Thank you. Good afternoon, fine ladies and gentlemen. Trust you are doing well, and in the usual way, I'll take you through the first two chapters of the results presentation, which I trust you have under your eyes, and then hand it over to you for Q&A. Looking at our first quarter key messages on slide three, BNP Paribas businesses activity progressed in all three operating divisions, which, if you look at loans outstanding, are up 4.2% year-on-year. At the beginning of the quarter, the market backdrop was still affected by the extreme market condition that we've seen at the end of 2018, but showed a gradual improvement towards the end of the period. Group revenues were up 3.2% compared to the first quarter 2018, or up 3.9%, taking them at constant scope and exchange rates.
Revenues of the operating divisions progressed by 4.4% on the back of a significant rise in IFRS and an increase in CIB, driven by the pickup in client activity during the quarter, and which confirms the positive impact of all the adaptations we applied as of 2018. Domestic markets' revenues were basically stable due to the low rate environment. We now turn to costs, we see they evolved by 2.3% compared to the first quarter a year ago, delivering a positive jaws effect. Taking them at the constant scope and exchange rate and excluding the lift and excluding the EUR 1.1 billion impact of annual taxes and levies that you know are almost all accounted in Q1 under the new accounting rules. If you do this, costs were up 1.2%, accompanying the uptick in business activity.
We take it to the other elements of the P&L, which is the group cost of risk, which stood at a low level, which is 38 basis points over outstanding. It was higher than the first quarter a year ago, which I remind you, had been particularly low due to write-backs in CIB and in Personal Finance. After taking into account the capital gain of the sale of 14% of SBI Life, as well as goodwill impairment, the group net result came in at a good level of EUR 1.9 billion, or up 22.4% on the same quarter a year ago. You turn to slide five, you can see the exceptional elements that I talked about, which had an impact of EUR 330 million net of tax, whereas they had been slightly negative net of tax in the corresponding period a year ago.
Besides restructuring and transformation costs, they included this quarter the EUR 838 million capital gain from the sale of 14.3% of SBI Life, as I mentioned before, as well as a goodwill impairment for EUR 318 million. I mentioned before the impact of IFRIC 21. Here you can see that the total taxes and contribution booked in the first quarter, and the fact that they increased by EUR 30 million, compared to a year ago. You go forward and you swipe to slide six, you can see the performance of the group in the first quarter with the top line up 3.2% and positive jaws effect, as such, translating in a 6.2% increase in gross operating income. Moreover, excluding exceptional items in the first quarter of the year, the group delivered an annualized return on tangible equity of 11.2%.
If we now move to the revenues of the operating divisions, which is slide seven, the revenues of the operating divisions, they increased by 4.4% or at constant scope and exchange rate, 3.6%. They were just lower 0.2% at domestic markets due to the still low interest rate environment, which was mostly offset by good growth in the specialized businesses. Revenues were up 9.5% at IFRS on the back of very good growth, as well as a positive scope effect, mostly related to Raiffeisen Bank Polska, which, as you know, we've added to the P&L. CIB's revenues progressed by 3.5%, as the 2018 adaptations that we announced earlier allowed for capturing the progressive upturn in client activity during the quarter. If we now flick to slide eight and we look at the costs of our operating divisions, they were up 3.1% or at constant scope and exchange rate, 1.3%.
In domestic markets, just up 0.4% with the rise in the specialized businesses, which accompany the growth of this activity. All in all, that activity delivers, of course, positive jaws. Nevertheless, costs were down 0.4% on average in our three retail networks in domestic markets, and this net of the IFRIC 21. Now turning to the second one, which is IFRS, its cost evolution reflected continued business growth and the development of new products also with a positive jaws effect. CIB's cost increased due to the development of the activity, but benefited from the implementation of cost savings, which also led to positive jaws. In synthesis, you can see the benefit of the cost-saving measures generated by our transformation plan and the focus on the bank of delivering positive jaws in the first quarter of 2019.
Now, if we stay on costs and advance to slide nine, you have the details of the progress we are continuing to make on the implementation of this transformation plan. In the first quarter, we generated an additional EUR 169 million of recurring cost savings, taking the cumulative cost savings since the launch of the program to EUR 1.3 billion. We expect an additional EUR 0.5 billion to accrue by year-end, these are additional savings. We booked transformation costs for EUR 168 million this quarter, reflecting the lower spending and visits for this year that should total EUR 0.7 billion for the full year 2019. In a nutshell, the implementation of our transformation plan with the reviewed and even more ambitious targets is in line with our roadmap.
If we now turn to the cost of risk, I would kindly ask you to flick to the three slides on the subject, which start on slide 10, you can see, as I mentioned, that it stood at a low level of 38 basis points over outstanding. It was higher than last year, this increase is not meaningful, as I remind you that in Q1 last year, we had booked write-backs in CIB Personal Finance. Now, if we take the businesses one by one, in corporate banking, cost of risk was low at 10 basis points, whereas in the corresponding period of 2018, it had been zero with, as I mentioned, the write-backs offsetting the cost of risk.
If we turn to domestic markets on Slide 11, cost of risk was low in French retail, very low in Belgian retail, and continued its decrease at BNL, despite the impact of a specific file this quarter at BNL in Italy. In the other retail businesses on Slide 12, Personal Finance saw low cost of risk compared to a particularly low base in Q1 2018, as I said. Euroméd's cost of risk was pretty much stable at what I would deem a moderate level, while Banque Populaire's cost of risk was low.
