Morgan Stanley Conference

Transcription

1 Morgan Stanley Conference Jérôme Grivet Deputy Managing Director and Group CFO 17 March 2016

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 1, article 2, 10). 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 are not audited. The figures presented for the twelve-month period ending 31 December 2015, approved by Crédit Agricole S.A. s Board of Directors on 16 February 2016, as well as financial targets, have been prepared in accordance with IFRS as adopted in the European Union and applicable at end-2015, and with prudential regulations currently in force. In the whole document, 2013 data have been restated for equity-accounted entities consolidated under proportionate method in 2013 and 2014 data (excluding solvency elements) have been restated for methodological changes in tax accounting following the application of IFRIC 21. Note: The Crédit Agricole Group scope of consolidation comprises: the Regional Banks, the Local Banks and 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 2015 Balance sheet assessment 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 Corporate and investment banking). Crédit Agricole S.A. also owns circa 25% of the Regional Banks up to the completion of the intragroup reclassification of CCI/CCAs held by Crédit Agricole S.A. in the Regional Banks, expected in the third quarter of MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

3 KEY FIGURES AND MESSAGES 2015: Crédit Agricole s strength confirmed Very strong results driven by the performances of all business lines, allowing for a 60 cents dividend (+71% vs 2014) One of the most solid banking groups in Europe in terms of solvency (fully-loaded CET1 of Crédit Agricole Group: 13.7%; fully-loaded CET1 of Crédit Agricole S.A.: 10.7%) A major project aimed at simplifying Crédit Agricole S.A. s structure, improving transparency and capital quality and paving the way for an ambitious Medium Term Plan focused on organic growth and profitability improvement 3 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH 2016

4 KEY FIGURES AND MESSAGES INCREASE IN RESULTS Crédit Agricole Group Crédit Agricole S.A. Stated 1,564m +16.0% 882m +27.5% Of which Regional Banks 943m 229m Net income Group share Q4-15 Including: - Issuer spreads, DVA running and loan hedges - Indemnity received from Alpha Bank (corp. centre) - Increase in legal provision (corp. centre) + 58m + 151m ( 150m) + 58m + 151m ( 150m) Underlying* 1,505m +3.7% 823m +7.0% * Details of specific items slide 48 Stated 6,043m +22.7% 3,516m +50.0% Net income Group share 2015 Of which Regional Banks 3,589m 1,072m Underlying* 6,164m +3.5% 3,633m +8.3% * Details of specific items slide 48 4 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH 2016

5 KEY FIGURES AND MESSAGES STRONG INCREASE IN NET INCOME AND DIVIDEND PER SHARE Dividend proposed: 0.60 per share*, up 71% versus 2014 Pay-out ratio: 50% Yield: 7.5% based on the share price at 12 February 2016, increased to 8.3% in the case of loyalty dividend Net asset value per share ( ) Earnings per share ( ) Dividend per share ( ) ,21 1,01 0,84 10,8 11,8 12,5 0,35 0, * restated restated o/w net tangible asset value per share 2013 stated data, without pro forma * To be proposed at the AGM of 19 May Increased to 0.66 for the loyalty dividend 5 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH 2016

6 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 revenue synergies in 2015 for Crédit Agricole Group An average of 9 products per demand deposit account 1 for a Regional Bank customer at end 2015 Asset gathering Retail banking Specialised financial services Large customers 1. Source: Regional Bank customer database 6 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

7 1 Simplify the Group's capital structure A STRATEGIC AMBITION EMBEDDED IN FOUR PRIORITIES Roll out an ambitious Strengthen the Group's Customer Project, 2 growth momentum in its 3 enhanced by the digital core business lines transformation 4 Transform the Group to sustainably improve our industrial efficiency 7 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH 2016

