Okay. Then let's start. Good morning and good afternoon, and thank you everyone from Asia still hanging on to this call. My name is Benjamin Goy. It is my pleasure to host Philippe Prasac, Chief Executive Officer of Credit Agricole at our conference today.
Just a couple of housekeeping questions first before Philippe will start his presentation. If you have any questions, please post them to the webcast, and I will pass them on. And Philippe will mention three slides. You can move in the slide deck, So please follow his words. And now the Philippe, the stage is yours.
Thank you.
Thank you so much, Benjamin. Good morning, everyone. Perhaps good afternoon because I'm speaking from Paris, and this is the afternoon for me. And thank you for having me. It's really a great pleasure for me to be with you today, even if it is only by the special channel that is the audio channel.
This is a very special particular situation because, of course, we should be speaking about our results and strategy. But probably results of the first quarter could seem a little bit irrelevant simply because the first quarter was for the most part before the lockdown and the world seems to have changed since then. But I think that this kind of rationale could be a kind of mistake. I think on the contrary that the results and the strategy of the group are very relevant to be commented today. They are not out of place, notably because this time, do I like the fact that this is this time, banks are not part of the problem.
Banks are part of the solution and on the behavior will depend the exit from the crisis. And our results and our financial strengths will determine our capacity to act. I'm convinced that the exit scenario is to a large extent in our hands And I had only one key message, it will be this one. I do feel since the very starting point that a positive scenario is absolutely doable. And it's kind of pity to have to explain that, but of course, I shall try to explain this point.
Three main messages. The first one, and you can follow my words on Slide number four. The first message is that the group, CrediAir Coal and CrediAir Coalessar, started at the very beginning of this crisis from a position of strength. This is very important because of course, the starting point is something so important to be able to cope with this kind of crisis. The first quarter results have only confirmed probably as you read that the robustness of Kreddie Colessa and the group in the continuation of 2019 results.
In fact, the first quarter was very positive until mid March, like 2019 with in all business lines, healthy activity levels, customer acquisitions and high profitability. You can see on the Slide number four that for our solvency, our core attitude of Q1 was 11.4%, 3.5% above the scrip minimal requirement. And 11.4% despite, you know that probably the partial unwinding of switch number two. Of course, I can explain that if you have questions. And I do remind you that Kalliakol Assa is part of a larger group that is a Kediacol group.
And the solvency of Kediacol group is between 1516%, to be more precise, 15.5%. This is why for many years, we decided that we could target only this relative low level of solvency with this target of 11%. DTDT reserves are very high EUR $338,000,000,000. You can see that the LCR of the KEDECO group is at 130%, same thing for KEDECOLESSA, 103% to be more precise. And the cornerstone of this first quarter was probably that for CALZA, the gross operating income was at plus 8%, close to EUR 1,600,000,000.0 for the first quarter.
These are the most important figures of this quarter. And this made it possible to absorb a tripling of the cost of risk and notably because we the cost of risk was mastered at the very low level for many years, thanks to our different policies. And to give you another indication, I can tell you that this performance represents an annualized return on tangible equity of roughly 9% restating for the special impact of IFRIC '21. Of course, I think this is a high level, 9%. And the question is how can we get this high level?
Simply because our starting point was 12%, one of the best, at least of the French banks and probably one of the best of the European banks in 2019. Once again, of course, when you have to face a crisis, the level of your starting point is very, very important. I would like to add this rationale that if we could reach this kind of performance, this is due to our diversified business mix. You know and we often repeat that our model is the universal model. That means for our customer to be able to provide the whole range of different needs of the customer.
And this is, of course, a source of resilience for revenue of diversification. But more than this, this is a natural way to nurture synergies between the different business lines of a Universal Bank. And this is why we do think for many, many years that a diversified business mix linked to the different needs of our customer is something very strong in terms of ability for growth, but very strong to face sometimes where weather is worse, of course. But we succeeded to get this performance, both thanks to our diversified business mix, but both thanks to our prudent risk management for a long time. I'm very pleased to report you that we have a very sound loan portfolio with high coverage ratios for many years.
