Well, good morning, everyone. Thank you so much for being there. Thank you so much for being connected too. It's really a pleasure for me to welcome you there in Montrouge. Today we present our new plan, a plan that is naturally built upon the success of the previous plan since we succeeded to reach 1 year ahead of schedule Almost all of the targets we had set in 2016.
And as we do not see any glass ceiling over our heads, The first key message is obviously that we will amplify and that we will accelerate. We will amplify and accelerate on our current and successful momentum. And for this new plan, let me immediately spoil the suspense with few figures. We shall target a higher net income above €5,000,000,000 for 2022, A return on tangible equity above 11%, 10% was our Previous target. And the solvency maintained around 11% within the group ratio significantly above The 16% level.
And we add and this is a very, very important point that we secure these objectives by saying that we can't reach them even Under the assumption of a much higher cost of risk, that means a higher and a safer net income target. 4th point, the switch mechanism. Our commitment is to unwind half of the switch over the span of the plan And we will start to switch off as early as 2020. One last point about The necessary control of our capital consumption, thanks to our universal model, we really can manage An asset agile policy where other players will have no choice but to adopt the My fusion policy, I shall come back on this point later. But for the time being, let me invite you to We discovered Credit Agricole Group, the 10th largest bank in the world.
Let us look to this following video. If we choose to come back and to recall the whole group's performance, it's because This is naturally very important for the shareholders of Cladiale Colicel. Just a single example, It is the group solvency that rating agencies look at and in 2018, we were so pleased To return to the highest rating for French bank for S and P as well as for Future and Moody's. But more concretely still for our shareholders, it is because the group is very solid With a solvency ratio of more than 15% at the end of 2018 and because it bears at its level the GC buffer That Credi Eicole SAID can limit its solvency target to 11%, an optimal level to be profitable. Now let me take a brief look back on the previous plan.
Geopolitical uncertainties, of course, constant new regulatory and production requirements, Pressure also stemming from consumer protection regulators, interest rates extremely low. Our performance in this kind of environment has clearly demonstrated The relevance of our strategy, a strategy that can be summarized in a very pragmatic triadic Organic growth, internal revenue synergies and consolidation driven by our Specialized business lines. Organic growth first. It allowed us to increase our customer base by more than 600 and 35,000 clearance since end 2015 in France and Italy. In France, we have By far, the highest penetration rates in all segments from individual customers to corporates.
Internal revenue synergies, they account now for a quarter of our revenues, And they increased by close to €1,000,000,000 over the previous plan. They are fueled by our strong Universal customer focused model that structurally links, connects our retail banks and our specialized business lines. It is also thanks to our synergies that we managed to improve Caesars costincome ratio by more than 6 points. Finally, our business lines have been very active in the ongoing European consolidation movement With major acquisitions like that of Pioneer by Amundil, which made us the first You're a current asset manager, but also with the signing of long term partnerships, Banco BPM in Italy and Bancur in Spain for consumer financing Creditu Valtellinese for life insurance More recently, Santander for CUSTOMER activities. This very simple, Very pragmatic strategy, organic growth, internal synergies and consolidation through business lines allowed us to reach in 2018 1 year ahead of time almost all the targets we have set in 2016.
11.5 percent solvency ratio, above our 11% target. Revenue growth of 4.3% per year versus a target of at least 2.5%. A return on tangible equity of 12.7% where we had aimed to return above 10% At the end of the plan, after the Eureka translation that had normalized our Silventi But at the price of below 8 percent profitability, finally, €4,400,000,000 net income compared to a target of 4.2 for 2019. And regarding the cost income ratio, it dropped by more than 6 points over the period. We have returned 50% of our results to shareholders in cash over the whole span of the MTP, Very concretely, €5,500,000,000 over 3 years without any dilution.
But as I have already said, not only did this strategy perfectly work, but better still, we do not I had an e glass ceiling over our heads. We are at the end of a plan. We are not the end of the cycle, we are not at the end of our momentum. Our growth potential in insurance remains high, in particular outside of France. And with the acquisition of 3 regional banks in Italy, we have built The foundations for more revenue synergies in this country, and these are just 2 of many examples.
Amplify and accelerate, this is really and quite obviously the key first message of the new plan. The second message is that radical changes can be observed in our environment. But these changes are also strategic opportunities for a route like 4 main observations, all of them being threats for those who choose to disregard them And at the same time, opportunities for those able to integrate them are the heart of their core strategies. And my conviction is that Credi Aecal Group is particularly well armed more than many others to seize the opportunities they represent to differentiate compared to other competitors. The first observation is this one.
When we moved after the 2,008 2011 crisis To a period of uncertainties, we thought this could be a transitional period leading us towards a new Table states, but it was wrong. The world has simply become structurally less stable and structurally less predictable. And the good news is that In this structurally less stable world, there is still room for ambitious strategy if and only if They are in continuation. If they build upon worldmaster know hows and if they are rooted in strong acquired positions just like what we have done over the whole period of the previous plan. My conviction is that our cultural preference at KDAI coal that is a kind of Trademark for us our preference for obscenity rather than originality.
The structure of Opsgenie is in fact a strategic asset in this kind of environment. The second main observation is this unprecedented increase in regulatory burden. We have all become RWA hunters. Can this be a comparative advantage for Kallia Accol? I am convinced that the answer is yes.
Because as I said in my introduction and contrary to specialized models Organizing one silo that will suffer therefore from financing constraints, our universal banking model gives us the Flexibility to dispose of the whole range of financing and refinancing methods, including the possibility to recently within the group refinance A share of the balance sheet of our banks by answering, for example, the investment needs of our life insurer and our asset manager always looking for situ quality assets. My third observation It's the deep transformation undergone by technologies and in their wake, customers' expectations. They expect immediacy. They expect simplicity of use, personalization, But they also expect the highest regard for the safety and confidentiality of their personal data. Again, These high expectations are a competitive advantage for us since we do have this double culture about technology and customer relationships.
You probably don't know in this room I don't remember for such an offer that Credit Agricole Regional Banks We are the 1st banks in Europe to use remote processing.
Of course, it was a long time ago.
It was at the very beginning of the 7th place. As a former IT manager, I was, do remember that Clari Ecoll As always massively invested in earning new channel available for customer relations. And at the end of the day, we always succeeded to confirm or to take the leadership. Yesterday or the day before yesterday in terms of ATMs, then for Any kind of telephone platforms, more recently with Internet Banking and today for digital solutions Accessible from mobile devices. 20 years ago, we even launched a bank available on the television.
Many of us don't remember that anymore. But we were simply ahead of our times, and it did not meet the corresponding demand on our market. What I mean? What I mean is that our culture is strongly technology friendly. I do tell you as I think that only the illusion created by solely digitally when in fact our model and our know how precisely consists in continuously building on the successive addition of every new channel technologically available, all this while consistently Lowering our cost income ratio, by the way.
Digital is ended. Digital is once again A strategic opportunity for us, really. 4th and last observation, The appearance everywhere in Europe of social movements of new kind. We are not solely facing traditional social demands, But we have interred into the deeper waters of societal contest. If we were in Europe, we can hear a growing defiance towards institutions and on a larger scale, Social and economic models themselves.
Different movements, of course, but a common and fundamental need Looking for meaning, looking for meaning. And now what is expected from private companies, I should say, what is really Pride from private companies is that they have to fully and clearly align their core business with the creation of positive impacts for the society. Hiring and paying taxes locally are of course appreciated. Deploying a committed and ambitious social responsibility policy is a clear positive point too. But far beyond that, companies' reputations will depend from now on their capacity to define their core business model on the basis of recognized usefulness.
These new expectations, these new requirements stemming from our society are, once again, An opportunity for us. To think otherwise would mean forgetting the magical cushion, The magical portion which transformed us from a smattering of small local and rural banks into one of the top banks in the world. That portion was made of 2 ingredients that these days sound so modern: Usefulness and universality. Let me give you 4 examples of societal transformation Teleye Coal has decided to accompany in a smart way, giving access to financing solutions for outcast farmers more than 1 century ago, granting banking solutions to all households for the citrullid and peripheral fronts of the 60s. More recently in the 80s, facilitating home ownerships Far before mortgage loans became the norm and today, democratizing a complete wealth overview For every individual customer starting from the first euro onwards to help each customer navigate through an uncertain future.
I know it may sound immodest, but simply we are sincere when we say that We are better equipped than most to face and adapt to new social requirements in terms of societal meaning, in terms of raison d'etre, in terms of usefulness. And this is why we decided that we would not only launch a new plan, but also reaffirm and we express on a deeper level our raison d'etre as well as our group project. Our raison d'etreasserts our willingness to be a real trusted partner for our customers. Our usefulness is quite concretely much more concrete than you probably think to advise them with transparency, with loyalty and with perdeegouet. And our Spell it out in black and white that we serve each and everyone from the lowest income households to the wealthiest from local small businesses to large multinational companies.
Our very simple but absolutely not Ben and Motto will be working every day in the interest of our customers and of society. And this work project has been expressed in 3 pillars: the customer project itself The human centric project, which addresses the growing responsibilities we want to empower with TIMSS with and the societal project, which clearly states how we permit ourselves for the environment in the broadest meaning of the world. 3 viewpoints for a single project working every day in the interest of our customers and of society. And let us be clear, truly working in the interest of 1's customer It is a full strategic project. It is a true defining choice because choices have really to be made.
Just a very concrete example. As we contemplated that Using data and artificial intelligence to reduce the complexity and allow each customer To fully comprehend the variety of available choices and then to give them back their capacity to exercise their free will When they decide on their own future, this is entirely different from the use of data and intelligence artificial to aim and shoot prospects with algorithm simply assembling people on similarities observed in their past behaviors. Working in the interest of customers does not only mean complying with the regulation, This has really become a strategic investment. Our customer project obviously focuses on Excellence in customer relations with 3 types of ambitions. First ambition, we want to become the favorite bank of individuals, of entrepreneurs and of corporates, no more and no less.
And the major announcement is that from now on, we will implement a group wide setup to the highest levels to manage this ambition for excellence. We want to become number 1 on the net promoter score indicator. And I can tell you that this indicator is now included in the calculation of top executives' remuneration. Also, we will implement a new organization to target and address pain points. Customer champions, process managers in brief a complete setup.
