again, our expertise in asset financing and that's also In Asia, that's Project Finance, that's similar transaction. So yes, U.
S. Banks are very competitive. They try to get in some markets, But we do as well.
For the capital market Tivity, this is mostly the same, right? We know that they are very big, that they are very aggressive. One key differentiator for us is the relationship and the deep relationship that we have with the client. And one more time, when you look at our model, which is basically based on the fact that we want to serve the client globally, this is something that sometimes the American Bank doesn't have. Yes, they are more aggressive in terms of Seeing more aggressive in terms of maybe product, but the quality or the deep relationship that we have is something which is still a competitive advantage and Help us to develop and to push our business.
On the question, I don't know if Jean wants to add something on it, but may you just Clarify one thing. There are 2 ratios, there are 2 percentages, which apply here. The first one is What I call the conversion percentage. So when we say 9.5%, it's a conversion percentage. It means if you have 100 of risk weighted assets, you 9.5 of capital.
And in a way, it's not about the return that you make. It's about the amount of safety net that you want to have. So That's why I was saying, you can put 9.5%, you can put 10%, you can put 11%. In a way, it's just a metric. And then there's a second Ratio, which is the one that you mentioned or yield, which is, okay, once you've calculated the amount of capital that you use, What is the return that you want to have?
So anyway, you can have 11% conversion ratio and Suttel say, okay, with the kind of business that we've explained today, which to be honest is a very resilient, stable, low risk business. You can take a conversion ratio of 11% and then say on that one, I'm happy with 9% return on capital because of the current environment. I just want to make the distinction between those two things. And then with regards to the CEO, Jerome Plent, I can tell you that he's asking me every time to reduce my costs and to increase my revenues.
That's for sure. No, I think you must understand that CASA is not a portfolio of businesses in which we would arbitrate regularly, selling the businesses with low returns and buying businesses with higher returns. CASA and Credit Agricole Group is a global business in which we have different activities working together, feeding the global growth of our revenues and this Global business model has a global target in terms of return on equity. This is especially the case for the listed vehicle on which we have set, by the way, a new Target in terms of return on tangible equity, which is now at 11% when it was at 10% in the previous medium term plan. So clearly, we have raised our ambitions.
And what we have said when we have set the minimum Returns that each business line must meet. We have said that if each of Our business lines meet its individual target, which is designed simply to Define its capacity to generate revenues and results considering all the regulatory constraints, then This will make it possible for the listed vehicle globally to meet its overall target. So You must not assess the profitability of each business line like you would do in a portfolio of activity being able to Sell one activity again and to buy another one. But simply, it's the combination of all our businesses that is generating globally the growth and the profitability of the listed entity. So of course, we are pushing every business line to improve as much as possible its profitability.
But Bear in mind that CACIB has to stand in the coming 2 years, an increase of more than 20% of its Capital consumption, I. E. RWA for regulatory reasons. So obviously, this is Putting a certain constraint on its capacity to generate return for the duration of the coming 2 to 3 years, It's clear that when we are going to work on the next medium term plan, we are going to raise again the hurdle forecasted. That's for sure.
Yes. Hi, there. It's Kiri Vijaraja, HSBC. Can I go back to the client EVA dashboard and just ask, How many actual client relationships have you exited since you introduced that dashboard? Just to get a feel for how disciplined you're really being in terms of client by client productivity.
And then a question for you, Jacques, having been here a year. How would you rate That particular EVA dashboard versus the equivalent tools at some of the predecessor the previous terms that you've worked at in terms of really pinpointing Relationship by relationship, profitability. Thanks.
Well, maybe to answer the first question, actually, I mean, We are using profitability indicators for a long time and we have already in the past to manage our RWAs made Job of either exiting, but well also very important, having some action plan to reduce RWAs with the clients. So, I would say that it's a combination of both. It's still going to be a combination of both. And well, what I can tell you and Olivier mentioned in this the financial section that we intend to globally Decrease, thanks to the client selection and using these tools to reduce our RWAs With this action of about €4,000,000,000 over the mid term plan.
And to answer your question on how does that compare With what I've seen or implemented elsewhere. To be honest, the tool in itself is not nuclear science. Face it, You can do it on an Excel spreadsheet, and it's just you take the revenues, you deduct you calculate your risk weighted assets, you The cost of capital, the working the maintenance costs and so far, so there's no it's no magic there. What is really difficult Is first to have it on an automatic basis, to be able to roll that out on thousands of clients so that the banker, When he's discussing with his management, when he goes to see a client, he has this plug and play. And this is really something in which you need to have robust system.
