Mentioned in the presentation that you do some securitization or technical optimization of the, your RWA. How, what size are we talking here in terms of billions of RWAs? Or maybe asked differently, in the previous quarters, when we've seen, especially actually in Q1, when we've seen this big increase in capital, what was the kind of actions you took back then? Maybe I can squeeze in the last one on Petercam Degroof . Can you give us some numbers in terms of benefit from this acquisition? Because 30 basis points is quite sizable investment. Thank you.
Thank you. Starting with the regional banks and the decision announced by our majority shareholder, it's very difficult for me to comment, of course, because it's a decision of the majority shareholder. The only comment I can make in terms of liquidity, free flow, or whatever, is the fact that the increase of the share price today is representing more actually than the amount of liquidity in terms of euro that this operation would take out of the market and of the free flow. Definitely there's no, no worry about a significant free flow remaining for the stock.
Second point, in terms of capital, we contemplate a securitization that could represent around EUR 3 billion-EUR 4 billion in the third quarter of this year. You know, that we regularly do that type of operations in order to monitor the capital consumption. In this second quarter, there was no need to undertake such transactions simply because the capacity of generating results was very significant and was ample enough to cover the RWA consumption, consumption by the business line. You know that in the past we've been able to be very agile and to be very reactive if needed, so this is what we are already working on for the third quarter.
For, Degroof Petercam, it's a significant business, sizable business compared to Indosuez Wealth Management. Because in terms of global figures, it represents more or less half of industrial, Indosuez Wealth Management. In terms of revenues, I would say that Indosuez Wealth Management, it's in the region of EUR 1.2 billion. This acquisition would be close to half of that, I would say. In terms of cost base, it's more or less in line with what we see at the Crédit Agricole Indosuez, with the cost-to-income ratio in the region of 75%. In terms of RWA, it's around 3 billion of RWAs.
It's not very significant in terms of RWA consumption at the level of the group. This is a transaction to which we expect not only a very high return on investment, far north of the 10% threshold that we have as a minimum criteria, but we also expect a very significant return on equity coming from this transaction. Because you know that this is a business in which the regulatory capital consumption is low, so we definitely expect this transaction to be very relative for the group globally, in terms of improvement of the return on equity.
All in all, we will provide, of course, more details at the time of the closing of the transaction, but, considering the type of synergies that we have identified ahead of this, closing, we, definitely think that this transaction is going to be very accretive for, not only for Crédit Agricole Indosuez, but also for Crédit Agricole S.A., globally.
That would be like 2026, kind of year, when synergies would ramp up, right?
Yes, exactly.
Yeah. Okay. Thank you very much, Jérôme.
The next question is from Jacques-Henri Gaulard from Kepler Cheuvreux. Please go ahead.
Yes, good afternoon, Jérôme. Two questions from me. The first one is, in light of all the restatements with CACF, I have a run rate at pre-tax level for the division of about EUR 170 million. Do you more or less agree with that on a quarterly level? Obviously, can we assume that this will grow with the years, with the contribution from the joint venture with Stellantis, which is equity accounted growing? That's the first question. The second question is, is on business model, and when I look at the acquisitions you've done, recently now, or acquisition or, let's say agreements to do business with RBC, Degroof, Worldline, obviously we know, because it's in their plan, that Amundi is off an acquisition by 2025.
Everything hints at businesses which are really at lower capital intensity, which means that you are going to need less capital. You know, Dave was talking about liquidity, I would like to talk to you about potentially returning a bit more money to shareholders, although more that your shareholder, as you mentioned yourself at the beginning, is very, very rich. Is it something that you should, that you could consider, with more serenity right now? Thank you.
Well, thank you for those two questions. The run rate at CACF, in terms of revenues, it's structurally, it's going to be increased by the fact that now we account for the CA, CA Auto Bank in terms of consolidated figures. You know that this quarter, CA Auto Bank represented around EUR 175 million and a net income of around EUR 65 million. The evolution going forward of these numbers is going to depend on the development of the new business. You know that within CA Auto Bank, we have a business which is running off, which is the former business of the former partnership with FCA.
There is a business that is growing, and actually growing very rapidly, which is the development of the new business, be it with other car makers or be it with independent car dealers. Actually, what we've seen in this quarter, the first quarter of functioning of CA Auto Bank, is that the ramp up of the new business is going far faster than the runoff of the old business. This explains, at the same time, the high level of profitability of CA Auto Bank on a single quarter, and also the fact that, of course, globally, the business of CACF has significantly increased its other value consumption. Definitely it's a business that is going quite fast nowadays.
