Earnings call: BNP Paribas surpasses 2023 trajectory with robust Q2 results

BNP Paribas (OTC:BNPQY) has reported a strong second quarter in 2024, surpassing its previous year's performance with significant growth in its Corporate and Institutional Banking division and solid results across other sectors. The bank's net income reached EUR 3.4 billion, with an overall revenue growth of over 2%.

BNP Paribas also highlighted its disciplined cost management and confirmed its ability to redeploy capital following the sale of Bank of the West. With a focus on serving clients, deploying platforms, and gaining market share, the bank is well-positioned for continued growth in the latter half of 2024.

Key Takeaways

• BNP Paribas (BNP) reported a net income of EUR 3.4 billion in Q2 2024, exceeding the trajectory set in 2023.
• The bank experienced over 2% revenue growth compared to the previous year.
• The Corporate and Institutional Banking division saw a 12.1% increase in revenues, with strong global markets performance.
• Commercial and personal banking in the CPBS division and insurance and asset management in the IPS division also performed well with revenue growth.
• Cost management remained disciplined, with a positive jaws ratio of 0.4 points.
• BNP Paribas plans to continue its growth trajectory in the second half of 2024 with a diversified and integrated model, and a balanced capital allocation.

Company Outlook

• BNP Paribas expects its net income for 2024 to surpass the EUR 11.2 billion reported in 2023.
• The bank is focused on serving clients, deploying platforms, and gaining market share.
• Investments in machine learning and generative AI are expected to improve efficiency and generate additional revenues.
• BNP Paribas is committed to ESG initiatives and sustainability, as evidenced by recent awards and rankings.

Bearish Highlights

• Specialized businesses in the CPBS division saw a decline of 3.6% year-on-year.
• The performance in Belgium was impacted by state bonds, although improvement is expected in Q4.
• The negative impact on net interest income in France's second quarter was due to a value reduction in a participation.

Bullish Highlights

• Global Banking within the CIB division reported a 5.4% increase, driven by capital markets activities and transaction banking growth.
• Security Services experienced a 10% increase due to fee volume growth and improved net interest margin.
• Commercial and personal banking reported a stable quarter with a 1.7% increase in revenues.
• Strong asset inflows and market performance drove positive growth in the Insurance, Asset Management, and Wealth Management divisions.

Misses

• The bank is winding down activities in Eastern Europe and Brazil, considering a third of the balance sheet as non-core.
• Resale values of cars are negatively affecting the growth in Arval and Leasing Solutions.

Q&A Highlights

• BNP Paribas aims to achieve a 12% return on equity by 2025 and will redeploy any excess capital.
• The bank maintains strong risk management with limited exposure to sensitive industries and low non-performing loans.
• The European Central Bank is reviewing leverage finance exposures, but no further details were provided.
• The bank's corporate clients are cautiously optimistic, with stable cost of risk and appropriate lending margins.

In conclusion, BNP Paribas has demonstrated a resilient performance in the second quarter of 2024, with a positive outlook for the remainder of the year. The bank's diversified model and strategic investments in technology and sustainability suggest a strong foundation for future growth. Despite some challenges, BNP Paribas remains confident in its ability to surpass last year's net results and maximize profitability.

InvestingPro Insights

BNP Paribas (BNPQF) has shown a robust performance in the latest quarter, and the outlook is complemented by additional insights from InvestingPro. The bank's dedication to disciplined cost management and revenue growth is evident in its recent metrics.

With a market capitalization of $79.14 billion and a price-to-earnings (P/E) ratio standing at 6.98, BNP Paribas presents an attractive valuation in the banking sector. Moreover, the bank's emphasis on sustainability and technological advancements aligns with its solid revenue growth of 1.72% over the last twelve months as of Q1 2024.

InvestingPro Tips suggest BNP Paribas has been consistently rewarding shareholders, having raised its dividend for four consecutive years. This commitment to returning value is further supported by the tip that the bank pays a significant dividend to shareholders. Investors looking to delve deeper into the bank's performance and future prospects can find more nuanced analysis on InvestingPro. There are an additional 7 InvestingPro Tips available, which can provide a more comprehensive understanding of BNP Paribas's financial health and market position.

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To conclude, BNP Paribas's latest financial results, combined with its strategic initiatives and favorable InvestingPro metrics, position the bank well for ongoing success and shareholder value creation.

Full transcript - BNP Paribas Ord (BNPQF) Q2 2024:

Operator: Good afternoon, ladies and gentlemen, and welcome to the presentation of the BNP Paribas, Second Quarter 2024 Results, with Jean-Laurent Bonnafe, Group Chief Executive Officer and Lars Machenil, Group Chief Financial Officer. For your information, this conference call is being recorded and is dedicated to sell side analysts only. Supporting slides are available on BNP Paribas IR website invest.bnpparibas.com. [Operator Instructions] If you would like to ask a question, please make sure to be in a quiet area to maximize audio quality. I would like now to hand the call over to Jean- Laurent Bonnafe, Group Chief Executive Officer. Please go ahead sir.

Jean-Laurent Bonnafe: Thank you. Good afternoon, ladies and gentlemen. Welcome to the presentation of our second quarter 2024 results. As usual, at the end of the presentation, Lars and I will be pleased to take your questions. So in the second quarter 24, the group delivered very solid results. As a further illustration of the strengths of its diversified and integrated model. BNP payback continues to demonstrate its ability to generate value and confirms its 2024 trajectory with unexpected revenue growth exceeding 2% compared to 2023, and a net income higher than the distributable income for 2023 of EUR11.2 billion. So, moving onto the core of the presentation with Slide three. Our net income group share clocked in at EUR3.4 billion in the second quarter of 2024. A very strong quarter for BNP Paribas, driven by good performance across our operational divisions, which Lars will discuss in more detail later. Our revenues are up 3.9% compared to the second quarter 2023 on a distributable basis. All-in-all, a very strong quarter for CIB, which was up 12.1% year-on-year with global markets leading the way and posting a 17.6% increase. Meanwhile, CPBS generated stable revenues with good positive momentum in the commercial and personal banking activities, which we expect to continue as the current headwinds taper off during the second half. Finally, IPS was strong with insurance up 5.2% and asset management up 9.8%. On costs, we remain disciplined. This quarter, operation costs were up 3.5% when excluding the phasing effect of the DGS contribution in Italy to the tune of EUR51 million. Cost growth was efficiently targeted as supporting our growth and we were able to sustain positive jaws of plus 0.4 points in the second quarter. If you look at the semester, jaws are positive by 0.5 points. Our objective for the year is to further step up the jaws. In addition, the second half of 2024 should see the continued implementation of the previously announced additional operational efficiency measures of EUR400 million. We expect to achieve efficiency savings of EUR650 million, adding up to the EUR1 billion over the full year. Our gross operating income is up 3.4% year-on-year at EUR5 billion. And now moving on to the cost of risk. It remains under control at 33 bps, well within our guideline. A good performance considering we had to contend with the negative impact of a specific credit situation in France during the quarter. Once again, we were able to show the strength of our credit portfolio through the cycle. As a result, our net income reached a solid level of EUR3.4 billion, up 1.6% year-on-year on a distributable basis. We're also pleased to report a solid increase of our earnings per share compared to last year. On a distributable basis, EPS was up 8.1%. Our financial structure is solid with the CET1 at 13%, reflecting a 10 bps impact due to model updates foreseen in 2025 which we brought forward this quarter. Finally, we confirmed this quarter our ability to continue the redeployment of capital from Bank of the West in line with the objectives we announced. As a reminder, at the end of June, 55 bps have been redeployed with an expected return on equity greater than 16%. Moving on to Slide four. With the very solid result in the second quarter, we're able to confirm our 2024 trajectory assisted by an overall environment that we expect to become more favorable in the second half in particular for BNP Paribas. First and foremost, our trajectory in 2024 will be supported by the growth in our revenues which we anticipate being above 2% versus last year. During the first half, revenues are up 1.7% at EUR24.8 billion, with the second quarter representing a tipping point. We shall also maintain our discipline on costs with positive jaws. Over the first half, we have delivered jaws at 0.5 point. Our risk management culture remains strong, delivering a cost of risk below our 40 bps guidance and as a reference over the semester. Our cost of risk stands at 31 bps well within the guidance. Hence, as previously announced, our net income for 2024 will exceed the EUR11.2 billion we reported in 2023. Our net income for the first semester of EUR6.5 billion holds well for that. With this in mind, our main priorities for the second half of 2024 are centered around our commitment to serving our clients to deploying our platforms particularly in asset management, wealth management and insurance and to continue gaining market share at CIB, while retaining a balanced allocation of capital. In the second half of 2024, we will also continue the implementation of operating efficiency measures as well our disciplined management of cost of risk. The intent is to continue leveraging on the key strengths of the group which are particularly relevant in the current environment. Our diversified and integrated model means on the one hand, that we are not overly exposed to one single business or geography. On the other hand, we have the capacity to grow over the cycle at a faster pace than the economy while sticking to high standards in terms of client relationships and risk management. Finally, our business model is well adapted to the expected gradual decrease in interest rates and we do confirm our strong ability to step up fee business. Moving on to Slide five, and our commitment to creating shareholder value over the long term and through the various economic cycles. This is illustrated in several ways. First, BNP Paribas revenue growth over the 10 years from '13 to 2023 has been clearly above the underlying average growth for the eurozone economies with a CAGR of plus 3%. This can be compared to our growth in revenues of 3.9% this quarter. As a result, the growth in our net earnings per share has been solid over 10 years, up an average compounded growth rate of 5.2%. Again, we can compare that with our second quarter with EPS grew by 8.1% representing quite solid performance. Regarding our dividend per share, we have the same continued growth with a CAGR of more than 10% over the period '12 to 2023, reaching EUR4.6 per share in 2023. Over 2024, 2026 we will return to our shareholders an estimated amount of EUR20 billion. Last, on the top right hand side, a chart you are very familiar with, representing the continued growth of our tangible book value at EUR88.5 as of June 30, 2024. Again a strong CAGR of plus 4.8% over the period '12 to 2023, showing that despite the significant distribution, we continue to grow the bank. With that, I would like now to hand over to Lars, who will take you through the group and divisional results.

