Societe Generale SA

PAR:GLE

Good morning, everyone, and thank you for joining us today. I am very pleased to be here with you to present, together with Leo, our first quarter results. I am happy with our performance this quarter, and I am proud of the work and commitment from all of the SG teams. We still have a lot of work ahead of us, but our renewed ability to execute consistently and with discipline makes me confident that we will continue to build on our strong momentum.

The environment is uncertain for sure, and our progress will not always advance in a straight line, but it will be consistent and predictable. We have taken what was once merely our aspirations and transformed them into a tangible execution track record. Since the CMD, the results we delivered continue to get better. Our strategy is paying off. Revenues are up by 10%, excluding asset disposals. This is above our full year target of more than 3% growth. We committed to at least a 1% cost reduction, excluding disposals. The reality is we did better than that, reducing costs by more than 4% in Q1. As a result, we reached a cost-to-income of 65% this quarter. This compares with our target of less than 66% by year-end. That's an improvement of 10 percentage points versus Q1 '24. In addition, if the taxes that are entirely accounted for in Q1 were spread equally during the year, the cost-to-income ratio would stand at 62% this quarter. Our cost of risk is low and remains below our guidance range at 23 basis points.

Leo will give you more details, but I would like to flag that it includes an increase in our S1 provisions, reflecting our cautious stance in the current context. And all this leads to a sharp improvement in our ROTE that has climbed to 11%, well ahead of our end of year guidance of more than 8%.

If we restate from around EUR 200 million of gains on asset disposals booked this quarter and if we consider a quarterly linear distribution of taxes, the ROTE remains at 10.9%, well above the guidance. And finally, and you know this is at the heart of our strategy, we have a strong capital position with a CET1 ratio of 13.4% post Basel IV implementation, once again ahead of our year-end target. This is a strong set of results. And as you will see on the next slide, we are in a good position to navigate in the current context.

Risk management is crucial in our business, whatever the environment. And if we filter out the daily noise and focus on what matters here, a couple of things could happen. The first is a global macroeconomic slowdown linked to the disruption of the international trade order. And the second is prolonged market volatility linked to the deep uncertainty. These two factors could trigger a multitude of scenarios, but whichever one ultimately emerges, we are confident in our ability to successfully navigate through it.

And my confidence stems from three of our strengths. First is our capital position with the CET1 ratio at 13.4%, which translates into a buffer of around 320 basis points over MDA. Second is our diversification. We are a very diversified bank in terms of revenue sources, in terms of geographies. And by the way, as you can see, many of our core countries are among the least affected by the tariff risk. And in terms of industry sector with a maximum sector concentration of 3.2% of our EAD and an average of 2.7% for the top 5 sectors. Third is risk management. We have a strong track record in terms of credit risk management. And within our market activities, we're benefiting from the deep repositioning and restructuring we did 4 years ago.

As a matter of strategic policy, we maintain in this business a low-risk profile as we maintain our focus on stable client revenue generation at a fraction of the risks we used to take on.

After a month operating in the current climate, we can make two key statements. One, we don't see any signs at this point of deterioration in our asset quality, and we have a robust inventory of S1, S2 provisions that we just further increased. Two, market volatility has been rather supportive so far, and we remain confident in the future performance of the Global Markets business.

Finally, I think it's also very important to stress that in the current environment, the need for what we provide will not change, financing, hedging, mobility services and advisory services across the board. New opportunities arise, particularly within Europe, and we are well positioned to capture them.

Now let me hand over to Leo to go through the Q1 '25 financial performance.

Thank you, Slawomir, and good morning, everyone. Moving on with the presentation on Slide 6, we show the key drivers of our strong revenue growth in Q1 '25. The group reported a solid 6.6% increase in revenues versus Q1 '24 and growth is even higher at 10.2% when adjusting for 2024 asset disposals, which amounts to EUR 219 million, mainly Morocco SGEF or private banking, both in Switzerland and the U.K. Excluding these disposals, this is comparing the same perimeter, revenues in French retail, private banking and insurance increased by 16.5%. While if we also exclude the drag from short-term hedges in Q1 '24, the increase stands at 2.5%, supported by fee income. Revenues at Global Banking and Investor Solutions increased by 10% over Q1 '24, driven by conducive market conditions, particularly in equities, as well as in financing and advisory. Lastly, revenues in Mobility, International Retail Banking and Financial Services grew by 0.8% versus Q1 '24, again, when excluding disposals.

Turning to the next slide, we can see the achieved cost reduction in the quarter, driven by the improvement in all our operating leverages. Expenses fell by 7.6% between Q1 '24 and Q1 '25, confirming our firm cost discipline. This is equivalent to minus 4.4% reduction, including disposals. The reduction is driven by lower transformation charges by EUR 278 million as guided, which offsets the increase in the following perimeter and inflationary elements. On the one hand, we had higher taxes on higher variable compensation in 2024, which accounted for EUR 29 million. This last quarter of the Bernstein perimeter impact, which is EUR 22 million, given that it was not part of the bank in Q1 '24. And M&A transaction costs stand at EUR 5 million.

