Good morning to all of you. Thanks for participating to this conference call on our Q1 and full 1st 9 months results. As usual, I will just say a few words, Then leave the floor to William, who will go through the figures more in detail. And of course, with our management team, we will then answer for your questions. So if I just go to the first slide, the key highlights.
First of all, let me just say that overall, we have results exactly in line with our priorities and objectives. The first priority was obviously and is the capital. It was your concern beginning of this year. As you can see in this Q3 and well in the previous quarters, very strong progress. Our forty one ratio stands at 12.5%, up to 45 basis points.
That includes the provisioning of 3 quarter of our cash dividend, 2 point to €2, so €1.65 per share in cash is provisioned at the end of September. This level of capital reflects a series of action and disciplines. 1st, strong discipline in the in the risk weighted asset consumption. The deleveraging in CIB, which is actually completed 9 months ahead of our initial time frame. Effectively, we have met the €8,000,000,000 risk weighted asset target that we have for our capital market activities.
We have also and we will go through this more in detail with William. Effectively. We are getting the benefit of the securitization that we have put in place. William will explain more in detail. We also benefit from the closure of some of the disposals, which were announced around a little bit less than 10 basis points.
This 12.5% is significantly above our NDA by 2.50 basis Let me just highlight that all the other ratios, in particular, the leverage ratio, total capital are up and strong as well as, of course, the fact that we are one of the very few banks already compliant with MRN. 2nd, regarding the businesses, we are pursuing the adaptation of our businesses. We will go through that in detail. All retail activities and financial services are delivering very well and in line with our guidance. And regarding the GBS, I would like to highlight that the again, the restructuring is being implemented smoothly in line or even ahead of the time frame.
And I'm very positive on the effects of this restructuring. We have a more focused business model. At this stage, of course, we are losing the revenues of the activities which We have decided to close and we do not have yet the benefit of the savings which have been decided that we have effectively in practice secured. So things are going in the right direction and knowing you will at the financing activity, the structured finance and the cash management activities are going very well. The third element is that, of course, beyond, we are also benefiting from a solid risk profile.
The cost of risk is stable at 26 basis points, 24 basis points for the 1st 9 months, well into our guidance. And the strong balance sheet is also retracted by the level of NPL which is going down. Let me just highlight that we have completed the funding program for this year. If I just turn to the second slide, which is around climate action. I think this is something very important for banks in Europe.
Let's face it, It is in Europe that this issue is more sensitive, more important, more than in U. S. Or even Asia. But in Europe, it's very important, and I think it's an opportunity of business beyond a fundamental responsibility issue. I'm proud that we have been ranked number 1 bank in the world by RobecoSAM regarding our investment environment strategy.
And beyond. If I look at all the ASG criteria very well in the top 10 top decile among European banks, number 6 in Europe. This is an important element. It is big amount of money that we commit in particular to the transition climate transition in an energy transition with EUR 100,000,000,000 between 2016 2020. We are ahead of this objective and we have recently renewed a new objective for 2019 2023 of $120,000,000,000 which is a mix of balance sheet financing and bonds.
Based on, we are a think pioneer. It's part of the DNA of this company to innovate. Let me just highlight that we were the only bank to structure in the sustainable development gold swap. It's a cross currency swap, which was attached, if I may see, linked to the bond issue made by Enel, a 1,500,000,000 SDG bond issue very recently. And again it's part of the innovation process.
Beyond, let me just highlight also that in our equity research we will from 1st January SME 2020 systematically include a significant element of ESG in the assessment of the companies. Now I will turn the floor to William to answer more in detail in our different activities.
Good morning, everyone. Thank you for joining this call. Let me start with a snapshot in the group performance. This quarter, as Frederic highlighted, the group underlying net income stands at €855,000,000 The 9 months underlying net income stands at €3,200,000,000, demonstrating to a Q3 return on tangible equity of 6.1 percent over the 9 months, the return on tangible equity is at 8.1%. This is consistent with stable business revenues.
If you would adjust and we will come back in that to the impact of runoff activities as well as deleveraging in CIB. And looking at the numbers foreign exchange and perimeter, business revenues are down 0.5% only in Q3 relative to the same period of last year and are flat over 9 months. With costs are going down on an underlying basis, both Q3 versus Q3, 9 months versus 9 months, they are both at around minus 1 0.3%. Looking at the key division that composes the company, It is fair to say that out of 5 key divisions we look at, 4 of them are already on target with the stated return or results that we guided you through for 2020 and 19 for the corporate center. French retail shows the first very solid profitability at 12% in Q3, 11.7% for the 9 months of 2019, which is to be compared with our guidance by 2020 of 11.5% to 12.5% return.
This is on the back of stable revenues, plus 2% in Q3, at minus 0% to 3% of the 9 months. And this is very consistent with what we've guided in terms of revenues over year, I. E. 0 to minus 1%. Costs are up year on year 1.3 in Q3, got 0.2 for the 1st 9 months, again, very consistent and below what we have given the guidance for the year.
International Retail and Insurance and Financial Services this altogether have a return on normative equity of 18.2%, which is on top above the 17% to 18% commitment we have by 2020 more in details. As you we recommend, International Banking has a satisfactory profitability of 16.4%, both on Q3 and on the 9 months, combined with respectively roughly 5% growth at constant check-in perimeter and 7% growth on a 9 month basis. This is also consistent with positive jaws. Interest and Financial Services, return on normative equity stands at 20 0.9% both in Q3 and for the 9 months, again combined with a 3% growth for the 1st 9 months of the year, again adjusted accounts in scope and perimeter. On Global Banking and Investment Solution, We obviously have a different story.
We're not at target with in terms of our NE, our investment at 7.7 for the 1st 9 months of the year, 7.5.1 in Q3. As already said by Frederic, we are in the midst of a restructuring with some impact on the revenue stemming from the restructuring we put in place and not all the impact on the cost. Yet if you would adjust for this restructuring, revenues will be down only 3% roughly in Q3, 2% over the past 9 months and Cost will still be down 4.2% versus the same period of last year. Corporate center is in line with guidance in terms of negative contribution to gross operating income. This is minus 66 for the quarter, minus 141 for the 1st 9 months.
We have incurred a loss according to IFRS 5 linked to the closings of some disposals for Bien Boudova and Montemeco for a total amount of 13,000,000. Going more in details for the core Tier 1, although you have already been told that the main elements in the split. Core Tier 1 stands at 12.5% at the end of Q3 to start of the 'nineteen. As said by Frederic, Please note that we have adjusted our provision for dividend this quarter based on the full year cash dividend of 2.2 per share. It means 2 3 quarters of it being EUR165 per share.
