Ladies and gentlemen, welcome to the Société Générale conference call. I now hand over to Frédéric Oudéa, Chief Executive Officer. Sir, please go ahead.
Good morning to all of you. Thanks a lot for attending this call. As usual, with William, our CFO, I will make a brief presentation, and then we will enter into Q&As. Let's turn to Slide four. I hope you have the document with you. Let me just highlight the few core items of this quarter, of course, which is the quarter of the lockdowns, and so we see the impact of the COVID crisis. What I'd like to highlight is the improvement in all activities since mid-May. You will see some charts, which on a monthly basis, reflect this improvement. Overall, we see a drop of revenues with a contrast situation. I don't enter into the detail. William will go through that. A strong decrease of the cost, 9.6%, and we confirm that we are well on track to deliver our guidance for this year of EUR 16.5 billion.
The cost of risk stands at EUR 1.279 billion, clearly much higher than last year, which was a low level. I'm sure we will comment a lot and answer your questions. As you can see, more than half is related to Stage 1 and stage 2, which means forward-looking on one hand, and also the impact of the downgrading of internal ratings. We give a lot of information on that. I won't comment further. What is important, I think, that with more visibility for this year, at the end of July, we say that we should converge towards the low end of our range, 70 basis point - 100 basis points, knowing that the cost of risk was 81 basis points for the first half. There is some maybe noise. If everybody could be on mute, that would be good to avoid this noise.
Let me just highlight as part of our results, we have two exceptional one-off non-cash items. William will comment. It's around goodwill and deferred tax asset related to the change of financial trajectory of our capital market activity. Last point, Core Tier 1 at 12.5%. Same thing, we spend time on this. It's a very solid Core Tier 1 ratio. All other capital and liquidity ratios are strong, and same thing, we confirm that we will be at the high end of our range, 11.5% - 12%, knowing that you know we have had already told you that we plan to have all our regulatory impacts, TRIM, and things like this in the second half. We plan also for more capital on the operational risk, and nevertheless, would be at the high end of our range. Page five, just one word on the structured product activities.
As you know, we suffered further in April and beginning of May of certain market dislocations, but we've seen since mid-May a progressive normalization. What we have done in the last two months is design a new range of products, a balance between the different products, which should, on one hand, reduce the risk if we were to face a similar situation like the one we experienced, and reduce by half. Maintain, in terms of market share, our franchise. Probably have an impact on revenues given the nature of the product, between EUR 200 million and EUR 250 million, that we will more than compensate with additional cost reduction initiatives by EUR 450 million. Same thing, I'm sure we will comment further on this. Page six, before turning the floor to William.
When I look at the bank and beyond the financial parameters, I think we, first of all, we are there to accompany our clients, and it's very important because going forward, it's capital on which we can build. It's very true with the French clients with the guaranteed loans. We have allocated for EUR 19 billion of these guaranteed loans. We were there. It's true also for large corporates, when you look at our market share, league tables, we've maintained and sometimes gained market share. I think it's positive for the future. For the retail clients, it's important we have signed a new partnership with Amundi, paving the way to an open architecture for our retail clients and providing the best of asset management products with a strong CSR component. Third, on the digital, further progress.
Boursorama actually made money in the second quarter with less marketing cost, more revenues on the execution on the market, and gained 267,000 new clients in the first half. We made a nice acquisition of a neobank dedicated to entrepreneurs in France called Shine, and we've developed some nice things across the board. In ESG, which I want to be enshrined really in the strategy of all the business, we have a number one position in mid-year in terms of renewable energy financing, number one in the world.
We have further enhanced our policy to exit coal financing, and we are developing innovative offer. We put the ALD example, as well as beyond climate, I must say, ensuring that our company further develop diversity and fight against any kind of discrimination. Third pillar, efficiency, we'll come back to that. Of course, we know that we need to pursue the effort on the cost. I turn immediately the floor to William to give you more detail.
Hello. Good morning, everyone. I suggest we go to Page eight with the traditional overview on the group performance. To begin with, the group net income adjusted for exceptional non-cash items is positive this quarter at EUR 70 million, with the published net income, including the two exceptional factors on goodwill impairment and deferred tax assets, is negative at EUR -1,264 million.
What are we talking about? As Frédéric mentioned, we have some impairment of goodwill for EUR 684 million, revolving around the entity that encompasses market activities and securities custody, as well as an impairment of deferred tax assets for EUR 650 million. I'd like to take the opportunity to mention that, as you're aware, this is not unique to Société Générale, this type of impairments, particularly this quarter. Just to remind everyone that we have a fairly low goodwill in percentage terms relative to our shareholder equity. That's about 7%.
That positions us at the bottom of comparables in terms of percentage. Same with DTAs. We have approximately 9%. That would be slightly down, given what I've just said, and that's pretty much at the low end of the comparables. This is not a big issue for us. This is obviously a non-cash item, and this has absolutely no impact on capital, very marginal issue in terms of capital. When you look now with a concord view at businesses, you have pretty much the same pattern, which we're going to comment more in detail upon. First of all, you have a performance on revenues that has been severely impacted by the COVID crisis until mid-May in French retail, with a fairly strong recovery ever since. At the same time, we increased, quite significantly, our provision for risk, essentially forward-looking, as far as French retail is concerned.
We have a very strong discipline on cost, -8.5%. That translates into a group net income for French retail at EUR 60 million, six zero. You would say something very similar for international retail banking, where you have a decrease in revenues of about 9%, which is a combination of the confinement impact on production with the interest rate cuts in Czech Republic, Romania, and Russia. We see a clear rebound in June, and ever since mid-May, for those who have been confined before, where loan production is much higher than Q2 2019 months we average. There, again, increasing cost of risk, particularly pertaining to forward-looking, and strict cost disciplines, -3%, 2.9% to be precise. Net income, positive at EUR 83 million. Financial services show resilience as usual. Insurance is very resilient at -5%. Equipment finance has even a gross operating income up in the quarter.
ALD, ex some provisions we've taken related to [Carrefour Resource], is effectively quite resilient as well. Cost decreased 5%, 4.4%. Net income stands at EUR 138 million. GBIS is on loss, EUR 67 million. There, we have reduced, obviously, the loss with the compressed performance across businesses. Very strong FICC, as you have seen with others, and very good financing advisory as well as private banking. Obviously, equity is on the recovery mode. With the month of June, I'll come back to that, which is back to a normal month that you would see in equity. GBIS costs are also a silver lining here, - 9.2%. On the corporate center, nothing much to mention. Apart from the two exceptionals, the rest is pretty much back to normal. The important message we wanted to pass, one of the important messages we wanted to pass is on the next Page nine.
It's on the cost side. You have to start with where we were a few years ago, 2018. The cost base was EUR 17.6 billion. We started to decrease in absolute terms that were stated in 2019, EUR -1.1 billion, and we committed to decrease it to 2020 to EUR 16.5 billion by the end of 2020. That's obviously a very strong commitment we made, but we are confident that we can achieve that.