As a result, we managed to improve the operating leverage of all businesses, as shown on the right-hand side of the slide, with particular attention to RPBI's evolution, which reduces its cost to income by 18 percentage points. The group cost-to-income ratio, as Slawomir was commenting before, falls 10 percentage points from 75% in Q1 '24 to 65% in Q1 '25, ahead of our 66% 2025 target.

Moving on to asset quality on Slide 8. The cost of risk in Q1 '25 remains contained at 23 basis points, in line with last quarter and 4 basis points below Q1 '24. This quarter was largely driven by Stage 3 provisions, which account for EUR 330 million out of the total EUR 344 million charges in Q1 '25.

In parallel, total outstanding Stage 1 and Stage 2 provisions remain high at EUR 3.1 billion. The balance is stable from the last quarter and falls slightly from Q1 '24 due to asset disposals, mainly Morocco and SGEF. Stage 2 provisions, in particular, represent 4.7% of the corresponding Stage 2 stock of loans. The asset quality remains sound with NPL ratio at 2.82% in Q1 '25 and stable from last quarter. And also, the net coverage ratio stayed solid at 82% in Q1, up 1 percentage point from Q4 '24.

Let's now turn to capital on Slide 9, where we can see our strong organic capital generation capacity. The CET1 ratio reached 13.4% in Q1 '25, which is 300 basis points above MDA. It represents an increase of 10 basis points versus the end of 2024, having absorbed this quarter the Basel IV impact. This 10 basis point increase is explained from left to right in the slide by returned earnings, which represent 18 basis points after accruing 50% payout. The positive impact from asset disposals, which are 43 basis points this quarter, which includes SGEF as well as private banking in Switzerland and the U.K. while on the other hand, the implementation of Basel IV had a negative impact of 48 basis points as guided. And finally, other impacts are broadly neutral this quarter with a 2 basis point impact.

Once again, our strong capital ratio sits comfortably above 13% target, which shows a discipline and strong capital management quarter after quarter. In addition, as you can see at the bottom right-hand side of the slide, all capital ratios are comfortably above the regulatory requirements.

Let's review the liquidity profile of the group in Slide 10. We have a strong liquidity profile. LCR ratio stands at 140% and NSFR ratio is 115% at the end of Q1 '25. Both ratios are well above regulatory requirements. Moreover, liquidity reserves is at EUR 316 billion, with 53% of them being cash at central banks. 54% of our long-term funding program has already been executed, including most of the subordinated issuances on the back of strong ratings from all agencies. The deposit base remains granular and diversified. It decreased by around 3% from last quarter, in line with our steering targets and string management of liquidity buffers. And finally, the loan-to-deposit ratio stands at 77% at group level.

In Slide 11, we show a summary of the P&L for the group, which we will cover in more detail in the next slides.

Let's move then to the business performance on Slide 13, starting with SocGen's network, private banking and insurance. In Q1 '25, loans outstanding decreased by 3% compared with last year or by minus 1.8% if we exclude state guaranteed loans, PGEs. This said, home loan production is increasing strongly this quarter, thanks to a strong commercial momentum, and it's up 115% versus the figures of Q1 '24. Deposits are broadly stable, is only minus 1% versus Q1 '24, which is reflected in the continued shift of inflows to private banking and life insurance products.

As a matter of fact in this regard, AUMs in private banking represent EUR 130 billion, having increased by 6% versus Q1 '24 if we adjust for asset disposals or EUR 4 billion this first quarter. On the other hand, life insurance outstanding grew by 5% versus Q1 '24, reaching EUR 148 billion, thanks to the continuation of the strong inflows. It actually increases EUR 2 billion in the quarter.

Moving on to BoursoBank. Once again, in Q1, the bank maintained a high acquisition pace, gathering 458,000 new clients and reaching 7.6 million total clients. In terms of client satisfaction, BoursoBank remains #1 in the French banking sector and was also recognized as best digital bank in France in January this year. At the same time, assets under administration, this is deposits and financial savings, improved further by 15% versus Q1 '24, reaching a total of EUR 67 billion, which shows that BoursoBank deposit gathering remains very strong. Similarly, gross inflows in life insurance increased by 25% from Q1 '24 with a high share of unit-linked products representing 57% of the total. Note that the bank posted a new quarterly record in brokerage volumes with 3 million market orders executed in Q1 '25. On the lending side, total outstanding loans grew by 7% versus Q1 '24.

Moving to the pillar level for French Retail, Private Banking and Insurance on Slide 15. I would like to stress the very positive evolution of the cost-to-income ratio, which goes down 18 percentage points from 86% in Q1 '24 to 68% in Q1 '25. This movement is driven by the sound 16.5% increase in revenues when excluding disposals and the strict cost management seen in the total expenses decrease of 6.6%, again, when excluding disposals. In the bottom part of the P&L, we can see the cost of risk came at 29 basis points, significantly lower than the 41 basis points in Q1 '24. All this translates into a net income of EUR 421 million, equivalent to a ROE of 9.5% for the quarter.

