Good morning, everyone. Thank you for joining this call. I'm very pleased to be with you today for the first time as CEO. I would first like to take a moment to highlight how specific the exercise is today, as this is the last set of earnings before fully moving on to the next chapter, that will start with our Capital Markets Day in September, which I hope you will attend in person or remotely. Before digging into the numbers, I would first address some of the key milestones that we reached this quarter. In France Retail first, the IT migration of the networks has been completed in May, in a very satisfactory conditions.
At the same time, Boursorama, early July, reached the milestone of 5 million clients. We have announced that we have signed agreements to sell four African subsidiaries, and obviously, the acquisition of LeasePlan by ALD was closed on May 22nd. Without further ado, if we dive into the numbers, we report an underlying group net income this quarter standing at EUR 1.2 billion, and the reported net income at EUR 900 million, which are equivalent respectively to 7.6% and 5.6% ROTE. The underlying revenues are down 5% compared to Q2 2022. Reported revenues are down 9% due to a few one-offs related to legacy legal disputes. The underlying cost-income ratio, excluding SRF, reaches 65.8% for the quarter.
Regarding cost of risk, the defaults remain limited and with no sign of material deterioration of asset quality. All in all, the cost of risk is at 12 basis points this quarter, Q2 2023. In terms of capital, the CET1 ratio lands at 13.1%, post-provision for distribution and LeasePlan integration. It is now 330 basis points above requirements. The LCR ratio is strong at 162%, thanks to high liquidity reserves, and despite a significant TLTRO repayment last quarter. I now leave the floor to Claire for more details.
Thank you, Slawomir Krupa. In Q2, the group delivered an underlying gross operating income of EUR 2.1 billion. Revenues are down - 5.4% versus Q2 last year at group level on an underlying basis. At business level, the revenue trend in France is in line with guidance provided last quarter on the net interest margin, partly offset by a strong performance on Boursorama that is worth noting. For market activities, revenues are steady in a less conducive environment than Q2 last year. In other businesses, revenues are robust, with solid contribution of IRB, ALD, and in France. It's worth noting LeasePlan's first contribution of around EUR 200 million from May 22nd to June 13th. In addition, revenues of the corporate center are impacted by one-off items related to legacy legal disputes for a total amount of EUR 240 million.
Overall, the underlying cost-to-income ratio, excluding SRF, posted in Q2, is at 65.8% and 32.2% for the first semester. Let's now have a look on operating expenses, slide six. Total underlying costs are stable versus last year at - EUR 2.5 billion. In detail, the contribution to the Single Resolution Fund is down - EUR 51 million versus last year. The change in perimeter versus last year contributes to net increase of EUR 71 million due to the integration of ALD, partly offset by a positive impact linked to the disposal of Rosb ank. Excluding these items, other underlying costs increased by only EUR 9 million versus last year. The cost-to-income ratio, excluding SRF, increases to 65.8% in Q2, mostly due to the decrease in the net interest margin in French retail and market reviews.
Moving on to the next slide on the cost of risk, slide seven. The cost of risk remains low across businesses in Q2. At group level, it stands on an average at 12 basis points. It illustrates once again, the quality of our assets with still no material deterioration of our portfolio. The NPL ratio remains low at 2.9% at the end of June 2023. Note that the gross coverage ratio is slightly down for technical reasons, as we transferred in Stage 3, highly secured files with low risk. Let's now turn to slide eight. As just mentioned, defaults remain low in the second quarter at EUR 204 million or 14 basis points. At the same time, we maintain high precautionary provisions on Stage 1 and 2 assets in Q2.
At the end of June 2023, the total outstanding of Stage 1 and 2 provisions amounts to EUR 3.7 billion, i.e., around 2.9x the Stage 3 cost of risk. A few words now on the remaining Russian exposure, slide nine. First, we successfully completed the disposal of the onshore legacy exposure with a disposal in April of ALD Russia, with an impact of -EUR 79 million, accounting for at the corporate center. The onshore is now limited to EUR 15 million following the integration of LeasePlan. The Russian offshore exposure is down 50% compared to the end of 2021, at EUR 1.6 billion at the end of June. It's highly diversified and secured.
Indeed, the net exposure at risk remains below EUR 0.5 billion before provisioning. This residual risk is covered by a total provision of around EUR 0.4 billion. Let's now turn to capital, slide 10. At the end of June 2023, the cost-to-income ratio lands at 13.1%, post integration of LeasePlan, 330 basis points above the MDA. The fully loaded Core Tier 1 ratio is 13%. In terms of moving parts, organic capital generation and distributable items set then at 35 basis points and -22 basis points, respectively, in Q2. Regulatory items have a total negative impact of 19 basis points, including, including IPC deductions, and M&A accounts for 36 basis points this quarter, following the closing of LeasePlan acquisition by ALD.
