Good morning. This is the conference operator. Welcome, and thank you for joining the Crédit Agricole fourth quarter and full year 2024 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions by pressing star and one on your telephone. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero. At this time, I would like to turn the conference over to Mr. Jérôme Grivet, Deputy Chief Executive Officer of Crédit Agricole S.A., in charge of steering and control. Please go ahead, sir.
Good morning, everyone. Thank you for attending our call. I'm very happy to present these results for 2024 and for the last quarter of 2024, which are absolutely excellent results. Let me start directly on page four of the presentation, and let me start by comparing our results for 2024 with the targets that we had initially set for 2025 in the course of our latest medium-term plan. As we have stated several times since the beginning of last year, we are indeed meeting, as soon as 2024, all targets that we had initially set for 2025, and I should say that it's the habit, because it's the third time in a row that we manage to meet our profitability targets one year ahead of schedule.
But actually, we are talking about meeting the targets, and I should also insist on the fact that we are by far exceeding the different targets. It's the case for the net profit, which is 20% above the target. It's the case for the return on tangible equity, which is two percentage points above the target. And it's also the case for the cost-income ratio, which is far below the ceiling that we had set at 58%. So it's definitely a very strong performance posted by the group globally, but especially by Crédit Agricole S.A. for the quarter and for the full year 2024. If we go now on page five, we have some key messages regarding this set of results. First message, it's clearly a strong increase as compared to the previous year and to the last quarter of 2023.
It's also a level that is a record level in terms of profit for a fourth quarter of any year and for a full year level of profitability. It's also a result that has been reached, and we will dig a little bit into that, especially thanks to a very high level of revenues. The level of profitability is also very high because 14% is indeed the best return on tangible equity we've posted. The capital position and liquidity positions are very, very strong, and we are proposing to the General Assembly meeting that is going to be held in May an increase of the dividend, the cash dividend that is going to be at EUR 1.1 plus 5% as compared to the one we've paid on 2023.
If I go on the following page, we see all the figures for the group globally and for Crédit Agricole S.A. specifically for the full year and the quarter. What I can say is that for these stated figures, all indicators are up. Up for the revenues, for the gross operating income, and for the net profit. Up for the quarterly results and for the full year results, and up for the group and for Crédit Agricole S.A. Cost-income ratio improves on both perimeters, and the cost of risk continues to be very, very low compared to historical standards. Let me now switch to page eight, starting with actually the level of activity that we've had in all business lines in the last quarter of the year and in the full year 2024.
It's been a year, again, of very high level of activity across the board in every business and every entity of the group. It's been very much the case for retail banking activities and all activities directly oriented towards individual and households, with specifically good news in France, which is the rebound of home loan activity in the last quarter. It's up in terms of production of new loans, up 18% as compared to the last quarter of 2023. We continue to see an increase also in corporate loan production, as well as in the level of loan activity, credit activity in international retail banks, and when it comes to consumer finance, we see a level of activity which is stable and high as compared to the last two or three quarters, so a good level of activity also in the consumer credit business.
Lastly, I want to comment on the fact that we continue to see this stabilization of the deposit mix in France, which is very important going forward for the further future improvement of the net interest margin. When it comes to CIB, asset management and insurance activities, we are posting very high level of activity and sometimes records. It's the case for the insurance activities where we have a record level of outstandings in life activities, and we have had also a record level in terms of net premium income in 2024, with a level of EUR 43.6 billion of premium for the full year. It's the case also for Amundi, with a level of net inflows of EUR 55 billion for the full year and outstandings of EUR 2 trillion 240 billion of assets under management.
And it's also been a year and a quarter of record level of revenues for CACIB. If I dig a little bit more in the analysis of the revenues that we've posted in the last quarter of 2024, you can see on page nine that actually this sharp increase in the level of revenues, plus 17.4% on a stated basis and plus 18.2% on an underlying basis, this increase, sharp increase, is spread over almost all our business lines. It's very much the case in the asset gathering activities, with a high level of activity overall, plus also favorable base effect in the insurance activities. You may remember that back in the fourth quarter of 2023, we had a significant level of weather-related claims, which we do not have in the fourth quarter of 2024.
We have also the benefit of the integration of Degroof Petercam, which was not there back in 2023. But nevertheless, the level of revenues is high and increasing rapidly. It's also the case in the large customers' division, so CACI plus CACEIS, no scope effect, but simply a very good performance of all activities in this business division. In the specialized financial services business division, the good news is that the revenue increased indeed by 35 million EUR, which is the first time in 2024. It's illustrating the fact that in CA PFM, so the consumer credit entity plus car leasing entity, we are now seeing the positive effect of this increase in the margin for new loans, translating into a slight improvement of the margin on the outstandings.
Lastly, on retail banking activities, there is a stable level of revenues with some slight ups and downs between France, Italy, and the other international retail banking entities. Lastly, in the corporate center, a sharp increase in the level of revenues that is partially driven by valuation of Banco BPM shares that is higher than the one we already had back in the fourth quarter of 2023. But nevertheless, the other elements in this business division or in this corporate center are also well-oriented. On the right-hand side of the page, you may see that the annual growth rate of the revenues in the last 10 years was 6.5%, and it's been very regular. So it's a very positive element that we are happy to illustrate there. On the following page, we have some elements regarding the evolution of the cost basis.
