Yes, hello. Good morning to all of you. I would like to introduce the speakers today in the room with me, Yves Perrier, CEO Valerie Boisson, Head of CPR, Passive ETF and Third Party Distribution and Wealth Nicolas Calcone, Head of Finance, Strategy and Roby Castells and Louis Pailleraud, CFO. Here's the floor details.
Thank you for this to attend this presentation. Anthony mentioned the title of Valerie. This title will evaluate in the coming period, and I will come back to this. As usual, I will make a short introduction, which will be in 2 parts. The first is where is Amundi in 2000 after the year 20 20 and my second part, which is about the evolution of governance.
First point, 2020. I would say that 2020 has been a very satisfactory year for different reasons. The first reason, it's our results. Net income of the year is only 4.5% down compared last year. And if we neutralize the market effect.
You see that we are completely in the trajectory of our 2 years plan that we announced. That means that Amundi has continued this trajectory of growth and profitability. And when you look at the results of the last quarter, it's the highest results that we posted since the creation of M and D, 5% up compared to last quarter and 22% up compared to the Q3 of the year. And with a good dynamic of inflows, EUR 40 €5,000,000,000 for the year, €15,000,000,000 in the quarter. But in reality, when we put aside specific situation in our joint venture with ABC, it's EUR 30 €1,000,000,000 on the quarter.
So same trends of growth with profitability. The second reason of to qualify them a very satisfactory is the fact that despite this very exceptional year impacted by the sanitary crisis, we have taken in 2020 major Strategic Initiatives, which will fuel the future growth. I recall then the renewal of the agreements with Societe Generale for 5 years more. The acquisition of Sabadell Asset Management. I can tell you that it's done.
The integration is done with the transfer of operation and IT and a good momentum on net inflows. The creation of BOC in China. Bear in mind that we entered into discussion with our partner in October 20 AT18. At the beginning of 2019, at the beginning of last year, we signed with our partner. In September, we had the authorization of the Chinese regulator.
And now this joint venture is operational and has launched its first funds in this network. And last but not least, the creation of Amundi Technology, which is the business line which will be dedicated to the services that we provide with our IT platform to competitors or Asset Owners, with an ambitious but realistic objective of €150,000,000 revenues in the next 5 years. 3rd reason, ESG. You know that ESG for us has never been marketing. It has been a conviction.
In 2010, we put ESG, to be a responsible investor in the 4 pillars of the values of the company. 2018, we launched an ambitious plan. And I can tell you now that this plan is done and specifically, All our daily open funds now will integrate an ESG process in addition to the traditional financial process. That means that for us to be a responsible investor is to be 100% responsible. So things are doing well.
The strategy is clear the same since the creation of M and D. Results are good. The engines of development are here. So I have considered that it was the right time now to pass the responsibility, the operational responsibility of Amundi to somebody who will be able not only to continue, but to amplify the development of Vermundi on a long term perspective. And The choice which has been made after a very comprehensive review of the bodies of the Board of Amundi, but also with the Board of Credit Agricolsa, which is our majority shareholders.
The choice of Valerie, it's a choice which is which has 3 fetches. The first is competence. Valerie is somebody with a strong leadership, a lot of skills, experience in the industry. She has been working with Abundi since 14 years. Like me, she was even a bit before me.
I joined Abundi because I know She was it was not Amundi, in fact, it was Credit Agricole Asset Management. She has successfully built from scratch our ETF business line. Then she managed very successfully our subsidiary CPA I'm increasing the AUM by 50%, and she has been also very instrumental in the General Management of the company. I am very happy And also, I can say this, very proud of this choice because this choice confirm that the way we have built the companies, with this motto in Amundi, there is nor star but Amundi itself with a talentless management team, very and I would say that Valerie is the spearhead of the Iceberg of the management of Amundi. And that's the reason why I'm saying it's a reason of proudness.
Myself, I will become Chairman of the Board. This evolution of governance will be implemented on the 10th May after the Annual General Meeting, which will approve the account. That means that During this period, until the 10th May, we will be with Valerie managing the company in tandem. In fact, we have some files on the tables. And then She will have the full responsibility as CEO.
She will be executive. I won't be executive. I will be a Chairman, which will organize this Board in the most efficient way. I will also try to consolidate or develop the relationship that we can have, especially internationally with our main partners, and that will continue to be on the debate of ideas through the Committee Medices that our think tank, which deal with the question of ESG and more globally, the question of Society of General Interest. And of course, I will be permanently available to advise, to support Valerie when she would consider that it's useful and only when she would consider that is useful.
That's what I wanted to say. And I propose you that before passing the floor to Nicolas, and Valerie can say some words.
Thank Thank you very much, Yves. So of course, it's an honor for me to be appointed Chief Executive Officer of Amundi. And to succeed Yves Perrier, who has been the European leader and global leader in Asset Management, and I know I can rely on his support. I had the opportunity to thank the Board of Directors of M and D as well as the Executive of clerical Group, and for the confidence they have placed in me. As Yves was mentioning, I've been dedicated The development of Amundi for 14 years now.
