Earnings Call: Q4 2011

Feb 23, 2012

Ladies and gentlemen, together with Bernard Delpit, we are delighted to welcome you once again at Montrouge. Thank you for being here. We are going to present our full-year 2011 results. I will share with you the broad strokes, and my friend here will go further into details. We will talk about the Crédit Agricole Group and Crédit Agricole SA in particular. I would like to insist on the fact that our net profit is positive, EUR 812 million in total. This is a major development. Despite tough economic conditions, this means that business is brisk and that all of our businesses have weathered the storm pretty well and have performed solidly. I would like to give you two more figures. The Crédit Agricole Group has revenues of EUR 35 billion. I would like to insist on that because we often refer to solely Crédit Agricole SA. From an equity point of view, this makes sense. The Crédit Agricole Group has a scope and responsibility that leads to revenues of EUR 35 billion, which means that it is a leading banking group. Revenues are up 2.7% over the year. Our gross operating income, that is revenues minus expenses, is EUR 13.5 billion. This means that the group is able to absorb the impacts of the crisis, and this ability is significant. The GOI is up significantly over the 2011 fiscal year. Obviously, our retail banking, regional banks, LCL, and also international retail banking businesses are working well. Cariparma is something worth noting. Also Amundi, Life Insurance, Private Banking are businesses that are delivering solid performance. We have a balanced deposit-to-loans position in the various countries where we operate. The regional banks have recurring business. The operating income, after taking into account cost of risk, is between EUR 5 billion, and net profit is EUR 1 billion. As you know, Crédit Agricole SA has a 25% equity stake in the regional banks. Those are the main results. We will get back to that, but I would like to emphasize the fact that in terms of net profit, we are talking EUR 4 billion for Crédit Agricole SA. You need to take off EUR 5.5 billion in outstanding impairments or restructuring costs. To keep a long story short, EUR 2.4 billion impairments of sovereign debt increase, in Puerto Rico in particular. Also, EUR 2.5 asset impairments. We are talking asset write-downs for assets such as Bankinter, and also EUR 500 million worth of restructuring costs. So EUR 5.5 billion worth of outstanding impairments, EUR 4 billion worth of business. Without those outstanding items, our net profit would be on a par with what I just referred to. This is what I wanted to emphasize. What I said about impairments, the majority of that has no impact on our cash position or on our solvency ratio. This means that the solvency ratios for the Crédit Agricole Group, after the EBA tests, stand at 9.6% at December 31st of 2011. We were the only French bank that was not required to increase its capital requirements because we are already on a par, and we have a target CET1 Basel III ratio of 10% by the end of 2013. This is what I wanted to say in just a few words. Of course, despite the hints that you may have heard here and there, we are continuing to go about our business as bankers. We provide support to the French economy. We provide support to SMEs and small businesses. We provide financing. We support markets, particularly in terms of Forex risks. This is part and parcel of our job. Crédit Agricole SA has a negative income of EUR 1.5 million, which means that no dividends will be paid out. We have already undertaken an adjustment plan in areas such as CIB or SFS. This means that we can lay the groundwork for the future. At the end of the day, in 2011, we coped with reality as it stands. We took the write-downs that we were supposed to take in order to brace ourselves for the future and approach 2012 with proper visibility. Economic conditions are tough, but we are ready. Let me hand over to Bernard. In keeping with tradition, I'd like to talk to you about the group at large, then about Crédit Agricole S.A. We'll talk about liquidity and funding, which are key fundamentals and have been key fundamentals since this summer. Key messages now with regard to the group as a whole. Net income group share EUR 812 million. Loans outstanding EUR 799 billion, including EUR 478 billion for retail banking in France. Revenues are up 2.7%. Gross operating income is up by 1%. GOI stands at EUR 13.5 billion. The regional banks have an operating income of up to EUR 5 billion, and our EBA ratio is 9.6%, in line with what regulatory authorities and ratings agencies want. We are solvent. I'm not going to discuss the economic environment, as you're fully familiar with it. Likewise, I'm not going to discuss the stepped-up timetable in terms of solvency. That is something that you're fully familiar with as well. Let me get