So what you can see is that the increase plus 5.6% on a stated basis and plus 4.4% on an underlying basis is less dynamic than the one we had on the first nine months of the year. So there is clearly a slowing down of the evolution of the cost base. It's perfectly coherent with the evolution of the inflation in most countries in which we operate, especially in France. And this is also illustrated by the right-hand side graph of this page, in which you can see that the recurring expenses increased by a mere 3% on this quarter, which compares quite favorably to the same calculation we did for the first three quarters of the year, which were more in the region of 4%-5% beginning of this year. So definitely, of course, we continue to invest.
We continue to remunerate our staff, but there is a slowing down in line with the evolution of the inflation. On page 11, some elements regarding the cost of risk. There is an apparent increase in the level of the cost of risk, be it compared to the fourth quarter of 2023 or to the third quarter of 2024 on the perimeter of Crédit Agricole S.A. But what you can see immediately is that actually this increase is driven mainly and essentially by IFRS 9 provisions, so as stage one and stage two provisions. And if you really dig into the numbers and look at only the stage three provisions, they are down as compared to both the third quarter of 2024 and the fourth quarter of 2023.
This increase in stage one and stage two provisions comes from both a revision of certain IFRS 9 models in certain entities. It's especially the case in the consumer credit business and also at CACIB. There is also a positive migration of certain counterparties from S3 to S2, so from doubtful loan to only sensitive loans, I would say, which is positive, definitely. Of course, the provisions attached to these loans migrate in the same direction. Overall, what we can see is that the non-performing loans ratios, both on the group and on CASA, are slightly down in Q4 2024 as compared to Q3 2024. The coverage ratios continue to improve. On the following page, you have some more precise information regarding the cost of risk in the different business lines. Maybe just to highlight two of them.
In the financing activities of CACIB, there is apparently a significant increase. But first point, it is, and it continues to be very low. Seven basis points is definitely a very low level. And the second point is that this level is only made of stage one and stage two provisioning. So in terms of cost and incurred risk, it continues to be around zero. And then within CA PFM, there is apparently also a sharp increase, but actually this is triggered by two specific elements I wanted to mention. First element, it's a EUR 50 million provision that is booked with regards to a revision of IFRS 9 models, as I mentioned earlier. So it's a one-step increase in the level of provision. And of course, the model is going to evolve going forward, but it's only the updating of the outstanding reserve in face of this provisioning model.
Then the second element, it's a reserve that has been set aside of EUR 30 million in regards with legal risks, including, of course, this issue in the U.K., in the U.K. with car loans. You perfectly know about this story, which is a story for the whole banking sector in which we represent only a very modest 1%-2% of market share. On the following page, you have an analysis of the evolution of the net profit on a quarterly basis by business line. And what you can see is that for this quarter, the contribution of asset gathering business division and retail banking business division improved quite significantly. It is stable for the large customers division because of this increase in the level of provisioning at CACIB, but again, at a very low level.
It's also slightly down at the SFS business division, again, in connection with the cost of risk I was mentioning, which is made of, amongst other elements, of two significant one-offs. On the right-hand side of the page, a breakdown of the evolution of the net profit on a yearly basis by lines of the P&L. What you can see is that all in all, the sharp increase in the net profit, plus 11.6% on a stated basis, and even plus 21.1% on an underlying basis, is mainly driven by the increase in the level of revenues, plus EUR 2 billion, only EUR 750 million of increase in the cost base, then a slight increase in the cost of risk for the full year.
Of course, a sharp increase in the level of taxes and a decrease of the other line in which you have the equity accounted entities because of some modification in our perimeter. But definitely, the increase in the level of net profit is driven by the evolution of the revenues and by the evolution of the gross operating income. On the following page, some elements regarding the solvency ratio at CASA. The target continues to be 11%, and we are stable at 11.7%. There is a high level of retained earnings after the distribution reserve. There is also a certain dynamic in the evolution of the business line organic growth of RWAs, which is partially driven by some rating migrations. And then we have some bits and pieces which are gathered with M&A effect, regulatory effect, and so on and so forth.
The main point there is the fact that we have started now in the fourth quarter of 2024 to prudentially consolidate the leasing activity, which is one of the provisions of Basel IV. This is leading to a one-off cost in terms of solvency of 12 basis points. Over the full year, the solvency ratio decreased by 10 basis points despite the sharp organic growth of our activities, despite also some technical elements like the one I just mentioned on the leasing, and despite also some M&A operations that were closed in the course of the year. Definitely, a wide margin of maneuver in terms of solvency, considering the target of 11%.
This, of course, takes place in the context of a group that continues to have a very high margin above any regulatory requirement, 17.2% CET1 ratio for the group, plus 740 basis points of margin above SREP requirements. So definitely, no issue regarding the solvency of the group. The same effect on the solvency in the quarter with a slightly different overall impact, which is, of course, perfectly connected to the high level of solvency of the group. With such a high level, every additional billion of RWA needs a higher level of capital to be covered if you want to maintain the ratio. In terms of other solvency ratio, be it leverage, TLAC, MREL, no issue and always a significant margin above all the requirements that apply to the group. On the following page, page 16, some elements regarding the liquidity of the group, nothing significant to signal.
