To the presentation of our 2nd quarter interest half results. As usual, we'll try to be as short as possible with William Caducher, our CFO, to present the figures and then enter into a Q and A session with all our management seen. Let me just start saying a few words before leaving the floor to William. I will start Page 4 with the main highlights of the 1st half and second quarter. Clearly, the first thing I would like to highlight is that we are fully on track to deliver on our capital trajectory.
You see that our core Tier one stands at 12%. It's up 52% 52 basis points, sorry, in the Q2, reflecting, of course, the benefit of our earnings in line with expectations, the strong discipline in risk weighted asset consumption, The deleveraging in CIB and of course, further progress in our refocusing program. We'll come back to that more in detail in the presentation. The second element that our underlying net income for the quarter is solid at €1,200,000,000 with business revenue stable at constant perimeter and with a resilient profitability of 9.7% return on tangible equity. The first thing is that the risk profile of our group remains strong.
The commercial net cost of risk remains low, 25 basis points for the quarter, 23 basis points for the first half. And as you can see, there's a further decrease of the NPL at 3.4%. Overall, the market, the rates also remain under constrained and the balance sheet is very solid as you will see later on. Let me turn to Page 5 just to highlight that beyond all the financial figures we are going to comment and focus on, I would like to emphasize that we are moving forward to accompany our clients in their fundamental transformation. This world is changing, and I think it's important to anticipate.
Clearly, on this slide, we show that on the climate, We are moving forward with, 1st of all, a very strong delivery regarding our commitment Finance Renewable, we have this EUR 100,000,000,000 target between 2016 2020. Let me just say that in this for the Q2. We had senior mandate on 14 green and sustainable bonds accompanying our clients everywhere in the world. I will highlight in particular the first ever green bond issue in Europe by Chile in the Americas. We are also developing innovative solutions.
For example, we have and issued a €1,000,000,000 positive social impact bond to finance home loans for carbon efficient buildings. And we are we have a strategy to exit coal finance by 2,040 for the clients, which have assets in Europe and OECD countries and by 2,040 for the other regions. Beyond everything which is done on the climate, I could also highlight what we are going to do with the shipping industry, where we are promoters and we have signed the so called put it on principle to reduce the emission of the different container ships. We are also engaged in Africa. As you know, the recognition of us being the best bank for corporate trust responsibility with different dimensions, SME financing, microfinance, women entrepreneurship and staff diversity is also aligned with our strategy.
As well as to get ready to take the opportunity of new business activities in advisory and financing regarding of smart city in the world. Now I will turn the floor to William so that we enter into more detail on our results.
Good morning to all. Thank you Frederic. I invite you to go straight to Page 7, where we highlight, As we do know every quarter, the key performance of the 5 main divisions of the group, including Corporate Center. Starting with the group headline numbers, the group underlying net income stands at EUR 1 EUR 1,247,000,000 which is consistent with a 9.7% RoTE to be compared with our target of 9% 10% RoTE by the end of 2020. The published number is €1,054,000,000,000 or 8.3 percent RoTE.
Looking at the divisions, what is key in French Retail is Number 1, revenue are up this quarter year on year 2.1%. Costs are very well contained. They are in fact decreasing by 1% year on year this quarter. Although we continue to implement our transformation plan and, as you know, invest in the development of our fully digital bank, Boursorama. All in all, our French Retail Banking division exhibits 1 of the very best return on capital in the country with 12.6% return on normative equity.
Turning to International Retail Banking, another very strong quarter. Revenues adjusted for foreign exchange and perimeter effect are up 7% year on year, 7.5% in the first half related The previous same period of last year, this is a combination of volume growth and pricing. We have positive jaws in International Retail Banking, and we continue to deliver a very solid profitability at 7.1%. Same with insurance and financial services, financial services encompassing, As you know, ALD, Fleet Management as well as Equipment Finance, the return of normative equity is up close to 200 basis points to a very good number of 21.3%. The revenues are up 3%.
In Global Banking and Investor Solutions, we are in the midst of executing our restructuring plan. I think what is key to highlight is the fact that in this context, we managed to get a double digit Return on nonmaterial equity on an underlying basis of about 10%, thanks It will lead to very good cost control. I will come back to that later, but the underlying cost of CIB are down 5% relative to Q2 2018 this quarter. Finally, on the Corporate Center, we have Gross operating income of €38,000,000 for the first half, it's a negative minus EUR 75,000,000. Allow me to address here the key one offs we have in the quarter.
You should take into account On the negative side, given the provision for restructuring in CIB as well as IBFS And the cost of integration of Com Hemet activities, a negative impact is about EUR 280,000,000, This is EUR 227,000,000 plus EUR29,000,000 plus EUR21,000,000 which we have on the other side on the OpEx side as well, A positive impact, which is a reversal provision for operating taxes of about EUR 241,000,000 in the corporate center. So you see the negative a little higher than the positive. We wanted, which is Highlighted on Page 8 to come back to the fundamentals of our business model and the split of our activities in the context Of the low for long rate environment debate, we are convinced and this is already part of our trajectory that the rates will stay low for a certain period of time. Now it's clear that the Key assumptions that many operators make is that they will be there for a very long time. In that context, we wanted to remember everyone that the proportion of our revenues that is directly The rate environment in the eurozone is about 10% of the total of our 25 €1,000,000,000 revenues.
Namely, as you would expect, this is a margin on deposits And this affects logically mostly our French retail activities. We've already given you, by the way, as you know, some sensitivities around the It is around the rate development and what it translates into in terms of revenues. All the other revenues of the bank either not impacted or very indirectly impacted. This is notably the 55% of revenues at group level that derive from non interest income. This is the 37% of the net income net interest margin that is generated outside of the Eurozone, which is 16% of group revenues.
And generally speaking, the margin of loans, be it in financial services, in structured finance or in financial banking or international banking, as a case matter, is not very sensitive. It's more sensitive the competition and margins. And our margins, we can say, are steady. That being said, we are aware of the pressure of the environment, as we rate our macro and we work further on cost, which is what we highlight on Page 9. You may remember, We had announced at the end of 2017 an efficiency plan equivalent to EUR 1.1 €1,000,000,000 gross reduction in OpEx, we have already achieved 50% of that 1.1 percent efficiency plan to date.