Lars Machenil: Thank you, Jean. Good afternoon, ladies and gentlemen. I suggest moving to Slide seven, with more details on the P&L and a clear demonstration of our solid operating performance this quarter. As already mentioned by Jean, our performance in terms of gross operating income is quite strong, up 3.4%. This can also be seen in the bottom line being up 1.6%, clocking in at a record for the second quarter of EUR3.4 billion. So this reflects the bank's intrinsic performance over the second quarter, a pivotal point for BNP Paribas. Before looking at the solid performance by the divisions, I want to quickly comment on some lines below the gross operating income. First, I want to highlight a set of negative ad hoc events which on one hand you have EUR98 million of other net losses for risk on operational instruments which covers mainly or amongst others the credit holidays in Poland. On the other hand, there is also a drop by EUR100 million in non-operating items, and that is mainly related to a base effect on personal finance and Europe Mediterranean. Then if you take a look at the same time, there is a positive effect, a positive effect in the income tax. And this from an updated tax rate in the U.S., impacting 2023, so last year, but leading to reversal of tax reserves. And this for around EUR200 million in the bottom line or around, let's say five points of tax in the second quarter. So those two effects basically offset. And this leads me to two key takeaways. The first one is those ad hoc events compensate. So the EUR3.4 billion bottom line is the intrinsic run rate. The other thing is that the tax reserve write back leads to a lower tax rate in the second quarter, but it will also lead to a lower tax rate of the year. I remind you that we have guided that the bank over a full year has a tax rate between 27% and 28%. With this event in the second quarter not only will we be towards the lower end, we will be below that lower end over the full year. So with this, if I can ask you to peruse Slide eight, we give you a global view of the exceptional items. As you can see, there is nothing particular, there is what we typically have the IT reinforcement cost and the adaptation costs. So with this, if you can turn to Slide nine, to review in synthesis the performance by operating divisions which illustrates the strength of our diversified model. So overall, group revenues were up just shy of 4% in the second quarter compared to a year ago. If you look, you see strong revenue growth at CIB, up 12%, driven by good performance in all three business lines. If we take global markets, they were up 17.6% with a really strong performance in equities, which was up 57%. And FICC displayed good resilience from a high base last year. I will go back to the strong performance of Equity and Prime Services. If we then turn to the second activity within CIB, Global Banking up 5.4%, leveraging on capital markets activities which were solid and which were up 12.5%, as well as transaction banking with an increase of 7.6%. And then the third one, Security Services was up 10%. Thanks to the sustained growth in fee volumes and improved net interest margin. So that's the first division. If we take the second one, CPBS, has a stable quarter. So holding revenues thanks to the good performance of the commercial and personal banking up 1.7% and this performance was driven by the growth in fees, up 7% as well as an increase in net interest income, which were up 3.8% year-on-year if we set aside the negative impact from headwinds which clocked in EUR140 million this quarter. So this is in line with the guidance we gave earlier, which was -- that had impact would be around EUR150 million. So it came in at EUR140 million. As Jean-Laurent said, we expect most of these headwinds to taper off during the second half of 2024. Then the second activity within CPBS is the specialized businesses. They were down by 3.6% year-on-year. And this, if we look at Personal Finance and despite higher volumes was slightly down year-on-year by 0.9% if we look on a like-for-like basis, but here, we have to make the difference between the rundown of non-core activities. I'll come back to that later. So then there is Arval and Leasing Solutions, which were reducing by 5%, still impacted by the normalization of used car prices. And last, in that section, a very good performance by the new digital businesses and personal investors, which posted a 9% increase. So if with this, we turn to the third division, IPS, a strong performing with up 6% year-on-year when we exclude the real estate and the principal investments which in the term of the current activity have an impact compared to a year ago. So Wealth Management and Insurance, if we look into that, delivered strong revenue and growth respectively up 6% and 5% a year. And then there was a very solid performance of asset management up by 9.8%. So if with this, can you turn to Slide number 10. We wanted to show our diversified and well-integrated model at work. Because when we talk about diversified, people think that, that is something that helps when you are in dire economic situations that you have different engines drumming to different economic beats. But it is much more than that. It is also a key component of our revenues and therefore of growth. So if you look at it, 32%, representing roughly EUR15 billion in 2023 and which were up 4% year-on-year. So it is strong in all our client segments with a fair representation in corporate and financial institutions. Also, in our products are well presented with a fair share of CPBS and IPS products. As a result of our cross-selling activities, a well-balanced contribution from each division to the group revenues with CPBS at 52% being well complemented with CIB 36% and IPS at 12%. So with this, after the revenues, let's look at the costs on Slide 11. Overall, they were up 4.2% year-on-year. If we exclude the impact of DGS in Italy, I remind you, it was accounted for -- it is accounted for EUR51 million in the second quarter, where last year, it was booked in the second half of the year. And so if you exclude this, the jaws are positive this quarter at 0.4 points. Our cost income stands at 58.5%. And this, thanks to a strong discipline on costs, those operating expenses were contained and are basically supporting growth. At CIB, the increase in cost is related to the growth in revenues with a low base effect. Jaws are overall positive, 2.7 points with very strong posted jaws for Global Markets at 6.3 points. Costs are also well contained for Security Services in a context of high volume growth and there the jaws are 4.8 points. If we now look at CPBS, the main source of growth in operating costs come from Europe, Mediterranean and the DGS, through the taxation that I talked about in Italy. And so commercial and personal banking in the Eurozone delivered a contained growth in operating expenses of 1.1%, excluding the impact of the DGS in Italy. Jaws are positive 1.5%, if we exclude headwinds. So within the specialized businesses, costs are down 1% and with positive jaws at Personal Finance Leasing Solutions and new digital businesses. If we turn to IPS, we see overall positive jaws effect, 2.9 points with all businesses delivering positive jaws above 2 points, except for real estate. So if we stay a moment on costs, and we turn to Slide 12. As a reminder, our initial plan 2025, we committed to positive jaws effect each year of at least 2 points on average between 2022 and 2025. Half of this was on the back of the single resolution fund falling off, which it has. We also announced cumulative recurring cost savings of EUR2.3 billion over the period of the GTS 2025 plan. Earlier this year, we have stepped up our operational efficiency program with further cost savings of EUR400 million, resulting in total savings of approximately EUR1 billion for the year and EUR2.7 billion on a cumulative basis by the end of next year. So these additional savings will be split 56% CPBS, 33% CIB and 11% at IPS. To date, all of the EUR1 billion plan for this year, we have achieved EUR350 million net cost savings, and we will pursue during the second half another EUR650 million. Those additional savings will be achieved through our industrial priorities. These include things like nearshoring, offshoring, combined with a global sourcing plan and optimization of real estate assets. And then automation, robotization, digitalization are another source of additional efficiency within our retail activities, enabling us to continue adjusting our model to better serve our clients while maintaining the right level of cost, so bringing it down. For example, it means increased digital services and self-care options. Finally, as mentioned before, we would like to emphasize the jaws effect of the commercial and personal banking entities in the Eurozone. It is intrinsically positive when excluding the impact of the headwinds and DGS, and they basically clock in intrinsically at 1.5 points. And this 1.5 will be further improved going forward by additional savings measures, the pickup in growth and the evolution in grids. So having said this, if we now move to Slide 13, where we have a few illustrations of our strong risk management culture, as mentioned before by Jean-Laurent. We have a limited exposure to currently sensitive industries and less than 4% of our gross exposure comes from commercial real estate just 2% from construction and leverage exposure represents just 0.7%. In addition to those low numbers, a very significant portion of our exposure to CRE and construction is in Europe where we have a local presence and therefore, superior relationship, expertise and intelligence. Moreover, our prudent risk management is also illustrated by our main ratios including our provisioning rate and the rate of non-performing loans. Focusing on the performance in the second quarter, our cost of risk is roughly in line with the first quarter if we exclude the impact of a specific situation in France. Overall, our stock of stage 1 and 2 out of the 3 is still comfortably above our stock of stage 3 provisions. Finally, the cost of risk of gross operating income, a metric that is very important to us remains low at 14.8% this