If you now swipe to Slide 13 on the financial structure, you can see that our Common Equity Tier 1 stood at 11.7% at the end of March, in line with the pro forma level at the beginning of the year after taking into account the 10 basis points impact from the application of a new IFRS rule, IFRS 16. Net of this IFRS introduction impact, the stability of the ratio, which is quite typical for a first quarter, right? If you go a year ago, it was the same thing. This is due to a combined effect, a combined effect of the following. The first quarter results, excluding both IFRIC 21 and the exceptional non-operating items, and after allowing, of course, for a 50% dividend payout, added 20 basis points.
There is the net impact of the SBI Life sale capital gains and goodwill impairment, which adds another 10 basis points. There is the impact of IFRIC 21, which reduces by 10 basis points, as I said earlier. There is the increase of the risk-weighted assets, as we've seen in the growth of the volumes, which adds another -20 basis points. I remind you on this risk-weighted assets increase is about half of it, that is 10 basis points, on the back of the postponement of securitizations that were scheduled for this quarter to the coming quarters, as well as the syndications that are in the process of being completed.
If we go to other metrics like the leverage ratio, which stands at 4.2%, which is well above where we have to be, and the Group's immediately available liquidity reserve totaled a whopping EUR 335 billion at the end of the first quarter. The evolution of these ratios illustrates the very solid financial structure of the Group. If we now go to Slide 14 and look at the net book value per share, which stood at EUR 76.7 at the end of March, showing a compounded annual growth rate of 5.2% since year-end 2008. This basically highlights BNP Paribas' continued value creation through the cycle. I now leave you to peruse the next two slides of this introductory part, which is basically on Slide 15, our ambitious policy of engagement in society, 16 which summarizes the continuous reinforcements of the internal control and compliance.
With this, I would kindly ask you to advance to the results by division. The results by division start with domestic markets on Slides 18 to 24. In synthesis, as you can see, domestic markets showed good business drive with good loan growth in the retail networks as well as in Arval and in leasing solutions. Deposits were also up on the back of good growth in all countries. Particularly in domestic markets, we continued to implement our digital transformation and to develop customer experience, as you know, the core of our ramping up to 2020. Thanks to those changes, the number of active mobile customers continues to rise at a fast pace with +20% this quarter compared to a year ago. Domestic markets is, on top of that, simplifying while digitalizing the onboarding processes with significant savings in terms of speed of execution and reduction in complexity.
Moreover, domestic markets is also simplifying and optimizing its branch networks in order to improve client service and reduce costs. Since year-end 2016, we've closed almost 300 branches in France, Belgium, and Italy, and we've successfully delayered the regional setup in the French network in 2018. BNP Paribas Fortis in Belgium has announced this quarter the closure of 267 branches by 2021. If we switch to the P&L, revenues were a tad lower at close to EUR 4 billion on the back of the low rate environment and the impact on financial fees at the beginning of the quarter of the still unfavorable market conditions, which however, picked up progressively during the quarter. This was partly offset by the increased business activity that I mentioned just before.
Costs were a bit higher due to the growth in activity of the specialized businesses, which nonetheless displayed positive jaws. Rest assured, in the retail networks, costs continued to decrease. Like for like, domestic markets showed positive jaws this quarter. Cost of risk remained low, but higher than in the first quarter 2018, which had been very low, and BNL continued to decrease despite the impact of a specific file this quarter. On the back of this, pre-tax income stood at EUR 608 million, marking a 7% reduction. Looking swiftly at each country and business, I'd like to highlight the following. First, French retail banking continued to show good business drive with revenue slightly up. Given good cost control, thanks to the impact of cost-saving measures, French retail delivered positive jaws.
Regarding BNL, business activity was essentially stable in a lackluster economic context, which weighed on revenues this quarter together with some non-recurring items. Given this backdrop, BNL is successfully implementing its cost-saving initiatives. Turning to Belgium, it showed sustained business activities, but its revenues were impacted by the low rate environment. Finally, the specialized businesses within domestic markets continued to deliver good business drive with positive jaws and significant income growth. To wrap up, domestic markets saw higher business activity and revenue resilience despite the low interest rate environment and the impact at the beginning of the quarter of the drop in financial markets that we saw at the end of 2018. With this, if you advance to Slide 25, you'll see International Financial Services, which continued its role as growth engine.
In particular, loans progressed well, especially at BNP Paribas Personal Finance, and assets under management of our insurance and savings business increased by 2.3%. The division is actively implementing its digital transformation and new customer experiences across all its businesses. It is optimizing client experience by, for instance, extending the rollout of e-signature. In BNP Paribas Personal Finance, over half of the contracts are already signed electronically, and that's the e-signature. International Financial Services is also developing new technologies and innovative products with already more than 200 robots operational in different business lines. If we now turn to the P&L, revenues stood at EUR 4.3 billion, up 9.5% with the scope effect of Raiffeisen Bank Polska in Europe-Mediterranean. They were up 7.8% at constant scope and exchange rates.
Costs were up 6.3% or again at constant scope and exchange rate 2.9%, this on the back of business development, and if you look at both delivering positive jaws. As a result, pre-tax income stood at EUR 1.3 billion, up 4.7% or at constant scope and exchange rate 13%. Zooming now rapidly on the different businesses, one at a time, if you start at 28, slide 28 on BNP Paribas Personal Finance, that continued to show good business drive in the first quarter with outstanding loans up 12% thanks to still high demand and the positive effect of new partnerships. In terms of P&L, revenue progressed by more than 5% in connection with higher volumes. Cost grew by 6% as a result of business growth. Thanks to the ramping up of the cost-saving measures through the year, BNP Paribas Personal Finance confirms its target of positive jaws for the full year.