For other capital and liquidity ratios, they are all comfortably above requirements. Moving on to liquidity, slide 11. First, let's note that we have achieved 95% of the 2023 long-term funding program. The funding balance sheet of the group remains sound and solid, with a nexus of long-term resources, notably thanks to a strong and highly diversified deposit base, high liquidity reserves, and limited reliance on short-term fundings. The robustness of the liquidity profile has been further strengthened with, on the one hand, a further increase by 2.5% of the deposit base, and on the other hand, a 2023 long-term funding program achieved at 95%. Overall, the loan-to-deposit ratio stands at 82% at group level. In addition, the LTR ratio remains strong at 152% after the repayment of EUR 14 billion of TLTRO in Q2.
Note that the remaining outstanding will mainly mature in March and September 2024. It's also worth reminding that the group has excess liquidity in dollars deposited with the Fed. I will not comment slide 12. Let's now turn to business performance, starting with the French network and private banking, slide 14. On the credit side, total loan outstanding is down -2% in Q2, with differentiated trend between retail and corporates. With corporates, the activity remains dynamic. Loans excluding PGE, are up +2.1% versus last year, driven by medium, long-term funding medium, long-term loans. On state-guaranteed loans, outstanding has decreased from around EUR 18 billion at end 2020 to EUR 9.8 billion currently, down by -27% versus Q2 2022.
On loans to individuals, we have applied a selective approach in production to limit the impact of the usury rate, which is translating into a decrease in production on a yearly basis. Home loan outstanding is down -2.8% versus last year. On the deposit side, total outstanding is down less than -3% compared with this Q2 last year. The deposit base is increasing for households, but is down for large corporates. On savings, we experienced growing AUM. Life insurance outstanding is up +1%, with growth inflows amounting to EUR 2.1 billion. Private banking assets under management was up +5%, with net inflows of EUR 2.9 billion, up 19% versus Q2 last year. Finally, premium in P&C continued to grow dynamically in Q2.
They are up by 9% versus last year. On personal protection, premium increased by 2% versus last year. Moving on to Boursorama, slide 15. Boursorama brings this quarter a positive net income of EUR 47 million, equivalent to a ROI above 60%. The performance in Q2 is remarkable in many respects, as it validates almost two years ahead of schedule, the objective set in December 2020, with 5 million clients already reached and an annualized result of EUR 200 million. This outcome demonstrates the profitability comes as soon as we decide to reduce marketing intensity, which we did in Q2.
It's all the more satisfying that Boursorama printed a net positive contribution while acquiring almost 130,000 new clients. On the commercial front, deposits and financial savings continue to increase significantly by 39% at EUR 53 billion, while loans remain stable due to a continuously selective approach in home loan production. Additionally, we still observe dynamic day-to-day banking operations with a 37% growth in activity versus Q2. Let's now comment the quarterly P&L. The French Retail Banking activities generated a net profit of EUR 277 million in Q2. Total revenues, excluding FSL, are down -11% versus Q2 last year, due to the headwinds of the net interest margin as guided last quarter. Conversely, fees remain solid and are up +2.4% versus Q2 last year. Regarding costs, they remain under control and well below inflation.
They are flat on an underlying basis compared to last year, are down by -3.2% on a reported basis, thanks to a EUR 60 million one-off provision release that occurred in Q2. Last, customer risk remains contained at 18 basis points. Overall, the reported ROE comes at 9% in Q2. On international retail banking, slide 17. Commercial dynamics remain strong across regions and segments. In Europe, loans outstanding are up 7%, deposits increased by 3% on a yearly basis. In Africa, the economic environment is supportive, notably for the corporate segment. Overall, loans grow by 6% versus Q2 last year, deposits increased by 5%. Overall, revenues are stable for IRB.
They are slightly up in Europe this quarter compared to last year, increased more than 10% in Africa, which offsets the negative base effect linked to the sale of Rosb ank, whose contribution still amounted to EUR 51 million in Q2 last year. Overall, our international division posts another satisfactory performance this quarter, with an ROE at 19%. On insurance and financial services, slide 18. The performance remains strong, with an underlying ROE at 27%. On insurance, the business activity is sound. Life insurance outstanding is up 2% at EUR 133 billion at the end of the quarter. On protection, premia increased by 5% versus last year, driven by a continued solid dynamic in P&C premia, which are up by 12% versus last year. Overall, revenue generated by the insurance division rose by +3% compared to Q2 2022.