Turning now on to Markets, Global Markets and Investor Services on Slide 16. We report another solid quarter with Q1 '25 total revenues for GIS up 10% from Q1 '24. Starting with Global Markets, we had a strong Q1, both versus an already high base in Q1 '24. This can be seen in the 10.9% increase in revenues, which reached EUR 1.8 billion. Equities, in particular, posted a record quarter with revenues up by 22% versus Q1 '24. The sound performance was supported by the increased volatility during the quarter, which drove an increase in client flows. And we saw particularly high volumes on equity-listed products and flows activities. Client volumes remained also strong in derivatives, supporting a strong performance this quarter as well.

FIC revenues fell by 2.4% versus Q1 '24 on the back of lower client activity and rates on rates investment solutions. The performance this quarter also reflects some margin compression in financing activities. Having said that, we do note that ForEx and rate flow performed well, benefiting from the increased volatility in the market. Lastly, in Securities Services, revenues grew slightly by 1.4%, supported by strong client distribution fees.

Let's move on to Slide 17. Financing and Advisory delivered a strong quarter with total revenues of EUR 972 million, up 10% versus Q1 '24. Global Banking and Advisory performed well with revenues up 10.5% versus Q1 '24, notably thanks to a robust performance in asset finance, steady results in asset-backed products despite less conducive market conditions and resilient performance in M&A and DCM. Transaction Banking revenues grew by 8.7%, thanks to a solid organic growth of payment volumes with institutional clients and good commercial performance on the corporate franchise.

All in all, GBIS had another sound quarter with total revenues reaching EUR 2.9 billion and growing 10% versus Q1 '24. We maintained a strong cost discipline, keeping expenses flat in the quarter, and this combination translates into a sound positive jaws. Again, the cost-to-income ratio decreased by 6 percentage points from 67% in Q1 '24 to the current 61% in Q1 '25. The cost of risk remained low at 13 basis points. And as a result of all this, GBIS delivered a net income contribution of EUR 856 million in the quarter, equivalent to an 18.7% growth.

Focusing now on International Retail. Overall, revenues grew by 2% in Q1 compared to Q1 '24 at constant exchange rates and perimeter. And this was driven by the strong performance in Europe where we saw loans up by 6% versus Q1 '24, notably in home loans, while deposits increased slightly by 1%, driven by Romania. Revenues growth was robust, up 5%, thanks to both NII and fees. Performance in Africa has been more stable. Loans were broadly flat year-on-year with a mixed momentum across geographies. Outstanding deposits, on the other hand, grew by 2%, driven by site deposits from corporate clients.

Turning now to Mobility and Financial Services. Ayvens' revenues were stable versus Q1 '24 with increasing margins. Earning assets grew by 1.4%. Margins increased by 40 basis points to 562 basis points, and both drivers offset the continued expected normalization of used car sales results per unit, which fell to EUR 1,229 versus EUR 1,661 in Q1 '24. Cost-to-income ratio stands at 58%, which is well in line with the guidance for '25. On the other hand, consumer finance revenues were stable in Q1 '25, with loans still falling by 3%, but at a slower pace.

All in all, the pillar of Mobility, International Retail and Financial Services posted an increase in net income of 14.5% or 24.4% when adjusting the perimeter, reaching a RONE of 11.2% in Q1 '25. This reflects disciplined cost management and lower cost of risk. The cost-to-income ratio improved 3 percentage points from 62.5% in Q1 '24 to the current 59% in Q1 '25. Revenues grew 1.1% at constant perimeter and exchange rate, driven by international retail in Europe, while they're down 7.4% versus the full numbers in Q1 '24 because of the perimeter changes. Cost increased slightly, reaping the benefits from a strict discipline, 4.8% at constant perimeter and exchange rates. And cost of risk of 31 basis points in Q1, it's down from 43 basis points in Q1 '25.

To conclude the financial performance, let's move to Slide 22 with Corporate Center. In Q1 '25, Corporate Center was close to breakeven with a net profit of EUR 12 million. And this benefited from, on the one hand, the negative results in NBI, which improved versus Q1 '24, thanks to management actions and to a more efficient use of excess liquidity. operating expenses, which fell from Q1 due to lower transformation charges. And in addition, in Q1 '25, it includes the accounting impacts from asset disposals of SGEF and private banking in Switzerland and U.K. This was booked in the net profits or other losses -- other losses from other assets line, and it amounted to EUR 200 million.

I will now give back the floor to Slawomir.

Thank you, Leo. I'd like to say a few words about the delivery of our ESG road map. We continue to move forward in line with our commitments and ambitions. And here, what truly matters are the emissions trajectories of our financing portfolios over time. And as you can see, they are going down substantially.