back to the figures for Q4 2011 as well as the full year 2011. Revenues are up 2.7%, reaching EUR 35 billion for Q4. We find a 2.5% drop. This is due to the tough economic circumstances and also due to the adjustment plan. Operating expenses are up 3.7%. In this increase, we need to factor in the scope impact and also restructuring costs, which are focused particularly on Q4. This means an 8% growth. Cost of risks is up 29.2% for the full year and 79% for Q4. This is mostly due to the cost of the PSI plan. We'll go further into details later. Now, negative impact on equity affiliates. This is pretty much in line with what we announced in December. As far as goodwill is concerned, the EUR 1.5 billion that we already talked about with regard to CIB leasing and factoring in Italy and in the Ukraine. So in total, for Q4, net income is actually a loss of EUR 2.5 billion. But net income group share is EUR 812 million. A few more figures that I'd like you to take home. Origination comes to EUR 96 billion for French retail banking, that is regional banks plus LCL. Because of the total customer assets have increased by EUR 40 billion, for every EUR 1 that is depreciated, EUR 2.50 extra are injected into our deposits. The loan-to-deposit ratio has improved by 2 points. Let me get back now to our profitability. Our quarterly revenues have topped EUR 8.5 billion. This is in line with our Q4 performance last year. Costs are up 1.9%. We need to include the NICE project, which is a major project, which will of course improve productivity over the long term. The cost/income ratio for the group is 61.6%. This is in line with our main competitors in France. Gross operating income before adjustment plan costs are over EUR 14 billion, and in Q3, that was EUR 3 billion before the cost of the adjustment plans, which we unveiled in December. Let me say a few words about our retail banking businesses. This profile remains stable in terms of income and profit. Retail banking accounts for 61% and 58% of all our revenues and also GOI, not forgetting asset management, which is a major business, and I'll get back to that later. Our solvency ratio. We have a Tier 1 ratio of 10.2% at December 31, 2011. I'd like to insist on this figure. This is an unfloored Basel 2.5 standard. The floor is going to disappear. On a floored basis, we're talking a ratio of 9%. The EBA ratio is 9.6%. As you can see, risk-weighted assets have increased. This reflects the impact of the capital requirement directive on the group. Crédit Agricole S.A. Revenues for the year are up by 3.3% to EUR 20 billion. We have to factor in the impact of the adjustment plan, the cost of Greece, and restate it for all those factors. All the way to the right, you find that revenues are up by 4.2% for the year. Operating expenses have increased by 3.2%. Again, you have to factor in the costs of the adjustment plan, the cost of Greece, and restate it for those factors. Expenses are stable, minus 0.7%. Gross operating income is up by 3.3% on a reported basis, reaching EUR 7.1 billion. Restated for those factors, it is up by 13.5%. Cost of risk has increased by 50% over the year. This, you need to factor in part of the non-performing loan disposals. Also, you need to factor in the cost of Greece, government bond impairments, and also the Emporiki situation. Restated for those factors, cost of risk has increased by 11.3%. You need to factor in the increase in cost of risk for CACF, more specifically Agos. Also for CIB, for specific individual deals, and also a EUR 50 million increase in Cariparma. I'm not going to get back to the equity affiliates or goodwill aspects. I already discussed that. There has been no change since our announcement on December 14. In total, we have a loss of EUR 1.4 billion over the year in terms of net income group share. Let's drill down on Q4, if we may. Revenues for CASA are up by 4%, restated for the factors that I referred to earlier, we're talking 4.2%. Operating expenses for Q4 are up by 3%. This is mostly due to the restructuring costs. Excluding those costs, expenses are stable. Gross operating income, a little more than EUR 7 billion for Q4. Cost of risk, EUR 1.8 million. Operating income is negative, and again, the impacts are concentrated into Q4. We're talking the impairments of equity interests and goodwill. So loss on Q4 in excess of EUR 3 billion. A number of highlights should be emphasized. Business is brisk. Performance is good in terms of retail banking and asset gathering or asset management. Loans outstanding are up for LCL and Cariparma. In terms of net income group share, it's been a good year since net income group share is up by 3.4% and for all of our asset management businesses. Now, two business lines have entered into an adjustment phase since September: CIB and SFS. Globally speaking, performance over the year is good. It is true that Q4 reflected a slowdown