You see that in H1 2020, we're close to 6% down relative to H1 2019, close to 10% down in Q2 relative to the same period of last year, despite the fact that we incur, like others, the increase of regulatory costs. Let me remind everyone that the charge relating to the Single Resolution Fund is up 25% this year over last year. For the same quarter of Q2 2020, this is an additional EUR 50 million to the bill.
We also have COVID-related costs, operational costs. For the second quarter, it's EUR 53 million. That puts in context the commitment and the achievement. Obviously, we continue, as Frédéric said, to work on additional cost measures. We want to decrease the cost base beyond 2020 further down. Cost of risk, Page 10. Much has been said already, and we have a very strong increase in cost of risk. These are annualized numbers, as far as basis point are concerned. 81 basis point cost of risk for the first half of 2020, relative to 25 for the whole year 2019. What is very important, I'll come back to that on the next slide, is to have in mind that this is primarily revolving around forward-looking and ratings migration of 51% as a total.
On Stage 3, we have some files, no new files, just additional provisions of things we had. It is very important to look at the approach we take. We take an approach where we go beyond 2020 as our scenarios are concerned. We have probably a slightly more conservative assumption than the average for 2021, 2022. Obviously, we smooth the impact over the period. Also, we probably have a weighting of the central scenario that is lower than some peers. That translate into quite a hefty additional provision for the forward-looking provisioning, which we think is a cautious approach given the uncertainties in the market. In any way, if things go better, this is shareholders' money. Let me point you to the NPL ratio, which is very stable and fairly low compared to peers on the European business at 3.2%.
That's combined with a 54% coverage rate, which is one of the highest that you would find in Europe. An important point is that we continue to be very active in the management of the NPL in the midst of the crisis, being able to offload some of these NPLs in good conditions to third parties. Also, let me take the opportunity to stress what we think is the quality of our assets. You'll find a lot of disclosures in our tendencies. We have done some comparisons of parameters, for example, used for internal modeling pertaining to corporates, for example, and find that should you look at probability of defaults for corporates, we probably ranked amongst the more cautious peers in Europe. The next page then, I would not comment too much. You have the detail.
You can call questions, but that gives you a detail in terms of staging of our provisions. We know that this is something that you're particularly focused on. As you can see, we have a strong increase in forward-looking provisioning in Q2 based on the scenario implementation of the IFRS 9 scenarios relative to Q1. I have to stress that this is what you should find with everyone, an increase in Q2 versus Q1, given the implementation of scenarios. There may be a few outliers, but that's a normal pattern one should find in Q2 2020. Capital. That's another area where we feel confident about. We want to put the company as far as the balance sheet is concerned, with capital and liquidity on the very safe side.
We've made the effort, and I hope you will find it useful as far as the capital is concerned, to differentiate what are the, not only the organic impact versus the non-organic impact, but this time around, to differentiate what are the permanent impact relative to the transitory impact. We are in a period where there are many things happening that are new, such as the provision of State-Guaranteed Loans, and the treatment may differ from one country to another. You have, obviously, the so-called quick fix measures by the ECB. Some of them are permanent, some of them are temporary. We want to make sure that it is very clear what is temporary and will vanish before the end of the year versus what is permanent.
If you look at this, you will find that effectively, our ratio is fairly stable, 12.6% Q1 2020, 12.6% pro forma, the announced transaction of SG Finans in Q2 2020. Should you adjust for the temporary effect, you'd find that actually, the ratio is up. Which is a very important performance in the context where, obviously, we didn't have much creation of capital through own funds, given what I've described before. Going ahead, as you know, we commit to be at the higher end of the range we had stated earlier in the year, 11.5%-12%. We're quite confident on that one, given that the main headwinds we may have in H2 pertain to regulatory. Nothing new there. This is very consistent with what we had said.
If you remember that we had said that TRIM would happen, and effectively, the ECB has recently said that it will happen. All the ratios are very strong, and leverage ratio is up. Actually, it's 4.4%, if you take into account the announced quick fix arrangements by the ECB. Total capital, TLAC, well above requirement this time around. Balance sheet on the liquidity side is very strong. The LCR stands at 180% at the end of the quarter. The liquidity set buffer is EUR 227 billion. This is EUR 30 billion, three, zero, more than at the beginning, at the end of last year. I don't comment traditionally Page 13. Leave it for questions. This is a multi-tab page. Maybe I'll go quicker on the results per pillar to give the opportunity for questions.
As Frédéric said, what we would like to focus on here is the trend, really, of what we see and how it has developed through time. When you look at French retail, I would focus on the upper end of the page. You see clearly, and we've just given here some indicators, we could have chosen others, that we are back to normal in June 2020 for retail activities or flow activities. We could have said the same for mortgage, for example, consumer lending as well. You see that on the corporate side, mid-size corporate, which is a key area of focus for French retail banking networks, we are actually more than the average in terms of production of 2019, with a high portion of state-guaranteed loans, but also a very dynamic increase in the medium-term corporate loan outstanding. You see, +17%.
That area is an area where we've been very focused, both on small corporate and large corporate. I'll talk about that later, because we think it's a core franchise for us. We are B2B house, and we want to maintain and increase our market share. You see that on the, for example, state-guaranteed loan, we have maintained a market share, maybe a little above of what would be our natural market share. We continue to make progress on digital. You see Boursorama had a record quarter. It's profitable. Profitable. When I say that, its published number is profitable. Adjusted number for variable marketing cost is also very satisfactory. We had given you an indication in a deep dive a few quarters ago. That was 14% for the quarter. The equivalent of the adjusted profitability is 25%. Brokerage accounts, obviously, brokers worked very nicely this quarter.
You see, in private banking, we have been able to increase net inflows in France. P&C penetration was helped. In context where you have confinement, that means that we have been focused on the key clients. The results, which you'll find in the next page, you'll find what we had mentioned. Pressure on revenues given the pattern on production, strong effort on the cost, increase of forward-looking provisioning in cost of risk. Maybe on the revenues, I'd like to point you to net interest margin. This is down 6% in Q2 related to same period of last year, actually - 2.4% in H1. In the context where you have a surge of deposits, less volumes on the credit side, I would say it's an okay performance, certainly related to peers. Same with commission.
You have to take the number excluding the adjustment on commission-related taxes in Q2 2019, you'll find 7.6% down. Actually, the financial fees are increasing at +8%. The net income is positive, although low positive at EUR 60 million, six, zero. You'll find the same type of pattern for production on international retail banking across areas. Europe, as you know, encompasses Czech Republic, Romania, and the consumer lending we have in Western Europe, primarily. There you find revenues pretty much in line with French retail banking, -9%, -10%. You see this pattern of strong improvement ever since May, and particularly in June, back to the production level pre-crisis. Still, the loan and deposit outstanding increasing. Russia is fairly stable. You see that despite very strong, strict confinement in the country, revenues are only down 3%.
There again, you see this pattern of going back to normal in June. Strong surge in online sales. Russia was already best in class, but close to 40% of the sales are done directly online. Africa is a tale of different stories. The revenues look down at 10%. In fact, sub-Saharan Africa is up at close to 5%, it's 4.6%. There we have the impact of moratoria in Tunisia, which is very specific law, where we have to forgo the interest for EUR 31 million impact. Absent that impact, this is 2.7% decrease for the whole of Africa and Mediterranean basin. I would say it's fairly resilient. Financial services and insurance, I've already commented upon, very resilient, down of course, but very resilient across the board. Insurance, leasing, as well as ALD.