This means basically given the catch up we did on the provisioning of the dividend from Q1 and Q2 that you would find in this ratio that on the same methodology as the previous quarters, the quarter 1 we stand at 12.6. We are managing this capital business based on our 4 key levers. Number 1, organic capital. We continue to produce organic capital this quarter. So if you would adjust for the catch up effect that I just mentioned that is equivalent to 10 basis points, you would easily find what is the organic capital generation for the quarter.
Number 2, deleveraging in CLT activities is well on track, actually better than what we had committed ourselves too for 2019. Remember, we have said approximately €10,000,000,000 in total, of which €8,000,000,000 in market activities. We already managed to do the €10,000,000,000 respectively, more than €8,000,000,000 in the market activities and more than €2,000,000,000 in the other activities with €3,000,000,000 particular additional deleveraging in global market RWA. 3rd, securitization, which partly reflects some of the €2,000,000,000 additional I mentioned. We've completed 3 large synthetic securitization this quarter and a bit of the questions should you have any of them.
Some of these transactions have been completed with some interesting innovative features, including With regard to ESG commitment we have, 4 and last closing on 3 disposals, Serbia, Motorvaz and Motorengo translate in 2 basis points this quarter. The other ratios of FADEXX are up and strong. Tier 1 ratio stands at 15.2%, up roughly 50 basis points, more precisely 46%. Total capital ratio at 18.5%. TAVAC is already 30% is up and totally 30% in general relative to regulatory expectations.
Embraer is compliant, and I would like to stress another increase of the leverage ratio this this quarter by 20 basis points. Liquidity ratios are strong. The liquidity buffer increases again this quarter and stands at €193,000,000,000 So if you look, which is on the next page, to the perspective through 20 'twenty, you'll find that there are evidences that we can be confident we should be and firstly our target, which is 200 basis points above MDA at this point in time under Basel III or Basel 4. So 2020 will be obviously under present 3, which is translating to the 12% target per se. As you can see, 1st, organic capital.
We already managed to create 28 basis points organic capital per dividend at 2 20. As I said, we shipped 56% of the 2 year 60 basis points targets and 12% of the yearly target of 25 basis points organic and book creation. Restriction about book value allocated to global markets have already mentioned, totally done. That's why you have the box colored in pink for total fulfillment. We have said you may remember that we would we committed our step to execute 75% of it in 2019.
So we have executed a basis 100% in 9 months. Other of the bureaus reductions, if you would find the 3 securitization, I believe the 2 was equivalent of 15 basis this point. On top of all the response loan measures, we have already benefited from in Q1 and Q2. So we have said 10 to 20 basis points in 2017. One can say we are above the middle of the range.
As far as these proposals are concerned, we are very well on track. Remember, this is only 9 months for a plan that should span over 2 years. In the country, we should still expect a negative impact in the quarters to come. Nothing exchange on our side with regards to the overall number. The next page reflects where we stand in terms of cost of risk.
As you can see, the 9 months cost of risk expressed in terms of basis points is 24 basis points, which is to be compared with our guidance of the cost of risk to be between 25 basis points and 30 basis points by the end of the year. So we feel quite confident again that we will be within the guidance. The non performing loan ratio decreases relative to the same period of last year by healthy 40 basis points. That is consistent with still relatively well in comparison to many peers, coverage ratio coverage rate of 55%. The next page, I don't comment in detail just to make sure that when you look at your numbers and what Frederic mentioned, there are some elements to remember that creates some perturbation in the quarter for the comparison.
Last year, we had incurred a a capital gain of 271,000,000 related to our shares in Europe here. That is about €200,000,000 net income, I. E. Post tax, which is to be considered as a big effect for 2018, both in Q3 and for the 9 months. This year, we have the IFRS impact.
This is down in the P and L just before the net income. I would like also to be more precise on the impact on GBS. We consider we have in Q3 a €95,000,000 negative impact stemming from the restructuring of our activities, I. E. The plan the execution of the plan runoff deleveraging for Q3 and for the 1st 9 months.
This number is €151,000,000 So that's reconciles with what I've said before. If you want to recalculate the revenues and net income perspective for business. Looking at the various pillars, starting with French retail and as usual on their franchises. I'd like to stress mainly 2 points. 1st, we continue to win clients in our core franchises.
You can see with the received companies, well seen massive clients, which are target clients for our traditional network, they are both up again. And we have another record month of acquisition of clients by Poslarna. We have 126 1,000 clients joining Botswana. So Botswana is already again approved its target of 2,000,000 clients by the end of 2019, which has been reached already a few weeks. And First edition, Alba Bosto voted for the 7th time in a row best bank customer service in France.
2nd element, Volumes are up. That obviously explains some of the performance, especially on the net interest margin year on year. In medium term corporate loans in Dynamics with outstanding up 7% this quarter. Individual clients loan outstanding are up 5%. Year on year despite strong selectivity again, especially on the mortgage loans, we target we allocate 90% of those mortgages to what we qualify as our targetpremium client.
Back assurance is up, live assurance outstanding, stand at €95,000,000,000 and net inflows are up 9%. P and C premium are up again this quarter. Private Banking net inflows are €1,100,000,000 That is consistent with a good execution of digitization on the network as well as execution of 72% of the brand closures relative to 2020 targets. I'll leave it to you to ask questions. Should you want to have more details with that respect?
So in order to tell, when you look at the results, which are on the next page, French Retail Banking post again at very good profitability at 12% and very much in line with the target of €11,500,000 to €12,500,000 which we have set. Net income is €311,000,000 Adjusted for the sales impact, the revenues are globally stable on the back of net interest income increasing by 2.9% relative to the sale price of last year and plus 4 0.4% for the 1st 9 months. Fees are decreasing by 2.3% for the 1st 9 months and roughly 4% for in Q3. However, the statement for yellow jacket measures set trade permit impact. You may remember we had at subsidiary last year.
And also the fact that we account for the acquisition cost of clients in Posthorama as fees, Fees are only down minus 1.5% versus Q3 2018 and roughly stable at minus 0.2% for the 1st 9 months of the year. Costs are increasing 1.3%, respectively, and 0.2%, I already mentioned, cost of risk is down. Let me mention that you'll find a capital gain on the sale of real estate property we have. This is part of the rollout of our real estate program, of course, which is consistent with the transformation plan. We plan to continue to optimize our physical footprint during the next quarters and you should continue to get from this positive impact on our results going forward.
Turning to international retail, this is a picture that is very similar to and positive to similar to what we have shown in the previous quarters. It shows strength in volume production. You can see loan outstanding and deposit outstanding growing across all regions, including sometimes double digit certain jurisdiction, Eastern Europe, Russia, Africa, which we continue to have some good momentum in in the conditions. So all in all, you can see revenues are up across international banks in aggregate by about 4%, 5% Q3 relative to Q3 and by about 7% over the 1st 9 months. Obviously, at constant scope and for any change with return on normative equity stands at the high 16.4%.