in financing and market activities, and also provisions have been booked for restructuring plans. The situation in Greece has weighed on Crédit Agricole assets results. A negative EUR 2.4 billion impact on the net income group share. Revaluation of debt issues has had a positive impact over the year, and also for Q4, but to a lesser extent than in Q3. Again, goodwill impairments are weighing in significantly. There is no impact on cash or no impact on solvency. I said that time and again. Let us have a more material analysis of our performance for 2011. The first half-year scored a net profit of EUR 2.3 billion. The second half-year, EUR 1.6 billion. So in total, almost EUR 4 billion. You have to take off the EUR 2.4 billion impact of the cost of Greece, the adaptation or rather adjustment plan. This means EUR 1.47 billion loss over the year. This is to enable you to identify what would be the restating for Greece and the restructuring plan, as well as the goodwill impairment on each individual line of the plan or the income statement. If you have questions, then I will answer them later on. On the support plan to Greece, you may remember that during the second quarter, we had booked EUR 146 million charges, the rest being stored in the balance sheet, it is on equity. At the third quarter, we had a 60% of impairment. The impact being EUR 637 billion on the net result. Fourth quarter, the exact figure is 74%. So 60% up to 74%, meaning that there is an impact on the cost of risk of EUR 220 million, and EUR 760 million on the result. So altogether, the plan for Greece represents a risk cost of EUR 1.3 billion, an impact EUR 143 million. Now let us focus on the adjustment plan. You may remember that we anticipated the reduction in the financing requirements of EUR 50 billion from June 2011 and December 2012, out of which EUR 21 billion were obtained at the end of December, nine on retail banking, one in financial service, that is specialized service, 11 on CIB. So meaning that it is more than 40%. You have the cost, the impact on net income, EUR 482 million, meaning an impact on revenues of the cost of risk with sale portfolio and restructuring cost, or again, projects of restructuration, which have been booked from this year onwards, EUR 422 million. Weighted risk. Our plan provides for a EUR 23 billion reduction by the end of 2012, and then an additional EUR 25 billion. We have already reached a significant proportion of those at the end of December. I will come back to this when I mention the financial structure for CASA. We have closed in a bit of a very important deal. As a matter of fact, the reduction in weighted risk is 30% on the like-for-like basis. That is at the end of February 2012. Let us move on. On the retail with banking, start with retail banking in France and regional banks in France. The loans have gone up by more than 4% in the year. The bad loan rate at 2.4%, that is stable, same thing as last year. The amount of the inflow of loans has gone up. It is 15.2% and 5.3% because of life insurance collection has gone up by 5.5%. Altogether, a slight improvement on the rate deposit to credit, and we continue working with regional banks. Coming to the operating income, which has gone up by 5.5% in excess of EUR 5 billion altogether for the year and especially the fourth quarter was good. Revenues have gone up by 1.4% throughout the year, minus 1.3% for this quarter due to the slowdown in the production of loans and a slowdown on commissions or fees. Operating cost plus 4% for the year, take into account the specific effect taxes on banks as well as the NICE project. Now, 55% being the ratio, the cost/income ratio, the retail banks are doing very well indeed. The cost of risk, EUR 1 billion for the year, we see it rather low, especially during Q4. There has been no collective charges on Q4, no provisioning, and the cover rate is at an 8%, meaning that it is extremely conservative. Now I would like to focus on the contribution made by retail banks to CASA in excess of EUR 1 billion for the very first time. So very good figure there. Coming to LCL. Very sharp, very quick growth, on balance sheet deposit up by 16%, more than that. 7% for the whole year-on-year. And I would like to highlight the improvement by 7.7% of the ratio as well as same thing for the second quarter or even higher than that because it is 115% at the end of December 2011. This of course makes an impact on revenues, which is down by 1.5% year-on-year and 1.4% from Q3 to Q4, which reflects the cost of loans and also the fact that fees are not increasing at a similar rate. At the same time, although there is a seasonal effect in Q4, that is on cost, you see that costs are contained, minus 0.6% year-on-year. The cost of risk is down for 2011. It did go up in Q4 due to a number of charges which were booked at the time. Altogether, it is 2.6%, and the cover rate has gone