And I look forward, together with the talented management team as well as all Amundi teams around the world to continuing to develop the company. This will be done in line with the strategy that has made Amundi so successful since its creation. So the key word will be continuity. Thank you very much.
Nicolas. So speak of the figures now.
Back to the numbers.
Back to the numbers,
Thank you very much. Good morning to all. Maybe a quick word on the context in which you're correct before I enter the specifics of our movie. I think you have access to the presentation that was prepared on Page 15 of this presentation. So first of all, in terms of market context, I will
not learn
anything, but it's important to remind that after the major shock The market in March, we saw a recovery during the year and this recovery continued on the 4th market. But also to remind that despite this recovery, the level of the market on the 4th quarter remained lower than what it was at the same period in 2019. So compared to, for example, the Q3, but still down by 5% if you look at the European Equity market compared to last year, important when you consider the net flows for revenues. 2nd element of context, the industry itself. And here also, the 4th quarter, By the more than EUR 230,000,000,000 of inflows with a strong component in long term assets, so confirmation of the recovery that started during the Q2 of the year.
In that context, I'm going to perform well since I am on Page 18. For asset under management at the end of the year reached €1729,000,000,000 so up by 4% compared to the end of the 3rd quarter. And this course is linked to a positive market effect of a bit more than €50,000,000,000 but also net inflows of EUR 14,400,000,000. These inflows were particularly focused if you look at the activity excluding the joint ventures, and I'm in Page 19, €30,000,000,000 on the Q3, actually, in JVs, with a noticeable improvement in medium, long term inflows, a bit more than €12,000,000 over the quarter. So continued improvement during all the year.
And Flow in Treasury Products that remain high at least more than €17,000,000,000 On the JV side, we had good momentum in long term assets, but somewhat flows on the low margin products. Going a bit more in detail regarding the retail segment, Page 20. As I indicated, inflows continue to They reached a bit more than €8,000,000,000 over the quarter, €6,400,000,000 excluding treasury funds. So Very positive quarter, driven by all segments. The networks, both French and international networks, So a significant recovery and our positive, especially in France, in Italy or in Australia, Thanks in particular to the developments in Unit Linked as well as discretionary portfolio management.
And 3rd party The distributors continue to show positive momentum, euros 3,700,000,000 across most of our geographies in Europe. On the institutional side, Page 21, significant thing to notice is There's a very strong rebound in flows on long term assets, a bit more around €7,000,000,000 While at the same time, we continue to Positive inflows, robust inflows in treasury products, a bit more than €15,000,000,000 concentrated in corporate clients. And finally, Page 22, Don't Venture. As I already indicated, Robust activity in high margin products, but outflows on low margin products. So what are these outflows?
First of all, in China, outflows on what is called channel business. So it's a historic activity that is subject to regulatory scrutiny and is seeing outflows of 16,000,000,000 in the quarter. And second element, in India, some outflows on some institutional clients. But in both case, it's at very low margins. And on other activities, in particular, mutual funds, which have much higher margins.
The business momentum remains strong, both in India and in China and totaling on the quarter EUR 6,000,000,000 In terms of results, Page 23,
sorry.
On this Q4, we posted a net income adjusted net income of €288,000,000 which is up by a bit more than 20% compared to the last quarter and by 5% compared to the 4th quarter. And also, it's important to notice, it's the highest quarterly income since Amundi was created. We can see clearly on this graph the fact that 2020 was a very particular year. We saw in the Q1 in the midst of the crisis the lowest results since the IPO since the acquisition of Pioneer, but also in the Q4 after a good recovery in the highest level. There are 3 elements explaining this good result.
First one, The revenues, Page 24, they are up by close to 2% compared to last year, with, in particular, a good recovery on net management fees, up by close to 1% and a very good level of performances over this quarter. We posted 94,000,000 revenues and performances, thanks to the market recovery, but also thanks to the good quality of our investment teams that made a good choice in terms of allocation during this period. So first element, revenue. 2nd element, costs, Page 25. They are clearly under control.
You can see that if you exclude the scrub effect linked to, First, the consolidation of Sabadell. And second, the startup cost linked to the creation of the new subsidiary in China with VOC that became operational in October. In fact, our costs are still down by 1.7% compared to the last quarter of 2019. And as a consequence, our costincome ratio remained very close to 50%, fifty 0.7% to be exact, which is, as before, one of the lowest in the industry. 3rd element, to be noticed, the contribution of our joint venture.
