Kepler Cheuvreux Conference

Transcription

1 Kepler Cheuvreux Conference Philippe Brassac CEO September

2 DISCLAIMER This presentation may include prospective information on the Group, supplied as information on trends. This data does not represent forecasts within the meaning of European Regulation 809/2004 of 29 April 2004 (chapter, article 2, 0). This information was developed from scenarios based on a number of economic assumptions for a given competitive and regulatory environment. Therefore, these assumptions are by nature subject to random factors that could cause actual results to differ from projections. Likewise, the financial statements are based on estimates, particularly in calculating market value and asset depreciation. Readers must take all these risk factors and uncertainties into consideration before making their own judgement. The figures presented for the six-month period ending 30 June 206 have been prepared in accordance with IFRS as adopted in the European Union and applicable at that date, and with prudential regulations currently in force. This financial information does not constitute a set of financial statements for an interim period as defined by IAS 34 Interim Financial Reporting and it has not been audited. Throughout the document, data on 205 results is presented pro forma: transfer of CACEIS from Asset Gathering to Large Customers, transfer of Insurance Switch from the Corporate centre to Insurance and reclassification of the contribution of the Regional Banks under IFRS5. Within Crédit Agricole S.A., Retail banking now covers only LCL and International retail banking. Note: The Crédit Agricole Group scope of consolidation comprises: the Regional Banks, the Local Banks, Crédit Agricole S.A. and their subsidiaries. This is the scope of consolidation that has been privileged by the competent authorities to assess the Group s situation, notably in the 206 Stress test exercise. Crédit Agricole S.A. is the listed entity. It notably owns the subsidiaries of its business lines (French retail banking, International retail banking, Asset gathering, Specialised financial services, and Large Customers. 2

3 INTRODUCTION Achievements of H-6 Major project of simplification of CASA s structure: transfer of CCIs/CCAs for a price of 8.5bn A tight schedule respected: announce made in February and transaction fully completed early August 206 Impacts on the business mix of the listed entity: remains mainly focused on retail customers (households, SMEs and professionals) Immediate positive impact on the capital position of CASA from both a qualitative and quantitative viewpoint Significant positive one-offs in 206 Presentation of a new Medium Term Plan for the next 4 years Ambitious Customer Project Acceleration of the digital transformation Revenue growth based on the further strengthening of cross-selling Significant cost reductions, financing an acceleration of investment program Credit Agricole Group: among the strongest banking groups in Europe Rating LT: A (Moody s), A (S&P), A (Fitch) Confirmation of financial solidity by the 206 stress test results: CET ratio at 0.5% under adverse scenario Target of CET ratio in 209 at 6% from 4.2% at June TLAC compliant Distribution policy confirmed: dividend in cash with a pay-out ratio of 50% CASA is becoming an income stock 3

4 SOMMAIRE Simplification of the Group's structure New business mix Good set of results in H 206 Appendices p. 4 p. 7 p. 3 p. 8 4

5 SIMPLIFICATION OF THE GROUP S STRUCTURE An 8.5bn transaction with major structural benefits for CASA Enhanced clarity of the Group structure for the benefit of the market and the regulators Significant one-off P&L impacts in the first 3 quarters of 206 Liability management transaction in Q enabling important future savings in the cost of debt - Cost of - 683m in revenues (- 448m in NIGS) booked in Q-6, lower than the - 750m initially estimated thanks to excellent execution (for recurring benefits, see slide 6) Total sale price of 8,542m - Initial sale price: 8,025m - Price adjustment: 57m 2 Total net capital gain for CASA of around,250m to be recognised in Q3-6 Dividends received from Regional Banks for year 205: + 287m (booked in Q and Q2) Immediate positive impact on Crédit Agricole S.A. s solvency: +70 bps CASA s CET ratio increased to.9% at 30/06/6 on a proforma basis Qualitative impact of CASA s CET ratio (unwinding of Switch ) No impact at Group level and limited impact for the Regional Banks (average pro forma 205 CET ratio of 7.3%) +70 bps.2%.9% June 6 June 6 Proforma Based on the Regional Banks balance sheets at 3/2/205 2 Taking into account the change in the Regional Banks restated equity between 3/2/5 and 30/06/206 5