ALD, more affected by some depreciation pertaining to used cars sale for impairment of stocks particularly, and future margin. That is, I would say, equivalent of what you would find in terms of forward-looking cost of risk. To me, that is a cautious approach to have. Nevertheless, as you can see, when you look at the total of the IBFS, you would find certainly a decrease in the net income. Thanks to strong cost discipline, you will find that overall for H1, you have a net contribution for the group net income at EUR 591 million and a return on normative equity for the first half at 11.6%, close to 12%. Global markets and investor services is an area where there again, they have a constricted performance, but the same message, things do improve over time.
You see FICC, as you have seen with other peers, this is a record quarter at EUR 700 million + 38%. Maybe what is a bit unique as far as we are concerned, is the fact that, and I remember that we had some debate at some point, we are a company that has largely restructured its FICC activities last year. There was a question as to whether we would damage the franchise or keep the franchise going on. As you can see, the franchise is intact and is performing well in the market. FICC, again, had a record month. Equities is improving. It's strong across the board in flow equities, very strong for listed products. Particularly, we are very happy with the EMC integration, which delivers well. You see the improving pattern month by month as far as structured equity is concerned.
The month of June is back to a normal quarter. Financing and advisory, asset and wealth management, this is an area where you are on positive territories as far as revenues are concerned, +2% for financing and advisory, +7% for private banking. Let me highlight that if you look specifically at structured finance, DCM, ECM, CIB and finance, you would find the growth is close to 5%. That's a very satisfactory performance given the fact that, as you know, we are, I think, pretty cautious on the risk side, and also, we constrain our businesses in terms of scarce resources.
Finally, what I've already mentioned, given the performance on the equity side, given the increase in cost of risk, and despite the fact that we have a very strong discipline on cost, -9% this quarter for Global Banking and Investor Solutions, you are in a negative territory also at a much lower level than the previous quarter. Corporate Center, that would be my last word, not much comments. The key issue elements are the two exceptional non-cash items I commented already upon. The rest, I have to say, is very normal. Cost in check, nothing to mention particularly elsewhere. I hand over to Frédéric for the conclusion.
Well, thank you very much, William. I will be very brief. We turn a first page with this first half, which of course, we've seen some impact of the crisis, clearly. At the same time, we keep a robust balance sheet we can build going forward. For us, short-term priority is to confirm the capacity to rebound in H2. We've given some clear guidance with this higher visibility. Of course, in the longer term, further build on client centricity. I think it's very clear that this industry will carry on changing. Client expectations have changed in this crisis and will further change, so we have to further adapt our service offering. Second, CSR, as I said, which is going to grow in importance, in particular in Europe, but I don't think that it will be just in Europe.
Of course, make further progress in efficiency and cost reduction with also technology helping in particular in that process. We are now ready to answer your question. Let me just remind you the nice rule, which is two questions per person. The floor is yours.
Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. The first question comes from Delphine from JPMorgan. Madam, please go ahead.
Yes. Good morning. Thanks for taking my questions. My first question would be on capital. Just wanted to go back to your guidance of around just below or at 12% by year-end. Just wondering if you could give us more details around the headwinds that we're going to see in the second half, because, if I'm not wrong, you're already at 12.8% if you pro forma of the benefit from the state-guaranteed loans, which are going to reverse in Q3. If you could just maybe give us, how much you expect from ratings migration. Do we have more than the eight basis points we've seen? Also the operational risk you mentioned that you haven't taken yet. My second question is on cost of risk.
Your 70 basis points guidance, which I recall is around EUR 3.5 billion, implies only a very small increase in Stage 3 provisions in the second half. If you could just give us maybe a little bit of color around why that is, and then also do you expect provisions to remain elevated in 2021? Any color on what we should expect for next year? Thanks a lot.
Yes. Hello, Delphine. I will leave the floor first to William on your question on capital and then to Diony Lebot on the cost of risk, the perspective of S3, the quality of the portfolio, et c. First of all, William.
Thank you, Delphine, for your question, and hello. We feel very confident with the guidance, because effectively, we don't see many headwinds that are not known. First of all, the main headwinds you would see in H2, if we are correct, is related to regulatory, and in the order of magnitude we had already said. We had said around 50 for TRIM. We had said 10, maybe a bit north of 10 for operational risk as new computation. The rest is pretty already there in terms of organic capital. Yes, we may see some further rating migration, but this is like the cost of risk. You have seen a lot happening in Q1 and Q2, so don't expect much to happen in the rest of the year.
We won't see the normalization of market RWA before maybe even 2021, maybe we are a bit cautious there, but that will happen. That's essentially what is behind our guidance. We'd rather be cautious on any guidance we make, but effectively, we are very confident about the upper end of the range.
Diony, what to expect in H2, please?
Yes. Good morning. As we said, we are confident on our guidance, the low end of our guidance of 70-100 basis points, which would be rather EUR 3.7 billion, given the increase of exposures for the low end of the range. The reason why we are confident is that based on our scenario and all the parameters already integrated in our IFRS 9 provisions, we have already taken a significant part in our Stage 1, Stage 2 provisions. As you saw for this quarter is more than 50% of total provisions, EUR 654 million, of which EUR 490 million only for the forward-looking. Based on the accumulated amount of provisions for the first half, which is EUR 2 billion, 81 basis points based on our guidance.
As you can see, we believe that this is the peak quarter, again based on our scenario, which is a combination of scenarios, quite conservative, we believe, because the accumulated impact of these scenarios is a quite sharp decrease of GDP with a delayed impact, but still a significant impact in terms of bankruptcy. In summary, we are quite confident on our guidance, given the conservative approach we took in building the Stage 1, Stage 2 provisions.
For 2021, we have a lower cost of risk next year. We've not changed our guidance, still higher than in mid cycle, surely, but lower than in 2020.
Great. Thank you very much.
Next question.
The next question comes from Jacques-Henri Gaulard from Kepler Cheuvreux. Sir, please go ahead.
Yes. Good morning, everyone. Sorry to dig on the capital guidance, because I think it's quite important. Indeed, 12.75% roughly would be everything all inclusive. You mentioned 50 basis points because of TRIM, 10 basis points for operational risk. You're still left with something that looks to be higher than 12%. The question is, and since you just mentioned that you are not expecting any rating migration, does that mean you want to give yourself a leeway, for example, the cost of realizing the cost savings of your next plan? That leads me to my second question, which is how can I appreciate the time difference you mention between the EUR 200 million-EUR 250 million revenue loss on your structured product activity and a corresponding EUR 450 million, I would say, cost reduction program you have there? Thank you very much.
Jacques-Henri, hello. I will leave the floor maybe to William, and then to Séverin on your second part of the question. Please, William.
Hello, Jacques-Henri. Thanks for your question. Before I go to the guidance per se, let me maybe clarify something that was obviously not clear enough on my side. I didn't say they would not, or I did not intend to say that there would not be impact of ratings migration going forward. Just saying that a large portion of what had to be done is already in the capital, and maybe there will be some as time goes by. In other words, effectively, you're right.