2nd type of ambition, We want to be the best in class digital bank. Not only by offering digital projects with a seamless user experience, It is no longer enough. We also want to streamline our pricing to make them clearer and more transparent. And in addition, we are intensively working on our digital acquisitions via This ambition goes with a strong ambition to be a leading player in the animation of innovative ecosystems. We plan on opening 17 new villages by CA in France and Italy, which will bring the total number to 46 third type of ambition offer a wide range of Banking and extra banking services, new offers and new service around cars, around health, around data management for our customer.
And we will create service platforms operated with Our in house solutions and non banking partners. We will launch, for example, Je suis entrepreneur and mon association this year, monpreneur empois and mon leujemont will start in 2020. But the point, probably the most important to highlight today is that this ambitious Customer project implies an ambitious human centric project and absolutely not a defensive one. The issue of a modern banking distribution can't be reduced, of course, to a matter of reducing staff our closing branches. On the contrary, we need a very ambitious human centric project to Speed up the success of our digital strategy because this is in fact the way it works.
Let me explain that. An increasingly digitalized society means an increasingly processed society with Predefined and pre coded rules and decisions entirely blind to the specificity of each individual situation. In a world where technology makes processes simpler but also makes decisions More and more standardized, offering customers a direct access to empowered human teams, Able to show discernment and able to decide responsibly is in fact A prerequisite for the successful digitalization of our customer practices. The true digital revolution is in reality The human revolution with teams who after decades of increasing automation We'll have to express the strongest value added and accessible ultimate Responsibility because for each of our customer neither software nor robots will be responsible as a result. More concretely, you can see on this slide that we shall make many concrete decision on this matter.
But at the end of the day, just an example, we want 80% of decisions taken locally within our retail banking networks. And we shall have really succeeded if at the end of this plan, Credit Agricole really becomes The best company to work for in financial services in France and in the top 5 in Europe. To be frank, when I read that, I'm wondering if we have been ambitious enough on this point. Perhaps we should have said Top 1 in Europe and not simply Top 5, but this will be probably for the next plan. Finally, last of our 3 pillars, our societal project.
It includes Actions in favor of inclusion and social impact as well as commitments towards All major environmental causes, a matter that we show name for simplicity, Green Finance. As the largest cooperative bank in the world, I do recall this point, the largest cooperative bank in the world, We have always acted as part of our identity for a more inclusive development, a development that benefits to all. First, by systematically providing entry level offers accessible for all customers. Following ECCO within regional banks and LCL essential for day to day banking, we will extend This kind of services to the rest of our offer range, including, of course, insurance products. We will also continue acting for the prevention and resumption of over indebtedness.
Also, we will increase our support to the development of social impact businesses. Amondi will dedicate €500,000,000 to the financing of social and solidarity companies by 2021 And CACIB, which is already a world leader in green bond arrangements, will strengthen It's leadership on social burns. To say that, Credit Agricole will be more than ever faithful to its roots. Regarding green finance, this is exactly The kind of new great challenge for our societies for which Credit Agricole can be once again decisive. As a matter of fact, we have already been pioneer on this matter and we are already a world leader in this regard.
But the key message of this plan If that Green Finance can no longer be considered as an adjacent activity, from now on, It is clearly a core business. We fully embrace the conviction of the climate emergency, and we will make Green Finance one of the key growth drivers of this new plan with different crucial decisions. First, we define a global climate strategy applicable in all group entities and in line with the previous agreement, it's in plain tension will be certified. Then we commit to reinforce our contribution to the financing of energy transition by financing 1 in 3 renewable energy projects and doubling the size of our green loan portfolio by 2022. And we promote 2 clean and responsible investment strategies.
Amundi will apply its ESG policy to all its funds by 2021. Amogy will also double its assets invested in green portfolios For institutional clients and triple its asset for individual customers, Crediacco Insurance will take into account ESG Immediate new measures concerning the industry responsible for the largest share of greenhouse gas emissions and for COOL2, As it is written, very precisely in the slide. Well, it is high time for me to leave the floor to another Speak to deepen several points several important points. My takeaway message is this one. Thanks to our prudent and pragmatic strategy, we succeeded to reach the different targets we had set in 2016 and this As soon as 2018, no glass ceiling.
Therefore, we accelerate and we amplify. How can we do that? Thanks to this ambitious group project. We want to be the favorite bank for each segment of customers. We want to be the very the best company to work for in financial services and the recognized leader of responsible financing, Nothing more, nothing less.
I am aware that this kind of presentation can be felt as Non spectacular, but this matter is the real life. This matter is the core basis on which you must be the best if you want to deserve sustainable and profitable development. And on this point, I hope I convinced you this morning that We are more than ever, more than ever very, very ambitious. Thank you so much for listening me. Now I shall leave the floor to Zadeh, who will present you with 3 priority action letters: Growth on all our markets, revenue synergies all across the group and technological transformation for greater efficiency.
And from now on, presentation will be in correct and fluent English. Thank you so much. I give you the floor.
Thank you very much, Philippe. Even though I wonder whether I should thank you for your last remark, which is raising the bar, but in any case, I will try to do my best. Good morning to all of you. In order to deliver the group project Philippe has just outlined, we will activate basically 3 levers. 1st, as Philippe said, we will grow our client base with of being number 1 in customer conquest in all our markets.
2nd, we will continue to develop synergies Up to €10,000,000,000 at the end of the medium term plan in line with what we did during the previous medium term plan. 3rd, we will invest massively more than €15,000,000,000 In technology, in order to improve our efficiency and time to market, let's briefly develop these three ideas. First on growth, I will try to give you some elements about the key segments of clientele in which we want to make Individuals, small businesses, SMEs, large corporates, financial institutions. I will also try to make a brief focus on 2 transversal areas, payments and international We have a 35% penetration rate and in 2018, we were number 1 in conquest in France. Our objective is very much to stay at this level of performance and to be on the whole duration of the next plan, number 1 in conquest again, which means having at the end of this medium term plan 1,000,000 additional customers in France and Italy.
How to deliver that? Well, obviously, the mobilization of the retail networks will be key, but also the improvement of digital All offers mentioned by Philippe and lastly, the fact that we will develop new ways to approach clients like the platforms Philippe, as mentioned, we have the characteristics of marrying financial services offers and non financial services. But we do not only want to conquer clients, we want to intensify the relationship we have with them. In this regard, we'll pursue our efforts to equip our clients with housing loans. You know that's very important for the loyalty of the clients, at least in the French market.
We have the objective for regional banks to reach 26% of penetration rate on this domain. 2nd, we will continue our well known strategy of equipping our client with insurance products. I won't detail, we have a lot of ambitions in all this area and we will make a lot of progress, but I want To stress the fact that in particular for P and C, we forecast quite a significant increase our penetration rate by 5 points sorry on LCL and Regional Banks network during the duration of the plan. Lastly, we have also an innovative approach on savings and wealth management. We call that The idea is to have interviews of our clients at least Patrimoine clients and to have a discussion with them to assess with them what is their wealth, what are their needs, what are their risk appetites And after that, to let them choose what are the products they want to select.
And that's very much in line with the For example, we are convinced that through this meeting, we will reach 500,000 real estate transaction by the end of This medium term plan on an annual basis. These interviews, we forecast to have €5,000,000 of them each At the end of the medium term plan. On small businesses now, on small businesses, well, the story is pretty the same. High penetration rate, number 1 in conquest in France in 2018. And I would say that the recipe to gain more clients Are in line with the one I've just described.
Improved digital offer, shorter time response to the request of those clients, Platforms notably for creation of firms. But I would like here to insist on the fact that we will try also To strengthen our relationship with specific clientele, let's take for example Farmers which is as you know One of the historical strengths of Credit Agricole Group. We think that customers which are important to us close to our heart for a variety of reasons And there is no reason to abandon them, rather we want to improve our situation vis a vis these categories of people. We will strengthen and develop A service platform, which is called Clanschon, we will support young farmers to set up their activities. We will create an energy transition fund and so on and so forth.
We have also high ambitions on independent professionals and here we on LCL, which has in particular a very strong relationship with healthcare professionals. Again, the objective will be During the next medium term plan for all these categories to be number 1 in conquest. On SMEs and mid caps, well, again, the story is that we start from High stacking from a high point. 1 out of 3 of SMEs in France are client of regional banks. 1 out of 2 mid caps are clients of LCL.
But here the key objective is rather Principalization, what do we mean? We want to be the preferred banking partners to those SMEs and midterms. We want them to consider them to consider us as a strategic partner. We want on this indicator to have the fastest growth in France. How do we deliver that?
Obviously, again, a variety of means, but I wouldn't like I would like to insist On two dimension, the first one is that we will try to help those companies to internationalize the business that's Keep occupation for most of them and we will provide new tools in terms of cash management And trade activities, we have recently set up, for example, for SMEs through the regional bank's network, a club which is Trade Club in order to help their internationalization. 2nd, and that's more innovative, We will try to develop comprehensive solution for all the social benefits companies can offer to their employees. And maybe I need to explain that because it could be it could sounds very French, sorry for that. In the framework of the reform of Social Security, the government is pushing through regulatory measures, but also through tax relief, The company is to grant new benefits to their employees and we think it's a unique opportunity for us, A unique opportunity because we have a strong relationship with this network of companies and also because we have Credit Agricole Assurance and we have Amondi. We are therefore able to offer comprehensive solution marrying saving schemes, health complementary insurance, retirement insurance, death and disability and to be the partner of those companies for managing the social benefits of their employees, we think that it's a way to strengthen the relation with them.
We are the only bank I think able to do that. By the same token, we will be the 1st bank by the end of 2020 to launch a P and C offer for SMEs and corporates. I would try to summarize this idea by saying that we have succeeded in bancassurance for individuals. We are now launching Bancassurance for corporates and for SMEs. I'm sure that again we will succeed.
On large corporate now, well, I have to say a word about CACIB. You know that we have here CIB, which is Low risk, which is customer oriented, which is adjoined thanks to its originate to distribute strategy. Basically, the message It's that we want to prolong this trend and we won't change our strategy as far as CACIB is concerned. Rather, we want to strengthen the relation CACIB has with its clients. And here again, 2 ideas very similar to the one I've just presented, Developing the relationship on a day to day basis with large corporate, thanks to the development of new offers and trade finance.