In the long term, nothing has changed. Global warming and energy transition challenges will persist, and we are progressing with the decarbonization of our portfolios, and we are supporting the financing of the energy transition. Through our policies and actions, we have received very good ratings from extra financial agencies, and we have been recognized with awards for our ability to help our clients with their own transition strategies.

In closing, our targets are clear. Our performance is compelling. Our commitment is unwavering, in particular, in terms of sustained and sustainable cost reduction as our bank's efficiency remains our core focus. You should continue to expect from us a consistent execution of our road map. Thank you very much.

Let's now start the Q&A with our usual kind request to stick to two questions per person. The floor is yours.

[Operator Instructions] The first question comes from Flora Bocahut of Barclays.

The first question is on cost. Costs were much better than expected this quarter. It was in particular the case in the French Retail Banking division. So can you just elaborate on what the drivers of the lower cost base year-on-year have been this quarter? And how sustainable you think this performance is? So basically, elaborate on the work you've been doing on the cost base here.

And the second question is still on French retail, but this time on the ROE, the return on equity, I think you achieved almost 10% this quarter in French retail. Normally, it's only the beginning of the improvement in this division. So I'd be curious to know what kind of ROE you think you can get to in French retail on a multiyear view?

Thank you very much. Good morning. On costs, it's two things. First, we do have a benefit linked to the fact that we do not spend CTA that much anymore, and that's a key driver, right? Let's be clear about this. Between these two quarters, Q1 '24 and Q1 '25, that's the most important impact.

Now as I said many times during this call and in meetings with investors and in my conclusion, costs and the long-term improvement of the efficiency of the bank from a breakeven standpoint as much as from an efficiency, efficiency of spending, efficiency of investment, efficiency of our technology spend, et cetera, is a strategic core focus of ours. And we are implementing constantly new ideas in this space and trying to do even better beyond the big Vision 2025 project, which is also delivering its own share of savings. And so this is the combined result of this focus.

Now how sustainable that is. I mean, the efforts are targeted at sustainable cost reduction. So we're really working in the weeds of, again, cultural aspects, organization and ways we engage our resources, again, both in terms of investments, technology spend, et cetera, et cetera. So it is sustainable, and we will continue this work. I mean, this quarter, because of the CTA, the performance is particularly strong, but you should expect from us a continued focus on this topic.

On the RONE side, you're right, I think it's 9.5%, so close to 10% indeed. And normally, as you say, it is the -- maybe not the beginning because I think actually, the bank and my predecessors have worked on this for a long time, and we are still focused on working further on improving the efficiency and the profitability of this division. So I don't think it's the beginning of the work, but it's clearly not the end. And as I said, as far as the costs are concerned, we are going to continue to focus on this across the entire group, but in retail in particular, but also in terms of commercial momentum and in terms of making sure that we do everything we should be doing to support our clients to acquire clients in this business to retain clients in this business.

So in a simple word to sustain the commercial performance and the commercial dynamic, we will also do that part. So the combination of the cost action and the revenue action should continue to support positive development in terms of RONE in this business.

The next question is from Tarik El Mejjad of Bank of America.

Congratulations on this good quality set of results. Two questions from me as well. First, I will come back on costs. So I hear you about the focus and efforts on improving cost efficiency. But if I do some -- if I calculate -- sorry, if I want to make sure that you reach 60 -- below 60% cost-to-income target in France and the group in [ '26 ]. I calculate there's still EUR 500 million, EUR 700 million cost savings to implement. This is considering actually consensus and not extrapolating the strong Q1 Global Markets performance. Where are the areas that you can still work on to address that gap? And should we expect more fresh announcements in the future?

And then the second question on capital return, strong capital build this quarter. Doing some simple math, if I start with 13.4% in Q1, I deduct 35 bps of FRTB to be conservative and add 10, 15 bps of capital generation in the Q2, that leads me to around 13.2% in first half. That's more than 1 basis point above 13% fully loaded Basel IV target. Now if I look at full year and add back FRTB because that's not been deducted this year, your CET1 reported will be above 13.6%, which should, actually could penalize your ROTE progress growth. I mean, with this in mind, is it fair to expect more distribution in the second half this year? Or is it fair to wait for the full year? I would be happy to hear your thinking here.

And last one related to capital. I'm only asking because I get -- I'm asked 10 times a day by investors. What's your position on introducing an interim dividend for that topic?

Thank you. Thank you very much, Tarik. So on interim dividends, I'll leave that to the ones pioneered on the team. So I'll leave that to you in a second.

In terms of the costs first, as discussed in the past, you have two things that are stemming from the past efforts, which are ongoing, which is, one, the continued delivery of the Vision 2025 savings throughout '25, right? I think in terms of the branch mergers, we're now above 80%, well above 80% in terms of branch closures. That gives you a sense for where we are there. And so the full delivery and then in '26, the full impact of the savings there, the gross savings there will be supporting the cost-to-income reduction, both at retail and group level. That's one factor.