On the organic side, the mixture of production, ratings migration, gradual normalization on the market risk side, and redemption of outstanding means that probably, effectively, this is not a major impact that we expect relative to the first half. Effectively, we confirm the regulatory impact that we said, it's a bit slightly higher on the operational risk, sorry. In a nutshell, that means that we want to make sure that we achieve that target, and we don't want to give a target that would be too tight. That's the way I would summarize the approach.
Séverin?
Yes, good morning, Jacques-Henri, thank you for your question. Regarding the revenue first, it's fair to say that we have already observed a reduction in term of revenue generation because we have limited the production just to adjust the risk profile of our current exposure. It's fair to say that the reduction of our risk profile risk appetite will have an immediate impact on the revenue earlier. In term of cost, as we did last year, you saw that last year we announced a cost-reduction plan, we delivered it finally completely now, it is 18 months later on.
We will have this cost reduction more observed in 2022 and 2023. We have also to have in mind that we have still some remediation costs, which will have protection, of course, during this period of time. The full year, it could be seen only in 2023. It's fair to have in mind that the cost and the risk profile and the risk appetite will have been decreased earlier also, which is explanation of from next year, for example, on the revenue impact.
Okay. Very clear. Thank you.
Thank you. Next question.
The next question comes from Jon Peace from Credit Suisse. Sir, please go ahead.
Yeah. Morning, everybody. My first question is on capital. In the capital roll-forward slides you had in the first quarter, you did illustrate the possibility of a catch-up dividend. I just wondered how you're thinking about that. Is it still a possibility, or would you rather run with a higher capital level given the uncertain environment? My second question relates to Slide 35, where you've given us your macro scenarios. I just wondered, how does that relate to the 70 - 100 basis points? Does your base case form the 70 basis points and the weighted average is the midpoint of 70 - 100, or how do we think about that? Thank you.
Hello, Jon. I will leave Diony answer your second question. On the dividend, let me say we took notice of the recommendation of the SSM. The board did not make any decision on that question. I think we will wait for your end. Who knows, things might evolve. Certainly, we keep the same policy, which is to provision for 50% of our underlying net profit. Of course, not taking into account any exceptionals like the one we booked this quarter or potential, whatever additional exceptional items. Let's wait, but there's no significance in the fact that we just confirmed there's no difference of message, if you wish, in the confirmation of our guidance. Diony, could you answer perhaps the second part of the question?
Yes. Indeed, our range is based on the scenarios base and prolonged, but takes also into account the fact that for the first half, we have applied the multi-scenario approach. In our disclosure, the probability-weighted scenarios, which, in applying the methodology, relies on higher weighting of the adverse scenarios than we usually do. It's almost double compared to last year.
Thank you. Next question.
Thank you.
The next question comes from Tarik El Mejjad from Bank of America. Sir, please go ahead.
Hi, good morning, everyone. Just a couple of questions, please, and one clarification. First, on the clarification, in the Q1, you said the strategic plan will be 2021 - 2025, now you seem to suggest there's only the plan will go to 2023. I'm just curious to know why the timing difference, is there anything behind that? On the cost of risk, in your scenario, do you factor in the potential deterioration of your exposures, especially when the government guarantee scheme will start to unwind in the autumn, and the reaction from some corporates not to keep some staff, and so on. Just to know how you capture that in your updated guidance of lower end of the range.
Lastly on CIB, just to know if there is any restructuring cost attached to the de-risking you've just announced. Will that be in a disclose later on? In terms of timing, the EUR 200 million-EUR 250 million revenues loss, is that a loss that will come in 2022 or so? It's just revenues that you owe the loss that are not coming back given where the level of revenues you are in equities. Thank you.
Tarik, hello. Good afternoon. On the clarification, let me be very clear. We will project the financial perspective of the group, as usual, on the next three years, and not go beyond 2023. At the same time, we might give, for certain businesses, further strategic direction. Maybe we'll see. It's premature. I will comment on that first half of next year. Some further perspective, in terms of long-term transformation. There's nothing changed. Really, the full set of figures for the group will be like usual, for three years. Perhaps, Séverin on the question of the provisioning and then again, Diony on the cost of risk.
Yes. If I may answer. Sorry. On the revenue, I have to be clearer than I was probably. When we speak about EUR 200 million -EUR 250 million in terms of impact on the revenue, it's clearly a structural impact in a normalized environment in our global market activity. You can take the figure we had before the shock of the COVID, and so it's actually taking less than 5% of the global market revenue we are speaking about.
In a structural environment, if I may, a normalized environment, it's fair to say that during the transition period, before being at that target in terms of business and product mix, we will have lower production, of course, just not to reinforce the current product mix we don't want to have anymore. It's something you have to have in mind. In terms of cost, your question is a bit premature, Tarik, sorry for that. We will come back later on this restructuring cost question.
Diony.
Hello. Indeed, we are taking into account the fact that when moratoria will expire and despite the rebound, we are going to have materialization of the default. In our scenario, actually, the way it is taken into account in the forward-looking and the IFRS 9 parameters, actually results in considering that all the government measures delay the bankruptcies and default versus fully eliminating them. This is the reason why we have such an important component this quarter of Stage 1 and Stage 2 and forward-looking, because we consider that all these measures, government guarantees, loan, or moratoria, will not eliminate defaults, but delay them. Indeed, our guidance take into account materialization of the risks.
Thank you very much.
Thank you. Next question.
The next question comes from Giulia Aurora Miotto from Morgan Stanley. Madam, please go ahead.
Yes. Hi, thank you. Good morning. A couple of questions from my side as well. The first one is quite straightforward. On costs, I appreciate the clear commitment to EUR 16.5 billion for 2020. Can we expect lower cost in absolute amount, in absolute euro billion also for 2021 and 2022? That's my first question. I wanted to ask you about NIM margins. If I look actually across divisions, you had loan growth, but NIM was down quite materially, and in particular, for example, in Czech Republic or in ALD. Can you guide us through how you expect NIM to develop across the different products? Thank you.
Giulia, I will let, when we talk about NIM, mainly Philippe Aymerich to answer on the French retail and Philippe Heim on ALD and the international retail. On the cost, it's premature to comment on 2021, 2022. What we've said is that we have, again, this commitment to beyond 2020, improve the efficiency of the group. Some savings this year, as we've said, which are related to travel, et c, might go up next year, will go a little bit more in more normal function months, but some will be consolidated, and much beyond, we will curb down, step by step, other costs, working structurally. We, again, well, capital markets is one example, but we will go beyond. It's a bit premature to give you any figure. It's part of the budget process that we have just started. Perhaps, the NIM, Philippe, maybe first on the French retail.
Yes. Hello, good morning. I would say that the story, it's pretty much the same, that what we said during the previous quarter. The big impact is still on the net interest margin for deposits. You have seen that during this quarter, we have been impacted by a strong increase in deposits, especially on sight deposits. This increase, it's +1 9%. Most of these amounts, it's replaced at the very short-term in this very low-rate environment. That's the main explanation of what happened on the net interest margin. Regarding net interest margin related to credit, I think it's well under control. Of course, the production has been reduced, notably for individuals this quarter. The new production is still at a good margin. We don't expect any bad news on this aspect.