The other point that has to ramp up going forward, is the, the leases joint venture, because for the time being, within this joint venture, we have only the new business generated by the, the lease co. There was no capacity of, you know, taking on board all the old business, because you had to, to re-immatriculate the car, and so on and so forth, would be too complicated. This equity account, the contribution, is supposed to ramp up as, as, the, the business is going to grow, the new business is going to grow within this joint venture. All in all, there is, ahead of us, a further improvement of the run rate at CACF, and I will, of course, let you do the math. Your second question was regarding capital.
It's true that we have been able to make some opportunistic and strategic acquisitions, and it's true also that we do not choose the highest, the most capital-intensive businesses in order to select those acquisitions. You know that in terms of shareholder remuneration, we stick to this idea that first, we want to be shareholder-friendly, and we've proved it in the past. Second, we want to be predictable. So what is predictable is that we are going to continue to distribute 50% of the revenue, the net income that we generate.
Going forward, we think that this will enable us to fuel the organic growth, and possibly to fuel us, also, some non-organic growth opportunities, like actually was the case since probably four, five, six years.
Thank you.
Thank you.
The next question is from Delphine Lee, from JPMorgan. Please go ahead.
Yes, good afternoon, Jérôme. Thank you for taking my questions. My first one is... Sorry, just to go back to the regional banks. I mean, this is the second operation they are doing. Is the- I mean, is the intention to go to 65%? I mean, I, I do think these two operations are a bit of a shift compared to the past, and just wanted to understand a little bit better, you know, the rationale for increasing to 65%. Clearly, the market is extrapolating, also, potentially above that. I don't know if you can share any thoughts on that. Then, just going back to your comment around capital distribution and the usage of capital.
I mean, so when you say you're shareholder-friendly, but you're still sticking to 60%, does that mean that we should kind of rule out dividend payouts going up from 50%, and you're prioritizing a little bit more M&A at this stage? And a little bit related to that, I mean, I guess Amundi's doing, Amundi doing acquisition is, you know, part of their, this is not on- always been the case, but just in private banking, that it's, it's a bit less frequent. I mean, are you becoming more acquisitive in private banking? Do you have more ambition to do more of these kind of deals? Just if you can just comment on that, that would be great. Thank you.
Okay, thank you. I will not be very long commenting, actually, the decisions of my majority shareholder, but the only comment I can make is that actually they stick to the framework that they have explained last year. Last year, they have said that they wanted to make an acquisition for EUR 1 billion of CASA shares, and they didn't want to go above 65%. They continue to be in this framework, and they reiterated the fact that they do not want to go above 65%. I think that they are happy with the prospect of Crédit Agricole S.A.. They are happy with the performances that we are posting.
They have this capacity of investing an additional EUR 1 billion, and there's nothing more. Actually, if you have additional questions, I think you should ask them to the representatives of SAS Rue La Boétie. When it comes to capital distribution and capital usage, what I'm saying is that we have two commitments towards our shareholders. The first one is to distribute 50%, and up to now, even when the supervisor was not very helpful from this point of view, we've tried to find ways of distributing, all in all, 50% of the accumulated results to our shareholders, and we did it. The second point is that we think it's better for our shareholders to have 50% of a growing income base than 60% of a shrinking income base.
What we want to do is to fuel our growth organically first, and this is the most important thing. Then when it comes to inorganical growth, we continue to stick to the same principles that we've explained already several times. A very strict financial discipline, with a very strict return on investment criteria, above 10% whatsoever in the first three years of the acquisitions, and actually, most of the time, significantly above 10%. Of course, also a proven capacity of integrating, and integrating efficiently the acquisitions that we make. Amundi has a proven track record in terms of acquiring and then integrating, and you know that they did it already several times.
In the field of wealth management, actually, we did it already in the past, three or four years ago, some bits and pieces in Asia and in Italy. It was, of course, much smaller than the Degroof Petercam, and the Degroof Petercam is a significant acquisition. It's not a game changer, because in terms of size, it's around half the size of Indosuez, but it's significant. We are having here, exactly the same stance, for example, than the stance we have had with Crédit Agricole Italia.