Cost of risk stood at a low level but was up compared to the first quarter of 2018, which as I said before, benefited from provision write-backs. Hence, pre-tax income reached EUR 340 million, down 8% on last year. To recap, BNP Paribas Personal Finance continued to show good business drive in the first quarter. Moving to our international retail banking, let's look first at Europe-Mediterranean on page 28. The integration of the core banking activities of Raiffeisen Bank Polska is going well. The resulting new entity in Poland will operate under the BNP Paribas brand. In terms of business activity on a comparable basis, Europe-Mediterranean loans were up 2.2% and deposits increased by 3.9%, driven in particularly by Turkey. We're also continuing to strengthen the digital offering, and we already have 2.5 million digital customers in Europe-Mediterranean geographies.
At constant scope and exchange rates, Europe-Mediterranean revenues were up 12% with an increase in all regions. Costs were a tad lower, thanks to good cost control and the first synergies in Poland, where we've closed 97 branches this quarter. As a result, the business line generated significant positive jaws this quarter. Overall, given an essentially stable cost of risk, Europe-Mediterranean pre-tax income was up 76% in the first quarter on a comparable basis. However, at historical scope and exchange rate, pre-tax income was down slightly due to the strong depreciation of the Turkish lira and the high base of non-operating items in Q1 2018. If we now turn to the other part of our international retail banking activities to BancWest on slide 29. BancWest showed moderate loan growth year-on-year, where deposits were stable.
Private banking's assets under management progressed by 8% to stand at $14 billion US, with net asset inflow in the quarter. At constant scope and exchange rates, revenues were down 1.7% due to lower interest income, partly offset by better fees. Costs were kept well under control and decreasing by 1.1%, thanks to headcount reduction and the transfer of some support functions to Arizona, a lower cost state. On the whole, cost of risk remained low, and BancWest pre-tax income decreased by 10.7% on a comparable basis. Given a favorable Forex effect, it was just minus 1.5% at historical scope and exchange rate. If you could now swipe to slide 30 on our insurance and savings businesses that saw assets under management increase to EUR 1.075 billion at the end of March.
Focusing on insurance first, slide 31, revenues increased by 32% on the back of the strong rebound of financial markets compared to year-end 2018 as a part of the assets that are marked to market. On top of that, a good level of business activity. Costs were up 6%, reflecting business development, and hence, pre-tax income marked a near 41% increase to stand at EUR 520 million in the first quarter. If we now move to the other part, that is Wealth and Asset Management on slide 32, which was awarded Best European Private Banking for the third year. In it, Asset Management continued to simplify its organization and launched its global sustainable strategy. The third one in that domain is real estate, which made good progress in real estate funds management, especially in France and Germany.
If we now switch to the P&L, the combined P&L of Wealth Asset Management, and particularly its revenues, were down 3.7%, impacted by the lingering effects of the sharp fall in markets in the fourth quarter, which were reflected in low transaction levels by Asset Management as well as Wealth Management client, and this compared to a high level in the first quarter of 2018 when it comes to real estate. There was a gradual upturn in business activity towards the end of the quarter. If you now look at costs, they increased by 4.4% or 3.7%, excluding the impact of IFRIC 21 this quarter. They increased mostly on the back of development costs of our Wealth Management, for example, in Germany, as well as the industrialization costs in our Asset Management. As a result, pre-tax income was 29% lower in the first quarter.
To wrap it up, Wealth and Asset Management was impacted by the unfavorable context at the beginning of the quarter, with a gradual uptick in activity only towards the end of the quarter. With this, we've done the first two of our three domains, and basically the first two forming retail banking and services. If I can now draw your attention to slides 33 and beyond on Corporate and Institutional Banking, which marked an upturn in client activity despite a still unfavorable market context at the beginning of the quarter. The operating division was well-prepared for this client upturn, leveraging the transformation implemented last year. In particular, it is implementing the announced acceleration of this transformation with the creation of the capital markets platform.
This capital markets platform joins the forces of Corporate Banking and Global Markets to better cater for corporate clients' financing needs by bringing the bank's issuer and investor clients ever closer together. On another hand, there was the discontinuation of Opera Trading proprietary activities, as well as the commodity derivative businesses in the U.S. As a third element in this transformation plan, there was, of course, the implementation of new cost savings. All in all, if we go now look at the P&L, revenues topped EUR 3 billion, up 3.5% compared to the first quarter last year, with strong FIG and equities impacted by the gradual market recovery. Corporate Banking had good growth, and Security Services was basically stable.
If you look now at the costs for CIB, they were up 3.1%, accompanying that business pickup and scope increases in Security Services, in total generating a positive jaws effect. Costs were up just 0.8% if we look at the constant scope and exchange rate, they benefited from the cost efficiency measures, which generated an additional EUR 65 million savings this quarter in CIB. This derived from the increased use of shared platforms, the implementation of end-to-end digitalized processes, and the automation of operations. On the back of this, gross operating income was up 5.5% this quarter. If you now look at the cost of risk, it remained low, but increased compared to the first quarter 2018, which I repeat myself, where it had net provision write-backs.