The second one, of course, remember, Ayvens is also in the middle of substantial, right, restructuring and merger activity. As you can see in their own figures, the cost to income is now substantially better than it was last year, in line within the range of the objectives that were given there. And so you have still actually significant improvements to come in terms of cost to income from Ayvens that will benefit once again the group.

And then third, it's the entire scope of all the efforts that I keep on referring to across our ways of working across our ways of spending, across our ways of engaging in technology, both investments and run-the-bank costs, et cetera. So we are working across the entire bank today, and we will continue to do so for the years to come in terms of improving further our efficiency. And the combination of all three make us reasonably confident about next year's target. And of course, I know you know, but there's also the Boursorama, the BoursoBank input into this trajectory in terms of the positive GOI and positive contribution of EUR 300 million, which is also going to help.

And lastly, as I said in my earlier answer, we are, of course, right, it's our job as bankers. We are also working on sustaining the revenue generation. And just to give you one example, so that it doesn't sound like just an empty statement. Our home loan production in Q1 in the French retail was up 115%, well, arguably from a low base, but still capturing a very significant market share in the French market in terms of home loan production. And as you know, it's an anchor product and while in itself not hugely profitable, it's also a very low-risk product, but it is an anchor of the relationship and will help drive the top line up as well. So this is the combination of the factors that are going to make us deliver on our target there.

In terms of capital return, well, I mean, you said it all, almost. I cannot disagree with you in terms of the fact that we have more than 1 basis points above 13%. And consistent with what we've said in the past, our target is 13%.

As soon as we consider -- as the Board considers and management considers, but for Board decision ultimately that we have a sustainable buffer of excess capital above this target, we will act on it. The Board will act on it through three ways. You know it, capital distribution to shareholders, organic growth or inorganic growth. In the current circumstances, it is obvious that the first order analysis points to rather a combination of distribution excess of excess capital and organic growth than to anything else. And the main uncertainty for us to be able to qualify this excess as sustainable is indeed the FRTB. And once we have clarity about this, we will make decisions, right? And that's the spirit of it.

And in terms of what's going to preside over the decision, it is clearly a disciplined and rational stewardship of our shareholders' capital.

In terms of interim dividends?

Sure. So in terms of interim dividend with my background, I think this is something that's very common in Spain. I always thought that this was very much related to the shareholder structure, especially in Spain, where retail shareholders have a broad part of the total shareholding space, and they're more eager for cash flows than anything else. Institutional investors have always been probably more focused on buybacks, which is financially more accretive.

Now this is becoming a hot topic. On this regard, I think we -- as Slawomir just said, we had a very solid capital position. We are well on track to reach our return on tangible equity targets for the year. So I don't see any reason not to discuss this with the Board, and we will do it, and it's finally their decision to make in the future.

So more to come, no philosophical opposition to it.

The next question is from Delphine Lee of JPMorgan.

First of all, I'd like to ask on French retail. Just wondering if you're still confident about your previous guidance of NII being fairly stable this year. I hear your comments on your mortgage production being up quite significantly, but the volume trends are still a bit challenging on the deposit mix as well. So just kind of wondering when we are going to see a little bit of that inflection.

And secondly, just a very quick one on your comments around capital and distribution. Does the general kind of environment and macro uncertainties around trade and tariffs change that view? Or do you think there is enough, considering the buffer on capital to go ahead as soon as you have clarity on FRTB?

Thank you. So on your first question, I see what you tried to do here, which is for me to confirm a guidance which I never gave. So that's not going to happen. There is no guidance on NII for SocGen this year. But I'm going to give you some components, which are the following, right? One, we have on the back of, as we discussed in the past, a rather conservative stance in terms of loan origination across the board. We have a trend from this perspective, which is stabilizing, but which was on the negative side in terms of growth of inventories, right? So this is going to stabilize, and we expect the book broadly to be also stable in terms of margins, right? So indeed, this factor will be of stability, modest growth to stability.

The very strong increase in terms of home loan production, as you know, is not a big driver of NII because of the net margin in France on this product, which again is a very low-risk product in France, is pretty low. The good news is that it's positive and no longer deeply negative like it used to be in the last 2 years. So this will be on the margin basically neutral. Let's call it neutral.

And then from a deposit perspective, our -- again, our expectation is that we will have something stable to slightly up in terms of inventories with potentially some, let's say, marginal negative effect from deposit beta, likely compensated by the Livret A tailwind, which we already start to have with it having gone down to [ 240% ], as you know. And we also expect the formula to be applied and which today points to a further decrease in August on this point.

So if you take all these factors, they point to something which is fairly stable. And I remind you that it's EUR 1.061 billion this quarter, which points to -- if you multiply by 4 to a certain number, which is not our guidance. So that's on French retail.

