Okay. Good morning to all of you. Thanks for attending this call. And first of all, let me say that I hope you're all well and it's still uncertain environment from a health perspective. As usual, I will go through the results with William and then our global our whole management team will answer your question and we'll try to be as short as possible.
Let me first turn to the Slide number 4, where you see the major elements of this Q1 results leading to a net profit, as you know, of €862,000,000 which is up significantly compared with last year, close to 10% on a like for like basis and at constant exchange rates. We've seen a clear rebound of revenues across all our activities versus the Q2. But also when you compare with last year, even versus last year, there's a slight increase by 0.5% on a like for like basis and at constant exchange rate. It's particularly true, of course, on the capital markets after the first half and the impact of the dislocations we saw on the markets. In terms of cost, we pursue with the same discipline, minus 5.6% versus last year, A strong increase of gross operating income as a result, plus 14.6%.
And we confirm our guidance for this year. Underlying operating expenses at €16,500,000,000 On the cost of credit, and I'm sure that we'll have different questions on this, but you will remember that we had initially, 6 months ago, guided for a guidance of 70 to 100 basis points, then confirm the capacity to converge towards the low range. And this guidance is more than confirmed with the Q3 at 40 basis points, of course, up compared with last year, which was extremely low. It was a low point with some write backs from insurance in Romania in particular. But of course, we have a strong decrease compared with the Q2 and we confirm our guidance around 70 basis points, including factoring, of course, this additional uncertainty with this second wave of contagion.
And regarding the capital, we stand at 13.1%. If I add the 10 basis points, which comes from the sale of our Scandi Financial Leasing Business, which has closed on the 1st October of 4.20 basis points, and 4.20 basis points, clearly giving us flexibility for distribution to our shareholders beyond the provision, which is already included in this core Tier 1 ratio, which is 50 corresponds to 50 percent of our underlying net profit and which is €0.21 per share. Let me turn to 2 pages then I will be brief. But can I say that beyond looking at the very short term the impact of this crisis as we prepare our next 5 year trajectory, we have to think about the structural trends that this crisis is actually accelerating? And the first, regarding energy transition, you know that usually it's of course a long term process.
People talk about 2,050. What I can say in the shorter term, first, we confirm our status of worldwide leader in renewable energy financing. And actually according to IG Global, this agency puts us number 1 in the world at the end of September. So we have definitely an extraordinary expertise in that field. And second, in terms of realignment of our credit portfolio, we have said we would in the coming months align our credit portfolio with a methodology that we have designed with 4 of the banks, European banks, BNPP and the Chartered, BPVA and ING.
We have now this methodology, which is actually available for all the banks. And we will align all our portfolios alongside the scenario of the International Energy Agency. And what we are doing, very concretely taking, of course, a portfolio which is probably after call the one which is the most questionable is to a commit to cut by 10% in the short term 2025, so the horizon that we have in mind for our strategic roadmap. Our footprint in terms of extraction of oil and gas, we will do that by also accompanying our clients in their own transition. There are some major companies which are doing the job.
I have in mind the TOTAL, for example. And we will accompany them including in the financing of gas that we see as a useful energy for the transition phase. But of course giving a priority also to the financing of renewable energy. And as part of that plan, one of the significant components is that we are going to stop any new financing onshore gas and oil extraction activities in the U. S.
Let me turn to the next slide. It's around, of course, also the client centricity in that period of time. Let me just say, we have tried to illustrate different things. 1st, that we have been able to maintain or even expand some significant market share in our core markets. I have in mind in wholesale in Europe in particular.
We are of course mobilized to help the economies to share this crisis. In France, it's now €20,000,000,000 of guaranteed loans that we have validated for our clients. And of course, difficult transformation is at the heart of what we think going forward. And I have to mention the extraordinary success of Borsella Ama, which has validated its business model in this crisis and which has now 2,500,000 clients and which will reach as you know 3,000,000 next year with a very high level of satisfaction and which is definitely the number one online bank in France. Can I also mention beyond the fact that we will be the first half Retail Finance Bank offering an open architecture in terms of asset management product from the Q1 of 2021?
I will turn now the floor to William, who will enter into more detail for our Q3 results.
Thank you very much Frederic. Good morning to all. Thanks for the attention you paid to our company, and I do hope that you are safe and healthy. Starting with Page 8. As Frederic said, the main takeaway of this quarter is clearly the strong increase in the group gross operating income, both on a quarter to quarter basis as well as on a year on year basis.
As you can see, gross operating income is up 15% close to 15% year on year adjusted for perimeter and foreign exchange impact. It's up 42% adjusted for the same factors Q on Q. That is based on a satisfactory performance or improving performance on revenues, very strong Q on Q, but also adjusted for perimeter and foreign exchange, you can see a growth in revenues by 0.5% in the 3rd quarter. That combined with a strong decrease in cost, 5.6 percent like for like. As you can see, as performance is across the board, you can see the strong increase in gross operating income across businesses and all businesses, I should say, with a very normalized corporate center performance.
As a result, net income stands at €862,000,000 on published terms, which is close to 10% increase relative to the same period of last year. A key element, of course, of that performance is the achievement on the cost target. Let me remind you that this would be the 2nd year in a row that we are decreasing our cost base in absolute term. The cost base was EUR 17,600,000,000 underlying in 2018, €17,400,000,000 in 2019 and we're heading towards our commitment, which we reiterate today of 16.5% by the end of the year 2020, which is about 5% decrease. As you can see, for the 1st 9 months, we are at minus 5%, and we accelerate that path in Q3 with a 7.3% decrease.
You also know that we are committing to decrease further that cost base through various efficiency initiatives, some of which we have already announced. You know the EUR 450,000,000 commitment in Global Markets by 2022 and 2023. We will be back to you with regards to the French Retail Banking study we are undergoing now and that we encompass obviously both commercial ambition and efficiencies. And as we already discussed with many of you, we are on a constant improvement mode as far as from Versal Functions processes are concerned. We should also benefit from the closure of some of the key remediations beyond 2022.
Cost of risk is down and that's obviously a major element also of this quarter as Frederic said. It is down relative to Q2 to €518,000,000 40 basis points annualized cost of risk to be compared with €97,000,000 7% in Q2. I would like, however, to point out that we keep a cautious stance as regards cost of risk. First of all, it's up year on year, up 57%. And second of all, we have added again some Stage 1 and Stage 2 provisioning, forward looking provisioning in this quarter, particularly pertaining to international retail, a bit in French retail.