You will find more details on the page. Turning to insurance and financial services. This is again a story of commercial strength. You can see Life Insurance outstanding up 5%, Protection in Sunpreneur up 9%, ARD fleet was 7%, GEF equipment finance loan and lease outstanding up 4%. Overall, the revenues are up and comes from scope and change by 3% for these businesses altogether over the first 9 months and the normative equity raises further relative to the same period of last year, it's now at 20.9%.
Let me highlight as DMD released their results today and that those results were very positive. Net income is up 7%. And as you can see, the market reaction for those who also follow the share of ARD is very positive. So we're very pleased with in that equity vehicle. Altogether, International Retail Banking and Financial Services results, which you can find on the page next, are up.
IPFS did a significant contribution the group net income again at €1,500,000 roughly for the 1st 9 months of 2019, which is up 1.7% year in constant scope and foreign exchange. Return on normative equity is 18.2%, okay, to be compared with the objective to be between 17% 18% by 2020, so we are ahead. Overall revenues are up both in Q3 9 months. And we have positive jaws. It is important to know when you look at the 9 months Prospective to remember that we had incurred a restructuring provision in Q2 for the headquarters of international retail.
So in fact, The operating expenses are only up 4.5% adjusted for perimeter and change effect as far as EBITFS is concern. And let me remind you of the fact that on the 20th November, we will held together with Frederic, Philippe and the whole crew of those businesses deep dive in London. Turning now to GBIS activities. What we would like to do is start first with what we are trying to implement and what makes us confident that on that division, again, we will be able to converge with the stated guidance in terms of return. We are in the midst of a fundamental restructuring work.
Number 1, as you can see, we have managed to decrease very significantly the capital allocated to the division. Over the past 9 months, we have been able to decrease the RWA allocated to Global Banking and Investor Solutions by €20,000,000,000 or 14%, which is consistent and Actually, even better to what we had indicated to you and certainly in advance to the plan in terms of execution. That obviously has some impact, especially on business revenues, but impact which I would like to highlight are very consistent with our own expectations with regards to revenue growth. Remember, separate events that mentioned to you, particularly a potential €300,000,000 revenue growth for the full year in market activities. We are very much in this ballpark.
So again, as I mentioned, in Q3 2019, You have roughly an impact of €95,000,000 stemming from runoff and de leveraging as well as the bedroom disposal. So if you would adjust the number for this €95,000,000 revenue would be down only 3.2% year on year. And for the 9 months, the same number is €151,000,000 So revenues would be only down 2% and very much again in line with what we had expected. Costs are done very much with in accordance with our guidance despite the fact, as Frederic mentioned, that we don't have the full effect of our cost reduction program. Costs are down 4.1% this quarter.
So to comment on The little boxes you have here, you can see a reduction of cost of about €100,000,000 of which €70,000,000 is due to the program and €30,000,000 is normal cost reduction that we do beyond the program. EFC integration cost represents €30,000,000 for this quarter. So that should help you to run these numbers accordingly. So if you go to the next page, which is the effective results, having made some comments on what explains some of the performance. And starting with financing and advisory, I would like to stress that for this core franchise, we continue to see strength.
We look at it more on the 9 months basis. Remember, this is not the business that you look at on a quarterly basis. So we continue to see revenues up 5% for the 1st 9 months of the year. So they are down just good for the restructuring 2% in Q3. But remember that we had also a big effect in 2018 linked to a strong number of big deals we had done especially in the TMT space in Q3 2018.
So when you look at it more fundamentally, in Q3, structured finance, very core franchise, revenues are up 6%, including the impact of this operation. When you look at transaction banking, revenues are up 10%. Obviously, we have some more negative impact. Income deleveraging, I've already mentioned, and also more disciplined corporate lending, but that is not necessarily the most profitable part of the business. Turning to global markets.
Revenues are down 9% in this quarter. They are just when you adjust for the business closures, especially the citywide closure, revenues are only down 4%. And if you look more in detail, you can see that FICC is up only 1%. But adjusting for what I've just mentioned in terms of business closures, is up 15%, which is much more consistent with the market. As well in equities, Revenues are down 20%.
Remember, we are more geared towards the structured products and obviously in equities, cash products were benefited more in Q3 than structured products. But the number we'd like to look at, again, taking some perspective, in the number of 9 months. Over the 1st 9 months of 2019, equities revenues were down 9%, which is slightly better, we think, than the pool and the market. In a nutshell, the numbers, as I said, return on net equity for the first hand bonds is 7.7 percent. Underlying normative equity for Q3 is 5.1 percent.
This is obviously not consistent with the target that we have set for 2020. But again, very consistent with the impact of the adjustment we are making. I won't make more comments on the revenues. I've already mentioned that. Operating expenses are down, as I at 4.2% in Q3 and actually 4.7% at conference call and revenue change.
Corporate Center, I think this is one of the division, which in a sense is also with the guidance. You can see that for the 1st 9 months, the gross operating income is €141,000,000 which is compared to be compared with the guidance of about minus €500,000,000 for a full year. And we have here the losses from other assets, which are already mentioned stemming from our disposals. I turn the microphone back to Frederic for the conclusion. Thank you
very much, Julian. Let me just conclude. First of all, by really saying the full management team is absolutely focused on delivery. Number one priority is capital, and I think we are providing with this first of a convincing answer. 2nd on the businesses regarding retail and finance services.
Let me highlight good and resonant performance of the French retail, which is probably the most profitable French retail business comes from the RPLs and the focus is on profitability. I think we have definitely clear an edge with all our international retail activities and financial services because they are fundamentally in a different environment in terms of rate or immune from the low rate environment. This is our growth driver. And of course, as William I reminded you, we are going on the November 20 to enter more into the detail. And regarding the GBIS, I think there is really very progress on the restructuring of this business.
You should see you should look at 2019 as a transition year, but we will have in 2020 the full benefit of all the efforts this year and I'm very confident in the management team to effectively take advantage of this refocusing. So as you can see, yes, the environment remains challenging. We all know that European banks It's a series of challenges, regulatory, interest rate, etcetera. But I think really we are moving on the right track, on the right direction. And really the determination is there to deliver.
That's what I wanted to say. And now we are open to your questions. Let me just remind you the good rule, which is the 2 questions per head.
And the floor is
And the first question comes from the line of Stefan Michael Thalmann. Please
The first one With regard to the French mortgage market, please, it seems as if prudential regulators Taking an increased interest in the market and there's a consultation going on, could you maybe outline What your recommendation would be? What the banks should do to address this market and the prudential concerns? And maybe also comment on what you think the prudential authorities will do to address their concerns. And second regarding your numbers and your results, I noticed that if I look at the GBIS credit risk weighted assets, They are down about 17% year on year. And I guess if I back out the securitizations this quarter, it would be about minus 12% year on year.