quarter. Regarding the evolution of cost of risk by individual businesses, you can see that overall, it remains a variant on the theme of low level, to only exception that you could hint at is Personal Finance, which, as you might expect, is experienced a small deterioration this quarter despite structural improvement in the portfolio. So with this, I propose we go directly to Slide 15 on the financial structure. So what do we see? As of the end of June, our common equity Tier 1 ratio clocked in at 13%, a solid level, well above our 12% objective as well as, well above the regulatory requirement. And so if we compare it to the end of March 2024, the ratio shows a negative prudential impact of 10 basis points, representing model updates that were initially planned in 2025 and they were in the plan that we announced and which have been brought forward. So on a forward-looking basis, we confirm our common equity Tier 1 target ratio of 12% by the end of 2025. And so this takes into consideration the impact of reconsolidating our Arval activities on July 1, as well as the remaining elements of the finalization of Basel on January 1, 2025, of course, excluding the application of the FRTB, which is postponed in Europe to align on what is happening in the USA. So our trajectory, including continued capital deployment from the sale of Bank of the West will be supported by organic capital generation and further balance sheet securitization. If we regard the other ratios, like the leverage ratio, it clocked in at 4.4%, well above the requirement and the same is true for the liquidity position, which is strong with an LCR ratio of 132%. So that's the fundamentally strong position of our balance sheet. Then if we touch two more things. One of them is the continued technology and deployment of artificial intelligence. So if you can cast your eyes on Slide 16. Beyond the financial performance, the second quarter marked the continuation of our ambitious but be a disciplined development within AI. So I remind you that when we launched the GTS plan, we included technology at the heart of our ambition, yes, technology is the key of GTS. On one hand, we included automation, robotization, digitalization, and also on the other hand, an acceleration of the rollout of the cloud platforms. Remember, we had an objective of 60% by 2025 and also AI use cases. Since then, AI has been at the vanguard of our transformation journey. More precisely, with the plan, the number of AI use cases in production was boosted from 427 back in 2021 to 780 today. And we have a pipeline of around 300 more being actively investigated, bridging the gap 2000 used cases that we have foreseen for 2025. Indeed, what you see in the last 12 months have been able to significantly accelerate. And in addition to this kind of machine learning aspects of AI, we're also gearing up on generative AI and are experimenting with around 150 cases. And this will give us the ability to better assess the potential of this technology and feed our next strategy with tested initiatives when it comes to this generative AI. So these AI cases are not only a source of efficiency. So it is not only delivering process automation, virtual assistance and so on. But it's also additional revenues from pricing optimization, sales automation and a crucial improvement of our risk management, for example, in fraud detection and payment systems. So that's one additional point I wanted to stress. Another one is, of course, ESG. So all our aspects when it comes to this. And so let's spend a few moments on the commitments that we are deploying. So if you look at the second quarter, it confirmed BNP Paribas leadership in sustainability as demonstrated by recent rankings and several innovative solutions that we deployed to address the needs of our clients and some of which are set out on this page. Among these, we have the world's first gender bond, a financial agreement in Spain with Solarpack to build Peru's largest photovoltaic solar power area. Cardif committing to take part in launching the Fonds Objectif Biodiversite, and a loan granted to Umicore in Belgium, a global specialist in recycling and clean mobility materials that will support the growing production of electric vehicles. Moreover, we added 10 quantified CSR objectives to the remuneration calculations of around 8,000 key staff members. Last, BNP Paribas just received the Euromoney Award for World Best Bank for financial inclusion. So that's basically the synthesis of the group. So let me touch on several divisional results. And let's do so by starting with CIB on Slide 19. What you have seen this quarter is our CIB model once again at work delivering a strong performance based on the full alignment of the three business lines, leveraging the BNP Paribas Group. With strong primary markets, Global Banking, so the first part within CIB, posted a strong quarter at EUR1.5 billion, up 5.4%. Activity was up in EMEA and the Americas. Then there was a strong 12.5% increase in the capital markets platform, particularly in EMEA, combined with good growth in every region for transaction banking. So another part of what Global Banking consists of, and Transaction Banking was up 7.6%. Activity was very strong in EMEA and the Americas on the bond market, with volumes up 13% compared to a year ago. Loans at EUR183 billion, were up by almost 2%. Deposits, EUR230 billion continue to grow. So that's the first part, Global Banking within CIB. If we now move to Global Markets, the successful development of the Prime Brokerage business and the integration of [Exxon] (ph) drove a very strong performance in what is the combined equity and Prime Services. and this was up 57.5% year-on-year, representing 51% of global market revenues in the quarter. Sure, growth is somewhat flattered by the low base in 2023, but in 2024, we benefited from a market that was supportive in areas where BNP Paribas has clearly leading positions. I'm referring here or thinking of structured products, corporate derivatives and equity finances. There, we are likely to have crystallized market share gains. Hence, in Prime Services, revenues are substantially up year-on-year as Global Markets has been able to monetize client flows in the context of very supportive equity financing markets. Moreover, Prime Brokerage revenues were supported by client balances reaching all-time highs. We also saw strong growth in equity derivatives with good client demand driven by recovery in structured derivatives in APAC and the Americas and strong corporate equity activity. Finally, cash equities benefited from sustained growth in client activity and a supportive market environment. So that's EPS. And if we look at FICC, an increase in credit markets, but with a higher base last year and particularly on commodities. So if with this, we move to the third part within CIB, Security Services. Here also a second quarter performance that confirmed the relevance of the business model with new mandates and increased transaction volumes. With outstandings up 8%, also thanks to the positive market environment, revenues went up 10% year-on-year, I would consider that a solid performance. And overall, thanks to a low cost of risk and operating jaws that I mentioned that are well under control, CIB pretax income reached a significant level of EUR2 billion, so up 16%. So if with this, I can ask you to move to Slide 20, where we focus on the equity and Prime Services and basically also allow me to confirm the deep dive that we will be doing on September 17, looking forward to see you there. So the second quarter has been a particularly strong quarter for EPS. It has really shown that we have a strong underlying business growth and remain confident on the medium-term outlook of the business as it is built on several strong growth engines. Indeed, overall, our franchise includes three strong businesses, covering the full range of the equity services. So we have also solidified our operating model and integrated leading technology platforms to ensure our infrastructure is scalable and can handle future growth. More globally, our integrated business model across BNP Paribas Group further benefits our equity franchise offering distribution opportunities and enabling us to offer the full equity value chain to our clients. So the full value chain, our banker, she can reach out to several of the adjacent services. So if with this, we conclude the view on CIB, and we go into CPBS, and let's do this on Slide 21. And we saw a good business momentum driven by the quality of the client franchises and the specialized businesses leveraging, in particular, successful partnerships. The performance of the division is still impacted this quarter by the headwinds we have discussed. We discussed it earlier and we discussed earlier this year, which had a combined negative effect of EUR140 million in the second quarter. Overall, these headwinds such as inflation hedges are expected to fade away during the second half of 2024 or even disappear entirely in the third quarter. So other headwinds include the gradual normalization of used car prices for Arval as well as the hyperinflation situation in Turkey, both of which also weighed on the second quarter performance. But again, as I mentioned, offset by the situation in the tax line. Beneath these headwinds, we are seeing CPBS businesses that improved remarkably. So if we look at the positive momentum within Commercial and Personal Banking for the first part within CPBS it led to growth in net interest revenues up 3.8% year-on-year when we put aside those headwinds. In addition, our capacity to generate value with fees was confirmed once again with fees up 7.4% this quarter, supported by good performance in France, Italy and Europe. The second part within CPBS is Specialized Businesses. Let me point out a few drivers. So we have, on one hand, Arval and Leasing Solutions combined net banking at around EUR1 billion, fell by 5%, and overall, the normalization of used car prices was partly offset by the higher financial margin and margin on services at Arval. I told you the different dynamic between the normalization of used cars taking an immediately and the financial aspect tapering up over time. On