And we are rolling that out, so this works. And the second thing is, you need to change the culture, as I was mentioning, of the banker So that they understand that it's not, oh, I did a great share, I made plus 10% of revenues. No, it's I did a great share because I've Incremented by 20% by EVA. And on that one, it takes time. I think we're good.
I will not make comparison with the previous firms Which I was. But definitely, the trend is very, very speedy. People really catch that. Maybe just one remark. I'm not sure I see it correctly because it's very far away.
But there's an interesting thing, for example, in this EDA graph. If you look, for example, I think that on that one, we have, for example, a dot In the pie chart, which is very important, is big and still the client is very profitable. Coming back to what Pierre was saying on market, You see, it's a good example because it shows that you can have on a given client, that is mainly the RCF business, not only it's also syndicated, it's also the Distribute to Arginate. But you can have a client in which you have a certain number of products which are not making good money in the sense that they have A negative EVA, they have a low return on equity. And still, the client is incredibly profitable like this one.
Why? Because And that's where it makes the link with the market activity. If you look at businesses 2 separately, you say, you know what, I'm not going to give RCF to my corporate clients. I'm not going to do this product because individually, it doesn't pay. The reality is that if you cut an RCF to a client, they cut all the business.
If you say to the client, you know what, you need the FX, you need this and this, but you know what, I'm not interested, go elsewhere. At one stage, you. He will not bank with you. So that's where it's the blending of the products and not the individual profitability, which matters. Olivier, you want to add anything?
Yes, I cannot make any comparison with previous or the banks. But one point, I don't know if you noticed it, you. The logo is Finn. So, one, it is distributed to bankers and all the figures are provided by finance and validated by finance.
Hi. It's Cecile Nie from JPMorgan. Just two questions. The first one is to come back a little bit on your EBA and RE. There is there doesn't seem to me any mention of leverage and balance sheets or Return on total assets or total leverage, I mean, is that because there's no focus at the group level?
I mean, just trying to understand a little bit, you. If you're trying half of the growth in terms of revenues is going to be driven by fixed income or repos, part of it is repos. I mean, Should we expect the balance sheet size to grow over your risk weighted assets are going to stay broadly stable because of optimization? The second question is on your regulatory impacts, Basel IV in particular, which is going to have quite a bit of an impact on structured finance. How are you seeing which businesses' adjustments have you done in terms of maybe exiting some of The activities given the impact or have you not done that yet?
I mean, just trying to understand the adjustments you've done ahead of Basel IV? Thank you.
So perhaps in terms of balance sheet growth, effectively, the balance sheet will grow. After that, at Croupe Le Havre, you know that the leverage ratio is very high, above 5.5%. And clearly, at Coupe Levo, the leverage ratio, we consider it as a backstop ratio and we do not manage and fix targets on the leverage ratio. Anyway, we have plenty of room in terms of leverage ratio. That's and Pierre mentioned it, that's one of the strengths of Credit Agricole and that's of the strengths on which our market activity can leverage in order to do business with clients and to improve the profitability.
So effectively, I don't think that balance sheet size It's really a problem for us. After that, it has been that we do not manage the balance sheet, that we do not Take care of doing profitable business anyway, but effectively the balance sheet size is not a real problem for Credit Agricole. And maybe a few words on the repo just to give you some element of thought. When the A big move on the repo in the U. S.
Happened in back in September, right? We were not affected at all by this move, which means that the size of balance sheet, We have even on the repo very strong constraints in terms of where we should land, what is the size of what we can allocate to our customers. So, this is very much something that is monitored on a daily basis.
Concerning Basel IV and our financing activities, As you've seen on Slide 42, we're giving details of the impact of regulatory changes and also The impact of the model changes on both on financing and some of the securitization business as well. And as you see, This is compensated by rotation of asset and optimization of our portfolio. We are not intent we do not intend at all to Exceed some of our activities, I mean, each of the structured finance activities, we have a deep knowledge And we are distributing those assets. I mean, what we continue to deepen the DTO model. As mentioned earlier by Jacques, we have 2 types of clients.
We have borrowers where we are managing structuring facilities and we have also investors. The investors, they are continuing to, let's say, be very attracted by those assets. What we have not computed here in our forecast It's an evolution of pricing. We assume that pricing will not evolve. And I think that's also something which could move up, Which is difficult to quantify right now in view of the competition in the market.