up. It is 75.5% at the end of the year. At LCL, same thing as last year, EUR 675 million. Still on retail banking, but international banking this time. I would like to focus on Cariparma, which has incorporated a number of new branches, so you have to check for the scope. And they have been working very hard, and they have been able to break even. I mean, loan to deposit or deposit to loans. So they have improved their position, and this includes the scope effect of easy 18% on-balance-sheet customer savings, as well as profitability from operations is quite good. The revenues, like-for-like basis, has gone up by close to 5% year-on-year. Operating costs are sustained, but they do incorporate the fact that we have acquired new branches and the cost of incorporating the new network. Restated, the progression is 0.6% for the year, which shows that costs have been adequately contained. The cost of risk has gone up during the year. However, in percentage of outstanding loans, is stable. 83 basis points, but we have entered a specific charges at the end of the year. This is why the cost of risk has increased around that time. Taxes, positive impact of a tax relief. In Italy, there has been a change in the deadlines for the payment of certain taxes. Now, setting aside the technical impairment of goodwill, you see EUR 191 million Cariparma. In Q4, you see EUR 180 million for the year. The Cofix is 68%, cost to income ratio 50. Now, another glance at our retail banking activities abroad. We have a surplus of deposits over loans. Business is very sustained in Poland. In particular, you see the positive revenues, EUR 116 million, excluding depreciation for Pekao Bank in there. The net result is EUR 8 million, although the environment of the overall situation is difficult. Moving on to Emporiki. We have continued to reduce the exposure of Crédit Agricole SA in terms of direct exposure or direct financing of Emporiki. You see in March last year, EUR 11.4 billion went for the refinancing and exposure. Refinancing is down to EUR 5.5 billion at the end of the year, and the capital exposure is EUR 1.3 billion. The outstanding loans has gone down by EUR 100 million year-on-year. Costs, we are working very hard at management to bring down costs. We have set up a staff departure plan. The cost-income ratio at Emporiki is positive, EUR 150 million. The operating cost has gone up in Q3 due essentially to the staff departure plan that I have just mentioned. The cost of risk is, of course, the main concern there. The cost of risk does incorporate the share of Emporiki in the support plan to the Greek government. The rate of bad debts has gone up, but majority of it is covered and 58% for cooperative credit. The situation on the side of asset management, starting with Amundi. Let us look at the results of EUR 413 million for the year. The income is up from last year. On the same table, 53.3% is the cost income ratio at the end of the year, showing that our operations are extremely buoyant at Amundi. Of course, Amundi was faced both to a slowdown, but also the market effect with market shrinkage. This is why there has been a decline in loans or cleansing of 7%. I would like to highlight a few commercial success stories. Gains in employee savings plans. Also, positive figures in Asia, inflows in Asia. Offshore funds abroad contributed a significant inflows. CACEIS positive net result, EUR 164 million for the year, that is up by 12%. Alliance remains stable, even in Q4, assets under custody are stable. The funds under administration, Fortis has gone back to their parent company, which accounts for the significant decline compared with the figures in December 2010. Private banking. Good results in private banking, EUR 113 million is net income. That is up by about 5% for revenues. Assets under management, stable, minus 5%, but this can be totally accounted for by the Forex effect and market effect. Moving on to insurance and other activities. Life insurance, it is a complicated situation, especially in Q4. Predica has been able to maintain their share. Throughout year-on-year, we are seeing an increase in net deposit of EUR 2.5 billion. Property and casualty insurance, a very good year. You see 1.8 million in new business and 6% rise in number of policies, 11% growth in premium income, which is slightly higher than market, and a good year on creditor insurance as well, +8% in revenues. International subsidiaries have been negatively affected, especially in Portugal, and this is due to the general situation there in that part of Europe. Insurance net income, EUR 386 million, and for that last quarter, EUR 59 million. Take into account the impact of the support plan to Greece, which was significant, of course, in the insurance business. The net result of insurance, disregarding Greece, is in excess of EUR 1 billion. That is up by 13% from last year. As you can see, the