a business perspective, its finance fleet rose sharply, up 6% as did its outstanding, up 22%. The offering for individuals, plus 16% is being developed through partnerships with automakers. Internationally, momentum is also good with large international clients. Leasing Solutions revenues are increasing due to -- and from the volume impact and improving margins. Then if we take another part within the Specialized Services, Personal Finance, which is evolving according to plan. And what you see in terms of revenues is a combination of a growth in the core countries. So the core countries are up 1.7% and a decrease in the non-core by 34%. So this shouldn't surprise you, right? Remember the non-core other countries that we have put in runoff mode, and therefore, that is weighing on the top line. However, if you look at the core activities where we can cross-sell like there is no tomorrow the revenues are up. And so volumes are holding well, thanks to partnerships in particular, in mobility. Another piece of good news is the implementation of the partnership with Orange in Spain and France. The last part is the new digital businesses that confirmed that they maintain a strong positive trajectory. So overall, CPBS revenues clocked in at EUR6.8 billion in the quarter stable year-on-year and driven by good performance of Commercial and Personal Banking, up 1.7% and the resilience of the specialized businesses that I mentioned in the face of considerable market and economic challenges. Deposits were stable year-on-year, in particularly despite the impact of the competition stemming from the Belgian government bonds and the increase versus the first quarter in 2024 with an increase in France, Belgium and Luxembourg. Now I would like you to go in a bit more detail about the drivers of commercial and personal banking and particularly in the Eurozone. So if we touch upon France, the quality of the client franchise was proven again, enabling us to report stable revenues, excluding headwinds. Our exposure to regulated savings remained low compared to the market, the structure of our deposits has stabilized. Regarding loan production, June saw a pickup in new mortgage loans which is continuing in July, and we have not seen any deceleration in the production on investment loans for corporates. Our capacity to generate fees you've seen is also confirmed. They are basically 6% driven by, I would say, our buoyant cash management and payment activities as well as a strong Private Banking business. In terms of net new cash, June has been globally positive for our private banking clients. On that front, we have seen a shift from deposits to life insurance and mutual fund products. Our net interest revenues in France should benefit in the coming months from the headwinds going away in -- after the summer. In terms of interest rate evolution, the short-term rate declining, combined with the normalization of the inverted yield curve should be positive for deposit pricing and margins on new loans. Regarding the current political situation in France, we see no change in the behavior, either from our individual or corporate clients. On the retail side, we saw no significant moves on deposits with stable outstandings between June and July. There was no major change in the structure of corporate deposits neither. And lastly, regarding the evolution of cost of risk in France, there is no increase excluding the specific credit situation we faced this quarter. If we look at Italy, the positive impact of interest rates on the deposit margin continues for BNL due to growing volume on corporate deposits. Net interest revenues grew 3.7% year-on-year and a substantial growth in fees at BNL was supported by cash management and life insurance. If we now turn north, we go to Belgium, performance is still impacted by the state bonds, the Belgian state bond, but we expect that to taper off in the fourth quarter, yes. So with it -- finding its way back into the market after the summer. Still, we saw a positive momentum on credits with an increase in the production of mortgages. On deposits, they were semi stable when excluding the state bonds with a good performance on corporate deposits. So all in all, excluding headwinds, net interest income was up 5.2%, a resilient performance considering the very competitive environment on loan margins. Fees were down 1.8%, mainly due to an intense activity last year on saving products for retail, creating a high base effect in 2023. This nevertheless, was partially offset by a good performance on financial fees in Private Banking. Going forward, we expect future growth in lending and cash management fees for corporates. When it comes to retail, growth is expected in recurring fees on our balance sheet assets, payments and lending. Last, we are implementing a dedicated campaign aimed at our mass affluent and private banking clients that is designed to help us recover lost deposits from state bonds maturing, that I mentioned before that will be maturing after the summer. The campaign includes new product offerings such as saving bonds, Plain Vanilla bonds and structured notes. If with this, we end off the network with Europe, Mediterranean, we see good business momentum in Poland, supporting the growth in net revenues and increased fees in Turkey. If with this, can I ask you to Slide 22, and this is all about our key positioning in the Eurozone in our Commercial and Personal Banking businesses. These are core to our integrated model contributing to significant cross-sell with CIB and IPS, as I mentioned at the start. There are also value-creating engines as illustrated by the healthy growth in fees year-on-year. All this is supported by our leadership in Europe, first in private banking and second, in the corporate segment. We saw again this quarter a strong increase in the net new cash from our Eurozone domestic networks. Our strong business with European corporates is also confirmed. As a reminder, more than 60% of gross operating income in the Eurozone from commercial and personal banking activities is done with corporate clients are key base. If with this, we go to the third division, IPS, and let's do this on Slide 23. During the second quarter, IPS revenues grew by 3%, or if I exclude real estate and principal investments, 6.5%. And this on the back of a very positive business momentum in insurance, asset management and wealth management. As of June 30, our total assets under management reached EUR1,312 billion or EUR1.3 trillion, and so this driven by a strong year-to-date organic asset growth of 6.8% and also a positive market effect. Starting -- if we look at the components within IPS and we start with insurance, revenues were up 5.2% year-on-year, and gross written premiums were up 10.8%. In savings, activity was sustained, thanks to a sharp increase of 11.6%, gross asset inflow and a good business momentum in France. We also saw good performance in protection, so the other part of the activities, thanks to the continued development of the offering and the contribution from new and existing partnerships. BNP Paribas Cardif has been very active in expanding these partnerships and we'll -- I will comment on it on the next slide. It has also enriched its product range with offers in individual protection or affinity, for example, in partnership with Orange. If we now turn to another part of IPS, Wealth Management and Asset Management, we saw a real dynamism in both businesses, with revenues up 6.1% and 9.8%, respectively. Supported by the relationship with high net worth clients, be they International or from our commercial and personal banking networks, Wealth Management saw strong net asset inflows of nearly EUR13 billion. This combined with a solid market performance to push overall assets under management up 7.6% in the first half of the year. Client transactions rebounded in all geographies, driving fees upward and interest revenues are holding up well. We were recognized as Western Europe's best bank for Wealth Management by Euromoney a testimony on our strong position in the Eurozone. Also a very strong quarter for asset management where it's worth noting that the sustained net inflows of EUR10.9 billion were driven by money market funds. On the downside, real estate is still contending with a very lackluster market environment. Overall, the growth in revenues was achieved with very good control of operating expenses, as you know, with efficiency measures and savings offsetting target investments, resulting in 2.9 jaws effect on the division. If I zoom in on Page 24, on the deep dive that we will do in insurance. So I mentioned there is a deep dive in September on EPS, so equity and Prime Services, there is also one on Insurance that is scheduled for the end of the year. And I remind you that we have a unique distribution model in insurance well balanced between, on one hand, our internal distribution channels, namely our networks and businesses and the external distribution network via a broad group of partners. Insurance is also benefiting from the group's integrated business model, thanks to transversal initiatives on savings supported -- or supporting the development of cross-sell opportunities with other divisions. In 2024, Insurance has provided us with a series of attractive opportunities in terms of development and a solid backbone to our capital redeployment strategy. So this has been a strategic avenue for development with several acquisitions, partnerships, such as stakes in Ageas, partnership with BCC Banca Iccrea and the acquisition of BCC Vita. Moreover, partnerships with Neuflize OBC and the acquisition of Neuflize Vie. These deals are very complementary with our existing presence and the expertise of insurance. Not only that, as you know, they are capital-light and enabled the bank to leverage on our great expertise in insurance, bank insurance and our strong capacity to develop partnerships. So that is what we do, what we will continue to do. And so the result of all this is a well-positioned insurance model supporting by two strong pillars, protection on one hand and savings on the other hand. So this basically sums up the divisions, and I now hand it back to Jean-Laurent for the conclusion.