Philippe Heim on ALD and international retail, please.
Yes. On ALD, what you need to understand is that, let's say revenues are driven mainly by the volumes we originate. The activity was pretty weak, and during this period of time, during COVID, what we did was to extend the contract that also granting some rebates on the contract themselves. The service margins remained pretty resilient during this period of time. Then on used car sale results, we have to take into consideration, let's say, two effects. First, we had to reset, let's say the way we assess the residual values and the gap between the contract residual values. This is an exercise we conduct on a quarterly basis. Then we have also take into consideration that due to the COVID and that market was virtually stopped, we have seen marginally the stock of vehicles increasing, and we took a specific provision on that.
If I have to expand the landscape to international retail banking, let's say two things in a nutshell, because I don't want to be too long. In Eastern Europe, namely Czech Republic, Romania, and Russia, those two countries were impacted by decreasing interest rates. I remind you that the Czech Republic between January and June, interest rates were cut from 2.25% to 0.25%, just an example. The activity in Africa was still very good, and it was mentioned by William, revenues increased by roughly 5% in this part of the world.
Thank you. Next question.
The next question comes from Jean-François Neuez from Goldman Sachs. Sir, please go ahead.
Hi. Good afternoon. I just wanted to ask, firstly, on the CIB. I remember a slide last year in May at the deep dive, where you showed that about half of your global markets business was flow business, which made less than 5% ROE. The other half of the business, which was financing and structured, which made 10%-15%, and the strategy at the time was to increase the capital allocation towards structured and de-emphasize a bit of flow to the extent it wouldn't impact the leading franchises and protect their returns. Now, obviously, this looks to have changed. I just wanted to understand what's the new return you think you can achieve in global markets, before you take into account the additional cost savings of EUR 450 million that are mentioned in the slides.
I assume that the cost savings in this envelope, if you want, are probably going to have to be allocated to different businesses across CIB beyond the structured products. If you could then elaborate as to where they fall, which businesses you think can be impacted, and what you can do differently in order also to preserve the revenues in the other areas where the cost savings will fall. My second question was, I thought that the cost management, as per William's recent call, was outstanding. As with other banks also, we've seen strong cost decline this quarter. I just wanted to understand what you think, what you learned, what you did better, and how much of this you think you can take forward. Just trying to understand in staff count or salary reduction or real estate and other expense reduction. Thank you.
Yes. Thank you, Jean-François. Perhaps, Séverin.
Yes. Thank you, Jean-François, for your question. The fact that the last year we had, before this crisis, a view that the full business, which is representing 45% today of our global markets activity, will have clearly a lower revenue return in the past. The cost reduction plan we made, and we will have still increased, if I may say, in the long run, will lead to have higher than 5% the revenue return on equity on the long run in this activity. It's certain say that it could be because, in my view, personal view, to have above 10% in the full activity for the long run. It could be a bit above this figure on the long run, clearly. For the rest, it's still valid.
The question we have today is that in such market condition environment, and we have seen that in the last two years, that the structured product or the investment solution activity has been really much, if I may say, under pressure due to market dislocation and market situation we have. The way we are dealing with this question, as I said, is to reduce the risk profile and to reduce the sensitivity of this exposure to some market parameters.
It will have a negative impact on the return structurally, but we are compensating that on the long run by the additional cost reduction I mentioned. On the financing activity, it has been, if I may say, during this period of time, the most profitable activity we had, above 15% also during this period of time. Having said that, beyond the current crisis situation where we are, we will be put in a type of similar situation we had expected last year when we presented to you, which probably due to the low revenue, cause slightly pressure on the return, but which will be addressed in the long run.
Of course, perhaps on your second question, I think they are very different things. First, it's fair to say, like probably most banks, as we've said, we've been able to save money on travel, events, all external contractors, discretionary expenses in a pretty unique way of functioning. As we've said, some of that will be consolidated by new way of working. I tend to think we will be able to save, for example, structurally on trips. Again, on the real estate, for example, you do not yet see the potential benefit of developing more structurally, a different balance between working on premises and from home. That's something we want to implement. There's certainly more on that front, step by step.
Beyond, I think the improvement of efficiency will come regarding our group, first of all, on the end of the remediation, because we've maintained that to avoid any delay in the remediation process. We've kept exactly the same effort regarding certain remediation, with the bulk of it, which would be completed end 2021. Of course, more structural changes which can be related to automation, digital technology, offshoring, et c. There are levers that we want to further develop. It's a really mixed bag, and I think, again, the priority on cost will remain very strong for us in the coming two to three years.
Maybe, Frédéric, one can add one specificity for European banks at least. Which is charge to the SRF. That's nothing that we commit upon in our trajectory. You should be aware that for us, this is approximately EUR 470 million. For the market activities which you referred to earlier in your question to Séverin, this is EUR 240 million. If you strip out that EUR 240 million, you add back 2% return to the activity, so to the 10% that Séverin was alluding to, that's from 2024 onwards.
Okay. Very clear. Thank you very much.
The next question comes from Anke Reingen from RBC Capital Markets. Sir, please go ahead.
Yeah. Thank you very much. I actually had a follow-up question on the slide five on the structured product review. Just to understand it correctly, so the revenue loss as well as the cost savings, they're compared to 2019, rather than what we've seen so far. Should this then mean the EUR 450 million cost savings, if I compare to the EUR 6.8 billion you talked about before for 2020?
Sorry.
Can you hear me?
Anke, Yeah, sorry.
Yeah.
Sorry, we had just a technical problem. I'm sorry, could you please repeat your question? We did not hear you. Sorry about this, Anke.
Okay. No problem. Thank you very much for pointing it out. My question is basically going to slide five. I just want to make sure I understand correctly the revenue loss and the cost reduction. Should I basically take 2019 and assume the revenues going off the 2019 number, and the same with the cost, they're off 2019 numbers. Although obviously that would suggest the business was never profitable because obviously, the costs are higher than the revenues.
Also the EUR 450 million, is that an additional step down from the EUR 6.8 billion costs for GBIS you talked for 2020? Lastly, just on the capital, I understand it's early days on the dividend, and you said it's a 50% payout ratio, but obviously a capital ratio would suggest you could pay more out than the 50% payout ratio would suggest. Would you consider going to an absolute level, or is it just really too premature to comment? Thank you very much.
Really, Anke, I will leave the floor to Séverin on the dividend. It's really too early. Let's wait, year-end, what the system is saying, et c, and after we build the trajectory. Sorry about this, but I think we cannot comment more. Séverin, sorry.
If we come back to the previous point I made already, Anke. In fact, I mentioned the fact that I consider a normalized environment, saying that you have the market parameters which are more stable and you have normalized environment. We can consider that our global market revenue in the past, in a normalized environment, was around EUR 4.5 billion a year. When I mentioned the EUR 200 million and EUR 250 million, it's obviously speaking to starting from this normalized environment first. Then when we had said that the EUR 450 million is, if I may, in addition to what we already done, and what we'd said last year, clearly to be below EUR 6.8 billion globally speaking for GBIS with a significant part with market. You have to take those view that on a core base would be lower than what we said last year by this order of magnitude.