But clearly, we want We want to continue and keep each of the engines we have in terms of financing.
Jean Francois Neuez from Goldman Sachs. I had two questions. The first one is relating to the advent of banking union and Maybe the listening of London as financial center as per the recent op ed of the German Finance Ministry. As and when that takes place, It seems that Paris is growing as a financial center in Europe. You've yourself said that one of your USP, the Credit Agricole Investment Bank, Was the depth of your relationship with the local clients or in the clients where you are present across your network?
I just wanted to Understand from a HR perspective, risk to retention and then when other firms move More here and try to get more granular so that they've all described that they want to do and how essentially you make sure that essentially no player is bigger than the club. And my second question was on the green thing. So I think Natixis was there with their on the green financing, sorry. And I think this came in with some green ratings, which I think were interesting to many, Essentially promoting inside the portfolio's rotation towards more green through that angle. Another bank, UniCredit, I think recently had a conference call I don't want to do green rating because I don't want to incentivize the wrong risk attitude.
I guess both of these strategies carry their own risk In terms of retention, the bad credit or over allocation to the good credit, what's your position here?
So let me start maybe with the green rating and then I'll give the microphone to Anne Catherine on the HR part. On the green rating, yes, you're right, Perfectly right. There are some people who are in favor, some people who disagree with it. My natural inclination is to say, like I clearly said that you can have a green liquidity factor. So you can add a little bit of money to the financing of green projects Because at the end of the day, you are the one who masters your financing.
And if it costs you a little bit, you can do that. When it goes to risk weighted asset, because the green factor is twisting the calculation of the risk weighted asset. You can do whatever you want. But at the end of the day, this is not And incentives, it's a measurement of risk. And the measurement of risk, the regulator, at the end of the day, puts a figure on that.
And you. There's no way you can escape that. And it's you mix in a way your strategic need To support green financing with the risk measurement, I think that personally within CACIB, I will not implement that because I think that once you start to have kind of a blur line into an indicator risk weighted asset, which is supposed to measure risk and now measures Risk that lowers down the level of risk when it's a green risk, I think that you. You can be in trouble. So I'm sure that the people who do this, they have a second level of control that enables them to Go back into a measurement, which is pure risk regardless of being green or gray.
With regards to London, before leaving the and Catherine answer to Paris, I think that we have to be also clear on the fact that I've lived 6 years in London. London is a fantastic place. It's a fantastic place where there's a huge talent pool. And there are certain number of resources that we will leave in London because that's where A certain of tenants are being recruited and can be recruited tomorrow. So our vision is not to say that after Brexit, One market will disappear and everybody will move to Frankfurt or Madrid or Paris.
London will, I think, There will be a place where there's going to be plenty of talented people. Now when it goes to retaining the French people Not the French people, the people in Paris and Catherine.
Yes, I think it's always a chance to be on a competitive market. It's a chance for our people because it pushes To be better as managers, as HR, as leaders, it also allows us to challenge ourselves on the way we motivate. We return, we responsibilize our people. And I believe that HR is about care and monitoring. So we have to make sure that we allow our people to project themselves in the long term.
And this is probably a huge difference with being working in an American bank in Paris is that You are probably less able to protect yourself in Paris for the long term. I don't say that it's an only cap, but I believe that for our Experts for the team who have been loyal and we say 20 years in average in some areas of our business where we are very strong at. Well, it's not that attractive. Then we need to pay specific attention to juniors because those guys want an international experience. And of course, an American bank is Probably very attractive on that point.
So we have to make sure that leveraging on our cross geographical presence, Allowing our people, wherever they are based in the world, to have an international experience and exposure in their day to day It's allowing them to believe that Credit Agricole is a great place to be. And the bank with a human face, as we are trying to show And intending to live in our day to day way to manage people is clearly for us a differentiating element towards some of the competitors.
I think at some point Lauren, for IHS, sorry. At some point, you said that 1 in 10 existing customer were cash management customers. What is the ratio you think you have by 2022. And perhaps to follow-up on Jean Francois's questions around green financing. What's today the share of manufacturing and fossil energy financing you have within your total portfolio?
And also what are the metrics that you put in place to measure the achievement of your climate change policy?
It's a
careful answer. The first one was on cash management. You're closing 1 out of 10 and you want to get to 10 out of 10 probably in 2020.