Capital and distribution, the short answer is our target is 13%. So when I took over as the CEO of the group, as you certainly remember, this was a major decision that was taken by the Board at my recommendation and obviously was framing somewhat parts of our strategy for this first cycle of 3 years. And it was precisely the idea that 12%, the previous target was not enough. It was not enough to be comfortable to be have the right strategic autonomy in terms of weathering crisis, in terms of seizing opportunities, et cetera, et cetera, right? And so this is why we moved from 12% to 13%, which is a substantial increase in the buffer that we have over the MDA and precisely so that when things get more uncertain and/or opportunities arise, we don't have any pressure from this perspective. So this is the answer. The target doesn't change today because of the current environment. And that's, I hope, clear.

The next question comes from Matthew Clark of Mediobanca.

So firstly, another question on capital, please. Could you say whether VaR breaches or counterparty risk or anything like that as a result of April volatility are likely to have a noticeable impact on your risk-weighted assets for the second quarter? Just any comfort you can give on how you fared in the recent volatility?

And then a sort of similar question, but from the opposite direction, your market risk went down in the first quarter despite clearly lots of opportunities in the market. Do you think you were leaving money on the table there? Could you be more aggressive? Or do you think that really you were deploying as much capital as you think it was prudent to do in that environment?

And then a final question on French retail NII again. When I try to reverse out the scope impact of the sale of Switzerland from your year-on-year growth numbers, it sort of suggests a EUR 30 million-ish impact there, which seems a bit high, so intuitively to me. So can you just confirm what the scope impact of the first quarter versus fourth quarter was on NII? And then what the remaining impact that's yet to come through in subsequent quarters is from the sale of the U.K. business?

All right. So, was there any noticeable impact on our market risk in Q2? -- without going too much into the details, the answer would be no. So, market risk down, are we leaving money on the table? I mean, clearly, right, when you run a bank, you can always take more risk, right? That's always an option. It's not ours. I think we have -- and I have a pretty consistent track record of trying to balance the opportunities with risk management. And I think in specifically the global markets, as you can see, we're faring well. We are going to be most likely in a central scenario above the top range of our guidance by the end of the year, given the performance of Q1. But I want to emphasize that indeed, this performance is achieved with minus 70% on our stress test consumption versus 2020. So it is a strategic stance that we have in this business to run it with a low risk profile, and that's not going to change.

In terms of the impact of the private banking disposals, it's EUR 35 million per quarter of NII that was sold, if you will. And it was -- the closings were during the middle -- I mean, both -- if you balance both, it was mid-quarter, right? So you do the math, but it's more or less EUR 35 million of NII that was sold EUR 35 million per quarter.

And that's both businesses, U.K. and Switzerland.

Yes, yes.

The next question is from Giulia Miotto of Morgan Stanley.

My first question is on this year's target. ROTE above 8%, cost income below 66%. Why not upgrade these targets because it seems like you're way ahead of them. Is there anything negative you see coming? Or yes, any comment there?

And then secondly, Spanish banks have a very good asset liability management disclosure in terms of hedges, in terms of ALCO portfolio, duration, yields and all of that. And Leo, is there a plan to bring something similar to SocGen? Because I think the market would benefit from better visibility on -- yes, on hedges. And I'm not talking about just French retail. I know we talk about it a lot in general, but I think having a better understanding of the group NII evolution would be beneficial.

Thank you. So on targets, listen, I mean, the statement we want to make is the following. It's twofold. One, we historically tend not to change targets during the year because, again, right, to some extent, our job is to run the bank. We gave you a vision at the beginning of the year in some form of a central scenario about where we wanted to land at a minimum, right? Of course, that's one statement. And so as a matter of policy, we tend not to change the guidance. Second statement, of course, in a central scenario, in our current central scenario based on what we have done in Q1 and what we see of April, so to speak, we do expect in a central scenario to outperform our targets.

In terms of ALM, well, listen, we have -- you have various circles, right, in terms of benchmarks. Our first circle is France. And we're trying to be among the best in terms of disclosure in France. So you have a number of data or sensitivities that we've given in the past, of course, in terms of the overall sensitivity to rates, but we also gave way back at the CMD, I think, actually 18 months ago, some indication of the sensitivity in terms of site deposit inventories, et cetera.

So I mean, we are going to continue to monitor what the benchmark is. And clearly, I mean, our general stance is to be as transparent and as precise as possible. And so we will continue to try and improve that. That's all I can say at this point.

Yes, we are asking the same question to the other French banks. I think the French are disclosing these things. So I would benchmark something against the pan-European banks.

We increase our benchmark eventually, right? I mean, I'm with you. I'm with you.

The next question is from Pierre Chedeville of CIC Market Solutions.

Yes. I have one question regarding SGSS. I know that your strategic review is a constant process. But I was wondering if now you consider that SGSS is complementary from your activities in global markets, for instance, or global banking. What is your view on this asset?