Small acquisitions, always, a leave time for digestion, and it means that, before we are able to contemplate any additional transaction in the field of waste management, first, of course, we must wait for this transaction to be completed, which is, again, going to take place in 2024. Also, we need to go up to the end of the integration, which is going also to take some time, especially in a business where it's very important not to destabilize the teams, the relationship with the customers, and so on and so forth. Definitely, it's not tomorrow morning that we are going to see any additional M&A in wealth management.
Great. Thank you very much.
Thank you.
The next question is from Guillaume Tiberghien, from BNP Paribas. Please go ahead.
Thank you. Good afternoon, Jérôme. Two questions, please. The first one relates to your cost-to-income ratio target of 58%. I think what you said recently was that the idea was not to try and go too much towards 50%, because otherwise you would feel you might under-invest. Now you're getting very close to 50%, and it doesn't look like your top line is massively over-earning. Do you need to change your, your target, point number one, or, w- do you feel that you under-invest for the time being, and therefore, the cost-to-income ratio might slip a little bit? The second question relates to the consumer credit business.
Due to the change in the agreement with Stellantis, I just wanted to understand how you accounted for all the loans that you acquired, because your RWA for the loans you acquired seem to be extremely low when I look at the RWA in SFS. On that same subject, the affiliates in SFS, is that correct to assume that they're falling about EUR 50 million now given that for for the bank, as opposed to equity account for it? Sorry, it's a bit detailed, but, thanks.
Okay. Let me start with the first question. 58% is a ceiling, of course. It's true that on this quarter, specifically, we are close to 50%, this is why we prefer to talk about the cost-to-income ratio on the first half of the year, which is at 52.3%. Very, very good, very efficient, but not so close to 50%.
We are starting right now the budget process for next year, so of course, we are going to scrutinize very precisely the projects of the different business lines, in order to see what is financeable, with a normal run rate in terms of revenue, and what must be postponed, because it could be a little bit exceeding the normal run rate, investment capacity of the different businesses. You know that in terms of managing the cost base, we permanently want to decentralize the, the, the management of the cost base, with very precise targets that are set by CASA to the different subsidiaries. So we'll see exactly what new investment capacity this can create for 2024.
You know us now a little bit, you know that we don't want to let the cost base slide too fast and too far away. Of course, with continuing to invest, and you can see, for example, that at CACEIS, we've been able to allocate some additional means in order to cover the development of the business. At SFS, in the consumer finance business division, actually, we've increased quite significantly the level of RWA this quarter. I think it's the region of EUR 5 billion. It's an increase that is, of course, linked to the fact we now consolidate Crédit Agricole Auto Bank, which was not the case before that.
Within the consolidation of Crédit Agricole Consumer Finance, we have accounted this additional number of RWAs. There is a slide here that is showing the figures. Where is it? It's on Page 62, and you can see that actually the number has gone up from EUR 60 billion, EUR 60.5 billion to EUR 70 billion. There's a combination between CACF, CALF, and other elements. Specifically for CACF, it's EUR 5.2 billion of additional RWAs.
Thank you.
Thank you.
The next question is from Giulia Aurora Miotto, from Morgan Stanley. Please go ahead.
Yes. Hi, good afternoon, Jérôme. My first question is on net interest income, more precisely, on the French retail division, but then also group level. Can we say that we have seen the trough this quarter, or do you still expect it to go down, and then recover for LCL? At group level, do you expect still a tailwind from rates next year? Because the French banks see it later than the average European Bank, or how do you see that evolving? So that's the first question on NII. Maybe it's two sub-questions.
Then on, on asset quality, I hear you, that, you know, overall the cost of risk remains low, but, are you seeing anything that starts to worry you in terms of, I don't know, any specific pockets of risk, be it, leverage loans or real estate or, or anything that you're watching more closely? Thank you.
Thank you. In terms of NII, it's, it's an area. We're talking about the NII of French retail, because clearly, NII is completely different if you're talking about Italy, if you're talking about France, if you're talking about CACEIS, and so on and so forth. If we talk French retail, NII is probably close to the lowest level, but we think that the lowest level will continue for a certain number of quarters. I don't know exactly how many quarters, but I don't see a significant improvement in the NII before the second part of 2024. Doesn't mean that I expect this to continue to go down significantly, and even to go down in the coming quarters.
Before completely recovering, it's going to take time, simply because you, you perfectly know the mechanics, and the mechanics is that the cost of the liabilities has increased very rapidly when the yield of assets is increasing only slowly. Even more slowly because the production of new loans has significantly decreased. You know that you've seen that at LCL, for home loans, the decrease is now about 40% as compared to Q2 2022, which was a high point, fair to say. Nevertheless, the lower the production, the slower the improvement of the overall yield of the asset book.