Jean-Laurent Bonnafe: So we are now on Slide 25, 26. So thank you, Lars. To conclude, BNP Paribas performed very well in the second quarter with solid results from across the operating divisions. We confirm our trajectory for 2024 as well as the strength and agility of our diversified and integrated business model. As the leading bank fully dedicated to serving our clients, we are well positioned for the new phase of the economic cycle. Thank you for your attention, and we're now ready to take your questions.

Operator: [Operator Instructions] The first question is from Stefan Stalmann, Autonomous Research. Please go ahead.

Stefan Stalmann: Yes, good afternoon. Thank you very much for the call and for taking my questions. As you can imagine, my first question will be on equities trading. This phenomenal performance that you delivered also in comparison to your U.S. peers. I wanted to ask first on Slide 20, you show this Prime Brokerage balances, what do these balances actually show? Are those the assets under management of your Prime Brokerage clients? Are these deposits? Are these loans? And also, why has there been this sudden takeoff of these balances sometime last year? And maybe more broadly, I imagine you could say that the very strong performance comes from the fact that you have managed to integrate the parts of the Equity franchise in the last couple of years. Why do you think that has suddenly happened in the second quarter? Why has that not been a more gradual process of progress? And the second question I wanted to ask is about a media story the other day about a potential project of cooperation between BNP Asset Management and AXA Investment Management. Now I guess there's only so much you can say, but I'm curious whether you think this is something that is plausible in principle? Or would you just categorically rule something like this out. And if you were to look at something like this in asset management, would you insist that you own a majority in such a joint venture? Or would you also theoretically at least be willing to go below 15%? Thank you very much.

Lars Machenil: Stefan, thank you for your questions. Listen, on your second question, as you know, there is no comment here. You know that we have a process of bolting on activities we will not -- but we typically have no comment on these kind of rumors that are going around. On the second question on EPS. So there's two things. I remind you that indeed, we have been able to complete or set up with EPS. We've been able to have in 1 entity both the cash equities Exxon (NYSE:XOM), derivatives we already had and where we're able to bolt-on the Prime Brokerage services. So it all of a sudden, it basically means we have that overall setup. It's in one entity. You've seen we have the capital, we have the liquidity. Because indeed, the main consumption quote-unquote, in these kind of activities, it is not capital because all of these activities are completely hedged, but it is the leverage that you consume. So you basically consume the balance sheet with current pond to these activities. And so that's basically -- but again, we have the balance sheet, we have the leverage to basically do so. And so why the pickup? Well, the thing is if you go back a year ago, the demand for these kind of activities was relatively subdued. And so it is what we have seen in the second quarter of this year, we saw the pickup. And as there was this pickup as we are basically one of the few Eurozone banks that has the complete offering, that is why you saw that strong pickup in the second quarter. So Stefan, that will be our answers to your two questions.

Stefan Stalmann: Great. And the Prime Brokerage balances, could you maybe just clarify what they actually show?

Lars Machenil: Yes. So if you look at it, so if you have this kind of -- if you do these transactions, typically, the question is, do you consume a balance sheet that is handling a counterparty wants some exposure, and we basically provide that exposure on the balance sheet. And then we basically hedge it with hedged exposure, which is on the other side. And so then if you look at the risk-weighted assets, you basically look at those two exposures, you risk weight them and you basically compensate them because intrinsically, they are compensated. So that is why when it comes to capital, you don't consume it, but you consume that exposure or the exposure that you get. And therefore, what you need is you need leverage to have that covered.

Stefan Stalmann: Okay, great. Thank you very much. Thanks a lot.

Operator: The next question is from Chris Hallam at Goldman Sachs (NYSE:GS). Please go ahead.

Chris Hallam: Yes, thanks, everybody. So one quick one and then a bit of a longer follow-up. So just following on Stefan's question on Prime, is that step-up in the quarter sustainable for Q2, above a EUR1 billion quarterly run rate for revenues. Is there anything one-off in nature that you want to call out there? Or is that sort of a run rate we can build the business off through the back half of the year and heading into next year? And then secondly, again, a little bit about scale ambitions in asset management, specifically around private credit. When you think about the loan origination relationships you have the risk management capabilities you have inside and outside the CIB, the distribution network that you have and obviously the asset management expertise, do you see the growth of private credit more as an opportunity or as a threat for that business?

Lars Machenil: So again, on EPS, I mean basically, there are no one-off within that quarter. It's a quarter in which, I would say, the strength, the skills diversification of that specific business was very much, I would say, aligned with the underlying economy and market with the evolution, so it's global market business, so you cannot guarantee anything. It can go up and down within a certain year and from one year to another, but the strength of the platform yes, I would tend to say, you can see it all in the second quarter, the platform is being completed. It took some time, I would say, to the right market penetration and even with a certain market penetration, get the right amount, I would say, counterpart type of business from certain, I would say, counterparts. So now we are at the right level and still global market these are, I would say, volatile businesses. But well, there is nothing that can be, I would say, consider the one-off in that quarter, this is the result of the strategy. This is the result of the execution of that strategy. This is the result of the quality of the platform. And that is quite unique to some extent and not that many banks that and I would say, present this comprehensive approach in that equity dimension. So this is a huge number. But Basically, this is the power of the platform we can show in the second quarter that for a number of reasons was, I would say, the right one to express this strength. Looking at Asset Management, it's not particularly strike. We are partnering with a number, I would say, of counterpart in those domains. And clearly, asset management will also grow in that domain. So you cannot do everything, you cannot do anything. It's a complex situation, private credit, but yes, we will grow some in-house with our Asset Management platform, and we are partnering with third parties, we said, to do a better job with the balance sheet of the bank. It's also a way to optimize the balance sheet of the bank. So I would rather say that this is an opportunity rather than a strike.

Chris Hallam: Okay. Thank you.

Operator: The next question is from Flora Bocahut with Barclays (LON:BARC). Please go ahead.