We have added at the end of the Q4 20 In 2018, another layer of €500,000,000 revolving around the C and D, and we are starting the execution so far. It goes according to plan, so we are very confident that EUR 1,600,000,000 will be delivered by the end of 2020. As you could see, We already have very positive dynamic on the cost containment in French retail as well as CIB on top of still having positive jaws in IBFS. I would like to touch a word say a word On cost of risk, we remain with a very muted cost of risk, actually one of the very best in The industry in Europe and certainly in France, the cost of risk, commercial risk in the first half of twenty nineteen is at 23 basis points, 25 basis points for the quarter. It is very It's actually lower than our guidance for the year of 25 to 30 basis points, despite the fact that As you can see in fact, Retail Banking, we have some specific sites, some of it being very, very shared in France by all the banks.
Otherwise, it's very contained in international self banking and financial services where it is pretty flat. The non performing loan ratio continues to decrease this quarter again and 3.4%. That combined with a gross coverage rate of 55%, which is one of the very best in the European industry. One of the key objectives we have is core Tier 1. And one of the key highlights of the quarter is logically the fact that we managed to increase the gain, the core Tier one ratio this quarter by a significant 52 basis points.
In total, In the first half, we will have increased the cost Tier 1 by 106 basis points. This is equivalent to date to a 213 basis Point of MDA, you remember that our target is to be at any point in time around running the company with a capital ratio that is consistent with around the 100 basis points of NDA, and we are above this quarter. In addition, you can consider that we will have for sure in the next quarters to come 20 basis point more stemming from especially the refocusing and the disposals. So the pro form a ratio is at 12 point 2, as far as the other ratios are concerned, they are all up and strong. Leverage ratio is up at 4.3%.
TLAC ratio is up again at 25.8%. Let me remind you that The requested capital TLAC ratio is 19 0.8% in 2019 and should be 21.8% in 2022. It means that we fulfill the ratio by far only in June of date. We are already MREL compliant, as You know the liquidity ratios have all improved. Our liquidity buffer is up €11,000,000,000 at €1 €88,000,000,000 and we've already achieved 6 close to 70% of our funding program, actually the vanilla program It's only 75%, which leads me to the next page, which you will remember refers to the page we had shown you in Q4 2018 and is a page that describes Where we stand in terms of building the capital towards having a significant buffer above 12% in 2020.
This capital book we had shown you in Q4, obviously, a lot What you would find in the final this chart in pink color is what we have already achieved. So you can see that we have already achieved 28 out of the 50 basis points of organic capital to be generated. We have already achieved 15 Basis point or 25 basis points of global market RWA reduction. Let me give you a number. We've managed to execute close
to €5,000,000,000 of the €8,000,000,000
global market RWA Deleveraging, €8,000,000,000 is due by €20,000,000,000 in H1 2018. We have already started other type of optimization. Refocusing program is very well on track with 47 basis points of The 80% to 90% that you know, and we expect on the headwind side, the notification of the bulk of the TRIM impact towards the end of the year. That is us to a 12.4, 12.8 estimated core Tier 1 by 2020, which is up from what we had shown in Q4, it was 12.3 percent to 12.7 percent. Let me stress for the avoidance of debt that this is consistent with the payment of cash dividend based on the 50% payout ratios for the period.
Allow me not To spend too much time on page 4 on the next page, the starting, we will give it 2 questions. You will have noticed that this is the first time that we implement the amendment to the IFRS 12 Accounting regulation, which doesn't change anything with regards to the way you can look The key ratio are we priority over EPS, but happy to answer to any question. I would like now to turn to the business performance, starting with French Retail And the commercial performance of French Retail, we continue to see very positive commercial development in that area. Starting with individual clients, we give you some figures. The loan outstanding are up 3% year on year.
We continue to have still good production, particularly in consumer credit and also home loans. Bank Assurance makes further progress this quarter. Life insurance outstanding are up 1.5%. The P and C Property and Credit Loss of Premiums are up 7% in the quarter. This is a key element for strategy to catch up in protection and property and casualty in terms of penetration of our client base.
Private banking activity is very solid again with net inflows up €1,100,000,000 And generally speaking, the wealthy and massive plant base is again up this quarter by 2%. Boursorama had another record month. We It took 127,000 new clients for Bussorama, which is Bussorama Bussorama to a 1,900,000 client base. Let me remind you that the objective that we have set for for Bostorama was €2,000,000 by 2019. So we are very confident.
We will over deliver. On professional and corporate clients, there again, core client base we target as far as Societe Generale Networks are concerned. We made good progress. The medium term corporate noise outstanding are up 8% year on year, and we are done with the setup. Let me say a word on the transformation beyond the commercial activities.
I'd like to come back to what we have committed to in terms of closure of branches. In 2000 from 2015 to 2020, We have committed ourselves to execute the closure of close to 18% of the number of branches. We have done it We have achieved 13.4% closure from 2015. We are mid-twenty 19. We still have 1.5 years.
So we are very much in line, on track with plan. On the French results, so I won't be too long. What you can see is a good EUR 350 €6,000,000 net income for the quarter, combined with a 12.6 Return on normative equity, which is the context I would qualify as reasonably healthy, given again the fact that We still invest in Botswana. That means that the return on normative equity of the traditional networks is higher By definition, revenue are up 2.1%, very positive spot On the net interest income, which increased 1.7% this quarter relative to the past year, this is a second sequential increase in the NIM, in the French retail networks, but the first that we've seen in a few quarters year on year. Fees are less high end this quarter, particularly given the impact of the so called yellow jacket measures we have talked to you about this.
And this obviously affects the service fees. The cost decreased by 1%, I already mentioned, which is a good performance. Turning to the performance of International Retail Banking. The new information we provide here to you, which is on top of The production that leads to the increase of the net interest income is here very good figures, plus 6% plus 7% plus 4% depending upon the region. We provide you some numbers as to the progress we make In terms of generating commission and fees in those regions where we start with obviously a lower base and commissions tend to increase When the market matures provided that you have the right commercial setup, you can see an increase of 6% corrected for perimeter and change effect in Europe, plus 22% in Russia, plus 7% in Africa, which obviously is a good sign for the future.
Overall, Net income is €297,000,000 for that division and the return is high at 17.1%. We gave also some key data on insurance as well as financial services. Life insurance outstanding are up 4%, Protection premiums are up 12%, revenues up 4%. And given the numbers I've given you for the French That means that in other jurisdiction, in other countries where we have commercial banks, we're able to have double digit increase across the board. A and D fleet is up 7%.
I refer you also to the publication of A and D results today. Its GEF had a very good quarter again, plus 3% in the lease outstanding, plus 11% in revenues. Overall, revenues are up 3% in the quarter For those businesses, group net income contribution is €237,000,000 which means a return on normative equity of 200 basis point roughly at 21.3 percent. So overall, what you can see is still that IPFS is a key growth driver The group profitability contributor for the first half of the year, IBFS contributed a good €979,000,000 let's call it close to €1,000,000,000 to the net income of the group. The return on nonmaterial equity is 18.6 Percent, which is very consistent with the ambition to be between 2017 2018.