But your gross loan book is flat. Could you add a little bit of color on where this disconnect is coming from? Are there mix effects? Are there additional risk transfer mechanisms to keep in mind? That would be very helpful.
Thank you very much.
Yes, Stephane. Good morning. I will give the floor to Philippe Hendrick to comment in detail on the mortgage market as we see it. And regarding your question on GBS to Sembravan, Philippe, what can we say on the potential evolution on the mortgage. Yes, as you say, there is a work in progress in discussion with the regulators on that.
We are supposed to provide the offers within the coming days. What I can tell you is that, yes, the mortgage market remains dynamic. We do consider that it's still very sound, especially for ACE. I mean, we have maintained in our selective origination policy. I can share with you that 90% of our production It's with our premium clients.
I also can share with you that, yes, the duration of the mortgages has increased, but it's still quite reasonable. And maybe an additional comment regarding in the renegotiation or anticipating the prepayments. So anticipated prepayments remain stable basically at 6.7%. And regarding renegotiation, They are still very low. At this stage for us, it's 4.8%.
I remind you that in 20 in 2017, we went up to 20%. So in a nutshell, a strong market, which is of course very important for clients, stricter origination policy on our side. And we are making sure that outside the site business, this product is profitable for us. And if I may add, Stefan, from my perspective, the kind of initiative of the authorities go in the right direction. What I mean by this, some players Probably play the card of volume to limit the erosion of interest margin, but if we see more discipline in terms of pricing, that will be good.
Stephane, the GBIS question of Stephane. Yes. The question Stephane is regarding the credit risk weighted asset evolution. Well, managing our risk appetite by using all the tools that we can have in our hands. And among those tools, you have synthetic securitization, You have insurance risk transfer or you have credit risk fund plus group CDS.
So all those three lines that are not impacting the balance sheet, they are just impacting the risk So you keep on your accounting rule, on your balance sheet, the exposure, the outstanding, but the risk transfer. But the main explanation of the gap we saw between the outstanding and the risk weighted asset evolution is due to this type of tool we are using to reduce our capital needs.
Thank you.
Okay. Thank you very much.
Next question?
Thank you. And the next question comes from the line of Mark Clark from Mediobanca. Please ask your question. Hi, everybody. It's
So two questions. Firstly, on the EMC contribution, you gave us the €30,000,000 in restructuring costs this quarter. Could you also give us the revenue contribution and the total costs at EMC contributed this quarter. And then secondly, on liquidity, your liquidity buffers It's gone up again this quarter and they're up year to date and your LCR looks pretty high still. I'm just wondering why do you feel you need to keep adding to liquidity buffers?
And why is this the right level of LCR to be running at? It looks higher than some of your peers.
Matthew, good morning. I will turn the floor to
Jean Francois Glebois, Head of Global Capital Markets, to answer Your first question on E
and C contribution. Good morning. So on E and C for the quarter, we have cost of 28,000,000 and that's 9 months of 57 Actually, in the EMT acquisition, there are really 2 different for market activities, I mean, 2 different type of portfolio. The first one is the structured products that we just currently integrated. And the second one, the 1 business ETF that we will integrate in mid February next year.
It happens that from the start we knew that the first portfolio structured product It's not presenting a lot of value for us because we already had a significant book And we want to be present in the growth of this book for a risk reason. That is to say that the revenues The link to the integration of this book this year are minimal and this is what's expected. This Everything we will the most part will be February next year with this round business in Germany where we expect some nice revenues.
Okay. And just to follow-up on the cost, that €28,000,000 presumably that is underlying costs and the restructuring is on top of that. Is that the right way to think about it?
In our accounting, it is not Labbeld as the restructuring charter. So it is in the underlying that's why I mentioned it clearly so that you can adjust But it is not it is in the underlying number.
But I would say some of it is probably some integration costs, which will then disappear in the migration, if I missed it.
Yes, 9 of them are in agreement.
Something like 10 of them are one off, yes. Okay. Thank you.
Okay. So, back to I will turn to William on liquidity. So, thank you. That Gives me the opportunity to express the fact that we are pretty we feel pretty good about the fact that we should have a strong balance sheet. And as you can see, very speaking in the industry, there is also a structural element to be considered in the increase of capital buffers and LCRs because LCR is a short term indicator, which most of the indicators we follow and we target are on the longer maturity.
NSFR is 1, all the liquidity and the stress metrics that we follow and SiC2 have more than 6 months, so reason at least. So that all that combined is an element of explanation to the LCR being weighted. On top of it, You may have seen that we have, as Frederic highlighted, we have completed our funding program ahead of schedule. And that also explaining and we continue to collect quite strongly deposits. So that's also part of the explanation.
Okay. Thank you.
Next question?
And the next question comes from the line of Azu Raghelfi from Citigroup. Please ask your question.
Two questions, one on capital and one on revenue for next year. Capital, you have clearly done very well and now you're at 12.5. The question is on TRIM. Is the guided impact of regulation between 30 to 50 basis points coming all in 4th quarter? Can we assume that?
The second one is on revenue. And I kind of strictly split in 2, 1 on the retail and the CIB. Retail revenue, especially on the NII, your margin are better and more resilient than peers. Can you give us some indication on The main reason behind it and the outlook for next year is because volume seems to be pretty similar to the main peer. And in the CIB, am I understanding well that next year you will have more or less €100,000,000 additional decrease from the restructuring plan compared to where you finished 2019.
Thank you.
Yes. Asura, I will leave Stephane commenting on your TBIS. Philippe, Henrique, on the perspective of the net interest margin for next year, let me just highlight that I'm absolutely convinced that in this market, we are more disciplined in terms of credit origination and pricing than our peers, with the PD project being further. And regarding the TRIM, I will turn to Jonny. We'll execute and expect that the first to come.
But again, there is uncertainty, let's face it. It does not depend on us and depends on the supervisor. So it just depends. So can you elaborate on this?
Yes. Good morning. So as Fabienne just said, we don't control the timing. What we have already Explain is that we had most of the decisions related to high default portfolios, meaning retail in mortgages, which was not material. We had a few TRIM reviews on the low default portfolios, meaning large corporate markets, etcetera.
And we're still expecting the decisions, that the missions are have our employees have attended. So we keep our estimate at the range of overall 30, 50 basis points and we expect the bulk of it in Q4. Maybe some would slip in next year, but that's how we'll estimate that.
But if I may, to a certain extent, You should be relatively indifferent on the timing. What is clear is that we have the buffer to absorb and I think you have the road map towards end of 2020, which is pretty detailed. Philippe, can you remind in the guidance for next year. Yes. First, regarding the evolution of the net interest income, I should remind you that this increase this year comes after a significant decline last year.