As I mentioned, we have high investments in cash management. We want to be local in some countries. So we've got India, which we started China for 2020, 2021 And also France. Europe will come next year could start next year. We've seen that the proportion We at least want to multiply by 2, the revenues.
So that's 1 of 10. I would say, we didn't count that way. We look at the clients. We looked at the setup in the countries we are going to implement cash management. There is a local, but also the overlay Best we can do is at the regional level.
And what we calibrated is Which offering can we embark and propose to our clients and what revenue it will bring? So it's a different approach. But By giving the image of 1 out of 10, which is what we have today, it just shows how potential we have there. And It's not only to develop cash management in itself, brings us so stickiness with clients. You have the day to day banking.
You can also generate some liquidity and that's quite useful as well in terms of monitoring because that's stable Corporate deposits are quite stable, so that's also improving our positioning. So we see a lot of attraction there to cash management. 2nd question about Fostil Energy. We've given Some information about our portfolio in oil and gas. It's at end of September, dollars 26,000,000,000 That's certainly a sector which is prominent in our activity.
But we are accompanying as well our clients. I mentioned earlier project finance. And if you can see on I was mentioning that 30% of our project finance activity was renewable activity. And if we look at the growth this year in terms of Revenues, the Power team is also very I mean, did this year a very positive growth. So, yes, Fosil Energy will be still when you look at the statistics, in 10, 20 years, Fosil Energy will still be there.
So we are accompanying our clients, I think, as well in this that way, but we're also accompanying them in the transition.
Question?
Sorry, it's 21.6 percent and not 26.1 percent concerning the oil and gas. Thank you, Olivier.
I have a question on the AML. I know you exited the deferred prosecution Agreement last year. But do you still have to work a lot more on procedures for AML? And Your group CFO was saying last year that as far as AML is concerned, the past is unpredictable. Do you spend a lot of time looking at the past or what you may have done that could still cause some issues?
Are you as far as you're concerned, that's done and Dusty?
Yes, of course. I mean, AML is one of the aspects of compliance on which we focus A lot and a lot. And we revisit every single issue we have on operational risk, including AML to make sure that we don't repeat the same kind of mistakes. You're never at 0 risk in those areas, but there are some business models Which are more exposed or less exposed. The fact that even when we go in some geographies that can be A bit complex.
We are there mainly, as Didier was saying, with the main multinationals expanding those countries. All we are helping the very, very big, big names in those countries. We don't have The intent to become an SME player in India and Russia or not even in Germany, you. Which is a country that we know much better. So with regard to AML, our business model, the geography in which we operate, in a way should Protect us a little bit.
The areas in which I think on AML, you run probably more risk is on trade finance, for example, in which You have a certain number of things that you have to really monitor carefully. Maybe you can give Jean Francois an example of it's It's not really a ML, it's more sanctions. But do you know, for example, that when it goes to ships, Jean Fran, do you want to explain what we do on vessels?
When you have a trade and you have the goods which are carried through maritime routes, We do follow the route of the goods. We know where the boat is going to stop. If there is, Let's say, and if there is, you have a defined route and the boat is stopping at one area, you know that the unofficial offloading of boats, we can So you can take documentation. I mean, the issue on documentary credit is that you have to be very precise. Just look at the Konecrombie, it's a bit of lading, you have to look at all the documents, switchboards and so on.
I mentioned earlier that we are investing in the platform Congo As we are using the blockchain, I mean, there, it will be very useful to be even more complete secure and to make sure that you can as well You can, let's say, detect any issue on transaction.
Jean, you wanted to add something As you were explicitly mentioned.
Yes, I was quoted. So I think I need to precise a little bit what I Already had the occasion to explain, I think, in front of you, Guillaume. What I've said is that, of course, Every time there is an AML issue raising for 1 bank in the world, It has to do with past operations. And you can never be sure that the way somebody looks at the operation you did a few years or several years ago It's the way it was looked at the time of when these operations were put in place. So it's impossible for us as for anybody else to say regarding AML, No problem.
We are absolutely certain that nothing can be challenged in our scope. What I said is that we can provide you with 3 elements of comfort. The first one, Jacques just told about it, it's our business model. It's a business model in which we focus on operations, we focus on trades and on customers and on geographies where we think the risk is weaker, especially considering the way we intend to conduct our operations. The second element of comfort we can provide is our attitude if a problem arises.