We are in a capacity to confirm on that basis that our cost of risk should be at around 70 basis points for the whole year as Frederic stated. One comment to finish on that on NPL. Our NPL ratio compared very well relative to peers in Europe, as you know, including the gross coverage rate. We have been able to sell some exposure in the Q3 and I can confirm that when we sell exposures, we are able to complete that at a profit. The next page gives you more detail on the asset quality.
I will not go into the details. We also have some additional information in the group supplement. We are at your disposal with Jonny to answer any of these questions. But in a nutshell, we consider that we have a very solid portfolio, both on the corporate and retail side, very diversified. Actually, the EBA stated that we were exposure to the COVID, the most affected sectors is lower than the average of European banks that we already said.
And as you can see on the right hand side, we have an FD inventory of provisions of €2,600,000,000 for the 1st 9 months. One comment specifically on moratoria,
because we know this is an
area of questioning on your side. So just remember you, we had an inventory of €35,000,000,000 outstanding as far as more material are concerned. Those are down by about €9,000,000,000 in September. We expect that 70% of moratorium will have expired by the end of October in France, 63% for the rest of the group and we should be done with the bulk of the moratoria at the end of the year. Very important to note that we haven't seen particularly specific abnormal casualties as far as this moratorium are concerned.
Core Tier 1 is obviously a very important element in the way we look at our company. We continue to increase the strength of the balance sheet. Core Tier 1 is up 60 basis points in the 3rd quarter to 13.2 pro form a for the sale of HD Finance. As Frederic said, this is a good 4 20 basis points above NDA. You know that what we consider is the right level in terms of management buffer is around 200 basis points.
We are very well above that number. What makes it increase
is a number of factors, some of which
or I should say most of which we had already announced. We have organic capital generation, 15 basis points through net income, net of hybrid coupons and dividend provisions of 50% of the underlying results, as you know. We have, secondly a decrease in organic RWAs for about 35 basis points, most of which we have already announced because we have the reversal of state guaranteed loans temporary effects. We also have a normalization of market risk out of the way coming a bit faster than earlier expected. And we benefit this quarter from the removal of the capital that we have the regulatory headwinds that we had talked about pertaining to regulatory operational risk for 15 basis points this quarter.
Would not comment the other ratios. They are all up and strong. Again, very well above the mandatory threshold. Just to mention that on liquidity side, this is not on the page, we end up the quarter with an LCR at 179% and NFFR remains above 100%. The liquidity buffer is up again and stands at €233,000,000,000 this quarter.
Next page, I usually don't comment, we leave it for questions. A few comments on the businesses now. Page 14, you have some key elements pertaining to French detail. Borussia Arman, I wouldn't say they are on the rebound. We continue on the very strong path both from in terms of client acquisitions, as you can see, plus 22% year on year for the 1st 9 months and the Q3.
Combined with record level of brokerage orders and that obviously translate into an improved profitability whilst Boxer Ammar is securing its position as a clear number 1 in online banking in France. In the rest of French Retail, you see a marked improvement in production across the board relative to Q2. And you can see that even relative to the same part of last year, we have we benefit from improvement in core client basis. The net increase in Private Banking, increase of the unique share in our spending in Life Insurance and P and C as a good quarter as far as Bank Insurance is concerned. You see the outstanding are up.
Clearly, the key element of the Q3 is that production has normalized as far as individual client is concerned. It's not necessarily back to 2019 Laurent. However, as far as corporate is concerned, our concern still strong boost in the context with key elements pertaining to PGE and deposits are up, strongly up actually. Site deposits are up 20%, which translate into obviously some pressure on the NIM, which I will now comment. You see the overall results of French Retail.
First key point, the return remains resilient. We keep saying that quarter after quarter, but that's a very key element. And when you compare it to others, it is a strong performance, I would say, overall in the context. 9.2% return for French retail in the context. That is made of a combination of improved revenues, certainly quarter on quarter, both from the NIM side and the commission side, although we continue to see a strong pressure for negative rates combined with marked increase in site deposit was leading to the NIM being in negative territory still.
In that context of improved revenue performance, also strong pressure on the NIM side, we see ourselves improving the gross operating income. So thanks to a very strong cost discipline, costs are down 6% year on year, translating into positive jaws effects. International Retail Banking, again, same pattern. You have a very strong improvement relative to Q2 across the board across all geographies and of course, including consumer lending where you know we have very strong positions particularly in car finance. I'd say, however, that on a year on year basis, situation is contrasted between geographies, with Eastern Europe continues to suffer from a decrease in interest rate environment.
As you see, Russia up 3%, and you could see that we're in the page that Sub Saharan Africa continues to be up, the revenues continues to be up year on year, particularly Western Africa. In Financial Services and in Insurance, very, very resilient business through the crisis, the 3 of them. But we see yet again marked improvement relative to Q2. And overall, we are in positive territory in some businesses relative to the same period of last year. So insurance, I don't repeat what I've just said on the life insurance, but let me focus on P and C premium.
We have the Protection Premier as a whole on the page, but the P&C Premium for the 1st 9 months are up 13%, 1.3%, which obviously reflects our strong efforts to increase our the penetration of our time base there and is dedication to the growth profile of this business. AFD has revenue up by 3% in the quarter. Leasing resist well with slower production compensated by higher margin. And as a result, the IBFS spin up, which is the next page, proves again fairly resilient at 12.3%. That's usually below the historical 17% 18% return for that business.
But in the context, this is satisfactory, we think. Given the fact that particularly in IBFS, we did increase the provisioning pertaining to Stage 1 and Stage 2 cost of risk. As I said before, as you can see, cost discipline remains strong in a context where you have naturally more inflation than other geographies or areas in the business. Global Markets and Investor Services, And generally speaking, GBIS is obviously the very bright spot of this quarter. You see when one focus on market, revenues up across the board.
Revenues are up for market operations 7%, equities plus 5%, FIC plus 9%. In the context, and we will come back to this with the team in the context where we are in the process of derisking a portion of the business as we had said in Q2, particularly on Instructure Products in the context where we continue to integrate the EMC acquisition, which has proven successful and in the context where we managed to decrease costs. I would say this is a strong performance overall this quarter. When turning to Financial Advisory, resilient overall with constructed performance, of course, as you would expect, Asset Finance does is a bit under pressure on the volume in volume terms, although the margins are holding well. There is less to do in aircraft and real estate finance.
On the other hand, infrastructure finance is very strong. Frederic alluded to Renewable Energy Financing where we are number 1. And I think CIB in general, we benefited from strong volumes in corporate bonds, ECM and advisory are strong particularly in France this quarter. Let me point to in Asset and Wealth Management, LIXOR, which had a very strong quarter, particularly in ETFs. You see the LIXOR revenues are up 10%.