For financial services, revenues increased by 17% in Q2, thanks to a 19% rise for ALD, which benefited for around EUR 200 million additional revenues from LeasePlan since closing on May 22nd. At constant perimeter, excluding LeasePlan contribution and ALD Russia, ALD's revenue remained robust, while slightly down versus a very high Q2 last year, which was positively impacted by a one-off effect in Turkey with hyperinflation. We continue to see, to see a solid growth of the selling fleet at +3% at constant perimeter, and UCS results remain high at EUR 2,600 million per unit, without reduction in depreciation costs. To sum up, slide 19. IBFS delivered another strong quarter with a reported net income at EUR 587 million. Revenues increased by 6% compared to last year.
Total underlying costs increased by 19%, mostly due to the impact of LeasePlan. Like the rest of the group, customer risk remains low at 24 basis points. Overall, the ROE is close to 23% in Q2. Moving on to global market and investor services, total revenues are down -13%, and slide 20. On global markets, revenues remain solid at EUR 1.3 billion. They are down -11% in a less conducive market, that is a very high Q2 last year. In detail, equities performed well in Q2, with a decrease in revenues of -6%, notably due to the softer flows activity. The commercial momentum remains solid in the realties. On fixed income, revenues are down by 18% in comparison to a very high Q2 last year.
The current market environment was very different than a year ago, with a much lower volatility in rate and FX. Client activity slowed, while financing activity continued to perform well. On financing and advisory, revenues are up 4% versus last year, at EUR 854 million, and slide 21. Global banking and advisory maintains a solid performance in Q2, with revenues slightly down -5%, that is very high Q2 last year. Momentum is good in asset-backed products. Investment banking shows a solid performance, mainly driven by DCM and Technomedia and Silicon Finance. Last year, the level of activity is robust in asset finance and resilience in resources. Last, in transaction banking, performance maintains solid trends with a 42% increase in revenues compared to last year, driven by business development and a positive interest rate environment.
Overall, slide 22, GBAS delivered once again a good quarter. Revenues are solid, down - 7.3% in comparison to a high Q2 last year. Costs are well contained. They are up by 2.6% on a reported basis, mainly due to a one-off items related to a few disputes for an amount of - EUR 95 million. On an underlying basis, they are down - 4.9%, demonstrating our strict cost discipline. This translates into a competitive underlying net income ratio, excluding SRF, of 65.2%. Profitability-wise, GBAS delivered once again a strong quarter, with an underlying ROE of 16.7% in Q2 and 19.3% excluding SRF. On the corporate center, slide 23, revenues are impacted by the unwinding of the hedges of the CSDO, following the decision made last year by the ECB.
The total impact is expected to be around EUR 300 million in 2023, out of which around EUR 100 million in Q2. In addition, revenues are impacted by additional provisions related to legacy legal disputes for a total amount of around EUR 240 million. The operating expenses include transformation charges for a total amount of EUR 184 million, largely related to costs linked to the merger of the French networks. It also includes a non-cash item of EUR 50 million related to the Global Employee Share Ownership program. Last, the impact of the disposal of ALD Russia is recorded in net profit and losses from other assets for an amount of - EUR 79 million. All in, the net contribution to the group's net results is negative by - EUR 602 million in Q2.
I'll now give back the floor to Slawomir.
Thank you, Claire. In one word, resilient, solid quarter, in an environment which was particularly characterized by the headwinds on the net interest income in the French retail in particular, which we discussed in the past, and trends of normalizing market conditions for our market activities. We will look forward to see you in London, or for you connecting to the call for our Capital Markets Day in September. We will now turn to the Q&A, and I'm joined, in addition, to Claire, obviously, by Pierre Palmieri and Philippe Aymerich, Deputy CEOs. Let's stick to the two questions per person habit that we have, and please let's dive into the Q&A.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star one on your phone keypad. The first question is from Tarik El Mejjad of Bank of America. Please go ahead.
Hi, good morning, everyone, morning, Slawomir, I'm pleased to have you on the call for the first time and ask you questions directly. I mean, I want to ask you specific questions around the Capital Markets Day, but just allow me to ask you and to know. I'm interested to understand, you know, what mindset you are. I mean, are you in a mindset of building capital faster, deliver on the ongoing strategic initiatives and remain conservative on the capital allocation, mainly direct and into distribution? Do you feel actually this is maybe the time to step up a bit the growth, especially, and being bit more punchy, especially on the GBIS, given your background? That's my first question.