I indicated we saw from outlook on lower margin product, activity on higher margin product is still positive and that's been so for the Q4. As a consequence, we have a good contribution of our joint ventures, €20,000,000 on this quarter, up by 20% compared to last year. If I come now to the full year, giving a bit of perspective
on this result at
the end of the Clearly, what we can say is that Amundi during the year continued its profitable course. First of all, in terms of activity, Page 28, with overall €45,000,000,000 of net inflows. And what is particularly notable is that we have in fact 2 halves of the year and every year, but very different Frater. The first half of the year, which was strongly impacted by the crisis. Despite the crisis, we had some outflows, but limited outflows of only €4,000,000,000 and a strong recovery on the second half of the year with overall €49,000,000,000 in the second half.
So good level of activity and that compared well with previous years if you accept the exceptional element that was accounted in 2019. You remember, we posted more than €100,000,000 of close but including around €70,000,000 on specific mandates in India for Margiel. So a good momentum maintained in spite of the crisis. And this is particular to both for retail and institutional business, Page 29. You can see that excluding JVs, we posted in total €40,000,000,000 In retail, net inflows were around €11,000,000,000 so our top compared to 2019 with, in particular, good momentum in 3rd party distributors on the French network, thanks to the development of the machine.
On the industrial side, very strong inflows on Treasury Products coming from corporate clients in the second half of the year. And on the medium long term side, positive development despite the crisis on, I would say, external clients, whether it's regional, so wines and so on, but negative outflows coming from the group insurance company, outflows that are completely linked to the fact that there were outflows in the market on traditional dual contract life insurance. And in fact, you can see if you look at this page, the counter effect of the outflows and the mandate from the group insurers compensated by positive flows in French retail, in particular in unit linked with, of course, a favorable impact in terms of revenues and margins for us. Regarding the joint ventures, Page 30, steady net inflows overall during the year despite these outflows on on channel business, if you exclude this channel business, close to €17,000,000,000 inflows across the year with a continued development in particular in India and our JV in India in 2020 became the 1st asset manager on the Indian market. This growth has been and this good business momentum has been nurtured by The success of our growth drivers and our product that meets well the need of the market.
First element, passive management, where we continue to proceed very strong inflows, EUR 22,000,000,000 inflows, both in ETF and index mandates and funds, with Several innovations flown during the year, the single ETF, for example, or several ESG products. Real assets that also continue to contribute positively to the aspect to the business with more than €4,000,000 inflows in real estate, but also in private equity and private debt. And last element, which is noticeable, Active Equities, where we posted positive inflows, a bit more than €3,000,000,000 thanks to the success of our thematic offerings who's also been nurtured by solid, I would say, steady investment performance. They are illustrated by At Page 32, you can see that more than 70% of our funds are classified as the 1st or second quartile over a long term period. In terms of results now 2020, as I said, is also a confirmation of our growth trajectory Despite the impact of the crisis on our revenues, we posted a net result of €962,000,000 which is down, I would say, only by 4.7% compared to last year and which is almost is basically stable if you exclude the direct impact on the market.
So confirm the trajectory that was announced a few years ago with almost doubling of our net results compared to the time of the IPO. Also worth to notice is that on the second half, less impacted by the crisis of the year, Our net result was €523,000,000 so very much in line with the overall objective of EUR 1050,000,000 for the full year for 2020, announced following the integration of PayPay. This result is the consequence of opposite effect. First, on the revenue side, a decrease in revenues by around 4% due to the crisis. My assumption is that we're done by a bit more than 2% due to the negative average market effect and a decrease in the average margin.
Financial revenues also strongly impacted by the crisis due to the negative mark to market impact on the value of our portfolio. But to be noticed on the positive financial positive evolution in performances with €200,000,000 of performances over the year. It's up by 17% compared to 2019, which was already a good year. This negative evolution due to the crisis on the revenue was largely compensated by 2 elements: First, our cost that remain very much under control decreased by 2.6% compared to last year. And even if you exclude scope effect into Sabadell and to VOC, decreased by 4% at constant scope compared to last year.
And last element as for the last quarter, positive development from our joint venture, which are illustrated by Page 35,000,000,000 with, in particular, a significant increase of the contribution These good results contributed to reinforce again our financial structure. And you can see Page That will continue to benefit from a very robust financial structure with a €3,200,000,000 tangible equity at the end of the year and a core equity Tier 1 ratio of 20%, so significantly above the regulatory requirement. This robust position allowed us to resume our dividend policy. You remember that we were not in a position last year to distribute the dividend due to the recommendation of the ECB. We now are in a position to resume this policy with a distribution of 65% of our 2020 net earnings.
And we will propose at the next general meeting on 10th May a dividend of €2,900,000 per share. So it represents probably 4.5% of Yield based on last day's market capitalization. So this is for the, I would say, the financial element of the year. But As Yves indicated, this year has been also very remarkable in terms of the growth initiatives that have been launched during this year or confirmed during this year. Yves already mentioned them.