And as a total, as you can see, revenues being on the increase for GBIS, both Q on Q and year on year, with cost decreased very materially as a result of the execution of our clients. You can see 10% for the 1st 9 months of the year, adjusted for foreign exchange in perimeter, 8% for the quarter. We have very strong positive geo effects. Reported net income in that division is up 50%. Return on reported basis is 10% underlying 8%.
Corporate Center, not much to mention except that as we had said, it is normalizing after some volatile components that we have seen in first half. So it's coming back to a very normal pattern and actually absorbing some of the volatility that we had in H1. As you see, the gross operating income does converge to a more normal level for the 1st 9 months. So nothing to mention particularly there. I'll leave it for questions.
With that, I hand to Frederic for the conclusion.
Well, thank you very much, Julian. Just a few words of conclusion, Slide 24. We are, as you see, working on optimizing the competitiveness of our franchises. Let me first start with GBIS. Obviously, the business in which you had most of the questions.
And I think we are showing that, yes, we have definitely a certain specific franchises where we work on the de risking, but it's a business which is able to compete with a very strong expertise, well suited for the transformation of the world in which we operate and where we work for further cost efficiency. So more work going forward, but I think we are confident there. 2nd, the France retail, obviously, the study on the combination of the 2 networks is a very important milestone for us. But I would like to highlight again the strength of Boursorama. And I think we'll be able to offer a very and I think we'll be able to offer a very strong overall franchise in our domestic markets.
And regarding International Retail and Financial Services, we have completed the refocusing. And I think beyond the current situation, we consider it's a growth pillar with good opportunities going forward. Next slide, Page 25, in terms of capital and dividend policy. We are not changing our dividend policy, the percent payout ratio on the underlying group net income, and we have provision for that for this year. But as you can see, the high level of capital we have gives us flexibility in terms of shareholder return in particular.
Let me just tell you on Slide 26 that we are we'd like to have a series of presentations with you. KP is presenting today also its road map for the next years. ALD will present next week its projections. And again, it's you will see we are really believe in the capacity of this business to develop with all this mobility sector, which is changing so much. We would like to have on the 7th December a presentation on the outcome of our study regarding the French retail.
And at the same time, we will present the roadmap for Boursorama. And then beyond the Q4 results in 2021, we would like to have the new management team for GBIS presenting probably in the first quarter months, you will have further clarity beyond what we are presenting in the Q3 results. So now let's turn to your questions. Please let me remind you that the nice discipline, which is to have 2 questions per people so that all of you can have the questions they want to ask. Let's start now.
Let's kick off with the Q and A session.
Thank you, sir. We have one first question from Mr. Stefan Michael Stallman, Autonomous Research. Sir, please go ahead.
Yes. Good morning, gentlemen. Thanks for taking my questions. I have 2, please. The first one on GBIS.
You very helpfully provide a geographic breakdown of your GBIS revenue every quarter. And it looks like you had a fantastic quarter in the Americas, about EUR 550,000,000 revenue, where you typically are closer to EUR 350,000,000 up to EUR 400,000,000 in recent quarters. Could you maybe add a bit of color on what went right in the Americas this quarter? And the second question relates to what you say on Slide 6 about the open savings architecture in French retail banking. Could you add a bit more color of what you expect to achieve there and what this could mean for your distribution agreement with Amundi?
And I was also curious whether this idea of home architecture also captures your unit linked products and the funds that would underlie your unit linked policies, please? Thank you.
Yes, Stephane. Hello. I will leave the floor to Severin on your first question and then Sebastien Porto is in charge of the France retail.
Yes. Thank you, Stephane for your question. As you know, our exposure in the U. S. Is mainly driven by 2 businesses, Global Market and Finance and Advisory.
And it's fair to say that globally speaking, our global market performance in this quarter in the U. S. Has been significantly good and specifically both in fixed income and in equity. In equity, all the show activity has been good and even the investment solution also made strong results. And the good news is that globally speaking, our FICC activity as you saw is growing by 9%, but it has been driven mainly by the U.
S. The U. S. Dynamic really. And on the Global Finance, we are more
or less in the same than the usual, if I may say.
So the real over performance, if I may say, is coming from Global Market Equity in the U. S.
Thank you, Sebastien. Yes.
Good morning, Stefan. So as you mentioned, our objective is to provide to our clients an open architecture in terms of savings in January 2021. So as of today, we have negotiated with AMD our agreement, which was supposed to expire the end of November 2020. So negotiation is over now. And we would welcome all the asset managers before year end in order to be able to provide the best offer for our clients starting 2021.
It will be something very important for our clients and acute differentiating factor on the French market because we will be the only bank able to provide an open architecture on the French market. You mentioned unique drink product. This is clearly part of our strategy and one of our key focus with a lot of success this quarter because as you can see in the slides, we had in Q3 a strong increase in terms of unit linked products. So clearly, the objective is the following, being able to offer the best products for our clients based on asset managers, which will be Amundi plus other names, which will be disclosed before year end.
Great. Thank you
very much for this.
Next question?
Next question is from Mr. Jacques Henri Gaulard from Kepler Cheuvreux. Please go ahead.
Yes. Good morning, everyone. So two questions. The first is probably on the cost side. And I realize that your priority now is probably to reduce the volatility on the P and L.
So for the two measures you've announced, the EUR 450,000,000 plus potentially on the French retail. Can you commit that there will be a decrease in absolute term of your cost base? That would be the first question. And the second question is on the energy transition. Thanks Frederic for being one of the very few CEOs to actually talk about it more than in passing for 30 seconds.
Your number 1 in Renewable Financing, but you can hear some horror story, in particular, on Windmill Finance. And I was wondering if you could maybe give a bit of color on the asset quality currently on your renewable financing portfolio and how it looks like on a maybe 3 to 5 year view. And the PACTAR initiative in terms of climate, when do you think you guys will be able collectively to present something to the market? Thank you.
Jacques Henri, hello. On your first question, I will let William answer. I think Severin can answer more specifically on your question on the quality of the portfolio. Really, I think we've made I just would like to say on the renewable, we've made first a very strong progress in the methodology with this Factor methodology, the Catawice Group. We have been working 18 months and that's the idea to now implement the methodology, if you wish in the alignment.
We might we have in mind to present something this year and what happened. Also, we were not able to do that. Maybe next year, we do something specific to explain further because I think it's important that the market gets more understanding of what it means and it's something which is relatively complex and I think we're spending some time on this. And I really believe it's going to be in the long run something very important. So we might organize an event on this topic.