Thank you. Next question.
The next question comes from Stefan Stalmann from Autonomous Research. Sir, please go ahead.
Good afternoon, gentlemen. Thanks for taking my questions. I have two, please. The first one regarding your agreement with Amundi, which you have just extended. Could you maybe talk a little bit about, first, what the direct financial impact could be? I understand that the retrocession rates have gone up somewhat. The second point, maybe more broadly, you do have a bit more freedom under the new agreement in terms of non-exclusive distribution capabilities. What do you think you can do with better degrees of freedom under this agreement? The second question, a bit of an accounting question, I'm afraid, but looking at your Level 3 assets, your trading derivatives that are held under Level 3 have doubled year to date. You also had very big moves in your P&L from Level 3 assets.
A pretty big gain on Level 3 derivatives, also a pretty big loss on Level 3 structured nodes. All of these amounts are quite big, and I was just wondering whether you have taken any particular provisions in your P&L to account for the arising uncertainty on how to value these positions, and whether these valuation allowances are part of the problems that you have faced in equities in the first half. If you could add a bit more color on that would be very helpful. Thank you.
Hello, Stefan. William will answer your questions. On the Amundi, I will leave the floor immediately to Philippe Aymerich. I just would like to insist that, I must say, my perspective is that going forward, the longer-term trend should be towards more open architecture for retail clients. At least for us, it was a good opportunity on one hand to consolidate strong partnerships with a strong asset management firm, but at the same time broaden the range of products to be sold, trying to really provide the best, in our view, and the most competitive product offering, as I said, including with a strong ESG component. It is really the purpose of that agreement. Philippe, can you elaborate on the potential financial consequences?
Yeah. I'm not going to elaborate on the financials of this new agreement. What I want to stress is that we do consider that the topic of savings is really more strategic than ever, and that really at the heart of the strategy for the coming years will be individuals. As you know, we have invested quite a lot. We have completely redesigned our setup in this area, not only on private banking, but also on all the wealth management clients. The renegotiation of this agreement is part of this overall strategy. As you know, with Amundi, we had this quasi-exclusiveness agreement
What we want to do is really to enlarge our product range, so to be able to sell more products, more services to these clients. Now it's possible. What we are going to do is really to enlarge this range of products. We are going to sign agreements with other partners and overall, yes, we do think that all these actions are going to help us to better satisfy the clients, but also to improve our financial risk.
Thank you. William?
Great.
Hello, Stefan.
Hi, Willy.
Hello. Listen, there are two components in your question. The one is pertaining to the balance sheet, and effectively this is a balance sheet item. The other one maybe I misunderstood, but on the movement of the P&L, which I don't fully catch with what we do. Anyway, I'll address it.
Could I just maybe clarify if you like?
Yes.
It's from the same footnote on Level 1 - 3 disclosures, where you also have basically a flow table that shows how much of the changes in balance sheet values went through the P&L. There was actually a EUR 1.5 billion positive effect from Level 3 assets on trading derivatives in the first half. There was also a EUR 5.5 billion loss on Level 3 structured notes going through the P&L.
Okay. Fundamentally, yes, that's the same stuff. First of all, you're right to point out that there are some changes, particularly on the asset side of the balance sheet, pertaining to Level 3. We've changed the methodology, and we now think slightly more conservative in the sense that we now gauge the observability of parameters, which is a key element to account for Level 3 and 2, and others, on a more regular level. This is no longer at a cluster of parameters that we take, but we will get it on a more regular level. That results in an increase of Level 3 asset on the asset side. On the liability side, we're not that comparable, I have to say, with peers.
Everyone maybe have a different approach, but we are clearly more conservative generally speaking, because we don't do any split accounting between the bond part and the derivative part. That's different. I'd say the main thing that has changed for us is what is the assessment of the significance of an observable input, and what is the granularity that you have to take in the assessment of observability? The real, for me, P&L impact that we are talking about is then how much do we have to reserve up front via the day one reserve. It is true that the day one reserve has increased in this quarter by about EUR 100 million. We have a very high level of reserve. Some people may say that maybe putting ourselves on the conservative side. That are the two comments.
There is a methodological refinance to put ourselves in the best, more conservative approach status, and that has an impact on the asset side, and then the day one provisioning. The rest, I would say, you're perfectly right. It's part of the normal accounting for trading assets and the ups and downs depending upon the valuation. There's nothing specific, I would say. Overall, you see that the balance sheet anyway decreased in Q2 relative to the beginning of the year. It's very much in check.
Thank you. Okay, next question.
The next question comes from Flora Bocahut from Jefferies. Madam, please go ahead.
Yes, thank you. Good afternoon. I have just one question really on revenues. At the end, you guide us on the cost, you guide on the provision. If we trust your guidance there, revenues are likely to be the main swing factor in terms of expectations. Obviously, if I think about revenues, Q2 was clearly a special quarter on that front with the effect of the lockdowns. What I'd like to understand is how we should think about the outlook for revenues from here, and especially in French retail and in African retail.
In French retail, the question I wanted to ask is, how much of a positive contribution could we see from Q3 onwards from the TLTRO III, if you disclose the take-up maybe? How quickly do you think we're going to see a rebound in the service fees, which you said in the slide pack decreased strongly in Q2? In Africa, regarding the comment you made, William, on the Tunisian moratoria, was this a one-off, or could that continue into Q3? Thank you.
Flora, good afternoon. Just a general comment before leaving the floor to Philippe Aymerich on certain specific items. Why don't we give any guidance on the revenue? There is more uncertainty. We have less control than on the cost, obviously. Even now, I would say, on the cost, there is even the development that we see, because if we were to go back to a lockdown in October, November, I don't think it's our central scenario.
Actually, the government cannot afford to go back to what we've experienced in March and April or May, but I think, who knows? We did not want to give any guidance. What we've said is the rebound that we saw from mid-May or June, depending on the geographies, is across the board. People, again, are able now to consume banking services more normally. Again, we remain a little bit prudent. Our confidence is still an improvement, as you've mentioned, compared with Q2 clearly, but we did not give any guidance. Perhaps Philippe, some more detail, or William also on that.
Yes. If I go item by item. The first one is that we foresee recovery on service fees. What we have said is that April and the beginning of May, were a very low level of activity generated by the clients. Less usage of credit cards, less transfer, less Forex, less payment incidents. The second point was, of course, the commercial activity was very low, including less account opened. What we have seen during the second part of the quarter is definitely a rebound, especially in June, and we do consider that unless bad news from an health standpoint, this rebound will continue. Regarding financial fees, actually, as we said, they were quite high during this quarter, and probably they will come back to more normal level in H2.
Regarding the net interest margin on deposit, it will continue to drag on the net interest margin, but probably we will see more usage of the cash by the corporates, and so maybe we'll have some relief on this side. Finally, regarding the net interest margin for credit, yes, we will have a positive contribution of the PGE, including some effect from the TLTRO, but still these credits are less positive than the classical medium terms.
Thank you. Thank you. Next question.