6 SIMPLIFICATION OF THE GROUP S STRUCTURE Recurring benefits of the transaction Transaction features Recurring impacts for CASA The intragroup reclassification of CCI/CCAs held by CASA in the Regional Banks to SACAM Mutualisation Deconsolidation of the contribution from CCI/CCAs: -,072m on an annual basis From Q-6 The unwinding of the guarantee mechanism ("Switch ") associated with the holding of the CCI/CCAs The initiation of a loan granted to the Regional Banks to finance the transaction + 46m in revenues on an annual basis From Q m in revenues on an annual basis From Q3-6 Optimisation of the balance sheet In revenues: + 60m in m in m in 208 From Q2-6 Total impact in Net income Group share ~- 700m in 206 and ~- 500m in 207 to 209 Elimination of the dilutive effect of scrip dividend, around 5% annually 2 Recovery of the 205 EPS before the end of the MTP The scope of the transaction includes all CCI/CCAs held by CASA except for (i) securities held by Predica, (ii) the portion of CCI/CCAs held in excess of 50% of the capital of 4 Regional Banks (Brie Picardie, Loire Haute-Loire, Nord de France and Toulouse3). This excess part will be retained by CASA to comply with regulations regarding the capital structure of the Regional Banks, which authorise the issuance of CCI/CCAs above 50% only if they are held by the Central body (in total, residual value of 0.5bn) and (iii) CCIs potentially held through liquidity schemes. 2 Relative to a situation in which an option to pay a scrip dividend would have been proposed with respect to the 206 annual result. Earnings-enhancement calculation based on the assumption that the take-up rate for the scrip dividend would be the same as that observed in 205 6

7 SOMMAIRE Simplification of the Group's structure New business mix Good set of results in H 206 Appendices p. 4 p. 7 p. 3 p. 8 7

8 THE GROUP'S DNA A Customer-focused universal banking model Recognised ability to distribute products created by our specialised business lines through our retail banking networks to meet our customer needs 7.8bn of cross-selling revenues in 205 for CA Group An average of 9 products per demand deposit account for a Regional Bank customer at end 205 and approx. 8 for an LCL customer Business mix mainly focused on retail customers (households, SMEs, professionals) Asset gathering Asset management Insurance Wealth Management Retail banking 27m individual customers in France,.7m in Italy 28% market share in home loans in France Specialised financial services Consumer Finance Leasing & Factoring Cards & Payments Large customers CIB Asset servicing Source: Regional Bank customer database 8

9 NEW BUSINESS MIX A balanced mix now more concentrated on Asset gathering A business mix historically largely dominated by retail-related activities: this will not change significantly going forward Net income Group share: CASA business mix (excluding Corporate centre) in % (including Regional Banks in 205 underlying) No change on revenues mix following the simplification transaction within Crédit Agricole S.A. 22% 29% 27% 30% Net Income Group Share related to retail customers to remain stable at around 70% 9% 33% 36% 3% 5% 3% 38% 4% 35% 20% 7% 22% Retail distributed products CASA s business lines will still benefit from the Regional Banks customer basis 205 underlying 205 underlying pro forma H 206 underlying 209 Retail banking Asset gathering Specialised financial services Large customers (CACIB and CACEIS) The share of Crédit Agricole S.A. in the Regional Banks was equity-accounted until 205 9

10 STRENGTHENING OF THE GROUP'S GROWTH MOMENTUM Business line strategies RONE 209 >6% Retail Banking RONE 209 >25% Asset gathering Digital transformation and branch network restructuration Acceleration of the pace of customer gains Enhancement of our multi-product strategy Reinforcement of business in specialised markets Tightening of cost control Insurance: reinforcing our leading position whilst adapting to the low rates environment Asset management: balanced development between retail customers and institutionals Pursuit of value-creating acquisitions Primarily in asset management And, to a lesser extent, in wealth management RONE 209 >3% Specialised financial services RONE 209 >% Large customers Further integration with the Group's retail banks Support the Group s networks Increase sales of insurance products at CACF Selective relaunching of profitable production in stand-alone businesses Direct channel Partnerships and car finance joint ventures A stable scope of chosen activities in which we have expertise and recognition A more selective customer approach to further increase profitability A low risk profile, both in financing and capital markets Optimisation of operational efficiency with sustained cost-cutting efforts Development of an asset-light model RoNE calculated as the net income (post tax) on normative equity, on the basis of a capital allocation tailored to the needs and risks of each business line 0