But certainly, as you can see, we are moving ahead significantly. And that's the message with this very short term, very concrete objective that we have taken. So first, that's on the cost.
Hello, Jean Louis. Yes, we confirm what we have been saying for some time now that the idea is to continue decreasing the cost base in absolute term in the midterm. 2nd, particularly about CIB, which we alluded to. We had said and we have done it and so far, we had said that we would decrease the cost base by a good EUR 500,000,000 between 2019, 2018 2020. Actually, we'll probably do more as you can hint from where we are now.
And allow me for not being more specific. On French retail, we will come back to you with potential numbers in a few weeks' time. Let me finish by saying that the effort we're doing on cost is across the board. It does encompass some of the businesses you just mentioned. It does obviously comprise all what we do on processes, functions, IT operations.
And it's also a big endeavor in the areas where we continue to invest or where we face some inflationary pressure, for example, in certain jurisdiction, you have to increase salaries. We can see that across the board. Case in point, look at Russia in Q3, despite the inflation CPI number, Russia has been able to decrease cost by 11% in Q3 year on year.
Thank you. And I'll see around our exposure on the Renewable Finance.
Good morning, If you speak about the specific credit concern regarding the windmill exposure we have, I have not specific on that for the time being. So we don't see any specific risk issue for the time being in this exposure.
Okay. Next question?
Next question is from Madame Florent Boucayou from Jefferies. Madam, go ahead.
Yes, thank you. Good morning and thank you for taking my questions. I have two questions on cost, please. The first question is regarding the cost cutting that you have announced in the GBIS division. So you target there to cut costs by €460,000,000 by 2022, 2023.
Could we already expect some progress on the cost base as early as 2021? Or should we expect that the bulk of the cost savings will be back end loaded towards 2022 and then 2023? And the second question is regarding your potential restructuring charge. I would say, especially in GBIS, maybe also for French Retail, given the ongoing study you have in the networks there. If you could just give us any information on the potential magnitude or timing of how restructuring charge that would be helpful.
Thank you.
Yes, Florent. Hello. Severin on your first question and William on your second. Yes, good morning, Florent. After the big growth and the
big impact we had this year, the last year and you saw this quarter specifically, And we have not expected a significant decrease next year. To be clear, it would be more in 20 22 and more 2023 for the full
impact. William?
Florent, thanks for your question. Yes, it is to be expected that there will be a restructuring charge or more generally speaking, cost to achieve in order to decrease the cost base, be it businesses or functions or processes. There are some related IT investments and sometimes as the case may be some severance. So just to be very clear what it entails as far shareholders are concerned. First, remember that we pay a dividend based on underlying Underlying will be retreated from this cost.
2nd, this is not a once and for all provision that we may see. It will be sequenced over a certain period of time depending upon the project and how they mature and how they develop. And 3rd, more specifically for 2020, we may see some very manageable number pertaining to what we have announced in some areas, but not necessarily a very big number.
Thank you.
Thank you. Next question?
Next question is from Madame Julien Giotto from Morgan Stanley. Please go ahead.
Yes, hi. Good morning. A couple of questions from me as well. So on French Retail, revenues are actually holding up pretty well. And I was wondering what's the impact from TLTRO that is booked in there?
And what is the outlook for the top line in French retail in your view? So that will be my first question. And then a quick follow-up on the restructuring cost point. So the total cost guidance for 2020 is 16.5% underlying, but did you clarify what the restructuring charge you expect in 2020? Thank you.
Julia, hello. I will give the floor to Sebastien on your first question on French Retail. Again, on the second one, William said there might be some elements of CTA in 2020, but relatively moderate. And it's not included in the underlying what we call the underlying cost as well as in underlying net profit, which is used to calculate the dividend. So it's a one off that we consider not part of the underlying.
It's actually the asset that we take out to calculate the underlying. First, Sebastien?
Yes. Good morning, Giulia. So on your first point regarding TLTRO, I can confirm that there is a positive TLTRO impact this quarter on the Q3. But keep in mind that on the opposite, so we wanted PG without any commercial margin. So all of this should be put in a broader context.
Regarding revenues in the coming months or years, As you know, we don't give guidance on this point. Just keep in mind that in a context of low rate for longer combined with a strong increase of deposits and especially site deposits with an increase by 20% in Q3, I. E. EUR 23,000,000,000 with 75% on commercial clients. So the impact of low rate and this strong increase in deposits, obviously, is pressure on deposit margin.
And this kind of pressure could last because we are talking about structural trends at least for the low rate environment. But in Q3, positive impact was recovery in terms of credit volumes combined with the positive impact of TRTO and gearing as mentioned. For the coming months, obviously, the level of activity will be key and especially to sustain fees, both services and financial fees in that context where, again there is a pressure on deposit margin.
Thank you. Next question?
Next question is from Madame Delphine Lee from JPMorgan. Please go ahead.
Yes, good morning. Thanks for the presentation. I just have
two quick questions actually. Just on Moratoria, the sort of the
EUR 26,000,000,000
that is still left. If you could provide a little bit of a timeframe of when they expire? And also on the EUR 9,000,000,000 that's already expired, can you just comment on the default rate on these? And my second question is on cost of risk. So you confirm your guidance for 2020 of 70 basis points.
Just wondering if you still expect at this point an improvement next year, any comment in the context of obviously the lockdowns that we're seeing and if you expect any implication negative implication from that for your provisioning trends in 2021? Thank you.
Yes. As of Delphine, I will leave the floor to Jonny on your two questions.
Yes. Good morning, Delphine. So on Moratoria, the bulk of the remaining will expire before year end, actually before end of November. And it is mostly in France and some European countries. The very small amount, which goes to 2021 is in Italy, where there is a government led moratorium request across the board.
Can you hear me? Yes. So in terms of cost of risk for next year, yes, we confirm cost of risk will be lower than this year as a consequence of more Stage 3 provisions, but taking back results from the significant S1, S2 results we have built, and this is fully in line with the updated scenarios.
And I think yes, please, Delfin, go ahead.
Yes, sorry. I was going to say so and on
the EUR 9,000,000,000 of moratorium that expired, you didn't see much default. I mean, what kind of default rates did you have?
Yes. So it's 1%. It's really very limited.
I think, if I may, it's really very important to understand that beyond the crisis impact on the GDP, there is also a very strong support from governments to help the most impacted sectors. And again, we saw that in the Q1, for example, there is a steady state, no increase of NPL from end of June in absolute terms in euros, no increase of NPL between end of June this year and end of September. And we remain very confident in the quality of the credit origination. What I find personally remarkable is, again, this trend is true whether we are in France with guaranteed loans, but also in other economies, which have been adapting differently. I mean, it's true also in Russia, it's true in Africa, in Czech Republic.