Reserves continue to increase slightly over the quarter. Customer deposits have also increased a little bit over the quarter, and the breakdown of these customer deposits continues to be very stable after the sharp shift that we've seen when the increase in rates started. Now it seems that we have reached the level which is, again, very, very stable. And the liquidity ratios, LCR ratios continue to be very significantly above the target of 110%, 131% for Crédit Agricole SA, and 127% for the group globally. Let me now spend rapidly some time on the following pages. On page 18, you have an update of our transition plan and the strategy that we develop in order to accompany our customers in their own energy transition with the acceleration of the development of the financing of renewable and low-carbon energy sources.
The second point, which is all we provide to our customers to help them transition, and then the third point, which is a consequence of the first two, which is the progressive reduction and targeting the exit from the financing of carbon-based energy going forward. And what we can tell on this point is that we are far ahead of the curve in terms of reaching our medium-term targets. And this is translated on the following page, page 19. You can see that the breakdown of the financing that we provide to energy production has very significantly shifted between 2020 and 2024. And now, every time we free 4 euros of fossil fuel financing, we are able to allocate 14 euros to low-carbon energy financing. Some elements regarding the rollover of our medium-term plan, besides, of course, the fact that we've reached the target one year ahead of schedule.
What is interesting to note on page 21 is that we continue to increase our market shares in most of the business lines in which we're engaged. And this is the perfect rollout of the organic part of the development plan of the group. And we continue to gain customers, 1.9 million new customers in our retail banks per year since the inception of the present medium-term plan. So definitely, the organic growth trajectory of the group continues to work exactly the same way, according to its DNA. And this is complemented on page 22 by the inorganic growth initiatives that we have taken. We felt it was interesting to look a little bit backwards on all the transactions that we've concluded and closed in the last four or five years. We've invested a significant amount of capital in those transactions.
This amount was definitely self-financed, be it by our capital or earnings generation capacity, and also thanks to some disposals, and these operations are representing a significant complement to the level of revenues. If you add up the transactions that we've concluded in the 2019-2021 period, which we consider as fully integrated and the ones that we've concluded more recently, all in all, this is going to represent close to EUR 4.5 billion revenues in 2025 with an average level of cost-income ratio, which is very close to the one that we are targeting in average, so a very positive lesson that we can take of all these initiatives of inorganic operations. On page 23 and 24, some elements regarding the trajectory that we've been able to follow in the last 10 years.
Overall, we've managed to grow the top line steadily year after year and in average by a very high 5.6% ratio every year, so it's a very high rhythm of increase of our top line, and in the meanwhile, we've improved the cost-income ratio at CASA by 15.15 percentage points over the last 10 years, so with a very, very steady, very linear trajectory. On page 24, again, with the same level of historical data, the trajectory of return on tangible equity. Actually, we should have started in '16, in 2016, not in 2015, because 2016 was the year of completion of the Eureka transaction, through which we reorganized the group completely, and so we started with the level of return on tangible equity around 8.5%. We are now reaching 14%, and we've been permanently above 10% with the exception of 2020, which was the year of COVID.
But definitely, even in this year, we've managed to post a return on tangible equity, which was above 9%. And in the same period of time, we've multiplied the dividend per share in cash by more than 3, 3.1, to be very precise, reaching this level of EUR 1.10 per share. So I will stop here. I think this is the relevant conclusion for this presentation. And I'm now leaving you the floor for the questions.
Thank you, sir. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up your receiver when asking questions. The first question comes from Giulia Aurora Miotto of Morgan Stanley.
Hello, Giulia.
Ms. Miotto, maybe your line is muted.
Still in mute. Maybe we can take this next one, and we'll go back to Giulia afterwards.
Certainly, sir. The next question is from Tarik El Mejjad of Bank of America.
Hi. Good morning, Jérôme. Congratulations for excellent results, really great quality, so I want to ask you again, as I usually do, on how you're reviewing your guidance up. I think we'll all have to wait for another few months, but still related to that, I mean, you've been delivering record high ROTE, so 14% for the full year 2024, and it seems that you are not yet firing on all cylinders, so do you think the bank has structurally shifted to materially higher ROTE versus previous plans? If I remember, the last few plans, you basically increase your ROE by 50- 100 basis points, plan after plan. Now we are way above the previous plan target.
So is this a structural shift, or there are some elements that flatter a bit your ROE? For example, I'm thinking of the CET1 ratio of 11%, but you seem to be adamant this is the right level for you. And then related to that still, on the Capital Markets Union, you wrote a very detailed article a few weeks ago on the securitization, the benefits of it to Europe, link it to your Draghi report. Should we expect in your new plan, after raison d'être, maybe there's a new plan where you are more trying to leverage on the European working together and securitization within the CMU? One of your competitors yesterday started to embed the CMU even within the medium-term outlook for their profitability. Are you in the same situation? And then the last question, I mean, I have to ask it.