impact of tax increase on corporate value added, provisioning are not accounted for in the calculation of the new French taxe professionnelle, tax professional. Hence this result. The fundamentals that core activity remains robust, up by 1.3%, and the claims over contribution ratio, claims ratio is 68% or in excess of it, which is really very good for that type of business. The consumer credit is next. We manage the consumption of cash in a very conservative way. You see the +0.3%, highly conservative. We have been managing the cash situation, but also the impact on consumer credit and the impact of the new Lagarde piece of French legislation. Second quarter, down by 0.6% for cash consumption. We intended to diversify sources, securitization, and deposits in Germany, major inflows there. With enter provisions for the last quarter, EUR 103 million, reflecting the restructuring cost as well as the sale of bad debts, impact being EUR 100 million. So in total, the cost/income ratio is down to 40%. So 1.8% is the fall in net income group share for the year, and a loss of EUR 30 million for the year. This taking into account the adaptation plan. The trade, which is adapting, leasing, and factoring. With the slowdown in growth, the outstanding lease finance has come down by 3% from Q3 to Q4. Revenues in factoring has gone down by 0.4% worldwide, it is still going up in France, though, by 4.9%, while it is 10% for the year. The kind of result, take into account the division of goodwill impairment of goodwill in Poland in particular, and the impact on the cost of risk, and this is due to the situation of Emporiki Leasing, where we have revalued the goods, and we have to push up the cost of risk, provision being pushed up by 93%. That is for the fourth quarter. CIB now. CIB is undergoing a transformational process. There are lots of outstanding items, and you can find more details about this in the appendices. In 2011, net income was down EUR 147 million. You need to factor in revaluation of debt issues in particular. Excluding the PSI, excluding the positive impact of revaluation of debt issues, we have a EUR 1.1 billion net income with a strong decrease in Q4 to EUR 85 million. The impact on revenues of portfolio disposals to the tune of EUR 258 million, charges to provisions for restructuring EUR 336 million, and also goodwill impairment of more than EUR 1 billion. I would like to insist on the fact that CIB's liquidity needs have been reduced by EUR 11 billion compared with the last half year. Expenses are down before restructuring costs. Expenses did increase in Q4 because those restructuring costs were taken into account. Cost of risk was up. There were specific deals, no specific additions to collective reserves. Also, the cost of discontinuing operations have been contained. Now, financing activities. Q4 has been marked by liquidity constraints, as well as loan portfolio disposals. Structured finance. Net income is down by 2.7% year-on-year in Q4, and down by 10% quarter-on-quarter in Q4. Commercial banking revenues are also down significantly, particularly internationally, and cost of risk reflects what I already talked about, with a EUR 206 million charge. There is an increase in specific reserves. There is one deal that has been made public. Our losses with MF Global, which went belly up in October. Now, our stock of collective reserves is stable for financing activities. Now, capital markets and investment banking is down significantly quarter-on-quarter, particularly for the treasury business and fixed income business, generally speaking. There is a 23% decrease between Q3 and Q4. I would like to insist on the fact that the value at risk, the regulatory ratio at the end of the year was extremely low, EUR 15.6 million, which is about one-third of what the competition is. Discontinuing operations. We continue to actively manage our portfolio exposures. In particular, there is a negative impact from the disposal of a RMBS portfolio to the tune of EUR 132 million. I would also like to refer to the EUR 125 million negative impact in revenues on valuation of CDOs in the trading book. Our correlation business, you may remember that provisions were made in Q3. They were partially reversed in Q4. There is one highlight, however. In the beginning of 2012, there is an agreement that was signed with BlueMountain to transfer market risk exposure in the correlation business, and it is now in effect. With regard to the financial structure, the shareholders' equity structure. Tier 1 capital is down by EUR 4 billion. Under the Switch program, we have repaid part of the T3CJ notes and also the shareholders advance. Of course, in return, there has been a drop in RWAs. The Tier 1 ratio is stable, 8.6% compared with the end of last year. I would like to dwell on this bridge. Changes in RWAs to explain how things have happened since the month of June. There