The second one is on your presence in Africa and Romania. I know historically, the French banks and Soc Gen have been present there, but things have changed, and profitability at your banks, there are not really even covering the cost of equity. I mean, it's a great business, great growth, but needs investments. Is it something that you are willing to pursue, or should we see the sign of the four already divested or ongoing divestment of the banks is the beginning of something there on exit there? Romania, there were lots of interest recently in the press of OTP exiting and some banks interested.
Could you take an opportunity here to basically focus more on Western Europe and, and Czech Republic and, and, and refocus your footprint there, as you started in, in 2019? Thank you very much.
The next question is from Guillaume Tiberghien of BNP Paribas Exane. Please go ahead.
Yes, good morning. I've got a question on the equity Tier 1 under Basel IV. You had guided for 120 basis points. I was wondering whether this is still the impact that you model or whether we can hope for better? The other one is for Boursorama. I wish, but I don't know if you will, in the future, provide some degree of P&L for Boursorama. If you don't, then can you at least tell us the year-on-year swing in revenues in Q2 versus Q2 last year, for the Boursorama revenues that are booked in domestic retail? It seems to me that domestic retail does benefit from Boursorama getting better, yet your performance in Q2 is in line with the guidance you had given. Thank you.
Excuse me, Mr. El Mejjad, your line is open again.
Oh, sorry, I already asked my question, but I think the, the answer was cut. I wasn't sure. I didn't hear the answer from Mr. Krupa.
Is this, can you hear me on the backup line?
I can hear you now, yes.
Okay. We seem to have a technical blip, which I choose to see as a good omen, not as a bad one. I'm gonna first start by answering Tarik's questions. Guillaume, if you could ask your question again, and we'll hopefully move on without further technical issues. Tarik, as I was saying, I don't know if you heard me, I was joking by saying that you had actually three questions, all of them about the CMD. But I was not going to answer them in a very, you know, detailed way because of the, obviously, of the CMD happening in September.
Nonetheless, I wanted to give you some hints, and in terms of the mindset, both mine and, and the entire team's mindset is very clearly focused on value creation, for our stakeholders and, our shareholders in particular, who own the company, and who have the right, to have, all the management, focused on creating sustainable value for the company. So, the mindset is to make sure that we do exactly that. I will partly address, I guess, your, your second question by saying, among the things that we have to do as a management team are, is the responsibility of running a tight ship in terms of portfolio of activities and making sure that at any point in time, they make sense from the perspective of long-term value creation.
Obviously, meeting a cost of equity in a sustainable way is a basic requirement that, you know, our business activities within our portfolio will have to deliver on. If, I hope this gives you a hint into what the mindset is, but, more details, at the CMD, in, September. Guillaume?
Than 20 basis points, or can we hope for better? The second question is on Boursorama. You don't provide the, the P&L of Boursorama, unfortunately, but it was up quite substantial for a year-on-year. I was wondering in the domestic retail France, how much of the year-on-year revenue swing is coming from Boursorama, and do you think the Boursorama of Q2 is sustainable slash beginning of the growth, or there are some one-off in the Q2 of Boursorama? Thank you.
Thank you. I will leave the floor to Claire on your first question. Please follow up, because we didn't hear exactly the beginning, so hopefully Claire got it right. If not, please follow up, and I'll leave the floor to Philippe afterwards to address your question on Boursorama. Spoiler alert, there were no one-offs in the Boursorama numbers this quarter.
Hello, Guillaume. If I heard well, the first question was related to Basel IV impact. As far as today, we do not review, the Basel IV impact we had gained on. This Basel IV impact is phased in, EUR 37 billion, which is around 100 basis points, fully loaded EUR 44 billion, which is around 120 basis points. This includes the impact of LeasePlan, which is already embedded in these figures. It includes all of the package of, Basel, I mean, credit risk, operational risk, and also FRTB. That's all what I can say as far as today. We have, as Slawomir said, a Capital Markets Day on the September 28th, where we will update, of course, all our financial data.
As for today, this is the most reliable impact we can commit on. We do not expect any significant changes in this data regarding the last version of the package. That's all what I can say.
Now, turning to Philippe, for the question on Boursorama.
Yes. Hello. Good morning. Thanks for the question. Yes, during the second quarter, we have deliberately adjusted the marketing intensity of Boursorama for client acquisition level at 140,000 new clients, which, by the way, you know, it's still quite, quite robust, and, you know, it corresponds to 500,000 of new clients on an annual basis. At this level of client acquisition, you can see the full impact of Boursorama business model. One, a strong net interest income, thanks to a robust deposit base on new inflows. Two, a very good level of fees, because of a good and growing equipment rate in terms of products, and also a real customer activity, notably on daily banking.