Hence, CIB generated EUR 514 million of pre-tax income, marking a 7.9% decrease versus the fourth quarter, which as I said, benefited from write-backs. If we now browse through the next three slides, that's 34 to 36, and we look at the three businesses within CIB. If we start with Global Markets, slide 34, revenues increased by 1.7%. Net of the transfer of activities related to the setup of the new capital markets platform that I talked about, revenues progressed by 3.8% on the back of that pickup in client activity. The first quarter saw a contrasted performance with increased activities on rates markets in Europe, and a gradual normalization of equity markets following the extreme market conditions at the end of last year. As a result, FICC revenues were 28.5% higher, with a strong performance in all segments, most notably on rates and Forex.
In FICC, we started seeing this quarter the effect of the adaptation of this business started last year, as well as the good development of our customer base. We confirmed our strong positions on bond issuance, where we ranked number 1 for all bond issues in euros, as well as for green bonds, and number 7 for all international bonds. If we now turn to equities, the revenues were down 29.5% compared to a high base in the first quarter 2018, but marked a strong but gradual rebound compared to the fourth quarter 2018. During the quarter, the normalization of inventories valuation partially compensated the recovery in client activity that occurred only gradually through the quarter. If we now move on to slide 35, Corporate Banking, where revenues increased by 8.6% with an increase in all regions and benefiting from the successful client onboarding over the past couple of years.
We saw continued growth of cash management and trade finance, where the business line retained its leading positions in Europe. Corporate banking also confirmed strong position in syndicated loans, where it ranked number two for the EMEA region. If you flick to the third part of CIB security services, where revenues were quasi stable at EUR 560 million in the light of the slight decrease in number of transactions due to the market drop that I mentioned earlier, as well as the ramping up impact of new mandates. Indeed, security services continued to gain new mandates as, for instance, with the online broker CMC Markets across 11 countries in Asia. More importantly, it successfully migrated $100 million of assets from Janus Henderson.
To wrap up, a good overall performance for our CIB that is benefiting from the amplification of its transformation and the good development of the client base. This basically concludes my introductory remarks for the group's first quarter 2019. In a nutshell, I would like you to retain that in Q1, we delivered business growth in all three operating divisions. The group showed a positive jaws effect and the rise in income, we're making significant progress in the implementation of the digital transformation throughout the group, we're actively rolling out new customer experiences. On the back of all this, we are basically in line with the plan that we reviewed in February. With this, over to you.
Ladies and gentlemen, if you would like to ask a question, please press zero one on your telephone keypad. Please lift your handset and ensure that the mute function on your telephone is switched off, and that you are in a quiet area to maximize audio quality. We will take questions in the order received, and we will take as many as time permits. If you find that your question has been answered, you may remove yourself from the queue by pressing zero two. Again, please press zero one to ask a question. We have first question from Mr. Jean-François Neuez from Goldman Sachs. Sir, please go ahead.
Hi. Good afternoon. Jean-François from Goldman Sachs. I have three quick questions, please. The first one is, I wanted to know whether you would be willing to give us an idea of, let's say, a cap or a target for risk-weighted asset by year-end, if you have one, just so that we can understand the securitization activity and your growth appetite. My second question is on fixed income. I would like to understand better what was at play in the quarter. Over the past four quarters of last year, the FICC growth rate was below that of the rest of the peers of the industry. This quarter it was markedly better. I just wanted to understand whether you saw the change in competitive dynamics, notably with some of your peers being subject to heavy headlines.
Thirdly, just to focus on Bank West, I was looking at longer term comparison to a peer group of more than 10 regional banks there. For the last five years, the cost income of Bank West has risen by almost 10 points. That of peers have fallen by five points. That has come a lot from much lower revenue margin than Bank West. I just wanted to understand what is behind this sort of chronic underperformance versus what we can see at peers for Bank West. Thank you very much.
Jean-François, thank you for your three questions. First of all, if we look at the risk-weighted assets. What we anticipate, for example, is that on an average quarter, if I express it in the impact on the Common Equity Tier 1, that would basically lead to a five basis point reduction in the growth. If on top of that, as you've seen, if we go back to the 20 basis points increase on RWAs in the first quarter, that basically would bring it back by five. Also we saw an uptick as we've seen in, for example, syndicated loan business. Meaning syndication has to happen or is going on, and therefore that will basically have another five basis point impact.
That is why in general, in the first quarter, you have a relatively stable evolution, which is what you see, and in the next quarters, you basically have the bottom line, which is outgrowing the RWAs and therefore generating capital. That is why we feel confident that we will ramp up in Q2, Q3, Q4 towards the 12% Common Equity Tier 1. That's on the risk-weighted assets. When I look at FICC, you're right, in 2018, and particularly in Europe, we noticed that there was pressure on the overall revenue pool. Basically the bank decided that it really wanted to accelerate and deepen its adaptation, and that adaptation basically meant that we had to further digitalize. The transactions that could be digitalized, where the interaction with the customer could be digitalized, that is what we would need to do.
That can be, we develop it ourselves. If we don't have the scale, we have to do it in a joint venture with somebody else. Then we also had to get out of some of these activities to redeploy the capital. That's the first thing. The second thing is we bolstered also our digital aspects, then we created capital markets. Capital markets is basically bringing together the global markets and the corporate banking to really bring together origination, structuring, and distributing, bringing that closer together, and therefore also bringing issuers and investors closer together. In order to do this, well, you have to do the investments. You have to have the skills in order to bring them together, and that is basically what we have done, and that we bear the fruits as we've seen the evolutions in the first quarter.