11 STRENGTHENING OF THE GROUP'S GROWTH MOMENTUM Revenue synergies target of 8.8bn for CA Group in 209 CASA s specialised subsidiaries have access to the customer basis of the Regional Banks (2m) as well as LCL (6m) and Cariparma (.7m) Cross-selling revenues represent more than 25% of business line revenues Targeted revenue growth at CASA level: +.8bn, of which 700m is related to internal synergies 40% of growth easily secured Main sources of additional revenue synergies CAA to insource the Group creditor insurance contracts Off-balance sheet assets inflow in high net worth segment Sales of individual property & casualty and death & disability insurance (LCL) Consumer finance loans distributed by our retail banks with CACF (LCL, Cariparma) CACIB CACEIS cross-selling to institutional clients Amundi - CAA revenue synergies in group pensions, health and death & disability CACIB Retail banks cross-selling to mid-corps 7. 2,3 2,5 4,8 5,3 203 Revenue synergies ( bn) Régional Banks + bn at GCA level o/w + 0,7bn at CAsa level ,8 6,0 209 Crédit Agricole S.A. 203 restated

12 SUSTAINABLE IMPROVEMENT OF INDUSTRIAL EFFICIENCY An ambitious programme in cost savings and investment A 900m operational efficiency programme for CASA and a 7.7bn investment programme for the Group to prepare for the future CASA cost savings 206/209 ( m) Group cumulative investments 206/209 ( bn) % Retail Banking 36% IT transformation bn Industrial efficiency 6% 0% 26% % Savings by business line Asset gathering Specialised financial services Large customers Corporate centre 35% 6% 3% Savings by lever - 6 pts of Crédit Agricole S.A. cost/income ratio by 209 i.e. a cost/income ratio < 60% in 209 Operational efficiency Purchases (non IT) Rationalisation of number of Group entities 3.3 Regional Banks Industrial efficiency CASA Regulatory CA Group Business development and digital transformation Stability of CASA s cost base over the duration of the MTP ~ bn Compliance and risk mitigation 4.9bn Business development and digital transformation Cumulative investments. Investments on a cash-out basis 2

13 SOMMAIRE Simplification of the Group's structure New business mix Good set of results in H 206 Appendices p. 4 p. 7 p. 3 p. 8 3

14 H-6 RESULTS Key figures Crédit Agricole Group Crédit Agricole S.A. Q-6 Q2-6 H-6 Q-6 Q2-6 H-6 Stated Net Income Group Share (NIGS) 88m -33.4% Q/Q,942m +29.5% Q2/Q2 2,760m +.2% H/H 227m nm Q/Q,58m,385m +25.8% Q2/Q2-8.7% H/H Underlying Net Income Group Share (NIGS),242m -0.2% Q/Q,623m 2,865m 394m 88m,22m -.5% Q2/Q2-0.9% H/H -9.4% Q/Q +3.0% Q2/Q2 +4.6% H/H Regional Banks NIGS 826m 780m,606m +4.6 % Q/Q -3.8% Q2/Q2 +0.4% H/H Fully-loaded CET 4.2%.2% 4

15 H-6 RESULTS Focus on Business lines impacted by low interest rates: Retail banking in France Strong commercial momentum in H-6: continuation of the dynamic growth in loan and deposit volumes Loans outstanding + 6.9% June/June in small businesses and corporate segment 206 Results Deposits up 7.4% YoY in Q2-6 Acceleration in the sale of P&C and protection policies Property & casualty: +24% Q2/Q2 (in home, motor and health insurance) Death & disability: +67% Q2/Q2 Stabilisation of revenues between Q and Q2 but new pick-up in renegotiations in Q2 Decrease of our Retail banking exposure following the transaction to simplify Credit Agricole s structure Progressive offsetting of the decrease of the NIM thanks to Strategy in low rates environment Increase in volumes Development in consumer credit and SME loans Cross-selling of fee businesses to new customers Network optimisation Launch of "Branch Network Optimisation" plan (closing of 250 branches for a 42m provision booked in Q2-6) Liability management operation for LCL in Q3-6 to adapt its cost of funding 209 profitability target of the MTP confirmed 5