As can see this is above sorry, the underlying is 18.9%, the headline is 18.6%. So it's still above 2017 to 2018. One thing I would like to point you to, you will see on these numbers that Apparently, operating expenses grew more than net banking income. You have to adjust this number of OpEx For the provision for structuration, we take for the headquarters of the IDFS activities, which is €29,000,000 Should you make that adjustment, you would find that in Q2 revenues are up 7.7%, OpEx 4%, in H1, respectively, 6.1 and 5.1. I reiterate that we still have positive jaws and we will continue to have positive jaws in that area.
Strong financing advisory, resilient global market, as you can see on the typhoon, this is another month where we have This contrasted performance with some improvement, though, including on the market side. Pricing and advisory, The dividend is strong. We had plus 10% revenue growth in the first half relative to the previous for the same period last year and plus 3% year on year in the quarter. You can see that Beyond the traditional strength of structured finance, we also have very good performance in transaction 19 with revenues up 19% this quarter year on year. On the market side, this is obviously more contrasted, although this very much in line with broadly the market, minus 9% for Global Markets and Investor Services revenues.
We have here FICC revenues down 10%, sequentially up 16%. Equities revenues are down 7%, which is better, we think, than most of the peers and consistent with our strategy in terms of focus and products. And revenues are up 4% sequentially. We may come back to that with Chevron, should you have questions. We are very much on track with regards to the integration of Commerzbank activities.
We wanted, as we are in the midst of it, To update you on where we are on the restructuring, I've already mentioned the provision. We obviously are in the process of closing our portfolios in commodities as well as prop trading and some of the client adjustments in the prep brokerage, As we have announced, nothing to mention particularly there, it goes on track. The cost plan As we've been launched in every jurisdiction applicable and the process has started, we have No reason to doubt that it will bear the fruits as expected. The provision I've already talked about, the deleveraging as well, we executed €4,900,000,000 out of the €8,000,000,000 that we have committed to by 2020, which makes us confident We will be there probably earlier by the way than 2020. And as a result in a nutshell, You can see, we start with this that even in the context of still muted market environment and Still decrease in the revenues of market, even in the context of being in the midst of restructuring, we have an underlying return that Goes back to double digit figure at 10% for the quarter, which is okay in the context, yet not being on target with what we want.
Particularly, I'd like to point you to The operating expenses, you have here on the page minus 3.5% based on the adjustment for the restructuring provision. Should you in fact take into consideration also beyond the accounting provision, The expenses due to the cost to achieve on our plan of restructuring and add The €21,000,000 of integration cost of Commerzbank, the total would be rather in the area of €2 €60,000,000 to be deducted, which means that the underlying cost base of GBIS is effectively minus 5%. So it's a good sign that our commitment to work hard on cost. Finally and rapidly, on Corporate Center, we have EUR 38,000,000 gross operating income, it's a plus. And for the first half, minus EUR75,000,000 I've already alluded to it.
It's impacted positively by an adjustment in operating charges due to operating taxes. And it is negatively impacted at the net income level by EUR 84 €1,000,000,000 given the IFRS 5 impact on the refocusing program. I see most of it, you know, as Delphine and her team disclose it when as they can. Thank you very much.
Thank you, William. Let me just conclude with the last slide just to besides that we are very confident to further deliver in the coming quarters on this trajectory with a lot of discipline on the execution on the different items. William has highlighted the dynamic of the businesses. We will get further benefits of the different initiatives in terms of cost, in particular, the adjustment of the setup in GBIS in the coming quarters. On the repocusing, I can already add 2 basis points on the disposal of PEMA, which was signed in July, not in the 47 basis points, but beyond all the processes have been launched.
And of course, as I said on the responsibility, we think it's very important in our long term to keep the confidence of our clients and stakeholders of all kinds. And we are also here very successful. And we see that business opportunities beyond, of course, providing added value to our society. So we are delivering. And I just would like conclude by saying that we will propose to you a deep dive on our international retail banking businesses and financial services, which I either as a core asset, in particular in light of the development in the eurozone on the interest rate, which in equating as we have been discussing impactful Eurozone return activities, having the benefit of this presence in in geographies with much more normal, if I may say, interest rate, good economic prospects, less mature banking markets and with a very significant presence in leading, sometimes leading countries will lead us, I think, to success and should give you confidence in the coming quarters on also that front.
The presentation is completed. Now let's turn to the Q and A session. Let me just remind you, of course, and I know you are very good in that, complying with the discipline. Just if possible, 2 questions for people. So the floor is yours.
Thank you. And your first question comes from the line of Stefan Storman at Autonomous. Please go ahead. Your line is now open.
Good morning, gentlemen. I have two questions, please. The first one on your rate sensitivity. That's a very helpful disclosure you gave, 10% of group revenue, which is about €2,500,000,000 of revenue. And you have about €200,000,000,000 of deposits in French retail, and let's say you have a couple more elsewhere.
So that means you're Still generating a margin on your euros own deposits of about 1% to 1.5%. My question is how Conceptually, do you calculate this margin? And related to this, how sustainable do you think this margin is Given where risk free rates are pretty much across the curve in many countries in the eurozone. And the second question regarding the EMC transfer, Thank you. As well on the guidance here, is it fair to assume that you have transferred roughly EUR 1,000,000,000 of risk weighted assets and roughly EUR 50
to Stefan, but again to confirm the impact of the beginning of the integration of the AMC. On your first question, let me just reiterate the sensitivity of our revenues towards The movement of interest rate, if you have a decrease of the curve by 10 basis This point, it is roughly €60,000,000 and actually 80% of that is in the French retail. After this, again, well, the definition of the interest margin on deposits and credit, It's part of the ALM and through the modeling. But I think what you should look at is the sensitivity. And what is clear this quarter, as William said, is that with this positive evolution this positive evolution of the net interest margin still with an erosion of the interest margin on deposits, but at a lower rate.
And positive contribution of the credit, I think, reflects what we have said in the past, progressively less impact, and you have the sensitivity. Stephane, can you comment on the AMC, please? Yes. Thank you for this question. As you know, the EFC business is comprising for activities and the process of integration has just started during the Q2, importantly.
So as you know, the 4 businesses were first what we called investment product, meaning, total product which are really aligned with our core franchise. So we have to solicit products, Barnes and Cernan, which are mainly in Europe and in Germany. As you know, we have the market mix activities and the asset management. So What we did during this quarter is mainly on the investment project transfer and on the ETFs, the asset management part. The impact of this update has been done over the quarter.