You can see for the first quarter, for example, that our non performing loan ratio was only at 3.1% and it decreased compared to the same period in 2019. And the coverage ratio is at 72.4% and increased compared to the precedent period. As a conclusion of this first message, my proposal is that you can remind first an underlying profitability able to absorb a higher level of cost of risk And then high solvency level and the high liquidity level, and once again, sorry to repeat that, in a crisis, the starting point is key, and we are very well equipped for this point. My second chapter, my second message is about something I can comment about Slide number 25. And this message is that even all the guidance you are expecting as are difficult to express to state.
The guidance is uncertain, but one thing is very clear and this is very important for us, Casa and CrediCorp Group will withstand the crisis. I would like to add because I do feel that quite easily. And this is due probably in terms of external support, thanks to all these positive impacts of strong support measures from central banks and governments. And I would like to share with you that we had to cope with the crisis in 02/2008. We had to cope with the crisis in 2011 for the sovereign debt crisis.
But we were not in this kind of paradigm with this kind of whatever it takes immediately present to save our activity. And so these positive impacts of strong support measures are there. They are massive and they have made available from the very onset of the crisis. Of course, I could give you many examples about notably the anonymity, the liquidity from Central Banks, but you know you all know that, notably with the pandemic emergency purchase program, the TLTRO III and so on. I have to add, of course, the state guaranteed loans that we can distribute.
And for France, for maximum amount of EUR 300,000,000,000 up to 90% of guarantee. And last but not least, the employee temporarily fell offing paid by government that made the situation of enterprise, of course, easier for being able to face this temporary crisis. Of course, I would like to tell you that with that in mind, it's really difficult to predict exactly the evolution of NPLs. But something for me is easy to be predicted and this point is that they will be mastered. Obviously, they will be mastered.
If I take, first of all, the bucket number three for IFRS nine, that means the real risk bucket three, you can see that the level of NPL may remain low for some time, simply thanks to support measures, of course. So probably you won't see something very important within bucket three at least during the current year. And I do repeat that, thanks to all the measures that have been taken by policymakers. And the important point is about bucket one and two, that means for prudential provisions we have we have not made and that depend from our forward looking. And of course, it depends of our forward looking.
That means from the different scenarios and their weighting, we are speaking some of scenario in U, sometimes in V, sometimes in W, sometimes in L, of course. But what I can tell you is that I feel I'm sure that our economic scenario is as good as anyone's and at least it is slightly more conservative than the scenario that has been provided by IMF. And in terms of proof of that, we could check that for bucket one and two during the first quarter, our level were close to our peers in France and best player in Italy. But most important point, the first point is, obviously, I repeat that, that I'm sure that risk will go on, of course, will increase, but we are absolutely able to master this level. But the second point is that this our model really protect us.
I've already highlighted the level of our coverage ratio. It is high at 72.4%. I would like to remind you or to inform you that on the 2018, for the changeover of IFRS nine, we created an additional provision for EUR 1,200,000,000.0. Once again, it's important to reflect with the patriot level of the outstandings of provisions and not only with the cost of rates that are only the new flows. And my simple conviction that I want to on which I would like to commit for you is that this good capacity of Credia Icolysar to absorb, if it was the case, the same level of quarterly cost of risk as in the 2020.
You can see on this side, another point that is very important probably for you is that our solvency target is unchanged, 11% for many years since the operation that we called Eureka, 11% for cardiac cholesterol. We don't change our dividend policy, 50% payout, and it was accrued in the first quarter for next year. And of course, I do re express for you or restate for you that all dividend options would be reassessed in the fourth quarter after you know that the fact that the 2019 dividend cancellation has been required by SSN. So the conclusion of this second part is that we can and we do remain very confident simply because the positive scenario is doable and simply because it is doable because it depends on the banks and of their behaviors. And this is special and notably for Credential Group that is that represents 25% to 30% of the market share and so of the remediation tools of this situation.