is a EUR 52.7 billion drop due to the Switch program. An increase of EUR 25 billion. A negative impact of EUR 5 billion for foreign exchange impact. We also need to factor in the adjustment plan. Also, the gains on disposal for BlueMountain, EUR 13 million. Also a further sale of our MBSs. As you can see in total, you have got the impact of the adjustment plan, all the operations that were carried out in early 2012. So in total, RWAs are down. Moving on now to liquidity and funding. Our short-term debt is EUR 127 billion on December 31, 2011. We have a surplus cash flow of EUR 21 billion. The group has adapted to the U.S. dollar liquidity shortage. Also, the percentage of debt from the U.S.A. is 4% of our gross short-term debt, down significantly since the beginning of the year. However, we do have access to U.S. dollars outside of the U.S. region. In total, the proportion of debt in U.S. dollars is 18% of our gross short-term debt. With regard to CIB's funding requirements are EUR 11.6 billion lower since the month of June. As you can see, there is a EUR 65 billion drop in our short-term debt since the month of June. This reflects both the impact of our adjustment plan, restructuring efforts of our debt structure. In particular, medium- and long-term debt is substituted for EUR 10.7 billion worth of short-term debt, and also our use of liquidity reserves. As you can see, our reserves of available assets have increased from EUR 103 billion to EUR 110 billion. So if you do the math, our liquidity is enough. We have enough reserves of available assets. Now, medium- and long-term funding. I would like to remind you that our 2011 program is 120% complete. Average term is 6.4 years. The 2012 program is well underway, 37% complete at February 20th, 2011. EUR 4.4 billion have been raised since the beginning of the year, including 28% senior unsecured. We have a longer average term, 9 years this time. Over and beyond this issue, our program, we have in our toolbox, bond issues to our networks. We have private placements with CACIB, and we also have a CACF securitization. Thank you very much, Bernard. Now, if you have any questions, we are on hand, and would like to say hello to those of you who are listening in on the telephone. Let me now open up the discussion. Good morning. I have a few questions. My name is Pierre Chevé. With regard to CIB goodwill, residual goodwill, we are talking EUR 1.4 billion. What is your position in terms of CIB goodwill, and what have been the main assumptions in terms of your impairment test? Why have you maintained residual goodwill at EUR 1.4 billion? Because CIB is probably going to have a hard time throughout 2012. It might break even, but might incur slight losses in 2012 considering the ongoing adjustments being made. Question number 2, with regard to the profit warning issued on December 14th, 2011. The consensus predicted a negative EUR 2.5 billion. Now, we know there is a EUR 182 billion reduction in funding requirements. But there is a significant gap between today's statement and the December announcement. We do not understand this EUR 500 million difference with the consensus. Visibly, the adjustment plan has had a much higher impact than announced. So how do you explain the gap? How do you explain the difference? Also, on December 14th, were you not in a position to fully appreciate this gap? Last question. You do have access to senior unsecured. Is there a correlation today in terms of how you invest your debt on the unsecured market, in terms of the level of collateral deposited with other sources of funding, corporates, for example, or even the ECB? How does it break down today in terms of the investments that are willing to grant unsecured debt, in terms of the level of collateral endorsed elsewhere, which of course, makes your position more vulnerable? Once you go and ask for LTRO in about a week. Let me answer your first question regarding residual goodwill for CIB. We looked at the impairment test for this structure. We took a very close look at the prospects for increasing income over the next few years. Of course, 2011 was a difficult year. 2012, we should achieve a balanced position and also reduce expenses because of the unrealized impact of our agreements with the social partners. There will be a 6-month lag. Obviously, 2012 will be impacted. But in terms of our prospects for 2013 and 2014, CIB has a different model. It is organized differently, and its profitability model means that we will be able to maintain the residual goodwill level with medium-term prospects that are sound. This is the exercise that we engaged in, as you well know. For example, with a number of structured loans, we organized a rotation system. Also origination of those loans, revenues for that is significant. We are switching from one foot to the other. This will happen in the first 6 months of 2012, but then we will