We are more or less going to be stable in terms of NII in the coming quarters, and we are going to see a recovery, probably starting in the second part of 2024. Lately we have had two news. One was a good news and one was a bad news. The good news was the decision of the French government on the livret and other regulated savings accounts, because we feared another increase, and actually it's not taking place, which is good. The bad news is the decision of the ECB on the, on the mandatory reserves, which clearly offsets, probably globally, the good news of the livret, even if it is not spread exactly evenly on the different businesses.
Because the livret good news is concentrated on LCL and the regional banks, whereas the bad news regarding the mandatory reserves is spread on all businesses that have a significant balance sheet, like CACEIS, like CACF, like Crédit Agricole Italia, and so on and so forth. It's not going to be spread exactly the same way, but more or less in terms of magnitude at the, the, the, the, the scale of the group, it's, it's globally close. In terms of asset quality, it's clear that for the time being, the, we do not see a significant deterioration of the asset quality. There are probably two areas in which we are more cautious.
The first one is in the consumer credit business, what we call the short circuit, contrary to the long circuit and contrary to the car financing businesses, the short circuit is probably a little bit more touchy for the time being, and this is why we started to cool down the production of new loans in this sector, in this channel. The second area, which is probably a little bit more touchy, is the category of very small businesses or even self-employed professionals, that you find in retail banks, a little bit at LCL and more significantly within the regional banks.
All in all, this remains quite moderate as compared to the size of the portfolio, and especially in the category of large customers, i.e., the customers of CACIB, no significant element, and even very low cost of risk, yeah. Again, EUR 25 million, I think, in the second quarter of this year, considering the size of the portfolio at CACIB, it's absolutely nothing.
Thanks.
Thank you.
The next question is from Stefan Stalmann from Autonomous Research. Please go ahead.
Yes, good afternoon, Jérôme. I wanted to explore the Degroof deal in a little bit more detail. It looks like about half of the revenue of Degroof is actually not private banking, but asset management and security services, and a bit of investment banking. Are there any plans to transfer these activities to Amundi and CACEIS and maybe CACIB? The second question on the ROI, I think if you want to generate at least 10% on the purchase price, that means at least EUR 150 million net profit. That's about twice what Degroof currently earns. I appreciate it may be a bit early days, but can you give us a rough sense of whether this very significant profit uplift would come more from cost synergies or more from, from revenue benefits?
Maybe the third and last part of this question, is there any appetite on your side to use this deal, buying Degroof as a catalyst to enter Belgium, with others, with other product factories that you have, and then push, maybe, harder on consumer finance, insurance, and the likes? Thank you very much.
Thanks for the question. Well, Degroof is, is, is effectively a, a business in which you have a business of wealth management, traditional wealth management, a business which is perfectly correlated to this one, of asset management, then you have some custody and a little bit of investment banking. In terms of custodian activities, so asset servicing activities, clearly, the idea would be to, to, to, integrate those activities within CACEIS. In terms of size, you know, it's, it's absolutely certain that CACEIS would be able to manage those activities with a marginal cost. Clearly here, it's a deal in which the cost synergies will be very significant.
When it comes to asset management, I think the idea is not to integrate the asset management activities of Degroof Petercam within Amundi, because it would be, I would say, culturally and, and, and structurally too different. You know, that Indosuez Wealth Management has already a slight, a tiny, asset management business, which is called Indosuez Gestion, and probably the synergies that we could find would be between Indosuez Gestion and Degroof Petercam asset management. When it comes to investment bank- banking activities, it's not decided yet. It's a, it's a smaller part of the value of Degroof Petercam. In France, we have CACIB, in France, Degroof Petercam has some teams in investment banking.
We don't know yet exactly what we could do, but probably there is something to do in between. All in all, what we expect is to grow the top line of the existing Degroof Petercam, by probably around 10%, because we will be able to improve the product offer of Degroof Petercam vis-à-vis its own clients. We would be able, for example, to improve the capacity of Degroof Petercam as a private bank to provide credit services to their customers.
We would be probably able to decrease the overall cost basis of Degroof Petercam by, let's say around 15%. This is leading clearly to the type of figures you have in mind in order to generate a return on investment, which would be above, above 10%. In my opinion, significantly above 10%. It's of course, it's going to be a little bit complicated because we absolutely need to preserve the identity of Degroof Petercam. It's most of its value that lies within this identity. There is absolutely no doubt that we have the capacity to do it, very significantly, generate synergies and so generate this return on investment. Maybe two last points.