I will just go over quickly over them. First of all, it's a renewal of the partnership with Societe Generale for 5 years, so until the end of 2029 that allow us to confirm our positioning in France and in retail in France. 2nd initiative, Page 14, the new partnership with Banco Sabadell in Spain for signed for 10 years, associated with the acquisition and the integration of Sabadell AM. During the last quarter, we can confirm that both the partnership is starting well. We posted €300,000,000 of that is closed with Sabadell Network in the second half of the year and the integration of Sabadell AM is also well placed since the IT migration, in particular, on our Alto platform already took place during the Q4.
So clearly, it confirms the potential for value creation associated with this operation. 3rd significant operation, the creation of the new our new subsidiary in China, partnership with BOC, 1 of the 4th leading banks in China. Reminds us about the short delays in which this project has been conducted and in particular during the Q4. At the beginning of the quarter, the new subsidiary became operational, and it was able to launch its first product in the BOCE network in December. So here again, an operation that is well on track and give us a unique position on the Chinese market.
The last initiative That we launched and on which we thought it was useful to give a bit of color today is the creation of F and D Technology. Page 43 and the following one. You know that technology on our IT platform is one of the and assets of the company since its creation. And that which we consider that it was an asset that on which we could also leverage to create a new business with external clients. He started a few years ago, and now we are in a position to make this business, we call it Amni Technology, a fully fledged new business line with ambitious targets.
We can set on this target because we think that there's a market potential which is important. And for Page 44, We evaluate the addressable market, mainly in Europe to some extent in Asia at €1,500,000,000 And we consider it should be growing because many financial many players in the financial industry are facing structural challenge and are trying to refocus our activity on core business and considering outsourcing their IT of Technology Services, which creates a potential for us considering of Technology Platform, Page 45, which we can characterize at being very performing, high level, thanks to the resource we have dedicated to this platform, with in particular 700 IT Specialists, which of which most of them are internal and with the investments that are made to develop this platform. The platform which is performing, which is very efficient. You know that the cost of the IT for Amundi represent roughly 1 basis point we compare to asset, between 6% 7% of our revenues. So at much lower level than the average of the industry, which makes it an asset when you want to promote it.
And 3rd element, thanks in particular to the integration of Many of you have seen in particular Fabienne in the last 2 years. We have a very strong experience in managing project and and that allow us to start to promote this offer to external clients. And today, we already have 24 external clients, representing last year around €25,000,000 So the time has come for new development, leveraging the distinctive advantage of the platform. I was already mentioning a The Performing Technologies, thanks to higher research in development. The partnership with Culture, which is very important to have an offer, which is relevant for many different clients.
Partnership cost structure is stated by partnerships with major custodians such as CACES or more recently, Bonnie Melain, which was announced a few days ago stronger experience on international teams with 2 hubs in Paris and Dublin and a technology platform, which is both open, connected to, Which is both open, connected to many, for example, many pedestrians, maybe distribution platform, many partners and also have a high capacity to treat a very high volume. Based on this advantage, The offer we can propose to our clients have several components covering the value chain of the saving industry. The 4th component, probably the most important one is Alto Investment, which is the portfolio management module that we can propose to asset managers or asset owners. But there's also what we call Aalto Wealth and Distribution, which is more dedicated to distributors, to wealth management, covering And we can have also a more dedicated offer, for example, towards entering the retirement selling platform, which is more a French market, but an important one, on which we can leverage on the capacity and our experience in employee savings plan. Based on the assets, we consider that it's time to accelerate the development of services, make it a full business line for R&D with ambitious target, and we consider that from €25,000,000 of revenues in 2020, we should reach €150,000,000 in a 5 year time in 2025.
Last element before opening the floor for questions. You also You've said a word in the introduction. ESG, where Amundi at our leading position since its inception. Remember that M and D made of ESG one of the from the pillar when it was created with new ambitious target set in 2018 with in particular the need to deploy in all the investment platform where it's possible integration of ESG criteria in the performance and ambitious target in terms of new initiatives. And the good news is that today, we are in a position to say that these coming months are met, on Page 51, a little bit in advance with the target, which was set for 2021.
Since from now on, 100% of our open ended funds will integrate NGS approach and will have NGS score, which is higher than the one of its benchmark. And second, I would say, big commitment. We said in 2018 that we had the objective to double from €10,000,000,000 to €20,000,000,000 the IOM on specific initiatives dedicated to the environment or social initiatives. And in fact, at the end of 2020, we are already at EUR 22,000,000,000 on these initiatives, Thanks to the many new solutions and initiatives that were launched over the recent year. Some of them are illustrating major fifty 2.
I won't go across all of them, but some elements You have been in the midst of all the partnership with the Asian Infrastructure Investment Bank, for example, to design a new Kai Minchin, the investment side of Fenwert, to build a new portfolio on this basis for the launch of many funds dedicated to based on the Paris Align benchmark or dedicated to the social impact of corporate in which deals. Thanks to the implementation of this plan, thanks to these numerous initiatives and new solutions, We can say that I'm only, at the end of the day, more and more recognized as a key player in this field. It is illustrated by a few elements. The last assessment of the PRI last year lead to form indeed towards the higher score A plus across all categories. And Maybe the last illustration, one of you.