And I would like to share this point with you, note as an optimistic guy, but simply as I try to do my job, I mean, as a scientific economist, I do look at the scenario, I do look at the crisis. And our conviction is that I shall come back on this point. This crisis is very special because we never knew something as deep as this crisis, but it is not comparable to any other crisis because this one is a driven crisis. It is a mastered crisis with a crisis that is being triggered and the end of the lockdown, for example, is mastered as was mastered the very beginning of the lockdown. So the point especially is the point of the bridge between the before crisis and the after crisis.
Last point, and I hope not to be too long, my third message and the third slide you can see on Slide 27, it is about our strategy. What about our group project in this kind of turmoil? What I want to tell you and to share with you is that we are fully busy with achieving our group project because it's absolutely and fully relevant. It is all the same vindicated by the crisis. And this is very important, would like to share this point with you.
Let me very simple. You can see on this slide that our group project has been organized with three main projects, the customer project, the human project and the social project. This has been written. This has been decided on June 2019, not during the crisis. And our conviction was, first of all, the customer project that the current model can be nothing but the combination of digital and human responsibility.
What we can see during this crisis is that, I tell you, as I think that nobody will ever argue that digital only banks could have met the needs of their customers in times like this. The correct answer is an answer of a full fledged model. That means full fledged means digital solutions, digital abilities for customers and human responsibility available and notably in proximity. This is the first point. And the second point of the customer project was to be agile with our technology, and we did we made the proof of our agility when we saw how our technology tools and digital tools were able to prove their robustness, first of all, and then their ability to adapt to this remote banking we had to work with during this crisis.
And I think it won't come back. It will be a new step of this new paradigm of digital using for the banks and human responsibility for the relationship. This is why the second project main project of our medium term plan is the human project. Why? Because of course, when we speak about human responsibility, that means that you have to provide really teams of men and women able on a personal point of view to take this to make decisions for the customer, personal decisions with the right level of judgment and discernment.
And this is really something very difficult, but this is the core project for our human project. And then you see the societal project that is more than ever very relevant in times we are living with two main topic. The first one is, of course, always in front of us, the climate change fight. And the second point was the customer inclusion. It was a special point on which we had a few questions when we launched our medium term plan.
But I think that today, everybody can feel that within this crisis or during this crisis. The most important risk is the fact that we can look at a kind of growth, huge growth of inequality and then a kind of social crisis. This is why in our interest, in the interest of the society and so in the interest of our business, we need to really be very busy, very engaged on the customer inclusion for all our customers and the different territories of our customer. My conclusion and my global conclusion, and then I'll leave you the floor, is that, of course, we are living in an unprecedented situation. But I know that it's very strange when I say that, but this is not a very so complex situation.
For the first time of my life, this is a crisis that we have decided to launch. I speak, of course, in the mouth of policymakers with driven scenario, not precisely, but driven scenario. And so this crisis is as deep as it is able to be driven. This is very important. And so I'm sure that we can face this situation because the consequence is a kind of economic crisis, but the factor at the very beginning is not an economic crisis, is not a financial crisis, is not a banking crisis.
The concern on the point is that we face this situation with a solid health to start with, thanks to everything all the things I've always listed, diversified business mix, profitability, solvency, liquidity, was the fact that we were very prudent and that we gave priority to organic growth to mastering risk during the different last years. The third point is that we are fully operational since the very first day of the crisis, and this is, of course, very important. And that we are in this position to enforce all the decisions made by all public authorities. And this is absolutely in accordance with our raison d'etre that we have stated during our group project one year ago. Well, the last point in conclusion of that is that I can feel today difficult to prove, but I'm sure of that, that during this crisis, I think I'm sure that the global reputation of our group is up.
I mean both in terms of political view, but in terms of usefulness, in terms of attractiveness for different customers, I'm sure that this crisis, of course, is a bad situation, but it's a positive occasion for us to prove our difference and to fuel our strategic attractiveness on the very long term. So that's all for me at this level. I leave you with that. I leave you the floor. And of course, I shall try to answer your question.