And I take the example of what took place now more than 10 years ago when the OFAC issue As soon as we identified in our scope of activities Potential problem regarding the implementation of OFAC rules, almost the first thing we did was to Report the problem to the American authorities and to be as transparent as possible. So this is the second element of comfort that we can provide you is that we will behave in a very reactive and transparent manner. And then the third element of comfort, again, As illustrated by what happened with the OFAC issue, when we've put in place the remediation plan, We did it very seriously. And this is why 3 years after the agreement with the American authorities, We managed to get out of the processing with the American authorities because They had acknowledged that we've put in place exactly as We committed to the remediation plan that we had decided. And this is why we managed to exit from the deferred prosecution agreement.
And we've managed to see the case dropped by the American authorities as quickly as 3 years after the settlement. So this is only the 3 elements that we can provide, but I think that those elements are quite comforting. And maybe if
I can add a 4th one, which is a bit intangible, but I think it's very important. And it's about ethics. You. What is the real risk that we have in a lot of cases? Is that something which is legal today becomes illegal tomorrow or Which is legal and acceptable becomes illegal or just unacceptable in 5 years.
And so When you're took first, you should never cross the line of between legal and illegal. That goes without saying. But even you have to be sufficiently careful To stay within a range in which even if something is today legal, today acceptable, you think, okay, Is this business, is this kind of attitude vis a vis the client, whatever, will this be still acceptable by the society in 5 years. That's what sustainable banking is about, is looking forward of what is acceptable. And trust me, If I have one thing, which is crystal clear after when you're in this bank is group clinical has a DNA, an ethical DNA, which is just impeccable.
So we might make mistakes. We are not perfect, but we get really far from the red line. One last question, I think.
Clotilde, BPM. Actually, I have a question on the strategy And the focus you have on the geography and 8 sectors. On geography, could we say that business In France and Europe is, let's say, below average in terms of ferroty and that pushing Moving forward to Asia, it would be a higher margin. And on the sector, same question actually, Is the 8th sector already contributing higher than the non 8th sector focus? And by year end 2022, the speed we have today, the 45% 50 5% in sector would become fifty-fifty or sixty-forty.
And internationally, what kind of figure we could expect? Now, today, it's 70% outside France will be 50%. Let me take
the first one and let Didier answer the second one. On the first one, which is the importance of France and are we putting our eggs outside France? Not really. When you're at the helm of a company like this one, if you really want to Make things sustainable and grow in the long run, you have to ask yourself in terms of geography, what should be my balance? If you stay just in France or in Europe, you can overperform the market.
But if growth is 1% or 2%, you can over perform and get 3% or 4%, but you will always be capped by the growth of the region. And even more when your business model is not to create money out of the blue, but to be Behind your clients, on the side of your clients and accompany your clients. So when I looked at the overall business mix, Geography mix of this company, I thought if we don't go into areas Where there is growth at 4%, 5%, 6%, 7%, then we can do a good business, but we will cap our growth. Now once you've said that, you. You should not be naive.
It's not because there is growth in Asia, for example, that we should do everything in Asia. It would be foolish. There are already some good players, and we have to bring something to the table. So what we say in Asia, for example, is okay or even in the U. S, We go alongside a sectorial approach because that's where we can really bring something to the table.
So you see, it's not really Saying that France or Europe is not an interesting region, it is. But in a balanced way, we need also to have exposure to Asia, Exposure to U. S, exposure to Middle East to have a global business which is stronger. You want to say something on sectors?
Yes. Maybe on sectors, well, The sectors we have been mentioning are global sector where we have a global presence and so they will accompany, I would say, the Growth of the bank. But we believe as we are expecting a 3% global on average global growth for the bank that we will deliver superior growth on a global basis. And so, we didn't, I would say, calculate that in term of return on the Capital employed, and so it's more a growth story that we believe we can achieve. And second, if you look at Proportion of NBI with this A sector today, it means that it will slightly change The breakdown of the overall business activity of the bank, but not very materially.
It will go probably up to around 50 Something like that, but it will not materially change the breakdown.
Clotilde, do you want
to Yes.
We had questions from the webcast. So one question from Jacques Henri Bollard from Kepler, who is saying that one of the few areas of CASA forecasting The company has been consistently wrong was the extent of the recovery of the cost of risk. And so why would you be right this time around, All the more so that the monetary policy seems very accommodating. And the second question, more philosophically, Jacques, aren't you in some sort of a Mission Impossible conundrum? You have picked up the division at peak earnings.