1 of the brokers that follow, in particular, ESG trend, Seleti Lamondi, among the 10 stocks, recommended stocks at global level, and Lamondi is the only won the financial sector to have been selected. So without coming back to the governance evolution that has been developed by Steve and Valerie, clearly a very pleased consolidation of the growth momentum, new initiatives that will mature future growth and confirmation of our leadership
in the
E and T field.
Thank you, Nicolas. So now we are ready to answer your questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer Perrier, Perrier, CEO. Perrier, CEO. And our first question comes from the line of Jacques Henri from Causade Capital.
It's Jacques Henri here from Kepler Cheuvreux. Congratulations on the 2 of you for your appointment. It's an amazing story and looking forward for the next 15 years, obviously, or more. Question for you, Yves. Man, I'm going to miss you.
Anyway, what type of Chairman are you going to be? Are you going to be a hands on Chairman, more like an executive one? Or are you going to remain in a more traditional role? And basically, tell us a little bit about the transition you were hinting at the very beginning. That's the first question.
And the second is more on what happened on the channel business In China, which is responsible for some outflows, if we could have a little bit more color maybe on the type of product it is and if you assume that this is going to be a one off outflow Or something that might recur and if that had any sort of impact on your financial trajectory on the new BOC joint venture, probably not because it's only new products there, but Just to make sure. Thank you very, very much.
Okay. So the question about the Chairman. Before seeing again what I have said in his introduction in detail, I want to tell you my spirit in the prison period. I've always, As you know, I'm connected in my life with 2 drivers. 1 is to build, the second is to transmit.
So that's why you consider it was the right time. The building of Amundi is done. I don't come back Again, now is the time of transmission. That means that I won't be I will not be an Executive Chairman. I will be a Chairman, which has his responsibility towards all shareholders in order to validate the strategy, to follow its implementation.
Of course, in this role, I will also consolidate the company about my the relationship that I can develop with our main partners. It's my influence also on the economic or financial debate. But for the rest, Valerie will be the Executive CEO with the full responsibility on the operational side. Of course, I will be available for her every time
she will
consider it necessary. But now it's a time on fact to Valerie to be hands on. And I will appreciate this new time to be more relaxed. That's clear. 2nd point, channel business.
We have often the discussion with Nicolas and Dominico, the definition. I will simplify. It's These funds, well, say, are the equivalent of monetary funds, which was in the context where Chinese Bank under the constraint of Capital and SOA. So an externalized off balance sheet product to off balance sheet. And they changed their mind, make the regulation Evolut.
That explains the outflows of this year. It will continue next They remain about, Nicolas, €12,000,000,000 or €12,000,000,000 Maybe there will be other product in substitution, but we can anticipate next year additional outflows on these products, but without any significant impact on the results because it's they are products with very low margins.
And no impact for the new subsidiaries with BOC since we manager don't have this product and we are managing other products that fit the new regulations put in place by the authorities.
Perrier, CEO. Our next question comes from the line of Eliecam from Credit Suisse.
Good morning. Thank you. If I can just quickly add my congratulations to Mr. Perrier and a very warm welcome to Valerie as well. So some very quick questions for me.
So firstly, just in terms of your capital on Slide 36. Could you remind us please what your minimum CET1 ratio level is that you would like to keep at and so therefore some idea of the surplus. And I guess given the change in management Coupled with perhaps the completion of integration at Sabadell, I just wonder whether M and A is still very much part of the Amundi story. And I noticed this morning there's some speculation in the press about BBVA asset management. So any comments you can give to them would be great.
Second question just on the Mundy Technology. Just to confirm, you're not expecting to incur any incremental investment costs Associated with the build out to €150,000,000 of revenue target. And just in terms of that target, how should we think about that in terms of new clients Versus the increased penetration with the existing 24,000,000 that you have who are generating the current 25,000,000? Thank you.
Nicolas, you take the question about capital, and I will take the 2 other questions.
So on capital, we had a core capital of 20%, where the minimum regulatory The requirement is around 7% and our managerial target is around 10%. We need to compared to the minimum requirement, which means that we have an excess capital compared to this managerial target of around €1,200,000,000 So The question of
the consolidation first for Sabadell, Nicolas mentioned to you that Things are doing the integration is doing very well with The transfer done in October or November, all the operation of Sabadell have been transferred on our IT platform, Alto, and the dynamic of flows is here. And so we confirm that we will realize the level of synergy announced at the minimum. 2nd question about technology. Firstly, I want to add what Nicolas said. It's not something which is new.