The first point is: do we want to expand further in Belgium? yes, on the customer basis of the Degroof Petercam, but not on developing additional activities, like selling insurance directly to the Belgian public. It's not exactly the type of idea that we have in mind. maybe, yes, I think it's, it's, it's exactly what we have in mind.
Great. Thank you very much. Very helpful. Thank you.
The next question is from Flora Benhakoun from Jefferies. Please go ahead.
Yes, thank you. Hello. Hello, Jérôme. The first question I had is on the corporate center. I know it's non-strategic, but, you know, it's still a non-negligible part of earnings. Obviously, it changed a lot with IFRS 17. If I look at this quarter, it feels to me like on an adjusted basis, and that means if we take out any one-off, and also the revaluation of the Banco BPM stake, could you provide us with a kind of underlying growth operating income we can expect there on a quarterly basis? I'm thinking something like EUR 250 million negative, if that makes any sense. Then the second question is going back to CACF.
You know, the answer you provided earlier where you described the runoff, on some of the books, but then also the good growth elsewhere, I think, if I understand correctly, this is all for the auto part of the business. There is a large part that is, especially personal loans, and I think specifically in France and Italy. How should we think about this there? The underlying revenues there were declining. I think they declined again sequentially this quarter, when do you expect the trough? Also on the cost of risk, you know, with the consolidation now of the auto loans, I think the cost of risk seems to be around 120, 130 bps this quarter. Is that gonna be the run rate you expect in the future? Thank you.
Let me start with the corporate center. It's true that in the corporate center you have bits and pieces that are moving. You don't have so many one-offs, if a one-off is something that is not supposed to take place quarter after quarter. You have some elements that can have a significant volatility in the level of revenue or in the level of, level of cost that they can represent. For example, if I take the valuation of the Banco BPM stake, it's going to be present every quarter. It's not going to generate probably EUR 140 million contribution every quarter, but it's going to be present every quarter.
When it comes to IFRS 17 component within the corporate center, the net between the revenues and the cost is around zero. Actually, it, it's representing a significant reduction in the level of revenues and a significant reduction in the level of cost at the corporate center, around EUR 200 million of revenues and costs linked to IFRS 17 on a quarterly basis, but it does not represent any significant net income component. All in all, we continue to stick to this idea that the corporate center should represent a global cost on a yearly basis between EUR 700 million-EUR 800 million. Of course, we'll try to continue to monitor this cost, this, yes, cost base globally.
I remember that and I remind you that back five or six years ago, it was more than the double of that, and so it was really an issue in itself. When it comes to CACF, I don't, I'm not sure I, I really got correctly your question. What is happening within Crédit Agricole Auto Bank is two things. First thing, the portfolio of loans that were granted under the framework of the agreement with Stellantis is supposed to wind down. It's winding down actually, more slowly than what we had in mind and probably actually we've continued a little bit to generate new loans for Stellantis customers a little bit longer than expected, but definitely this is a business we are progressively exiting.
Because this business has been granted now to both BNP and Santander. Within Crédit Agricole Auto Bank, there is a new business that is developing quite rapidly, and probably more rapidly than what we had in mind, which is the business of financing car acquisitions, both to smaller car makers that don't have their own financing captive, and also to independent car dealers. When it comes to margin issues, it's true that globally in the consumer finance business, but also in the car financing business, there has been a certain shrinkage of the net interest margin because the refinancing costs increase more rapidly than the capacity of increasing the customer rate for new loans, but it's improving now.
As an example, we've increased the average cost of the new loans that we've provided to our customer by around 25 bps in the second quarter of this year. This is progressively improving, and definitely, I think that we are close also in this front, from the trough.
Okay, very clear. Thank you. Just one clarification also, I forgot to ask you, sorry, in the questions earlier. You previously were guiding for TRIM impact of EUR 4 billion on RWA. Does that still stand, or was that booked in this quarter?
No, it still stands, and actually, it's, it's as the horizon, it's getting farther and farther as we advance. It now seems that it's going to be taken only in 2024.
Okay, thank you.
The next question is from Matt Clark, from Mediobanca. Please go ahead.
Hiya. Question on transaction banking activity. Quite a lot of your peers are seeing very strong cyclical increase there. I'm just wondering if you are, too, whereabouts within your segmental reporting that gets booked, any hints or guidance you can give us on the magnitude that that's had year-on-year for you, would be helpful. Thank you.