On your third question, with respect to our Bank of the West activities, if you look at it, there is a couple of things. Let's not forget that this activity has gone, depending a bit on the size with whom you compare, but there has been a set of regulatory steps that had to be involved in. The second thing is that we orient our Bank of the West just as we oriented also our European retail players. That basically means when in an interaction with a customer, we also want to serve him on his corporate needs or on his personal needs, or his personal finance needs, on his leasing needs. In order to do this, well, that takes time of ramping up. Yes, you can send somebody from personal finance in France to California, which is what we've done.
You basically have to build the skill. You have to build the data in order to do that, and that is what we keep on doing. Jean-François, that would be my, a bit maybe long, three answers to your questions.
Thank you.
Next question comes from Tarik El Mejjad from Bank of America. Sir, go ahead.
Hi. Good afternoon, Lars. This is Tarik from Bank of America. A couple of quick questions. First of all, I would like to come back on the FIC significant performance versus peers. I understand your arguments about the capital markets platform, but I'm still puzzled that actually it all happened around one quarter. My question here, is this performance really driven by better client activity or mainly by actually trading that was boosted at the bank in Q1? Second question is related to the FIC. You announced in Q4 deleveraging of, or optimization of 12% of RWAs, including EUR 5 billion of exits. Attached to that, there is EUR 250 million or EUR 200 million to EUR 300 million revenues loss. Is that already start to happen? When would that happen? And should we expect softening in the revenues from that exit? Thank you.
Tarik, thank you for your questions. When it comes to FIC, let's be clear. There are some elements, as we are a FIC player, and particularly in Europe, and there has been a pickup somewhat in that European environment, that is driving it. Another thing is the change that we've done and that we see it's the Forex related, which picked up well. That is also driving the overall boost. To end your suggestion, because you some said, is it proprietary? It's not proprietary. As you know, the proprietary trading, which was called Opera, is basically wound down.
It is client-related business that picked up, and as I said, focus on Europe, focus also on the Forex related, and that is the pickup that we saw and that we prepared for. When it comes to your second question on CIB exits, it is something that we review well. As I said, it's looking at if there is a product that is typically taken by a limited set of clients, and the clients do not take other products. That is the review that we do. We enter on discussions to see if it can be lumped with other products. If not, we might ramp it down. It's a process where we take the due time to review. Tarik, that will be my two answers.
Can I follow up on the last one very quickly? I presume that even given the very good Q1 and fixed income, you will still keep your discipline on reviewing all these businesses product for products, I guess, right?
Tarik, you know we are disciplined. The review process and the cost reduction process remains focused. No worries.
Okay. Thank you.
Next question comes from Stefan Stalmann from Autonomous Research. Sir, go ahead.
Good afternoon, Lars. I have two questions, please. One regarding the results coming back to Bank West, please. There was quite a noticeable shift already for a couple of quarters now away from commercial real estate and consumer lending and towards mortgages. Is that a strategy? Is it structural, or is it a bit more random depending on what clients want to do? Is it fair to actually blame the revenue weakness year-on-year on this mix effect, or are there other factors at play? The second question regarding Personal Finance and not really related directly to the results, but I was curious if you could give us a rough indication of how much of the Personal Finance loan book actually relates to France. I think the last disclosure on this dates back a couple of years, it was about 40%.
I was wondering if that's very different today. Thank you very much.
Stefan, thank you for your question. First of all, Bank of the West. The key thing of what we're doing is shifting more, and now that we can, more into the model as we have it in Europe. It's not a chance. We're not standing on the market and saying, "Who wants this product and who wants this product?" That is not what we do. We really brought in our skills. For example, as I said, for Personal Finance, we send people who are experienced in Personal Finance, we bring them in. They basically adapt the skills that we had in Europe in the U.S. market. We are ramping up gathering the data, because in Personal Finance, that's really core of what we do. That is what we keep on doing.
It's not by luck that one product or another is picking up. We're really focusing on, as I said, Personal Finance. It's the corporate banking kind of elements that we really structured and set up also managerial structures in order for it to grow. On your number of France in Personal Finance, I don't have exact number with me. It has gone down. It is 30%. Sorry for that.
All right. Thank you very much.
Thank you.
The next question comes from Azzurra Guelfi from Citigroup CIB. Sir, please go ahead.
Hi. Good afternoon. I have a quick question on France domestic revenue. We are seeing still a very strong volume, but also a first uptick of margin. Would that be something that you expect would continue, or do you expect some additional margin pressure to come in the second part of the year, given the rate environment? The second one is on the CIB. You said you're still going ahead with the review of the businesses as per plan. Can you give some indication on what we could expect in coming quarters if there is any area in particular that you are targeting for 2019? Thank you.
Thank you for your questions. First, if we look at France, yes, we foresee the revenue to remain in this kind of situation where we are. We guided that it would be a kind of established evolution. This evolution is on the back, indeed, in an environment of low margins. However, the volumes are there, and there is also the fee business that we are stepping up. That is the kind of things that we look at, and so it is established. Let's not forget, in that environment, we focus on costs. We reduce them, and so we have positive jaws. On the second question on CIB, listen, overall, we are reviewing this, and so we'll give you regular updates. As I said, we are reviewing on some activities if we can streamline it, do it in joint venture with others.
At the same time, it can be like, for example, in security services, that we step up mandates with others. This is the overall process we're looking at. We'll give you some updates. For example, we told you Opera Trading, we told you Commodities, and we've also said that we have basically ramped down our activities in the Philippines. We'll give you an update every time there is something to announce. Thank you.
Thank you.
The next question comes from Matthew Clark, from Mediobanca. Sir, please go ahead.