And three, a strict cost monitoring, both on the acquisition side and on the operating model. Overall, we do believe that this quarter demonstrates both the profitability and the maneuverability, of Boursorama business model.
Thank you. If you don't provide the revenues, can you provide the revenue swing compared with last year at Boursorama?
Around 5x .
It's around 5x .
In million euro, what is the swing?
No, no, we, we don't communicate that.
Okay. Thank you.
The next question is from Delphine Lee of J.P. Morgan. Please go ahead.
Yes, good morning. Thanks for taking my questions. So my first question is on French retail. Just wondering if you why, why not changing your NII guidance for the whole year, given that Livret A is not going to 4%? Related to that as well, for 2024, was the sort of guidance of going back to 2022 level in terms of revenues or NII, assuming a decline in the Livret A, just, just kind of trying to get a feel of what you had in mind before and now. My second question is on the global markets revenues. Is the sort of normalized trading range still, still EUR 4.7 billion-EUR 5.3 billion, given the performance we've seen so far?
Just wondering, you know, how quickly we could, we could get there in the future. Thank you very much.
Thank you, Delphine. Good morning. I'll let Claire give you some details because they're fairly technical in nature, linked mostly to the recent decision by the ECB on reserves remuneration. On the global markets, I'll start with this. You can see that the current performance, you know, basically, if you take into account some of the seasonality of the beginning of the year in this business, you know, inches towards the higher end of the range that you are familiar with. Currently, you know, there's no reason to change this range. As the markets are normalizing, they were not entirely normalized in H1, if you will.
We still had a very particular and a very strong Q1, because of all the trends in the fixed income market. The H1, what you see at H1, is something which is normalizing, but not normalized. You know, it's very difficult in the current situation to predict exactly where things are gonna land. You see the trend that we were foreseeing since the very beginning, and this is why we always guided towards this range. Right now, we are operating towards the higher end of that range, slightly above, but we'll see what the markets will offer in terms of opportunities and in terms of most importantly, client flows in a lower volatility environment in the next few quarters. Claire?
Hello, Delphine. Indeed, a positive impact linked to the stabilization of Livret A is good news. Last week, ECB made a decision about the remuneration of the mandatory reserves, which offsets the positive impact of this good news on the Livret A. These, this remuneration of mandatory reserves in mainly allocated to the French retail. In addition to that, keep in mind that we have reduced margin on loans and lower outstandings on loans than in our forecast. For all these reasons, we expect the net interest margin to decrease in 2023 by around 20% versus last year, based on current assumptions on rates, on deposits, and on outstanding evolutions.
Thank you.
The next question is from Mate Nemes of UBS. Please go ahead.
Hi, good morning, thank you for your presentation. Two questions, please. The first one is on capital. Could you just give us a sense of the remaining regulatory headwinds that you expect to your CET1 ratio? I think this quarter it was 19 basis points. From memory, that's about half of the full-year guided number that you mentioned previously. Is that still the relevant number? Then should we expect any other moving parts apart from the Bernstein deal? The second question is on-
French retail NII, do you still maintain the guidance that next year NII could be back to 2022 levels? Is there any, any upside to that, that, that you can see, or, or that's the guidance for now? Thank you.
Thank you. I'll leave the floor to Claire and then Philippe to address both your questions. Thanks.
Hello. First, please note that the - 19 basis points impact is related on the one hand, on the IPC deduction, which is - 5, and on the other hand, on regulatory impact, which is - 14. Now, for the rest of the year, we expect the regulatory impact related to model updates, I mean, TRIM, IRB, to be around 30 basis points by the end of the year. With regards to the M&A, to give you a global view on the quarter one by the end of the year, the impact of the closing of LeasePlan acquisition, as you've seen, is slightly below the guidance we had gave you.
On inaudible, the closing is postponed to 2024, and on Africa, the disposal of our subsidiaries should generate around 5 basis points at closing by end 2023.
Philippe?
Yes. So regarding NII, as explained by Claire, you know, the net interest income, you know, as this is decreasing in 2023, for four reasons, the fact that the benefit from TLTRO is gradually fading. Second reason, the higher client rate on regulated savings, notably on inaudible. Three, the usury rate, to do on mortgages. Four, the impact of the hedges, which were put in place in 2021 and 2022 to protect the bank in a context of very low interest rate. All these effects are quite mechanical, so that's why we communicated that the NII will be down by around -20% in 2023.
Similarly, the NII will mechanically rebound in 2024 with the stabilization of the inaudible, the normalization of, total usury rate, and the extension of the hedges.
Next question.