So at the end of the quarter, the impact in the risk weighted asset is EUR 1,000,000,000. I am not sure, Stefan, what you had in mind. You mentioned on the past the total size of the balance sheet impact of 5 of €50,000,000 I don't understand this figure, Stefan.
Yes. Basically just looking at the evolution of your fair value assets during the quarter, It seems there's maybe a bump of around SEK 50,000,000,000 that might be attributable to E and C.
No, no.
I think that's wrong.
I'm not sure other than that. So I have to confirm this figure with my mind is between 5 and 10,000,000 in terms of total asset impact on the transfer of the portfolio of the expected product of the AMC. And second impact you see is on the ETF side. You have in terms of ETF asset under management evolution, €12,000,000,000 increase, which is related to the EMC transfer. In terms of P and L, The impact of the NBI is very limited on the 2nd quarter.
And you have, on the other hand, a cost of integration, which has been mentioned by Julia, which is a negative impact on the P and L for this quarter.
Great. Thank you.
Next question.
Your next question comes from the line of Giulio Miotto at Morgan Stanley, please go ahead. Your line is now open.
Yes, hi. Good morning. Thank you for taking my questions. I have 2. And so the first one is on Slide 12, which is very useful.
So the capital Impacts are very clear. Can you just please remind us what the associated P and L Impact are of the disposal of global markets and the refocusing program. So what is already in the numbers and what we should be expecting. And then the sensitivity on NIM that you provided is very helpful, the €3,000,000 for 10 basis points. And I was just curious, you mentioned that in France, corporate margins are actually Going up on Slide 7, but then when I look at the public disclosure from central banks, It looks like the front book is well below the back book.
So how is it possible that Margins are actually seeing a good trend when it comes to corporate. Thank you.
Yes. Julia, I will turn the floor to Stephane on your first question and Philippe Amari in charge of the French retail. It's hard to say again, things are improving a little bit on the corporate side. What I'd like to highlight in particular, just as an introduction to the answer of your question. You see really the kind of policy we are pursuing, being selective in the mortgage, trying to really originate mortgage for clients, which in our view will provide going forward for the site business, in particular, on the saving.
And as you know, My conception of the evolution of the market, it would be at the heart of the relationship. And we are more dynamic, of course, on the corporate side where we see that going forward. And of course, we've fundamentally shorter term loans or capacity to reprice particularly with the midterm loans, which are between 3 5 years. In an economy where I would like to highlight the dynamism of the investment by corporates, which was confirmed in the Q2. So I think it's really a good policy, which helps to maintain this profitability.
And now I will say on The overall impact of our restructuring and then Philippe, if you'd like to comment a little bit on the markets. So on the revenue side, As you know, we have made a comment on the cost side. So as you saw, in terms of the averaging, we delivered during this quarter during the first half, sorry, €5,000,000,000 only €5,000,000,000 €4,900,000,000 in terms of risk weighted debt, deleveraging in the global market activity. But we have also a liquidity in our financial and advisory activity. So globally, the impact is mainly driven by the CTY principal stop exit, we started this quarter and to stop our prop trading activity.
But globally speaking, the impact is not significant in terms of revenue, but it's tough. The good news is that part of our delivery is coming from our ramp services risk weighted asset consumption with a very limited impact on revenue. There is also some impact on the financial and advisory the financing advisory division because we have reduced our corporate lending capital allocation, which have an impact on the top line. So globally speaking, the impact is some tens of 1,000,000 of euros this quarter compared to Thank you, Philippe. On the margins in France?
Yes. And sorry, if I can can I just follow-up on that? And looking forward, when we think about the disposals that are yet to come and not just in global markets, but also part of the refocusing program, And what's the profitability impact of those?
Listen, William will comment on the Listing already signed transactions and generally speaking for the coming transactions, the further Also, let me just highlight fundamentally the idea is to improve the profitability. So no deterioration of profitability to be expected from these further disposal and the capacity on the On the contrary, to concentrate our resources on more profitable business. And I think that the figures of International Retail and Financial Services reflect that. You know that some businesses have been sold, some Balkans, Bulgaria and Poland, but it It's not, of course, on the contrary, benefits to the results are best. More granular information will
be on that. We had given you some impact in the previous quarter, but we had announced at the time, we said it would be equivalent to €125,000,000 net income loss. We only took net income, so that's easier for you to deduct. With all what we have announced, Close to 50 basis points as of the 80 to 90. We are having we're expecting an impact of €190,000,000 total net income.
We have already taken this impact our numbers, because if you look at what we closed already, this is equivalent of €70,000,000 which are already in our numbers. So gradually, This force includes the numbers. So 190, 90, 90, out of which 70 are already in that numbers.
Perfect. Thank you. Philippe, on again, what we see
on the French market in terms of margins. Yes. So first, coming back On the deposit, it is also very important to mention that we are closely monitoring the volumes, making sure that we are taking deposits with key clients. I would like to mention that we have adjusted our pricing, I mean, interest paid to the client, not to be for corporates and for financial institutions on term deposits. So it contributes also positively.
And regarding the loans, we continue with our origination strategy G for focusing both for individuals and for professionals and for corporates on our targeted clients. The volumes have been quite good in the quarter as explained by you, Liam. And also we have been able to closely monitor the margin and very still the significant pressure from competition. But we are again, we're joined very closely all of that. Again, coming back to the deposit margin.
I think the importance also to mention that we have an increase and compared to the Q1 by 1.4%, so which means that we are we consider that we are definitely on good track.
Thank you. Next question please.
Your next question comes from the line of Jean Francois Neuez of Goldman Sachs. Please go ahead. Your line is now open.
Hi, good morning. I just wanted to come back on the interest rate sensitivity, the first question. So if I mechanically apply €60,000,000 to the assumption which you had provided At the time, you had 30 bps for Euribor in 2020 and 1.8 for the OAT at the stage. And this was already consistent with the reduction of revenues group wide of €500,000,000 like the futures are not minus 50 basis points for Euribor. Is it okay to just multiply the EUR 60,000,000 By the 70 bps or so difference that we can see in rates?
Or is this not working? Is this not linear?
Jean Francois, hello, it's not necessarily that linear, but it probably is a certain order of magnitude.
That's not as linear, but because you have to look into more details as to which part of the portfolio is being renewed. That being said, It's not a bad approach. This is why we gave the sensitivity. Effectively, for the year 2020, we had said we would be In average, in aggregate, it's about plus 20 basis points for the short term rate. Clearly, if you were to take the forward today.