Good afternoon. A couple of questions. Firstly, on the goodwill write-down. Can you give us some more information on what business that related to, and why that was taken in the first quarter rather than with the full year audit, please? Second question is just on Personal Finance, and the trends there. It still looks like your revenues are growing much slower than your volumes. Is that still the case, that's due to a mix shift? Or is there any underlying margin pressure going on in any products or regions? Secondly, I understand that there are cost saves to come through as the year progresses, but it's still a bit startling that the costs are growing so much on a gross basis.
Could you just explain why costs are up about 5% or 6% year-on-year, even before considering the cost cuts that are going to come through later? Thank you.
Thank you for your question. If we look at the goodwill. Indeed, in the first quarter, we impaired an old goodwill. As you know, goodwill has to be validated on a regular basis. As this goodwill stems from almost 20 years ago, validating the initial assumptions is not straightforward. Every year adds complexity. As such, we took a conservative stance this quarter. We impaired some EUR 300 million of goodwill. As a reminder, goodwill impairments are booked in the corporate center. This quarter, it doesn't weigh on the results, given it being offset by SBI Life. This is basically it. This one, as I said, is 20 years old. It originated in consumer finance. That would be the stance on goodwill.
If we look at Personal Finance, yes, the fact that the evolution of the margins are at that slower than the volumes is indeed the focus on the quality. Let's be very fair. In these moments, as you know, we're always a very conservative bank. In this low interest rates environment, it is important to be focused on the good quality product in order to protect the cost of risk going forward. That's basically what we keep on doing. On the cost, yes, we have this overall plan that we have in the wings to adjust the poll and to deliver positive jaws. At the moment, as I said, they are starting to ramp up the delivery of those. That is what we will get over the years.
We confirm that there will be positive jaws when it comes to the cost evolution in Personal Finance in 2019. Matthew, that will be my three answers.
Thanks. Could I just follow up on the jaws? Should we think that the natural rate of growth, cost inflation, and Personal Finance, is that 5%-6% level that we've seen year-to-date, so that once this current cost plan is over in 2020, we then need to worry about 5%-6% in 2021 and another 5%-6% in 2022? Or do you think you're structurally changing the operating leverage in this business with your current program?
It's a bit both. Indeed, let's not forget our Personal Finance part of IFS is the engine of growth of the bank. That basically means if you have that engine of growth, if you say, "I want to step up delivering also, for example, in Scandinavia," that means that you have to start up with a cost base in order for that business to start. There is a combination of things. The overall cost evolution is somewhat negatively impacted by that kind of startup growth. There we will be into a steady state. We will have cost reductions kicking in, and that is why we feel comfortable on the positive jaws.
Thank you.
The next question comes from Omar Fall, from Barclays Capital. Sir, please go ahead.
Hi, good afternoon, Lars. Firstly, could you give us some more color on the delay in securitizations, which isn't something I've heard you call out specifically before. Sorry to be simplistic, usually there's a revenue or earnings impact linked to these securitizations and risk transfers at other banks, because obviously you're no longer the owner of the asset's cash flows. Is the implication therefore that you've booked revenues this quarter that then go away as these securitizations are implemented? It seems a sizable amount implied here at some 10 billion of RWAs. Secondly, just on the fee performance in both French and Belgian retail, could you give us a sense of the amount of impact of the, I guess it's the Gilets jaunes related fee reductions on poorer, more fragile customers in France, and then the impact of the higher retrocession fees in Belgium.
Is the latter more of like a one-off factor or just a lower base we should expect going forward, given the branch reductions? Last, third question. One of your peers, one of your French peers last quarter disclosed what their leverage ratio would be under a kind of daily averaging effect of the balance sheets, like what the U.S. and U.K. banks do. You wouldn't happen to have that number at all? Sorry if it's a bit of a left field question. Thank you.
Omar, thank you for your questions. When it comes to securitization was part of what we announced in our plan and our plan update. I remind you that we basically said, for example, in CIB, we want to keep our RWAs flat over the period of the plan, and that, amongst others, we will realize through securitization. That is basically what was initially foreseen in the plan, which was in our outlooks. From that point of view, there isn't anything material to say. When it comes to your question on France and Belgium, yes. On the fees, well, the Yellow Jerseys, that's France.
Overall, there has been a slight impact when it comes to the cost with respect to the impact that we had on lowering the banking charges for the more fragile customers, which is an impact of around EUR 9 million in the first quarter. When it comes to Belgium, in Belgium, what we're doing is indeed shifting into independent distributors. What we saw is that that is intrinsically staying, but the impact in Q1 2019 versus Q1 2018 is indeed a step up in those branches. As you've seen, we have announced to reduce further intrinsically the branches. That is something that could still have some impacts from time to time. As I said, should be compensated also by the effect of the reduction in branches. If we look at the leverage, as I said, look at where we stand.
If you look at, for example, our derivatives, our loans, they are respectively up at the end of the first quarter. Our leverage ratio clocked in at 4.2. We have to be above 3.75 if you be. For us, as you know, it's a backstop metric, but even if you would add EUR 100 billion, I'm exaggerating, add EUR 100 billion of derivatives, we would stay above the 3.75, which is the benchmark going forward. Omar Fall, that will be my three answers.
Great. Just as a very quick follow-up. Just to confirm, are there revenues that have been booked this quarter that will no longer be present following the securitizations?
Listen, there will always be some part of the cost that we will have, just as we have cost of funding and things like that. It is not something that we expect to be material versus our plan.
Got it. Thank you very much, Lars.