In cash management, as you see here, Kasiba, the ambition to multiply by 1.7 It's revenue on this domain. And basically, the message here is we want to be the day to day partner of large corporate, but also we will develop also with this category of clients the offers on savings and Insurance for employees I've just presented. Another issue on which Progresses will be possible and will be reached is obviously in enhancing with financial institutions. We have obviously ambitions for M and D Services with the objective of reaching €50,000,000,000 at the end of this medium term plan. But above all, as you know, we have set the foundation for a strong development of CACES in the years Come.
Casaise is about to buy CAS in the Netherlands and have struck a very decisive and strategic accord With Santander, we are convinced that thanks to this agreement, but also thanks to the development through organic growth, CASES will be among the 3 biggest players in its domain in Europe at the end of the medium term plan with 3 Trillion Assets and Custody. I've outlined through this presentation The different segments and I think now it's time to go for a more horizontal approach. Giving you some flavor of our ambition concerning payments. On payments, We have here a conviction I want to share with you. We consider that even though this business It's a difficult one with a lot of competition, a lot of regulation, a lot of technological changes.
It is key and we want to maintain it in house. We have a strong leader on payments with 27% of market share on individuals And therefore, we can't abandon this segment of activities. Our strategy is therefore twofold. First for individual customers, we will continue to deliver the highest standards in products and innovation. We will launch the different XP starting with Apple Pay at the end of this year.
We will develop the biometric card, we will develop instant payment and so on and so forth. The idea is that we have to again be the best also in this domain if we want to preserve our relationship with our customers. For merchants and corporate, we will offer them state of the art payment services. In particular, for example, omni canal offers And thanks to the partner we have with Wirecard, we will offer them Pan European solution. It is again key to gain market shares and to preserve our relationship with those merchants.
All in all, in order to develop payments And to keep the pace in innovation, we will invest €450,000,000 in this area. I have mentioned talking about merchants, The need to accompany our customers when they want to go abroad and that leads directly to another topic which is important which is our international strategy. Here I can be quite brief because Philippe outlined the key elements of our position, but I want to restate very clearly that Europe is and will remain our priority. We have a strong Universal Bank in France, in Italy. We are also developing our Universal Bank in Poland.
On all the other countries of Europe, we will rely on the different business lines, obviously working together to develop Their activity, we put a specific stress on Germany as we consider this country as very and potentially promising for our businesses. Apart from Europe, Our efforts will concentrate on Asia, which is a region in which we have an historical presence and in which Some business lines of credit I recall, notably CACIB and Amondi have a strong presence and are developing quite fast. We consider that we can again develop more In these countries, and we have there a recognized expertise, which will be very useful for these fast growing countries with also A high level of savings. But the point on which I want to insist right now, it's rather the way to develop. And here is the originality of the approach we are following.
Obviously, priority to organic growth, but also to partnership. As mentioned by Philippe and as you can see on this slide, I won't comment in detail. In the recent past, we have struck Different partner areas which have been extremely successful and we will continue exactly on the same path as we are convinced that it's the best way to minimizing risk, to be quite economic in terms of cost of capital and to take advantage of the strength of business, We are convinced that the good strategy is consolidation through business lines. In all these initiatives, I have outlined the strong relationship built between the retail banks and the different businesses. And that leads to the 2nd levers I will evoke briefly, which are the Our ambitions in terms of revenue synergy.
I think you should look at this slide which is illustrating of this strategy. Basically it shows that in almost all the business lines, apart from asset management, The market share is lower than the one we have in France on retail. That means by just conquering our home clients For insurance, for consumer credit, for leasing, etcetera, etcetera, we can easily gain market share, we can easily gain revenue And this conquest is not expensive. It's not risky. So we want to develop that and it It's key for this current PMT as it was for the previous one.
You can see that we have high ambition to reach €10,000,000,000 of Synergies on revenue synergies and that represent an increase of €1,300,000,000 A good example of well, no, a word before that, The way to deliver that is obviously to mobilize fully, well, Trends first. I won't describe in detail because I've evoked repeatedly the role of entrants, but it will be a key driver of the improvement of revenue synergies, but also consumer finance and leasing. Consumer finance may be one fact You can ignore we will have in the next months is 6 new regional banks, what 6 regional banks joining CICEF which have not yet joined, Which means that by the same token, we will increase the synergies in this area. And the same for leasing. We are developing Greenlease, which is leasing through the networks of the regional banks and We are convinced it will increase the synergies.
So 80% of the synergies will come from SFS and from Entrance, a good example of the synergies is obviously Italy. Recently, as you remember, we have bought Pioneer and therefore we became number 3 in asset management in Italy. We have bought 3 small banks. We have also bought Leonardo, which is now integrated into Indosource And we have launched plans to strengthen the relationship with all our business lines in Italy and in particular the relationship Between Sera Italia and CACIB, we are convinced that it will bear fruit And these are the €1,000,000,000 synergy we forecast for Italy during the course of this medium tonne plan. In order to be able to deliver the synergies of history, we need IT system which are fully interoperable, which are flexible.
And that's lead to the evolution of our IT system. We have to be able to make The IT system of the different business line dialogue in a seamless way. In order to do that, We will invest massively on technology. We will invest €15,000,000,000 out of which 40% are built, which represent an increase of More than 10% compared to the previous medium term plan. That is quite impressive and it needs to be explained What are the objectives of those investments?
First of all, we will try to move towards a data centric architecture of our IT Because we think it's essential to develop the API, the interfaces, as you know, that allows different apps to communicate quickly. It is very important in the prospect of digitization of our offers. It is important to increase efficiency To lower the cost of future developments, so we will go this route. The second element on which we will invest massively Our people, we will train 1% of the IT people to new technologies and we will make sure to maintain a fair equilibrium between external and internal resources and to keep strategic IT skills in house. As a result, we will hire more than 2,000 people during the course of this medium tonne plan in order that we can rely on internal resources to manage and transform our IT system.
We will also invest in Applied Technology Research's capacity like cyber security Artificial Intelligence. You see that these investments are quite heavy. Again, I repeat more than €15,000,000,000 but there are also to a certain extent profitable. We consider that all in all, This IT investment will help us save €300,000,000 on a recurring base At the end of the MTP and to give a concrete example, for example, the creation of Cajib, which is our production house we have set at the beginning of this year will allow us to reduce the cost By 2023 at around €185,000,000 but that's only one part Of the different techniques we will apply in order to reduce cost, they are listed here. I won't enter into all the details.
You see that both automation, streamlining of the processes, simplification of our legal architecture And also improvement in the payment system will be concerned, but more fundamentally will put under stress the Different business lines in order to be sure that they all converge towards this objective of reducing the cost income ratio by 2 percentage points And to reach the level, a level below 60%. That is very much at the heart of the financial ambition We have for this group and which will now be presented by Jerome. Thank you for your patience.
Good morning to everyone of you. I too would like to start by thanking all of you to be here today this morning. It's now my pleasure to continue the presentation and to address, I would say, more financial elements of this new medium term plan. I'll try to be concise so as to leave you enough time to ask your questions at the end of the presentation. Let me start now with a first view on what we forecast in terms of economic environment for the coming 3 years.
As you can see, we forecast neither a recession or a shock nor a strong improvement of the economic outlook In the coming years, we foresee an inflation that is going to remain subdued and thus we foresee Monetary policy that will normalize only very slowly, only modestly in the next 3 years. In this context, we think the credit worthiness of our counterparts will remain good. Nevertheless, we have chosen to embed in our plan a very conservative, I would say, hypothesis in terms of cost of risk As you can see on the right hand side of the slide. Lastly, we of course tried to integrate in our plan all the regulatory and prudential evolutions that we know will happen in the coming years. Let me start now with, I would say, more financial elements, starting with the group level.
At group level, I think that 2 key features of the group are very important. And we've been able to Monitor those key features in the last medium term plan. It's the solvency and the liquidity. In terms of solvency, the group has one of the best capitalized position amongst SIFIs in Europe, as you can see and even more important, it's the systemic bank, which offer the highest distance between its capital situation and its Pillar 2 requirements. In terms of liquidity, we've been Steadily building buffers and reserves, and we are able to provide a very strong capacity to reach And exceed all regulatory requirements.
These strengths have helped us clearly to obtain An improvement of our rating with all the 3 major rating agencies in the last few years. As you can see, we are A plus or Equivalent with all the 3 rating agencies and this has a very positive outcome, which is a further reduction of our refinancing costs. This is why we think it's absolutely key going forward to continue to reinforce those strengths, especially given all the uncertainties of the environment Philippe mentioned earlier. And so this is why the first Targets that we have set for our medium term plans are group targets, and they are summarized on this page. We intend to increase further the solvency of the group with a CET1 ratio, which should exceed And then remain above 16% despite any regulatory strengthening with a MREL ratio, which is the European version of the TLAC that you know, which should go even further up, Reaching a target between 24% 25% by the end of the medium term plan without taking into account any element of senior debt.
And lastly, we want to keep the surplus of stable funds above €100,000,000,000 Let me go now to The figures regarding CASA. Philippe already unveiled the Net income target, €5,000,000,000 by 2022. And I'll try to explain a little bit how we intend to reach this target. Let's start with the revenues. And this revenue evolution, which is shown on this slide, is Actually, the result of all the actions and all the programs that have been developed by Xavier when he presented the first 2 levers we intend to use in the coming years.
As you can see, we intend globally To target revenue growth, which should be around 2.5% a year for the next 3 years. We think that In the environment I was describing with nominal GDP growing around 3% a year, 1.5% of economic growth, 1.5% of inflation, we think that 2.5% of income growth Our revenue growth is quite reasonable. As you can see, this objective We'll be secured by all the revenue synergies we intend to continue to intensify going forward. And actually, 20% at least of this revenue growth is going to come from further revenue synergies internally. Of course, this revenue growth is also going to be underpinned by all the strength positions, The strong positions that have been built in all our business lines.
It's going to be the case in asset gathering, Of course, with Armondi and the insurance businesses, this is an area in which we are going to continue to target a very strong commercial momentum. And so we think that 2.5% revenue growth in average despite the rate environment and the pressure it puts Margins is feasible. In retail banking activities and specialized financial services, we have integrated in Our hypothesis, the prospect of further pressure on margins, but we think we will be able to compensate and more than compensate With volume growth and fees and commissions increase and lastly, in the large customers division, considering all the strengths of CACIB and all the Project of additional partnership of CACES, we have set a target of 3% revenue growth. This is globally how We intend to reach this 2.5% plus target in terms of revenue growth. In this context, The breakdown of the revenues between the different business lines is not going to be strongly modified.