And regarding asset financing, you mentioned a good performance this quarter. And I was wondering what type of assets were you financing, shipping, aircraft or anything else? And how do you see the evolution of asset financing in the current environment?

Thank you. On the SGSS business, it's -- let me make two statements, right? One, it is a business in our shop, which is deeply embedded in the value chain of the group. So it's a business which obviously works with a number of our GBIS clients and not only we have issuer services, we have investor services there. We have a retail component, which is also important, very much connected to, obviously, our retail businesses in France. So from this perspective, it is complementary to our activities. And it is part of what we need to take into account when considering strategic aspects around this business.

On the other hand, it is also clear that it's a fundamentally scale-driven business. And there, I would not surprise you by saying from a scale perspective, it's probably something that is a bit of a bind for us at this point, right? And so as in everything within any strategic consideration, you want to balance all the aspects and make sure that you have a sustainable business. And so we're constantly, like for any other business in our portfolio, making sure that we both understand what is the stand-alone capacity for a given business to develop, to grow at a sustainable pace and with a decent contribution to the group profitability versus what are the other options. And this is no different for SGSS. But again, it's a little bit of both, right? Scale questions, on the other hand, high level of complementarity and synergies within our group.

In terms of the asset finance, it's mostly infrastructure and some real estate, which fueled the growth this quarter. I mean, going forward, it's -- the way we think about this in the end is, are we financing the right assets from an economic cycle perspective, from a long-term investment rationale perspective in terms of the infrastructure. And there, many opportunities exist, as you know, because many regions and countries in the world need -- have a profound need to deepen, expand better their infrastructure. And we are there for this all over the world. And from this perspective, it's a very diversified business.

And second, at the right price. And so this is what drives our culture here because we are focused, obviously, on the long-term risk management of the bank in this business, as you know, and it has a very strong track record has had for decades. And so we're still focused on this.

We believe that depending on the macro scenario, within the an unchanged base case scenario of, let's say, slower yet clearly positive growth globally, we think it's a business which is going to thrive in a scenario where there's a bigger downturn, bigger slowdown, it's a business which is going to slow down. But again, the good news is that some of that is linked to critical infrastructure that will not be stopped in terms of investment policies, et cetera, anytime soon.

The next question is from Kiri Vijayarajah of HSBC.

A couple of questions, if I may. So firstly, just on your IFRS 9 provisioning and your macro scenarios, assumptions, et cetera. When I look at Slide 4 and that box on the left, is the message that the tariff impact and the fiscal stimulus side largely offset each other? So you're kind of confident that there's no need to alter your input assumptions for now? Or is it more a case that actually it's -- you're going to have to wait until midyear or even year-end to make a more thorough assessments as things get a bit clearer. So how should we interpret the message on the macro assumptions for the purposes of IFRS 9?

And then on the excess capital position at Ayvens, I know it's very, very early days. But hypothetically, if Ayvens were to do a share buyback, would SocGen participate pro rata? Would you like to let your percent ownership in Ayvens creep up? So just your thoughts there because Ayvens as well is in a position where they should be contemplating extra capital return as well.

Thank you. On the first topic, so maybe let me explain once again what we've done this quarter. Most of cost of risk, most of cost of risk is a fact, not an opinion, right? And there's a dimension of opinion in the forward-looking provisions, of course, but which are still -- which still need to be grounded, right, in a proper analysis, proper scenario development and proper documentation.

So what happened this quarter is our standard NCR on the back book, if you will, was very low, helped on the S1, S2 side by a write-back on the significant single counterparty provision that we had, which we wrote back. And this is why you see only EUR 14 million, if I'm not mistaken, which went into increasing the S1, S2 inventory, but it actually is significantly more because of that write-back. So we took a position to cover some of the uncertainty that was rising clearly in Q1 in terms of forward-looking, and it's, let's say, more substantial number than EUR 14 million. And this is why we feel comfortable at this point.

Now to your very statement about the thorough assessment and the timing of it, you are absolutely right. It is way too soon to have a final opinion on the topic. And as I said, depending on where the tariff thing lands, but also on how beyond the mechanical adjustments in terms of supply chain structure, in terms of regionalization of production for our clients, et cetera, it will cause disruption, bigger or smaller depending on the tariffs, et cetera, and it will impact the macro scenario in ways which at this point, we cannot yet characterize.

Now we have already before that, we had a pretty conservative macroeconomic scenario, which we have adjusted slightly downward to something which remains positive in terms of global growth at this point, yet clearly muted in a number of jurisdictions and something around that kind of central scenario. So, depending on the outcome, yes, we might revise that. But obviously, it could be revised both ways to some extent. We don't yet know.

And then the other impact, but that's not really your question is obviously market volatility, but I spoke to this earlier. We do maintain a conservative approach in terms of working through the volatility, and it has been supportive of our business so far.

In terms of the excess capital at Ayvens, we -- like for SocGen, we do not have as a policy to run excess capital in Ayvens. And this will be considered in due time by the Board of Ayvens, and we will act as a rational shareholder. Now increasing our participation further is a matter of strategic decision and a matter of managing excess capital, which is going to be assessed within that kind of effort by the SocGen Board when the time comes.