The next question is from Flora Benhakoun of Jefferies. Please go ahead.
Yes, good morning. The first question is actually coming back once again, sorry for this, on the French NII, but this time more to discuss the timing of the inflection that we can expect into 2024. Do you think that the French NII is going to bottom in H2 this year, or do we have to wait until probably H1 2024 to see the inflection point towards, you know, NII moving back up, sequentially, in France? The second question is around LeasePlan. I think you mentioned in the slide pack, the contribution of the consolidation on cost, and then also the transformation cost. I haven't seen the impact on revenues, so just wondering if you could give us also, for modeling purposes here, the LeasePlan contribution to revenues.
One last clarification, Claire, you know, on the capital work you just gave us, am I right that there is also 6 basis points coming into 3 from the Global Employee Share Ownership capital increase for employees? Thank you.
Thank you. We'll start with Claire, on your last question. Claire, if you could talk about the inflection point as well, then we'll leave the floor to Pierre to address your question on ALD.
Regarding your last question, that's correct, it's a Q3, a Q3 impact. Regarding your first question related to NII, we gave you the moving parts of the NII trend, one of them being the fact that we have, let's say, old hedges, that did intend, that protected, are protecting the net interest margin against the decrease in interest rates. These hedges affect the benefits of the deposits increase, deposit revenues increase, and this is the main driver of the trend. We did commit and communicate on the fact that these hedges would come to an end until first part, I mean, mid 2024. The inflection point should be more in H1 2024 rather than this year.
This year is really as we did a guide on a transition year. We anticipate right now, at current outstanding interest rates, a -20% by the end of the year.
Pierre?
Hello to everybody. As you know, the reminder, ALD has been consolidated LeasePlan only since closing on May 22. Therefore, the contribution to the groups is slightly more than one month, and the impact in terms of revenues is EUR 200 million.
Thank you. Very clear.
Next, question.
The next question is from J-H. Gaulard of Kepler Cheuvreux. Please go ahead.
Yes, good morning, welcome, Monsieur Krupa, to this call and many more to come. Two questions. The first one, to you may be talking about mindset. I thought Tarik's question was very interesting. What was quite interesting over the last, I think, three years when you were head of GBIS, was the fact that, you know, despite the fact that your quarterly revenues were systematically higher than the range, you kept the range between EUR 4.7 billion and EUR 5.3 billion, EUR 4.7 billion-EUR 5.3 billion, and couple of minutes ago, EUR 4.7 billion-EUR 5.3 billion. Question is, is it that mindset that you will keep for the whole of the group as far as your objectives are concerned? That's the first question.
The second one on ALD, I was surprised at the speed at which the used car sales are actually normalizing. Is it in line with what you were expecting? Can we accelerate the trend that you're giving in the ALD slide pack for 2024 and going forward, or to make it maybe easier for you, do you confirm more or less the targets that you gave at the time of the LeasePlan acquisition? Thank you.
Thank you very much. Thank you for your kind words. In terms of the mindset question, I obviously take it, and then I'll pass on the floor to Pierre to address the ALD question. On this particular angle of the mindset, if your question is, do I intend with the entire team and the entire company to meet the objectives that we will set ourselves? The answer is definitely yes. That's one aspect of it. A little more color on the EUR 4.7 billion-EUR 5.3 billion.
The reason we kept, and I kept on giving this guidance and keep on giving this guidance, is exactly because we always recognized that there was a portion of the revenues that we saw as particularly linked to the, you know, exceptional nature of the environment, right? Because we're talking here about post-COVID super cycle going into war and post-war cycle. Everything baked, if you excuse this image, into a rising inflation for the first time in the Western economies in over a decade, frankly, decades. The regime change in rates, which is basically unprecedented in speed and spread.
The number, right, of these exceptional features of the environment was conducive to our business in the markets, because in these conditions, clients need to do much more than they need to do when volatility is low and not very volatile. Which is, for instance, something we experienced quite strongly into 2017, if I remember well. Because of that, we were always cautious. We were, we were trying to be realistic in the long term about where the equilibrium point is. It's not just a matter of, of setting targets low so that we can, you know, systematically beat them. That wouldn't make any sense. It's because our long-term view about this equilibrium point was closer to a EUR 4.7 billion-EUR 5.3 billion range.
Right now, as things are normalizing, normalizing in Q2 with still a Q1, which was strong, what do we see? We see something which is indeed coming closer to the top end of our range, and so it all makes sense. What we're trying to do is just to give you as an accurate estimate as possible, knowing that, you know, it's not, it's not also a hard science clearly, but more experience and quality of the estimate. Now turning to Pierre.