The next question comes from Guillaume Tiberghien from Exane. Yes, sir, please go ahead.
Yes, thank you for taking my question. I have got two. The first one relates to the cost. You have got EUR 16.5 billion commitment, but then you did not seem very sure whether there will be or not a restructuring charge. Should we allow for a restructuring charge already this year or next year? The second one is more about your long-term aspiration in the CIB division, because with EUR 15 billion of capital allocated and maybe even more after TRIM, if you wanted to make just 10% ROE, that would probably require, if I put a normalized cost of risk, about EUR 2.2 billion -EUR 2.5 billion of pre-provision profit.
You have been below EUR 2 billion since 2017, and actually, at the moment, you are below EUR 1 billion on the run rate. I do sympathize that equity derivative is not great, but fixed income is booming, and corporate banking is actually very healthy. Actually, I don't find your revenue generation particularly weak at the moment. My question is it reasonable to aspire to 10% ROE? If so, in what sort of timeframe do you think? If not, then should you just consider giving up on the whole business line?
Guillaume, hello. On the cost, the EUR 16.5 million do not include.
Provisioning.
It's absolutely premature to comment on this.
Frédéric, do not include and do not require, because we're looking-
Yeah.
... at all initiatives.
Absolutely.
For the beyond, that's another story.
Again, on the CIB. William. Sorry.
Sorry. Thank you, Guillaume, for this perspective question. It's not the time, if I may say, to present you the plan. We will present you for the long period of time. Let me share with you some view we have already. In the long run, the EUR 15 billion capital allocation to GBIS, it will be a question we present to you in the next strategic plan. The way to allocate, if we take this EUR 15 billion as a given today, there is clearly a trend where we are committed to, is to reduce the capital allocation to our global market activity, and to increase the capital allocation to the business where we think there is a real profitable opportunity. Today, I can mention two of those, which are very benefiting from the current situation, and we think it will continue for the next years.
The first is what we call the global banking and advisory side. It's fair to say that during this quarter, we had to put in place some treasury lines for all our large corporate who are not really profitable activities, what we call commercial banking. If you have a look on the investment bank activity during this quarter, we think that for a long period of time, there are opportunities in Europe for us and for banks in Europe doing that work. We can allocate more capital in global banking and advisory with higher return than in average for global GBIS. The second area where I think, and we took market share over the last years, and it's continuing to do that, is in the transaction banking, which is a low capital intensity business.
We have demonstrated very recently that we have capacity to take market share. All in all, I will not tell you now what will be the target in term of return on the global banking. I really feel, not feel, I'm really convinced that there is a way to deliver higher return than cost of equity in this activity. The franchise we have is a corporate franchise and a financial institution franchise. This business is serving a core franchise for Société Générale, and it also irrigating all the other business lines. I can mention with Africa, for example, today we are making more than EUR 100 million in term of pure GTB activity with African clients, and there is some opportunity there to continue to do. For me, it will be at the heart of the business of Société Générale for a long period of time.
If I may, Guillaume, just don't forget between 2017 and now, that the Single Resolution Fund, which is going down to the net profit and probably, and we can check the global figures, is probably around EUR 300 million net on the GBIS division. This, of course, we can figure that, at some point it will go.
We can hope.
Yes. Hopefully. Next question.
The next question comes from Kiri Vijayarajah from HSBC. Please go ahead.
Thank you. Yes, good afternoon, everyone. Firstly, just clarification. William, did you say you've increased the stock of revenue reserves you've taken against Level 3 assets, in the quarter? If you could just quantify that, please, and presumably that's all in global markets rather than in the corporate center. Second question is on French retail and this issue of deposits growing faster than loans, and that hurting your net interest margin. I just wondered, do you think that buildup of cash deposits on your balance sheet, is that continuing through into the second half, do you think, or is it more just was a blip because of the crisis and so that sort of drag on net interest margin slowly unwinds, as that sort of excess liquidity kind of drip-feeds off your balance sheet as we head into the end of the year? Thanks.
Kiri, William, on the first element, I think, on deposit, a bit difficult to predict. You have households and corporates. Corporates, they certainly wanted to secure liquidity. They might reimburse some of the facilities if they feel now when they started, to feel more comfortable in the environment, and also they should consume a little bit more. Now, it's also fair to say, when you look at France, the people are a little bit worried about the future, and we tend to think that savings should remain relatively high, the saving rate. Hopefully we will also advise to invest in other products. That's the point also of the saving focus. Perhaps Philippe, maybe just to comment.
No, just I agree with Frédéric. I think regarding corporates, yes, our assumption is that they will use this cash at some point. The need for the operations for we are going to reinforce some activities. Regarding individuals, I think, they will continue to save money. The challenge, as I just mentioned before, is we need to make sure that we are able to redirect a part of the saving in financial products. That will be good for the clients and also good for us.
William?
Just Kiri, sorry if I was not clear. Level 3 is not a P&L item. Just not a P&L item. It's a balance sheet item. What I said is that, in the way we classify trading assets or banking assets, we level them according to their characteristics. To the extent there are unobservable parameters, we would classify them in Level 3 or Level 1 is also unobservable parameters have certain features. What we said is we've become more conservative in as much we decided to do at the parameters in open observability on a very granular basis, on a family of parameter basis. That basically means we have translated some assets or some liabilities from Level 2 to Level 3. That's why you have the difference.
In fact, would you look at the PNL, the way you have to look at it, again, is potential impact is via the reserving of future revenues or future margin generated through those assets. The so-called day one reserve, which I refer to. In fact, this quarter, it does cost us a bit through that reserve in terms of PNL. The fact that we have classified more assets on Level 3. Again, I want to be very clear, and I'm sorry if I was not clear enough. This is a balance sheet item.
Thank you. Next question.
The next question comes from Azzurra Guelfi from Citi. Please go ahead.
Hi. Good morning. Thank you for taking my question. One is on the business portfolio. You clearly made a huge effort last year reviewing your businesses. Post the crisis, do you think you can expand or divest across, and review other division, not just the CIB, and if you can give us some color, if possible. The second one is on Boursorama. You showed significant growth year-on-year there. Can you give us some color on where are you taking the clients, how active are these clients? Ideally, some indication on the profitability of clients comparing year-on-year. If without the record brokerage activities that have been shown, would they still have a positive contribution to the group in terms of net income? Thank you.
Yes. Azzurra, I will let Philippe and Frédéric answer on your question on Boursorama. On the refocusing, I mean, we are done with the refocusing retail financial services, and we have this disposal of our SG Finans equipment finance business. We are done there fundamentally, but we think we will effectively complete our refocusing program in the coming months, as soon as things are normalizing. Philippe.
Yes, thank you for the question. Yes, it was a very interesting quarter for Boursorama. I think that really, all the metrics are pretty well aligned. As we said, the acquisition of client, yes, it is slightly down compared to the second quarter of 2019. It's still quite vigorous. We have acquired 120,000 clients during the quarter. Overall, during the first semester, we are above the first semester of 2019. Today, Boursorama has approximately 2.4 million clients, which is an increase of 24% compared to last year. What is really interesting is to mention still that at the same time, we have + 32% regarding the deposits, + 23% regarding mortgages. Regarding the acquisition cost, it's actually down. All the costs are still very well monitored.