Thank you.
Thank you very much, Philippe. While we are gathering questions from the audience, I might start with some questions. Philippe, you mentioned you have strong starting point on asset quality going into this crisis, but you also have some exposures to higher risk sectors or industries, I think about oil and gas, but also aerospace and so on. So maybe you can differentiate a bit on this type of portfolio, what is really the higher risk part? And what would you see as rather low risk and some considerations around your cost of risk view here?
Thank you.
Yes. Thank you for this question. I shall try to answer the more precisely I can. Of course, what I said was very global. That doesn't mean that was wrong.
It was global, and we have to be more precise on certain sectors. And obviously, sectors are more vulnerable sectors. That's right. And I can give you some colors about that. And we have many questions, of course, and we have question from ourselves about aerospace, shipping, tourism, hotels, oil and gas and so on.
What I can tell you is first that on the global outstandings of our loans, 33% of our corporate exposures are till today investment grade, 73%. What did I say? 73 of our corporate exposure are investment grade. This is a very first point. Second point about Oil and Gas, because this was your precise question.
The exposure today is EUR 23,700,000,000.0, and this is 5.5% of our global corporate exposure. But only so this is a relative exposure and only 18% from them of them are on segments which are sensitive to oil prices. So I repeat EUR 23,700,000,000.0 on oil and gas. That means 5.5% of all our exposure and only 18% sensitive to oil prices. And I would like that you could note that I do remind what we lived in 2015, 2016 and in many other circumstances.
But between 2015 and 2019, we already had to cope with prices of oil at $25 and the annual losses were only seven basis points a year. So that's a kind of very useful reference of the real kind of exposure for the future. A special exposure can be commented to is about aircraft. Exposure on aircraft is 14,800,000,000.0, 3.5% of our corporate exposure. And as you probably know, our portfolio is very good quality because it is really asset based financing.
And we are, of course, concerned about the scenario about aircraft activities today. But this is absolutely relative within our outstandings simply because how we decided for D. K. To be Universal Bank, each of these kind of exposures, some of them are really vulnerable sectors. They can't hugely or roughly impact the global cardiac cholesterol group.
And my main message once again is that when I integrate all these rationale, I'm sure that we can master cost of risk. The first point is that because provisions were very high at the starting point, but we are absolutely able, since we are starting from a high level of profitability and a low level of costincome ratio to face, for example, if we had to cope with the same level of risk each quarter. I don't know which will be the right level of risk for the next quarter. But if it was the same level than for the first quarter, it wouldn't be a concern for the profitability and the solvency of cardiac coalesce.
Very clear. Thank you. And then maybe following up on one of your last points, meaning the attractiveness for clients. Could you speak a bit about how you expect the competitive situation to develop in Europe, maybe across corporate or retail, wherever you see major changes happening maybe? And what the opportunities specifically are for Crediasecoil?
Yes, this is for me, this is probably the most important question I have always in my mind because I always repeat it for many years that the first guideline for a CEO is to work on the attractiveness of his bank, his company. Commercial attractiveness because the main trend is obviously your ability to get customers better than others. And this is why we decided at least since 2015 to always give priority to all the new growth and external growth could be simply put an ability if we could bolster the organic growth. And now I think that when you work on the quality project, I mean, your ability to be attractive And to be attractive, you need to be in the universal answer. And when you have the universal answer, you must have universal ability to channels and so on.
You are really working for the future. And so what I see today in terms of consolidation is the next point. The first point is that first, I repeat, this is clearly not our priority for our Credential Groups. Consolidation between banks is a matter that is something a little bit external to our core strategy. But I don't think that even if things are more and more difficult for certain banks, I mean that there is no room today for cross border consolidation for many reasons.