Flora Bocahut: Yes, thank you. And good afternoon. There's two questions on my side, please. The first is regarding your Global Banking business where there was this quarter suddenly a strong increase in client loan balances. So I was wondering what drove this strong improvement, which we hadn't seen in quite a few quarters now. And also it seems to me like it has accelerated at the end of the quarter. And therefore, does that bode well for revenues in Global Banking into Q3 and Q4? The other question I wanted to ask you is regarding the RWA optimization plans from securitization, which you talked about in the previous quarter where you were highlighting that this is something you intend to use to partially offset the reconsolidation of Arval and the model update impact on your CET1. So is this something you've already started to do? Would that be done as synthetic risk transfers? What's your stand on this? Thank you.

Lars Machenil: Flora, thank you for your questions. If I start with Global Banking, yes, Global Banking, you've seen the strong results. And so we have in their capital markets and also transaction banking. And what we do see is that there was indeed a strong demand in Europe, but let's not forget, on top of that, we not only provide this kind of intrinsic strongly European, but we also provide the corridors into the U.S. and Asia. And so that is what we have seen. And so to that also leads to a step up of the balance sheet that go with it. And then that basically links into your second question, when it comes to the securitization in general that we do related to the RWAs. So indeed, part of what we are doing is optimizing the RWAs. But don't get me wrong. You're talking to a frugal CFO, so we look at the right prices, and so we're not basically in a rush. We're looking at the prices and with a bit what we saw in the first half of the year, we think the opportunities to do it at the appropriate price are better in the second half. So we will do what we have intended to do. But yes, it will be shifted a bit towards the end of the year for these reasons.

Flora Bocahut: Okay, thank you.

Operator: The next question is from Tarik El Mejjad, Bank of America (NYSE:BAC). Please go ahead.

Tarik El Mejjad: Hi. Hello, everyone. Two questions, please. First of all, at the beginning of the year, I mean, it was clear that 2024 would be too speed year, slow first half and a better second half. For all the reasons we know and you discussed today, both on top-down but also specific like hedging, Belgium, et cetera. And I'm factoring here the seasonality effects as well. So Lars, you suggested that all the numbers in Q2 and Q1 sounded sustainable and no one off there. So first half came much stronger, not only on track to reach your target, but also exceeded the margin, I guess. So why not updating the targets for the full year in this quarter? Or are we missing a big negative moving part. So maybe you can take us through what can be repeated or not? And second question on capital. I just want to clarify, the 12% target in 2025, this is Basel 4 without the FRTB impact but -- and assuming that you redeploy the whole excess capital left. So the question is, I mean, do you confirm that? But secondly, have you budgeted any on-site inspection effects there? And for the FRTB, do you assume this is delayed? Or what's the chances that should be canceled altogether? Because you didn't mention FRTB in 2026, you just basically excluded it from your Basel 4 impacts. Thank you.

Jean-Laurent Bonnafe: I'll start with your 12% capital on 2025. So indeed, your understanding is correct. Let's be fair. I mean, you know is, on one hand, we optimize capital, yes. I don't want to be sitting over the longer term on capital that is not used. And when it comes to things like [indiscernible] and whatever that you have, so basically reviews by the supervisor or updates on the regulation, we basically handle those, yes. Tarik, I typically ask where have you been the last couple of 10 years. But I think I know where you've been, and you've seen that we have basically been always able to optimize and to be at the right level of capital. So that is basically what we will do on the capital. And then when it comes to the FRTB, yes, listen, you know, the European tax when they translated Basel into legal tax, they basically said that when it comes to the FRTB, they have to align with the U.S. And I don't know if you have been listening to what the U.S. has been saying, but some parties within the Fed are basically saying that it is that they will have an evolution of regulation, but that it should not lead to any capital increase related to that. And so that is what Europe has said. If you look at the tax, Europe has basically delayed the FRTB, not just delaying for delaying, but delaying to see what the U.S. is doing and aligning it on that. And so intrinsically, that's the best thing is that we have a level playing field. And so maybe we'll see what form it takes. And so that's what it basically is. And then on your results, listen, we basically guided that 2014 would have a bottom line superior than the one of last year. When we spoke a couple of months ago, not all of you were entirely convinced of that. And maybe the second quarter results indicates the pivotal point of that. Tarik, those would be my answers.

Tarik El Mejjad: Well, I mean, I was hoping for a bit more on the -- on your second answer, to be fair. I mean, if we go into the dynamics for the divisions, all the hedges will be going away, the Belgium drug, the -- I mean when we met with Jean, few months ago was suggesting second half is -- will be the second half for CIB. We had already extraordinary Q2. The volumes are picking up. Personal Finance is doing better. I mean overall. So I mean, consoles already moved to 11.2%. So you're already convinced actually most of the markets that you can do 11.2%. My question is more how much margin we can hope for, I mean on my numbers, but I mean I'm surprise because that could be a big margin to what you think you've communicated to the market?

Lars Machenil: Tarik, there are several things. I'll put it this way. There are several things that you see that we are pounding well. Yes. I mentioned that the tax -- the income tax base will be lower. You can basically see that the results are very solid. Moreover, Remember, when we basically said, we confirmed the targets rolling into 2025. And if you confirm the targets rolling into 2025, we also said that it would not be a opstick evolution. So I think that you see the evolution. Listen, we are not a bank that gives a forward guidance every quarter, yes, but you see the trajectory for the second quarter is clearly in line with improving the results and which is in line with the trajectory we put out for 2025.

Tarik El Mejjad: Okay, thank you very much, Lars.

Operator: The next question is from Anke Reingen, RBC (TSX:RY). Please go ahead.

Anke Reingen: Yes, thank you very much for taking my questions. The first one is actually a follow-up to Tarik's question about the 12.0% at year-end 2025. Just to confirm, it's not -- I mean everything else being equal, you could call it now 12.3%, but I guess that's just rounding and we shouldn't interpret that as there's a negative now running against the EUR30 billion -- the benefit from the FRTB delay? And then secondly, I'm not sure if you want to say anything, but about the Bloomberg report about the ECB potentially asking the banks to book additional provisions on the leveraged finance exposures. And I just wondered if you have any concerns on that aspect. And can you just confirm, do you still have a capital add-on related to your leveraged finance exposure? Thank you very much.

Lars Machenil: Okay. So first of all, let me come back to the 12%. You know we are through. So we basically said our objective is 12%, and that's where we fly. So if we are above and we have opportunities to redeploy it, we will do so, yes. So from that point of view, we have -- we reconfirmed that in any case, we will be respecting that 12%. And if whatever capital we have, we will make it redeployed as fast as we can. So that's basically on that one. When it comes to the ECB, the ECB is doing all kinds of reviews. They're doing all these, they're doing kind of review of stress tests and the likes. And when it comes to leverage finance, they are having a reflection of what things could be in a stressed kind of environment. So that is what they are doing. That reflection is ongoing. There is not much more, I can say about that.

Anke Reingen: And do you also can comment if you have a capital add-on for leveraged finance?

Lars Machenil: Listen, the SREP is due to end of the year. So we'll give you an update at that time.

Anke Reingen: Okay, thank you.

Operator: The next question is from Aurora -- Giulia Aurora Miotto, Morgan Stanley (NYSE:MS). Please go ahead.

Giulia Miotto: Yes, hi. Good afternoon. Two questions from me as well. The first one to change topic is on asset quality. Cost of risk was quite high in France. I understand this was related to one specific file. But if I look at industry data across France, Belgium is where bankruptcies are ticking higher. So I am wondering, if there is anything you see in that point to deterioration in asset quality. And perhaps if you can remind us of how much overlays you still have? So that will be my first question. And then secondly, in terms of margins, in particular, lending margins, how are you seeing those in your different markets, France, Belgium, Italy and on the corporate side on a European levels. Thank you.