In addition to that, it's true that we have a kind of boost on the revenues due to the stock market orders, times four compared to last year. Also to mention, interesting thing is that we have opened a lot of accounts for market orders. It's times six compared to last year. Yes, there is a kind of boost during this quarter, more fundamentally, this quarter demonstrates that the business model of Boursorama works, we still do consider that it's very important to continue to build this customer base.
Thank you. Next question.
The next question comes from [Jean-Sébastien Satge] from Oddo BHF. Sir, please go ahead.
Good morning. Thank you for taking the question. Two question, if I may. The first one is very basically regarding the TLTRO. What kind of impact should we expect in H2? Is it significant? Is it something which could support really the net interest income? Second question regarding the goodwill impairment and the DTA you're charging in Q2. Could you share with us the assumptions in term of future profitability you used as an input for those impairments? Thank you very much.
Jean, hello, good afternoon. I will let William answer your two questions.
I guess, hello, Jean. The second part of the question is the easiest one. You see, we will not share our business plans because we don't have numbers beyond 2020. What we are talking here is about business plan. Methodologically, what you have to look at is the fact that we take a three-year vision, and then we extrapolate. The three-year vision, again, is not something that we detail. Also have to take into account some weighting the different scenarios, it's a judgment call in the end where you end up in terms of both yield and impairment of things like that. TLTRO, I start with the balance sheet again. We have so far drawn for an amount for about EUR 46 billion - EUR 47 billion of TLTRO.
If I combine Société Générale S.A. and Crédit du Nord, we have a capacity which is in excess of EUR 60 billion. We have not drawn all capacities we have. Clearly, it has some interest economically, but the weighted average coupon, you can think of taking the different periods time, at least through June 2021, is about EUR - 67 million. Now, you have to look at it in a very nuanced way when you make your calculation. This is clearly a positive for us. It also helps finance assets such as the state-guaranteed loans which grow as a substitute sometimes to production we may have had otherwise. Profitable production means usually good margins as well. It's not just one for one.
Thank you. Next question.
The next question comes from Lorraine Quoirez from UBS. Madam, please go ahead.
Yeah. Hello, good afternoon, and thank you for taking my question. Just a quick follow-up. Do you exclude booking new restructuring costs by year-end? Sorry, it's not entirely clear to me. I was wondering whether you could give us the date, when you intend to unveil your new strategic initiative for the next coming three, four years. Thank you.
Lorraine, we plan to comment on the new plan the first half of 2021. We are, again, as I said, working on this, but in terms of communication to the market. As I said, it's premature to comment on any restructuring cost. Can I say, even if we were to do that, it would not be included in the calculation of our dividend policy. We always calculate an underlying net profit. It's again premature, so I can't say more than that on this topic. Next question.
The next question comes from Omar Fall from Barclays. Sir, please go ahead.
Hi. Thank you for taking my questions. I am very sorry to come back to structured products. I didn't hear Séverin's answer to some of the questions, the line's a bit bad. I just wanted to clarify, the EUR 450 million of savings, it's not just the costs associated to Auto calls. It's a broader target for more cost savings, even from businesses not directly affected by this de-risking. Where are these costs going to come from in terms of their nature? You've already done so much on the expense base since CIB. I mean, you took out EUR 500 million as recently as the last year. How can we be comfortable this doesn't have even more of an impact on revenues in other businesses beyond the EUR 200 million-EUR 250 million revenue losses you've highlighted?
Is there an opportunity to sell some of the impacted portfolios to competitors to accelerate things? Some of your peers have done this in the past. If you could give us what the risk-weighted assets associated with the perimeter being looked at, that would be helpful. The second question is just on loans under moratorium. Could you just give us a bit more detail on these programs? I know this is kind of spread out a bit across the presentations, but how they're performing at the end of their grace period, and also whether you expect these balances to reduce meaningfully from here, that would be helpful. Thanks.
Omar, good afternoon. I will first leave the floor to Séverin.
Thank you. Thank you, Omar. To taking the last point you made, we will consider any opportunity, any possibility to de-risk the portfolio we don't want to keep. If there is possibility to sell, as you mentioned, yes, we will consider it. The structured product portfolio are not easy to sell, as you know, because there are not so many counterparts in a position to buy it. If there were some interest, we will look at that. Regarding the risk-weighted asset, there will be a slight positive impact on the risk-weighted asset of this new adjustment of our product portfolio.
In this business, there are a lot of netting impact when you are disturbing one asset that you are increasing another part. You don't have to expect a significant impact on the risk-weighted asset due to this product adjustment. There will be slight negative, positive one and maybe reduced one. Coming back to your question on cost, it's fair to say that we made a significant part of our cost reduction last year, and we consider that we can go beyond.
Without impacting the revenue beyond the EUR 250 million we mentioned during this call. Why? The first thing we did last year, as you know, in the global market activity, was what I call the Agile at Scale initiative, putting, for example, together our IT and operation by business lines. We can consider that we have to go further, including what we call the central function and the control function in this front to back view, which we have not done yet. There is some, if I may, additional capability in terms of efficiency, if we have the pure front to back view, not only from the front office until the accounting part, if I may say, we didn't completely address yet. Second point, very important, the risk profile of this portfolio will be lower. We have also to adjust, and the product mix will be lower.
We have also to take into account the fact that we could have some simplification in our process with a lower risk profile of the business. Third, on IT. On IT, we are still very intense on IT. My view is, we can go further in terms of IT cost efficiency. We will have, clearly, in that area, some cloud initiative, which are further than what we have done today. We could also have further offering capability, what we have already done today. All that means, in my view, might give my comfort in terms of capability we have to go further in our cost reduction without impacting beyond the EUR 250 million revenue.
Thank you. On the moratorium, I must say, I'm speaking under the control of Philippe, I'm not sure actually that we have seen any end of the moratorium.
They have just been put in place for over six months, I guess, for most of the countries. briefly, Philippe Aymerich and Philippe Heim.
Well, yes, very briefly. In France, there are two aspects. The first regarding corporate and professional, that's true that there's been automatic for many clients. It's a six-month moratorium, and as disclosed in the financial statement, it's relating to approximately EUR 20 billion of standings under moratorium. Regarding individuals, actually, the numbers are quite low. It was not automatic at all. It was really specific decisions, client by client. Of course, I remind you that if the payment is postponed that the interest are due.
Thank you. Philippe Heim.
On IBFS side, I would say that we have a very diverse landscape. We have a moratorium from three to six or nine months. Just to give you an example, in Czech Republic, it is covering retail, semi-corporate between three to six months, in Romania, nine months. In Russia, this is restricted to individuals having a 30% decrease in income, and allowing a six-month credit moratorium. We have also contemplated such a system at group level in Africa, and as indicated already by William, there is only one situation in Tunisia where there has been, let us say, forgiveness was granted on interest, and impact of EUR 30 million.
Thank you. Next question.
We don't have any more questions.
Okay. Well, thank you very much for attending the call, and have a very nice afternoon.
Thank you, and a nice, a good break.
Thank you very much. Bye-bye.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.