Actually, it's going to be to remain quite balanced The different business divisions. But you can see that we foresee a reduction in our revenues of the revenues coming from net interest and a further increase of the proportion of our revenues coming from fees and commission. Lastly, the geographical breakdown of the revenues is also going to evolve a little bit with a stronger part coming from Europe, Italy and the rest of Europe. Let me go now to the cost base. I think the key point was already expressed by Xavier.
We Intent to continue to reduce a little bit the cost income ratio. We managed to reduce it by 6 percentage point in the last MTP. We intend to improve it by a further 2, A little bit more than 2 percentage points in the coming 3 years. We have set, of course, specific Cost to income ratio targets for each business line according to its capital consumption, It's RWA consumption and also it's, I would say, average cost of risk across the cycle. And the idea clearly for each business line is To be able to reach this costincome ratio, I would say despite some possible volatility on the evolution of revenues.
So it means that depending on the evolution of the revenues, we will be able to deploy All the cost cutting programs in order to reach business line by business line these cost to income targets. On a global basis, the idea is that the cost base of CASA should Raised by no more than 2 percentage points, 2% a year, less than 2% a year. So globally, as Xavier described it, we need to invest in several areas, IT but not only IT. We need to reduce the costincome ratio by a further 2 percentage points. So this has driven The target in terms of cost based evolution.
Considering the natural inflation that we are going to face on our HR costs on all our running costs, I would say, considering also the evolution of the single resolution fund Contributions that we forecast increasing in the coming years, considering also the scope effects that we are going to and counter. And considering the investments that we deem necessary, this is implying A further and significant cost cutting effort on our running costs. This is an additional €600,000,000 Of cost cutting that we are going to pursue in the coming years, meaning that we are going to continue to deploy our different programs in terms of Organization optimization in terms of robotization deployment, in terms of purchasing programs improvement and so on and
so forth.
At the end of the medium term plan, what you can see is that the IT proportion of our expenses is going to Exceed a little bit 20% when it's below 20% as of now. So clearly, this illustrates also the Strong improvement, the strong efforts that we intend to make in order to improve our IT system and to really deploy all the necessary programs to implement the action plans that We are described by Xavier. Globally, this illustrates The way the net income will evolve at CASA level between 2018 2022, Starting point, €4,400,000,000 in 20.18, target final target €5,000,000,000 in 2022, 2.5% annual growth of the revenues. The efforts on the costincome ratio with a cost base Growing by less than 2% a year. Cost of risk, it's a key element of Security of solidity of our financial trajectory.
We make the assumption. It's not The forecast, it's not based on any elements that we foresee now, but we make the very conservative assumption That we should reach our net income target even if the cost of risk was To increase from 23 bps last year up to 40 bps in 2022. So it's An increase by more than 70%. And if I put it in euros, it's an increase of the cost of risk by more than €700,000,000 So after tax, it's a hit on the net income of around €500,000,000 Then we have the equity accounted entities contribution, strong development which is coming from the very good level of activity both for Amundi's joint ventures and for CACF car financing partnerships. The tax Burden is going to continue to increase, thanks actually to the improvement of the profit before tax.
And despite the fact that we've taken into account the reduction in the French corporate tax rate going forward, And then lastly, non controlling interest deduction is also going to increase a little bit due to the good development of all the activities in which we have minority partners. So this is the very, I would say, virtuous way in which we intend to grow The net income of CASA from the present €4,400,000,000 to more than €5,000,000,000 next year. All the business lines are going to contribute. And as you can see, the green areas are The improvements that we foresee for each business line, the gray area is what is dented by the increase In the cost of risk that we foresee or that we, I should say, that we've embedded in our hypothesis without foreseeing it. So again, this is going to keep a very balanced, Diversify and thus resilient business model for Credit Agricole SA.
All in all, the Shareholder, I would say devices that we propose are summarized on this page. Return on tangible above 11%. Philippe mentioned it already. Dividends that we intend to pay on the period €8,000,000,000 And tangible value per share at end 2022, which would be growing by 20% to reach €14.5 per share. Let's go now to capital and let's start with what Philippe already mentioned, switching off.
So you all know that we have always considered the switch as a very good mechanism in order to provide Temporarily some solvency from the regional banks to Credit Agricole SA, but that we've always At no cost for our shareholders. And this is why we have taken the decision to unwind Progressively to start the unwinding of the switch mechanism, to start it as soon as 2020 and to do half of the way in the course of the present medium term plan. Integrating this decision, This is the way our CET1 ratio is going to evolve between the 11.5% level that we have reached by the end of Last year to the target that we are going to reiterate at 11%. Let me start by just a few words on this target. This is a key feature of Casa as a listed vehicle to be able to operate at a solvency level of 11%, Thanks to its inclusion in the more global and better capitalized group, Credit Agricole.
I've told you that For the group, the target of solvency is going to further increase at and above 16%. In this context, obviously, we can and we will continue to operate CASA with a target of 11%. Let's start at the 11.5% that we have reached at the end of last year. The results that we are going to make On the course of the medium term plan, I'm going to represent 5.40 bps of capital, out of which we are going to distribute 300 bps. It's the 50% cash payout policy plus the payment of the 81 coupons.
TRIM and other Regulatory strengthening that we know for sure are going to happen are going to cost 30 bps. And of course, The dismantling the partial dismantling of the switch mechanism is going to also dent our solvency by 60 bps In the course of the medium term plan, this leaves us by the end of 2022 with 13% of solvency. So a 200 bps Margin with the target of 11%. We estimate The transition to Basel IV in 2022, if it indeed takes place that year, which is not sure as of now, would cost us 60 bps of capital. And so this leaves us 140 bps For the organic growth of RWAs of our business line and for any other volatility element that can be taken into account in our solvency trajectory.
So it means that clearly this trajectory is completely compatible with All the regulatory strengthening that we know for sure or that may happen and with the continuation of our cash dividend Policy. Let me end with this slide, which completely summarizes our commitments for this medium term plan. Net income above €5,000,000,000 earnings per share above €1,600,000 and return on tangible equity Above 11%, despite again the very prudent assumption that we make on cost of risk. Cost income ratio below 60%. This is going to contribute significantly to the improvement of the profitability.
CET1 At 11%, no need to be above. And payout ratio continuing to be at 50%. Thank you very much. And I think that I will leave the floor now to Philippe for this presentation.
Thank you so much, Jean, for this presentation. Before leaving you the floor, Let me conclude by giving you a very important point about rationale, about our Strategic positioning, this is according to us very important. When you look at us, clearly, clearly I call It's already one of the largest bank in the world. That means absolutely no concern for us about critical size. Our model is the model of Universal Bank.
That means that we already master all the different business lines, all the different know how we need for A sustainable and global relationship with each of our customer. Absolutely no concern about the range of our activities. Fair point, as we are the biggest customer base in Europe, Kedale Coal is already a natural consolidator Through business lines, that means absolutely no concern. We proved that about our ability to gather with us different kind of commercial partners. We are therefore in this particularly excellent position with no constraint to make any strategic move and at the same time, powerful and solid enough to seize any kind of opportunity.
I do think there are not so many competitors in this kind of strategic positioning. Well, we can now use as much Time as you like for any question you may have. Just some rules. My proposal is that we shall take Only one question at a time, but of course, you will be able to come back to microphone as often as you wish. And probably, we could be helped by some members of the executive committees that are who are very excited in this prospect I know that, but many, we'd like to highlight that this is an excellent team, and we are very Proud to work together in Telia Ecolesa.
So now the floor is yours.
Good morning, everyone. Three questions, please. No, just kidding.
Just one question. Can you start by the first one? So in
your assumptions, you have 100 basis points of interest rate increase in the course of the plan. So my question would be, What is the risk to your targets if that doesn't appear? And if it doesn't, What can you do to compensate for that lost revenue? What's the most important target here that you're committing to the net profit, the revenue or the cost?
It's obviously a very important question. First, I think that the real assumption This medium term plan is more the trend than the actual level of rates by the end of 2022. This is the key point. And again, I repeat what I Just said, we think that the normalization of the monetary policy is going to take time. It's going to be long.
So we [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Made very aggressive assumptions going this route. Then if the actual rate by the end of 2022 It's not at the level we have forecast now. It's different if we are talking about Long term rates and short term rates. As far as long term rates are concerned, I think that 2 businesses can be impacted: The retail banking activities, of course, because in the portfolio of home loans, It's important to know exactly when the rollover effect, I would say, would start to Increase the yield on the portfolio. It's not the case as of now.
We expect It's to be the case somewhere in the medium term plan. So obviously, if rates continue to decrease, it will not take So clearly, there is a slight risk in this area. But you may have seen that we have Already taken into account the fact that net interest income is going to decrease in proportion of all our revenues and fees and commissions are going to increase. If it comes to short term rates, then the situation is a little bit different because Short term rates are important also for retail banking activities, but for custody activities. And in those businesses, especially in the custody business, Actually, we managed in the last 3, 4 years to progressively pass to the customers the negative rates that we Outstanding.
So of course, the assumption if short term rates start to increase is that we are going to Pass it also to the customers. And then the last point, which is I think important, is that we cannot have at the same time Lower interest rates than the one we forecast and a higher cost than the one we had today. So it's 1 or the other. So it means that if We make a little bit less revenues because of interest rates. It will more than probably be compensated by less cost of risk,
Which is what we have seen during the past medium term plan, in which also we weren't not totally accurate on the level of interest rates, but we were Quite generous about cost of risk, which realized to be far lower than the amount we expected.
We can take another person, then we shall come back to you. I don't And remember, please.
Hi. It's Guillaume Tiburon, Exane. The question relates to the RWA budget. You have 320 now. If I add Basel IV and TRIM, that's about 350 And half of switch would be 3.67 and your end of 'twenty two budget is 3.60.
So that would imply negative organic growth and I don't
You start with the figures at end Q1 this year. And when we presented the results at end Q and this year, I had the opportunity to explain why we had a peak In the level of RWA, so I think that you should look at the evolution between end 2018 and end 2022. So the figure at end 2018 was €306,000,000,000 if I remember correctly. We are targeting €360,000,000 by the end of 2022. So this is enough to cover all the elements that you've mentioned, Switch and Winding, TRIM and Basel IV plus organic evolution of the business lines Minus, of course, all the optimizations that we are permanently trying to generate everywhere.