Jean-Laurent Bonnafe: Giulia, thank you for your questions. Well, if you look at the asset quality, as a quick reminder, the core of the businesses that we do are rather on the corporate, the large mid-sized companies and so forth. So that's the first thing that you see. And when you talk to them and you see what they're doing, the word I would coin is they are cautiously optimistic. And so indeed, that's what you see in our cost of risk. If you look at our cost of risk, if you exclude that one, that one file, you are basically at 29 basis points over outstanding, which is coherent with the last quarter. And so what I mean that one file, you can always have an idiosyncratic fall. That doesn't mean that there is an overall trend that you see. Again, on the corporate. If there is one point of attention that we follow, it's rather on the individual side, yes, if you look at our personal finance, which is where the core of our individual clients are. And as you know, we have been shifting out of the non-kind of collateralized kind of activities in the car financing, which are also, therefore, collateralized by the car. And you would have expected that the cost of risk would be gliding towards that one of the car financing. And what you see is our cost of risk in basis points is basically stable, even up a couple of basis points. So if there is one point of attention, is that consumer side that one has to keep an eye on in the asset quality. But again, for us, that is not the main set of our clients. On the lending margin, if we look at it, so the lending margin when it comes to the core of what we do on the corporates and the likes, we are in the appropriate margin. So I remind you, when you have the corporate side, when you -- when corporate deposit money or they take loans, the margins that we do is basically this ESTR. You look at what the ESTR rate is and you do a markup in both cases. So you don't price assets towards liabilities. And so the margins are basically fine. When you look into the other activities, let's take mortgages and particularly in the countries where you are you know that well, the mortgages are fixed rate, yes. So everything is to do with what the new loans are doing. And what you see in the countries where we are, like in France and Belgium, we are facing banking environment where, yes, the competition is stiff on mortgages. And so there, the margins are tight because of that. So that's a bit the two things. So the corporate ones again, they are ESTR-based and with a margin which holds. And on the mortgages, that's basically the competitive pressure that we see.

Giulia Miotto: Thanks.

Operator: The next question is from Delphine Lee, JPMorgan (NYSE:JPM). Please go ahead.

Delphine Lee: Yes, good afternoon. Thanks for taking my questions. So my first question is French retail. It seems like it's the only geography, where NII is still down. Just wondering where we would see a little bit of an inflection point. If you could give us a bit of more color on the trends and what you're currently seeing maybe and why we could see that improvement? And on Personal Finance, my second question, the margins are still under quite a bit of pressure. But now that the ECB start cutting rates, should we get a bit more relief in the second half? If you could also provide a bit of color on the trends there? Thank you very much.

Jean-Laurent Bonnafe: Yes. So on the French retail, the NII is quite complex, I would say, to look at because of a number of factors, [AL AM] (ph), headwinds, and even that quarter specific, I would say, impact in the range of EUR30 million negative impact. So totally specific to that quarter. So the best way to look at the French retail, this is, again, not a French retail bank. It is not a French retail. This is why also it's a bit complex to look at. It's very much mid-caps, SMEs, private banking. This is quite different as I would say, as a P&L compared to savings and loans type of banking operations. So, if you look at the top line, roughly -- taking out the headwinds this quarter is up by 0.7%. And in reality, if you neutralize this negative impact, we are not mentioning in the financial communication, it's above 2%, clearly. If you look at the top line for this year 2024, including headwinds, because headwinds, unfortunately, exist were going to be above 1%. And if you neutralize headwinds, looking at that year, we are going to be above 3%. So the intrinsic, I would say, evolution of the domestic bank is in the range of 3% plus this year and unfortunately because of the headwinds, it's somewhere above 1%. And if you look at clearly, next year, I would say, growth will be in the range of 4%, even 5%. So this is the best way to look at the domestic French bank and cannot be just looked at on one side, fee business and the NII. There's a number of, I would say, ways that are, I would say, connecting those two dimensions. So again, for that year, 1% minimum top line, neutralizing the headwinds above 3%. And next year, we're going to be in the range of 4% to 5%. And again, this quarter is quite specific. The reality of the interesting underlying business is reserve 2.5% than even 0.7% that is just neutralizing the regular headwind. So this is for France.

Delphine Lee: And that EUR30 million is in one-off is in net interest income?

Jean-Laurent Bonnafe: It's.

Lars Machenil: Yes, it's a net interest income.

Jean-Laurent Bonnafe: Yes, of course, yes.

Lars Machenil: It's basically a value reduction in a participation, Delphine. That's what it is.

Delphine Lee: Thanks a lot.

Jean-Laurent Bonnafe: And Delphine on PF, indeed, I mean, if rates would come down that would basically lead or trigger to a more optimized pricing. So that would be a positive effect for Personal Finance.

Delphine Lee: Great. Thank you so much for the color. Thank you.

Operator: The next question is from Sharath Kumar at Deutsche Bank (ETR:DBKGn). Please go ahead.

Sharath Kumar: Good afternoon. Thank you for taking my questions. Two please, both on your specialized businesses. Firstly, on Arval and Leasing Solutions. I thought the results were more resilient than what the headline numbers indicate, particularly around volume growth and leasing and service margins. Obviously, I think the comps get a little bit better in the second half, but can you grow a bit more -- can you decompose the results into these various components, be it Leasing Services margins? And used car results? And what do you see in terms of outlook there? That's the first one. The second one is on Personal Finance. Agree, there are a lot of ongoing perimeter changes, by when can we expect all of these runoff activities to be completed. Still, there are a few countries like Romania, Brazil Nordic countries. I know previously, you had indicated a broadly breakeven P&L level for these disposals, but can you indicate the share of loans or RWA from these? Thank you.

Lars Machenil: Thank you for your questions. So listen, on Arval and Leasing, I mean, don't get us wrong, but given the fact of all the divisions that we have, we don't carve up the segments that we have. So basically, Arval and Leasing is one. And then Arval and Leasing, if you wish, intrinsically, when you look at the volume growth, the finance growth, the services that we provide, all these are -- but indeed, the one thing which is weighing on it is the resale value of the car. So you know the dynamic, the resale value of the car is in mark-to-market. So it hits the bottom line while the top line in this case immediately, whereas the growing of the financing of the new cars is basically accruing over time. And so that basically means if you take an average of car lease four years, and so if you take half of the (inaudible), that's two years, we're basically, well, two, three quarters into that process. So that effect of the weighing that you see on the top line will continue for the next couple of quarters. So that's on Arval and Leasing. And then indeed, the compensation will come from the turnaround that we're having at Personal Finance. So what we've guided for. So as a reminder, what we keep on doing in Personal Finance is basically the Eurozone and the UK activities, where we have the opportunities to cross-sell massively towards our clients. And so there are activities where we were more mono product like in Eastern Europe and like in Brazil, we are getting out. And the getting out means we can be ramping it down, we can be selling it. We can be selling parts of it, but all that takes indeed time because you need authorities or you need the ramping down and what have you not. And so if you look at it, yes, we said that in the bottom line, it's breakeven. But of course, it basically means it's breakeven because there is still revenues and there are still costs and they both tapering off. So that's the dynamic. And we basically said, if you look at the balance sheet, it was roughly a third of the balance, it is a third of the balance sheet that we are considering as non-core and that we are winding down. So those would be the two answers.

Sharath Kumar: Thank you.

Operator: The next question is from Pierre Chedeville, CIC. Please go ahead.

Pierre Chedeville: Yes, good afternoon. I have one question regarding the integrated model and the cooperation between Cardif and BNP IM. I was wondering if you could increase the assets from Cardif being managed by BNP IM because as far as I understand, it's not the case or partially not the case. And maybe as you mentioned, the fact that you want to partnership to develop BNP IM platforms, it would be an ID. And I was wondering what was your point of view on this point? And my second question is regarding the profitability, which is not present in the presentation, I mean the main presentation. Generally, you mentioned your profitability, which is relatively good. And I was wondering why this time we do not present it because I don't think that you are ashamed of it. So could you explain us why it's not present? And last question is regarding CPBS. I'm not sure it's a good level to see it. But when I look at the loan-to-deposit ratio, it is at 88%. And I was wondering if it meets internal criteria for this ratio for you? Is it above, is it below? And what is your policy regarding the loan-to-deposit ratio? Thank you very much.