Let's see how much you can say on that. But on Italy, I know the situation remains very fluid, but I wanted to see where is your position in here. You often present it more as defending your interest. That was a few headlines this morning again. But I think it's quite the opposite. I think you have a big opportunity here to leverage on your stake. So in BPM, can you maybe update us on where you sit there and what kind of timeline we should watch? Thank you.
A lot of questions, Tarik. Nevertheless, I'll try to answer as quickly as possible those questions. First one, guidance. It's clear there is a new CEO that is going to be in charge mid-May. He has started indeed to work on a future medium-term plan. But of course, it will take a little time.
So do not expect a new medium-term plan before probably the fourth quarter of this year. And we will update the targets, and we will give new targets for probably 2028. So nevertheless, 2025 has to go its way. And what I can tell you regarding 2025 is, first, we do not forget the initial targets of the last medium-term plan. So we continue to target a return on tangible equity for 2025 that should be above the 12% threshold of the previous medium-term plan. We continue, of course, to target a cost-income ratio which should be below 58% and possibly significantly below. And in terms of net profits, you know that in 2025, we are going to face tailwinds and headwinds, as some of our competitors are stating.
But all in all, what we feel is that we have the capacity to repeat the same, more or less the same type of performance as the one we've been able to publish regarding 2024, I would say, on a structural basis. So definitely, we all understand that you would prefer to have an update of our targets as soon as now, but we are in a transition period, which is not a brutal transition. It's going to be very fluid. And we need a little time, excuse me, before we are able to post new targets. In terms of Return on Tangible Equity, this will be part of this new Medium-Term Plan. Of course, we are taking into account the modification of the breakdown of our businesses, the fact that we have embedded in our scope of businesses some low levels of capital requirement.
There is also the necessity to fully take into account the impact of Basel IV, which are not, for the time being, completely taken into account in the latest figures we've published because it continues to be deployed. So it's clear that we are well positioned regarding the return on tangible equity. We do not want to abandon this good position. But again, this will be part of the new medium-term plan. Securitization, it's clear that it's an important possible development of the activities of the group in several areas. It certainly is the case for CACIB, but CACIB is already using these tools in order to monitor and to fine-tune its capital consumption. So CACIB is and will continue to use this securitization operation with different categories of investors in order, again, to monitor its capital consumption.
It's also, of course, a possible target for Amundi to develop activities regarding all these credit funds. So it's definitely something that we are going to look at closely in the course of the next medium-term plan. And then Italy, what we are seeing is that the evolution of the situation in Italy is not going to be decided by Crédit Agricole itself. Crédit Agricole has an important setup in Italy. We behave as much as possible as a good Italian citizen when we operate in Italy, and we think that we have a good image in this country. But what we are seeing is that at the end of the day, the reshaping of the banking landscape in Italy is not going to be decided by us.
And what we want to be is to be in a position where we have the capacity to defend our interests, again, to use this expression, which doesn't mean that we are passive, but we are actively defending our interests.
Merci, Jérôme.
The next question. Excuse me, sir.
No, no. I was asking if we were going back to Giulia.
Yes, we are. The next question is from Giulia Aurora Miotto of Morgan Stanley.
Yes. Hi. Good morning, Jérôme. Can you hear me now? Let's try again.
Yes. Absolutely.
Okay. Wonderful. Thank you. I'm sorry. I don't know what happened earlier with my phone. So two questions from me as well. Slide 22 shows how you created value via bolt-ons. I think it's a nice slide.
You are currently ahead of the 11% CET1 target, and I hear, of course, there is Basel coming, but what are you most focused on with your excess capital at the moment? At the margin, what sort of business or geographies are you looking to deploy that? And would this be mostly bolt-on, or could it be a larger deal? That's the first question. Then second question, in terms of you mentioned risk migration on RWAs. Is there something that we should start to worry about, perhaps with respect to France in terms of asset quality deterioration or not, really? What are you seeing there? Thank you.
Let me start directly with the second question. No, it's technical. And even in the case where an asset is upgraded from default to sensitive, it happens that there is an increase in the level of RWAs.
So really, it's the consequence of all the migrations that we've seen. But what is the most important is that in terms of actual cost of risk, there is no sign of deterioration. So always the same areas that are sensitive. It's the case for many, many small businesses that are, for example, connected to the car-making business. It's also the case for all the SMEs in the building contracting sector. And we see those sectors as being sensitive since now many quarters, but there is no overall sign of deterioration and no worry on our side. But simply, we have to acknowledge that all the regulation is sometimes having some volatility effect on the capital consumption because of the models that we have and all these elements. This is what happened with a very moderate magnitude, definitely, on the fourth quarter of this year.
The second point regarding the usage of the excess of capital, we do not decide in advance where we are going to be able to make acquisitions because an acquisition is a matter of availability of opportunity, and so we cannot decide in advance. What we know for sure is that we continue to look at bolt-on acquisitions much more than transformational acquisitions because I think the success of the past acquisitions was clearly linked to the fact that this was easy to integrate operations, and I think it's very important if we want to make sure that we take advantage of those operations and that it's a good usage of the capital that we're able to generate, we must make sure that the integration is going to go smoothly.
The best way to see a smooth integration is to make the acquisition of entities that are coherent with what we're doing now and that are easy to integrate.