So we are permanently it's exactly the same, I would say, discipline as for the costs. We permanently Try to optimize the RWA calculation. And this is going to continue to represent a significant part of our, I would say RWA allocation capacity, it's at the same time the capacity of Reducing the RWA density by some optimization. Last point, we are going To continue to stick to this distribute to originate model that we've developed in the last 3, 4 years, 5 years. And as far as CACIB is concerned, for example, 5 years ago, I think the primary distribution rates Of all the assets that they generate was in the region of 25%.
It's now above 40%. If we get the front sorry.
Sorry, just to clarify,
so it means net growth plus optimization is only just EUR 10,000,000,000? Yes. Okay, thank you.
You can leave the microphone on the left side, I think. Okay. You can. Hi.
It's Arik Hamidjat from Bank of America Merrill Lynch. I have one follow-up and one question.
Is it
low? So just I mean, Jerome, this is very helpful answer on The question on assumption on interest rates, especially on the short rate. I mean, I understand you've been conservative on the cost of risk. Maybe we can judge on that. And just to know and you can provide us sensitivity on rates, let's say, 50 basis points low rates, what that's me in terms of your revenue growth.
Some other banks gave that. It's very helpful. I mean, then we can see, I mean, how costs could And my question is on the capital. And I didn't see the OCI Bit into the capital planning, is it within this other, the business development other? And the Basel IV, 60 bps, Is that fully loaded with all the phase in of the output floor?
Or is it only back in 2022 and then we have to add later on the rest?
May we have the capital chart on the screen? Is it possible to come back on the capital chart?
Let's start with your last question because you at the end of the day, you asked 3. The OCI reserves are in the volatility elements I was mentioning, so in the right hand part of the chart. I remind you that by the end of 2018, the remaining OCI component of the capital was 40 bps. It can be it can stay above 0. It can be negative.
When it's negative, it's a potential of pull to par, which is going to create additional solvency going forward. So it's an element and we are going to integrate that in the, I would say, Day to day steering of the solvency as a volatility element because it's really a volatility element. I've lost your previous question.
Basel IV.
Basel IV, yes, Basel IV, of course, it's only Basel IV Season 1, which is the input floors And Basel Floor Season 2, which is going to be the output floor, is a completely undetermined question And a very late question because this is going to take place only or to really bite if it takes place only in 2026, [SPEAKER PIERRE ANDRE DE CHALENDAR:] 27, which is the last phasing in date for this output floor. So clearly, We haven't taken that into account. And then going back to the rates situation and the sensitivity analysis that you were asking for, It's very difficult actually because it doesn't depend only On a point in time level of rates, it also depends on the evolution on the trajectory of rates during the coming years. So it's not a very easy question to answer. What I can tell you is that and I've always been clear on that, contrary to some of our competitors, we are not Relaying on rates, on an increasing rates to improve our revenues and we think the sensitivity is at the end of the day Smaller than what many competitors say.
Have a question? As you want. Flora.
Flora from Deutsche Bank. I'd like to ask you a question on the insurance. I think it's in the appendix, but you have a revenue growth target 3% per year, which doesn't sound like it's very much considering what you have achieved in the past, everything you just Regarding the growth potential outside France, the synergies, did you assume in there that you would further accrue the PPE provisioning?
We included in the insurance forecast this interest rate situation we are just talking about. So we integrated in the figures for the insurance business the fact that The portfolio of assets of the life insurance companies is going to yield less In the future in average than the yield we had in the last year. So this is the main explanation because Otherwise, we continue to target a significant gain of market shares and of penetration rates for our different insurance activities on our customer base.
The question please.
Just one question regarding the dividend. You mentioned the payout ratio of 50%. I would have liked to know if you are flexible on these figures. In case of relative stagnation of net income in the beginning of your plan, considering the situation in the rates but also in the global market. So my question to be clear is that you mentioned the previous plan that your objective was to increase every year the dividend In absolute terms, if we have the hypothesis of a relative stagnant net income, Are you open to the idea of slightly increase the payout ratio to 55%, 60%?
Thank you.
I would like simply to ask to your question first that we proved in the past that we were flexible. That means we are now launching a new major term plan, so we have to give colors for the future. One of the main message of Credelco Group is this Stability. There's a stability for you to see that we can be on a continuous trend in terms of growth, commercial point of view and financial point of view. But each time something special happened within our P and A, we proved we were able, in fact, to be flexible on the real and concrete pay off ratio.
So probably my financial director could add something about that.
No, I think I was up to say exactly what Philippe just said. 1st, we've been flexible in the past. 2nd, it's a yearly decision that is taken by the Board to propose to the General Assembly meeting The level of dividend and of course, each time the board is making its decision, it's taking into account all the elements of context. So no other answer possible. Please.
Hello. Matt Clark, Mediobanca. The previous plan had a percentage point kind of buffer in the CET1 Walk through for flexibility. This one doesn't. And I guess tying into that, the over the past plan, you've done a lot of bolt on M and A deals and some quite large ones.
So just putting those together, should we expect less Acquisitions and bolt on acquisitions going forward in this plan? And the last one is a set of size of strategic shift. And then related, why did you feel you didn't need that kind of flexibility buffer in this plan? We just have
the last one
and a half questions.
I think that Maybe the first thing is that you've seen that in the chart represented about the capital evolution, we remain quite, I would say, well, giving a broad range for growth in RWA. And obviously, there is here a capacity to have some flexibility. So you shouldn't understand what we have said here and presented here Not incorporating a certain degree of flexibility in this regard. My second element is that obviously Again, we will remain flexible either on acquisition and on selling activities, which are not Call for us. But it's obviously impossible at that time at that point in time to make any assumption on both this movement.
And in any case, we consider that it's an element of, I would say, financial discipline not to build in, I would say buffers which would be devoted to specific acquisition. Finally, I would add that there was one buffer at the end of this medium plan and we are partially using it. And it's not for external acquisition, it's For embossing the switch, which is to a certain extent investment on ourselves. And I think that's the most secure way to invest.
Micro, please. Micro.
Just to check by implication, that means the switch or the partial switch repayment takes priority over material M and A. Is that the right way interpret this and the differences.
No, I think we are committing to and when half of the switch, we are saying no more than that. Obviously, as we commit, it supposes that if there are other movements, for example, of acquisition, they will have to be financed another way. And that's clearly a commitment we shall depart with. And I don't know how to rephrase it in a more convincing way. Let me insist on
this point. As a matter of fact, I do repeat to you that we have a quite boring policy. I mean, organic growth first, Internal synergies and consolidation through business lines, but we proved that each Time and opportunity could be there. We were able to decide about these opportunities. So it's not useful today to have a priority between The last part of switch and kind of opportunity we can't note today.
So once again, I think that it's Hugely better for investors to know the normal trend and the normal business of banks and the ability to be able to look at opportunity if opportunities are there. We proved we are able to do that. Don't hesitate on the fact that we should be able to look at opportunity either about half of switch either or any kind of other opportunities. But we can speak about things that are not real today. Thank you.
Thanks.
My work, please.
Yes.
My Mediobanca colleague question in
I do repeat, as I did that at the very beginning of 2016, it's very simple to answer the question, what will be Helical in 2 or Yes, exactly the same but safer and more profitable, simply. Our model is stable, and it works. The universal model is something very special when you look at that. This model means that we have built Sustainable and long term relationship with each of our customer. So we can't break that.
And so that means that when you look at Filaecol in 2, 3 or Probably, this is our willingness. It will be exactly the same in terms of perimeter, but We should do so that it could be safer, it could be more profitable. And this is exactly what We launched today as a new plan. So is there a microphone in hands? So you can.
Hello. Hi. It's Omar from Barclays. Just looking at Slide 57, You're showing that you're growing fastest.
We have 57. 57.
Yes, you're showing you're growing fastest in the FE, the large customers. And then towards the end of the slide pack, you have I think you're adding $300,000,000 in revenues to fixed income. Why is it a good thing for shareholders for you to be growing in the most capital consumptive parts of the institution. And then also why is it credible given what we're seeing in fixed income with Electrification, the dominance of American banks for you to be adding that much in revenues over the course of the plan. Thank you.
Maybe I'll start the answer and then Progyny Jacque is going to be able to complement my answer. As far as capital allocation is concerned, I think we have always said that we want to master all the businesses in the field of Financial Services, we have designed several years ago actually the type of CIB that we want. CACIB TB is exactly the type of CIB that we want and we have made the choice that in the different business lines In which we want to be in the CIB space, we need to have the critical size because if you don't have the critical size in those businesses, Then it's better not to be there because otherwise you take the bad risks and you fight to try and cover your cost base at any Cost of risk price. So clearly, we are in a situation where we have the critical size in all the businesses in which we are engaged in the CIB space. And all in all, the return on equity that we have in the CIB is above 10% and clearly above our cost of equity considering again the type of CIB that we have.
But maybe Jacques on fixed income, if you have some additional elements to Yes. I think that first
Yes, sorry. I think first that the figures compared to 2018 are a bit misleading because 2018 was definitely a year A very low revenues in fixed income. So in a way, the growth between 2018 2022 should be measured based on this very low base in 2018. Secondly, I think that the bigger you are in the market and the more you will stick to the overall performance The market in the case of fixed income at CACIB, we're still a reasonable player, which means that if we're able to continue to develop our client base because our fixed income is only following our clients and giving them the service they're expecting. We still have a growth which is probably bigger than the players who have a huge size in the market and which will More or less, we'll stick to the performance of the market.
And last but not least, as Jerome was mentioning, the return on equity of This investment bank is a pretty solid one and definitely above the cost of capital.
Maybe I had something very important on the strategic level because I had very often this kind of question. For example, Why don't you increase the part of asset management and increase the part of CLB activities since the level of profitability are so different? I have truly explained that we are a global bank. We are not a holding conglomerate just optimizing different kind of business lines. I mean, for example, he didn't say that, but it's so important.
CACIB is very useful tool to create links and business and co businesses with many other entities of the group, regional banks, LCL and many other activities. That means that You have to appreciate the global performance of Claviacolese as a share. And I do tell you that the most important part Our future performance is precisely there. That means the ability to exploit to have a better level of Performance on the global relationship market by market or customer by customer. So this is very important, but Probably, we can help because this is very important.