And that's true that we work very hard to stabilize our revenues as promised. So what we have done, as mentioned by Frederic and William, it's a strict credit origination. We always speak a lot about mortgages, but I would like to also to insist on the very good performance on consumer loans. And even more important in corporate fields. I have to remind you that 50% of India is coming from corporate and professional.
That's very important to us. We have also worked quite hard and we continue to do that on the repricing of the term deposits and making sure that we have the right mix between the deposits, making sure that we have the right allocation, both for the clients and for the bank. So this is all this kind of thing that we have done and that we continue to do to improve, to maintain the net interest income. Regarding the guidance on the revenues, What they said is that for this year, we'll be in the range of 0 minus 1 and basically in the same trend for next year. Thank you.
Gerard, can you answer as well as firstly, please? Yes. As you saw, this 3rd quarter is the Q1 where we had the full impact in terms of NBI loss after the decision taken regarding the NCI principle and take out trading. So it's fair to say that we will not have the full €200,000,000 impact on the entire issue, you're right. And then next year, you will have less than €100,000,000 I would say in terms of negative impact because the 4th quarter will have a full impact as the 3rd quarter also.
Having said that, we are also growing activities. You will not see that growth in the NBI, of course, because all the rest is growing. You will have, as mentioned by Jean Francois, the EMC seeing back on the list of products, which would give us additional revenue in the next year and our growing franchise like asset finance, our digital and in banking and for the other business of Argyle. But you're right to say that the full impact is not visible this year. Thank you.
Thank you.
Next question.
And the next question comes from the line of John Pice from Credit Suisse. Please ask your question.
So two questions, please. Number 1, on the corporate center. You continue to exceed your guidance. I just wondered if there's any update on that for the full year and maybe also into next in the Q2 and the reason for the beat of the guidance? And the second question is just on Basel IV.
Do you have any update please on your expectations around timing. And also, you gave us a number once before. How has that number evolved? Thank you.
Hello. I will turn the floor just to William on the corporate center.
On the corporate center, you're right to point out that You're obviously much below in the months relative to the guidance we had set forth. I'd like to say that we don't like to change guidance in the course of the year because We are beating the guidance. It is fair to say that the 500 is probably on the conservative side.
Yes, probably. We have a great update. Let me just remind you our impact just in the Q2 of Basel IV. So nothing to change. Nothing new
in the debate that makes us to change the perspective, knowing the composition of the business model. So As you remember, it's about 110 basis points in 2020, which probably the concern achieved assumption as well given the pace at which the discussions will be will evolve. We have also given some application that the output flow will not die before 2027, it will be a smaller part and for many people who have with these numbers. We still expect the flat TB somewhat if that happens between 'twenty three and 'twenty four. So all but I can say that there's no reason for us exchange the way we steal the capital.
We feel confident that with the level that we should reach back end in 2020 combined with the organic capital generation I mentioned earlier, we should be in a position to absorb that
Next question?
Thank you. And the next question comes from the line of Lauren Quares from UBS. Please ask your question.
Hi, hello. Just a few questions for me on French Retail. The first one will be how long in your view will it in before the deposit margin stops being under pressure, how many years? And then my second question will be on the guidance for next year. What is the assumption that you made for fee growth when guiding for revenue flat to minus 1%?
Thank you.
Laura and I, we do not give this level of detail. I think we are already the first to give guidance for the revenues for 2020. So we will give you maybe more but later and certainly not now. You have again a clear good visibility for the revenues for 2020 overall. On your second question on the erosion of deposit margin.
I'm not sure that we also think we can give so much ahead. Philippe? No, I mean, it will remain on the pressure. What we are doing, as I said, It's making sure that we have the right allocation, both for the clients and for the banks of VCSELIX. So between, of course, accounts, savings in the balance sheet, long term deposit, of course, So life insurance, financial products.
And I think that's the key topic for us and for all the banks in the coming months, in the coming years, just making sure that we are proactive and we adjust to this new equation. Thank you. Next question.
Thank you. The next question comes from the line of Tariq El Mehtad from Bank of America. Please ask your question.
Hi, good morning. I have only one question actually. So you saw, I think, the headlines this morning about the German Finance Minister will finally open up for an Edis and put things in motion for Banking Union and the French Finance Minister as well said, apparently, will be in the 3rd, the Eurogroup meeting be discussed, the Banking Union. So can you probably comment on How you think things will evolve from here? Obviously, there's conditions apparently about sovereign risk weights and about NPLs and so on.
But Do you see really like potentially banking union being implemented or put in place quite rapidly? And for you specifically at SoftGen, How would that benefit you in terms of better balance sheet optimization and potentially ambition to do cross border M and A? Thank you.
Tariq, good morning. First, let me say it's very good news. And I would like to see a German Finance Minister taking care about of this topic. It confirms the view at least that I have and that the French government have that it should be part of one of the top priorities of the agenda of the new commission, completing a more efficient, more robust overall financial sector with the banking union and the capital markets, which are two elements of the same play. So it is very 2nd, beyond completing the banking union, I think it probably reflects also.
The growing awareness that our public authorities need to pay attention to, of course, creating a more better environment for banks. And I'm not surprised, I think I had the opportunity to mention that already. I had the feeling that there was more tension by the German government in the last few months and to a certain extent, it is a confirmation. Now more practically speaking, as you said yourself, they are it is probably more kind of roadmap, which is being proposed with some complex topics and the one we've mentioned in particular is the issue of sovereign debt. We know that the Slovene issue is a preliminary condition probably for the German government to move forward on in this knowing that the structure which is proposed is very similar to the one we had in mind actually.
The 3 tier level and not creating a single fund, but having a kind of reinsurance system. So I'm is there the capacity to move forward? I think it's probably around this kind of option on the ADID. But again, there's a need to think to find a solution on the sovereign debt and it might take some time. Again, what I find very positive is that it confirms that there will be further discussions.
And from that perspective, 2020 see probably the crucial year. Not to deal with everything, but at least to have TRN roadmaps and for us to highlight What is that stake beyond ADIT? And because ADIT is important, but there are other elements to have a more consistent and more strategic approach of the financial sector in Europe. And so this is a positive move given if, of course, David is in the detail and it might take some time on certain topics. In terms of impact for us, I don't think there's an immediate short term benefit.
And again, we'll have to wait for 2020, but it means also Basel IV implementation might be something that the governments will look at closely and the European Commission. So 2020 should still be in my view a year of confirmation of the regulatory framework. And then our bank and ourselves will see probably more towards 2021 whether or not there are new opportunities. I don't think it's premature, but and for us, it's great to have a new way of a year to further complete our roadmap, our business model adaptation. We'll see what it means.