You are going to take the full extent of regulatory RWA add ons and your cost of risk is bound to deteriorate. This is Jacques, I'm quoting. Can you really improve the financial performance of Jacques Henri Panel? Can you really improve the financial performance of CIB? Is it simply possible?
Thank you.
No, it's time for annual review. Thank you for the question. More seriously, on cost of risk, Yes. You always have to be cautious because you never know really where the next crisis is going to come from. And so What is very important is that you need to put in place a lot of tools so that you're able to identify early signals of deterioration of your risk and be able to react very quickly through hedging or through distribution or through catching your exposure.
I think that if you look at the cost of risk we had in the past, First, we made some losses on products on markets in which we are no more there since the last 10 years. So this is completely you can take this out. In terms of corporate risk, credit risk, we've implemented early detection of all our exposure. We implement, including with artificial intelligence, tools that enabled us to have kind of a first assumption of derating of a certain number of counterparts, And it works. We put in place strong frameworks so that you don't look at the risk at the moment or you don't look at risk When you enter into a deal, you have before kind of a global envelope per sector of activity per geography in which you say, Regardless of what is going to be the atmosphere in a year, I don't want to get higher than this and this and this geography or this sector.
So it's this kind of Forward looking global framework early detection that helps us to be Pretty comfortable on the fact that, yes, there will be a downturn because today we're at level of risk, which makes no sense, But that we will be largely able to weather that kind of storm. You wanted to add something, Olivier? Yes.
[SPEAKER JEAN PIERRE CLAMADIEU:] That is, whatever you put in place in order to monitor your risk anyway, our business and our day to day business is to take risk. And nobody has crystal balls. Once again, I think that we have taken a neutral approach and we have given you other Hypothesis and we have in a way quantified this hypothesis. So that you can make your own assumption. We have assumed that we will converge Progressively toward the expected loss of our Basel II model.
Neutral approach, no crystal ball, After that, you can make your own assumption.
And trying to answer the second question, Ryan, the Michel de Perceval kind of challenge, I'm going to shoot myself in the foot in this moment of time, but no, I don't think you. It's impressive the potential that I discovered here. And that doesn't mean that my predecessor has not done the job. They did a fantastic job because if you think about it, what have we told you today, it's a story of a bank that has made a certain number of choices probably 5 years ahead of the pack. So all the restructuring that was supposed to happen on market, all the refocusing on structured finance, all the work on risk weighted asset, Some have done that already like us, but definitely my predecessors have done the job in the previous years.
And I'm now in a position where it's true The revenues are at a high level, but including in the 1st 9 months of this year, we've been able to increase our revenues. Yes, the cost of risk is at a very low level. But I think that, as Olivier was saying, we all know that this is kind of a bit of an odd situation. But I personally think that the potential is still ahead. Can you imagine in terms of the amount of expertise we have today, The tools that we're able to implement on the EVA, the cross border transaction that we have because we really play as one team Across geography, across product, I mean, the upside is clear.
And I'm going to give you just one example of What team player means in CACIB. And sorry for being a bit granular on that one. But We have, for example, in our team, people who are helping companies in big transaction with what we call the LBO team. And we also have some teams which are on the high yield side. When you're a company engaged in a big transaction and it which is kind of a high yield one, If the market is there, you will issue a high yield bond.
If the market is not there, you will have a banking loan through the LBO. Before, those two teams were separate, which means that we were working under the tent with the company. And at the last moment or in the last And Mile, when time came to know if we would do a bond or a bilateral loan, there was one team which was winning and the other one which was losing, 100%, because fundamentally, if the high yield team has worked and it goes into bilateral, they've lost. We said, I mean, this doesn't make sense. What is important is not our own organization.
What is important is the client. The client, in a way, they don't care how we get organized, they don't care if it's a high yield or a bilateral loan. So we decided to merge the team and to create, it's not even a joint venture, it's a team. And suddenly, everything changes. Suddenly, those guys, they go in front of the client and they say, you know what, don't care about what is going to be the final solution.
Cathib will always find you the best moment and we don't really care. We will give you the best advice. That's the kind of thing in which When you free that energy, there's plenty, plenty of room for improvement. So I don't think it's Michel Pecep. It's a hard one, but it's not Michel Pecep by far.
I think we have other questions, but I think we're going to stop there. And we can always answer your other questions by email and on the phone with IR, of course, naturally, but it was good to stop on that and comment.
Thank you very much. Bye.