16 H-6 RESULTS Focus on Business lines impacted by low interest rates: Insurance Growth in all business lines Q2/Q2 206 Results Savings/retirement: +6.4% Property & casualty insurance: +6.0% Death & disability / creditor / group insurance: +2.0% Strategy in low rates environment Improving business mix by the development of non-life activities Share of non-life activities in total NIGS of Insurance: +6 pts between 200 and target: +27% growth in P&C premiums and +35% growth in Protection premiums since 205 Increasing the proportion of unit-linked contracts in our AuM in life insurance Nearly + 2pts in share of unit-linked products in the total of AuM between 20 and target: + 5 pts in share of unit-linked contracts in AuM from 205 Maintaining prudent risk management in euro-denominated products and adjusting the activities to the new context Quick adaptation of the profit-sharing rate (reduced by more than 40% since 200) Increase fees on euro funds CAA has the capacity to cope with this situation Average investment portfolio yield far above the minimum guaranteed rate due to policyholders Significant increase of the different reserves (profit-sharing provision and capitalisation reserve) 6

17 OUR COMMITMENT TO INVESTORS Crédit Agricole S.A. is becoming an income stock Group organisation clarified Simplification of the Group s structure completed Solvency situation normalised CET ratio at.9% end-june 206 on a pro forma basis Commitment to a level above, and as close as possible to %, throughout the duration of the MTP Ambitious but realistic MTP Main targets for NIGS: 4.2bn for CASA - RoTE: >0% (i.e.: ~850 bps above risk-free rate) Conservative assumptions within a controlled business mix An attractive pay-out policy: 50% in cash 7

18 SOMMAIRE Simplification of the Group's structure New business mix Good set of results in H 206 Appendices p. 4 p. 7 p. 3 p. 8 8

19 An 8.5bn transaction SIMPLIFICATION OF THE GROUP S STRUCTURE The transaction announced mid-february was completed early August Current Group structure New Group structure mutual shares (with voting right) and CCAs (no voting right) Local Banks of Crédit Agricole and other members 75% of capital Holders of CCI/CCAs CCIs (no voting right) Local Banks of Crédit Agricole and other members Holders of CCI/CCAs SACAM Mutualisation ~25% (through CCI/CCAs () ) 00% (2) 43.3% (3) Float RB RB 2 RB 3 Crédit Agricole S.A. RB Regional Banks (excl. RB of Corsica) (2) 56.7% (3) Mutual share(s) () 25% of capital under the form of CCI/CCAs (no voting right) + Switch Guarantee RB RB 2 RB 3 RB Regional Banks (excl. RB of Corsica) (2) Float 56.7% (3) 43.3% (3) Crédit Agricole S.A. The CCIs/CCAs formerly held by CASA were transferred to SACAM Mutualisation, a wholly-owned subsidiary of the Regional Banks, on August () The transaction includes all CCI/CCAs held by CASA except for (i) securities held by Predica, (ii) the portion of CCI/CCAs held in excess of 50% of the capital of 4 RBs (Brie Picardie, Loire Haute- Loire, Nord de France and Toulouse3). This excess part will be retained by CASA to comply with regulations regarding the capital structure of the RBs, which authorise the issuance of CCI/CCAs above 50% only if they are held by the Central body (in total, residual value of 0.5bn) and (iii) CCIs potentially held through liquidity schemes (2) The RB of Corsica, owned at 00% by Crédit Agricole S.A., will also be a shareholder of Sacam Mutualisation (3) As of December