8 PLAN TO SIMPLIFY THE GROUP'S STRUCTURE RATIONALE OF THE TRANSACTION FOR CRÉDIT AGRICOLE S.A. Simplification of Crédit Agricole Group s structure Improvement of quality of capital CET1 target of 11% immediately reached Return to cash dividend as soon as 2016 results Greater clarity for the market and the Supervisor Unwinding of Switch 1 mechanism: impact of 170bps at the fully-loaded CET1 level Fully-loaded CET1 targeted ratio of 11% achieved at 31/12/2015 (pro forma) CET1 target of 11% confirmed over the duration of the Medium Term Plan Corresponding to a 150bps buffer above the 9.5% Pillar 2 requirement As part of a Group with a fully-loaded CET1 ratio already at 13.7% Distribution policy confirmed: pay-out ratio of 50% Payment of the dividend in cash secured, as of 2016 results Elimination of the dilutive effect of paying scrip dividend Deleveraging of Corporate centre Impact on liquidity of 13.0bn, after repayment of the Switch 1 deposit 1 Deleveraging of Corporate centre 11bn loan granted to the Regional Banks to finance the transaction Active financial management Elimination of the financial expenses relating to Switch 1 Improvement of cash flow by 0.3bn per year 1. Before price adjustment 8 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

9 PLAN TO SIMPLIFY THE GROUP'S STRUCTURE IMPACTS ON THE FINANCIAL SITUATION OF THE GROUP AND CASA Transaction overall neutral at Crédit Agricole Group level On net income On regulatory ratios On liquidity position (Intragroup funding of the transaction) No change in the scope of tax consolidation Immediate positive impact on the capital position of Crédit Agricole S.A. Positive impact of 41bps Pro forma fully-loaded 2015 CET1 ratio 11%: target achieved one year ahead of schedule, with better quality of capital Limited effect on net EPS of Crédit Agricole S.A Impact on net income, excluding one-time items, of around - 470m Elimination of the dilutive effect of scrip dividend, around 5% annually 1 Limited impact for the Regional Banks Regulatory situation sufficiently strong to largely absorb the impact of the transaction (average pro forma 2015 CET1 ratio of 17.3%) 1. Relative to a situation in which an option to pay a scrip dividend would have been proposed with respect to the 2016 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 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

10 PLAN TO SIMPLIFY THE GROUP'S STRUCTURE CONSEQUENCES ON CRÉDIT AGRICOLE S.A. BUSINESS MIX A balanced business mix which remained very largely dominated by retail banking activities until now and this will not significantly change between 2015 (pro forma) and 2019 Revenues: CASA business mix (excluding Corporate Centre) in % (excluding Regional Banks 1 ) Net income Group share: CASA business mix (excluding Corporate Centre) in % (including Regional Banks in 2015 underlying) 14% 14% 14% 27% 27% 27% 9% 13% 13% 22% 29% 30% 26% 25% 26% 33% 38% 35% 33% 34% 33% 36% 20% 22% 2015 underlying 2015 underlying pro forma underlying 2015 underlying pro forma 2019 Retail banking Asset gathering Specialised financial services Large customers (CACIB and CACEIS) 1. The share of Crédit Agricole S.A. in the Regional Banks was equity-accounted until MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

11 THE GROUP IS TAKING ACTIONS TO ACCELERATE THE DIGITAL TRANSFORMATION AND FOSTER INNOVATION 3 levers to drive this transformation AGILITY INNOVATIVE ECOSYSTEM DIGITAL CULTURE Introduce new working methods to foster agility Setting up Digital Factories APIs Big data: creation of a Group DataLab Take advantage of our relationships with innovative companies Supporting and investing in start-ups Partnerships and investment in Fintechs and Insurtechs Develop a digital culture among the men and women of the Group Digital Academy Recruit digital talents (e.g. user experience designers) Information systems adapted for open innovation thanks to the development of APIs 200m for investment in start-ups and Fintechs 600 start-ups within 2 years in the Villages by CA 100% of staff have access to a MOOC Appointing a Group Chief Digital Officer, a symbol of the new impetus given to our digital transformation 11 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

12 PROACTIVE DIGITAL TRANSFORMATION Concrete examples of the digital transformation serving our customers 100% of branches digitalised by flagship branches Open Bank 1 Online platform distributing all Group products Full digital bank Full online offer available on all Full online "Mobile first" strategy Digital branches Innovative products and services Supporting our customers and partners bank + devices in the digital transition + Seamless interface between channels with symbiosis between human and digital 1. Open bank: customer area providing 100% connected and available free-access services 12 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