So I think it shows we have a quality of asset, which is as a starting point, pretty good.
Thank you very much.
Next question is from Mr. Matthew Clark from Mediobanca. Sir, please go ahead.
Good morning. So I was hoping you could give us a bit more clarity on why the operational risk weighted assets went up this quarter. So what was the change? Why did it affect you this quarter? I think a couple of your competitors saw this kind of increase a year or 2 ago.
So I'm curious why this is happening now. And then second question is back to the TLTRO. Could you confirm that you are already booking the benefit of the 100 basis points negative bonus rate this quarter? Or are you waiting until the observation period is over before you recognize that benefit? Thank you.
Matthew, I will turn to Jonny on your first question and William on your second question.
Yes, hello. Yes, on operational risk, it's really technical. It's evolution of the regulation of the calculation of AMR capital under advanced model related to some correlation factors, and this is what we implemented.
Okay. So that was the regulators the catalyst here rather than it being any change in
Yes, yes. It's an EBA standard. And let me just say, of course, it's a kind of anticipation of Basel IV. It means that the Basel IV impact, which will be just proportionate to the net banking income will be reduced by the 15 basis points in practice.
Thanks.
William? It was CLTO. CLTO, the benefit of the one that is defined. So
I think we stated, we are now at EUR 62,000,000,000 drawings. We account it over time. Just to be clear, it's not exactly 100 basis points because this is for Atatten Forest. Some of it is at lower rate at 100 basis points. In aggregate, it's around 67 basis points.
Thank you.
Thank you.
Next question?
Next question is from Mr. Tarik Emejjad from Bank of America. Sir, please go ahead.
Hi, good morning, everyone. Thank you for taking my questions. So first on GBIS and most of you on Global Markets. Can you give us an update on your progress in terms of derisking of the equity derivatives? And maybe in the same context, would you I mean, do you feel you've been actually taking conclusions very quickly on decisions to do this business because now it's tempting to say derivatives are recovering a bit in the U.
S. And whatever happens in the elections in the U. S, maybe the appetite for clients will come back. And would you be willing to revise your decision to actually change the structure of these products? And yes, if you can quantify how much have you de risked already or the impacts of the €250,000,000 on revenues, how much you've done already so far?
And second question would be on International Retail Banking and specifically on the outlook you would have there because we know that profitability has been down because of rates in Czech Republic and so on, but asset quality as well will probably will take time to recover. So what's your outlook in there in terms of returns? Is it 12% we see now could come back to 18% from year or 2 or which would probably take longer? Thank you.
Yes. Hello, Tarek. I will turn to Jean Francois Gregoire,
our Head of Capital Markets for the first question and then to Philippe Henrique for International Retail. Let me just say we are not changing our stance because of the election. Again, the strategic decision we made to adjust the portfolio looks at the long term and we are not switching. But Jean Francois, could you give us some color please?
Yes, sure. Good morning. So we're talking about the specific exotic products that we have in the broader investment product offer. For example, in the U. S, we are still developing our offer with QIS indices or such or in the listed products.
As you know, we are developing our offer specifically on the exotic equity products. So we spend a lot of time to define our strategy for the long term and which is to derisk first by changing the mix of our portfolio when we analyze it product, sub product by sub product. And there are some products where we will be smaller than before. And we will push the innovation that for the last even years and especially quarters were geared towards products that are much more sustainable for us to manage. So this shift of portfolio, this shift of franchise obviously cannot happen overnight, but we engage in it.
And actually it is happening quicker than we were anticipating. It depends partly on the exogenous factor and the fact that the equity market rebounded triggered some calls on these auto call products. And so we're able to replace that with some new products. So it's a mid term effort. It's happening quicker than could have been the case, but it's not over.
However, because we complemented that with additional macro hedges on the trading side, We are close to being at the minus 50% risk in this specific area, if we consider the major the main risk metrics to follow this business. So again, which is quicker than what we had anticipated. Having said that, we will remain in this business as leaders in innovation and we could gauge in this quarter that the customer had a very strong appetite for this differentiating products. And so we stick to this plan.
Thank you. Philippe, perspective of international retail please?
Yes. Hello, it's Frederic. On international retail for this quarter, I think that we are facing 2 kinds of situations. So the first one, it's for Russia, Africa and I would say consumer finance with 4 trends. The first one, it's definitely growth recovery.
Following the lockdown and the slowdown of the 2nd quarter. 2, for these banks, revenues increase or revenues almost flat compared to the last quarter 3, it's an ongoing cost reduction effort. And as mentioned by William, there is an impressive minus 11% cost reduction in Russia, which is we are definitely bearing the fruits of all the optimization efforts, which have been implemented during the last year. And the 4th comments on this first category, it's a cost of risk, which is increasing, but with a big component related to forward looking. The second category, it's Czech Republic and Romania.
Again, I would say 4 comments, a good level of activity. You see the numbers for KB, for example, there is a plus 5 percent regarding loans outstanding, plus 7% regarding deposits compared to last year. The second comment is yes, NDI for this quarter, it's down. I would say there are 3 components. The first one is, of course, impact of the decline in the market rates with the same kind of impact that we have now in France, notably on deposits.
The second component, it's a lower activity compared to last year. And we have for these 2 banks a kind of price effect related to the payments, the fees on payments because now we have to align the prices for euro payments and local currency payments. The cost for this quarter are up in these two banks because we are still investing a lot to reinforce these banks and to prepare them for the next transformation phase. But all the other costs are strictly under control as mentioned by William. And regarding the cost of risk, again, a big component of forward looking.
And just keep in mind that last year, the cost of risk was extremely low. For KB, for example, it was only €2,000,000 So overall, of course, all these banks will continue to work on the cost base. On the revenues, they are definitely still part of growth story and profitability story. And just as an evidence of that, I want to mention that as mentioned by Frederic, KB has an Investor Day today and they are confirming a target of 40% for cost income and of 15% for return on equity.
Thank you. Next question.
Next question is from Madame Gorin Quirell from UBS. Madam, please go ahead.
Yes, hello. Thank you for the presentation and for taking my questions. Just two quick questions from me. The first one is, do you intend to extend the date at which the state guarantee loans in France will be repaid? And if so, is this going to be systematic?
Or will this happen on a case by case basis? And my second question would be, how would you use the excess capital if effectively the regulators tells you that you cannot distribute it all the excess capital or at least you can only distribute very little because obviously we are waiting for regulatory update in December. And so if you cannot distribute that at all, what options do you have in mind? Thank you.