The used car market remains still strong, with a reset per unit of EUR 2,814, without reduction of any depreciation costs in Q2 2023. Leveling off from the peaks observed in these last quarters, as a reminder, 3,330 in Q2 2022, 3,102 in Q1 2023. For the full year 2023, we expect the underlying UCS per unit, including depreciation costs, to be between EUR 1,200-EUR 1,600 per unit. This, this is including depreciation costs. For the ALD perimeter, because we anticipate 0 as, as you know, the fleet has been reevaluated on the basis of fair value in the context of the acquisition.
We anticipate that there will be a normalization throughout 2024, but remember, these levels are extremely high by historical standards.
Okay, thank you.
The next-
Next question?
Yeah, the next question is from Giulia Aurora Miotto of Morgan Stanley. Please go ahead.
Yes, hi, good morning. Two questions from me on two topics that haven't been touched upon yet. The first one, cost of risk remains very low, but you're dropping the guidance for below 30 basis points. I was wondering, you know, is that because you're definitely below, so there's no point in keeping it? What are you seeing? Is there any area that worries you, especially on the corporate side? An update on asset quality. The second question is on costs. I think in the quarter, there was a strong performance, with costs underlying pretty much flat, despite inflation. I was wondering, what are you seeing there, and do you see more room for, for being more, more efficient, essentially?
Perhaps this is more of a question for the mindset into the Capital Markets Day, but, yeah, I'm interested, on, on your take on costs. Thank you.
Thank you very much. I'm very flattered, by your interest in my mindset today, which is only fair, obviously. So, I'll, I'll start with the cost of risk, though. Basically, we're saying that we will be well below the guidance that we gave. Meaning, from a qualitative perspective, we do not see at this point in time, any material deterioration, be it from a sector perspective, geographic perspective, or, or specific name perspective at this point in, in our asset quality. So, we feel reasonably confident that what you're seeing right now, is going to transform into a decent year, from a, a cost risk perspective, once again, well below the guidance that we gave at 30.
In terms of the mindset question about the cost, first of all, you know, is there room for more efficiency? You know, as a mindset answer, always, right? There's always room for more efficiency in a company our size, with the kind of product range and geographical reach range and entities that we have, so there's always room for efficiency. We're trying already, right, to do our best in terms of containing the impacts of inflation, containing our cost base. You know, more holistic answers to come in September. If the question is, is there room for more efficiency? The answer is yes. Next question.
The next question is from Amit Goel of Barclays. Please go ahead.
Hi, thank you. Yeah, two questions from me. One, just on French retail. Just looking at the customer deposit movements in slide 50, seems like the site deposits is continuing to come down quite, quite meaningfully. Just curious if that does mean that at some point there will be some pickup in the pass-through rates there, and/or whether that impacts your hedging policies. The second question, just relating to the kind of cap return and buyback. Obviously, it's very welcome the buyback's starting today. Just curious in terms of the process between announcement and getting it started.
You know, also when thinking about future, capital return prospects, you know, what are the factors that, that lead to, I guess the, the timing difference there? Thank you.
Thank you. Can I first of all, ask you to clarify your, your second question? Is it about the, the timing? I'm not sure I understood it. I'm sorry.
Sure. Sorry, it was just that obviously we had the announcement of the full 40 million with the full year results. We're now going to start buying it, just curious, like, so is it a time for the, the regulator to approve it? Or, you know, what's the process between making the announcement versus actually commencing the, the actual program?
Okay, no, it's clear. I'll let Claire give you some details, but it's, it's, it's approved, right? We're announcing the actual launch of it. I'll leave the floor to Claire in a second, and then to Philippe on the French retail.
Okay. First, you know, keep in mind regarding the deposit that we have a positive evolution globally at the group level. We also have a positive trend on the private banking and Boursorama, and also a positive trend regarding the deposit from individuals in French retail. Basically, what is happening is that, yes, some corporate treasurers are reducing what I would call the excess site deposits to benefit from higher yield, and they shift a portion of, of the, of the deposit to other in-house treasury products. That's what is happening at this stage, you know, it has no, no, no, no impact on our aging policies or on all this.
Claire?
Regarding your second question, we had announced for the Q1 results, that we had a green light from the ECB. The reason why it's launched now in September, in August, is for technical reasons, we had closed period. That explain the launch right now.
Next question?
Thank you.
The next question is from Anke Reingen of RBC. Please go ahead.