13 STRENGTHEN THE GROUP'S GROWTH MOMENTUM RETAIL BANKING Accelerate the pace of customer capture to support our leadership over the long-term Individuals: 3 main levers to gain new customers Digital products and services Young customers Home loans Small businesses and Farmers: expand our presence in these markets Full digital offer, free for young customers +20% vs 2015 in home loans1 and launch of an e-immobilier site 500,000 customers in 2020 (i.e. +360,000 customers in 5 years) +180,000 individual and small business customers in 2019 vs 2015 Corporates: strengthen our position in the mid-corp segment pts in small business penetration rate vs % of mid-corp customers 1. Excluding renegotiations 13 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

14 STRENGTHEN THE GROUP'S GROWTH MOMENTUM ASSET GATHERING Investment in the growth of our business lines Growth in the capital allocated to the Asset gathering business line Capital allocated to business lines 1 ( bn) Pursuit of value-creating acquisitions Primarily in asset management And, to a lesser extent, in wealth management % 3% 71% % 27% 70% 2019 Wealth management Asset management Insurance Increase in costs to support growth, mainly in insurance ~ +2% p.a. business line costs 1. Allocated capital: for wealth management, 9,5% of RWAs; for asset management, 9.5 % of RWAs, plus needs for Seed Money as well as stakes and investments ; for insurance, 80% of Solvency 2 capital requirements, reduced by 9.5% of RWAs transferred by the Switch 2 guarantee to the Regional Banks 14 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

15 STRENGTHEN THE GROUP'S GROWTH MOMENTUM LARGE CUSTOMERS A CIB serving the Group whilst maintaining a low risk profile A CIB serving the Group Support the development of the Regional Banks and Cariparma in the mid-corp segment A Large customers business line with a specially prudent risk profile, helping reduce earnings volatility Capital markets and investment banking represented only 42% of the Large customers business line's 2015 revenues (-14 pts vs our peers) Develop market activities with corporate and local authority customers of the Regional Banks and LCL Servicing on market transactions for other Group entities 11% Peer group average 1 15% 56% 42% 33% 43% Asset servicing Capital markets and investment banking Financing activities xxx Average VaR (m ) 1. BPCE Group + Société Générale + BNPP 2. Mutualised VaR 99%-1 day for Crédit Agricole S.A. < 5% of total RWAs linked to market risks for Crédit Agricole S.A. by MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

16 STRENGTHEN THE GROUP'S GROWTH MOMENTUM SPECIALISED FINANCIAL SERVICES A selective growth Further integrate specialised financial services with the Group's retail banks Support the Group s networks in gaining new customers and expanding its loan book Increase sales of insurance product at CACF Selectively relaunch profitable production in stand-alone business Direct channel Partnerships and car finance joint ventures + 1 pt market share in consumer finance by % of production made jointly with the Group's retail banks in bn in consumer finance loan book in France excluding Group networks over the plan period Digital and innovation 2 key drivers to support renewed growth 40% of consumer loan production from digital channels in partner in top 5 e-commerce/mcommerce in each country 16 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

17 STRENGTHEN THE GROUP'S GROWTH MOMENTUM INTRAGROUP REVENUE SYNERGIES Revenue synergies target of 8.8bn for Crédit Agricole Group in 2019 i.e. more than 25% of business line revenue Main sources of additional revenue synergies CAA to insource the group creditor insurance contract Off-balance sheet assets inflow in high net worth segment Sales of individual property & casualty and death & disability insurance Consumer finance loans distributed by our retail banks with CACF 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 Revenue synergies ( bn) + 1bn Régional Banks Crédit Agricole S.A restated 17 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

18 TRANSFORM THE GROUP TO SUSTAINABLY IMPROVE OUR INDUSTRIAL EFFICIENCY A 900m operational efficiency programme for Crédit Agricole S.A. Annual cost savings by 2019 ( m) Retail banking IT transformation 37% 16% 10% 26% 11% Asset gathering Specialised financial services Large customers Corporate Centre 36% 35% 16% 13% Operational optimisation and efficiency Control of non IT purchase Simplification of organisation structures - 6 pts of Crédit Agricole S.A. cost/income ratio by 2019 i.e. a cost/income ratio < 60% in 2019 CASA cost savings by business line CASA cost savings by lever 18 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