With a 10% level of return on number of equity, We are proud of our CLB activities. Yes, we are really proud of that. And maybe one last,
I would It's a technical answer to your question. We are targeting 3% revenue increase per year at the Large Customers division, including a positive scope effect coming from Casaes where we have these operations With Santander on the one hand and CastBank on the other hand, which are going to generate additional
I just
wanted to
Okay. Thank
you. I just wanted Follow-up on your comments about volume growth, fee growth. And I mean, it suggests you're taking market share and increasing the The penetration with your products. What is the key lever to increasing the penetration or Market share, is this general pie growth or is it market share growth as in your product is better, The digital investments are paying off. If you can maybe elaborate and especially for insurance and for As management was mentioned.
I'm sure I absolutely understand the question. I'm sorry, but I can tell you something that is very important. The you that we always have to gain market shares. This is the real and fine tradition of organic growth. I always repeated that organic growth was not the inability to do, it's not growth, but the challenge To fight competitors, first, you have to prove that you can fight competitors before looking at potential And how can we gain market share as a whole as we gained them on our different markets for the last 2 or 3 years.
I do tell you that, of course, you need innovations. You need good products. But let me tell you that This, as a rule, don't create huge level of differentiation between competitors. I do tell you that The real strength of a bank as we are is the quality of the global relationship. I have to tell you that something very important, and I have very often this kind of question, how do you do to have this high level of cross selling?
I don't know what mean cross selling. I just understand what means global selling. It is not because we are organized in different Entities that our main driver to get clients, to get market share is this global relationship. And this is why you always find that for us, internal synergies, that is very special word, means developing the potential of this global relation with our customer. And each time we do that, we gain market share.
We gained in terms of penetration on simply banks. Regional banks, for example, Last year, we gained more than 1 point I mean, 1% in terms of market share in France. We gain about P and C insurance. And what I said at the very beginning, we maintain the churn about the fact that, Well, pay attention. There's no lessening above our head is absolutely right.
That means when we go further, When we give mains and mainly when we coordinate the different links between business lines and banks, Really, it works. But I'm not sure I've understood the beginning of your question that was probably more precise.
I guess the question I meant to ask is, is price one of the key drivers for you to gain a
cash flow?
The price?
Price. So
I look forward to that.
Of course, price is very important. And we have to explain that to NeoBank because to get Net income positive result, you want to sell prices. But this is another question. Let me explain you that When we decide to have a complete range of offers from the entry level, EECO, euros 2 a month, nothing more, And a much more sophisticated offer with high level of cards today, the cards that are the most sold The most sophisticated, I mean, the price, the most important, the highest. That means that something is very important.
Either you choose to have a fight on this kind of price And at the end of the day, you are dead. Or you organize a complete range of solutions from the entry guide to very sophisticated solutions, It works. For time being, only 8% or 10% of our customer open accounts on echo. 90% of our new customer opened something with a higher level Our functionalities are a little bit more expensive. So we think that once again, It's not so easy to explain that, but the real battle is about trust, confidence, relationship.
With comment, you can take in terms of behavior towards your customers and that it works for many, many years. And according to me, it is not linked to the different kind of channels you use for processing.
Maybe if I can complement, for example, on P and C, on insurance. The choice we have made is not to be low cost. We are in the middle of the range of all the prices we are which are practiced by our competitors. If we are gaining market shares, It's for two reasons. 1st, the excellency of the service.
And second, the confidence, the relation of confidence we have with the client. Because obviously when the client is someone, which is not only the client of your P and C, but also the client of your whole bank, you know him and he knows you. Thermal relationship is very much different. And that's why if you look at the recent past during each year of the past medium term plan, We have gained market shares on our competitors in P and C Insurance. And that's why we are quite confident we will do the same, Not by lowering the price and that's an important message because it's very important on the profitability of the whole business, but rather by continuing to maintain the Excellency of the service.
So again, it's not a fight, as Philippe said, in which you try to lower prices. Obviously, we have to do that for certain segments of clientele because it's also part of our universality model. But we are not convinced that I would say, the cross to the bottom will be the recipe for success.
And maybe just a last point To try to complement the answer, this is precisely why we have set specific and targeted costincome ratios My business line because we know that there is competition in France on the different businesses in which we are engaged and we need To be efficient enough to stand this competition. So the idea is not to be Low pricing actor and to capture market shares by decreasing the price, But we need to be able to stand the competition and therefore, we need to have a competitive cost income ratios. This is exactly the approach we've taken on the different businesses.
Nick Davy from Raeburn. Can I ask a question about the timing of cost inflation in the period of the plan? So you say less than 2% over the period, but We've seen with a lot of other European banks a phase of higher cost growth at the beginning and efficiencies hopefully later in the plans. So should we expect that in the case of your plan? And if we should, would you tolerate a year or 2 of negative jaws?
Do you hope to deliver positive income and cost jaws through the period?
No, I think that As Philippe said, this plan is in the continuity of the previous plan, meaning that in terms of cost base, We are going to benefit as soon as this year, next year from the effects of the different efficiency programs that we've put in place in the last plan And this is exactly designed to finance the new investments that we want to make. So clearly, the idea is that The evolution of the cost base must remain quite regular. The Potential negative jaws that we can have on a specific quarter can come not from an evolution of the cost base, but can come from a more Volatile level of revenues, it can always happen. But clearly, the idea is not To create kind of hockey stick curve in which we have all the costs in the beginning and hopefully, as you said, We expect some benefits at the end of the period.
Yes, it works.
Yes, it works.
Okay. Orediafer from Santander. A question on the corporate center, which was a key In the last Investor Day, could you give more details on what you are planning to achieve there? In particular, I've seen that The revenues are going to improve. And how about costs?
I know that your corporate structure is Well, prevent some cost reductions, but could anything be done on the corporate center, Vincent?
Well, on the corporate center, you are right in saying that we target an improvement of the revenue line By around, if I remember correctly, around €50,000,000 It's clearly Remination of a more important improvement of, I would say, the recurring revenue base of the corporate center, which is actually a cost, Revenue cost, which is the financial charges that we are facing in order to bear the cost of all the debts that are carried by Credit Agricole, I say, especially the acquisition depth of the former acquisitions. So this is going to continue to improve. Then In 2018, we have had and we mentioned it when we talked about Q1 results, we have had some Exceptional and positive element of revenues. So of course, with this basis of comparison, the revenue improvement is only €50,000,000 and not more than that because of this base effect. But The underlying performance is improving more than €50,000,000 Then when it comes to the bottom line, It's maybe a little bit strange, but we are facing a headwind, which is the reduction in the corporate tax rate in France Because the corporate center has a significant tax product, tax gain every year And this tax gain is reducing because of the reduction, the forecast reduction in the corporate tax rate.
So this is why all in all, there is not going to be an improvement As we forecasted as of now, of the corporate center, of course, we'll try and optimize as much as possible this going forward. But the positive effect on the revenue line is going to be offset by the negative effect on the Tax line. And as far as the cost base is concerned, of course, all the costs that we bear in the corporate center will be We'll benefit from all the cost cutting programs that we deploy across the board. Please.
Boris from UBS. Just one question on the cost of risk that for Tbilisi, you said it's an assumption rather than forecast. Is that here actually guarantee the customer acquisition targets that you have. And if you had to actually forecast it, what would it be?
I think that it's going to it would be differentiated by business time. 1st, it's very difficult to forecast the cost of risk in 3 years' time. So clearly, it's better to make an assumption and a prudent one than a real forecast, effective forecast. Then on a more shorter horizon, I. E, for this year and next year.
What we have in mind is that in retail banking activities, we don't see Any significant sign of deterioration, it's not either and we even see a potential of Further improvement in Italian retail banking activities in terms of cost of risk. In Consumer Finance Businesses, we have a certain volatility around a low level, which we have reached since now probably 1.5 years. The area in which we may see a certain deterioration, which is Only natural is the CIB simply for one simple reason is that on the last four quarters, we have had Write back of loan losses provisions. So we cannot have permanently write backs and reversals. So we are going to go to a more normal level of cost of risk, which is not going to signal a deterioration in the credit worthiness of the counterparts, But simply back to normal situation with no more reversal.
But just look back, it's very important on our chart For the last 2 or 3 years, I remember that a very long time ago, I was a graduate in 'thirty six. And If I had to do a prediction, a forecast for cost of risk, the normal forecast would be really lower because the trends are decreasing continuously on each of our business line, each of our territory. Simply, we said that We shall be able to reach €5,000,000,000 even if with this option, the cost of risk could be at 70% higher than today. So of course, we are not able to do this forecast, but we do tell you that the current trend is not this one. And within this assumption of a cost of risk really higher, we could reach €5,000,000,000 of net income.
That's simply the rationale we give you today.
But if behind your question is the idea that the conquest will be at the cost Of increased risk we would take in order to conquer new categories of clients is not the case. We are not planning Relax our rules and our requests notably, for example, for consumer credit. We will stick to A very cautious and conservative approach. So we are in a situation in which there are a lot of uncertainties on growth, uncertainties on rates, But these figures are not forecasting any relaxation in our standards.
Unfortunately, we are seasoned personally. This is not the trademark Of our development for many years, we don't do this kind of thing. We can see the icon. Thank you. Other question?
Sorry, on cost of risk, it's a shorter term question than the long term plan. But just with regard to the Casino rally situation, Question number 1 would be, if we had to have provisions on that file, would they be booked in LCL or CIB? And then maybe can you explain more in terms of risk management when a file is problematic for years and you grant a credit line to a company, Would you already take some provision when you ground that credit line? Thank you.
In my mind, as a rule, we never answer this kind of question that means on the solo case. This is question of perhaps rules And we can speak about one case, whatever can be the case. So I'm sorry, We don't give any figure, any explanation about that. Even if we had to say in which kind of balance sheet, of course, We perfectly know this topic. Well, because we are a banker for many time of many, many, many corporates, And we do muster this kind of situation.
I can simply say that.
I can add something without violating the rule that Philippe just mentioned. Now IFRS 9 makes it compulsory for us to take provisions every time we grant a So it means that every time we grant a credit, we have to take into account and you know the rules bucket 1, bucket 2, bucket 3, We have to take into account a certain element in cost of risk.
Hi. Tom Adewad from Goldman Sachs. Short question on Basel IV. I think in the past when [SPEAKER JEAN FRANCOIS VAN BOXMEER:] When we are transferring to Basel 2.5 and 3, you had given estimates of RWA inflation, which included some kind of mitigation. So my question is, are the 60 bps including any kind of mitigation like higher syndication for project finance?