Yeah, thank you very much. Just coming back to a cost question, but on French Retail Banking, given you co- you completed the integration, I mean, aside anything you might announce on the Capital Markets Day, can we now assume that costs can continue to run at flat or potentially even downwards the over year comparison? Secondly, just a boring corporate center question. Do you think the gross operating profits in Q2, ex the EUR 100 million, that would be around -EUR 100 million , is a good run rate on a normalized basis? Thank you.
Thank you. I'll leave the floor to Philippe. It's, it's, it's about the cost on integration after post-integration, whether they are poised to stay flat or even slightly down. Obviously not, not talking about any Capital Markets Day item. And then Claire.
Okay. No, yes, I mean, we are definitely committed to deliver the cost reduction which have been announced, you know, as part of this creation of the new bank. As mentioned at the beginning of this meeting, you know, the legal merger is complete, the IT integration also. That's why, you know, in 2023, we are going to have the benefits of the decommissioning of the IT platform of Crédit du Nord, and we start to have the benefits of the restructure of the network to be, you know, the merger, you know, of branches.
You know, just to give you an idea of the momentum, you know, for 2023, and starting, you know, basically at the beginning of the second half of the year, we are supposed to close 160 branches, and we are already, so basically within a month, close to 60 branches. The momentum is definitely there, and yes, we will deliver what it, what it's, what is planned.
Claire?
Regarding your second question related to the corporate center, in the corporate center, we book some one-offs, and we book notably in business as usual, the results related to, for example, the hedges or the replacement of the own funds. This result is by nature, slightly volatile, we do not guide on this part of the revenue and on the underlying revenue for the corporate center. This quarter, you've seen that we have some one-offs. We have a -EUR 240 million one-off in the revenue related to old legacy disputes. And we have also in the revenues, a one-off related to the unwinding of the TLTRO, which has an impact of -EUR 100 million this quarter.
We anticipate for the whole year, around -EUR 300 million results related to this unwinding.
Thank you. Next question?
Any further questions, please press star and one on your telephone. The last question is from Chris Hallam of Goldman Sachs. Please go ahead.
Yeah, thanks for taking my questions. Just two quick questions to finish it off. First on corporate deposits, on slide 14, you mentioned they declined in the quarter. Maybe if you could just provide some color on where those deposits are going. Are they going to other banks, other asset classes, or are they just being reconsumed by those businesses in their day-to-day operations? Second, on capital markets, several CEOs have spoken about seeing green shoots in capital markets activities. I just wanted to get a sense of how you think about the near-term outlook for the global banking and advisory business, and how that is either sort of helped or hindered by the later closing of the Bernstein deal.
I'll start with your second question, and then pass on the mic to Philippe to address your first one. Once again, in this business, we have clearly, for all the reasons I spoke about earlier, a normalizing trend. It's true in the global markets, you know, business, which I spoke to earlier. It's true also on our financing side, on the global banking and advisory in particular, where, as you may remember, when we spoke at the Capital Markets Day dedicated to GBIS, I guess it was roughly three years ago, we were talking about a potential growth of 3% per year. We actually printed throughout the sequence something which was in mid-teens.
Clearly, a mid-teens growth in this business was outstanding. It was a testament to the quality of our franchises and of our client relationships. Clearly, this was not a trend which was in any way sustainable. From this perspective, our view in this business is clearly a normalization. In terms of the Bernstein integration and, you know, the fact that we will most likely close it next year.
It has one to do with- the fact that it's a double carve out, as you know, which we are executing, and there are a few operational delays, and the process is, you know, heavier, let's say, than just merging two companies. From a revenues and impact on the entirety of GBIS, given the size of this business, this is not something which would, you know, meaningfully change the picture for the GBIS performance in the next few quarters. Philippe?
Yes. Regarding, you know, corporate deposits, I think you, you said it all. Yes, we are seeing, you know, you know, some, some usage by the clients for their operating needs. Yes, we see some, some shift, you know, between asset classes, so basically a reduction of site deposits, transfer to term deposits , or money market funds. Overall, you know, our trend is consistent with what we see on the French market. We have not identified, you know, any, any loss of market share, if, if it's your question. And, and of course, we are monitoring all this topic very carefully. You know, I would say every day with our clients, making sure that we are answering their needs.
Great. Thanks very much.
Thank you. Maybe one more question I see on the screen.
The last question is from Pierre Chédeville, of CIC. Please go ahead. Mr. Chédeville, your line is open. Please go ahead. I think he withdrew his question.
I assume, he got all his answers. I think if there are no more questions, I want to thank you warmly for joining the call this morning. I wish you a nice summer and a nice rest if you're taking some days off. Definitely, we all look forward to seeing you in London or having you connecting remotely to the Capital Markets Day on September 18th. Thank you very much, and talk to you very soon.