I'm not sure I have precisely in mind the figures regarding the transaction you're referring to the transaction banking activities within CACIB, is that right?
Yes, on the corporate side.
Yeah, on the corporate side. It's a business in which, which is developing well, because we've invested a lot in the, the development of cash management tools, at CACIB. This business is growing, and it's a business that is getting more profitable as rates increase, you know? I don't have any precise number to give you in mind. Maybe the, the team is going to look at what kind of number and what kind of information we are able to, to provide, and we'll, we'll revert to you in, in the coming, I would say, hours or maybe days, if you allow us.
Thanks. within, presumably it's in the financing kind of subdivision.
Yes, mm-hmm.
Within the commercial banking line.
Yes.
Rather than the structured, is that right?
Yeah, exactly. It's within the, the financing part of CACIB, and it's within the commercial banking activities. That's very clear, but I don't know... I don't have any metric in mind to, to guide you in the, in the evolution of this precise business category.
Okay, thank you.
Mm-hmm.
The next question is from Anke Reingen, from RBC. Please go ahead.
Yeah, thank you very much for taking my questions. The first one is just on the costs. I mean, that was a very good cost control, the 3%, Q2, Q2, and the 5% year-over-year in the first half. Can you just maybe explain a bit, I mean, it's below inflation, what we should be thinking about how you can do so well, I guess, considering obviously you're also investing at the same time. Secondly, on your flexibility to capital from securitizations, is it fair to say, assume that there is no real related costs, because I guess you keep the securitizations? Thank you very much.
I'm starting with the second point directly, because, actually, no, when, when we securitize some loans, it's in order to free some RWA, so we sell it down to the market, and so there is a cost. But actually it's integrated in the, in the, in, in, in the, the overall cost of each business line. And if we decide to make a securitization in, for example, of consumer loans, it's going to be absorbed by the profitability of CACF. So definitely they have certain targets in terms of self-financing their activities, be it in terms of liquidity or in terms of capital usage. And if they exceed their budget, they have to finance the ways to get back into the budget.
It's, they have to absorb the cost, and so it's not going to be a, a one-off cost that is going to be, accounted for, for example, in the corporate center. When it comes to the management of the cost base, again, it's very important to, to bear in mind that we decentralize the responsibility of managing the cost base. This is why, for example, you can see that at LCL, they've been able to decrease quite significantly, their cost base again this quarter, because LCL is feeling the pressure of the shrinkage of the net interest margin in retail banking activities in France. The reaction of the, the management of LCL is to try and, and generate some cost, economies in order to, absorb as much as possible, this pressure on the, on, on the revenues.
Again, this is the best way for me to manage the cost base. If here in my office, in Montrouge, I decide that CACIB is going to invest that amount of money and that CACF has to decrease its number of staff by, I don't know how many, people, I will probably miss the right decision. It's far better for me to have a permanent discussion with the different heads of businesses in order to see what they have in mind in terms of action plans to moderate their cost-based evolution, and simply then to trust them for the implementation of those action plans once they are approved. It's, it's really the way we do that, and it proves, to be quite efficient.
Nevertheless, I just want to precise one point. I think it's in the slides, but it's important to have it in mind. We have had influence on our French staff, again, like last year, to grant a general salary increase that is going to start to apply beginning of H2. So we will have an increase, all things being equal, of the cost base of our activities in France, overall, by around EUR 10 million-EUR 12 million a quarter. All things being equal, you're going to have this increase starting in Q2.
Thank you. Thank you very much.
The next question is from Pierre Chédeville from CIC. Please go ahead.
Yes, good afternoon, Jérôme. Two quick, two quick question, less from my side. First one is regarding insurance, P&C business. I was just wondering if you had a significant impact regarding the discounting of reserves in P&C on your combined ratio, because with the new IFRS 17, and the rise in interest rates, I have seen in some other insurance companies that the new discounting of reserves in P&C could be quite interesting for insurers. My second question is regarding your business in auto loans. I was wondering if you had set any target regarding the financing of electric vehicle, or maybe on production or in outstanding at a certain at a certain time.
Is that something that you manage on this angle or not? Thank you very much.