Or is it a growth estimate? Thank you.
It's a growth estimate, but of course, when a business line is facing A regulatory strengthening of that kind, it will definitely try to optimize somehow its Overall, RWA consumption. So clearly, the higher the impact of Basel IV, The more important, the efforts of optimizing the organic consumption.
Another question, please. In terms of the 3% revenue growth in large customers, Do you take into account already sort of impacts of Basel IV, especially on the large corporates? I mean, all issue there will be repricing or Or you should be still lobbying to get collateral on aircraft? I mean, what's your thinking there because that's tomorrow? No.
We haven't made any specific evaluation of what would be the impact of Basel IV in terms of repricing. It's still a long way from us. It's due in 2022 and actually more and more we think it can be delayed a little bit because as you know, No directive proposal has been issued yet by the European Commission. And for anybody who knows a little bit The length of the legislative process in Europe, it's difficult to envisage that this It can be up and running end of 2020 2021 in order to be applied Beginning of 2022.
Thank you. Please. Sorry if I missed it in the disclosure. Are you willing to give the fully loaded impacts, including the output flows of Basel IV? And If you're not, is that because you're confident in the discussions around The application of the output flow between the consolidated level and the solo CASA level because reports suggest that Those discussions aren't exactly going the bank's way.
So I'd be curious on your thoughts on that.
First, it's I was just saying that Basel IV Season 1 is already a long way from us, 2022, at best or at worst, I don't know what I should say, but at the soonest and more probably 2023. So the output flow effect is even much later. So it's very difficult to guess What would be our portfolio of assets in 8 or 10 years? Then of course, We are having regular discussions in order to try to orientate, I would say, The way that the regulation is going to be written like it should be. For the time being, we don't know exactly what Would be the outcome.
But clearly, it was part of the package initially, and we are going to do Anything that is required in order to make sure that it remains in
the package. For Basel IV, Season 2, as Jerome said, that I can say I'm a little bit optimistic. I don't say absolutely optimistic. I can say a little bit optimistic because the point that would be the most Hurt by season 2 is, for example, financing assets, our shipping, aircrafts, highways, airports and so on. That means this is no more a concern for banks.
This is really a concern for economy, for policymakers. We have many discussions about that. And I know that there will be a very high pressure from industry against the fact that Basel IV can't create a rupture in the ability of French European banks to finance this kind of activity. Perhaps new speakers.
Thank you very much. Stefan Stahlmann from Autonomous. I would like to have one question, please. Actually, two parts of one question. Regarding your tax rate, your effective tax rate that you're using for the business plan and also the effective minorities as a share of your profit after tax, if you could maybe either guide where you see these ratios or maybe guide whether they will be very different from where they were in 2018?
That will be very helpful. Thank you.
I think the only two modifications that we've taken into account because it's very difficult to predict going forward what would be the tax rate. We've taken into account 2 elements. The first one is The already decided decrease in the level of the corporate tax rate in France, which is Now still 33% and which is due to go down to 25% In 2022, if I remember correctly, so this we've been taking that into account. The second element we've been taking into account is the progressive evolution of the breakdown of our activities between the different geographies, but no more than that.
Okay. So
Yes, I'd like to come back on the cash management and trade finance. That is a business that all banks like now. Could you give us a color regarding the revenues you're making in this area? And also where this what is the breakdown of these revenues? Because one of your competitor recently I announced €2,500,000,000 in this Global Trade Finance, I would say, activity.
But in details, we realized that most part of these revenues were actually booked in retail And not in the CIB activities, and particularly for ETIs, SMEs, etcetera. And also, do you have in mind Any development in terms of tools? Because here again, we can see that some of your competitors develop very Front to end very developed front to end tools like Centrix, Cortex, LG Markets, for instance, in order to capture This type of clients in this type of business and what are your projects there in order to develop and multiply by 1.7 Your ambitions in this business. Thank you.
Jacques, can you take this question to do some comments? Cash management and Sri.
Yes. Definitely, cash management, you cannot do cash management without good tools. And definitely, we have a plan to start developing or enhancing the systems that we currently have. The way we consider this business, which is a bit specific, is that we try to have teams that are joining forces between Not only the front office, but the front office, the back office and the IT and risk and compliance, because all those tools you need to have them really fully integrating all the aspects of the business. And that enables us to have a development which has started, which goes at a pretty nice pace and which enables us, as you were mentioning, to have kind of an STP approach of those businesses.
With regards to the revenues, I'll come back to you on specific years. But as it was mentioned, the overall figure is multiplied by 1.7 and it's definitely revenues that are only within the Cassie Perimeter, nothing that is accounted for in the Retail here.
Here, I come back to you.
Just a quick follow-up on Basel IV.
Could you
give the impact on Credit Agricole Group? I mean, ideally,
Actually, the impact on Credit Agricole Group is a little bit smaller than on CASA itself. I don't have the figure, the precise figure in mind. I think we've put it somewhere In the pack, I don't remember, but it's in the credit update Actually, in our credit update document, we have the impact on the group globally and I think it's around 30 Bips of ratio at group level comparing to the 60% at CASA level.
Thank you.
Ben, please.
Jean Pierrepour from Santander. Just a quick follow-up on Basel IV. Could you give more details of what is included in the season 1? For example, is the trading book review included in season 2 or season 1?
Now TRIM is a process that is presently going on. So this is part of the 30 bps of regulatory headwinds that we know for sure and that we've taken into account in the left hand side of the chart Presenting the capital trajectory, 30 bps in which you have all the
best guess we should project the chart.
The best guess, I would say, of all the TRIM effects are included in this 30 bps. And this is clearly going to take place in 'nineteen and 'twenty. Then the 60 bps, What I'm calling season 1 is all the decisions that are part of the Basel IV package That modify the rules in terms of input flows, so all the rules that you have take into account in order to design your models. And what I'm calling season 2 is all what is Regards the output flow.
How about the trading book review?
Trading book review is before.
Can you is it enough on this question? Is it okay? Okay. Next question.
Thank you. First, as a quick follow-up to What we just discussed actually, what you say 30 basis points TRIM and other, what is other? And the Other question I wanted to ask is going back to the revenue growth targets that you were showing. So if Asset gathering is growing by around 2.5% and insurance is supposed to grow at 3%. I guess Amundi is supposed to grow at 2%.
Could you explain why only 2% because I suppose you've made here an assumption of market Effect being neutral, net inflows, flat margin? Thank you.
Let's start with your first question. So 30 bps is TRIM and all the Bits and pieces of regulatory headwinds that are already decided from a regulation viewpoint And that we have to apply. So TRIM has been decided. It's a process that is going on. And we have all the TRIM missions that are Performed by the ECB staff and then every time a mission finishes, we have to take into account the outcome of the mission.
Same thing for different internal model modifications that we have to take in place. Typically, it's the case for securitization. We know that we have to modify certain parameters of our models in the securitization business. This is going to bite Reputation business, this is going to bite in 2019 2020. So this is the others, Trim and others.
Your second question, I'm not sure I fully got your the math of your question. If you can please.
Thank you. Because you know you have this slide where you show the revenue growth by division and you have 2.5% for asset [SPEAKER CARLOS DA
SILVA:] Gathering. Yes, exactly.
Asset gathering is pretty much
[SPEAKER CARLOS
DA SILVA:] Insurance and M and D and Private Banking.
Exactly. And Later in the appendix, we show for insurance 3% revenue growth. So given it's roughly half half insurance Amundi, I guess we can assess. It means Amundi is about 2% in the assumptions.
Yes. It's clearly I'm talking under IFRS control, but it's Clearly, the type of assumption that we made, Amundi is going, as I said, to have a very good commercial momentum, net Positive net inflows obviously, but the pressure on margin is going to continue. We know that for sure. And especially in the context of low interest rates that we know that we are having, I think the pressure on margin is going to continue.
The question? The top of the room.
Hi. It's Bruce Hamilton, Morgan Stanley. Could I just ask how you view the consolidation environments in the asset management space and Amadeus' role within that? And then when you think about your I think what you said earlier in terms of prioritizing repayment of switch, it sounds like If Amundi found something, you'd be quite happy to keep your current stake and therefore raise capital to support that? Or would you be happy to be diluted and to what level Going forward.
Well, I explained you the global situation of Kedale Coll Group and Kedale Collis about this kind of issue. I explained you that we are still we are simply open to look at opportunities. In the special case of Asset Management, I'm just looking To his parier, probably he can explain you how we see this environment of potential consolidation that is, First, a move of the past, not simply of the future. When you look at what really happened in the past, And we are very happy to have been successful in this consolidation on the last years. So now probably Yves is Ready to give some more colors about that.
What could you say about, let's just have a very simple discussion about that?
About consolidation, my position is very simple. It has not changed. It's a question of opportunity. And The problem that there are more buyers than sellers generally. And so far, there are not so many sellers.
But We have no objective of size. Very often, people are saying, Amundi, the story of size. We have not no strategy of size. We have a strategy of efficiency, organic growth and size is a consequence. And in the future, We have made the demonstrations that we know how to integrate to deliver synergy, to create value, And it will depend on the opportunities.
Maybe just as a reminder, in the latest Amundi acquisition, Credit Agricole SA accepted a certain degree of dilution of its participation. The key for us is to Remain in control of Amundi because asset management is a key and strategic business for us, But we have this capacity too,
and we like to leave so much, so we keep the control. Another question, please.
Yes. Thank you. If you can please come back to the costs and revenue goals. So if I don't think you can make the €22,000,000,000 Because I think maybe I'm more conservative on the 3% revenue growth in large corporates. Will you still be able to deliver the cost income ratio?
So will the cost be lower than the 13.5
percent? Clearly, what I said is that we have set Targets of cost income ratio per business line and then each business line has to develop its activities and develop its cost Cutting programs in order to meet the cost income ratio that is targeted for this business time. So clearly, and this is actually the way we've been managing things in the last period of time. Revenues are never exactly where you forecast them and so you have to adjust.
So the 13.5
It can change.
Me again. So you've repeated a few times that you want to be a safer bank, more prudent. And with all these topics about consumer lending, you are universal bank, you are almost everywhere. I mean, as an elective, I was in West Coast last weekend or find a colleague or somewhere where you Never think you've heard it, but anyway. So one really question is how can you give us confidence that you are In control, at least we are doing as much as you can in terms of onboarding of new clients, KYC processes.