And you take the difference between the 20 and the number of the level where the forward are multiplied by You probably get a gross number, which is not absurd. Then it's obviously pretax And that does obviously not assume all the things we made. Let me remind you That this is pretty much in our sensitivity. The reason why we have given the range precisely because we allow ourselves around the central scenario to have some sensitivity, including some negative sensitivity. So that's why Frederic comments on the fact that this is not linear beyond the technicalities.
Some of it It's obviously somewhat encompassed into the low end of the range we've given you in terms of profitability for the business. And let me
just highlight Jean Francois also that I see as a positive development, the recent comments of the You see the idea of the kind of tiering, etcetera. I think there is a growing understanding of the impact on profitability of European Bank by the ECB of this situation, which might last longer than expected. That's 18 months ago, everybody had in mind an increase of rate. And so we see what kind of development we could have, but I think it's something positive that A few lines have been written and said on the recent press release and communication.
Okay. And my second question was on the cost in capital well, in CIB. I just wanted to understand Of the €500,000,000 of cost saves, so already there has been a decline in the underlying run rate of cost this quarter. Just wanted to try to understand How many of the staff you thought you'd, let's say, let go? You've let go so far?
Just to try to understand what's left of the savings going forward, Because it only says that you've only started in outside of France, there is still France to go and so on. So I get the feeling it might there might be some legs to this.
Yes, absolutely, Jean Francois, the bulk is not yet now in our figures. Stephane, Can you give some kind of estimate? What I would do, if I measure, Francois, is to come back to the commitment we took to be below the €6,800,000 next year. And up to now, the plan has been implemented not in France, as you know, which is roughly 50% of the Job Cat position is in France, and we have not done anything in France because we have started only in July. So what we delivered up to now is a part of the 50 percent which are out of France.
And but the real point to me is we are on track to deliver the commitment we took next year. And it's the important point to have in mind.
Okay, great. Thanks a lot.
Next question?
Your next question comes from the line of Flora Benhakounbocca at Deutsche Bank. Please go ahead. Your line is now open.
Yes, good morning. The first question is regarding the French retail commissions. If I would adjust for the €61,000,000 that you Mentioned this quarter. I would get to commissions that suddenly collapse a bit this quarter, especially on the service commission side. It's an almost 9% decrease year on year.
So just wanted to ask, first of all, whether you could Elaborate a bit on the reasons around that. And the second question is regarding the FICC revenues. When we look at it on a year on year basis, it's pretty okay. Actually, maybe even pretty good considering the deleveraging. But when we look at it on a Q on Q basis, so compared to Q1, You are the only bank so far seeing such a big increase versus Q1.
So the question is really what drove the difference between what you printed in Q1 And what you just printed for Q2, please? Thank you.
Good I will turn to Philippe Heinrich for the French Retail and Jean Francois Leguard, Head of Capital Markets, to answer your question on the fixed side. Philippe?
Yes. So yes, you're right. There are various components regarding this decrease on service fees. So the first one, of course, compared to last year is impact of Yellowjackets, I know that these measures kept getting some fees. So it has a significant impact on this quarter, this compared to last year of minus €21,000,000 So that's more or less 50% of the decrease.
2nd component, we have also a decrease On some fees, firstly on mass market clients, people now using all the self-service, the digital things, They are more careful on the use of the overdrafts. So we have also a decrease on this fee. And the 3rd component compared to last year, on this line, We have also impact of the premium paid to the new clients of both our amount. And as you know, the quarter has been quite strong. So we have So an impact compared to last year.
I would like to still to insist that on the contrary, there is still a good momentum on fees related to corporate, insurance and private banking. And finally, and I think that you have also Take into account the trend on the line over income because on this item, we have Fees that the fees related to subsidiaries on consumer finance and also on insurance, which are close to commissions. Maybe in other banks, we are classified as commissions. So that's the explanation of this trend. Thank
you, Clive. And maybe just for the sake of clarity, let me just highlight a little bit and explain the 61 because It's not specific to Societe Generale, it's something common to all the French banking industry. You have specific instruments when the government wants to collect taxes on a compulsory way, which is called an in French. There has been in the last few years a debate and the government said it should be actually packed with the VAT. We challenge that as a profession with legal action on side.
So we provision on the VAT, we are charging their clients and it happens that effectively we won this legal action. So I guess that most banks will effectively recognize revenue. Of course, it was meant less money in the last few years of orders on that front because of the provision. Now on the fixed side, the evolution of our Activity between Q1, Q2, please. Good morning, Jean Francois Agua speaking.
So it's true that there is a rebound compared to Q1. Actually, it's Even our quarter is even better than the last three quarters. So we are not satisfied with the Q4 and the Q1 results obviously. And we are happy to see that even with the lower revenues that we have on the commodity principal part, where it is obviously a delivery date. We are going back to our normal more normal productivity.
So to name a few on the flow business, we like to, as you know, to distinguish between flow in an investment solution. It's the rate business that is stronger much stronger than Q1 and actually more in line to our normal business. In Investment Solutions, there was Poor demand from investors in Q1. So here as well, the improvement is significant. It's both on the rate investment products and the credit investment products.
Thank you. Next question?
Thank you. Your next question comes from the line of Tariq Al Mejjad at Bank of America Merrill Lynch. Please go ahead. Your line is now open.
Hi, good morning, everyone. Can I just come back please on the global markets? And so you've described what happens in Q1, but so I think Previously, you said that the deleveraging would drive around €200,000,000 revenues drop. So should we expect like if you had Few tens of millions gone because of the deleveraging so far. So for the remaining €3,000,000,000, we Expect around €150,000,000,000 of revenues coming off from that, and that would be within this year and next.
Because so far, we have the costs Well modeled, but for the revenues, to be fair, it's still a bit not clear. And then second question on capital. I mean, clearly, you've done very good progress, but your aim is towards Basel III targets. And you've seen all your peers clearly Have a horrendous strategy on a Basel IV, even the compromise some short term growth to build capital faster towards Basel IV. So how do you think about like internally your budgeting and how you deal with growth and so on?
How do you think About the Basel IV. And still on capital, just can you reconfirm you still have the €2,200,000 floor in the dividend? I didn't see it in the slides. Thank you.
Yes, Patrick, I will give a separate comment on your first question. Let me just highlight on your second one. Yes, We are plugging in the calculation in 2019, 2020 that you saw Page 12, if it gives a 50% payout and the flow of 2020. Can I just say on Basel, we can from our previous estimate on the operational risk and credit, and we updated the calculation and it's actually slightly lower than the €8,000,000,000 with I think it's around €36,000,000,000 So it's roughly €110,000,000,000 But as you know, as you see, with the kind of projection that we have for end of 2020 and plus the as per the capital generation in 2021, 2020? We should be comfortable to absorb the Basel IV impact.