19 TRANSFORM THE GROUP TO SUSTAINABLY IMPROVE OUR INDUSTRIAL EFFICIENCY An ambitious investment programme of 7.7bn over 4 years 1 to prepare for the future and better serve our customers Cumulative investment over the plan period ( bn) bn in improving industrial efficiency and cutting costs in all business lines 3.3 ~ 1bn in strengthening the Group's compliance and risk mitigation Regional Banks Industrial efficiency Crédit Agricole S.A. Regulatory Total Developing the business lines and digital transformation 4.9bn in developing the business lines and digital transformation (of which ~80% for Retail banking) 1. Cumulative investments. Investments on a cash-out basis 19 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

20 2019 FINANCIAL TARGETS Crédit Agricole Group Of which Crédit Agricole S.A. Revenue growth cost / income ratio >+1.5% >+2.5% <60% <60% Cost of risk / outstandings <35bps <50bps 2019 Net income Group share > 7.2bn > 4.2bn 2019 RoTE >10% Fully-loaded CET1 16% 11% TLAC excl. eligible senior debt 22% Pay-out ratio 50%, in cash CAGR vs 2015 underlying pro forma for Crédit Agricole Group simplification transaction 20 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

21 2019 FINANCIAL TARGETS BUSINESS LINE INDICATORS Revenues CAGR Cost / income 2019 RoNE 2 Retail banking LCL Cariparma ~+0.5% ~+3% ~65% ~55% >16% >16% Asset gathering Insurance Asset management Wealth management >+3% <45% >25% Specialised financial services Consumer credit Leasing & Factoring >+2.5% <46% >13% Large customers Corporate & investment banking Asset servicing ~+2% <60% >11% CAGR vs 2015 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 ). 21 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

22 FOCUS ON THE CORPORATE CENTRE NET INCOME GROUP SHARE (NIGS) ANALYSIS A 2019 NIGS of the Corporate centre lowered to approximately - 700m Evolution of the Corporate Centre NIGS (in m) ~ -700 ~ -1, (50) (100) 550 Underlying 2015 NIGS Capital simplification and B/S optimisation Transfer of Switch 2 guarantee to Insurance business line Costs allocated to equity stakes TLAC convergence Other items 2019 NIGS Normalisation of Corporate Centre thanks to the capital simplification / strengthening transaction and to the transfer of Switch 2 to the Insurance business line Gradual decrease of funding costs allocated to equity stakes in a low rate environment Limited cost of TLAC convergence 22 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

23 RISK WEIGHTED ASSETS RISK WEIGHTED ASSETS AND CAPITAL ALLOCATED BY BUSINESS LINE Moderate growth of RWAs Capital allocation tailored to the needs and risks of each business line Business lines RWAs (excl. Corporate Centre) pro forma before transfer of Switch 2 guarantee 42% ~ 312 bn 17% 24% 17% 41% 47% 2019 after transfer of Switch 2 guarantee 28% 47% ~ 287 bn 7% 18% 2015 pro forma after transfer of Switch 2 guarantee 35% ~ 278 bn 20% 26% 7% 33% Capital allocated to business lines (excl. Corporate Centre) 39% % 23% 23% Asset Management 2 : 9.5% of RWAs, plus needs for Seed Money as well as stakes and investments Insurance: 80% of Solvency 2 capital requirements, reduced by 9.5% of RWAs transferred by the Switch 2 guarantee to the Regional Banks Other business lines: 9.5% of RWAs Retail banking Asset gathering Specialised financial services Large customers 1. After analytical transfer of Switch 2 guarantee to Insurance for 34bn 2. See Amundi s IPO document. 23 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

24 Retail banking Asset gathering Market Specialised financial services Large customers Corporate centre CRÉDIT AGRICOLE S.A. S SOLVENCY SUSTAINABLY STRENGTHENED AND A RESILIENT BUSINESS MIX Improvement in the quality of Crédit Agricole S.A.'s capital A controlled and oriented increase in RWAs towards Retail banking and Asset gathering Crédit Agricole S.A. CET1 fully-loaded Incurred impacts Change in RWAs ( bn) Chosen impacts 10.7% 1.7% 11% Switch 1 11% % % - 2% % -5-4% pro forma 2019 target 31 Dec pro forma impact 1 Regulatory 2 31 Dec target + x% Chosen change in RWAs of the business line between 2015 and FX effect and impact of interest rate increase on Insurance RWAs. 2. Quantifiable at this stage (fundamental review of the trading book, low default portfolio, new prudential treatment of securitisation, revision of internal credit and market risk models) 24 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