But please, I think it goes in the right direction. Thank
you. The next question comes from the line of Jean Francois Neuez from Goldman Sachs. Please ask your question.
Hi. Good morning and thanks for the call. The question that I have remaining is that in the month I think towards the end of the summer or beginning of September, there were a few press articles which were mentioning the potential for SoftGen to remedy what has been essentially impact from deleveraging, which were expected also by additional in cost cuts in particular in the central functions, which were mounting at least according to the press to a significant amount. And In view of the deleveraging revenues which have been lost and the ROE where the bank is today, I guess, this seems to many market participants as the main avenue to regain capital generation potential above what is currently the case. I just wanted to understand whether there was anything to it and what is your Key lever from here to get the ROE, the RoTE back At or close to cost of capital.
Hello, Jean Francois. Good afternoon. Let me just first of all
highlight that on GBS, as we've said, the €500,000,000 savings fundamentally are not yet there. In the restructuring. People have raised their hands. We know who is going to leave or might have left end of September, always been to give in Q4, but we have already deposits. So firstly, it's a very important level there.
And beyond, let me just say, we are of course going to carry on focusing on costs. And my own you have my own dedication and commitment on this. So it's not the end of the story.
And have you got so my second question would be, have you got an absolute cost number you're ready to share which are cost cap which you would ready to share with us, We'd be ready to share with us for next year.
No, not yet. Not yet. Not yet. Okay. We have the 1.6 don't remember, we have a 1 point €6,000,000,000 of savings that we are implementing in a very disciplined way, including €500,000,000 on JDIS.
This is currently the target. But as I said, the story will not stop end of 2020.
We couldn't be more precise than what in CIBENA, we've already committed to an absolute cost base for GBA decreasing to 6,800,000,000. This is consistent with the €500,000,000 net cost reduction that Frederic reiterated, of which we give you today the portion that has been already executed, I. E. The 70 out of 100 I mentioned in Q3. So basically, I think we have normally most of the numbers.
We also gave you some clarification with regard to impact on deleveraging as well as stressing the fact that there is no deviation to what we had anticipated for full year effect. So hopefully, that would clarify on your
modeling.
The next question comes from the line of Laurent Paul from Barclays. Please ask your question.
Hi. Good morning. Just Two questions, please. So firstly, have you made any changes recently to the allocation of swaps in your deposit reinvestments, for example, in terms of duration, I recall in the past you said you had like €30,000,000,000 of deposits or so being invested short term out in the total €200,000,000,000 And then for new deposit, as you update your macro hedging, What stops you from simply not entering into new unprofitable swaps? Would there be regulatory considerations, The regulator would think you have more interest rate risk and that would play into your shred.
And then the second question, just On asset quality, can you update us on your thoughts there? NPLs continue to come down slightly, but like everyone else, cost The risk is ticking up due to an absence of write backs and a few files in CID. I guess you're still comfortable with the group level target of at 35, 40 bps next year for cost of risk? And then in particular, if you have any thoughts on to the credits in Africa cost of risk that would be interesting in international retail. Thank you.
Okay. Now on your first question, let me say we pursue permanent policy in terms of L and M. There was no recent change and Nothing more to comment. But, Jonny, what can you say on the cost of risk? I don't provide consumer credit in Africa.
We're trying to get it relatively limited. So I mean, I don't think there's anything on that specific topic, but more globally, Julien. [SPEAKER LARS
FRUERGAARD YES. GLOBALIES, COGS OF RISK REMAINED LOW, SO 26 basis points for the quarter, 24 for 9 months. So well within our guidance for this year, 25, 30 basis points, Very strong risk profile across the board. We have decided to progress in normalization of cost of risk for 2020. Taking into account also the fact that we have benefited in the last quarters from write backs of provisions, in particular, in international retail in Europe.
So It's a little to think that we are going to see this progressive normalization. So the guidance 35, 40 basis points from next year still remains our guidance. Again, solid risk profile. We continue to see the reduction of NPLs, both through improvement of portfolio that's also active management of NPLs and sales. And we will continue to see this trend.
That's the work from Philippine on consumer credit beyond Africa.
Just to mention that the cost of risk as we see today on the IBS
side is Portugal.
So kind of consumer finance we have. So don't be We are talking of consumer finance mainly in Western Europe, mainly in Carbone. So this is the type of consumer finance which is, let's say, very secure by nature. And we have an uncertainty bank. We have a partnership with auto, ensuring that the cost in the very limited.
Sorry, just a quick follow-up just on the first question. I understand that nothing has changed for your existing hedging. But just to understand, for new deposits, if you did want to change your hedging policy. Is there something that stops you from a regulatory perspective from doing that?
No, no, there's nothing of that. We have had not to change for regulatory purposes our ILM and it's It's more a bit on an economic approach of models, which are very traditional, if I may say yes. So there was nothing about regulatory
The next question comes from the line of Anke Irene from RBC Capital Markets. Please ask your question. Yes. Thank you very much. I just wanted to ask about the costs in in Retail Banking and your guidance of the cost increase of 1% to 2% this year.
Would you So is that just a conservative guidance given the trends in the 1st 9 months? Or would you consider or should we Basically, let's keep the old guidance. And then I'm not quite sure if I understood your comments correctly. You were saying, are there in developments and the guidance is obviously 2020 decline. Would that be beyond on the investments of 2019 dropping out as you take more actions on costs in your network?
Thank you very much.
On the cost of retail. First of all, we stick to the guidance. And let me just remind you that we have said in the previous conference that it might include a limited restructuring provision given what we've just announced 2 weeks ago. So No, 1 to 2 is the good guidance given that perspective. And for next year, we don't answer into again more detail and saying decline of costs.
Same thing. We are the, I think, only bank in France, which is giving this kind of guidance. So we will update you in due course. But The idea is to say, yes, we have spent quite a lot in the restructuring. This restructuring would be pursued.
But at that point. We are able then to get the benefit of all the investment. And that's why we see in the decline of the cost next year. We can't give you more detail on the stage.
Okay. Just to ask, You said a few times now you can't update us now. So with full year results, should we expect an update of your RoTE 2020 target?
Well, yes, we see as usual. As usual, the end of the year is a way to look at the year and of course I give you information on the run year, if I may say, 2020. But again, you have guidances which are pretty precise already on the Trans Retail GBS as we said during the call.
The next question comes
from the
line of
Kiri Vijayaracha from HSBC.
Yes. Hi there, guys. A couple of questions from my side. Firstly, on capital on Slide 9, specifically your securitization Risk transfer bucket where you've only earmarked another 3 bps to do. And I compare that To one of your peers that view securitization more as a kind of ongoing tool for RWA optimizations.