Yes, Laurent, I will leave Sebastien. But explaining exactly how things will work with the loan the guaranteed loans and to be very precise on what is going to happen and how we want to handle that. But can I say, if for any reason we were not allowed to distribute or not as much as we would like, I will keep the money because I consider it's I owe this money to the shareholders? So at some point, we'll be able to distribute. Sebastien?
Yes. Good morning, Laurent. So as a reminder in terms of PGE, number of requests in mid October was 91,800 requests for close to EUR 20,000,000,000 And so there would be 2 changes for the PG. The first one is the decision that your new request could last up to June 2021. That's the first point.
And second point, there is a change in terms of amortization with 1 more year with no amortization. It will be the outcome of the dialogue between the bank and the clients, not something systematic, but something different. And in terms of impact, as it would not be qualified for the forbearance, there would be no impact at the end of the day. The maturity of the loan would be maintained unchanged, I. E, 6 years, but the amortization profile would be modified.
Again, it would not be qualified as a forbearance and it would be the outcome of a dialogue, not a systematic approach vis a vis the clients.
And maybe perhaps just to say that a lot of these guaranteed loans have been used just an insurance as an insurance by companies. And I think we see a lot of reimbursement actually, including immediate reimbursement.
Yes, true. And we talked about NIM earlier on the call and then clearly part of the PGA drawings went on the deposit. And that's exactly what Frederic described, a kind of cushion for the clients, which was supposed to help them in this context of the first lockdown.
Very helpful. Thank you.
You're welcome. Next question?
Next question is from Pierre Chedebel from CIC.
Yes. Good morning, good afternoon, I don't know. A follow-up question on Laurent's question on capital. You have a very high core Tier 1 ratio above 13%. As far as I remember, the TRIM impact would be minus 50 basis points.
And we can imagine, and I hope that in Q4, you will generate organic capital. And at the end of that, you say you want to be above 12%. But I am not very good in math, but I see a high leeway between your internal objective and the level where you could stand at the end of the year. So my question is very simple. Can we imagine or do you let the door open for an extra distribution if, of course, the ECB is okay for that?
And my second question relates to Protection business. I am a little bit disappointed by your performance in this booming sector of the protection, if I look at your revenues quarterly. And I wanted to know why you are not as dynamic as other, I would say, players in this area of protection. Is it due to the fact that your mix product is mainly on creditor insurance, which are penalized by a decrease in mortgages business? Or is it another factor?
Can you give us a little bit color on your perspective on Protection business? Thank you.
Yes. Hello, Pierre. Good morning well, no, good afternoon actually in France. Just on your first question, I will leave Denis Lebow to answer on the insurance side and perhaps to Sebastien, if he wishes to complement as he's in charge of the distribution channel. No, no, you're good.
You're still in math. I think you have to put on. And let's say, can I just say on this dividend, you're first it's a question for the end of the year and for the board? And clearly, I would say that the less we speak about this sensitive topic, the better. But I think we've written a sentence which says we have flexibility for distribution to shareholders, which I think you can interpret.
Okay. Because it's also a question of profitability, which is, in my view, the main item for you in the coming years. And accumulating capital is not very good for your profitability.
No, no. Listen, all banks today are in the situation where they have effectively accumulated the capital and have first much above their management target because again of this ban in particular. No, I agree, it's not optimal. As I said, let's wait first for the decision of the supervisor. On our side, as I said, we want to remunerate our shareholders at the right level and this is part of our equity story definitely.
First, Jonny, on the protection insurance products.
Yes. On the protection insurance products, actually, we had indeed an impact from the COVID, but it was mostly on the international side. We have a good increase in France, and we had a very strong increase on property and treasury. It was 13% in France as said by William. So we do have significant growth, and we continue actually to invest in this business quite significantly, in particular, in France.
What are your main products in Protection?
So we have health protection, we have life protection, auto insurance and credit insurance, of course, related to the market.
And is this the main part, the credit insurance, creditor insurance regarding protection specifically, not P&C but protection.
What is your mix between tax
and credit or insurance?
That would be in protection overall. P and C, obviously, is a different matter. I think it's important, Pierre, that you differentiate this quarter France International because there are some technical elements which we have driven that drives the performance of 1 protection. Protection, as Joni said, beat personal protection health, what have you not plus creditors insurance is up 4% in France. It is done internationally for reasons, I would explain.
And in France, as Janice reiterated, PLC is very strong, 13%, continues to be okay elsewhere. The question that we have is we decided to decrease some pockets of consumer lending in certain areas, particularly Russia. But that's risk management, it's profitability management. And as a result, we didn't cross sell as much. So I would say, we are not worried about that because the key intention is to increase the penetration wherever we want to be, particularly France and that is more of a technical adjustment.
Okay. And Pierre, maybe in addition to Jonny and William's comment, let me just say that in the context of the study of the potential merger between Creditinar and BDDF, clearly insurance is a key question. And we know that we can extract more synergies between distribution and the production in terms of insurance. So we have 2 main focus in terms of revenues in this context or in that context of the study, savings and insurance. And clearly, we know we can be more ambitious and especially in terms of equipment rate.
And so that's an area where we need to be very granular to analyze why and when we can do more. And that's our objective.
Thank you.
Thank you. Next question?
Next question is from Mr. Jean Francois Neuet from Goldman Sachs. Sir, go ahead.
Good afternoon. So I just wanted to ask 2 questions, 1 on French retail and 1 on CIB costs. So the question on French Retail is you've noted, right, that a lot of the PGEs have been redeposited in the Central sorry, have been redeposited with you, honestly not used for cash purposes by the corporates who've taken them. I'm just trying to understand how much of these loans has been redeposited because now that you have an excess of deposits in French retail over loans and high LCR, I'd assume that these deposits are earning probably minus 50 of the Central Bank redeposit rate, if you want. And then just trying to understand that if those corporates either use these loans or otherwise pay them back, what would be the impact on the NII of the French retail, which it doesn't seem like it's insignificant?
And the second question I had on the cost savings plans of CIB. We've seen that a lot of peers including yourselves have had it's tough to cut cost in CIB whilst maintaining the revenues. And I just wanted to understand exactly how you plan to do this additional cost saves, what areas of the costs they are impacting, whether they are non comp, comp, whether it's headcount modification or otherwise compensation structure modification and whether all the desks have been identified and notified so that we can try to understand whether those things that you want to keep is now well ring fenced and where the revenues impact could be? Thank you.