Thanks, Omar.
Next question comes from Anke Reingen from RBC. Sir, please go ahead.
Yeah, thank you very much. Sorry about three brief questions. The first is on TRIM. I'm sorry, did I miss any guidance there? Is it still the 10 to 20 basis points for the rest of the year? Secondly, your slide 35 on the corporate client penetration looks very interesting, but I guess it would be useful to compare this, what the penetration with capital markets products is in order to see what the additional potential is. Would you have anything where we could say where this penetration could increase? Lastly, on the volume growth you saw in the retail divisions, is all quite impressive. Looking at the NII, it's still down to flat. Do you think NII performance in the domestic markets can be better until interest rates go up? Thank you.
Anke, thank you for your three questions. When it comes to TRIM, the targeted review of internal models, which is a relevant exercise conducted by our supervisor. In 2017, already the ECB had completed its review on market risks, and we have included some minor adjustments into our RWAs at the end of 2017. In 2019, for example, we had a negligible impact of those reviews. Honestly, I do not know what the impact is. For the moment, the only guidance we can give is that, yeah, it could be around 20 basis points looking forward, as we said earlier, but your guess is as good as mine. With respect to corporate client and your demand on penetration and data, it's a very good question.
If you could give a call to Greenwich, which is basically the provider of these data, that could be good for you, and I will piggyback on that one. When it comes to-
Well, you have to convince them.
Yeah. We'll try. That on that.
When it comes to retail, yeah, in the environment where we have, you still have, depending a bit on country to country, you have some loans rolling off which are dating from before that period. That keeps on issuing pressure on the top line. Let's not forget that on top of when you look at the first quarter, there is this pressure indeed on the net interest income, the first quarter also had some pressure on the fees and commissions. Let's not forget what I said. At the end of 2018, there was quite some turmoil in the market. The clients returned into the more equity and the fees business slowly into the first quarter.
Normally, you would see a compensation of what is the bit, the pressure on net interest income, you would see that compensated in fees and commission, which was a little bit lower in this first quarter. Anke, that would be my three answers.
Thank you. Maybe just quickly on Italy.
Yeah.
Will you please comment anything on the outlook for revenues here?
The thing is, if you look at Italy at our first quarter, it has been a lackluster environment. We keep on being focused in addressing our products, so we stay on loans that are, for example, core to us. It's corporates which are internationally oriented. We keep on working on that. That is what we keep on working on, we also keep on working on the costs, in order to have positive jaws, we also keep on working on the cost of risk. That's a bit the environment. As I said, as long as that environment remains a bit lackluster, we will continue this focus. Focusing on the core clients that we have, focusing on the costs to warrant operating jaws and ensure the cost of risk going down.
Thank you.
Anke, that would be my four answers to your questions.
Sorry. Thank you. Next question comes from Kiri Vijayarajah from HSBC, CIB. Sir, please go ahead.
Yes. Good afternoon, Lars. It's Kiri from HSBC. Firstly, can I just come back on the securitizations? Just trying to understand what's going on there. It's resulted in an increase in RWAs. Are you actively trying to build market share in the securitization business or in the securitization space as a product, or is it purely just a tool for you to try and optimize your RWAs? Secondly, just still on RWAs, just the closure of the prop desk during the quarter, what was the benefit in terms of the RWA? Because the market risk RWAs looks like they've been flat during the quarter. Just those two questions, please. Thanks.
Kiri, thank you. No, on the securitization, it is a tool. It is a tool, as we said, NCIB, we want to have over the plan our risk-weighted assets stable, at the same time, of course, we want to continue developing our clients. We securitize what we put into the balance sheet for our clients, we put that in the market. That's originate-to-distribute, which is what we have at the core of what we want to do.
When it comes to your question of looking at the market risk, related, the fact that, if you look at the slide 65, you see that the VAR is again at a way too low level at EUR 23 million, which is on the back of those activities which are the Opera Trading, which is out of the books. That's how you can see it. Kiri, that would be my two answers.
Thank you.
Next question comes from Flora Bocahut, from Deutsche Bank. Madam, please.
Yes. Thank you. Good afternoon. I have two follow-ups please, one on TRIM, one on the goodwill impairment. Regarding TRIM, maybe let me ask you the question differently. I think you said in the past that the portfolios that have been reviewed so far are market risk and then the French credit risk. Could you tell us if during Q1 other portfolios have been completely reviewed? The second question is regarding the goodwill impairment. I know you talked about it already, could you give us some more details? It's just a bit surprising to see suddenly an asset that is 20 years old being impaired this quarter with little clarity on what this asset is. Should we read there that potentially you're looking at additional disposals? Thank you.
Flora, thank you for your questions. On TRIM, indeed, the ones that have been finalized, we said the impact is limited. In the first quarter, there are ongoing reviews, for example, what is happening in Belgium and so forth. At this stage, for us, we didn't increase our requirement to cover those. That's basically where we stand. When it comes to the goodwill, for us, if you know, if there is goodwill, we basically don't allocate that into the businesses. This is something that we consider is not related to the business, and that is why this impairment was booked in the corporate center. That's basically all there is to say about it.
As I said, it is almost 20 years old, so validating exactly the assumptions that we had made at that time for activities which are then maybe have evolved, have tuned, are cooperating with others, that's the only reason what happened. It's not an indication of something that will follow. Flora, that would be my two answers.
Thank you.
Next question comes from Jacques-Henri Gaulard from Kepler Cheuvreux. Sir, please go ahead.