And how would you rate your processes at the moment? Because We had experienced we've been disappointed for some other banks that we thought they were actually on top of things.
What I can tell you is that we are probably Expressing the highest requirements on this kind of topics. But you have to add the fact that we are one of the Most important bank in the world, €50,000,000 clearance. That means that, of course, it may happen something. But when you look, for example, the last cases about some case in Europe, the problem was systemic problem in banks in North Europe, of course, you can have links with some clients with that. So we always take decisions to be very safe about that.
Simply, you have to mitigate the fact that on one hand, We are very hard in terms of constraints. And I can tell you that for commercial teams, it's More and more difficult to do all these kind of requirements. And at the same time, we can be sure Not to be concerned by 1 or 2 cases because once again, we are systemic go back. But I would like to add on this point that we can be sure absolutely that when we took the decision To focus all the international wealth management, only on territory that have decided To be compliant with the international standards in terms of exchange of information, this was not compulsory. We could have taken another decision.
We took this decision to be more easier in terms of behavior on this kind of target. So what I can tell you is that probably we are one of the banks The most invested, both in terms of behaviors and in terms of means about this topic, unfortunately, We are a strong put in bank, a so systematic bank that from time to times, we can have cases. And of course, it's a pity in terms of reputation, but we have to face and to cope with this kind of situation.
If I had If you allow me to add something, we had a problem with the U. S. Administration, as you know. We have gone through a remediation process, And we took it extremely seriously, in particular to lower the level of risk we are incurring. And well, For example, we have reduced the number of counterparts in terms of banking relationship.
We have centralized, for example, screening and filtering. We have improved our instruments. And as a result of all of that, we have handed the deferred prosecution agreement At the time, it was set initially. So we took it very seriously. I personally, with my friends here, have Regular meeting at least once a month in order precisely to follow all the progress.
And we will not Despite the fact that we have gone out of the deferred prosecution agreement, lower the bar in terms of security and conformity and compliance, sorry.
Other questions? Hi, yes. Sorry.
This may be a slightly strange question, but when you think of the use of capital At the Caisse, the Caisse Regional, I know they have a specific business model, hurdle rates and returns, I'm aware of all that. But if we look at 2022 beyond the very long term, can they basically just Keep building capital forever because in the bad old days, their use of capital was Bailing out Gaza, external growth, Eureka, what does the use of capital for them look in With TASA being a normal bank.
It's easier to answer the question, what is the usefulness than the use of this organization. I do remember you that this group has to be one of the safest in the world. We want to be above 16% in terms of core QTTRO. That means 11% for us, 20%, 'twenty one percent or 'twenty two percent for regional banks. But The first point is that we want a group one of the safest in the world.
So the 16 Some percentage something very important. And we do use that as an advantage for shareholders of Credit Agricole Assas since We can maintain 11% target within the Credit Agricole Sy perimeter. This The first point, and you don't have many banking company that can present you this kind of organization Being safe and at the low and optimal level of solvency. This is the first part. So, Gun pointed that, of course, regional banks are champions on many, many things and including the fact The ability to create capital and each time in our story, Credit Agricole said the group needed them, they were there to invest or to defend the group.
And that means that we don't have to say To earlier what we could do with this global excess capital, but I do tell to the shoulders of Clari Coricin that There is a current advantage of this organization, thanks to the fact that we can simply stay at 11%. If you look at 11% for other shares, this is a problem. This is not for us. And each time in the long story of the group, You can see regional banks that are always there for simply supporting the group In bad or good, good moments. But you have to add something else that regional banks are not only majority shareholders, They are the basis of our market share, notably in France.
They are the basis of our reputation. In France, when we speak about Telecom, in fact, we speak about regional banks. And they are absolutely integrated in our plan, even if it is not within our P and A, because all our targets in terms of development Hugely depend on the fact that they are with us to reach these targets. And something I have not probably Enough highlighted in this meeting is that we present you a plan for 3 or 4 years within Clarias Colusa perimeter. But this is the big inclination of a group project that we committed to develop altogether regional banks on the one hand and Telia Colasarde on the other.
But this is another story, a story that we shall explain June 18, I think, together within the group. And this is something very, very important for Opelika Group because one of our commission, one of my commission It's better to be safe. We absolutely have to avoid the fact that the group could be considered in 2 parts, with General Bench on one hand and Clari Ecclesia on the other hand, because if we did that, at this time, Clari Ecclesia could become Just a holding with different business lines, though we are, in fact, a global bank on each of our territory. Thanks to all of our banks and all our business lines. So I succeeded not to answer your question about using the capital buffer, but I think my answer is not so bad.
It is the expectation that we will make a lot of losses in order to be rescued by the return banks.
There's another point we can add is that This excess of capital you were referring to is also helping us to build a very cheap MREL or TLAC ratio at group level? Because actually it's And the rights of issuance as well. And ASKESA is Supporting the issuance of TLAC debt, this is also a benefit for Cresar. Please?
Hi. Thomas again from Goldman Sachs. For international retail market, it seems that some of your Global competitors are in a mood of divesting some of their subsidiaries locally, notably in Eastern Europe. Some local players are willing to scale up and invest in those markets. And at the same time, some governments Increasing levies there.
What's your thoughts about local dynamics and how could you react to them if they were to evolve dramatically? Thank you.
Well, it's a very broad question. I'll try to answer to it. I would say that we have very simple rules in order to manage International Retail Network. The first rule is obviously, and that's part of the global model we follow, utility for the whole group. And let's take, for example, you mentioned Eastern Europe, let's take a country like Ukraine.
Crane, for us, it's quite interesting. Why? Because we have agribusiness companies, our clients, CASIB clients and they are very much interested to see us being present in this country and being able to manage business there. So that's the first rule. The second rule is obviously the fact that we want these subsidiaries to be extremely safe.
And after what has happened with Ampariki, we have strict rule. We want them to have Liquidity, a very strong liquidity, we don't finance them from Paris. They raise themselves their liquidity. And second, we want them to have a return on equity, which is decent. And indeed, I mentioned Ukraine, but it's not the only example.
In fact, very often and you can see on the last report we published, they have a return on equity which is far higher than the one we have on the Global Group. So provided that they follow these rules, we don't see any need to withdraw from this market. I mentioned is obviously not concerning a country like Italy, which is not, I understand, encapsulating your question.
Just to illustrate what Xavier just said, the return on equity that we target for these international retail banking activities Outside Italy is above 18%, which is clearly relative globally for Credit Agricole.
Any questions?
Please. Can I ask a question about the pace of credit growth in France In general, on the one hand, if you look to the Banque de France as they keep putting up the countercyclical buffer, their message is It's time to try and slow things down? But when I look to your bank, double digit SME growth in Q1, When we look at mortgage rates now touching again new historic lows, when I look into the LCL presentation, which Aggressive is perhaps a harsh word, but it's talking about conquests, market share gains. At what point is Working every day in the interests of our customers and society in France about slowing down the pace of indebtedness rather than Fueling it.
Well, that's a very good question. First of all, We are not in charge of the management of the global economy. Thanks, Scott, maybe. In any case, when we are making assumption about growth, it is supposed to be, in some cases, getting market shares against some competitors, And we are determined to deliver that. But I would say that more globally, I'm sorry if I shocked some people in this room.
We think that At least there are some inconsistency in the messages delivered by the authority because on one hand, We see, well, the ECB talking about maybe lowering interest rates, Prolonging and even renewing the TLTRO. And on the other hand, the French Central Bank worried about the pace of Credit groups, I doubt there is a lot of consistency. But to be more serious about the substance, what I see as far as France is concerned is A few things. First, well, quite a good dynamism. And when you look at the last report about foreign investment in France, It goes quite well.
And there are a lot of dynamics which are extremely positive. Just look for example at what we call Grand Paris. That's a huge subject which attracts a lot of foreign capital, which triggers a lot of investment. Why shouldn't we participate to that? My second remark is basically that We think that the sentiment of the people about France is too gloomy.
And again, that growth is there And there is no reason that it won't be prolonged. Lastly, if we look at the risk, because As we said repeatedly, we are extremely conservative. When we look at the risk we anchor on both individuals, SMEs, mid caps, large corporates, We don't see too much tension. At least the posture we adopt is to Remain always quite conservative. We again, I repeat it, we don't see risk of significant deterioration of the credit risk.
And that's a good indicator in our view to the fact that, well, we are handling our credit policy in a reasonable way.
There, one of the last questions perhaps. Yes.
Yes, a follow-up question regarding your international retail business. You mentioned Ukraine, but you also mentioned in your presentation Poland. I remember that some months ago, You are questioning your presence in Poland and particularly the fact that You are not very sure to remain in this country regarding tough regulation, market share, etcetera. So now it seems that you have made your mind on this subject and decided to remain there. So what are your objectives?
Because I guess that your ROE there is not 18%. What is your objective in terms of market share? What do you want to do there? And what are your financial targets? Thank you.
Well, I doubt that we have raised so much doubts about our presence in the country. Indeed, Poland has been in a more difficult situation, I would say this way, Than other retail foreign banks that other retail banks we have abroad for a variety of reasons, one of which being, as you mentioned it, The fact that regulation became tougher. What are our plan as far as the country is concerned and presence? First, we have a strong presence in retail, but you have also to keep in mind that we have also a presence which is Extremely significant in leasing with EFL. We have also life insurance, non life insurance.
We have asset management and we are convinced that we can go developing all these businesses in synergies with the retail What we have decided to do is to put the focus again on one of the strengths of Serb Bank Polska, which is consumer credit. It's used to be initially a consumer credit subsidiary, which we transform into a full fledged retail bank. That was needed. But in the course of this move, maybe we have not yet Sufficiently developed precisely consumer credit. We forgot about the consumer credit.
And one of the plan we have is to relaunch very much The development of consumer credit and to gain market share. So we will use, in particular, the know how of CICEF and our friend Philippe Bimon is here to strengthen this activity. And again, on top of that, we will use all the business lines In order to comfort the position of Saban Polska. Lastly, what I want to say is that after a period in which, as you mentioned it, The ROE of Poland decreased. We are now in the opposite process.
It increases again And it's reaching a level which seems to us quite satisfactory, and we are confident that we can improve it again.
Thank you. Last question before drink. If there's no other question, let me simply thank you so much for being there. Thank you so much for Your kind presence and let us have together a friendly drink if you want. Thank you so much.