I'm really just curious your thought process Why you think you can't do more? And specifically, are there any kind of regulatory constraints from being maybe too aggressive with things like synthetic securitizations coming from the regulator? And then secondly, just follow-up on the Thanks for the cost numbers you gave us. But the earlier, I think you gave us a GOI target of in €150,000,000 per annum from the EMC business. So just wondering, is that still valid or given in the market environment.
That feels a little bit of a challenge for that business now. Thank you.
Okay, Kerry. I will turn to William for your first and then to Sylvain for the question on EMC. William, on the securitization techniques.
First of all, thanks for the question because that and opportunity to state that most of it effectively you could add to the organic capital generation. That is an important factor. It's true that most of our peers report the benefit from this type of securitization into the organic capital generation as it is very much a way to work on your own balance sheet and RWAs. The reason why we decided to put it here is because you may remember in GIB, we had said, We want to implement a deleveraging of about €10,000,000,000 equivalent to about €10,000,000,000 of other bill rates, of which €8,000,000,000 in the market and 2 elsewhere. And basically, the 2 you would find through this securitization or this transfer, This is equivalent to 7 bps of core Tier 1.
So effectively, it would be easy to add back at the very least 10 basis points to the organic capital generation, which would then stand at 38 relative to the 50 objectives completed in the 1st 9 months. So we will continue to do this type of securitization going forward as a way to have our balance sheet brief. There is no particularly particular problem on the rig that we said. As you know, all this securitization has to be submitted to the ECB. There is a very formal process for it.
All of the transaction we have submitted to the ECB have been accepted as they were shaped. And I don't expect that there should be any problem. I think there is more and more convergence towards some standout features so that we can collectively in the industry do more. And last comment, You mentioned that we have 3 to do. Listen, this is a 10 to 20 basis point objective.
So I consider we have already fulfilled fit the objective, but we may do 3 and maybe a 4.
Thank you, Stephane and Yancy. Yes. We are still and confirming that we'll stick to the €150,000,000 gross operating income generation after the EMC integration. But this It will be visible fully in 2021. Very important to have that in mind.
The transfer is clearly on the Has been done partially this year. Jean Francois may comment on the rest to be transferred. But the cost synergies, which is one part of this DRI Generation will not be completely delivered next year. And so you have to have that in mind for more, 2021.
The next question comes from the line of CMC IT Securities. Please ask your question.
Yes, good morning. One question regarding M and A. I remember You were quite ambitious regarding this activity. Today, we see that this business Decelerating everywhere in the world. Do you still are you still very ambitious whatever the result of this quarter in this activity.
And could you give us a little update regarding your setup in This activity seems significant. Anything interesting to see that? And my second question is, How would you qualify, I would say, the ambiance in your group regarding the fact that we have the impression that you've made a lot of effort for shareholders to pay them in dividend and also to avoid them a capital increase and the market is applauding that. But What about your salaries now? And don't you think that it's time for them now to give them, I I would say a new story because you can, as people say in France, you can die And what would be the next step?
Thank you.
Pierre, good afternoon. I will leave the floor to Serran, but let's answer your question. I think, 1st of all, I'm very lucky to have people in this bank who are very, very engaged, We're attached to the company. It's the result of our story. And I must say, including in areas which are in the restructuring.
Most banks, let's face it. I don't think there's a paradise somewhere in Europe, but in the French Retail or the GBIS. We are now passing the most difficult moment, at the moments of the announcement of restructuring, etcetera. And I'm very confident in the different management team precisely. And I must say Everybody is encouraged by the progress made in the last 9 months after the beginning, a difficult beginning of the year.
Everybody on the contrary is encouraged to pursue the trajectory. And we want to complete the job at the horizon 2020 because in itself there are plenty of things which are being done, plenty of very positive things, the development of activities, in investment in technology. We are taking advantage of differentiating presence in geographies and businesses. Philippa mentioned the fleet management, I could mention at SOHAMA, Africa is the territory of growth, etcetera, etcetera. So I'm very convinced that, yes, Everybody is aligned, motivated, engaged in delivering further.
And then in due course, we will prepare, I would say, the next Financial and Strategic Plan in 2021 to 2023, 2024. I think we need to to do that to have more clarity on 2020. As I mentioned on Banking Union, Basel IV, blah, blah, blah. It would be good to have More visibility. There's no urgency.
And you will see, as I said, I think my message at the end of this presentation was a message of confidence in the capacity of The teams in this bank to carry on moving forward. And let me just remind you that there's a significant number of people who are also shareholders. So when they see the share increase, it's not just for outside shareholders, it's for all of us. And so It gives good morale. Now I will turn the floor to Florent on your question on advisory services.
The answer to your question is yes. Yes, we are still committed to this part of our investment banking offering really. In M and A, the fee based activity and very much related to the quality of the senior relationship you can have with your clients, even corporate or financial institution clients. It's fair to say that we are not GTMA in all geographies or sectors clearly, but we are very much and highly considered in some sectors and in some geographies. And I would continue really to commit and to invest in that direction.
More generally speaking, I think, than when the balance sheet is at stake. When the bank is providing some scarce resources to its clients. There is also more and more possibility to really deal on pure advisory. My view is we like to push further advisory fees in the CIB world. And Societe Generale has, in my view, a lot of capability to do that, not only in M and A.
We are also, as you know, project finance. We have a lot of browser advisory capability, but M and A is part of those and we will be still committed on that on the sectors and geographies where we are legitimate. Thank you. Next question?
Thank you. And the next question comes from the line of Flora Benhakoun Bauchaud. Please ask your question.
Good afternoon. The first question I'd like to ask is regarding the revenues in the financing and advisory business this quarter. You had a very strong performance the past 3 quarters with a much higher run rate than you just printed here in Q3. I understand that you had Quite some impact this quarter from the RWA optimization you are doing there. So the question is whether Q3 is a new normal run rate given all the RWA optimization you have done or we should consider that Q3 is a bit of a one off and you continue to see good growth in that business.
And the second question is regarding French Retail Banking. I understand you don't want to provide more details on the 2020 outlook yet. Maybe can I ask it a bit differently because you're guiding for revenues to be down between 0% and 1% and a slight decrease in cost? So could you do you think you can achieve positive jaws in that business next year. Thank you.
Florent, I will turn to Serran on your first question, Philippe Henrique on the second. Yes, this Q3 results, as you mentioned, is impacted slightly by the deliberation. But the real underlying analysis we have made has this quarter has been weak in 2 holes, in Investment Banking activity and in our Corporate Banking. In our pure Commercial Banking activity, the delivery team had an impact on the revenue. Course, we have less exposure.
But the good news in this number, which I mentioned by Julia, is that our asset finance capability I mean our sector finance capability and our transaction bank are still on the positive growth dynamic today. So, we are really focusing, as I said earlier, on the strength of the company and those that we are outgrowing. So we have been impacted slightly by the deleveraging on the commercial banking activity and by a weak market and investment bank. And it will be up to you to see what will be the revenues in the investment bank next year, it's difficult market condition could change. But the real point is our structural trend in terms of asset backed finance, in terms of structural finance and term of financing banking are still positive this quarter.
Thank you, Philippe. So of course, we are in the middle of the budget process. We are still running the numbers. So yes, of course, we do confirm again the guidance of reduction of cost base in actual terms. You know the guidance on revenues between 0 and minus 1 and positive jaws.
It's A good audition and we are working on it. Thank you. Next question, sorry.
Thank you. The next question comes from the line of Gregor Des Salins from Morgan Stanley. Please ask your question.
Yes. Hi, Alex. Yes. Two questions on my side. So the first one on disposal.
So you still have like to complete by 2020. Given that the deadline to reach this target is relatively close now with 12 months to go, I guess you should have relatively good visibility on the asset you are looking to sell. So could you just please confirm the kind of assets you're looking to dispose like the key criteria that you will look at? And secondly, On
money laundering, so Banque de
France has recently issued an AML assessment report in which it strongly request some banking players in France to strengthen their KYC and compliance systems. Could you please Just tell us how comfortable you are with your current level of spending to support your compliance function and your internal control environment?
Thank you. Thank you, Marc. Good afternoon. I will take briefly the two questions. First, Let me highlight what I can say that there are currently further processes which are going forward in terms of disposal.
Clearly, I will not say more on more specific assets, but typically these are assets that we have identified, which in our view are more nice to have, but not core strategic assets in terms in in the amount of synergies and what we will never do is jeopardize at the court merchandisers, which fundamentally works for common client base. And I'm confident with the assets that we have identified as we've done in the past. I think the IBSS, the performance from that point of view and illustrate that we've been able to maintain in absolute term despite the disposal and further improve the profitability of the business. So it's exactly in line with that and I think it makes sense. 2nd on your question, let me just highlight that we are spending a lot actually a lot on different remediation programs.
As you know, we settled some litigations with U. S. And French authorities. As part of it, There are remediation programs we are which are currently up and running. We invest a lot.
We will not compromise on the investment there because I must say, it would be easy to make savings, but if it's at the cost of our reputation and with big fines. I think it's a very short term calculation. And I would say probably for the next 2 years, 2020, 2021 in practice. As you know, we have signed litigation mid-twenty 18, typically, it's a 3 year program. We will have this kind of cost and we are not compromising.
So I think we remain on one hand very humble because the level of requirements are always increasing. We are out to find needles in handmade. As we all know, there's nothing from that perspective for Societe National and Leuvens. But let's say the idea is certainly to further develop strong control functions, but you have already that, I would say fundamentally in the cup base and it would be like this for the next 2 years. Next question?
Thank you. And this question will be our last question, Guillaume Spierge from Exane. Please ask your question.
Yes. Good morning. I have two questions. The first one is on capital and the second one on GBIS. So, capital, can you, number 1, remind us whether there's going to be an impact from the EBA guidelines and from calendar provisioning?
And the second question on capital relates to Basel IV. I want to challenge you a little bit on your €36,000,000,000 guidance because It only refers to standardize credit risk and operational risk, but your model and operational risk doesn't seem particularly aggressive. So that leaves a lot for credit risk and you're going to have about €8,000,000,000 of RWA increase from TRIM. So In total, that seems quite a big number. The second question relates to the GBIS.
So, based on your current capital allocated, if I want 11% ROE, that means I need to have about €2,200,000,000 pretax. And if I add back the €6,800,000,000 of cost, I need basically €9,000,000,000 of revenues. And I ignore provision and I ignore The EMC business for simplicity, they want to sell the other. €9,000,000,000 of revenues, your current run rate in Q3 is €8,000,000,000 So where is this €1,000,000,000 going to come from?
Thank you.
Hello, Guillaume. I will pass the It's clear to William on your first question and to Sylvain your second one.
Thank you.
Hello, Guillaume. There were actually Three questions in your first question. Iberia Geisel, I understand the
back slope
on NPL in the Basel IV assumption we've taken. On the first one, I think we don't make any particular comment. It is because This has not particularly a major impact on us. So overall, when we have disclosed the TRIM and other risks that we impact, That encompasses everything before that we anticipate in our trajectory to happen in the next years, maybe in certain areas, others are very different. But usually what we and see that our practices are already quite in line with I take expected process of managed provisions also some default accounting.
With regards to the backstop, I don't think it will have a major impact. It will have some impact, but this is in the trajectory. And then you have in the script is already guidance. If each of us has received from the ECB, as you know, this would be part of the scrub discussion. So it's not necessarily translate to the extent there would be some findings into a provision.
If that's changed, we obviously would update you, but So far we think it's manageable. And on the 36 we've given, that encompasses all assumptions we make, be it on credit, including cash dividend and of risk based on the interpretation we have of the text as it stands. And there's no reason for us to think that we are either too conservative or too rosy relative to the stated knowledge we have. We don't provide the details behind the 36, that's a basket, which I can We assure you encompasses every bit, again, risk of risk and Casimir.
And knowing Guillaume that I think that in terms of current density of operational risk, we are significantly higher than a lot of our peers. Over our starting point in operational risk is relatively high in terms of density. And so the gap might be also a little bit lower.
In Cepranche. For Derek, sorry, that was my point, which is I think your €36,000,000,000 is actually quite aggressive, quite conservative.
And this is the reason, Guillaume, thank you for this comment. I mentioned that we at this stage, we have no reason to think that it's either too conservative or too rosy. Yes. We don't want to change it.
Yes. Yes. Thank you, Guillaume, for I do not consider that the Q3 is a running quarter because you have rightly said that €2,000,000,000 as revenue for the 3rd quarter by 4th 8. But as you know very well, the 3rd quarter has always been strictly the lowest quarter for us in terms of revenue. So we cannot consider that as a rolling level today.
On the other hand, we will continue to have both. In summary, we and continue to allocate our capital on the right position to deliver this growth for next year, even if we reduce the growth on businesses where we consider the return is too low. And we are committed to continue to focus on our cost management also. The way we will deliver this target for next year is working on older lines, that continue to work on older lines. We want the full benefit of the in the transformation plan next year, which is not difficult yet in your clear enough.
So we have one point in terms of revenues not, in my view, to multiply by €4,000,000,000 to €2,000,000,000 this quarter as we will have more benefit on the call for next year.
Okay. Thank you. Thank you. Any more questions?
We have no further questions. Speakers, please go ahead.
Okay. Well, listen, thank you very much for your time, and Have a nice afternoon. Thank you very much. Bye bye.