Yes, good afternoon. Just one quick question on consolidation. Remember that last time we mentioned it with your CEO, he was saying that it was very complicated, he was not necessarily interested by launching himself into any sort of pan-European consolidation. Obviously, your regulator is becoming much more enthusiastic, referred to the speech of Mr. de Guindos yesterday. Just wondering if anything has changed since February, and that would be the only question which will enable me to average with Anke at two and a half questions per head. Thank you.
Jacques-Henri, thank you for making my average in questions work. No, for us, nothing has changed. We remain in our plan ramping up to 2020. What is very important is digitalization, because digitalization is the way that customers want to interact, and basically an interaction that leads to lower branches. This is what you've seen. We've reduced branches tremendously in environments where people really hit on the digitalization, like for example, Belgium, you see that there's more than 250 branches that we will be able to close going forward. That is basically the focus that we have. That is the focus that we keep. Nothing else to add on that one.
Okay, thank you.
Next question comes from Bruce Hamilton from Morgan Stanley. Sir, please go ahead.
Hi. Afternoon, Lars. Just circling back on a few topics we touched on. For Bank West, I understand that the plan is to replicate what you do in Europe in terms of offering different products. With the pre-tax ROE at around 7%, how much time will you give yourselves before determining whether that business unit should really be non-core? Secondly, just on capital, to clarify the securitization impact you'd expect should be Q2 rather than any further delay. Thirdly and finally on fees, some useful comments around the impact from fragile customers and so forth. Do you expect any further pressure from MiFID II transparency through both Wealth Management and through distribution fees in places like French retail? Is that already, to your mind, in the numbers? Thank you.
Thank you, Bruce. If you look at Bank of the West, yes, as I said, we're stepping up and building the expertise in the more specialized kind of products. That, of course, takes some time, yeah. It takes some time to build, to have a good view of what the behavior is of a customer, to basically be able to judge. For example, in Personal Finance, the idea is that in the point of sale, we can have a decision, therefore that takes time. As we said, for us, we're ramping up to 2020, and that is the kind of horizon where we look at the progress on these things. On securitization, yes, that's something for this quarter. When you look on your questions on MiFID, that is basically behind us. That's basically done. Bruce, that would be your average of three questions.
Thank you.
The last question comes from Jean-Pierre Lambert from KBW. Sir, please go ahead.
Hello. Good afternoon, Lars. Three questions. The first one is regarding the planned cost saving. You are at EUR 1.3 billion versus EUR 1.8 billion for the target for 2019. When we look at the target of 2020, which is EUR 3.3 billion, does it mean that you're front-ending, or you could revise upwards the EUR 3.3 billion, as you have a track record of doing that in previous plan? The second question is regarding insurance revenues, fairly high this quarter, EUR 874. What is the underlying, if we exclude the market movements so that we have an idea of the sustainability? The third question, IFRS 16, can you explain the movements? Is this going through risk-weighted assets? Is it going through a particular division? Or if you could pinpoint where we can find it in the divisional breakdown. Thank you.
Yes, Jean-Pierre. Thank you for the three last questions, apparently. If we look at the cost savings, you're absolutely right. We already delivered EUR 1.3 billion. It's going to go up to EUR 1.8 billion by the year-end and EUR 3.3 billion thereafter. Let's not forget that this is already revised upwards. In the initial plan, we said that we would have EUR 2.7 billion recurring savings that we've now brought up to EUR 3.3 billion. That's the first thing. Why does this cost ramp up? It's because those costs basically come from activities that are accompanied by some double run. For example, if we move some activities which are spread over Europe and we move them into one country, that move is not just lifting it and dropping it in another country. You basically have dual runs, and then after the dual run, you basically capture the savings of that transaction.
That is a bit the trend. It's lifted already from EUR 2.7 billion to EUR 3.3 billion. It's a bit stepping up for the reasons of being just sure in the dual run. That's what we basically do. When you look on your question on fees, it is true. There's two things. When I said on one hand that the fees that are related to the retail, they are basically gradually building up because our customers, they stepped up their demands within the quarter. However, there is also the effect in insurance, which is a picture at the end of the quarter. In insurance, you saw the end of the quarter, which was fine, and in the fees in retail, you saw the ramping up over the time. That is basically how you can bring the two together.
When you look at IFRS 16. What this basically means is that the elements that you have in leasing, for example, that are now having to be put in the balance sheet, and that element can basically also translate into your Common Equity Tier 1. That is basically where you can find it. Jean-Pierre, those will be the three answers to your three questions.
Just to come back on the second one, the insurance, the revenues, EUR 874 is fairly high. My question was, what's considered a sustainable or normalized, excluding the market movement?
It's a bit the thing. If you go back, when we saw the growth in the Q4. There is a part in insurance, which is basically held at fair value. When the markets move rapidly, as we saw in the fourth quarter of 2018, you had somewhat a reduction in the revenues. Now that the markets swing back to a more kind of natural territory at the end of the quarter, you basically recuperate those. That is a bit the swing. When you look at the average rate, maybe the run rate in insurance is a bit higher because of that. However, as I said, the run rate in the retail is a bit too low because they are ramping up. Overall, if you look at the combination of those two, we are basically in the right run rate.
Jean-Pierre, those would be the answers.
Thank you very much.
My pleasure. With this, as this was the last question, I thank you very much for your kind attention. I would like to take away that we had business growth in the three operating divisions. I've probably said it too often, positive jaws. We had significant progress in the digital transformation, all of this in line with the plan. Thank you very much.