Jean-Laurent Bonnafe: On the first point, clearly, I would say the situation is not to stay for too long period of time, and we will have, to some extent, to integrate the two approaches so far, Cardif remain in a kind of a stand-alone basis and probably looking ahead films are going to be managed by the asset management from BNP Paribas. So it's a natural evolution. It's already, I would say, the loop we're moving and probably we will move quite soon. So it's something that is taken and we will change the way we operate within the -- which said the one year to come. The second point, Lars, you want to?

Lars Machenil: Yes. The second point is, I'm sorry that the profitability has been moving a bit deeper in the slide. Listen, we have been adapting our presentation. We have been adapting our press release. So I take it overall, I hear positive comments that it is better to read. If your comment is that we should bring the RoTE back forth, I'll take note of it, we'll do so. And when it comes to your loans to deposits, the thing is intrinsically loan to deposits is not a metric as a group that means something. What I mean by that, it all depends how an economy finance itself and how the economy works when it comes to loan to deposits. We have some extremes like the Belgium are sitting on truckloads of deposits, whereas in France, the financing is done in other way with assurance via and what have you not. So intrinsically, as a group level, having a specific loan-to-deposit is not something that is an intrinsic metric for us. We want to make sure that the overall financing, the reserves that we have available are fine, and that is the key metric, not a loan to deposits. So Pierre, that would be the answers to your questions.

Pierre Chedeville: Thank you very much.

Operator: The next question is from Kiri Vijayarajah, HSBC. Please go ahead.

Kiri Vijayarajah: Yes, good afternoon everyone. A couple of questions from my side. So firstly, one of your competitors that reported today flagged or deterioration in U.S. commercial real estate in our outlook for the second half. And I know you're your exposure to the U.S. CRE is fairly small. But is that something that's concerning you from your side or -- and actually, also, could we just have some -- just broader color on how that derisking in the real estate finance unit has been going as well? And then secondly, to come back to the FRTB, operationally, how should we think about that 30 bps of FRTB related capital. So hypothetically, what I mean is if the FRTB never gets implemented, is that extra capital that you'll hand over to global markets for them to reinvest in the trading business, or is there a possibility for you to maybe ring-fence that and at some point return it to shareholders once we get clarity? I know there's lots of moving parts for 2026 onwards. But really, what are the scenarios that are on the table on what happens to that 30 bps of capital if the FRTB never happens? Thank you.

Lars Machenil: Kiri, thank you for your questions. So listen, on U.S. commercial real estate, we had a EUR7 billion exposure that we basically sold it. So my view on the U.S. commercial real estate, honestly, we are not a bellwether for that, so we are not the one. So if you look at it in Europe, listen, those kind of activities, we have a small portfolio. We do it in the areas that we know, and so that's basically fine. It's a point of attention, but it is not something else. On the FRTB, so the 30 basis points. Yes. So imagine that, in the end, the U.S. would not implement it and that Europe would follow and those 30 basis points would be there. As you know, the sequence I follow when it comes to capital. So for me, the most efficient way to redeploy capital is organic. So I give it because it's organic. I know where it goes. I can do it at marginal cost. I can do it at scale. So that's ideally. If that would not be possible, then the next thing is, if I can find a frugal bolt-on acquisition then that is basically what I would look for. If none of those things would be on the horizon, and I would pick up my phone to see how to return it. Kiri, that will be my answers.

Kiri Vijayarajah: Great. Thanks, Lars.

Jean-Laurent Bonnafe: That's again -- looking at the quality of the platform globally, it's much better to invest.

Kiri Vijayarajah: Organically?

Jean-Laurent Bonnafe: Organically, saying nice.

Lars Machenil: Or inorganically? So Kiri, listen, you understand our point of view. I mean, we have seen in the past that it is much more efficient. So you get like 15% and more yield on what we do in the activities that we have or that we can do. And so we haven't so far been running out of these options.

Kiri Vijayarajah: Great. Got it. Thank you.

Operator: The next question is from Azzurra Guelfi, Citi. Please go ahead.

Azzurra Guelfi: Hi, good afternoon. Two questions from me. When I look at the loan growth. I see trends that are quite different between Italy, particularly in the corporate space. And in Belgium, why is that you have started to see some lending growth. And I just wanted to know if there was any particular trends that we should be aware in terms of strategy in the area. And the second question is a little bit more generic. I know France is not a big group, but there has been quite a lot of volatility in the political environment in France. Do you expect if there is continuous uncertainty that this could impact the activities in France in terms of volume recovery or savings? Thank you.

Lars Machenil: About France, I mean, you know that globally, I would say, the bank is, first of all, our European platform, France and, let's say, domestic France is relatively small looking at the net result. I mean looking at the so-called domestic French bank, the total contribution is well below 10%. And most of that is not epically related to, I would say, domestic economy. I mean, many, many counterparts that are to belong to the private bank, wealth management, international SMEs, mid-caps, large cap. So I'm not saying we are immune, but well, the impact overall, there were an impact at the end of the day would be quite marginal. Obviously, if you look at France globally, I would say, unstability the political dimension is not great for any countries also certainly after the Olympic games, this will come to an end. There will be a new government account of coalition, a new program probably looking at the distribution of the parliament is going to be very much, I would say, balance because it has to be that way. There is no other option. So it's difficult to understand who is going to be the Prime Minister, who is going to be the Minister for Finance and so on and so on, but it's not that very difficult to understand that at the end of the day, this country needs additional discipline in terms of public spending. The country will have to comply with a number of norms. And that's it. And as for BNP Paribas, so far, we do not see anything really material for the growth of the platform or for the risk profile of the platform because of the, I'd say, the business model of BNP Paribas in that country.

Lars Machenil: And in particular, Azzurra, let's be fair. I mean, BNP Paribas, we have 70% of the balance sheet in Europe. And if I can use a bit of the scientific language, the signal in Europe is that growth is picking up. And so that is what we are ready to accompany and ready to capture as well. And then indeed, you see in some countries, there is some political uncertainty and that indeed to some noise around that signal. But the one thing that is important is the underlying signal, which is positive and which we had BNP Paribas time to profit from. And then on your question on loan growth as well. You know there is a couple of things. When -- again, whenever you look at our figures, you basically see them with what we are doing. And so yes, you do see in Belgium that there is a pickup, and we are accompanying that pickup. And you might remember that in Italy, we have decided to remain focused on, let's say, the international kind of oriented companies that we do continue to do business with, but we are reducing a bit the kind of heritage loan portfolio that we have. And so that is why you see this different trend between Belgium and Italy. So Azzurra, that would be our answers to your questions. Operator, are you still there?

Operator: Excuse me, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Jean-Laurent Bonnafe: So thank you very much for your question. We already said it. I mean we're going to post this year net results that are going to be above last year. We are not revisiting the guidance because there is no need revised the guidance every quarter or the semester. But clearly, the trend is quite positive. And there is no doubt, I hope in your minds that we are going to beat last year results. And now we are very much, I would say, focused on how far we can go and how strong debit can be. So this is the situation why in, and this is quite positive and quite pleasant comparing to the six months ago. So fair enough, the model is moving having good successes in a number of domains. There are some domestic, especially France that is under pressure because of a number of headwinds like Belgium. This is going to, I would say, to pass away, if I may. And next year is going to be another Europe. But meanwhile, for 2024, we will deliver what we, I would say, promise and probably in a more aggressive way than anticipated. So this is it. Thank you very much again. And well, let's see what will happen for the second half of that year. Have a nice summer.

Lars Machenil: Good Olympic Games.

Jean-Laurent Bonnafe: Good Olympic Games, if you take the risk. I mean, Paris is becoming quite complex those days. So good luck if you are coming to Paris. Thank you so much.

Operator: Ladies and gentlemen, this concludes the call of BNP Paribas second quarter 2024 results. A replay of the webcast is available at Invest dot bnpparibas.com. Thank you for participating. You may now disconnect.

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