We have begun with The amount of revenues is limited, euros 25,000,000, but it has been done. Having in mind that what we have done, in fact, we are in a context where nearly all our software now are proprietary. 2nd point, 75% of our IT platform people, which is based in Paris and Dublin, are internal, which is not the case in the industry. And so what we are creating, in fact, is we are creating sort of IT company, which in 5 years will be one of the company of reference for software, not only for asset management, but also for the management of all the savings, for example, for Discourse, Asset Management, tools to help advisers and so on. Of course, to go from 25 to 150, it will be mainly new clients.
But I can tell you that yesterday, but I can It's not official. It will be official in some, say, in the coming months. We have signed an agreement with a major French asset management and also an agreement with another company that things are going well. And of course, to be able to serve more and more clients, we will have to add additional people to make it. But the bulk of investment have been made.
The investment, they are our softwares. And you know that in the industry, except one big competitor, which has been a pioneer on this BlackRock, nobody has the equivalent in terms of software.
Thank you. That's very clear. Can I just quickly follow-up, if I may, with the integration of Sabadell Asset Management hadn't gone so well? Are you now comfortable with the level of your presence in Spain? Or is there some way you would still look to extend the scope of your distribution?
Thank you.
Now we are number 4 in Spain. I recall you, we are number 1 in France, number 3 or number 2, we've accepted generally, in Italy number 2 in Austria and the Czech Republic, the 2nd foreign asset manager in Germany. So we have a strong footprint. After We permanently firstly, we want to grow organically in each of the country where we are. And frankly speaking, I consider that there is not a country where we can grow organically again market share.
Secondly, after it's a question of possibility of acquisition, but For acquisition, you need a buyer, but you need also a seller. It will depend on the opportunities.
Thank you again.
Thank you. Our next question comes from the line of Arnaud Giblatt from Exane.
I've got 3 questions, please. Firstly, on the to come back on the technology, I was wondering if you could give us a bit more on the road map. I mean, how many clients are do you need to get to achieve EUR 100,000,000 EUR 150,000,000 of revenues? Maybe from a client's perspective, can you talk about the sales pitch you're coming up to when you see the clients? Are you selling A big savings to them?
Or is it just, well, without a technology, you'll achieve a better functionality or maybe both? Is there any competition? I mean, I'm thinking about Allergan's in Corpus Charles River. They typically operate at the very large end in the asset management space. So I assume you're not competing against them.
Or is it just a case of you competing versus their internal systems? And I also wanted to come back on the JVs. Clearly, you've stepped up in profitability to €20,000,000 a quarter. Are there any one offs to think of there? For instance, I'm thinking particularly, are there any large performances I should be thinking about?
Or and as well, you were guiding I mean, You've launched your VLC JV. So have the start up costs come through in Q4? Thank you.
Nicolas, you take the 2 last questions, and I will answer about technology. On the GV, are there the increase in the results, do they benefit from one off or not? So the 2018, no one off?
No, no significant. That was a negative Last year in China, we had to acquire. But most of the increase is, I would say, organic linked to the increase in revenues and profitability.
Very often, you were asking about growth in AUM and then a growth which was not at the same level of net income. In fact, it was normal that at the beginning, there was a delay between the growth of IUM and the net income. And so for the future of this joint venture, we'll see their result in the dynamic of growth. About technology, why we launched this business? Firstly, because we have the tools, we have all the software that we have developed.
It's Alto Investment, which is, let's say, the portfolio management for asset management Alto Wealth and Distribution, which is to support the advisers in private banks. And we have what we call Norway as the Norway Arch, which is the software for Employee Saving Schemes. Which are the competitors? Effectively not so many competitors, Aladdin of BacRock, of course, you have SimCorp for our portfolio management. For Alto, we have some Charles Rivers and so on.
But the good news that there are not so many competitors and the market is huge because many, many competitors have to face this technology challenge. Personally, I think that not only in Asset Management, that in the financial services industry, there will be those who are able to manage digitalization, the global digitalization, will make their IT Evolut and those won't be able. But to do see, you need to have invest a lot to have our teams and so on. And we have a real competitive edge because when you implement and in my career, I've managed big projects like this and Valerie also. You have 2 parameters: 1, the functionality of the software 2nd, the capacity to implement.
And when and this when you look at Alto, firstly, Pioneer was using Aladdin. And we merged we transfer all operation from iodine to Alto. And the investment managers of Pioneer. Look, we are able to compare. And frankly speaking, I have never an investment manager of Pioneer saying that it was better with Alamy.
Second, the capacity of implementation. But we have done this with Pioneer. We have done this with Sabadell. We have done this with Babag. We have done this with BSE.
We have implemented in the new joint venture, Alto. And we have begun to do this with other Companies. And I think that we have something which is really unique Rolle, the reason why we are very confident with the objective which is announced. But what I propose for you Nicolas Valerie is that one day you make with Guillaume L'Assage, with the head of this division, a dedicated session to explain this. Final point, we have in January signed a technology cooperation agreement with Bank of New York to combine the offer in custody of Bank of New York and the offer of Amundi Nattour Investment Management to have a solution which goes from front to back.
I think there was also a question for Arnaud on the cost of the new company in China with VOC. So the cost in the quarter was €10,000,000 versus the start up cost, recurring cost linked to the fact that the company is now fully operational with 40
Perrier, CEO. Our next question comes from the line of Bruce Emmington from Morgan Stanley.
Thanks. Good morning all and congratulations on the promotions. Two questions. 1 on sort of distribution and then a question for Valerie. So I mean clearly, one of the strengths of Lumumbi Is it a combination of captive and sort of 3rd party distribution?
I guess in light of A slightly more open SocGen arrangements. Is it fair to say that the trends going forward maybe that we see Stronger growth in 3rd party than in the other sort of branch international networks and French networks. And certainly, that appears to be the Case in the last couple of years. And are there any do you expect any change from the regulatory push in Europe that could lead to more Opening up of what is still currently quite closed or captive architecture. And then secondly, for Valerie, I guess, in the opening remarks that Yves made, It was a story of continuity, but he said that you might amplify some of the trends that are in place already.
So I'm just interested in any areas that we should think about, particularly perhaps given your responsibilities on sort of Distribution and Wealth division. Is that an area where in Wealth we should look for an acceleration in growth or anything that we should look for there? Thank you.
So I will pass the bulk the 2 questions to Valerie, except about the Question of regulatory. Of course, there are things that you know to come, additional things to MiFID. But about the question of open architecture, I don't see a major impact for us. Have in mind that when you take SocGen, UniCredit, even Sabadell, When we have a long term partnership with these banks, they are the not only is a possibility that they do, they propose to their clients also fans, which are not manufactured by Amundi. They are in an open architecture.
The real asset that we have with these partners, in fact, is the fact that we are not selling only funds. We are selling a global service and, for example, discretionary investment management, training tools and so on. And in fact, that's what we export to 3rd party distributors. I think that the future is for those who will be able to bring this global service, which is really in the DNA of Amundi since it was born. But Maybe Valerie will add a more specific view on this and about the future business.
Thank you, Yves. So on the momentum, on 3rd party distribution, I think there are 2 explanations. The first one, obviously, is our current organic growth. We're present in 37 countries. So we are gaining clients every day and new opportunities for Yes, every day, especially in Europe, where as Yves was mentioning, we can gain market share in all countries, despite our strong positions already and obviously in Asia as well with a number of countries where we are very strong with capacity I can think about Taiwan, for instance.
2nd reason is the good momentum on the ETF and passive management and third party distribution, which was a part of the significant growth last year. Regarding your other question about the future, so On this specific area, obviously, we will go on covering our clients on both Steve and Passive Management. But we are working on selling them more and more services and solutions. Of course, Yves was speaking about technology, but here I'm more speaking about solutions to help them advising more efficiently their own retail clients. So we're speaking about They are on retail clients.
So we're speaking about advisory. We're speaking about digitalized DPM that we are already developing with our retail partners, and we want to benefit from this expertise to develop them with our 3rd party distributors. We can speak about fund selection, for instance, or ESG advisory. And last but not least, I could mention that Fun Channel, which we now own at 100%, will be distributed Very globally now that we are the only shareholder. So all these services will be distributed in addition, obviously, to our To our traditional active and passive management and in addition to our multi technology to amplify the growth.
Excellent. Thank you. Very clear.
Thank you. Our next question comes from the line of Hubert Am from Bank of America. Please ask your question. Your line is open.
Hi, good morning. I'd like to congratulate both you and Valerie Three questions from me. Firstly, on fee margin. Fee margin fell 1 basis point year on year this year. Do you expect the same type of fee margin pressure for 2021?
That's the first question. Secondly, your medium long term flows after being on the sidelines for a lot of last year. And lastly, on costincome ratio, you're getting close to a 50% costincome ratio now. Is getting a 50% or even lower than 50% cost saving ratio possible? And is this something you are actively targeting?
Thank you.
Fee margin, it's very difficult to predict the average fee margin because is the result of the structure of the assets, passive, active, institutional, retail and so on. But we have always considered that it's reasonable to consider that the pressure on margins will continue with the context of low interest rate. That means that the reason why we have always designed company, in order to be able to adapt to this. About long term outflows. Flows are depending on many factors.
And one of the main factor is the risk aversion of the customers. You see that, As Nicolas said, the 1st semester in Europe, we had outflows. Now we have inflows. If you look at the long term, I think that it will be positive for a very simple reason. The fact that if you take Europe, the main product for her service has been life insurance and especially the Euro contract.
But the Euro contract, its remuneration is every year down and down. And so they will need alternative investment. When I say alternative to euro contract, and I think that structurally, there will be a growth for the fund industry. And the second point is Asia. In Asia.