Thank you very much.
The next question is from Delphine Lee of J.P. Morgan.
Yes. Good morning. Thank you. Thanks for taking my questions, Jérôme. I mean, maybe just to follow up a little bit more sort of on strategy in general in Italy. I get your point on that you don't decide on the landscape in Italy, but sort of what would be the best scenario for you and for Amundi in general? What's on your wish list? Then a second question also on M&A. I mean, you've been very successful on bolt-ons and completely agree that it's easier to integrate.
But if you were to look at opportunities that are slightly bigger, what countries would you focus on first in your view?
Okay. These are quite difficult questions, but let me start with the wish list. The wish list is actually quite simple to design because the wish list would be clearly to be able to develop all the partnerships that we have presently, to conclude new partnerships, and at the same time, to develop the network of the retail bank that we have in Italy. So that's very simple. We want to develop. So we have two ways of developing our activities: directly through our own network and indirectly through partnerships. So the wish list would be to be able to develop at the same time in those two directions and with the same, I would say, magnitude. M&A, which country?
Again, I think that the starting point would be because if we want to integrate what we are acquiring, it means that we need to acquire entities, to acquire objects that are in connection with activities we already have. So it means that by definition, either we make acquisitions in business lines that we already have, and possibly this could lead us to complement the geographical footprint of some businesses. It's been the case, for example, when CACEIS made the acquisition of KAS Bank in the Netherlands. This gave CACEIS an improvement of its footprint in the Netherlands. Or when CACEIS made the acquisition of Santander Security Services in Spain, there was a complement to the setup of CACEIS in this country where CACEIS was not really present. So that's a first geographical approach.
And of course, from a pure retail banking point of view, where we can make acquisitions, the countries where we have already some activities because setting a new franchise of retail bank in a new country, I'm not ruling completely out such a strategy, but it's not really what we have in mind nowadays. And what we know best to do is clearly to integrate some additional setups where we have already some activities.
Great. Thank you very much.
Thank you.
The next question is from Kiri Vijayarajah of HSBC.
Yes, Kiri.
Yes. Good morning, Jérôme. A couple of questions from my side. So firstly, on the interim dividend, or rather the lack of it, I have to say I'm a bit surprised because I know when we talked in the past, you've sounded quite amenable to the idea.
I know you mentioned your big shareholder would probably be in favor of it as well. What's the rationale for not following what your peer announced yesterday with regards to the interim dividend? And then just more of a technical question on the exchange rate effects in CIB on slide 14, the 2.7 billion of RWAs. Presumably, that's from a stronger U.S. dollar. I guess I'm a bit surprised you're not better hedged, but is it fair to assume that there's more of that to come through in Q1 given what's been happening with the euro/dollar exchange rate year to date? Just, yeah, guidance on the non-euro denominated RWAs, please. Thank you.
Let me start with the second point because it's quite straightforward. Actually, we are not hedging the RWAs. What we're trying to hedge is the impact of rate evolutions on the solvency ratio.
So it means that we try as much as possible to have the same proportion of dollar-denominated, for example, capital components as the proportion of dollar-denominated asset proportion in order to immunize as much as possible the solvency ratio. But there is no specific hedging of the assets. We prefer to hedge the asset and liability elements alongside in order to, again, immunize the ratio as much as possible. When it comes to the interim dividend, well, we are swift. We're able to react rapidly, but asking us to react today to something that was announced by one of our competitors yesterday is maybe a little too quick. So I have no, I would say, religion regarding this interim dividend issue because in itself, paying the dividend twice a year or once a year is not creating any euro of additional value. It's a technicality.
So I have no in-principle opposition, and I have no in-principle, I would say, inclination to do so. We are going to see what the competitors do. I take due note that one of the big French banking competitors has stated that it was going to do so. We'll see what we can do, we want to do, we deem reasonable to do, and we'll act accordingly. But again, this is not creating a single euro of additional value in itself.
Okay. That's very clear. Thank you, Jérôme.
Thank you.
The next question is from Flora Bocahut of Barclays.
Yes, Flora?
Yes. Yes. Good morning, Jérôme. So two questions from me as well. I'd like to go back to dividend, but more to discuss the payout here because obviously, you have excess capital. There are moving parts in Italy. There is bolt-on M&A that you do here and there.
I know there is Basel IV also coming. But yeah, what's your appetite here to potentially look into the payout again, or is there absolutely no will from your side to change the 50% payout? And then the second question is actually regarding the announcement today from the regional banks that they're going to buy up to 500 million EUR of Crédit Agricole S.A. shares and that they have no intention to go beyond 65% ownership. I know I should ask them rather than you, but you're also part of the group more generally. So I'd be interested in your view on a few things there. First, why that 65% limit? If you could explain, that would be helpful. And then, obviously, they continue to pile up excess capital in the regional banks. So what is the view once they're at 65%?
Are you considering within the group changes to the capital structure, or there is absolutely no discussion there? You think it's optimal as it is? Thank you.