And I think the issue is more for us to adapt the business model to have a good profitability. But, on the estimated revenues. Yes, we don't change up to now the guidance we gave you at the end of the Q1. So I answer what we have already, but it's the bulk part of the revenue impact will be seen The full impact will be next year, right, because it's progressive. So we don't change the assumption we made and the disclosure we made to you in the Q1 for the full 2020 In fact, it's more difficult to see how fast you will have this in the Q3 and Q4.
But I think the point is more to have a new And my insight and your budget impact for 2020, which we have already disclosed.
Okay. Frederic, if you can just To wrap on your answer, I mean, so your base case now is we get to somewhere around 12.4% next year And then we'll offset the battle for phase in as it phase in basically. There's no intention to come with some additional management actions to offset earlier than first implementation date of Basel IV.
Listen, Dijk, We have done, and I think everybody would acknowledge, much better than everybody, anybody could have anticipated on the capital. We remain very positive on the 12.4 percent to 12.8 percent. So it's not 12.4 And can I just say that if I just look at the capital generation for the next 18 months, the plus 22 basis points, May I say, relatively probably conservative? When you see that in 6 months, we did 28. So we'll monitor that.
We know how important capital is, and I think it was reflected in the last 6 months. We remain very confident with our target. We are above the 200 basis the margin of the MDA. I think things are really developing in the right way, if I may, when you look at this capital trajectory. And I think we have provided hopefully a lot of comfort in just 6 months towards that level.
Okay. Thank you.
Next question comes from the line of Jacques Henri Gaulard At Kepler Cheuvreux, please go ahead. Your line is now open.
Yes. Good morning, gentlemen. So two questions. The first one the capital, congratulations for getting where you are. I guess the one thing that really showered a little bit the enthusiasm last quarter was the fact that a couple of days after your 11.7% and your 50 basis point accretion.
Was the fact that you had hired McKinsey as a consultant to help you So your capital problem, that's the way it was put on tape. And basically, it doesn't look you need any sort of consultancy to get where you are. And then after that, you had also a report on the tape according to which you were on the verge of selling your U. K. Private banking business.
So could Clarify what happened on the consulting side, please, because that was a bit disturbing. It's question number 1. Question number 2, We ended up with a significant bounce in the Q2. And it would be helpful to have a little bit of a guidance for the end of the year or for the next year about where we should have the trend on the cost of risk there. Thank you.
Jack, good afternoon. I will let Philippe comment on the second part on the first one. Of course, absolutely ridiculous, this element. We don't need exactly, as you said, any consultant to act on capital. We know our business.
We are deploying and I think all this is just noise, which makes absolutely no sense. We are acting on different fronts. As we've said, the net profit, which It's good. A strong discipline on risk weighted assets across the board. We have said that we have been going through all our if it is to do that.
The refocusing of CIB, which is going well. The disposal, which follows strictly The guidelines which was decided when we commented on the adjustment of our plan beginning of this year, which is to sell And we have started before, which is to sell assets, which can be nice to have. But at the end of the day, in terms of synergies, do not I'm not necessarily that core and to optimize the allocation of capital towards our main franchise. We know how to do that. And I think it was demonstrated in the last 6 months.
And can I just say my confidence to pursue that trajectory? Bert Philippe? Yes. Good morning, Jacqueline. Thank you very much.
You gave me the opportunity to highlight that the outlook in Africa is still very, very bright. Just a few figures, you see that the top line growth stands roughly around 5%. And we focus a little bit more on Sub Saharan Africa, we are on the growth of 10%. Regarding specifically the cost of risk, On IDSS, you see that we are currently at 30 basis points in terms of cost of risk. So we are well below Our guidance, we give during our Investor Day that the cost of risk should go within, say, within 70 basis points.
My point is that in Africa, clearly, the outlook is very calm in the subcontinent, in Western Africa and Central Africa, where the GDP growth is still around 5% to 7%. Maybe more contrasting in Northern and the cost of risk maybe affects the complexity of the situation here and there. But down The cost of risk is very low, and we are comfortable with the guidance we gave 2 years ago that we should be within well within the 70 basis points for 2020.
Your next question comes from the line of Azir Jagalffy at Citigroup.
Hi, good One question is on capital. On the regulatory impact that you expect, can you give us some split between 2019 2020? And also coming back to the point on tiering. Last time, I think you had around €80,000,000,000 of excess deposit at the ECB. Is it still the case?
Thank you. Just to try to understand what could be the benefit of?
Yes. As you have, William, And if he has the figure, we answered your second question. Again, on the TRIM, if you return to that, as we said, We expect the pulp to be in the second half, but of course, it can be also postponed. So it's still a little bit uncertain, but A significant portion of the 26% to 46% estimate range should be in the second half. On the deposit,
To be clear, you can fluctuate from 1 quarter to another. You see that our liquidity buffer increased €11,000,000,000 this quarter. So it's In average, at the ECB, we have between €30,000,000 €40,000,000,000 on the current account.
Next question?
Your next question comes from the line of Matthew Clark at Mediobanca. Please go ahead. Your line is now open. Matthew Clark, your line is now open.
Hello, sorry, still on mute. So just a question on the EMC contribution this quarter. Could you break out what it Okay. On revenues and costs, and it is the €21,000,000 restructuring or integration charge. But in terms of the contribution to Ongoing earnings, how much is already in there?
Thanks.
Matthew, good afternoon. We get very limited because It was just a process of integration. So, Mike, can you confirm? Yes. It's a significant this quarter in terms of contribution.
And when should that start to be noticeable?
We don't change. We say that late next year. We will have the not the full impact next year because the transfer of Businesses will be over the next 18 months starting in the second quarter. So you will have the full impact in terms of P and L. And we mentioned that it will be a EUR 150,000,000 GOR impact in 2021, to be clear.
So you will progress from nearly 0 this quarter to this full impact in 2021.
Great. Thanks very much.
Thank you. Next question?
Thank you. Your next question comes from the line of Guillaume Thibault at Exane. Please go ahead. Your line is now open.
Good afternoon. The first question relates to Basel IV. Would you care to give us a first assessment of what you think the FRTB impact could be. The second question relates to your TLAC. Obviously, you seem to have a very comfortable level.
And I'm wondering whether Your stock of €81,000,000 at €9,000,000,000 when presumably you only need €6,000,000,000 is not a little bit too high and can you not optimize that? And the third it's not a question, it's just a clarification. I don't think you answered the question on whether the dividend is still slowed at 220.
Good afternoon. I will leave William answering your two questions. I said sorry, if it was not clear. Yes, All the calculation that we made in the capital trajectory throughout 2020, so it means for 2029 2020 and capacity in the calculation, both the 50% and the potential application of the floor. So the 2 are integrated.
Perfect.
William?
Hello, Guillaume. So it is true that we have amongst the very strongest The ratio with effectively TLAC being one of the first banks in rate compliance. And also with a Tier 1 ratio of nearly 15% and a total cap of 18%, that benefit from The strengthening of the core Tier 1 ratio, it is also true that we have always had a policy to upvote the necessity to tap into the S and P market. We may do some marginal adjustments because we're also very mindful of The economic sense of all of it, but so far we are happy to show that we have a balance sheet that is strong across the board. And that leads me to pointing everyone to the fact that core Tier 1 is only one of the key ratios.
And the way we see the balance sheet overall is a little more comprehensive. You're correct on the margin. We could do some Economic adjustments and replace, for example, some Tier 2 instruments with more S and P, which is more economical on the margin.
And on the FRTB, let me just say we are still refining the interpretation of the tax. Let me just remind you, we have The market risk is €17,000,000,000 So our first assessment, certainly, is very manageable. Let me just also remind you, it's likely to be implemented between 2024, 2025. Not earlier than 2023, but more likely in 2024, 2025. So No figure at this stage, but as I said, a very manageable impact at the group level.
Thank you.
Next question?
Your next question comes from the line of Maxence Leggobello at Jefferies. Please go ahead. Your line is now open.
Yes, good morning. My question would be on corporate finance. You have already achieved your yearly securitization. What kind of level can we expect on 2019, please? Thank you.
Good afternoon.
Stefan, can you just clarify when you
share corporate finance because you mentioned securitization at
the same time? Do you The little bit more You mentioned on your question?
You mentioned on your Slide 20 that you have an active management of your for the years. And you have apparently transferred some risk and assets for €10,000,000,000 in first half of twenty nineteen when you already achieved 11% on 2018. So my question is, which kind of range can we expect and What kind of RWS can we expect in terms of free up?
Okay. Thank you. Thank you to clarify that. Maxence Hi, Maxence for the question. Sorry for I mean, you repeat it.
We are managing our risk weighted asset consumption in our global banking under the new limits we fixed and we play out the new program we have. And we are managing so we don't change the total target we had to reduce by EUR 2,000,000,000 in our WIA consumption in GLP. But we are using to adjust the origination we have. We are using all the tools to risk transfer utilization or recapitalization. So the real point may is that we will be at the target we are committed to using all the instruments we have.
So we have an active capital management. So I don't think it's fairly useful to have the part of the distribution part, but because we are managing the OT with our OTD processes, the global risk weighted assets and consumption. And then, obviously, if I may, I had just additional operations to counsel, which give us a lot of comfort in the management of the risk that I've said in the coming quarter in terms of capital trajectory. So we think that things are really under control.
Thanks.
Thanks.
Next question?
Your next question comes from the line of Omar Fall at Barclays. Please go ahead. Your line is now open.
Hi, good afternoon as well. Just on just two questions. So just taking your comments around the impact of lower rates in Western Europe, Making your remaining international retail franchises more valuable, is the implication therefore that when we think of The remaining disposals in the program, the 33 bps to 43 bps, we should think of assets outside of that. And in that vein, could you help us understand the synergies with the rest of the group of the custody business? When you stop disclosing it separately a few years back, it wasn't making much money.
So are you the right owner of that asset? And then the second question is just on the 26 bps to 46 bps of further regulatory headwinds. Is NP calendar provisioning included within that? Sorry, if I missed it. I know you don't have many NPEs, but there are some pretty surprising outcomes for that in the sector.
So I was just checking. Thanks.
The first question, I will leave
the floor to Severance to comment
on custody. As we said, regarding international retail, The disposals are done. So we will keep our current operations in Central Eastern Europe, Russia, Africa. And as you said, I see that as a real and clear asset as effectively
in the
eurozone retail activities might further suffer from a longer low rate environment than expected. So that's done. So we will not do more. I'm not sure to have understood exactly your question on capital. Can I just say, I think that we've given a range between 30 50 basis points, which precisely It takes into account some uncertainty?
And we are then making the calculation. That's why we have a relation. That's why we have a range. The first point of the 12.8 on one hand takes all the worst assumption and then the best assumptions. It's probably fair to say that at the end of the day, we might end up in the middle at this stage.
So I think that we give as much information as we can on that front, and we think it's still a reasonable range for those TRIM exercise for 2019 2020. Stephane yes, sorry?
Sorry, it was actually just on NPE Calendar provisioning and the impact that might have and whether that's in your guidance of regulatory headwinds.
Okay, so I will jump to Judy on that and then Chevron, the custody.
Yes. I assume you are referring to the backstop On the new NPS starting in 2018, which would have an impact for 2020. So as you already said, we have already quite a high coverage ratio. So we expect this to have a very limited impact. And it is included.
Great. So on the custody, yes, regarding your question, it's a fair question. If you get the synergies, which we have with this business with other activities with the group, we have real synergies. We have real synergies with global market It is of course, but we've also seen a result of financing advisory, because corporate clients are also clients of our facility and business. And we have synergies with the retail because as you know, our customer activity is mainly institutional, but also retail.
So there is real synergy with other with other activity. So second part of our thinking is the capital intensity of this activity is limited. Today, the global Capital allocated to GBIS businesses, SGSS, our business, represent 2.5%. So the real point I have today In my plan is really to restore the profitability. But even if the capital consumption is slow, we have this issue in terms of return within our customer business.
And the plan we have launched is also covering our Brazilian activity. And we have clearly an efficient and productivity plan in the plan to restore the profitability. So for me, at that time, there is still a value to create in restructuring our physician activity. And there is also a consolidation in the European market. And we can, through our fees, increase your size, not necessarily through acquisition, which is not our strategy, but just to have the normal commercial activity to grow.
So it's a size business, but I really feel that we can deliver more value within associated analysis activity.
And when we sorry, just a follow-up on that. So given that you're slightly ahead of the 12%, You're clearly very confident of your ability to generate and generate more capital. If one of the levers had to be reduced. Would it be the potential for maybe not selling The full 33 to 43 basis points worth of additional refocusing programs, I. To try to not value to the earnings by selling some further assets, could that be a possibility if The capital generation maintains its current track.
No, I mean, listen, we have definitely a list of assets, which makes sense in order to sell in particular, again, to allow the core businesses to have grow and further develop, while, of course, having this top priority in terms of building our core Tier 1. So I don't see a reason to change that assumption. And we stick to our plan. And as I've said, Further processes have been launched to meet the target, and I don't see a reason to change that plan.
Thank you very much.
Next question?
Your next question comes from the line of Lorraine Kuras at UBS. Please go ahead. Your line is now open.
Hi. Well, congratulations on achieving so much on the capital front in such a short period of time. And I think Progress are very important for the investment case, obviously. Now I'd like to move on to the underlying profitability. I can read you put a 9.7 percent RoTE, but I think if you adjust for some numbers in the corporate center, The underlying profitability is actually a lot lower.
And even if you have progress on the capital, I was wondering whether this structural low profitability is not something that could come and hunt you again in the future. Thus my question would be, how can you accelerate the cost cutting, particularly if the interest rate environment It's trending lower. Thank you.
Narmin, thanks again for your kind words on the capital. Can I say that this Sure, profitability is probably common to many banks in Europe? We are engaging in Cost cut, we are following our program. As you know, we don't have yet all the benefits of things which have been launched. As we just mentioned, For example, on the CIB, it's a modest part of the cost savings that we have in mind.
We will further improve profitability with the contribution of international retail and financial services. And of course, we are monitoring strongly the cost on the French retail. And I can say that we are ahead of also our target that we've given for this Sure. So as you can see, a lot of effort has made on cost and we know it's also a key lever going forward in terms of profitability and an area of focus for all the teams in the group. And so we are working on that significantly, and We speak to that discipline on the cost side.
I can can I just highlight the decrease of cost in the French retail this quarter, Decrease of cost in the CIB this quarter also, even if we don't get the benefit fundamentally of the restructuring. I think we are moving in the right direction.
And maybe just to follow-up on the French retail. So Costs are coming down 1%, but you still confirm the cost to be up 1% or 2% versus the previous year. So Is that what's happening in the second half? Is it really like restructuring costs being booked? Or can you
Yes, Laurent, it's fair. We don't want to change our yearly guidance every quarter. It is likely that our initial guidance was a little bit now can appear a little bit conservative.
Thank you.
Next question?
Your next question comes from the line of Kiri Vijay Raja of HSBC. Please go ahead. Your line is now open.
Yes. Good afternoon, everyone. So first question on French Retail. So given the move in rate expectations in June, I'm just wondering if there's been any sort of Flow through in terms of mortgage pricing. And in particular, actually, if there's sort of early indications of refi activity Picking up in French mortgages.
I know it's kind of early days, but just in terms of if you've had incoming inquiries from your from mortgage customers. Second question is for the other Philippe. So your loan growth in the Czech Republic, that seems to have slowed quite dramatically, just 0.7% you show On Slide 57, is that the rate rises in the Czech Republic starting to bite into kind of loan demand? Or are you turning a bit more cautious on the Czech Republic. So just some color on what's going on there, please.
Thank you.
Yes, no worries. So first, Philippe, the first Philippe on the refinancing of mortgage. And then the second one on Czech Republic. Philippe, hey, Mike.
Yes, at this stage, regarding renegotiations, the volumes stay very low. We are at 3%. I remind you that in the Q1 of 2017, we were to 25% at the peak. So at this time, we do not see a significant wave. And the repurchase, I mean, if you take the repayments are also quite low at 4.9%, which is what we call the normal level.
The second, Philippe, on the Czech Republic, the loan
Clearly, yes, thank you very much for your question. Just here a point of clarification. If you want to measure to Gauche properly the evolution of the company loans in Czech Republic. You have to strip out a technical effect on the repo book. So if we exclude this effect, in fact, the loan growth, then it's roughly between 3.5% and 4% off of my mind.
So more in line, little bit below the market, but more in line with what we see on the market. So we have to neutralize this effect.
Okay, got it. Thanks guys.
Thank you. Any more questions?
There are currently no further questions. Please continue.
Okay. Well, I think as there is no more question, we will there is another question, sorry. Yes.
There is one further question just come through. It's from the line of Pierre Chadville at CMCIC. Please go ahead. Your line is now open.
Hello. Good afternoon. Two quick questions. First question regarding the cost of risk and particularly in the CIB. I wanted to know if there are any write backs this quarter regarding the cost of risk, Because I'm a little bit surprised to see it so low regarding the fact that we all know that Some situations are quite tricky in France and some bustier flats, I would say.
And my second question is regarding Romania. We can See here again that the cost of risk and also in Czech Republic, the cost of risk is net write backs. And here, we are not in an environment linked to, I would say, low interest rates. So the correlation With low cost of risk and low interest rate is not evident, I would say. How do you explain that Quarter after quarter, we have these write backs.
Shouldn't you do definitive write backs Once for all, that we could see, I would say, the normal profitability on About a deep dive on international banking, which is a very interesting perspective. I think it would be also interesting to see what is your strategy and your position regarding the payment fight, Because we see that a lot of banks and new companies are Very eager on this subject. And we don't know a lot regarding SocGen strategy and payments. Thank you very much.
Pierre, good afternoon. I take on your point on payments. We might not be able to do it on the November, as we have already many items. And I think they're interesting ones actually in terms of for the development and profitability going forward, but I take your point. We'll need to talk to Philippe in a minute to Romania.
Can I just say on the overall cost of risk, in particular, referring to what you said, the CPAP, We are, by definition, provisioning when there is a potential issue? We don't comment on any speak to file. This good level of cost of risk includes the adequate provisioning. You might know, we might not be necessarily the most exposed on certain of these files. And I just would like to reiterate our context regarding our We said 25 to 30, we stand at 23 basis points.
I'm very confident on the capacity to maintain this guidance and level of cost of risk in the coming in the year 2019 for the second half. But Philippe, on Romania more specifically. Yes. Pierre, thank you very much. So it's true that we have a writeback This is quite a bit again in Czech Republic and Romania.
So we have €30,000,000 in Czech Republic, roughly €25,000,000 in Romania. Here, just I remind you that 2 things. We don't have this quarter Reimbursement of insurance, we have this benefit last year.
Now I think this is more
or less the effect of IFRS nine. So you have to capture, Let's say, in a forward looking view, all the adjustment on the PDHUB. And currently, the outlook is positive and the benefit of that It's fairly technical.
Hence, we have as expressed of our exposure,
the cost of risk on The euro business unit stands at 4 basis points, so it's a switch variable. But then You all know the business and the pitfalls of IFRS nine. So clearly, as we speak, the outlook is positive. And when again, I confirm that we are comfortable with our guidance for the cost of risk on IDFS for this year and next year.
Thank you very much.
Thank you. As apparently, there is no more question.
There are no further questions.
Okay. Well, thank you very much for your participation.
Have a nice summer break if you can take some holidays in August and see you in the autumn. Thank you very much. Bye bye.
That does conclude the conference for today. Thank you for participating. You may all disconnect.