break even, and this is why we made that decision. We did the math, and we agreed to maintain residual goodwill. The interpreter, sorry. The speaker was not speaking in the microphone. We used to be told that CIB would be EUR 1 billion net result as an average, excluding any major impact or high volatility, but the CIB should generate EUR 1 billion per year. This was in the 2014 plan. You decided to discontinue this plan, to scrap it. At the moment, what about the CIB, once it has been reformatted or changed to meet your wishes? What will be the net income by then? Approximately, of course, you cannot simply quote the figure for 2014. What it would be approximately? I will ask Jean-Yves Hocher to say a few words. He is the boss of CIB. The guidance for 2014 was more than that. Jean-Yves Hocher, would you care to say a few words on CIB, please? He is the one who is in charge. The assumptions underlying our calculation are as follows. On revenues, we anticipate a rather moderate increase in the revenues of a financing bank because we do not have much leeway. Still, it will go up. As Jean-Claude said, the rotation of assets is such that we should keep an adequate level of origination generation. On market banking, our assumption is that revenues will go up. Why is that? Because on flow products, especially a yield derivative, CACEIS is shifting from a structured model where the margin is high. They will not go on with this model. They are moving on to, let us say, a plain model. The level was extremely low for CIB and will go up to a more traditional level for CIB. Second feature in this trend, market banking. Bonds. The bond market is bound to open up in Europe. Credit will end up being more expensive, so access to bond financing will be highly profitable for corporate entities. This is what we see happening, as a matter of fact, at the beginning of the year. Then it might be that the market last year was extremely slack. It is not the case anymore. Moderate improvement in this field, which is the specialty of CACEIS, but market revenues will go up. Lower expenditures, since the number of people working in the banking sector will go down tremendously next year. Revenues in CIB in excess of EUR 1 billion net per year, which is not as high as what we anticipated originally. I think it was EUR 1.7 billion, so we'll be above EUR 1 billion. This is the math. I'd like to answer Pierre on the difference between the consensus and the current present situation. It's not so much the cost of the adjustment plan that comes into play. Remember what we said on December 14. We said that the cost would have a EUR 500 million impact, and we are less than that, EUR 482 million. But on December 14, we hadn't seen the last layer, as it were, of the plan for Greece. So 60 up to 74, 75. We were missing that information at the time. Clearly, as you can see, this makes an impact on the cost of risk, EUR 220 million, and on net revenues, EUR 260 million. A number of things were restated regarding leasing, provision entered for leasing, trading in Greece, and Ducato in Italy, where we've entered provisions on the old portfolio, Ducato, where we've entered in additional costs there. You may remember I mentioned this when we met in early January. I did tell you there would be an adjustment. There was such an amount, and the other item too. As to the adjustment or adaptation adjustment costs, we're totally in line with the December guidance. On the LTRO and unsecured. I can't see any connection between our emissions issuance pattern, secured, senior, unsecured, and what we use for collateralization purposes. In other words, the part has been pledged, or which has been used for covered bonds. So we monitor this very closely, but so far, there's no link. Our LTRO, you should consider this makes a very positive impact on the market, as it's useful. It brings prices down. This is what we can say at this stage. So we are rather optimistic when it comes to this initiative taken by the ECB. Good morning, all. Alex Koagne, Natixis. I have a few questions. Number one on the 2012 guidance that you issued at the beginning of the year, the annualization of the results for the second half of the year, EUR 1 billion. So there'll be EUR 2 billion for 2012, before the dividends plan kicks in. Can you confirm this guidance? Second question, on Greece, LTRO. Do you intend to move on to the second one? Third question, concerning Emporiki. What about assets that might help you lower the refinancing requirements by making use of these assets? Also concerning Greece, we've seen that one of your competitor has made use of a fund made available or advance made available by the Greek government. Would you envisage doing the same thing? Then you said that insurance, a gain or the increase on what? Insurance. The amount of the capital gain. Thank you. LTRO, I think we've already given you the answer