Let me start with the second question again. 65, it's not a magical figure. It simply was the figure they stated when they issued their first operation of share reduction, capital reduction in the capital of Crédit Agricole S.A. And I think, but again, you had it right, they are better placed than myself to comment. I think that they want to stick to what they've said back two years ago, and it seems reasonable. Is there any change to foresee in the capital structure of the group? There's absolutely no discussion regarding that presently within the group, that I can tell you.
I see, from my point of view, no specific reason why we should want to change this capital structure, which proves to be efficient, which provides the group a vehicle that is very, very capital efficient and that is delivering high return on tangible equity, where at the same time, you have the regional banks that do not look that much to their own return on equity. They look to their level of profit, which is very important, of course. But when it comes to profitability in terms of return, it's not so important for them.
And they want to continue to accumulate capital in order to continue to develop their activities locally and also to contribute to the most efficient coverage of all the capital structure requirements that we have at group level because, again, their very high level of solvency allows us to cover our different ratios, be it TLAC or MREL, for example, with the most efficient set of elements, subordinated debt and tier one and tier two debt at CASA, but mostly CET1 capital at the level of the regional banks, thus leading to a very robust and very cost-efficient capital structure for the group. So no reason to change anything from this point of view. And when it comes to the dividend and payout policy, of course, this is an element we are going to reassess in the medium-term plan, as every time.
But between you and me, I doubt very much that we are going to change our stance. Again, it's proven to be efficient in the last medium-term plan, efficient meaning that we've been able to deliver a very good shareholder return. And at the same time, we've been able to seize opportunities to accelerate our growth. So we think, even if it's not very scientific, that this 50/50 breakdown between dividend and capital that we retain for the development is relevant.
Understood. Thank you.
The next question is from Pierre Chedeville of CIC.
Yes. Hello, Jérôme. One question regarding insurance. I remember that when you launched the previous plan, Philippe Brassac was very optimistic regarding the development with SMEs customers.
I remember at that time that I was a little bit skeptical, considering the fact that these types of clients were very targeted by AXA, for instance, or other pure player in insurance. When I look at your beautiful slide 21, I can see that your P&C business in terms of market share is quite stable. I wanted to have a view maybe on the development and SMEs. Was it as good as Philippe thought at that time? First question. My second question relates to Asia. We have seen yesterday that Amundi is performing very well in Asia, and not only in the JVs, with more than EUR 400 billion of assets under management, ex-JVs in Asia.
And I wanted to know if you can link this development with other parts of your business, especially CACIB, and if you have seen these last years during the plan, a significant increase of your revenues in Asia. And do you see a link between Amundi and other parts of your business in Asia? And last question is regarding LCL. Could you come back a little bit on the impact of macro-hedging this quarter? I did not really understand why this quarter your margin is decreasing. And could you confirm that in 2025, regarding the evolution of rates, this margin should increase? Thank you.
Okay. Insurance and the development of P&C insurance for SME clients. We are patient, and it takes time to really install the development of a new business line alongside between the insurance entities and the Caisse Régionale or LCL.
And so it has started indeed with some regional banks which are quite active. It's not at this stage very massive in terms of global figures, but this is not so much our worry because we perfectly know that even when we started the life insurance business or the P&C insurance business for the household and the individuals, it took a little time before it was completely, I would say, part of the DNA and part of the day-to-day behavior of all our commercial staff on the territory. So I don't have any precise figure to give you right away on this business. It's developing correctly compared to what we had in mind, and it's going to continue to be an area of future development for Crédit Agricole Assurances and for the group. Asia, it's clearly a very important geographical area for Amundi.
You've stated it well because Amundi has decided to focus on Europe, Middle East, and Asia, and we will close in the coming weeks or months the deal with Victory Capital in the U.S., through which Amundi is going to change its setup in the U.S., gaining 26% of the capital of Victory Capital in exchange for the contribution of its own U.S. setup. So it means that on a purely autonomous basis, Amundi is really focusing on Europe, Middle East, and Asia. And it's, of course, developing well in Asia, and it's developing also in terms of cooperation between all the entities that are present in Asia.
I can give you an example because I remember back some years ago now when I was heading the insurance activities. We have a small life and protection insurance business in Japan, and the development of this business was only made possible by the support of CACIB on the one hand and Amundi on the other hand. So it's clearly a policy that we have in every country in which we have several subsidiaries or branches of our large global business lines. It's key that we organize things in such a way that they work together and that they try to help each other to develop their activities locally. So it's the case in Asia between Amundi and CACIB, definitely. And have you seen the revenues progress during the plan? I don't have the breakdown of the revenues, geographical breakdown of the revenues at CACIB.
We can give you maybe some more precise numbers later on, but it's always difficult in CIB activities, you perfectly know that, to tell exactly where the revenues come from because you can allocate the revenues either in the country of the client, in the country of the commercial team, in the country in which you book the asset. So you have different possibilities, and it's a little bit complicated to allocate and to break down completely the top line of CACIB between the different countries. But CACIB is developing in Asia, that's clear. That was the target of the previous medium-term plan, and I can guess that it's going to be a target for the next medium-term plan for CACIB. And again, for the same reason, which is that the largest players are U.S.