20 SIMPLIFICATION OF GROUP S STRUCTURE Quarterly impacts in 206 of the simplification of the Group s structure Reclassification of the Regional Banks' contribution under IFRS 5 as of 0/0/6 Approval obtained from the Autorité des Marchés Financiers (AMF) on 06/04/6 Final completion of the transaction on 03/08/6 206 Q Q2 Q3 Q4 Balance sheet optimisation - 683m in revenues - 448m in NIGS Dividend + 256m in NIGS Dividend + 29m in NIGS Capital gain ~ +,250m including the price adjustement - 08m related to the dividend paid in H Deconsolidation of the contribution from CCI/CCAs ~ - 207m (based on their contribution at 00% in Q-6), then ~ - 270m on average per quarter (205 basis) One-off impacts Recurring impacts Total impact Estimated total impact Impact Q-6-399m in NIGS Impact Q m in NIGS Balance sheet optimisation + 53m in revenues per quarter in 206 End of interest paid on Switch + 46m in revenues per year (i.e. : + 230m in 206) Interest on the loan granted to the Regional Banks and investment of the remainder of the net proceed + 26m in revenues per year (i.e.: + 30m in 206) Estimated impact Q3-6 +,00m in NIGS Estimated impact Q m in NIGS Note: NIGS calculated using the 206 tax rate of 34.43% 20

21 MEDIUM TERM PLAN 209 Global financial targets Crédit Agricole Group Of which Crédit Agricole S.A. Revenue growth 209 cost / income ratio >+.5% >+2.5% <60% <60% Cost of risk / outstandings <35bps <50bps 209 Net income Group share > 7.2bn > 4.2bn 209 RoTE >0% Fully-loaded CET 6% % TLAC excl. eligible senior debt 22% Pay-out ratio 50%, in cash 209 CAGR vs 205 underlying pro forma for Crédit Agricole Group simplification transaction Q to Q3-6 are impacted by the transaction to simplify the Group s capital structure. These atypical quarters are fully taken into account in the financial trajectory of the MTP. 2

22 MEDIUM TERM PLAN 209 Business line targets Revenues CAGR 209 Cost / income 209 RoNE 2 Retail banking LCL Cariparma ~+0.5% ~+3% ~65% ~55% >6% >6% Asset gathering Insurance Asset management Wealth management >+3% <45% >25% Specialised financial services Consumer credit Leasing & Factoring >+2.5% <46% >3% Large customers Corporate & investment banking Asset servicing ~+2% <60% >% 209 CAGR vs 205 underlying pro forma for Crédit Agricole Group simplification transaction and analytical transfer of the cost of the Switch 2 guarantee to Insurance activity 2 RoNE calculated on the basis of a capital allocation tailored to the needs and risks of each business line (see Profitability - Risk weighted assets and capital allocated by business line ). 22

23 MEDIUM TERM PLAN Digital revolution supporting the rolling-out of the customer project A Customer-Focused Universal banking model A model based on the expertise of all our business lines, on the excellence and the know-how required to meet the financial and wealth management needs of our customers A «Full Multi-Channel» distribution model A model that enables our customers to choose how and when they interact with their bank and switch easily between the various channels % of customers BRANCH Prefers to have a face-to-face relationship with his adviser MULTI-CHANNEL Attached to the simplicity of digital for some transactions and the extra value provided by an adviser DIGITAL Attached to the freedom and simplicity of digital banking ~0% ~70% ~20% source: McKinsey Retail distribution 205: full digitalisation with a human touch ; estimation of banking customer behaviours on complex operations A strategic investment in customer relationships An acceleration of the digital transformation and foster innovation A new wealth advisory approach with a renowned sales/advisory method of customer advisers New products and services 23

24 SOLVENCY PLANNING Fully-loaded CET ratio of Crédit Agricole S.A. 205 to 209 A capital planning reconciling a cash pay-out policy in a constrained regulatory environment and capital allocation favouring high profitability business lines Fully-loaded CET ratio - Crédit Agricole S.A. +4.6% -2.3% -0.7% -0.7% +0.7% -0.6% -.0% % % 3-Dec-5 Net income after AT coupons payment Distribution AFS reserve Regulatory impacts Selectivity & optimisation Expansion of each business line Flexibility 3 Dec 209 Target 50% dividend pay-out ratio, based on net income after AT coupon payments, paid in cash as of 206 results Downward trend in AFS reserves expected in the context of rising interest rates Selectivity and optimisation actions, mainly on CIB Expansion of business lines with strong added value driven mainly by retail banking Leeway allowing flexibility in the solvency monitoring Regulatory impacts, including IFRS 9 24