25 PROFITABILITY NORMATIVE PROFITABILITY OF CRÉDIT AGRICOLE S.A. BUSINESS LINES An increase in profitability for all business lines Business lines' RoNE 1 in 2015 and 2019 RoNE (%) 26 Asset gathering >25% Cariparma >16% LCL >16% Specialised financial services >13% Large customers >11% NIGS ( m) LEGEND: light color= 2015 ; dark color= RoNE calculated on the basis of a capital allocation tailored to the need and risks of each business line 25 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

26 SOLVENCY PLANNING FULLY-LOADED CET1 RATIO OF CRÉDIT AGRICOLE S.A. A capital planning reconciling a cash pay-out policy in a constrained regulatory environment and capital allocation favouring high profitability business lines Fully-loaded CET1 ratio - Crédit Agricole S.A. +4.6% -2.3% -0.7% -0.7% +0.7% -0.6% -1.0% 11% 11% 31-Dec-15 Net income after AT1 coupons payment Distribution AFS reserve Regulatory impacts 1 Selectivity & 1 optimisation Expansion of each business line Flexibility 31 Dec 2019 Target 50% dividend pay-out ratio, based on net income after AT1 coupon payments, paid in cash as of 2016 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 1. Regulatory impacts, including IFRS 9 26 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

27 CAPITAL STRUCTURE AT END-2019 TLAC RATIO EXCLUDING ELIGIBLE SENIOR DEBT Capital structure adapted to future TLAC ratio requirements 1 Additional TLAC Solvency requirement Target capital structure Crédit Agricole Group 19.5% 7,5% 1,5% 2 10,5% ~ 19.7% 5,0% ~ 1,0% 13,7% 22% ~ 5.0% ~ 1.0% 16.0% T1 under Basel 2, T2 and new category of debt as foreseen in the draft French law AT1 CET1 AT1 volumes are calibrated to optimise the capital structure of Crédit Agricole S.A. No additional need of AT1 at Group level TLAC target ratio of 22% excluding ~ eligible senior debt Eligible senior debt constitutes an additional buffer of 2.5% to 3.5% 2 Regulatory requirement end of Dec Actual 31 Dec Target CET1 ratios are fully-loaded, AT1 securities are limited to eligible Basel 3 issues, TLAC includes the phasing and grandfathering of Tier One non-eligible Basel 3 securities and Tier Two securities. 1. TLAC calculations are based on Crédit Agricole S.A. s understanding of the FSB s term sheet rules. They exclude the eligible senior debt of 2.5% to 3.5%. 2. Including SREP Pillar 2 requirements. 27 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

28 LIQUIDITY MANAGEMENT LCR AND NSFR Regulatory requirement End-2015 ratio Target LCR Crédit Agricole S.A Crédit Agricole Group 70% at 01/01/ % from 01/01/2018 >110% ~110% >110% ~110% LCR: the aim of the Group is to secure its compliance with regulatory requirements by maintaining a buffer of a magnitude of 10% The Group s financial structure provides for a surplus of stable resources covering LCR needs (at 100%) of commercial activities. The Group intends to maintain this structure over the MTP NSFR 1 SRP 2 Crédit Agricole Group Crédit Agricole Group 100% from 01/01/2018 >100% >100% 108bn > 100bn NSFR: no definitive text yet The EBA report was published on 18 December The European Commission should make a legislative proposal before December 2016 These proposals remain penalising for ST market activities (repos/ reverse repos and lending/borrowing transactions) as well as derivative activities (20% add-on) Moreover, the EBA advocates an application on both individual and consolidated scopes 1. Calculation based on our understanding of the 18 December 2015 EBA text. 2. Stable Resources Position: long-term sources surplus (cf. Registration Document definition) 28 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH

29 CONCLUSION A structural prudence for an ambitious but realistic plan A major project aimed at simplifying Crédit Agricole S.A. s structure, improving transparency and capital quality A customer project enhanced by the digital revolution An increase in profitability for all business lines A sustainable improvement in our industrial efficiency A prudential situation already fully compliant with all known requirements Dividend pay-out policy confirmed: 50% pay-out, in cash 29 MORGAN STANLEY CONFERENCE LONDON, 17 MARCH