They are based in the U.S., and so the U.S. market is very difficult for European banks, be it in CIB activities or be it in asset management activities. And it's clearly why we try to develop as much as possible in other regions where the domestic players are not so dominant. Then LCL macro-hedging, why this decrease in the NII in the fourth quarter, and what do we expect for 2025? You know that the macro-hedging globally is a series of swaps in which we pay the long fixed rate, and we get the short-term rate. And what happened in 2024 and what continues to happen in 2025 is that the short rates are decreasing rapidly alongside with the decision of the ECB. So this is what happened in the fourth quarter, and it's absolutely not unexpected.
But what we foresee in 2025 is that thanks to the continuation of the decrease of the weighted average cost of the customer liabilities, thanks to the reduction of the cost of the market refinancing that we need to provide to LCL, and thanks to the progressive repricing of the loan book with the acceleration, hopefully, of the production of new home loans. And even if the macro-hedging will continue to see its contribution reducing, we will see the stabilization and the increase of the net interest margin at LCL and also at the level of the regional banks in 2025.
But not an increase, a significant increase, not a significant increase.
We foresee a slight increase, to be frank.
Okay. Okay. Thank you. Very clear. Thank you very much.
Thank you.
The next question is from Alberto Artoni of Intesa Sanpaolo.
Yes, Alberto.
Good morning.
Thank you for taking my questions. I have two questions on the asset gathering business. The first is, do you expect a lower rate to continue to support business momentum, particularly life insurance, asset management, wealth management? And the second question is more general. There has been a debate around the active fixed income funds and products, and some people say that going forward, we should expect the same level of competition that we've seen in active equities. Other people say that given the difference between fixed income and equity markets, the competition would not be as tough, and active fixed income products have a much brighter future compared to the active equity traditional products. So what's your take on that debate? Thank you.
On your second question, you were talking about asset management or CIB?
Yeah, in general.
Yeah, asset management, but that also fits into life insurance products and directly wealth management indirectly also.
Okay, so lower rates have an effect on the valuation of outstandings, especially if you have a large fixed income business in asset management activities as well as in insurance activities, and you know that in the insurance portfolio of assets, you have a large proportion of fixed income assets. So it's a mix because at the same time, a decrease in rates is generating a positive valuation effect, but at the same time, going forward, the new assets that you can buy are yielding less, so it's a mix, and I think that at the end of the day, what is important is to be able to adapt to any type of rate context.
We've proven that it was the case for us, both for life insurance activities and also for asset management activities. What is important is the commercial demand in terms of savings products and savings support. As long as our clients want to invest their savings into different categories of savings products, we have the full range of products, and we are able to serve them. When it comes to competition, it's fierce. It's getting fiercer and fiercer in all categories of businesses, be it equities, be it fixed income products. What is important is to be as much as possible a low-cost producer. Size, of course, if you manage in a clever manner your size, size is a good advantage if you want to be a low-cost producer. We have the size, and we have this habit of being a low-cost producer.
It's the case for Amundi, where they have an average cost on their assets under management, which is probably one of the lowest in the market. And it's also very much the case at Crédit Agricole Assurances.
Okay. Thank you very much.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Matthew Rosso of RBC.
Yes, hello.
Good morning. Thanks for taking my question. Morning. Just a couple on consumer finance. So based on just what your assumptions on the provisions you've taken, do you make an assumption on the Supreme Court ruling coming up in the U.K.? And then secondly, related to that, are there anywhere else, any other things in Europe, in other parts of the business where you'd expect similar actions to be taken by European regulators in terms of discretionary commissions?
Thank you very much.
In the U.K., it's clear that it's a very preliminary stage of the case because what we've seen is that the number of claims that we've actually received is very limited for the time being. The second point is that we've seen that the U.K. Minister of Finance is now putting some pressure on the regulator in order to be moderate in terms of setting the framework of potential indemnification, especially, of course, taking into consideration the potential impacts on U.K. banks, but also willing to frame a scheme in which there would be no windfall profit for some of the customers, which we deem perfectly reasonable. All in all, it's a preliminary provision.
We do not know exactly if and when we are going to need to book additional provisions, but what I can tell you is that first point, we will continue to have provisions according to our respective size on the market, which is very limited, again, 1%-2% of market share. So it's a very, very limited proportion of what is going to be booked by U.K. players. Second point, most of these activities were performed at a time where Crédit Agricole Auto Bank was FCA Bank and was a JV between FCA and ourselves, which means that at the end of the day, there is a loss-sharing scheme with Stellantis.
And then the third point is that, to the best of our knowledge, every time there has been, in the last 10 years, a precision given by the authorities on the way these activities must be developed, those new provisions were directly implemented by our setup, our operations there. So what we think is that we've been behaving as accurately as possible in this market in the U.K. So all in all, this is leading us to be very confident that this is not going to be a major issue for us. But of course, we have to monitor the situation closely. And then for the last aspect of your question, do we foresee other areas of such difficulties, such disputes? We do not see any other areas of such a case being opened.
Of course, we disclose all the risk elements regarding our set of businesses in the risk part of the presentations. So there's some pages in the appendix. Of course, in the registration document, we update regularly also on our risk factors.
Thank you very much.
The next question, sir, is from Sharath Kumar of Deutsche Bank.