Thank you, Pierre. In insurance, it's clear that with IFRS 17, the P&C activity is going to be more volatile, especially because we will not be able, as we could do that in the past, to build some provisions in order to be able to withstand without a too important a cost, some major events like climate events. In Q2 2022, restated under IFRS 17, we have a very bad results of the P&C activities, because Q2 2022 was earmarked with a very severe climate event in France. IFRS 17 is a little bit new. We are going to learn progressively.
We hope we are going to be able to do what we like to do, which is to, to build different categories of cushion and, and, and, and, and buffer, in order to help us accommodate some punctual events. For the time being, what we must acknowledge is that P&C activities are going to be more volatile. In terms of financing-.
Sorry, Jérôme.
Yes.
Sorry, Jérôme. My, my question was more specific on the discounting impact, which is new. I was just talking about the.
Okay.
The discounting impact. Ah, okay.
I don't have the answer in mind.
Okay.
I will ask Cecile. She knows quite well the insurance activities, considering her past, and she will provide you the precise answer.
Okay. Thank you.
When it comes to electric cars, we have presented in December last year, some strategies in order to decrease the CO2 emissions in different sectors of activity. One applies to the car sector. In this sector, what we want to do between 2020 and 2030, is to reduce by half, around half, the amount of CO2 emissions per kilometer for the cars that we finance. It means that included, embedded in this objective, of course, there is an objective of growing the proportion of electric car that we finance. It's not directly an objective in terms of numbers of car that we want to finance. It's through this global objective to divide by around two, the CO2 emissions per kilometer for the car that we finance.
This target has not changed with the changing in parameter?
No.
Okay. Thank you very much.
Mm-hmm.
The next question is from Amit Goel, from Barclays. Please go ahead.
Hi. Thank you. One follow-up, and then another question. Just on the costs, so I appreciate there are a couple of questions already, but, I just wanted to understand, in terms of that cost-to-income ratio, and from what you see today, are, are you expecting it to, to trend up back towards that kind of 58% level? Or do you think that, you know, we could see it staying at around this level, going forwards? Second question, just on the, the, Degroof Petercam transaction, I mean, obviously there are a couple of different, you know, interested parties. I'm just curious from your perspective, what it is that, enabled you to get the, the deal, across, across the line?
... Maybe just a small follow-up on that or clarification, but the 30 basis points of capital, is that for, you know, for if you get to 80%, or is that at the kind of, 59.5% level of ownership? Thank you.
Okay, let me start with the second question. The 30 basis points is for the, the, the full acquisition of the group, because actually, we are providing some liquidity puts actually for the remaining shareholders. We have, of course, to, to provision all the credential cost of this possible operation. Definitely 30 basis points is for the 100% of the group. It's very difficult for me to explain why and what was our edge in order to, to, to, to, to be the, the, the winner of this process. It's, it's again, very difficult. I don't know exactly who was our competitor and what was the, the, the, the...
Which were the elements that pushed the decision in our direction. So it's difficult for me to, to comment. cost-to-income ratio, of course, we are not going to frame the 2024 budget by saying, "O-okay, everybody can go back to 58% of cost income." We are not going either to ask everybody to keep the level where it is now. It definitely, and I, I appreciate that it's maybe not exactly the answer you were expecting, but definitely, we don't want to go above 58, and we are not going to go above 58, and we are not going to, to set as a target to get back close to 58.
There is no hatchet, I would say, saying that everybody has to permanently remain at the best level ever reached. It's going to be, again, a matter of appreciation, and it's going to be one of the key issues of the budget process.
All right. Thank you.
Thank you.
The next question is from Fred Kumar from Deutsche Bank. Please go ahead.
Hello. Good afternoon, Jérôme. Thank you for taking my questions, and congratulations on a very good result. I just have one question pending still. On the EBA stress test results, Crédit Agricole group did see a high impact of around 730 basis points on the CET1 under the adverse scenario. I do know that the stress test results are only conducted at the level of the group, but given it would also be relevant at the level of CASA, if we were to kind of use the same assumptions, what sort of impacts are we looking at for the listed entity? Any color there would be useful. Thank you.
No, we, we, we are not going to provide any detail on what would be the impact on the on the listed entity, because it was not the perimeter that was tested. Maybe one clue that I can give you is the fact that actually this exercise was not really framed for French banks, because there was a hypothesis within this within the methodology that was completely contradictory with the way we do banking in France. This was the hypothesis that we should feed into the cost of our sight deposits, half of the increase in short-term rates, which is absolutely not going to take place whatsoever. The clue is the fact that most of our sight deposits sit within the regional banks.
This has had a very significant impact on the, the, the, the, the depiction of the group.
Understood. Thank you for that.
The next question-
Thank you.
The next question is from Geoff Davis from SG. Please go ahead.
Yeah. Hi, good afternoon. It's Geoff Davis here from SocGen. Thank you for your time. A lot of useful stuff there, so thank you. One quick question on the CIB and capital markets in particular, operations. Obviously, quite a good quarter revenue-wise. You mentioned an increase in market RWAs over the period. First of all, just whether that was a kind of deliberate thing, whether some of the increase in revenues is down to a change in the appetite for risk. Then on a longer-term basis, obviously there's been a very good post-COVID level of revenues coming through in that division. Market conditions a big part of that, has there been any geographical change in the breakdown of your revenues over that period as well?
Um, or is it just-
Mm.
-more activity with the same, with the same sectors?
No.
Those are the questions. Thank you very much.
Thank you for the question. No, globally, we're not changing anything in the strategy at CACIB, neither from a geographic point of view, nor from a risk appetite point of view. What is happening in this business division is two things. The first thing is that definitely an environment where rates are positive is better for fixed income activities, that's for sure. There is more business and more, I would say, generously, priced business when rates are positive, and this is benefiting to all CIBs. The second point is that CACIB is progressively improving its rankings and its positioning towards its different categories of customers. It is benefiting from a better share of wallet-... with each of its customers.
When it comes to the RWA evolution on this specific quarter, of course, nothing to do with a potential increase in the risk appetite at CACIB. No change in the scope of businesses undertaken within the capital market activities, but simply some, some technical issues, you know, that's the RWA consumption or capital consumption in the capital market activities, is building up, it's a building block process in which you have some netting benefits, and it happens that this quarter, the netting is not so positive, not so favorable, so this is why the RWA consumption has increased. There is in my understanding, nothing structural on this point.
Okay, regulatory and technical. That's very helpful. Thank you.
Mm-hmm.
The final question is from Chris Hallam from Goldman Sachs. Please go ahead.
Yeah. Good afternoon, everyone, and good afternoon, Jérôme. So just one question from me on the sustainability of performance. If we look at the underlying performance of EUR 1.85 billion in the quarter, or 14.7% returns in the first half, clearly that's a long way ahead of the targets and ahead of market expectations. I understand that you don't want to change the medium-term target every time you report, perhaps you could just remind us of where we should expect to see some kind of normalization in performance over the coming quarters or years, whether it's around things like seasonality, rising deposit betas, peak NII, increasing investment, et cetera, et cetera. Sort of how much more confident heading into, you know, the summer break, how much more confident do you feel about that medium-term returns outlook?
It's, it's a fair question. I will reiterate that I don't want to, as you said, to update every quarter our, our, our medium-term target. Bear in mind that a significant component of the profitability at CASA comes from CACIB, and at CACIB, within CIB activities, the first half of the year always represent more than half of the year in terms of revenues. You know that in the second half, you have the summer, in which the level of activity is generally lower, and you have also the second part of December, where generally there is absolutely no business. It's possible that in this front, we will have a slowdown of the activity, not compared to last year, but compared to the first half of this year.
For the other businesses, I see no specific seasonality, so, we've been quite clear on the different elements that can be considered as one-off in this quarter. I think that the, the, the, the, the run rate of each business, of course, has to be assessed by each of you, considering their own analysis. I think the, the, the, most important business in which there is some seasonality, it's the CIB. When it comes to insurance, we've said that that IFRS 17 is modifying a little bit, the pace at which we recognize the, the, the, the revenues and, and thus the, the profit.
Two elements are going to be important going forward for the insurance activities, the evolution of capital markets, and also the evolution of sinistrality in the P&C activities, and this is something you'll have to monitor in order to assess a little bit, our capacity to repeat the performances of the quarter. Maybe one last point I could mention, but this is a point that goes in, into both directions. In terms of impact of the increase in rates on our different businesses, some businesses are negatively impacted. It's the case of LCL. Some businesses are positively, positively impacted, it's the case, for example, of Crédit Agricole Italia or CACEIS.
We are feeling that we are reaching a more stabilized level of rates, so definitely, we are not going to see the repetition of the strong evolutions, be they negative or positive, in the coming quarters in those businesses.
Okay, thanks. Very helpful.
Okay. Well, thanks, everybody. It was a pleasure to comment those results again. Thanks to the team around me, and wish you good vacation. Bye-bye.
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