It's a continent of growth of the economy, growth of GDP and growth of the ceiling. And that's why our unique position in this region is a real interest. For the cost to income ratio, where this guidance to be under 53%, and then it can be 50%, 51% or 49% and so on. But the idea is to be at this way that not only it depends on the just we are You don't see us, but Valerie was saying, and 49, She's undone now. And now as a Chairman, I give the pressure.
No, but seriously, the philosophy of M and D is each to invest and to finance personally by productivity gains and the economy of scale, Dupuytamp, for example, to synergies and so on. So it's not we have not a religion of the 50,000,000,000,000, the 51,000,000,000,000,000 and this because also it depends on the revenues. For example, the year you have very good performance fees. It will be better than the year we'll have lower performance fees. But the main important point is that we are a leader in efficiency.
Even we can say the leader, we will continue to be the leader or Ramon, the leader.
Great. Thank you.
Thank you. Our next question comes from the line of Mike Werner from UBS. Please ask your question.
Thank you very much, and congrats to you both on the new roles. And the Two questions. On the dividend payment, Nicolas, I think you indicated the excess capital is €1,200,000,000 At the end of 2020, I assume that excludes the payment for the 2020 dividend. I was just curious as to whether there's any thoughts On paying a retroactive dividend for 2019 or do you see better use for that capital from an investment perspective? And then on the technology business, I believe it was back in 2016 you discussed some of the opportunities available from selling This platform and this technology to 3rd parties, there were no hard commitments like you were making today Back then, but you certainly brought it up, I believe, on some of the conference calls.
And I was just curious as to what has driven The renewed vigor for this business now over, say, over the past couple of years. And then ultimately, what level of AUMs or client assets are currently serviced? Our 3rd party client assets are serviced by Alto. And what level do you need to get To achieve that €150,000,000 of revenues by 2025. Thank you.
Nicolas, you take 3rd party AUM. I will begin by capital to be simple, very simple. We have 1.2 excess capital presently two situation. The first, we have something an acquisition which fits to our criteria, Reinforced Industrial Models, creating value and we will use this excess capital for this. And in any case, what we have always said, If we are not this kind of opportunities, we will give it back to shareholders.
But frankly speaking, the job of entrepreneur is to find good acquisition because we create more value. On the technology side of the world, we have, I think, accustomed to you that when we were promising something generally is that we are very, very highly confident to do this. And if we give this figure of €150,000,000 that we are confident. Why? To €8,000,000 that we are confident.
Why? To announce this, we had begun, but now we have made adaptation of the organization in order to accelerate. This year, we have recruited about 20, 25 new people on this. We have now a part of the division, M and D Technology, which is dedicated to new clients and So now we are ready to accelerate, and that's the reason why we announced this.
And for the DRMs that are today's service, I don't have the exact number, so we will come back to you. For maybe it's for third party Using Alto.
For the time being, It's limited, it's 4 or 5, something like that.
Client,
No, not for Alto. No, for Alto, it's 25,000,000,000.
Thank you.
That's a question in the U. M, but we'll come back.
In the U. M, we don't have the figure, yes.
And they're not all distributors. So we'll come back with the distributors and distributors.
Thank you.
And I confirm that When I mentioned EUR 1,200,000,000 of excess capital after provisioning the dividend to be paid in May, of course. Okay. Thank you.
One or two Question and then we have to close. And of course, after Anthony, Nicolas and Domenico can speak to you.
Our next question comes from the line of Angeliki Veracratzvi. Please go ahead.
Good morning. Thanks for taking my question, and congratulations from me as well and to you both. Just two questions. First of all, at the time that you had presented the previous plan for 2018, 2020, If I remember correctly, you had given us an indication of retail net flows of around EUR 60,000,000,000 cumulatively. And when I look now at what you have achieved, the number is closer to €20,000,000,000 So I just wanted to hear your take With regards to sort of what might have not gone in the direction of Target, was it particular network that sort of didn't perform as you would have expected?
Was it the market overall? Any insight on that would be useful for us. And what do you consider to be the annual run rate that you can achieve going forward when it comes to the retail And then on MMA, would you be interested in growing your passive franchise via acquisitions? Thank you.
On the question of passive, we are interested permanently to improve all the kind of expertise and passive TF among these expertise. I said it depends on the opportunities. But what is show that we will inform them also organically by new teams and so on. On the question, you are right on the Retail, but have in mind that during this 3 year plan. We had a first semester with this financial correction
of the market. And we have this also in the second half of twenty eighteen, we have 2 Significant myself.
And it generates this I mentioned in the introduction, it generates this risk aversion, which is probably for me the most important parameter for the net inflows in retail for Long Term Assets. Okay. So ladies and gentlemen, Really thank you for your attention and The life is always beautiful. Good day.
Thank you.
Bye bye.
Thank you very much. Thank you.