Thank you, Jérôme, for taking my questions. I still have a couple. Firstly, coming back to French retail, again, expanding a bit on Pierre's question. I would say it was encouraging to see more mortgage loan production pick up. Where do you think is the current appetite for a further improvement in the current political climate? I note that the ECB lending survey suggested some softness in the first quarter versus the prior quarter, so any comments there would be appreciated. Second one is on personal finance.
Again, encouraging to see a good sequential recovery, although I note some one-off elements, but nevertheless, the underlying growth is still encouraging. So where do you see the development of margins and volumes in the wake of lower interest rates in 2025? Thank you.
Excuse me, your second question was relating to which business precisely?
Personal finance or specialized finance.
Okay. Personal finance. Okay. So French retail and appetite of the customers to engage into home loans. I think the appetite of our clients to buy their homes has never weakened. What has weakened is their effective capacity to borrow in the context of the sharp increase in interest rates that we've seen in 2022, 2023, up to the beginning of 2024. So definitely, the willingness of French consumers to be able to become homeowners hasn't changed.
What is changing and improving is their effective capacity to borrow and to buy their homes, and to this extent, the political uncertainties in France do not have any impact because whether there's going to be a budget or not is not really having an impact on your willingness to buy your house, to buy your home, so definitely, it doesn't change a lot, at least for the vast majority of the population. Of course, for the higher end of the population, the person who invests in real estate and who buys properties to rent them, then, of course, they are going to hesitate a little bit and to see whether there is going to be an additional tax burden on this business.
But for the vast majority of the home loans that we grant, it's for people that want to borrow their home, and so there's no impact of the political uncertainties. So what is going to be important is to see how the rate evolution is going to continue. In my opinion, considering the level of customer rates as of today and considering the cost of refinancing, we should see a stabilization of the customer rates, which is coherent with the market rates and which is coherent also with the capacity of our clients to borrow. So we expect to see a further development of the home loan market in France and in our network, both LCL and the regional banks.
Then in consumer credit, the good news that we've seen in the fourth quarter of this year was the fact that the progressive improvement in margins at inception of new loans started to translate into an improvement of the overall margin on the outstandings, which was, again, the good news because we had seen a very sharp decrease of the margins with the increase of refinancing rates back two and two and a half years ago. We were expecting this moment where the price effect was going to start to invert. It's now the case, so we expect a lot from 2025 going forward on this business.
Thank you, Jérôme.
Thank you.
The final question, sir, is from Matthew Clark of Mediobanca.
Hi. Two questions, please. One, going back to the macro-hedging in LCL. Sorry if I missed it. I just wanted to confirm.
Is this macro hedging on the mortgage portfolio? And then second, and if not, what is the macro hedging on specifically in terms of products? And then second question is just on the tax rate. Can you give us a guide for the year ahead, please? Thank you.
The macro hedging is not specifically on one part or the other of the balance sheet. What we do when we define and implement the macro hedging policy is that we start by assessing all the elements coming from the customer in the balance sheet. So we have on the asset side the fixed-rate loans, especially home loans. We have on the liability side different categories of customer deposits. We have sight deposits, which is considered as a fixed-rate liability with a zero-rate cost.
We have also all the regulated savings accounts in which there is a component in the rate which is connected to market rates, and there is another component which is linked to inflation. And then we have also the term deposits in which there is a rate that is set and that depends on the duration of the deposit. And then what we do is that we aggregate all these positions regarding their rate components, and then there is a gap between the assets and the liabilities, and we cover the gap. And generally, the gap is, in a sense, has a sign in which we need to complement and to book some swaps in which we pay the fixed rate.
So it means that we complement the liabilities bearing a fixed rate, the customer liabilities by these swaps in order to match as much as possible the level of rates that we receive, the level of rates that we have to pay, and in order to leave only a marginal gap between both of them. So this is a macro hedging as opposed to what would be a micro hedging in which we would hedge every element of the balance sheet individually. And so this is the situation in which we are, in which we have a significant portfolio of swaps in which, in aggregate, we pay a fixed rate, which is known, and we receive the short-term rate, which is varying every quarter or even every day.
Understood. Thank you.
Okay.
When it comes to the tax rate and this additional tax, so it seems now that we will have the final answer only this afternoon, that the government is not going to receive a non-confidence vote in France. It means that the finance bill is going to be passed. In this finance bill, there is an additional corporate tax surcharge that will have to be paid by large French corporates as we are in 2025. It's clear that the level of corporate tax that we pay is going to increase in 2025.
We do not see exactly where this is going to lead us in terms of amount, but what we can tell is that more or less it looks a little bit like the one we already had to pay back in 2017 with the same type of mechanism, which is leading to a charge that could be possibly for the group between, let's say, EUR 200 million and EUR 300 million. And then there is a repartition of this burden between CASA, the listed entity, and the regional banks, which is not completely set because we are in the same tax integration group. So it's way too early to tell exactly what it's going to represent. It's clear that we will have in 2025 an additional corporate tax surcharge, and that hopefully is going to be a one-off.
Understood. Thank you.
I understand it was the last question.
So again, thank you for attending the call and looking forward to discussing with you soon. Bye-bye, everyone.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephone.