Great. Good morning to all of you. Thank you very much for being here with us this morning after this bank holiday in the U.K. We are going to deep dive onto our businesses, French Retail and Global Banking and Investor Solutions. What I just would like to do in the introduction is actually to speak a little bit about what we are not going to speak about. Perhaps also importantly, give you, beyond entering into the details and integrity of these businesses, some common important parameters, features which are guiding our daily action, also nurturing our long-term perspective. We are not going to talk about international retail banking and financial services. I'm going to speak a little bit about this, but it is likely that we will organize something, an event like this, in the second half in a similar format.
First of all, let me highlight a few things on this group, which are really important and part of its DNA. The first thing I would like to say, I really believe that we have shown, and we have a track record of combining expertise and innovation. It's really at the heart of the history of this group. We are pursuing that trajectory. We are developing a model with long-term relationship with our clients. It's not a transactional model. Whether they are corporate clients or retail clients, our clients, I think, value, in the long term, this capacity to deliver. When I look at expertise, it's of course, expertise in certain products, probably well known to you, whether they are structured investment products, with all kind of underlying assets, structured finance and advisory in selective areas, which are really feeding this relationship with corporate clients.
It is the same with individual clients, as you will see, in particular, in their key moments of their life and in particular, with wealth management. Innovation, I think we have proven our capacity, again, to deliver new services, new business models in the long term. These business models are not built just in one quarter. Here, I have in mind, of course, what we've been able to do with ALD, long-term growth, and also Boursorama. We will have a specific presentation on Boursorama. Let me just remind you that five years ago, we decided to push for the development of what was, at that time, what I would call an internal startup, and which is now much more than just a startup. It is also in the way we innovate and pioneer in new areas.
You will see that, for example, in the new renewable energy sector, which is a very big growth engine, we are ranking very well in the world and innovating as probably our teams from GBIS will explain. It's also, I think, in the way we work together. It's in particular important when I think about embracing the new technology, because it is probably the number 1 challenge at the end of the day for all financial services industry. In the way to disseminate this effort, I'm very happy to see that we are acknowledged, you know there is this ranking in front between all the CAC 40. It's not just financial services which is important, it's also industrial companies.
We were number 1 in the eCAC40 award for 2018, after having ranked permanently in the top 2 and top 3, which I think reflects, because again, it is the whole ecosystem which assesses this capacity to work together. We are going to communicate in a few days, on an Internal Startup Call, where we've launched internal startups, which are already very promising. That's just an example. Sorry. Here, I would like to highlight in particular, that we think we have precisely the expertise to contribute to positive transformations of our economies. These positive transformations will feed our growth. Again, beyond this is also something which is very motivating for our stakeholders. I would like to highlight three areas in particular. As I said, the transition towards renewable energies.
This is something which is becoming a very important sector for us. We are number 2 in terms of financing renewable energy in the EMEA region, number 4 in the world, and we are doing this across all geographies. Second, mobility. The usage of cars is fundamentally changing. The kind of ownership is changing, and we see definitely ALD as a key and a clear leader in that sector with potentially very long-term development. As you know, it started with a corporate business, car fleet management for corporates. It is now developing a business for individual clients, something like 100,000 cars are private leased cars. Eventually Africa. Africa, let me say, maybe today it's not your priority and for most people-We consider that the long-term development of African economies is probably not just a business opportunity, but one of the biggest challenge for Europe.
If we think about monitoring the immigration pressures, for me, it's clear that the sustainable development of Africa will be one of the top priorities of all European governments. Behind this, it means, of course, a fantastic opportunity for us to accompany these economies, the African government, but also all the multilateral agencies in their efforts to put more money on the ground. At a time where all international banks with marginal presence in Africa are basically leaving, I think it will be a further differentiating factor. As you can see, contributing to these long-term trends, again, is not only for us a growth driver, something which will feed our businesses in a profitable way, but also which will make us, we think, a responsible bank in terms of being committed to these common goals. Just a further word on responsibility and responsible banking.
As you know, probably at the end of the day, when you think about what will make a bank successful, alongside innovation, it's around being responsible, the question of conduct and culture. I think that the enhancement of a shared common culture on one hand, and of common, well-established, well-organized, with good resources, control functions on the other hand, has been, in the last 10 years, a permanent effort for us. It's very clear, and here I remain very humble. There is more to be done there. We have further projects in that matter, but I think that we have the benefit of having put all the legacies of the crisis behind and already started the journey a few years ago. A last word on the integration of this model, because at the end of the day, why to have these businesses together? It's really to have synergies.
A third of our group revenues are generated thanks to synergies between our different businesses and/or different geographies. It will be illustrated, I'm sure, in the coming presentation. I think it enables us, of course, then to develop this business, conquer new clients with a more efficient way of doing business. A word on the integration from a geographical point of view. As you know, we are a bank with European roots. We keep these European roots. Something like 68% of our revenues are generated in Europe, in the large concept of Europe. From a retail point of view, we have, as you know, completed the refocusing of our international retail banking, having now announced the sale of our last subsidiary in the Balkans. We are happy now to focus on Czech Republic, Romania, and Russia, and of course, in Africa.
Looking at Asia and the Americas, we have decided, as you know, to focus on the CIB. I think that overall, this geographical focus, and this business focus is perfectly appropriate for us. I will be very short because in a minute, you will have a lot of detail on French retail and Global Banking and Investor Solutions. What I just would like to remind you as an introduction is that we are really combining two approaches. Omnichannel businesses, I mean the combination between digital channels to offer simple transaction to the clients online, and a human presence with networks to provide advisory services when needed. Second, Boursorama, our online bank with 1.8 million clients as of date. The clear leader in online banking, in France, which is differentiating itself from other neobanks because it provides a full banking service. We are keeping developing.
We are announcing today that beyond the 2 million target that we were able to meet earlier than expected, we will meet this 2 million target in 2019. We aim now at more than 3 million clients in 2021. Importantly, you will see that this business model is intrinsically profitable. Benoît will come back to that and explain all this in detail. I just would like to highlight two key parameters in the way we manage this retail bank in France. First thing, permanently in the last few years and today, we are clearly giving the priority to return on equity, preserving the capital usage rather than just the revenue generation and piling up loans, which can be sometimes at very low margins.
This discipline has remained, which makes us probably the most profitable bank in this market. Second, as Philippe and Marie-Christine will elaborate, we are probably at the inflection point in 2019 in terms of being able to reap the fruits of all the investments we've done in the digitalization of our processes, and hence having a capacity to come back to positive jaws in 2020 and going forward, improving step by step our operating efficiency. On GBIS, again, Séverin with his team will comment more in detail.
What I just would like to highlight is that what we have announced in terms of strategic adjustment has been based on very thorough examination, very granular examination of all our activities, all their prospects in a new environment, in a new regulatory framework, that we are very confident to be able to deliver our target while keeping the consistency of the model towards our strategic lines. This is very important, so we have a capacity definitely to improve the profitability. Let me just spend a little bit more time on the businesses that we are not going to present, but which are really a pillar of profitable growth for us today, as well as in the coming years. I will start again with international retail. Let me just highlight, you see that in the translation of the growth of revenues and the profitability.
First of all, you have here favorable market dynamics. These favorable market dynamics are fed with good GDP growth overall and prospects. It is true for Central Eastern Europe, Czech Republic, and Romania, 2.5% for Czech Republic GDP growth this year, 3% for Romania. In Russia, the growth is expected at 1.5%, the retail market should grow between 12%-17% according to the Russian Central Bank, starting from a very low leverage of households. For consumer finance, we have very good operations across the board in Europe, consumption remains relatively good. In Africa, growth also remains pretty good. The IMF has released recently its latest forecast for the different countries in Africa. In the countries in which we have a presence, in particular sub-Saharan African countries, which do not depend too much on commodities, the GDP is very good.
Needless to say, beyond GDP, the rate curve is totally different. It's a fundamental ingredient, potentially, of growth revenues, that's why you have such a gap currently between what you see in Eurozone retail markets and in countries like this in retail. In these markets, we have a capacity to further enhance our franchises. First of all, by further, like we do to a certain extent, of course, in different environments in France, but differentiating in retail with the best client experience. The digital transformation in Russia is not very different from what we do in France or anywhere in Eurozone. Russia is probably more advanced in mobile penetration than Eurozone countries, the development of digital services is pretty well advanced. Same thing in the Czech Republic, more or less the same features. In Africa, it's different as the starting point.
The legacy is less significant, same thing. Digital technology is also there, as you know, we are developing also our own electronic wallet. On the CIB, we are working, of course, leveraging on expertise. The benefit that we have as being an international bank with specific expertise, whether it's in structured finance or capital markets, compared with many local banks, is a clear edge, whether it's in Central Eastern Europe, Russia, or Africa. We will be able, I'm sure, to answer questions if you have on this. The second thing is we are also able to further improve the gross operating efficiency. It is true when we look at, for example, certain subsidiaries. The Czech Republic, for example, is moving towards agile working ways, organization. 40% today of central functions are organized in an agile way.
It's exactly the same that you can maybe see in your own organizations. It is true also in Africa, for example, where we are currently implementing all our resources in Africa, close to the ground. Of course, reduce then the staff in Paris who used to provide services to Africa at a more expensive cost. Beyond this, there are also some tactical improvement, such as the merger between DeltaCredit and Rosbank. The legal structures are merging. Things like this which will further improve, of course, the capacity to develop and deliver net profit. A word also on insurance financial services. We have three businesses here, insurance, fleet management, and equipment finance. Across all of them, the prospect of growth and profitability is very strong.
Let me just remind you, insurance is, of course, at the heart of bank insurance model in France, but also in all our retail networks. Overall, our insurance businesses represent EUR 2.3 billion of revenues. That's 9% roughly of the total group revenues. While fleet management, I've already commented, it's a long successful story of growth, more than 10% a year of the fleet. As I've said, alongside a structural growth market, which is the corporate car fleet, the development of private services. A lot of growth going forward. Equipment Finance, which is also a leader, as well as ALD, a world leader. ALD is number 2 worldwide. Equipment Finance is also number 2 worldwide and number 1 in Europe. It's at the heart of the economy.
It's financing equipment goods across the world. Is doing also very well with something like close to EUR 30 billion of loan outstanding. What I'd like to highlight is themselves, these businesses are transforming. They are innovating. They are partnering. ALD, just to give you a few examples, has more than 150 partnerships with banks. For example, they provide the service to banks which have not this capacity. There are scale effects in this market. We are also pioneering a partnership with companies like E.ON, Enel, big utilities, or a company called ChargePoint, which is the leader in the electric vehicles charging networks to develop electrical cars, because we are accompanying this transition towards also different cars. Regarding Equipment Finance, we are very much also developing new partnership with European investment to also move in terms of financing climate transition.
Let me mention one thing, which is interesting also to show the culture of the company in insurance. We launched in 2015, again, an Internal Startup Call Moonshot-Internet, starting from scratch, from inside the company. Internal talent. It's contextual insurance. It means the insurance you do when you transact on internet, you buy something. You want to tick a box to have an insurance on something. Very small tickets, but an insurance precisely, which is cheap and maybe gives you security. This startup, starting from zero, has just signed an agreement with a partner called Roadzen, which is a leading business in global fintech, Indian-based fintech, with them entering into a capital, taking a stake at a valuation much higher than, of course, what we invested in the startup, to develop the leader in the European, precisely contextual insurance market.
What I'm just showing here, reflecting, is that, okay, we work with external startups, of course it's good, we are able also inside to generate our own innovation capacities and new businesses. Let me say a word on something very different, the risk profile and culture. Something which is common to all our businesses, that we do not always comment that much in all aspects. Let me just highlight, on the credit risk, that we've made fundamental progress in the last 10 years in the quality of our origination. As you can see, in the last three years, we have had a cost of risk of 25 basis points on average, among the best in Europe. We start this year at 21, as you know, we've kept the same kind of guidance, 25 to 30 for this year.
Second, we have a very low NPL ratio, which is going down step by step at 3.5%, which is also very well covered. Second, on the market risk, also very well contained. On average, 5% of total risk-weighted assets since 2016 represent market risk. We have a very disciplined approach in terms of market risk, the value at risk has remained also very low since 2013. Last but not least, I would like to come back to that, operational risk, which maybe today is the risk which is the most significant to a certain extent, maybe also more difficult to predict. We have, as you know, settled all our litigations last year. The effort on compliance has been very significant. We have not waited for the settlement to start the journey. As I said, we had anticipated.
Beyond this, we have established now for two years a transversal culture and conduct program to ensure that all these elements, not just of compliance, but also of culture, were embraced in all our activities. Third, we've put in place last year, I think, a pretty innovative remuneration scheme for our top 60 managers, where whatever their business is, their activity, a very significant part of their variable compensation is linked to common objectives, which are not just financial objectives, which are client satisfaction, which are the level of engagement of the staff on a transversal basis and on CSR objectives. I cannot underestimate, I think, personally, the benefit of something like this to cement the action of a management team, which again, has as a responsibility to manage a group which is integrated and which share, of course, common clients.
Let me just remind you a few things on our short-term priorities for 2020 that you probably have in mind. First of all, roadmap to profitability. We have readjusted our target between 9% and 10% return on tangible equity in 2020 in a more challenging environment than the one we had in mind in end of 2017. It is the environment which now we anticipate to remain lower rates, less growth, slowdown of the economy, not a catastrophe, but a slowdown of the economy, in particular, even more in 2020 than 2019, which remain always relatively positive. I think that we see the confirmation of that actually with the real GDP figures. We are working on that. Fundamentally, we've, as I said, the benefit of a strong comfort on the cost of risk. We are comfortable with our guidance. No bad surprise to be expected from settlements of litigations.
It's really the optimization of gross operating income. This is going to be presented more in detail for two of our businesses. I've already told you the comfort we have on our international retail banking. Again, it's a mix of growth of revenues, leveraging on certain business initiatives, an improvement, as you will see on the French retail, turning point, in 2019 and 2020, we'll go back to growth, Philippe will comment. Of course, on the cost, a strong attention on the cost. Overall, a EUR 1.6 billion saving plan, EUR 1.1 billion which was announced 18 months ago, an additional EUR 500 million, in Global Banking and Investor Solutions. Séverin, again, will come back in that more in detail. Delivering our roadmap to capital target, 12%. Here you have again a few reminders.
First of all, in GBIS, Séverin will again come back to that to answer your question, a EUR 10 billion reduction of risk-weighted assets by 2020, EUR 8 billion in capital markets, EUR 2 billion in the financial and advisory businesses. You have seen that we have started to implement this quickly and smoothly with already EUR 2.3 billion in the first quarter, coming from capital markets. On top of that, there will be 10 to 20 basis points overall in the group of optimization, such as securitization, insurance, et cetera, with some of that also in the first quarter. The second point is overall, a more disciplined approach in the growth of risk-weighted assets. We plan now a 2% average yearly growth of risk-weighted assets between 2018-2020, rather than the 3% rhythm we had in mind at the end of 2017.
Maybe more importantly, you have on this slide how we will differentiate the capital allocation in the different businesses. As you can see, a clear differentiation and more capital allocated to the more profitable and more promising businesses, such as international retail banking plus 5%, or financial services plus 4%, compared de facto, for example, on Global Markets and Investor Services at minus 9%. All this being, of course, at the constant scope and guarantee, excluding all the model reviews, including the TRIM that we have already commented to the markets. Let me just conclude this presentation, this introduction. We have the conviction that we are going to deliver our short-term financial goals, I hope that this morning with the two businesses, probably at the heart of that, you will have even more detail to have even stronger conviction there.
Beyond this, I just would like to finish on something, again, looking at the longer term. Here, every one of you can have its own conviction. We might disagree, only time will tell. When I think about what will make a bank successful, I really consider number one is around innovation. Like a few sectors, retail sector, automotive, the banking sector, the financial services, are going through an immense need of adaptation to new client behaviors. We have really the ambition to provide a service which will be fundamentally with processes fully digitalized. Yes, there is an effort in the investment there, I think that the benefits in the long term will be massive because it's a way to improve the client experience, let's face it.
Also, of course, to be more efficient internally compared with still processes today, which are not digitalized front to back, and automated. The second thing is, I think, the capacity to be able to lever on innovative business models. From that perspective, we have the benefit, as I've said, on businesses like ALD, Boursorama, which have ahead 10, 15, 20 years of growth. It is not true for, in my view, plain vanilla, let's face it, retail banking. These businesses will be probably more cannibalized by all these changes. The capacity to have this kind of assets, in my view, is key for the future of any financial institution. Third, I consider that our positioning in promising markets and geographies is also a competitive edge. Let's face it, the mature Eurozone markets will face further unfavorable conditions.
It is probably difficult to imagine a sudden GDP growth improvement, a strong improvement of interest rates. When you think that you can have a difference between 8% and 10% of revenue growth a year, that makes a difference. When you add year after year, that makes a huge difference. Same thing, we are, I think, one of the few European banks to have the benefit of this positioning in these geographies. Of course, beyond that, two ingredients which are absolutely crucial, as I already commented, capacity to innovate, remaining responsible. Having this culture shared across the group, it is not just a question of figures here, it is a question of history. It is a question of tone from the top. It is a question of fundamental DNA of the teams. I must say, my conviction is that Société Générale has both.
Even if here, again, the journey is not finished, let's be humble, we have both of that, and we have, I think, the capacity to make further progress. I will not be longer, I will immediately turn the floor to Philippe. We will start with the French retail. We will then have a Q&A session, then a pause, we will enter into the presentation of the Global Banking and Investor Solutions. Thank you very much. Philippe, the floor is yours.
Good morning. I am very pleased to be here with you today to present our French retail banking activities. I will be accompanied by four colleagues, Marie-Christine Ducholet, Designated Head of Société Générale Retail Banking, Françoise Mercadal-Delasalles, Chief Executive Officer of Crédit du Nord, Benoit Grisoni, Chief Executive Officer of Boursorama, and Bruno Delas, Chief Operating Officer for SG French Retail Banking. Our purpose is to share with you for 45 minutes our activities and our strategy. Our presentation will be followed by a Q&A session. We have two main objectives in French retail banking. First, stay relevant to our customer by improving their experience and their satisfaction. Two, increase our profitability by growing the top line and reducing the cost base. That is our focus, that is what we will explain to you by answering three questions. What are our strengths? What are our key initiatives?
What are our financial results? First, I would like to remind you briefly some specificities of our environment and domestic market. As you know, the banking industry is changing dramatically. Customers, individuals, corporates, change their behavior. They are increasingly demanding real-time, convenient, and cheap banking services, but they also will still want personalized attention. Competition hardens with new entrants from everywhere, challenger banks, non-banking payment institution, credit intermediation platforms, big techs. Furthermore, during the last years, the regulatory framework has significantly redefined the way we operate. Finally, I cannot but mention the low rate environment, which has been, and still is, the most penalizing factors for our revenues. Disruption and market fragmentation are already taking place and could trigger material revenue migration. This movement is also offering, for innovative banks, real opportunities, including outside the boundaries of our industry.
We believe in the potential of a domestic market, the French market. France is a wonderful country, full of diversity. Regarding its banking sectors, three specificities should be mentioned. It is dominated by three mutualist networks. The market is very competitive, as demonstrated two years ago with the mortgage renegotiation wave, and it is characterized by a combination of high online banking penetration and persistence of a very dense branch network. Let us not forget the attractiveness of this market. France is a country with a positive demography. The country is rich, with a GDP per capita above the European average and with important savings capacity. The country is also characterized by a strong entrepreneurial energy. It is true that regional dynamics are uneven, but Société Générale and Crédit du Nord are well-positioned in the most attractive regions.
Finally, unfortunately, people still trust the banking system and their own bank. We operate on this dynamic market with three strengths. Let's focus first on our key asset, our client franchise. Our client base, combining Société Générale, Crédit du Nord, and Boursorama, is strong and diversified. 700,000 corporates and professional, and almost 11 million of individuals. On the slide, you can see the breakdown of the 2018 revenues by client segment. Two key takeaways. 50% of our NBI is generated with corporates, blue boxes, and professional, gray boxes. These segments are at the core of our DNA. They are a great source of synergies with all SG group businesses. As I said before, they are sectors with potential in the French market. Regarding individuals, our overall portfolio is well-balanced in terms of age distribution of our clients and duration of our relationship with them.
Wealthy, mass affluent, and affluent clients represent 34% of our total NBI. There is a clear difference of revenue generation before the various subsegments. A wealthy or mass affluent client generates revenues three times higher than an affluent client, who generate twice as much revenues than a mass-market client. Therefore, the tiering of our marketing approach is key. As we will see later, we clearly want to continue to serve our core clients, who generate most of the fee-rated revenues, with the best client experience, the best offer, and the best expertise. We also continue to address the mass-market segment, given its contribution to our revenues, EUR 1.2 billion, and because some of these clients, notably the young people, will migrate in their lifetime to the affluent and mass affluent segments.
We'll continue to adapt our model to meet the needs with a cost-efficient setup by leveraging our digital banking capabilities. Our second strength is our specific setup in France with three banks. Société Générale, a powerful universal bank with a strong franchise on corporates, private banking, and mass affluent clients. Crédit du Nord Group, with its eight regional banks, a premium bank with a highly recognized franchise on SMEs, professionals, and entrepreneurs. Boursorama, leader of the online banking market in France. My team, Françoise and Benoît, will comment more into details the three banking models. I just want to insist on one point. There are very few clients common to the three banks, and especially between Société Générale and Crédit du Nord. Less than 1%. This situation validates the fact that each value proposition is considered by the customer as a different and specific one.
We strongly think that this multibank approach is powerful and consistent with some major trends of the French market, such as the fragmentation of the market and the rise of regional and community banks. To make it short, it is a differentiating factor. These three banks are not acting on a standalone basis, but on the contrary, have developed many cost synergies. This is our third strength. We commented this topic during our Digital Day last November, but I just want to remind you the key points. A significant part of our operating activities is shared between the banks through processing platforms such as Transactis for payments and Transfinance for short-term credits. Technological capabilities are also developed and mutualized between banks. Two examples.
The accounts and documents aggregator function has been developed in Boursorama after the acquisition of Fiducéo, and has been deployed in Crédit du Nord and in Société Générale. Second example, the tools used for the KYC remediation are shared by Société Générale and Crédit du Nord. Of course, best practices and innovations are spread across the banks. The recent creation of the group innovation direction will help us to work even further, including with SG Retail banks outside France. Critical point, a major part of Société Générale and Crédit du Nord IT system is mutualized. The two banks share 60% of their run-the-bank IT activity, mainly on IT infrastructure on digital hubs. Last November, we told you how our common IT division is conducting our digital transformation, making sure that the new components such as data lake, digital hubs, or artificial intelligence are shared by the two banks.
Finally, let's mention as well that the SG Group corporate functions, compliance, risk, finance, cover the three banks. Therefore, the teams share the same methodologies and most of the tools related to those tools functions. Now, I will present you what our strategy in retail banking. We have two strong strategic axes, expand our reach and adapt our model. Expand our reach. First, we still want to develop our core client base. As mentioned before, we are proud of our existing client base, but we are facing, in the French market, an intense competition from the new entrants on the incumbents. Therefore, the pace of new customer acquisition will remain a priority with clear and identified targets. In Société Générale and Crédit du Nord, we will continue to conquer customers focusing on core segments, youngsters, mass affluent clients, professionals, and corporates.
We'll also make sure that we keep our leadership position on some geographies, Paris area, for example, for Société Générale, or markets, legal professions, for instance, for Crédit du Nord. For Boursorama, as Frédéric said at the beginning of our meeting, our ambition is to stay the leader in the online market. We have built a best-in-class online bank that customer value, which has a very efficient operating model, and which is intrinsically profitable. The 2 million clients milestone will be achieved by September of 2018, one year ahead of schedule. Our new target is to reach 3 million customers by the end of 2021. We want to leverage further on cross-sell and sell up opportunities. Step 1, we'll continue to capitalize on SG group expertise to offer more and more qualified services to our clients.
We have still some room for growth with our key internal partners such as Societe Generale Insurance, ALD, or Societe Generale Real Estate. Step 2, our strategy is also to keep innovating. As Frédéric mentioned, we have a strong track record of innovation in Société Générale group. Just remember that we were the first bank in the world to propose a crypto dynamic card in 2017. We'll keep on investing on new technologies, but innovation is not only a question of technology, but also of mindset. As you know, to encourage creativity, Société Générale launched, by the end of 2017, a major entrepreneurship program called the Internal Startup Call. Several startups have passed the assessment phase successfully, and soon the projects will contribute to enlarge our range of services. Step 3, our strategy is also to develop external partnerships to broaden our range of products and services.
The idea is to master a customer center platform through which other providers can interact with our customers and sell differentiated products and services. The Crédit du Nord case, with more than 30 active partnerships, will be detailed later in the presentation. Overall, with this cross-sell and upsell push, our objective is threefold. Consolidate ourselves as the key point of interface with the customer, owning the relationship on the associated data. Two, deliver one-stop shop for all banking products and move beyond traditional banking to address broader customer journeys. Three, offer open platforms to allow for third parties to plug in through APIs and provide additional services to our customer. Further, in addition to new clients and new range of products, we want to explore new territories on a B2B2C mode.
The idea is to offer in white label mode some of our assets to players that will continue to manage the end customer relationship. Some of the specialized subsidiaries are already in the open banking area. 2 examples, insurance with its Moonshot-Internet startup, and Franfinance with its consumer credit distribution programs. The acquisition of Treezor in 2018 is a unique opportunity to expand our ability to find new distribution channels for our products. Therefore, we will further structure and develop our bank-as-a-service know-how. The key success factors on this model will be operational efficiency and scalability. To summarize this important slide, to expand our reach means to acquire new clients, to grow our wallet share with customers beyond financial services, and to serve with some of our assets, other firms in a B2B2C mode. Our second strategic axis consists of adapting further our model.
To increase client satisfaction and to improve our efficiency, our target model, as Frédéric mentioned, is first, to be an efficient producer for all standard operations. We are investing to automate and digitalize as much as possible day-to-day banking operations. In addition to client satisfaction and cost reduction, this approach contributes to reduced operational risk and compliance risk. To offer a high level of expertise, both human and AI-driven for key projects of our clients, with tailor-made solution and advisory services. To rotate our model, we have launched three years ago a large transformation plan with a proper mix of investment in traditional and digital capabilities. I will give you some concrete examples. Enabler 1, digitalized client journeys with best-in-class experience. Our key question is, are our digital capabilities robust enough to compete with platforms or FinTechs? Our answer, we are closing the gap.
We offer to our clients the use of the bank 24/7 in self-care through a rich mobile application. It is quite comprehensive, user-friendly, and very much appreciated by our clients. Our clients can also purchase the main banking products and services online or with a remote relationship manager, thanks to the electronic signature. It is a success with 50,000 signatures each month. We are also progressively digitalizing our main banking processes, account opening, mortgage onboarding, personal loan applications. Enabler 2, leverage on data and artificial intelligence. Two examples, the combined use of data and artificial intelligence allows to optimize and personalize our marketing approach and promote the right offer at the right moment from the right touchpoint, with a responsible usage of data to remain the first trusted partner of our clients.
Second example, thanks to AI, we have developed a capacity of detection of fraud by identifying risk behavior in real time. Enabler 3, expertise and specialization. Specialized relationship managers have been appointed for specific segments, back offices have been specialized, and all training programs have been redesigned. We have also adapted our managerial practices. Enabler 4, overall setup transformation. This is probably the most visible effect of our actions, with a large reshaping of our networks. Marie-Christine will elaborate on this matter. I just want to give you some headlines. Sharp reduction in the number of branches, -22% for SG since 2015, and -9% for Crédit du Nord. Differentiated formats with flagships, classic branches, secondary branches, professional corners, business centers, nomad bankers, proactive remote platforms. Major back offices adjustment and deployment of agile ways of working throughout the organization.
This setup transformation has a very significant impact on our teams. For instance, between 2016 and 2020, a total of 3,450 FTE reductions are planned in SG network. Enabler 5, digitalized and data-centric IT systems. As detailed during the digital day, we have digitalized our IT systems by using our strong core banking system as backbone and building an ecosystem of digital bricks around it. This digital decoupling frees ourselves from our legacy system constraints and give us the flexibility to ensure best-in-class customer experience, to move quickly, to minimize execution risk, and to integrate our external partners. Our transformation is deep. We are developing a flexible, adaptable model, and we will be able to continue adaptation to the market in the coming years. Our financial results reflect this overall transformation strategy. First, on the revenue side.
During the last year, the interest margin on deposit has been impacted by the low interest rate environment in two ways. First, the former generations of stable deposits have been been replaced by less remunerated generations. Second, in the context of low rates, over liquidity in the market on more volatile customers' behavior, we have shortened our ALM policy. This downward trend is called to diminish, and the margin on deposit will therefore progressively normalize. Meanwhile, the net interest margin on credits will mechanically increase, thanks to a successful selective origination strategy, which has protected both our margins and our credit risk profile. We will maintain in the future this balanced approach between production volume and profitability. Overall, we are getting closer to the inflection point in terms of net interest margin.
It will stop decreasing year-over-year and will increase sequentially before the end of the year. Fees should, for their part, progress thanks to the many business initiatives I have mentioned. In the past, our three banks have consistently demonstrated the ability to generate commissions, both on new activities such as private banking or on more recurring activities, flows, means of payment. Fees should be stable in 2019, despite the impact of a cap on banking fees for vulnerable clients, impact of EUR 16 million, and increase in 2020. After the revenues, the cost side. Our costs are mainly explained by the impact of our transformation, our growth initiative, and the regulatory charges. The first important point is that a transformation plan generates actual savings. They are clearly visible, red column, in the evolution of our cost base between 2018 and 2020.
These savings are delivered according to plan and are principally related to staff downsizing in front and back office. They are partly offset by spending increase in growth initiatives on IT cost. Growth initiatives are of two kinds. 50% is about Boursorama additional development and 50% about critical growth drivers such as consumer credit, private banking, insurance, and real estate investment. The increase of IT cost corresponds to the investment related to the transformation effort that, unlike HR and real estate-related costs, are not covered by the provision set up in 2017. They are tightly monitored and strictly aligned with the transformation program. Savings are also partly offset by increase in costs resulting from the new regulatory requirements, taxes, and to a lesser extent, compensation growth linked to inflation and pressure on the labor market. I have detailed the evolution of our revenues and our costs.
Let's move to our overall profitability. In 2018, our French retail banking activities posted a good level of profitability with return on normative equity of 11%, despite the low interest rate environment, increasing regulatory requirements, investment in network transformation, and Boursorama development. Our networks, Société Générale and Crédit du Nord, have demonstrated their resilience. In 2018, they deliver revenues of EUR 7.7 billion, a net income of EUR 1.3 billion on a return on normative equity of 11.6%, which means that they have been able to remain very profitable while implementing deep transformation in a very challenging environment. With Boursorama, we have developed an online banking leader that is profitable off acquisition cost. Indeed, excluding VAM and under a standard method, Boursorama would have posted in 2018 a return on normative equity of more than 14%. Benoit will comment Boursorama numbers into more detail in a few moments.
Overall, based on our strategy on financial results, we confirm the guidance for French retail banking activities. On the revenue side, progressive improvement in the current rate environment. We expect a light decrease in 2019 between 0 and -1%, increasing revenues in 2020. On the cost side, full benefit of this transformation as of 2019. We expect an increase in cost between +1% and +2% this year and a decreasing cost base in 2020. Trends will have positive dual effects in 2020 and beyond. The cost of risk is projected between 35 and 40 basis points on the return on normative equity between 11.5% and 12.5%. To conclude in a few words, we operate in the French retail market, a highly competitive landscape, which is nevertheless attractive and offer opportunities.
We have three main strengths on which we can rely, a strong and profitable core client base, three franchises with specific value proposals, and a capacity to innovate and deliver synergies with SG Group. We have two major strategic axes, expand our reach in terms of clients, services, and new territories, and deeply adapt our model. This is not just an incremental evolution. We are totally focused on delivery and on track on our execution plan. Our work is paying off, our financial results are improving, and we confirm our guidance with positive shows in 2020 and beyond on a return on normative equity between 11.5% and 12.5% in 2020. Thank you for your attention. Now I'm leaving the floor to Marie-Christine Ducholet to continue with Société Générale.
Good morning. SG Network relies, as Philippe said, on a large and diversified client base, well-positioned to benefit from the French retail market growth drivers. We propose to our customers a universal bank offer, leveraging on the whole group capabilities. I will focus today my presentation on four elements: our approach to two specific customer segments, and the current status of our transformation on the digital front and on the physical setup. First, I want to present a focus on our French Corporate. We have a very dynamic and diversified client base on French Corporate, with a specific high penetration rate on large corporates and export-oriented ones. We are growing our client base on a regular basis. We have been able, for example, to grow the number of our new clients by 25% on the last 12 months.
We are today reorganizing our approach to this segment by specializing our network to the corporate segment. We have already launched nine business centers, and we are continuing this transformation in order to reach a target of 30 business centers by the end of 2020. The aim of this transformation is, of course, to gain in expertise on our workforce and to be able to present to our customer a better design capability, leveraging, as I was saying, on the whole group capability. We are offering to our large customers already all the group product, for example, the ALD product, restructure financing product, hedging, et cetera, and we are enlarging this approach to all our SMEs. We are also preparing the future with specific initiative. We are, for example, investing on our setup for startups.
We have more than 150 people specialized on startup, and we are also entering in partnership with BPI, for example, in order to accompany the startup from the beginning, and with some accelerators. We have also a specific sector in order to prepare the future on the Grand Paris approach, where we develop our financing to the different initiative around the Grand Paris. The second customer segment where I want to make a focus is the wealthy and mass affluent clients. We have created in 2014, the new Banque Privée, BP, for French wealthy clients, putting together the large client base of Société Générale network to reach a private bank expertise and franchise. It has been a very big success, as we have been able to attract over EUR 10 billion AUM during the last five years. We are now expanding this new approach to our mass affluent clients.
We are investing on a multi-channel coverage based on an increased number of wealth management advisors and a dedicated remote platform, and also enhancing our product offer by leveraging the private banking specificities and capacity to offer an open architecture context offer to our clients and tailored content. We are developing this new approach currently, and we are well on track on the development of the new teams. These two new approaches have been made, and we are able to do these new approaches because we are investing a lot on our setup and on our digitalization. We are investing in our digitalization in order to be able to offer, by 2020, a full digital day-to-day banking offer, a full range of standard product online, and digital processes in order to have front to back better alignment.
This is done in order to free time for our workforce that will be able to concentrate more on advisory services. Today, we have already 75% of our day-to-day banking offer and standard offer for products that is digitalized. We want to reach, as I said, 100% at the end of 2020, so we are well on track. Our customers buy it. They already do a lot of the day-to-day banking operation online. As you can see, 70% of our international transfer are already done directly by the customers without any branch integration, and it's the same for healthcare. We are, as Philippe said, also investing a lot on online-signed, contract signed. And we have been able to multiply by 10 the number of contracts signed online since the end of 2017. The digitalization of our processes is also progressing as expected.
I won't come back on the means of payment that Philippe has commented, but it's also an area where we invest a lot, in innovation and in digitization. I want only to highlight an example. For example, on instant payment, on the global SG network offer, not only SG network, but Crédit du Nord, Boursorama, and Société Générale, we have a penetration rate today of 40% on instant payment. Finally, I want to come back on our transformation on our physical setup. Because of our digitalization, we are able to highly transform our setup and to close branches. What I want to say on this final slide is that we are totally on track on our transformation plan. Be it on the evolution of the physical setup, be it on the evolution of the back office, or be it on the evolution of the remote platforms.
On the physical setup, we have already closed a high number of branches, and we will close finally more or less 22% of our branches before the end of 2020. The closing of branches is not the only point. We have been redesigning our approach to customer, and rethinking about the format of the branches with design thinking approach. We offer today a multi-format approach with traditional branches, multi-site branches, with branches specialized for professional customers, branches specialized for corporate customers, as I mentioned before. We have also delivered on the reorganization of the back-office platforms. The plan is to close 6 platforms by the end of 2020. We already closed three of them, and we will be even earlier on plan in order of closing those platforms.
That point is also to specialize the platform between individuals on one side and professional and corporate on the other side. The specialization has been done, and we are finalizing this process, and that will be ready by the end of 2019. On the remote platform side, the topic is to be able to use it not only to answer calls but to sell. We are also investing on the people and transforming the way they interact with the customers. For example, we are already in a position to sell a lot of products and on consumer products, consumer loan products, for example, we have been able to sell 30% of our loans through the remote platforms. Everything is on track, as I was saying.
The aim of this transformation is mainly to gain in efficiency and on agility in order to prepare the future. Now I will pass the floor to Françoise to present you Crédit du Nord.
Good morning. I'm going to speak about the little sister now. Little sister, but older anyway. As you know, maybe I have to pass the slide myself? Okay. The CDN group is a union of 8 regional banks. The oldest was founded in 1760, a long time ago, in the south of France, in Toulouse, and the others progressively throughout the 19th century, Lille, Paris, Clermont-Ferrand, all the country's big regional capitals in France. All of those banks are federated around the same three singularities. The first one is that since the foundation, we've been dedicated to the service of entrepreneurs, and this is very strong in our banks. 60% of our revenues come from professionals and small and mid-sized businesses, particularly in the range of the 2 to EUR 7,500 million revenue bracket.
The second singularity is that client satisfaction is the driver of our relationship model. It's based on a very close proximity and knowledge of our clients. We are regularly on the podium for client satisfaction, despite, as you know, of a very tough competition from mutual banks, particularly in France. Three, our governance is still decentralized, really decentralized. Our banks remained social entities. The CEOs of those banks are entrepreneurs themselves, speaking the same language as their clients, bringing more agility to the management and transformation of the group. While, this is very interesting, maintaining a strict discipline and full alignment on all the centralized policies such as risk, compliance, finance, et cetera. What is our strategy? Our strategy is very simple. Is to continue to concentrate on our core clients through a balanced operating model between human and digital, reinforcing continuously our uniqueness.
Concentrating our energy on core clients. As you know, we are a very small group with less than 2 million clients. We are focused on the profitability of our clients, rather than aiming for a huge increase in the number of them. Nevertheless, we continue to focus on the acquisition of good corporate counterparties. Our rate of penetration is impressive. It's 18%. Impressive compared to our size. We will remain strong in the professional space, 9.5% of revenues in this market in France go to CDN. We will continue to be the private banker of our entrepreneur clients, which is really very specific to Crédit du Nord. 70% of our professional clients also have their personal account with CDN. Overall, we continue to acquire new clients every year, more than 100,000 in 2018. We've made a good start to 2019.
To foster this strong proximity we have with our clients, we need a balance, as I said, between a high-quality human presence on the ground and the support of all the possible digital tools. What we call our STAR model, here on the slide. We designed it. It's being deployed according to a number of principles. Our branches first. Our branches, the main ones, are profoundly redesigned and rebuilt into concept stores, we could say, co-working spaces, dedicated more and more exclusively to providing advice to clients. The others, the other branches, becoming small base camps, either on the street or upstairs in a very specific, individualized relationship with the clients. Of course, as every other networks, we continue to progressively reduce the number of them. Our bankers, second. Our bankers are more and more mobile, nomad bankers.
Working more and more outside the branches. Meeting clients where they want and when they want, with the help and the support, of course, of all the fully mobile tools, needing a higher and higher expertise from them. Our multimedia expert center remote platform is playing a bigger and bigger role. It supports the branches to deal with day-to-day banking. Will progressively become the only contact point for non-core clients in order to dedicate fully the physical branches to the core clients. Branch automation, for sure, it's fundamental. We are progressively phasing out bank tellers. The self-care tools developed with agile methods. We're building. Progressively deploying new features through our redesigned journeys. In order to enforce this strategy, we are committed. Embarked in a fully client-driven transformation. This is just to give you a glance of this.
Our aim is to provide core clients with a full range of products and services that they can access in an open architecture model on our new platform. In order to make that live, we did three things. First of all, we tried to better know our clients, and we have fully rebuilt our client segmentation. Supported by big data and AI, we now have a system that not only measures the actual value, which is common in banks, but also the potential value and the future behavior of our clients. Where we used to have only two to three categories, we are now much better at handling the individuality of our clients, which allows us to create much deeper, of course, relationship.
Second, in order to better identify the needs, we categorized those needs in 28 different universes, thanks to this new segmentation, but also using all the information we can collect on the ground, using surveys, using voice of the clients. For an example of those categories of needs, if I am the CEO of a very little company, for sure I need to finance the development of my company, or I need to finance the transmission of it. But I could also need to find insurance or need help with accounting to save me time. Or need to understand better GDPR regulation, for example, because I don't have any expert in-house, et cetera. To answer those categories of needs, we are building what we call our CDN new platform in order to better serve our clients.
This platform is supported, of course, by a largely opened architecture built by our friends from BIT. Very soon, our new portal will provide our clients and employees, who will also choose the same platform as the clients, a range of products and services that are homemade for the core banking products, of course, but also come from outside. This is the idea of openness. It comes first through internal partners in the Société Générale group, in total synergy with them, important. For example, insurance, Frédéric mentioned that a moment ago, but also real estate solutions, but also car leasing, factoring, all the payment systems, for sure. This is new, brought to our clients through the partnerships we have signed over the last few years with startups and fintechs, such as Fizen or Payzen or Captain Contrat.
As Philippe said, more than 30 partnerships are in place as of today, with potentially, the development of two startups that we are incubating inside the bank that will be up and running, I hope, quite soon now. This open architecture will prevent us from being disrupted, we hope, and will help us to grow revenues, selling new services. It will secure and deepen the link we have with our clients, core clients, which again, is the foundation of our strategy, but also our raison d'être. Going through this cultural and operational transformation, we want to continue to secure our clients' satisfaction. This is our first goal. Also to secure our people satisfaction, which is so important. Our NBI, our operating costs, and our risks. Thank you very much. I leave the floor to Benoit for Boursorama.
Thank you, Françoise. Good morning to everyone. I am very pleased to explain to you today why Boursorama is an attractive, simple, and successful model. Boursorama is by far the leader of digital banking in France. We have reached more than 1.8 million clients as of today, and we acquired 465,000 clients in the last 12 months. We are number 1 in number of clients and number 1 in client acquisition. We reached this position thanks to a dramatic acceleration of our growth since the end of 2015. We have multiplied by 2.2 the number of clients in 3 years. The momentum is still very positive. We have beaten a new monthly record in April, and we have recruited, last month, 63,000 new clients. Despite the huge enlargement of our client bases, the profile of these clients are very valuable.
They are rather young, 38 years old on average. It was 41 years old 2 years ago. They have a high sociologic and professional profile, which represent this segment, 35% of our clients. They are urbans. For instance, 8% of Parisians are clients of Boursorama. We have a unique growth in the French market. I know that there are questions regarding their activity. Are they real banking clients? The answer story is yes, because Boursorama has developed a full and comprehensive offer. We do day-to-day banking, means deposit payments. We do savings with all kind of savings accounts. We do life insurance, investment products. We do all type of credits, overdraft, personal loans, mortgages, Lombard credit. It is absolutely key for 3 main reasons. The first one is if you have a comprehensive offer, it is the only way to have satisfied, loyal, and active clients.
Second thing is the fact that it is a way for us to have diversified sources of revenues. Thanks to this model, we have a competitive advantage versus competitors. It means that we are more attractive and we are more difficult to replicate as a whole. This is the first thing to have in mind. Second thing is the fact that it works. For example, deposit and savings outstanding has increased each by EUR 1.1 billion in the last 12 months. The global credit amount has increased by EUR 1.5 billion in the same period of time.
As you can see, at the start of the relationship with new clients, we have a really decisive moment because we are able to multiply by 3 the deposit on average between the Q1 and the Q4 following the onboarding moment. You can also see that we are with more and more active clients also on other metrics, as payments, connections, and opening accounts, with even higher rate of growth compared to the evolution of the number of clients. Thanks to its comprehensive offer, Boursorama is not only just focused on acquisition, but also on equipment in order to create a full and a long-term relationship with its clients, which is absolutely key. How does it work? Our model is very simple. We develop a pure online banking model. We have no branches, no dedicated client advisor.
It's a win-win situation, because the client can do what he wants, whatever the product, including for mortgages. He gets a very good price, because we need fewer people to manage the bank. It's as simple as that. To succeed in this model, there are some clear conditions. The first one is obvious. We need to have all the products natively digital, and the whole bank has to be supported by automated processes. The second thing is open architecture is not an option. Clients want the best solutions. It's true about content. Boursorama delivers advice, news, tools for comparison, for example, and we work with 70 providers. They are all external. It's true about products. We have more than 100 financial partners. It's true about services. For instance, we work with the three main worldwide payment wallets, Apple Pay, Google Pay, and Samsung Pay.
We are the first bank in France having a real interaction through Google Assistant for banking management. Sorry. At the end, what is very important to understand is the efficiency of our model. As you see, customer service is just here to manage exceptions. We have less than 1.4 contacts per year and per customer. It was two in 2016. The goal is to improve the efficiency each year, because it's the key of the model. We are less than 800 people to manage 1.8 million clients, and it's very important because it allows us to have the most competitive prices on the market. It's recognized as we have been ranked for the last 11 years as the less expensive bank in France. To give you an order of magnitude, our banking fees on a yearly basis is EUR 10.
The rest of the industry, it's EUR 215. There is a huge gap, which is justified by the model. To conclude, our clients are autonomous, and they are satisfied. Our net promoter score is above 40. It's +40. We have a double unique position towards mature banks in terms of pricing power because of our efficiency, and towards neobanks because of our comprehensive offer, allowing us to have a real relationship on a long-term basis. Now we are going to talk about financial metrics, because I think this is an important and key point. If you look at the 2018 financial results of Boursorama, I think that you have to keep in mind five elements. The first element, which is absolutely key, is the fact that we do not amortize any of the direct cost related to acquisition.
The full investment is booked the day the client comes. Take in mind the fact that we have almost recruited half a million clients in one year. It's a huge effect, of course, in our financial metrics. Hopefully, the investment we need to acquire our clients, it's almost fully variable. 92% of the expense is due only in case of success. I think it's the second point you have to keep in mind. If you take now a theoretical view of the financial metrics without any the acquisition financial effect, you see that the model is virtuous, as revenues are growing twice more quickly than expenses. About revenues, you maybe have to take in mind the fact that half of our clients were not in the bank two years ago. Here we are talking about retail banking, which is a long-term business.
Half of our clients were not there 2 years ago. The second thing is we have very young clients. Almost 50% of our new clients are under 30 years old. Maybe they will get richer. The third thing to have in mind is the fact that our deposit has been collected in a recent period of time where the rates were not already so good. Just to give you an idea of maybe the revenue will stay at a lower level than what we see in mature networks, but they will improve by the time. This is for the financial things. Now what's next, I think that you have understood that our new target, explained by Frédéric and Philippe, is to reach more than 3 million clients by 2021. The reason is very obvious. We want to leverage our unique position.
We are number 1 in number of clients, number 1 in acquisition capacity. We are number 1 in client satisfaction, number 1 in notoriety, number 1 in pricing position. We have a very specific position. The second thing to have in mind, and that we are convinced by the fact that we have our real industrial model, developing a full range of product, and it allow us to have the best in-class cost to serve per client, and to build a relationship for long-term with our clients. The third thing to have in mind, the momentum is still very positive for online players in France. It's obvious. As I said, we hit better record in April. 48% of the French people are considering the fact to switch their primary bank. I think it's not a French topic, it's a European topic. The momentum is good.
We want to leverage our position right now. Of course, if we decide to move from large growth to profitability, the profitability at a midterm point will be above 20% on advanced method, which is not the case today. It means two, three years after the large growth period. That's it for me. Maybe now I think it's time for questions, of course. Maybe not alone. Thank you.
You can stay longer.
No.
We probably need him to talk with you.
Okay, we are ready to answer questions.
Hi there. It's Nick Davey from Redburn. Two questions, please. The first one on risk-weighted asset growth and loan growth. I think the target in there is for risk-weighted asset growth to be 0.5%-1% per year. Loan growth at the moment is 4.5%. Could you talk us through how you'll keep risk-weighted asset growth so low in the period, especially with SME loan growth quicker than mortgage growth? The second question, please, on interest margins. Thank you for the update about interest margins beginning to flatten this year. It looks like they'll flatten around 2% as a percentage point of your loan book. I just wondered if you could give us some more detail about that. It looks like some of your peers are closer to interest margins of 1.3%-1.4%.
What is the secret sauce at Société Générale to keep an interest margin above two, when most of the loan rates I can see, at least here from London, are about 1.3% or 1.4%? Just seems like quite a high interest margin, if you could give us any more detail on that. Thank you.
Regarding the RWA momentum, as it was projected in the slide by Frédéric, we are on a range of 1% in the coming years, because we are also optimizing a lot the way we are managing our portfolio, which was not the case. It has been the case for a while now in investment banking, but it was not the case in retail banking. We are starting seriously to work on this topic, including within a global project, which is led by the finance and risk division. That's why keeping a good momentum on product, on credit origination, we are going also to create a new space on our capital base. Regarding the pricing, I don't know if it's a secret, but that's what I told in my presentation.
For the last two to three years, we have been, I would say, not conservative, but very vigilant on our pricing on credit, especially on individuals. Basically, we are reaping all the benefits of this policy. I don't know.
Yeah.
Okay.
Good morning. [Flora Li] from Deutsche Bank. The first question is on Boursorama. When I look at the slide, where you disclose new financial information, I was surprised to see that even when you strip out the revenue lost with the commercial offers, then also the direct acquisition cost, you still end up to a cost-income ratio that is north of 70%, which is not better than a physical network. Now, I've seen it's improved over the past two to three years, but where do you think it can go? What can you do further to improve that cost income? Then the second question is actually going back to the deposit margin question. If I understand, there's going to be a deceleration in the pressure from the deposit margin. What's driving that?
Is it basically because the comparison base is improving, or are you also on your side doing something different, reinvesting into longer-term assets to improve the deposit margin? Thank you.
Boursorama, yes.
Yeah. For the cost income, you're right. I think it's 71 excluding
All acquisition effect. I think it will come around maybe 60, under 60. It's possible. I think the key point is really the fact that the revenues today, you have all the recent clients, and the percentage of recent clients in the NBI UC is very huge. There is no comparison, I think. It's very difficult to have in mind, but the rates are so low that maybe we have to also have in mind that the cost income will not be at 20% or 30%. I would like them, but I think with this rate, it's not possible. We can't be dreamer. I think the fact that it's already 71 is not so bad, and I didn't mention it, but you have seen maybe that the cost to serve our clients has improved by 35% in two years.
I think that may be a good point to have in mind also regarding Boursorama. On the stabilization of deposit margin, yes, it's a fact that the most important part of the decrease of cost, it's behind us. We have not materially change of replacement policy. The number which I didn't mention, maybe you have to keep in mind, is that when you compare the deposit margins, the 2018 compared to 2017 for the first quarter, it was minus 9%. When you compare the first quarter of this year versus first quarter of 2018, it's only minus 4.6%. There is a real stabilization.
Yeah. This is Jean-François Nuet from Goldman Sachs. I just wanted to ask on the sustainability of revenue margins and pricing discipline. If I look around in France, you've described yourself that the market is extremely competitive with mutual players. They are not return seekers. They don't pay dividend, and they have 15% at least core Tier 1 ratios. The second thing I observe is your own, when I drive to France or look around, your own advertising campaign seems to be a lot more favorable to volumes in general, I saw recently. I might be wrong here, but that's my perception.
I just wanted to understand, looking at the level of your revenue margin, whether if the competition continues to remain as hard as it is or intensify even, given all the points before, whether you won't feel in a position to have to follow and see your revenue margins under further pressure, given that they start from the very top, and how you would respond to a future acceleration in competitive pressure.
Marie-Christine.
On the position, it's true that the competition is very hard in France. That's the reason why we work on our value-added approach, and that's the reason why I was insisting on the fact that we present the offer of the whole bank. Our competition is very focused on pricing. Effectively, the mutualists don't look at the same return that we are looking for, but they are not able to offer the same kind of value-added approach, and that's the way we want to position ourselves. We have been doing that for a while on large corporates, and we are extending that to smaller ones. That's the way we are resisting to competition. We have also a positioning where at least for SG network, where we are more on the Parisian region and the south of France, where mutualist competition is less aggressive.
They are very much on Brittany, for example, on the east of France. We have also a good positioning towards the mutualists for that.
Maybe concerning Crédit du Nord, due to the very long and historical relationship we have with those guys, they know why they came to a CDN bank in the region. We're still keeping the capacity to price, and our clients agreed to pay for the service and the strong human relationship as of now, as of today.
The truth, and maybe it's not 100% rational, is that all clients are still ready to pay the quality of service. Take the simple example of a mortgage. When you subscribe a mortgage, you want a good price. You want also to be sure that the money will be at chez notaire at the right time, and that your file will be managed diligently. That's a real asset, and I think we are, on this example, very careful also about the quality of service delivered by our bankers. I think the geographic mix is also important. For example, on the corporate side, probably the best prices, and from the bank standpoint, are in Paris. The most competitive areas are in the middle of nowhere in France. When you are in big city, actually, you have some room for maneuver to define your pricing.
Hi, Omar Faruqui from Barclays. Just a few questions. Firstly, on the selective loan origination policy where you've grown less than peers for several years now. When and how will we actually see the benefits of that? Because so far we've had this NII that's fallen more than peers in the last few years, and your starting point with deposit margin was always thicker than everyone else anyway because of the nature of your client base. Is it that when rates start to move up, you have a better path on NII because you have a lower stock of low-yielding assets, or is it a credit quality issue? Secondly, just on the deposit margin point, you mentioned that you'd shorten the duration of the ALM. What is the effective duration of the reinvestment portfolio today?
Is it a case for us externally to track that, to take the moving average of that duration or something like that? Then last question, what is the amount of the 2 million clients at Boursorama? How many are primary clients where Boursorama is their main bank account, where they receive their salaries or whatever? Thank you.
You want to answer on Boursorama?
Maybe just to answer to this question, we don't have the figure as primary banks for the same reasons. It's maybe because we are very recent clients. The thing you have to take in mind is the fact that our current accounts, on average, it's EUR 2,500 per current account. In terms of payments, we have an average per month with the debit card at 14.5 per month. I have no doubt that we have active clients. That's why I tried to demonstrate before. Maybe not enough. Primary, I think it's not for us right now the good view to have in mind.
Regarding the net interest margin, what I can tell you again is that that's something that we are monitoring very closely at the origination. On a deal-by-deal standpoint, so making sure that the pricing is appropriate on the credit, but also according to the overall relationship we have with the client. I think it is a very good practice. Again, I think that even though we have been slightly below peers, still a production volume, especially on the corporate, it's good. Again, don't forget what I've mentioned at the very beginning, 50% of our NBI, and I think we too often forget that, is related to corporate and professional. These markets are very different than the individuals, especially because the global understanding of the relationship, the long-term view of a relationship has some value for the bank. More importantly, for the client.
They want us to be there on the long term. Regarding Yes.
If you wish, I can take the nice ALM question. There's nothing changed relative to what we've said, been saying for some time now. The average duration of the ALM has been quite stable now. It's about five years. It's very comparable to other French banks. The thing we may be doing different is, as relates to the classification of the recently collected site deposits. As you may remember, we consider that some of these site deposits is about EUR 200 billion site deposits with the French retail. We classify close to EUR 30 billion of this as rather volatile because we consider that this site deposit growth was explained by the lack of alternative investment opportunity to a site deposit in a monetary world. That's why those are reinvested very short term, i.e., Eonia, in other words.
Basically, we're moving away from the base effect, and that also explains why sequentially it does improve. You have to take your own assumption, the way to follow it as regard to short-term rates going forward, multiply by the whatever is the collection rate you assume, and that's the way we do it ourselves. To summarize, we've already said in the past quarters that for any 10 basis point change in the rate curve, there is for our BDDF, i.e., the French Retail, roughly EUR 50 million impact plus or minus per year out of EUR 8 billion of revenues.
Yes.
Thanks. Yes, it's Kiri Vijayarajah at HSBC. Just in terms of the, you show on slide 17 the mutualization of the infrastructure at 85% within French Retail. Can that go any higher? What's to stop that going to maybe 100%? Also on costs, you show kind of a new type of branch format there. You've got the full service branch, but also some of these new branch formats coming in. Could you give us a feel for what's the cost differential between the kind of old style full service branch and this new format, please?
Maybe Bruno Delas, our Chief Operating Officer, can answer first question.
We mutualize all the infrastructure, I mean all the data center for the bank. We also mutualize, on the software part, all the product and services like payments, like card, like security services. We also share all the software on the regularity part. I mean, for example, anti-money laundering. Okay? At the end of the day, we also mutualize all the new digital capabilities, and you remember in November, I explained to you that we create some new capabilities like, I don't know, electronic signature, and we use exactly the same electronic signature for all the bank.
Regarding the real estate cost, it really depends on the format. From a pure real estate standpoint, it is less expensive because we are using less space. In some cases, we are not on the street, but above. The other key component to take in mind is that, especially during the last 2 years, 2, 3 years, we have invested a lot on ATMs because we closed the cash machines and the cash function within the branches. We created a lot of what we call Espace Libre-Service or ATM machines providing a lot of functions. The pure real estate component is down.
Hi, Andrew O'Flaherty from Credit Suisse. Correct me if I am wrong on this, just on slide 36 and 35, just on Boursorama, I see the revenues excluding commercial offices growing at a CAGR of 13% from 2016 to 2018 versus the client acquisitions where the CAGR is roughly 30%. Is the revenue per customer declining, and is that of any concern? Is the first question. On the second question, still on Boursorama, as I see you say you've got 30% market share of online banking. Can you give us a sense of what the overall French market, for online is growing by just top line? Thank you.
Regarding revenues, I think that you mean that the last year it was a little bit lower than 13%, if I understand your question.
You said a CAGR of 13%.
Yeah, you're right. It's a little bit lower. Mainly due to fees regarding investment products because Q4, the end of the year was not very good in term of trading activity for our clients. Maybe it's not only in Boursorama, and it's also better for operating expenses last year compared to the CAGR.
It's correct to assume that the revenue per client for Boursorama is decreasing.
No. I think it's clearly the effect of the trading activity, which is still huge in Boursorama. People trade a little bit less during the Q4, and I think it's the main effect you have here. There is nothing regarding your question. In the Q1, for example, it's exactly the same growth.
All right.
Same pace.
Just on the overall growth rate.
Sorry?
Just the second part of the question, just the overall growth rate.
Online banking.
Yes.
I don't have the
Okay.
Online.
[Foreign language]? Of the market?
Yes. Correct. Yeah.
We think that there is 20% of French people with an online bank. I think it was in a study last week. The growth is quite huge because we had 4.4 million clients in online bank at the end of 2017, and we think that it was 7 million at the end of 2018, including N26, Revolut, Nickel, so all neo banks, not only online banks. It's all pure online players.
Thank you.
Hi, it's Bruce Hamilton, Morgan Stanley. If I can just ask a couple. Firstly, just circling back to Nick's question at the beginning. In terms of the sort of loan growth in French Retail versus RWA growth, can you sort of walk us through some of the ways you can optimize that so that the RWA growth sounds like it'll be materially lower than the lending growth? Secondly, you mentioned there are ways that you can mitigate RWA growth.
Can you just help us understand some of the bigger ways you could manage that, so that you run lower trajectory on RWAs versus loans? Secondly, on Boursorama, I guess just understanding the revenue generation from a client over time. So for a client who's been with you three years, say, how different does the revenue capture change over time? Just trying to understand perhaps the revenue growth potential as we look forward.
Can you take the last one? Okay. If you see the revenues of our clients, it's clear that there is a big effect in the first month. As I show you regarding the average deposit between the Q1 and Q4, we have a multiply by three the deposit, and it's exactly the same for the three years. Clearly the relationship begins with a current account with a very low amount. People are testing us
Little by little, the relationship comes with Livret, with life insurance, sometimes investment products, but it's not a very fashion thing in France. We have also credit, which is quite new for us. I mean, the personal loans, we started in 2016 to sell this product, and we have almost EUR 1 billion right now. Things are too new, to be honest. Clients are too recent to have a perfect view. It's why I can't answer. I think we need to be humble. What we see is the deposits, the credits are increasing exactly, and sometimes even with a higher rate in term of activity. I hope you see it in the global outstanding we show to you. We have EUR 21 billion in term of assets. We have almost EUR 8 billion in credit. We have real clients.
The question is, half of these clients were not there in 2015. I can't imagine everything right now. What I'm sure is I have a comprehensive offer so they can be equipped by Boursorama. When we do it works. I'm sorry to not be more assertive.
I think what is important for Boursorama is to keep in mind that really, we don't know yet what is the future, we are monitoring all the activities very precisely. Looking at all the clients vintage by vintage to understand exactly how they behave, what kind of product they buy. That's true that it's quite impressive because for the time being, they behave very consistently. Your first question was about loan and how do we-
RWA.
RWA. Well, it's a lot of components. It starts again with origination policy. We have a lot of projects to make sure that we have clean data. We have identified some room for progress. We have also securitization, project for securitization, sales of portfolio. That's part of all the constraints we are managing RWA, NPL, and all these kind of things. Of course, we are leveraging all the technologies which have been developed in investment banking. Now also VC has been expanded to retail banking.
Yeah, go on.
I just had actually more like two follow-up questions. The first maybe more for William. In terms of the divisional return, I guess that assumes a risk-weighted assets for TRIM as well. How much should we expect this in French Retail Banking? The allocated equity, I assume that's 11% or is it 12% in line with your group target? On French Retail Banking, you talk a lot about new customer acquisition. How many years on average, or do you expect in case of Boursorama, how many years do you think it would take for new customers to be profitable? What's the sort of cross-selling ratio? Have most of your customers one product, or is it, you said some have a second product, and you mentioned cross-selling has improved. Maybe if you can give us some color.
I think the new customers were across the different networks. Maybe if you two ladies can talk a bit as well about how long it will take for a new customer to be profitable. Thank you.
Maybe on RWA, it allows me to clarify because we had some questions. Just at the group level, the 12% target, by 2020, which we expect to be above. It includes everything, including TRIM, just to be clear. What we're talking about here in terms of the return on normative equity for retail also assumes everything, in the RWA base, including any TRIM impact. This is different from the 0.51% per annum, which is organic at constant, for an exchange, obviously it's not relevant for retail, but [NPI meta], previews any TRIM impact or any other regulatory. Lastly, to your question, we don't provide granular split of TRIM on businesses. What we have said, and we can reiterate based on our knowledge, is the fact that the bulk of the TRIM impact will revolve around the CIB activities, particularly the market activities.
We assume that two-third is roughly there. The irony, Frédéric reminds me, is calculated on the basis of 11% of RWA.
Time for profit. Time for profit. New clients, I think it's really depending on the environment, of course, but today it's around six years for new clients to become profitable. Including what I said before, we have a lot of strong clients, a lot of young clients. The second question was regarding the equipment. The only thing I can tell you is we have 30 products globally in the range of products, and it was three products per client one year ago. It's 3.1 today, including the growth of the client base.
It's always difficult to have a judgment on the results, but it's improving. I think you saw it, but in average, our client has EUR 12,000, EUR 12,500 and EUR 4,500 in credits. I think compared to, for example, neobanks, when we have figures, it's not so obvious. It's not exactly the same size per client. It's 15 times lower to have that in mind.
Tarek Mehrez from Bank of America, Merrill Lynch. Just a couple of questions. The first one on your strategy of volume growth, especially on the retail network, Société Générale internal network. You clearly don't want to compromise on your strategy. You're getting affluent and high net worth. To Benoit's comment, is it now a moment to invest and maybe grow further in low profitability, younger professional people? Because for now, they might not put your salary with you, might not buy expensive products, but in 15 years of time, when they will inherit or get more successful or more experienced, they will be more profitable. This is what actually the Revolut and [Intersex] and Boursorama looks like to bet on, because that's where the growth will come from later on. My second question is on costs.
Competition, interest rates will remain low, your strategy to minimize that selected volume growth. Clearly cost is the lever you have to pull. Since 2017, we didn't have any updates on where you can adjust that lever because things have changed there as well in terms of interest rates. One question here is, when you announce departures, closing branches is actually good, but the lease is not the most expensive thing, it's really people working there. What you do in France is that you just reshuffle people around, which is good as a responsible employer. Why in France we don't have net departures of staff when there is cost cuts?
We have a lot of departure. We are reducing the workforce for 3,500 people now on our plan. We have a lot of departure, in fact. It's a real work on cost. What we do in digitalization is to try to have our customers doing by themselves a lot of the operation in order to be able to free time for workforce, to decrease the workforce, and to focus the workforce more on advisory, value-added products, et cetera. We are working on the number of people, heavily working on the number of people, first of all. After, in term of clients, I won't speak for Boursorama, but even on the traditional networks, and I will let Françoise also speak about that. For example, at SG network, we acquire a lot of our new customers when they are young.
It's our big driver of our acquisition of new customers. We invest for the future. It has been paying over time. That's the reason. We invest on the future. On the beginning, when we acquire them, when they are young, they are not profitable, but over time, they tend to be very profitable. We really do a lot like that. We also invest on other way of acquisition, obviously, with real estate loan, with consumer loans. We truly have a big part of our new customers that are young and specifically for the students one, where we have a specific acquisition strategy there.
Effectively the same. We continue to acquire new clients particularly, even in our own networks, they continue to come because of the specific service. At the same time, we continue to decrease the workforce. You're absolutely right by saying that the number of branches is not really the right KPI, it's the number of people, and it is continuously decreasing in CDN and two.
Well, at the end of the day, the ultimate KPI, it's EUR, in the chart I show you, the red column, you don't have the amount, but it's quite significant. It's actual cost cutting, and most of it relates to people who left. We are not advertising these numbers every day for obvious reasons. Yes, people are leaving the company, not just finding a new job, a new opportunity. That's all the purpose of the provision, which was defined in 2017, which we are using. We used it in 2018, and again this year, and again next year.
Matthew Clark at Mediobanca. I had a follow-up question on cost as well. On slide 21, it's not clear to me whether you are still guiding for 2020 costs to be below 2018 or whether they're now going to be above, because on the chart, which doesn't have any numbers, it looks like they're going to be slightly above 2018 costs, whereas previously in the slides that gave the cost trajectory, it was to be down a bit. Could you just clarify that, has there been any slippage in the cost ambitions for 2020 on French retail overall? Thank you.
Actually, yes, the guidance, it's a cost reduction in 2020. I don't know if we disclose this number, but it will be slightly below 2018. Below.
Okay. Can you not be any more specific there? Previously, you showed year-by-year growth.
No, again, for guidance, we stick to the guidance. It is still an increase in 2019, deceleration of increase and actual cost reduction 2020 and so on.
Okay. No quantification?
No?
No quantification of the 2020 costs.
No.
Okay. Thank you.
Pierre Chedeville, Crédit Mutuel. Two quick questions. First question is regarding insurance. I am quite surprised, generally speaking, by your, I would say, low-profile ambition in this area with an equipment rate of 12%. When I look at your main peers, for instance, Crédit Agricole, we can see that their equipment rate has increased a lot in the last three years, more than six points, for instance, for LCL. You are currently at 9.5. My view is to say, why are you so shy, I would say, in this area, which is a basin of profitability in a low interest rate? I'm not only talking of protection and casualty, but also of protection and health, and not savings, but I think you lack something here in your speech to investors, in my view, because I think it's clearly an important point.
My second question relates to the GV with the CIB. Once upon a time ago, you used to give some figures regarding the GV between CIB and retail, and particularly regarding the equipment of the utility intermediary companies. I would like to know where does it stand, this business, which is more and more competitive because we are going to see some American banks in this area, it seems. Also mutualists, which were currently not too much present on that, but are trying to be in this area. How do you see your added value in this area and the growth of this part of the business? Thank you.
On the first point, you are completely right, and I was not clear enough. When I mentioned in my presentation that we have area for growth, we, for existing internal partners, I mentioned insurance, and that's definitely one of our priority. We have currently new plans, which have been defined, Société Générale and Crédit du Nord, to go further, because definitely we have, yes, room for growth, room for profitability in this area, in which we have not been good historically. Regarding our joint ventures with investment banking, we have several joint ventures, one for private banking, one for Forex and interest rates. I think the one you are mentioning is what we call MCIB. MCIB, it's key. Again, when I was mentioning part of DNA, we are at the heart of it. It works very well. We have extended it.
Now we have something called SG Entrepreneurs for Société Générale. We have the same kind of structure for Crédit du Nord, combining not only MCIB, but private banking and even real estate management. We have, how many, eight teams dedicated-
In the region, yes
the regions. Not only a team in Paris, but also when I was mentioning specific account managers, that's part of it.
Yes. MCIB has been developing very well on the past years. We are leader for the ETI segment. It is the segment that is effectively targeted today by the American banks, et cetera, that are coming to the market, we are already leader, we have been developing our franchise on the past years. Through these return on teams, we are extending the franchise to smaller ones that are not the target of the TPN and other American players. We have a very wide coverage of our client base in order to propose them all this approach, M&A, social finance, et cetera.
The last piece of this setup is that last year we have reinforced the joint venture, the partnership between Gilbert Dupont, which is a subsidiary of Crédit du Nord, and Société Générale, we have clearly defined the parameters of each bank. Now Gilbert Dupont is in charge of all the operations below EUR 50 million, including for SG customers if necessary. We are really leveraging our capacities in this small, mid-caps market. Okay.
Hi. Yes, good morning. It's Stefan Stallmann from Autonomous. I would like to revisit your ROTE target, please. You are basically guiding for revenue that seems about flat 2020 versus 2018. First down a bit, then up a bit. On cost, it's the opposite. First up a bit, then down a bit, but about the same in 2020 as in 2018. Cost of risk, probably a bit higher the way you guide than 2018, and it's on a growing loan book. Your pre-tax profit could be very much lower than in 2018. At the same time, you have some risk-weighted asset growth. I wonder how you want to improve your ROT from 11% in 2018 towards 11.5%-12.5%, except for maybe by a lower tax rate. The second point, revisiting the question on expenses.
Before you started the transformation of the business, you had a cost base of about EUR 5.5 billion. Since then, you have cut a lot of branches and you consolidated call centers and a lot of staff has left. Is there any chance that once you are through this, let's say in 2021, your cost base will actually be lower than EUR 5.5 billion? Thank you.
Yeah.
Regarding this last question, it really depends. We do not control 100% of our cost base. You have seen, for example, in the chart that a big part of our effort has been offset by additional regulatory costs, taxes, and so on. The costs which are under our control will decrease for sure. For sure, because we start to see the effect of all our efforts, and it's true for this year, and it will continue in the next years. Regarding our target ROE, when you combine and what we are combining in our spreadsheet, all the numbers, increase of revenues, decrease on cost, strong monitoring of risk of RWA, we are within this bracket communicated to you, the 11.5%-12.5%. That's our guidance.
Now, together with the team, with Jean-François Grégoire, the new Head of Global Markets, with Pierre Palmieri, the Head of Global Finance, with Cécile Bartenieff, our Chief Operating Officer, and also with Alexandre Fleury, which is Head of Equity Derivatives in the Global Market division, and Sylvain Cartier. Congratulations, Sylvain, you have been appointed yesterday as the new Head of the Fixed Income activities within the Global Market business of Société Générale. We are there this morning to go deeper in our Global Banking and Investor Solutions activity and to answer your questions. Let me start with a conviction we have, which is a long-term conviction. If you look at structural growth drivers on the environment where we are working with, Société Générale has recognized leadership, which are very well fit with those structural growth drivers.
First of all, in mature markets, the aging of population is creating huge new needs in terms of investment for pensioners. We have in that, and specifically in the low rate environment, which will last for long in Europe. In that world, we have with our investment solution franchise, a key strength to address this. Which is also a resilience strength we have. We can see that, and we can discuss with Jean-François later on. Secondly, the world today has a huge need in the energy transition and infrastructure needs. Our Global Finance and specifically our structured finance franchise, is completely in equation with those needs. You have seen that during the last two quarters, how we can benefit if we put the capital at work, and we will come on that, all those trends clearly.
Third, there is international trade is still a positive trend in the world, despite the noise we can hear every day and the discussion between countries like China and the U.S. This creates additional needs for our large corporate clients in terms of international trade. We have decided to invest, as you know, some years ago, to our transaction banking solutions. We are there clearly aligned with long-term trends, and we have already global leadership position or local leadership positions in that field. The vision we have in terms of model, as you know, and Frédéric insisted a lot on that this morning, we are a relationship bank. We want really to create long-lasting and trusted relations with our clients. To do that, we have implemented for a while, as you know now, a specific coverage setup.
This coverage setup is based on what we call our senior banker organization and the client management team. The role of this coverage team is, first of all, to build and to establish this long-lasting relationship. There's also another role, which is to sell the full offer of the group, not only the GBIS product lines, but the full offer. It's working very well with ALD. We are one of the first fleet management providers through this coverage with equipment finance and even with retail services. This coverage team have also a second mission, which is key. A third mission, I should have said, which is to manage the client profitability and to manage the client allocation in terms of capital. This give us a clear capability to make an active client portfolio management and to reallocate capital when we think there is opportunity.
Our vision is we have to serve clients where Société Générale is the most relevant for them, and we have also to serve clients we are the most relevant for Société Générale. For us, it's the way to deliver the right return on our global corporate and financial institution franchise. On that, you can see that over the last four years, we have been in a position, despite the environment, which was still uncertain, to grow our client revenues. Thanks to this organization, I think so. We have also a focus, specific offers focus, like all division within Société Générale group regarding client satisfaction. We have implemented a close monitoring through the net promoter score measurement every year with our clients. And the good news is we have increased our NPS by 15 point of percentage during the last two years in the GBIS world.
So we are monitoring that clearly. The last point is we are concentrated in terms of clients. We have 800 strategic clients, and interestingly, those clients are served in different regions of the world. And I come to the next slide now. How do we justify our geographical footprint for a bank like us with EUR 8.5 billion as client revenue, as I mentioned? Of course, Europe is our domestic market, but as I said, we have global franchise in investment solution, in structured finance, in asset finance. Our geographical setup is there to be in a position to reach our clients everywhere in the world to serve them with our global franchise. On the other hand, we have also the ability to accompany our European clients in their international development. Interestingly, today, Europe is 68% of our revenue in 2018. The Americas is 17%, and Asia is 15%.
In terms of growth, we see that Asia first, America second, and Europe third in terms of growth potential during the last years. And it will probably continue in that direction. In America and Asia, we are just serving on our core strengths. Just give me time to give you examples on America. In America, we are still seen by our clients there as a leading equity derivative house, clearly. And we have a strong franchise in the U.S. We are also serving, and through this equity derivative franchise, we are seen as an investment solution bank. Just to give you an example, last year, the first product in terms of customized investment products of Athene. Athene, the number 2 in term of fixed index annuities in the U.S. The first product of this company is a Société Générale product.
Not seen by the clients, but we have been structural, and we have been in a position to serve that. Just to show you that we have a very specific niche, but we have the legitimacy to be on that market. Second area where we have a legitimacy in the U.S. is structured finance, of course, and we have developed from now three years our asset-based products activity, which is very performing and very successful, generating more than EUR 100 million of revenue last year, starting from zero three years ago in the U.S. Second point is 21% of America's revenue is coming from European clients. In terms of DCM, we decided, for example, to be an active player in U.S. dollar DCM some years ago. And today, our European clients are seeing us as active book runner on their DCM operations in U.S. dollar.
Now we are among the top 10 in this market, which is highly competitive. We were nowhere some years ago. Just to show you that we have some legitimacy in this U.S. market. In Asia, it's a bit different. In Asia, we have been for a while, a leader in terms of B2B2C investment products, and our main clients are private banks in this area. We are seen for the main private bank as a first partner to develop their investment product for their retail clients. We are also developing our corporate clients with our strengths in Asia and with our natural resources capability also in Asia. Today, Asia is 15% of our revenue, but 17% of our Asia-Pacific revenues are made with European clients.
Just to explain you that our global setup is really in that equation and consistent with the capability that we have within Société Générale. Let me spend some time on that slide, which is a result of the detailed and granular analysis we launched some months ago to revisit and to make how we can restore the profitability of GBIS. Which was the main point for me to address after the 2018 difficult year. If you have a granular approach, you can see very interestingly that in Global Markets Investor Solutions Services, sorry, which has been in 2018, the lowest return of our part of the lowest of our activity. We have split in three main activities. Investment Solutions, which is mainly the structured product, cross-asset structured products you know very well.
Financing Solutions, which is mainly collateralized financing solutions we are to financial institutions mainly providing, and the flow activity. Jean-François will come to that in a minute, how does this display. In terms of capital allocation, this Global Markets Investor Solutions business is representing 50% of the total GBIS capital consumption. In this part, you have 25% in Investment Solutions and Financing Solutions. Those 25% in terms of capital allocation are delivering higher return than 10% and even last year in 2018, which is very important to have that in mind. I have heard a lot of questions regarding the franchise of Société Générale impact. Is this Global Markets has been impacted? What we can see here in 2018, that in terms of Investment Solutions and Financing Solutions, our franchise is intact and still profitable in 2018.
The issue we have is on the flow activity, which is representing 25% of the capital allocated to GBIS, 50% of the Global Markets, where we have a sub-optimal return. It's the reason why we are, in our plan, focused on the restructuring of this activity. I will come back in a minute on that. If you have a view on the two other businesses. In Financing Advisory, we are driven by structured finance, asset finance, and investment banking, and transaction banking. Globally, this business is profitable. We have separated in this slide what we call the corporate lending. The corporate lending is a must in the client relationship, of course. The return on this specific RCF or term loans activity is not very good, as you can see there.
The issue we have in that field, because the competition is very high, to be honest. On those plain vanilla financing products, you have the Chinese, the Japanese, and all the players coming in, even in Europe, for example. For me, the real issue we have is to increase selectivity in terms of corporate lending allocation on our core and profitable client relationship. It's one of the areas where we will improve also the return during the next period of time. Globally speaking, the rest of financing advisory is profitable. We have, even if it's only 10% of the capital allocation of GBIS, an issue on wealth and asset management. You can see that the return is below 5% in 2018. To be very clear, we have different parts in that area. We have Lyxor with two parts.
One is ETFs, which is still highly profitable franchise, and the other one is traditional active asset management, where we have an issue of return. The second part in private banking, we have the French private banking, which is growing and profitable. Philippe told you that we have still huge potential if we include the mass affluent population of clients within our private banking setup, if I may say, what we will do in the midterm now. We are a good, profitable, and growing path. On the other hand, we have this international private banking activity, which is not profitable yet. We have to restructure that. It's one of the part of the plan I will comment on.
This slide has been already shown to you last Friday, I will not comment very fast, but just I want to justify what we are doing there. Clearly, to refocus our global markets on strengths. Strength, as you saw, is cross-asset investment solution and financing solution. Where we have to restructure is on the flow activity. That the reason why we have decided to close the parts which were the less profitable, and in some parts, we have decided also to, if I may say, not only we have closed businesses and reduction of cost base across the board in this activity. You know that we have decided to close the commodities OTC activity, which is 60% our total commodities activity. We are still in the commodity world, very importantly. Secondly, we have decided to close the prop trading activity.
Third, in the prime services, we have decided to be much more selective in terms of capital allocation. It will have an impact on clients and on cost. Fourth, in the fixed income and currencies activity, we are streamlining the situ everywhere in the world, meaning that we are reducing costs in Asia, costs in America, and costs in Europe in this activity. We are closing, Alfonso could be more specific, but we will close some desks emerging in the U.S. We have closed, of course, as I said, commodities, OTC, and the card and so on. This represents the core of our refocusing on global markets with the target to save EUR 8 billion of risk-weighted assets before TRIM impact. As mentioned earlier by William, the global TRIM will impact more global market activities than the rest of the group.
We have to have that in mind when you made this assumption and when you made the assumption of risk-weighted asset evolution in that. It's before TRIM, of course. As we made, which is a good achievement, EUR 2.3 billion in the first quarter. Very importantly, the first quarter outcome in terms of risk-weighted asset delta bridge is EUR 5.5 billion linked to the market normalization in term of market risk, which is something which is apart from this EUR 2.3 billion. This EUR 2.3 billion is a real structural reduction we made in the first quarter, and we will do 75%, we say 75% of the EUR 8 billion, by the end of this year, and the remaining part next year for Global Markets. 75?
75.
Sorry, we said 75. I hope we'll do better than that. On the cost, I can tell you today, with uncertainty on the top line, the cost adjustment base is the core objective of GBIS, clearly. In addition to the plan we announced during the investor day, we have decided to add EUR 500 million of cost saving in our plan. With, for the first time, a real guidance in term of absolute term of cost base. We are targeting to be below EUR 6.8 billion in term of cost next year from the EUR 7.2 billion, including the integration of Equity Markets and Commodities from Commerzbank, which is, roughly speaking, this EUR 500 million cost saving. How we will do that? We mentioned already last week that we will close business in the Global Markets activities, specifically in FICC, we will not do only that.
This EUR 500 million is a global cost reduction plan, which is across the board with all the businesses of GBIS. Very important to have that in mind. Even if 75% of this cost reduction is related to Global Markets, everybody will contribute. Pierre will comment on, we have decided to merge, for example, the Global Finance activity and the investment bank. This merge will lead to cost savings, synergies, of course. It's a 14% contribution to the total cap. As I said, we are restructuring our international private arm. We are closing the international headquarter, if I may say, in Paris, and we will relocate that in Luxembourg. We have also a 10% contribution of this restructuring necessity of asset and wealth management activity. The way we will do those cost reduction are very usual, if I may say.
The first labor in a service industry like bank is luckily internal staff, linked to our closure of business. We will also reduce the external IT staff needs to the agile methodology where I spend cost available within the comp, we will reduce the discretionary cost. A big part of this, Cécile is there, she can comment on, we are reorganizing completely our back office and IT organizations within the GBIS. We are merging the operations, back offices, and the IT teams in a relationship with all business lines, which is the first step in what we call the agile organization of a company like us. We are really dealing with everything we can to adjust this cost base. Now the main question everybody could have in mind is how we will deliver our return.
You have here the theory of return. Interestingly, you can see that our published return of our GBIS has been above 10% for the last five years, with one exception, which is 2019. 2019 has been a very tough year for business like us, not only for us, and with a specific impact on the fourth quarter, as you know. It has not been the biggest for Société Générale. We can say that 2019 is not necessarily the structural level of return if you have a look on the path. There is some structural event we have to take care, which is the main objective of our plan. TRIM impact, which is something which is not in the past, we will have to manage for the long term for the future, clearly.
Secondly, we are now in a scenario where the interest rate will be low for longer in Europe, with an impact on volatility. There is a kind of correlation, in our view, between the interest rate and the volatility level, which means that we have also to adapt our setup to a lower client demand in terms of hedging products, which is linked to the flow activity I already mentioned. It is one of the main reasons of our plan also is to adjust to this new environment, the global GBIS setup. How we will get to this 11.5%-12.5% return we have targeted for next year? The first thing, and I had this question from Pierre last Friday, is, yes, there is a slight assumption in terms of market condition improvement for next year. First thing, slight.
The revenue in 2020 in our plan are slightly higher than 2018. First point. Second point, the cost. As I say, we have put a cap on our cost target of EUR 6.8 billion next year. Third, there is clearly a risk-weighted asset management behind this target. Now with TRIM impact, post-TRIM impact, we are targeting to be more or less flat in terms of risk-weighted assets between 2018 and 2020. It is a bit difficult to predict because we have not a final outcome of the TRIM review, clearly. We are on the safe side saying that it could be a bit less impacting us. In any case, we are guiding you on the cost of risk normalized. Last year it was less than 10 basis points, we have 20 basis points for next year as a guidance.
All that dimension makes us confident in the fact to deliver this target in terms of return. To be in a nutshell, 75% of the improvement is coming from the cost part and 25%, roughly speaking, could come from the revenue part, just to be more precise to answer the question. There is uncertainty on revenue. What I can tell you that if the revenue would be a bit lower, we will have to adjust again our cost and risk-weighted asset consumption, clearly. We have possibility, in my mind, to do that. Then to give the floor to Jean-François. I would like to conclude on the vision we have as the Global Banking and Investor Solutions. As I said, it is in the DNA of Société Générale, we are first of all a relationship bank.
Meaning that the transactional relation, the transactional banking, which is part of the business, is not the core of business, even if we need it, because there is two words in transaction banking. There is a payment part, it's core, but there is this part in this story, I can give you this story, where we are 10 years ago in the U.S. 10 years ago in the U.S., Société Générale was 10 hedge funds, separate hedge funds in New York. Today, it's completely different. We have client strategy. We are a really integrated setup in New York, serving all the group clients where we have at Société Générale and within GBIS. This relationship vision has been built over time, and we will continue in that direction.
Second, I think it's still a DNA of Société Générale, which is recognized by our stakeholder, we will bring expertise and innovation. As Frédéric mentioned, for the bank, we will do the same for GBIS. With this positive impact ambition, fair to say that we are a leading bank in renewable today. The growth in term, and Pierre will comment on that in a minute, that the growth in term of origination for renewable projects, energy projects, has been significant, more than 100% during the last years. We have really something interesting there. Of course, the global target we have, globally speaking, is to raise our return on capital above the cost of capital through, what I said, very selective capital allocation, very focused on where we are strong for clients, and of course, with anticipation.
There is still a question regarding the potential impact on Basel IV on our businesses, very clearly. It's too early to say on the final FRTB. The good news, I think, is we are in a position to anticipate. We already make decision, for example, to reduce the maturity of some very structured product which could be impacted by the FRTB to manage that transition in 2024. Just to make you aware that this Basel IV question is at the heart also of the way we work today, managing our businesses. Very importantly to have that in mind. Just to finish, I want to tell you that we have a clear vision that we want to build the European B2B banking services platform with [SG Market ].
This is the reason why I mentioned earlier in some other presentations, the willingness we have to develop partnerships. This platform is an open platform, and we need to develop partnerships. It's the way we will continue to maintain and protect our franchise. On the short term, the commitment we have together is two things. Deliver the plan in term of cost and capital, and we are very much, can tell you, committed on that, but also, and very importantly, protect the franchise. The real risk we have in this transition period is really to lose the franchise. I will try with the team now to demonstrate that what we have did up to now, we have protected the franchise. The decision we took is also protecting the franchise.
It's a key point. We have to manage those two dimensions with the team, which is not an easy path today, because when you make a big original structuring like we are doing today. There is a risk that people are just impacting their commitment and their engagement. We have to manage those two dimensions. Clearly today, and you saw that in the first quarter, that the franchise is protected, and we are committed to do that. At the end, we will restructure also small part of GBIS to bring the return where we want to bring it. Thank you for your attention. I will let now Jean-François to go deeper in the Global Markets activities.
Hello, everybody. Let me turn to Global Markets. Beyond the classic asset class view, we like to describe our activities using three different categories that you have heard of. Investment solutions, financing solutions, flow and hedging solutions. We think it's particularly relevant for SG in general, and particularly relevant for SG now when we have to make a strategic decision. These products, this offer, how does it go to our customer base? We have basically three categories of customers, financial institutions, corporates, and distribution. Distribution, we mean by that the B2B2C business, where we sell mostly investment products to our retail investor through bank or insurance networks. For example, our own retail banking, but as well in Asia and in other retail networks in Europe. Financial institutions, this is where we sell the full suite of our offer.
Obviously, we sell ALM hedging solutions to insurance companies. We sell financing solutions to banks. We sell, obviously, to asset managers, hedge funds, pension funds, investment solutions. Last but not least, corporates. The corporates are very important for us. It's mostly hedging solutions, but as well, some investment products for their own treasury, for example. Before I dive deeper into these three categories of businesses and give you examples, let me stress out something very important to understand our franchise, something that is part of our DNA and that explain very much our franchise. There are two main characteristics. First, we have a truly cross-asset offer, and this is due to our history. At one time, we had an organization that was completely cross-asset in terms of investment products, and we have kept this feature. In our organization now, we are still very much cross-asset.
As long as there is some hybrid products or hybrid quant research or products that are involving different asset classes, we see that we are much more competitive, much more reactive than the competition. Another characteristic that maybe you know, but that is deeply entrenched in our history, is that we have been the first, and we are still a lot of structures that we call engineers in our front office staff. Originally, that was in the investment solution business, in the exotic business. For recent years, it has been spread over the entire organization. Now we have these people in investment solution, in financing solutions, and as well in flow and hedging solution. As well, across the whole MARK organization, we see really ourselves, and our customers see ourselves as a solution house. Now let's look deeper at our investment solution business.
I start by this because we think this is our core DNA. This is one of our jewels. This is our oldest business where we think that we are a leader, definitively leader in equities, but now a leader, we think, cross-asset as well, where basically, we answer to the complexity that some of our customers do have. An investor has to generate returns, and it's particularly complex in an environment when rates are zero, yields are so compressed. We come up with solutions, with products that are exactly suited to their needs and showing enhanced returns. I give an example on structure products, obviously the Autocallable equity products that maybe some of you have heard of. These are products that are principal-protected. That means that the customer will get back its principal, except in a very extreme down scenario on the equity market.
As soon as the equity market goes up, then it would get reimbursed with a very nice coupon. This is why in such an environment recently, it has been so popular. Because this product is now very much standardized, where do we bring innovation? Because we are still seen as a house bringing a lot of innovation. This is in the fine design of the underlying. We came up with little tricks on the underlyings that make the difference and that show products that are less risky and that are showing a little bit more coupon. As well, over the last year, we had another trick, which was a philanthropic component. When the product is reimbursed, a little bit is given to charity.
It has had a huge success. So on this, the innovation is not on the payoff, it's on the little trick that we do on the underlying design. That's for equity. I say that beyond equity, we have very much developed our offer on rate and credit products to the extent that last year, maybe you have heard that the market conditions were a bit tough for Autocallable risk management. Actually, our rate business has had its best year ever. Overall, it was well-diversified, and that's how ultimately we had, in 2018, an investment solution that was still very profitable. On this, we pride ourselves of being extremely risk-conscious on these products. We manage these positions with eyes wide open. We think that, from sources that we have, that we have the most sophisticated setup for risk management in the Wall Street.
This feature is developing a new set of offer to other customers. To sophisticated clients, when we hedge the second order risk component of our investment products or Autocallable, we make these sophisticated clients benefit from this opportunity that we call hidden assets. For example, that's on correlation. We enter into swaps with the sophisticated client, so that when the future correlation between equities is not too high, they will benefit, and they will have a nice, positive expectancy on these results. Here you see that there is a strong virtuous circle where we generate business with these customers, and at the same time, it reduces our risks and allows us to grow our Autocallable book in a very responsible manner. I come back to more plain vanilla products that we classify as well in investment products, the warrants and certificates. Here it's completely simple.
These are calls and puts. The value is not created by the complexity of the payoff and the complexity of the risk management that you need to do. By this factory, this IT factory that you need to put in place to animate thousands and thousands prices on different products all over the world in real time. This is a very profitable and old business of Soc Gen because we have been the first ever, 30 years ago, to issue the first equity warrant. This is a business that has to renew itself year after year. For example, in Asia, recently, over the last two years, we reconquered the top one position by implementing low latency techniques, that was used in other parts of our business. What is our plan here is very clear.
We want to be world leader. For this, we need to make a breakthrough in Germany, because Germany, German Warrant is a huge market in terms of size, is very difficult to penetrate. This is exactly the goal of the EMC acquisition, where in the beginning of 2020, we will be active on German warrants and we hope at that time to be world leader. Another type of strategy that we have been developing, that is hugely successful and has a huge growth potential. Index strategies. These are trading strategies that we do, and where we pass the performance to investors through indices and swaps on those indices. As Séverin mentioned, we have had enormous commercial success in the U.S. with insurance companies with their fixed annuity programs, where they ask banks to provide them with underlying to generate performance for their policyholders.
This is not a new market. Banks are already present on this segment. We completely disrupted this market over the last 18 months by proposing indices that were extremely well risk-adjusted, and where the performance of our products was the best in absolute terms and in risk-adjusted terms. We have a huge success there. This development is extremely interesting because there is almost no market risk and almost no scarce resource usage on the structured product. We are very aware of the risk, and it cannot grow infinitely. On this, there is a huge potential. Let me accelerate. On the financing solution business. Completely different business. What do we do here? Our customers do have market assets, and we finance these assets. Initially, this is the very well-known equity finance or govies report that has been done for years.
Here there are two developments that occurred over the last years. First, in flow financing. Flow financing for us is the most liquid assets. First, on our side, following the Newedge acquisition, we are still developing the synthetic equity prime brokerage. This is something core that is very linked to our prime services clients and our equity business, and where we will accelerate the development now. There is something very interesting that happened in the market over last years. Client financial institutions, because of regulations, need a lot more collateral. There is a market that has emerged to trade collateral. This is a new market, as always in new markets, we have an edge because we are able to understand and to put IT systems to profit from that and to advise our customers.
Just simply, if an asset manager is naturally long govies, maybe he will enter into a downgrade asset exchange, so he will give his govies and get equity. He will get a pickup for that. The other asset manager get govies because he needs them to put them for derivatives margin. Between these bonds and the equities, they can be in different currencies. There are a lot of arbitrage and opportunities for the customers to benefit. This is something where we are extremely active over the last few years, and we are putting in place some very cutting-edge IT development using cloud computing. Because when you think about it's a huge optimization problem where we have good ideas to serve our customers. Structured financing. This is on the longer term. These are assets that can be extremely complex.
It goes from equity, bonds, emerging assets, ABS. It goes to hedge fund shares, private equity, even life settlement policies that we have financed. We have done a big deal in the U.S. again, recently. We have now the full palette of eligible assets. We, again, like on the structured products, we take our time. We want to be extremely risk-conscious, to know exactly what we do. Overall, with the risk, the haircuts that we take on the collateral, this business is extremely profitable in terms of ROE, because, even in extreme scenario, with a shock on the collateral, we don't lose any money. This business overall is extremely important for us because it's recurrent revenues, and recurrent revenues for a market activity, that's something very nice. You have observed in Q4 or even generally that our revenue volatility is lower than others.
This is partly because we developed that. This is ROE extremely relative. Finally, our flow and hedging solutions, which represent currently half of MARK revenues. This is where actually we need to have focus and mission. Why? First, structurally, we have never seen ourselves as a flow master, as you know. This is especially something dangerous right now because with the rise of cost of doing business, there is even more a benefit for size. On top of the fact that flow, by definition, is benefiting from size when flows are always going to the biggest marketplace. By definition, it's to have the ambitions to be big to everybody at the same time everywhere is absolutely dangerous. At the same time, we do have strength. For example, on equity derivatives, it's well known that we have developed that for years.
We have specific ambitions where we want to be good. Another characteristic is that this flow and hedging solution obviously is extremely synergetic with other MARK activities. For our investment solutions, we need to have a sufficient good flow business. For our financing business as well. With the group in retail banking in France, in IBFS, for corporate, obviously, there are a lot of links. This backbone, we want it to be solid and then to generate profits on focused areas of expertise. Particularly, what do we do, what we decided. On cash products, mainly on cash pure execution businesses, this is where we want to be lean. We want to be lean to support our corporate issuers that are using ECM and ECM franchises. We will work on efficiency in terms of cost and RWA allocation for the rest.
For example, there are even desks where we decided to stop, like inflation in the U.S. or emerging credits in Europe. We are currently reviewing our whole primary dealership setup. In clearing. Clearing is special because we have a strong market share. We have a leading position. Here we identified very clear optimization in terms of RWA that we have started to do and that you can already observe in Q1, and it will continue to deliver. Lastly, on derivatives, I said equity derivatives is a strong franchise. Here, and that applies as well on fixed income, our specificity is to be a solution house, so we can add innovative content to our customers through research, engineering, SG Markets. We have an environment where actually, a very potent tool to provide ideas, and we are remunerated for that.
On fixed income, in Europe, we have a strong franchise that we want to protect with corporate. Obviously, with our presence in Eastern Europe or in Africa or the emerging markets as well, we are strong. We are very clear about what we do well, where we still want to progress, and where we want to optimize.
Thank you very much.
Good morning. I will talk about Financing & Advisory. F&A is a diversified business aiming at providing advisory and financing solutions to our wholesale clients. It's a business that is well-diversified in terms of regions. You can see that we are active in EMEA, Americas, and in Asia. Asia being smaller, but growing pretty fast, in absolute and relative terms. We have a global responsibility. Each head of business has a global responsibility, which is very important. Good diversification as well in terms of businesses. First, we have asset finance, which covers real estate, shipping, aircraft leasing, and export finance. Asset-backed products, which is, securitization in a broad definition, investment banking, including ECM, DCM, M&A, LBO, acquisition finance, and telecom. We have the hedging because we've got some JVs together with our Global Markets. Transaction banking, I'll talk about this in more detail.
Natural resources and infrastructure. Last, what we call the corporate lending, which is not really a business, it's the portfolio of deals, RCF, big vanilla transactions that Séverin described, which is something we do for the sake of the relationship because it's a strong cross-selling enabler, not only for the Financing & Advisory business lines, but for the whole of the group. These businesses, putting aside corporate lending, are profitable businesses, as Séverin said, above 15% return on equity on average. If you take the structured finance activities, it's even above 20%. Structured finance being natural resources, asset finance, and asset-backed products. Interestingly, these businesses are even more profitable than before the crisis. Project finance used to be a 12% return on equity business. It's more than double today. We are very diversified in terms of clients, financial institutions, and corporates.
We've got strong competitive advantages. First, we have in many sectors, a strong industry knowledge. This is a very strong competitive advantage because it takes from 10 to 20 years to really build an industry franchise. We are strong in energy, in metals and mining, telecom, real estate, shipping, aircraft, and a few others. We are also, I think, one of the best banks around when it comes to structuring and finding tailor-made solutions for our clients. Last, we've got a global and holistic approach to our markets. This is also very important because our vision is that more and more, the markets are going to be global. Issues will go issuing into different markets, different regions. There will be convergence between the banking, the loans, syndicated markets, and the capital markets. Having a global approach to these markets is important.
It enables you also to better manage your risks, and risk awareness is also a strong competitive advantage, and we'll talk about this later on. In terms of revenues, we have overperformed the Investor Day plan, between 2013 and 2016. We have promised a growth of 8% a year. We have delivered more than this. Strong increase in NBI. You can see we decreased a little. This is due to the commodity crisis. The oil crash was such that it was wise, we believe, to slow down a little, but now we are again in a growth mode. We are increasing, and this is confirmed in Q1 2019. We are in line with the Investor Day targets, and in terms of net result, we are even above this.
We decided to put forward some products, the most profitable products, the most accretive, which are asset finance and asset-backed products, and we have increased on average more in these businesses. We underline the renewable finance because it's a very interesting case. The energy business post-crisis has picked up very nicely, and I think we went out of the crisis very successfully. Within the energy space, the most
Biggest growth is the renewable business. It fits well with our positive impact approach, but also it is a very profitable business. We have multiplied by two the income over the past two years. We have also gained market shares. In 2018, we gained market shares in almost all our activities. The way we tend to look at this is when competition is not too high, and especially when the American banks are not too much focusing on one given market, our objective is to be in the top five worldwide. If we are on markets where all the banks are really focusing as a priority, for instance, DCM, our targets will be to be in the top five in the European region, but still with a global reach. What is interesting also, you can see when it comes to advisory, we are number one worldwide. This is important.
We want to be advisory-driven, and when we are not competing on balance sheet and it's not balance sheet-driven and driven by size, we tend to punch above our weight. Now, transaction banking is something that was also put forward during the investor day. It is an area where we are investing. It is important, first of all, for the client proximity. There's an important client angle, and this is one of the reasons why this is an important investment. It is stable in terms of revenues, and it is accretive. It's got a good level of profitability. It's accretive at the GBIS and at the group level. This business here, what you would see the number, the NBI, EUR 2 billion, is not only what is within the GBIS world.
We've got EUR 400, basically, that is accounted for within the wholesale banking, but the rest of it is, you will find within the retail networks. This EUR 2 billion is at the group level. We have increased our market share in this business, going from 10 to seven in Western Europe in payment and cash management. Therefore, we are well on track to deliver the investor day targets. We are going to keep on investing, both in terms of IT and headcounts. Now, how do we manage our capital? We manage capital very carefully. First, we are selective when we look at the global client relationship, and we take into account the global profitability. We are selective at the deal level, and we've got a minimum ROIC for each of the transaction we consider. We reallocate between the different businesses depending upon the relative profitability.
We also implementing, and we have implemented, an OTD model. What does it mean exactly? I would like to separate two things, the primary phase and the secondary phase. On the primary phase, what we do is that if you are leading a transaction, if you are a book runner, you will be the bank distributing the loans on the market or the bonds. We are number five in EMEA in terms of book running. It shows that on the primary business, we are distribution-driven. This is a function of the number of mandates you get as a book runner. Just to give you an idea, we originated EUR 80 billion last year, and we distributed on the primary market EUR 33 billion. Being a book runner is important because you get more fees.
You are in the market, you understand the markets, you can take more underwriting, which is the most profitable part. We are very fee-driven, and you see the fees account for 50% of our income. What is more important is what we do on the secondary side. Once you've got the deals getting into your books, because you cannot do pure OTD, except the high-grade bond market. You keep final dates, and even on capital markets, you raise your warehouse before you exit to the capital markets in many cases. Once the assets get into the balance sheet, what do we do? We have built a whole range of products or solutions, I call it, in order to manage this actively. Secondary sales to investors or banks.
Insurance, this is a very important solution because that has been building over years and good complement to secondary sales. Securitization, synthetic securitization, selling a first loss on a portfolio of assets, and we did this on our LBO portfolio. You see that this one, that is on the bottom left, it is increasing significantly, and it is going to keep on increasing. The way we do it is that at each point of time, we look at our portfolio, we look at the deals, we try to see what is the best solution in order to create more value as possible. For instance, in 2016, we sold most of our LBO portfolio because it was the right time to do it. We sold EUR 1 billion. It's not nothing on secondary markets. The following year, it was not the right solution.
It was better to use insurance on other asset classes, this is what we did. As a result of all this, our NBI on RWA has increased. It has reached a record high. If you would not take into account the corporate lending book and the other financing activities, it would be even steeper. We have reached a record high in structured finance with a 7.6% NBI on RWA. Normally, this red line there should increase because of competition. The fees and the margins are going down. It shows that we have been efficient in terms of maximizing profitability. The questions you may have is in the context of the so-called Basel IV, what will happen to these businesses? Several things there. First, we don't know exactly what will be the impact, the magnitude of the impact.
Still a lot of uncertainties in the way this will be applied. We are comfortable that we can manage the situation. First, we are not going to be static. We are going to reallocate between the different businesses, because some businesses are not going to be impacted, and there are even some businesses which will probably benefit from this. Second, we believe that the pricings are going to be reviewed. Of course, if there's a 7% impact, the pricing will probably not move. If the impact is higher, I think at some point there will be a repricing on the market. This repricing will, in a way, be beneficial because we will be able probably to bring more liquidity in these activities, especially on the structured finance activities, where the pricing are not attractive enough for some investors today.
I think if you are fee-driven, if you are OTD-driven, you are well-placed to resist. I think the banks who are not leading transactions, who are not leaders in their markets, and this is why we want to be leaders in our markets, they will have difficulties. For a pure asset taker in these activities, it's going to be tough. We are convinced that we can, through reallocation within our business mix, more OTD than even than today, because we do more advisory and because there will be some element of repricing, we will, I think, in relative terms, even benefit from the situation. It was not a good news for the industry, of course, but in relative terms, I think we are well-placed. Last, how do we go through the cycles? Credit markets are cyclical markets.
I think this is a very interesting chart because it goes backwards and captures several cycles. You can see the subprime crisis, which translated into an LBO and real estate crisis, the liquidity crisis, then the commodity crisis. Several things. First, in spite of the very harsh crisis that we have seen over the past 10 years, we have never had a negative net result. We have always been net result positive. Second, you see that post-crisis, usually we recover quite a lot because our net cost of risk decreases quite a lot, because we recover a part of what was defaulting. Because of the structured nature of many of our activities, because we've got securities on most of our loans.
Third, our net cost of risk on average over the whole period has been below our expected loss, which proves that our models are conservative and that we have overperformed in that front. Last, we have a kind of counter-cyclical activities. You can see, for instance, when there was the commodity crisis, the rest of the markets were pretty stable. Except for 2009, because the magnitude of the crisis was such that it kind of embarked most of the sectors. This is my time for my conclusion. First, I'd like to say that we've got two very strong assets, the trust of our clients and the quality of the relationships across all these periods. Second, the quality of the teams.
We have, I think by having on some of our activities, leadership positions, we are still in position to attract a lot of talents, and also the experience of our management team who has been going through all these different crises and cycles. We are confident that we can deliver a profitable growth going forward throughout the crisis and throughout the cycles.
[Foreign language]. Thank you very much, Pierre. Now we open the Q&A session. Mike.
Hi. Me again. Just, you mentioned your relationship banks, which is, I guess, how you've been created actually 150 years ago and developed big projects. I saw in your slides, you put you are focusing on 800 clients. Honestly, I have no idea, but seems to be a big number of focus clients. Is there, I suppose, a tiering within these 800 clients? Because that asks the question about profitability for most of these clients. Second one is on capital markets or global markets. From Coalition data, 36% of your revenues, you rank top 8 and above. We reconcile that with the slide you have today about the RWA density that shows that around 35% or above of RWAs in global markets.
The EUR 8 billion number that you came with in terms of deleveraging, is that really what going through, I know they've been through details division by product by product, is there any more to do there? You think that this is really what you can do in the medium term?
I will let Jean-François, for the second part of your question. For the first part of your question, when we say strategy clients, for us it's a very clear definition. It's the clients where we are allocating our scarce resources in priority. When I say scarce resources, I mean senior bankers, teams, and capital. In this type of client, they are not all the same level of development in the relationship. You have some which are very mature with high level of revenue and good return, we have also what I would call prospects, where we think that we can allocate more scarce resources now. It's the reason why it's probably as a big number. In fact, it's also the investment part of our franchise there.
On the second part, coalition, as you know, the bench is very limited. It's not the total market, first of all, we have to take that with a
When we look at the aggregate numbers, it's difficult to draw a lesson. That's why we took time to really analyze by buckets that are consistent. Sometimes on such Coalition numbers, you can see some more detailed analysis. Here you can see confirmation of our strength in investment products in equities. We have 16% market share, and we are by far the top one. On overall investment solutions, we are in a very top league with 9% market share. In financing businesses, it's not so much about market share because then it depends a bit about your balance sheet that you are deploying. But with the ROE that we have on this activity, between 15% and 20%, we are very much satisfied with that, with our RWA consumption. We come back to the main point. That's the flow business.
On the flow business, we know what we want to do, in terms of protecting some franchises and on some others, yes, we are taking actions. EUR 8 billion, when you zoom on those sub-activities and not on the total of MARK, it's already very significant. We think that with this, we can really stabilize and improve globally the ROE of MARK.
Important to say that the important dynamic management. If one day we have to go further, because we think that we will go further. My view, we don't intend necessarily to have the same return on equity for all the businesses, because there is a big synergy link between the flow, as mentioned, and the rest. We can accept to have on the flow activity, let's say 7% return, if globally we are delivering the cost of equity above. For me, it's important to have that in mind. Exactly what we have designed today. Bruce?
Thanks, yeah. Bruce Hamilton, Morgan Stanley. You spoke quite a bit obviously in terms of shrinking some of the fixed income flow. What about equities? I mean, most banks don't make much in equities in Europe. What are you changing strategically there? Obviously, others on the continent have looked to outsource or partner in research. They've looked at maybe partnering on execution, BNP with GTS in the U.S., for example. What else are you doing within equities to try and raise? It may not be the capital intensity that's as bad as fixed income, but the profitability still feels quite challenged across the industry.
If I may, I will take the point. I will let Jean-François to complete. When you look at the equity, you have to look at the chain. It's a chain. In fact, it's an equity chain. It's starting where the need of our clients for, let's say, equity capital market needs, for example. There, we are the leading bank in Europe for forever, if I may say. We have a big position in equity capital market in Spain, in Germany and in other countries like that. We want to protect that because it's our corporate franchise, and in some cases also the financial institution and more the corporate franchise, which is really driven there. The point for me is to protect this franchise because it's a key part in the client relationship, first.
To see the chain where you are in a position to save cost and to benefit from the scale of economies. The question is more on the execution part, where we have the question of size, I would say there. Probably the point we already mentioned, that we will have to optimize the chain, clearly, and we are in the process of optimizing the chain. In some cases, we can find some partners to do that. We don't exclude that solution. It's a core point to have in mind that we want to protect the corporate franchise also. In some cases, we will exit in some countries locally, we don't mind. On France or on Europe, it's something we want to stay there. It's not only global market question, if I may say, on the equity.
Second part is we are very small, not in France, but globally speaking, we are small in cash equity. We could be much more selective probably also in the research part.
Not much more to add. With MiFID, as well, you know that it has put even some more difficulties on this business. We are open to all creative solutions, and there are a lot of talks in the market, and we are listening to these talks, yes.
Yeah.
Hi, everyone. It's Nick Davey from Redburn. Two questions, please. The first one, I don't see the phrase repricing very much in the presentation. I just wondered if there was any pockets of these businesses you talked through, particularly in financing, where you see any repricing underway. Maybe specifically, if you can talk to corporate lending, which you say here is 10% of the risk-weighted assets delivering less than a 5% return on capital, and where the strategy is increasing selectively, which to me seems perhaps counterintuitive. The second question on Basel IV. I know you've alluded to it, and I know in general your advice to us is to wait and see.
Given that it is likely to have a large impact on the capital allocation of this unit, I just wondered to what extent work has been carried out about the economics of some of the decisions being made today in tomorrow's regulatory environment. Thank you.
I will let Pierre to take the repricing part.
On reprice, I thought you are going to answer to the second question.
Sorry.
No. In terms of repricing, what we have seen of pricing pressure over the past years, it is kind of stabilizing over the past 18 months. I think it has stabilized. I think it is not increasing yet. It depends upon each sub-segments, because it's not a homogeneous market. The LBO market has little to do with project finance in Asia. Globally, we still see a lot of liquidity into the system, into the banking system. Therefore, yes, a lot of competition. I think we are at the bottom of it. Again, I think the positive thing is that you can distribute. The answer to this is, more than ever, we need to go have this OTD machine going. The only benefit you get from stronger pressure on margin is that there's more liquidity and therefore you can distribute more.
I think for us, it has been manageable and I think it's more a problem for the asset takers and pure asset takers.
Yeah. If I come back to your point regarding corporate lending. I am sorry, I have not been clear because what we are managing is a client profitability. When we are allocating capital, like we are putting an RCF in place, or you are putting some financing, private financing in place. Decision is taken not on the return on this specific product, which is highly competitive, but globally speaking. When we say selectively increase, it means that we will choose a client where we will allocate those resources because globally we have a growth potential and a return potential, is the way I should have said. Sorry for that, I was not clear. It's not so counterintuitive, in fact, in my view. Thank you. Second part, regarding Basel IV. I'm sorry, we are not staying and waiting.
I mentioned we have two different questions. Pierre covered that point in the structured finance, and we can come back if you want. On the global market, the interpretation of the current FRTB is still questionable. There is a risk on some part of our businesses. The decision we are taking today is just to limit the maturity of our exposure to be sure that we can manage into 2024 when it will be enforced, that we will not be stuck in something which will have to exit in some cases. If the new rules are completely, if I may say, destroying the return, we will exit from businesses. The real answer we have to this question is to manage the maturity.
Hi there.
There is a question there. Yeah, please.
Hi. Omar Fall from Barclays. Just three questions. Firstly, on private banking outside France, is moving the headquarters enough? You have EUR 50 billion of AUM, you haven't made money for several years. These are businesses that other banks would love to take off your hands. Why is Société Générale the right owner of these assets at a time when you need capital and getting rid of these would be non-dilutive to you? The second question is just on the repo business. You mentioned some of the positive elements of regulation. All through last year, the regulator has been upset at French banks window dressing around leverage ratios, and they've made that pretty clear. I know the business has a good return on equity, but the return on assets is not very good. Is this an area you'll be looking at?
Lastly, just on slide 46, you highlight you'd like to keep profitability above cost of capital. What do you think your cost of capital for this business is?
To come back to the private banking, international retail banking, the private banking. In fact, our global private banking has three legs. The French one, which is under a joint venture with a French retail, which is growing fast. We will extend the presence we want to have there and so on. There is a U.K. situation where we just are in the process to merge between Hambros and Kleinwort. This is not profitable yet due to this process of integration. There is a rest, and the rest is three important, is Luxembourg, Switzerland, and Monaco. During the last five years, on those three specific areas, we have been under a deleveraging process to refocus on the client quality we want to serve. We have divided by two, the number of nationalities we are serving and so on.
The impact of this rationalization has been a decrease in assets under management, a very strong decrease. Today, if I add all those different parts, we are around probably EUR 30 billion of assets under management. What I am doing today is I am creating this international part with Luxembourg, Switzerland, and Monaco under one roof, which is a move I made in term of headquarter. There is a link with France on those specific points. For me, there is probably a meaning on the long run to stay there. Everything is open. We can change our mind if we have to. For the time being, we have a plan. We have a plan in terms of restoring profitability with those specific U.K. situations and with those global non-French parts. We will rise because the capital consumption there is limited.
We have put a cap in term of credit allocation to the total AUM. I am managing that cap, and I can reduce it in fact, even if it's an appeal product for the clients, we can reduce the capital consumption there, and we will do that if necessary. What I want is to restore the return as soon as I can. On the repo business, we have not been in a case of window dressing at all. You are probably mentioning some peers, not us.
I think it's always worth repeating what we've said about this. First of all, the leverage ratio, as you know, is not mandatory as of yet, but we stand at 4.3%. When it would be mandatory, it's probably in the area of 3.5% as far as we are concerned. Second, we have an internal border-proof floor under which, including within a quarter, we don't want to go below, which is set forth much above this future mandatory threshold. I don't think it's already in force today.
3.5.
It will be from a regulatory standpoint. We stand at 3.3%, the limit under which we never want to be based on the board decision of Société Générale within a quarter, not just at the end of the quarter, is much above this 3.5%. I don't think we are in this case of window dressing at all.
There was a question there?
Yeah. On slide 41, thanks a lot for the additional detail on the geographies. I was just wondering, the revenue mix, does this broadly reflect as well the risk-weighted asset allocation, I guess ex operational risk-weighted assets? To be honest, I'm a bit surprised about, I always thought you had more European client revenues in the Americas and Asia Pac. Is that because the rest of the revenues with non-European clients is basically equity derivatives, structured finance, where you consider yourself world leader? Second question on the costs. You indicated the cost could be lower if the revenues are not in line with your revenue expectation. What sort of sensitivity are we thinking about? Is 10% of the costs really flexible or 20%? To give us an idea about maybe what part of the costs are variable.
I think in the last investor day, you gave a percentage of 30%. I think that was at the group level, which seems a bit high in that context, anything would be helpful.
Okay. Coming back to the risk-weighted assets allocation. I have not exactly because this figure in mind, it's not a difficulty to mention it. What I say depends on the business model we have. I would say this should be roughly aligned with revenue, more or less. It's my first PS, if I must say. Regarding European clients, part share. It's fair to say that the share of financial institutions in Asia, for example, is much higher than globally speaking because we are serving this B2B, B2C market, and we have big clients like Singaporean banks, Japanese banks, and so on, which explain why in Asia, the percentage of European clients is lower. Clearly, due to our setup there.
In the U.S., is a bit the same answer, we have to say that we are also a corporate franchise in the U.S., which is a long-lasting corporate franchise, and where we will continue to have profitable relationships. It's coming from the history of the bank. In terms of cost flexibility. The next question is, what is the horizon you have? What is short-term flexibility and long-term flexibility? At the end, any cost is flexible at long-term. My point is, probably your question is, what is your short-term flexibility? It's important to have in mind that the short-term flexibility have an impact on the future return and future. Very important. I will give you two examples. I can have a very strict flexibility on my IT investment. I am spending EUR 1.7 billion in IT.
I can really say that next year I will cut severely my IT spends.
You will have an IT impact 3 years after that. The flexibility is not total, is not EUR 1.7 million, I say. It's a part of that, if I may say. If we can just reprioritize our IT project to be more flexible with that. Part of that is some amount of millions, we can flexible. We can reprioritize certainly not the total part of that. The second part is, which has been said in the past, is bonuses, because it's depending on your revenue. At the end, for me, also, we have to manage this flexibility with, if I may say, with security, because at the end, you are losing your team and if you are not paying them and you are putting at risk your franchise. We have been managing that risk very easily during the last period of time.
We have had low revenues, we cannot put to zero this several hundred of millions in term of bonus we have there. There is probably several hundred of million of flexibility. Difficult to say because we have to go deeper in a way we want to, what we will decided to stop and so on. It's the order of magnitude. Last question? Yes, Pierre?
Oh, sorry. Yes, two questions. First question is, regarding the evolution of the business with electronification of some platform, the development of multi-dealers platform. We also hear about Project Smart, for instance, regarding primary bond issuance and electronification of this kind of business, et cetera. We see there a kind of deflationary trend in terms of revenues. Of course, we can assume that, in regards of this trend, we will have also a decrease in cost. All in all, how do you see the impact of this strong trend on your cost income? I would say globally for the industry, not especially for you as such, Jean. Globally, how do you see this trend?
My second question is maybe more a question for Frédéric, is regarding the fact that your Global Markets division accounts for around 20% of your net banking income, compare, for instance, with 10% or less than 10% for BNP or Crédit Agricole. Are you feel comfortable regarding the fact that this division has, I would say, a bad reputation in terms of ROE today, volatility in revenues? Don't you think that, even if you make a lot of efforts on that division, that will wait on the perception of investors? How do you dilute, or do you think that it would be useful within a five year or 10 years, five years, trying to dilute that by, I don't know, but I have an idea.
On the electronification?
Yeah, I start by the first question. Obviously, the electronification has an effect on the cost, but maybe at the same time, fees are decreasing or even more than that. That's completely part of our analysis. Yes, we are part of this effort with SG Markets. For us, it's not a pure execution tool, and we don't want to go much deeper into this execution business because we think it's extremely difficult and maybe we are not the best position to reap the fruits. Our positioning, again, is to add content. SG Markets is not purely about execution. It's as well market insight, it's trade ID, it's risk management. It's the whole package for us that makes sense and will not go on a pure volume and lower fees because that's not our play.
What we see in terms of electronic exchange for us fits with our identity of bringing ideas.
Okay, I will take your second part of the question, which is probably a nice way to speak about consolidation beyond, I guess, just the capital markets, maybe, and we might end there. First of all, I think there are some wrong perception. We have, as it was said, actually, a low volatility of a revenue line from a quarter to the other. It's very important, it's related to what Jean-François said, for example, in the development of relatively recurrent revenue generation businesses, such as the financing activities and the investment solution to a certain extent, because it's also a widespread number of clients. As you've said, on the return on equity, and that's why we are addressing the issue, we need to do better, needless to say.
Can I say, if I may, beyond that, and I've made just an interview this morning on the FT, and I will say exactly what I said to the journalist. If you look at banking union and the completion of the banking union, the logical outcome is more consolidation in the banking market in Europe, definitely. You have too many players, it's more fragmented, and it corresponds to the idea of a more integrated market. Clearly, in that perspective, when you think about it, Société Générale is probably one of the players which have, on one hand, enough activities to leverage on such a consolidation process. If you are just a retail bank in one country, not clear that moving to another country makes a lot of sense.
It's very obvious that we are one of the very few banks with some capacity to leverage and mutualize some investments or, of course, client capacities. At the same time, we have a size, because there will be a limit of the size, and with all the parameters that we all know, MREL, et cetera, which is probably around EUR 2 trillion. We have a size capacity to think about maybe growing. At the same time, let's be realistic. Today, there are still too many obstacles. Beyond the fact that we are just in a period of time where there are elections, et cetera, and so much more to do in the coming 12-18 months. We have a lot, because what we've been just describing requires a lot of energy of the management and all the staff.
We need to have a better and more visibility on the rules of the game. Not just the implementation of the regulatory framework, but beyond that. The problem of this banking union is that when you think about the way even countries look at their own banking system, it is in contradiction to a certain with the initial plan, with a more integrated market. We need to overcome still, probably because there is still an incomplete construction on resolution, et cetera. We need to overcome current behaviors, which are obstacles and would not help us or any bank to get the full benefits of a merger, knowing that what you know is, of course, the additional handicap. Immediately as you grow, you have a risk of having to have more capital. The posture of the SSM will be critical in that matter. Let's leave Mr. Enria just some time.
He's just there, new, to assess whether Société Générale with his 12% target, if it were to grow, could keep the 12% target, for example, if we were to grow. Precisely, as you said, dilute to a certain extent the capital market activities, make maybe even the system more resilient, but he's just there for two months. What I mean by this, there will be a time exactly in line with, I think what we've said 18 months ago, end of 2020. You will know about Basel, you will have a clarity on what the new commission, new council wants to do, and it might then be the time to see whether or not it can add more value rather than just grow.
It's not today, I think the right time, and we have so much to do today to create much more value by effectively delivering and getting a share price, which will reflect much more the intrinsic value of the bank. Then we will have time to see whether, again, the conditions, the overall environment can make that an opportunity or not, and the jury's out there. Okay. Thank you so much for having attended this morning. Thank you to the teams and the presentation. Now there is a cocktail if you want to spend more time with all our management team. Some of the people here did not have the chance to speak, but it's an opportunity for you to meet with them. Again, I hope you will have a better understanding of our businesses. Thank you.