Perhaps, I'm not sure of that, it's just a rational path. There is a room for domestic consolidation, notably in Italy, Germany or Spain. But I do think we do think that the best way today and notably when there is a crisis to face the situation is to cooperate within business or through business lines. Because the best way today, it was right for many years, but it is more and more relevant. The best way to immediately lower your costincome ratio and be sure to enlarge your range of projects is to cooperate on bigger and bigger platform for business lines because these are win win operations, you have immediate gains and you are protecting your brands.
Just let me give you some example. You know that we are the provider in terms of asset management of Societe Generale, but Societe Generale is always Societe Generale. We are the provider of consumer finance for Banco Popular de Milan, but Banco Popular de Milan is always Banco Popular de Milan. We are the providers with the joint venture of custodian solution with Santander. Santander is always Santander.
I mean that this is the proof that when you need and every bank will need to reach a lower level of costincome ratio, appreciating comprehensive quality of the range of solutions and protecting the brands, the only correct solution today is to consolidate through business lines. And I would like to highlight the fact that, I do repeat that for many years, that Credit Agricole Group is in an excellent position. First, because we decided to keep the Universal Bank. We master all the different business lines useful for our customers, and we are probably one of the rare banks in Europe to be able to that. Second point, we have the size.
Third point, we are organized for all these business lines in legal entities. And fourth point, as we are a group, we are used we are a seasoned person for providing solution for many banks, notably for our internal bank. So my view is that probably some consolidation could happen on domestic market, but the right solution, the best solution for many, many competitors will be to accelerate in terms of cooperation to business lines and our position is really great.
Thank you. Maybe in the interest of time, one last question, that is on capital. You mentioned 11.4%. You had some adverse impacts in the first quarter. So I was just wondering what is the glide path here for the rest of the year when I look at some negative impacts, call it risk inflation or risk rate inflation, but also plentered the European Commission proposals, some of the OCI might return.
So maybe some thoughts around the capital development going forward. Thank you.
Thank you. The best thing I can provide to investors for many years is that for Credit Agricoleca, capital concern doesn't exist for since 2016 since Eureka. You have with KLIA ECOLASA very stable vision. Our target is 11%, we don't change. And we don't decide to change sampling because for many years, this is a red target.
And sampling for this crisis, because many questions are about could you lower this level of 11% since, for example, you can have the benefits of regulatory requirements that have been decided to be decreased. I would like to answer first that the stability of CrediCorp Group is due to the solvency of the group, CrediCorp Group, 15.5% of solvency. So we are very comfortable with our target within Credelco Group of 11%. And I do remind you that Credelco, since it is included in Credelco Group, is a nonsystemic bank compared to other peers. What do we see for the foreseeable future?
We can see first regulatory decisions that have been made in terms of decreasing requirements. And for KDI Cola Sartre, it was a decrease from nine point seven eight point seven percent to 7.9%, first point. So this is very positive. But we have, on a concrete point of view, many moving pieces going forward. Just to share the rationale with you, when I'm just looking to add to a, of course, they should increase next quarter, first because of downgrading of counterparts.
We show unfortunately, as many, many banks, a new one off effect on the second quarter since the fact that we shall add in our balance sheet the state guaranteed loan for the first two months that are not well rented. So this is a one off effect. We could have a possible increase in the equity, the continued value of insurance contribution if credit spreads could improve. But on the other way, that could have a positive impact on the core equity Tier one via OCI reserves. And EU is just looking at new decisions to make us more comfortable.
And I saw today that ECB has stated a favorable opinion about a new kind of quick fix about the fact that we could they could lower once again the requirements about CRR2 and notably about the future leverage ratio. So all in all, this is not stable. But you can simply remind that for us, capital is not a constraint for Cloudera and Colossal. So we are comfortable with that and we should be able to maintain this target or to fix the most relevant target that we could decide to fix in the future, when the future will be more easier to be predicted, of course.
Very clear. Thank you very much, Philippe, for joining us today, and I hope we can welcome you in person next year. Thank you.
Thank you so much. Bye bye.