as to situation December and the figures submitted in February. I think we were clear enough on this point. As to the competitor who has accessed ELA, I think only Greek banks can have access to this facility. Banks held by Greek shareholders. The other shareholders don't have any access to that facility. Of course, we're putting pressure on them. We'd like to make use of this. Otherwise, it's a situation of distorted or unfair competition. Of course, we will continue putting pressure on increasing deposits and bringing loans down. Our exposure will be impacted positively, and we also make use of a number of means in order to reduce it. The strongest pressure is on access to ELA. We are monitoring the situation, but other people are at stake, and we claim, we bring our claims to the authority. On the revenue share, the capital gains, the impact of EUR 200 million on the net revenues, I think. What about guidance? I did not give any guidance in early 2012. What I did say was that to me, 2012 would be more in tune of the last quarter of 2011 than the whole year because there were two parts, two very different situations in 2011, and this is what we are showing in the bridge graph. Not the recurrent, but the current second half will be lower than the first half of the year. I think that we are revising our model. In 2011, restructuring cost of EUR 482 million were born there. Of course, both half years will be felt. The full impact will be felt in 2013, but even in the second part of 2012. Other questions? Jean Sutordjow. Good morning. Back to LCL and the top line of LCL. I would like to understand better what happened in terms of refinance costs. What are you talking about, technically, about nature of deposit transfer? Are you talking about the refinancing of the gap? To what extent can we anticipate? What does it mean in the longer term? Let us ask LCL manager to say a few words to this, and then Bernard Delpit will add a few words on the financial part and the Crédit Agricole Group. Right. LCL, with our position, wanted to make sure that we were responsible financers of the economy. You have seen the 7% changes in loans outstanding compared with the situation last June. The deficit cost income was significant, about EUR 20 billion. We decided we would reduce it during the second quarter and significantly so by going for balance correction and doing less in terms of off-balance sheet collection or deposits. So we went as low as 215 costing ratio at the end of last year. We have collected more money in saving loans and significantly so. Corporate loans, about EUR 2 billion, which had impact in the net revenues of about EUR 20 million. Commissions on life insurance, which are not in our books on December 30th, contrary to the situation the year before. This is what I had to announce. Then the unfavorable impact on securities, the economic situation being unfavorable. Where in the past, it made a very positive contribution on the balance sheet, and of course, the fourth quarter was not good. So this made a significant impact on our results. Any other questions? Sorry. Yes, on Emporiki. Now, if one disregards the PSI group and the good impairment in 2011, we are talking, I have done the math. The impact on the net income group share is -EUR 1.2 billion. What about next year? One can expect, in view of the further deterioration of the situation in Greece. Are you expecting similar levels, or in view of the fact that you have improved the provisioning of the charges and that the cover rate is 74%? Have you reached the end of the tunnel? Should we expect a further loss, about EUR 1 billion for next year? No, we hope we are reaching the end of the tunnel. However, we are realistic, and we think that in 2011, we'll have to enter significant charges and costs, maybe not as high, but we're only in mid-February. I'm not sure as to the Greek economy and whether plan that was decided recently is of such a nature that the economic situation in Greece is bound to improve and the economic situations will improve. But it would take more efforts on their part. So the level of provisions will be lower than this year. But still, it remains rather significant. We are monitoring the revisions by the IMF and similar institutions, and whenever they publish different figures, well, we change our figures as well. The CDL level, the structure of this rate is very interesting. Housing as opposed to corporate. This ratio varies from one structure to the next. Now, the audit performed by backlog seems to be in line with our forecasts. We were not surprised. Because it seems to be higher, the provision that we've taken seems to be higher than those of Greek banks. I don't know why, maybe because Greek banks are not really realistic. It's for you to decide. No more questions? No more questions? Going on. Right, thank you for your participation, and have a very good day.