Yes, Francois. Hello. I will turn to Severin on your question on the cost. On the first one, yes, you're right. I mean fundamentally it's the money which is not used and effectively deposited in the Central Bank.
So which costs? After that, I guess, you can make the calculation on the amount multiplied by 5 minuteus 5. So yes, there would be a positive impact. Let's see how things are developing going forward now.
So what is the amount please, if you may?
Sorry?
What is the outstanding amount then if you may disclose it?
Arban, you know what we
are disclosing
is Do you mean the amount of deposits that we have at the European Central Bank?
No, no. The deposits that the corporates have taken and we deposit No, no, no, no,
No, no, no. We disclosed the increase in deposit side deposits. I told you 20% of those deposits are up 14% in France. What you what we can say is that the increase of in the site deposit by corporate is higher than the increase in site deposits by individuals. And of course, this is to Frederic's point and your comment, what type of deposits that we tend to model more cautiously because they are more volatile in nature.
So effectively, I mean, you know that PGE, we did €15,000,000,000 out of €19,000,000,000 as we speak. So if you assume that a portion of it has translated into deposits, Maybe this
is not a good way to look
at it. We have an increase of €23,000,000,000 of site deposits in the deposits in the French retail and three quarters the accounts from the corporate self employed professionals. So not all of them have a guaranteed loan. But it might give you some indication again of maybe the amount which might come from the guaranteed loans.
Okay, excellent. That's very helpful. Thank you.
And I saw a question. The second question Cost reduction. Cost reduction, sorry, Severin, because I thought I was in the middle of this non guaranteed loan. So Severin, please
on the call. Good afternoon, Jean Francois. When I'm referring to what we said in August, in the second quarter, we already commented on the impact on revenues on global market of this re profiling, if I must say, of our business portfolio and product mix in our structured product activity. So we already commented on the revenue and we know that there will be an impact due to this redesigning of our product range and with our other management was between EUR 200,000,000 per year or EUR 260,000,000 per year in terms of impact on revenues of this. Simultaneously, we made this commitment to reduce by £450,000,000 by 2022, 2023, more importantly, to have that in mind, our total cost base of the global market activity.
And the way we will do that, we already done last year, as you know, a significant plan and which encompasses all TriMas Organization of Global Markets and not only marks in type. Global is GBIs from the front to back. Now we think that on the front side, the main part of the work has been done. And now the way to get to the EUR 450,000,000 with an additional streamlining automation, digitalization of the processes from to book, if I may say, from to book. Having said that, it takes a bit more time.
And the reason why we put that horizon of 2022 to 2023. So it's a bit early. We are building this down. We have communicate that when it will be ready with our social partners, with our new unions in France and elsewhere in the world. So to be just generally speaking, it will be a global streamlining from the book of our processes.
And I think we could be in a position to comment more on this specific plan early next year. I mean, we have probably a specific presentation. As you know, we will have a specific presentation on GBIS on the Q1 and it will be from the opportunity to be deeper in this plan.
Thank you. Next question. Thank you very much.
Next question is from Mr. Omar Fall from Barclays. Sir, go ahead.
Hi, there. Thanks for taking my questions. Just a follow-up to Jean Francois's question. I'm just a bit confused at the treatment of deposits. I thought you used a replication corporate deposits is very volatile, and therefore, you're basically not reinvesting the deposits at the 5 year swap rate, whatever, at 50 basis points?
And then just to be clear that I understand the benefit from TLTRO to French Retail. Is that about $100,000,000 this quarter, if I take a quarter of the pro rata 67 bps on the 62,000,000,000 of balances? And then lastly, could you just update us on your thoughts on Lixol, please? Obviously, there's been some press reports on disposal and I know you rightly want to discuss press speculation. But in general, why would one would you sell assets in this kind of environment Unless you're not going to get a very good price for anything and you don't seem to need the capital based on what you're telling us?
Thank you.
Omar, William will answer your question on the deposits and the TLTRO on XL, again, same sense, we don't comment market rumors and they have been there for some time, but no comments on this. And I just will point out the good performance of LIXAR with an increase of revenue by 10%, which is definitely, I think, a
nice asset. Perhaps, William? Omar, hello. Nothing really has changed in the way we model our asset and liabilities, whether this is in French Retail or elsewhere. So we have the same story.
Some of the deposits we collect are considered as stable over time. And some of the deposits we collect will be a model rather short term. Let me remember you said contractually, this is an overnight commitment. And nothing has changed specifically pertaining to the crisis. What we're saying what we have been observing ever since 2014 is a disconnect between the monetary mass correlation with GDP and the collection of deposits because of negative rates.
And that has accelerated quite massively in the context of COVID because of lower rates and also because of factors that you and Jean Francois alluded to, which is an oversupply of liquidity. It just means that at constant ILM modernization, fundamentally, we have more pressure on the margin because we have technically more outstanding that we would model short term and so reinvest on short term rates, which usually are negative. So that's, I hope, a clarification. In order to offset that, we benefit from 2 things. 1, you know very well, which is Tiering.
You know that we have a mandatory reserve of EUR 3.5 €1,000,000,000 times 6 times 50 basis points. This is on an annual basis the benefit we get from Tiering. And that would go massively into the networks given the fact that they are the main contributor and TLTRO. So we will the way to think about TLTRO is that you have to take into consideration that we give back everything in the businesses. But gradually, as time goes by and that is poor at the temporaries, so it's not exactly a full year of numbers that you have to take in 2020 even when the program started.
Thank you. Next question?
Yes. Next question is from Mr. Vijayadja from HSBC. Sir, go ahead.
Yes. Hello, everyone. Yes, so first question, I wonder if I could come back to the guaranteed government guaranteed loans. I'm just curious, does the risk profile of those government guaranteed loans, do they largely fit with your own risk criteria. I know you're not on the hook for the credit risk, but it would be helpful for some color there in terms of what proportion are in kind of troubled sectors?
And then secondly, on Borsorama, just wondering if the surge in the brokerage orders you had during lockdown means that Boursorama is going to be clearing its cost of capital this year. I'm guessing there's probably some nice positive operating leverage from all the extra activity. But on the other hand, you're still adding new customers at Borsorama pretty rapidly. So what does that mean for kind of its profitability this year, please? Thank you.
Yes. Philippe Henrich will comment on Boursorama, knowing that we will have a full presentation in just a little bit more than 1 month. Just on the guarantee loads, keep in mind, it's not something which is automatic. There's a minimum rating fundamentally in terms of quality of the counterpart from the that we have to comply with the Banque de France and there is few exceptions. So it goes through our own assessment of credit.
I mean, we don't provide that without a level of comfort that it will be reimbursed. So it meets our criteria in terms of the credit assessment. Philippe Henrique,
Philippe on the pro form a. Yes. Thank you for the question. And yes, we have the opportunity to go deeper into presentation in Gosarama within a month. I would say that, frankly, all the indicators are really clean for CorSoArmor.
As we said, acquisition is still very high. 125 1,000 clients in the last quarter. So clearly leadership in France, so clear leadership regarding online brokerage, as you said. And all the other indicators increase of deposit on loans are so quite robust. Still, we are also very careful regarding all the efficiency ratios.
I can tell you, for example, that the acquisition cost by clients is reducing due to all the efforts and due to the increase of the critical mass. So that's where we are with Bostor and Alain. Clearly, the ship, a very strong personal model. We still believe that there is a great potential. And we have demonstrated during the last two quarters that financially we can monitor the profitability in the accounts of this bank.
Boursorama was at breakeven in the 2nd quarter and almost at breakeven for this quarter despite a huge, huge acquisition of clients. Thank you. Next question.
Next question is from Madam Azurag Wealthy from Citi. Madam?
Hi, hello. Quick questions for me. One is on CIB. If I look at it's clearly coming back versus what happened in Q1. But when I look at fixed income, your year on year performance is lacking peers.
Is this explained because of your business mix, your geography mix, your risk appetite framework? And can you give us some color on that? And when you talk about the restructuring charges, if I understood well, you said there's no expectation of big restructuring charges this year, could there be coming more next year when you present your updated CIB plan? The second one is on your climate disclosure and energy. It seems that French banks are ahead of the curve compared to other European banks on the climate and environmental issues.
Can you share with us what do you think the regulator will do in terms of climate risk and if whether this will be accounted in capital anytime soon? Thank you. Okay.
I will leave Cesar your first question. Again, on the reach of the restructuring charge, I think William was very clear, but he can reiterate what he said. Your question on climate risk and regulator would request some time. I would perhaps just say what is that currently being done. So gentlemen, Stephane again, perhaps can you come back to this question of year on year comparison?
Yes. And thank you, Eduardo, for your question.
We try to say that our performance of 9% growth compared to last year is comparing differently with our peers. The first reason of that and you mentioned it is the product mix and just the overall mix. Clearly, we are less on the U. S. And as we saw and as I already said, the U.
S. Performance has been very good this quarter. So our peers, which are more exposed to the U. S. Have more benefited from this market condition.
And on the product side, that's the same. We have a strong house in rates and that this quarter, the credit and commodities have made a specific good quarter.
And as you know, we exited
commodities last year. Good quarter. And as you know, we exited commodities last year. So we and this business has been transferred for a part to some of our peers just to disclose their results this week. So there is some product mix and geographies mix.
There is another point we have in mind that when you look at the capital allocation to our global market activity, it's also to say that our competition has probably allocated more capital for this period of time to this business than us. And we have taken this view that, globally speaking, the generation of core Tier 1 was the 1st target we have. So we will put that core test capital than the average. That's it. So we have those 2 expansions in my mind.
William, again, on the restructuring charges.
Yes, Eduardo, Charles. Just to come back to what we've been saying. First of all, in 2020, there may be some cost to achieve pertaining particularly to what you've just said and reiterated with Severin on CIB. Now when I say a very manageable number, I refer you to what we've done historically. You can see for the type of savings we've been able to achieve, what type of provisions we've taken that would give you at least some reference points.
For the future, it's too early to say when and what amount. We obviously have some ideas depending as to how the projects would develop. Yes, there would be restructuring charges. But we consider that the way to manage it is to sequence it and basically make sure this is to be absorbed by a strong capital base and something that
the shareholders should not care about given
the fact that it is not in the underlying. That we will be obviously be more specific as time goes by and when we have specific projects to announce.
Thank you. And Jennifer is on the regulatory side.
Yes. In terms of analyzing a climate risk, we have internally implemented already 2 years ago a measure and a policy where we want to measure the exposure of our clients, in particular corporate clients of the most exposed sectors to transition risk. And we give them a rating. It's part of our rating process. So we which translates into what we call a vulnerability indicator.
And this, of course, it's a long term view we are taking on the way clients are exposed to transition risk and what impact you'd have, the fact that they would not adapt to the objective of climate change and in particular, taking into account a scenario which is the sustainable development scenario. So at this stage, for us, it's a way to work on stress test on climate risk. It doesn't lead into additional capital yet. But of course, it prepares us to handle all the upcoming stress tests, which are going to be led by regulators and supervisors. It's part also of our disclosures, and it will prepare us also in terms of segmentation of clients, that information and reporting when we will have to align also with the various regulation.
Thank you. Next question?
We have one last question from Madam Anke Reingen from Bank of Canada. Please go ahead.
Yes. Thank you very much for taking my question. Firstly, just on the cost, if you just maybe can explain structurally how you address the cost programs differently from in the past? Because clearly, there were some in the past, but this time, is the focus more on absolute costs versus the past was more on efficiency, and that's why it didn't quite work out as planned? And then secondly, on the restructuring of the structured products business, the equities number in Q3, would that already be a relatively clean number?
Or should we expect further headwinds? Thanks a lot.
On the cost, it's fair to say, yes, we have a focus on absolute amounts. Again, we think it's at this stage a good discipline. At the end of the day, it's also very important to of course, we get cost income ratio for each business. And I think you would admit that if we were to double our revenues, we could also reward the staff also accordingly. But at this stage, we have this objective to really be able to demonstrate that we've previously answered the previous questions that there is a capacity to fundamentally decrease the absolute cost level with reasonable assumptions on the revenues aligned with the business plan.
On your question on Equity Clean, etcetera, it's a bit complex to answer your question. I guess it's still a transition currently. We cannot say we are yet, if I may say, on target having completed the reshuffling of the product portfolio, etcetera. So I hope we will be able going forward to do better. But I mean, already I think it's comforting versus what you saw in the first half.
And we are, as Jean Francois previously said, probably in the middle at this stage of this transformation, which is moving a little bit more quickly and more swiftly than what we even had in mind 3, 4 months ago. But there's still more to be done and still a transition period and it will take, I guess, a few 1 or 2 additional quarters to complete the job.
Okay. Thank you very much.
And we will give more explanation as Sylvain was saying. Also, it will be the opportunity to see where we stand in the Q1 of next year.
Okay. Thank you.
Any other question?
We do not have any other questions, sir.
Okay. Well, listen, thank you very much for your attention and have a very nice day and keep safe. Thank you. Bye bye to all.