The next question is from Anke Reingen of RBC.

The first one, sorry, just coming back on costs. I just noted the slow growth in the cost in CIB in spite of the strong revenue growth. And I just want to make sure that's basically because some of the cost savings coming through, not because there could potentially be like a true-up later in the year. And in terms of cost savings, I don't know if you've given like an absolute number your target for 2025 and maybe just on how far or how much is realized at the Q1 stage?

And then secondly, on BoursoBank, I mean the new acquisitions in Q1 are still running at a relatively high level. I'm just trying to understand if you changed anything in terms of your view on slowing down customer acquisitions? Or is it just -- I mean, is it now cheaper or more opportune to or the customer base at the moment?

Thank you. So on the cost side within GBIS, very simple statement. The variable compensation linked to the performance of Q1 has been accounted for. So there will be no true-up based on this. And so the number you see is the real number. And indeed, it comes from a combination of higher cost mostly linked to performance, I mean, linked to the higher performance, offset by continued efforts on the cost base, like I said, a focus of ours across the entire group.

I'll leave the second portion of your cost answer to Leo in a second, and I'm going to address the acquisition levels in BoursoBank. So the strategy for BoursoBank is unchanged, meaning it is maximizing the growth potential in terms of client base, in terms of client acquisition for this asset, which, again, is of strategic importance for SocGen and for the -- actually for the French market, I would venture in terms of retail banking for the next decade. And we are going to continue to act on the opportunity, if you will, within the framework of our strategy, which was acquisition with up to EUR 150 million of negative GOI investment. And the good news is that we're doing much better from this perspective because we are operating the strategy, the growth strategy at basically zero net income. for this business.

So BoursoBank continues to deliver a slightly positive net income to the group, which is, again, better than what we initially had intended to do, while maintaining a very high pace of high-quality origination and with maintaining a very high ranking in terms of client and customer feedback, customer quality being #1 once again and with a very low churn.

So right now, we're operating the strategy in a very successful way. We'll continue to do so within the framework of the CMD strategy.

Leo, just on that one last point on costs.

Sure. Basically, we have given a guidance for '25. Our guidance was that after disposals, we expect our cost line to go down 1% in net terms versus 2024. So this compares to the EUR 4.4 billion that we had in the quarter. Of course, this quarter, it was impacted by a significant reduction in transformation charges versus Q1 last year. But there's still some more to come in terms of lower transformation charges this year. We did around EUR 650 million last year. We are expecting to do around EUR 300 million this year. So that should be a total of EUR 350 million down. We did around EUR 280 million in the first Q.

And then also, we had some extraordinaries in Q1, which we also -- I also tried to tackle before, like the taxes on the variable compensation, which is a one-off for Q1 and also the Bernstein perimeter effect, which will not be there in the coming quarters. In other words, we are very much committed to actually probably exceeding our target in this minus 1% net cost reduction for the year.

The next question is from Jacques-Henri Gaulard of Kepler Cheuvreux.

Well done on the results. Two questions. First, on the Corporate Center, on the Slide 22, you're mentioning the management action to more efficiently use excess liquidity. Can I assume that this improvement is something that could actually linger now structurally in the Corporate Center? Just to get the guidance up there just in case.

And the second question more generally is on the equities business on which really you have phenomenal performance, which is not totally intuitive considering that some of your competitors have been much more vocal about how much they spend and everything. What is your ambition for that business eventually, I would say, 2, 3 years down the road? And maybe a little bit link that to your fixed income business, which is probably not as big as you would wish it to be? Or do you view those two businesses are a little bit more independent?

So on the first question, I'll leave that to Leo, but I'm going to start by answering the second one. Thank you very much, Jacques-Henri. So I mean, on equities, we have the ambition of continuing to operate this business with a very much low-risk profile and contained risk profile if you compare to our historical, let's say, management of this business, especially if you take the reference point of 2020, and I've given the figure about the stress test, which I think is eloquent, and which is synthetic, but eloquent.

So we want to continue doing this. while continuing to enhance our client footprint. In the end, this is the strategy, right? So making sure that while not substantially increasing our risks, we continue to increase the depth of the client franchise. And for instance, the investment in Bernstein was part of this strategy. As you know, only part of Bernstein is today integrated in the top line of the equities, but we continue obviously to go through the integration and improve our performance there. It is very good in terms of the secondary flows. The ECM part is obviously a little subdued, but we are very confident that this will contribute to this increase in client revenues at that part of the market shop.

In terms of the fixed income, it is somewhat independent. I mean it's a different asset class that has its own opportunities and challenges in a given market. As you know, we have a footprint which is slightly different from our peers. So we tend to be overweight on rates, right? And so when we have strong trends and strong opportunities from a hedging perspective, hedging needs perspective for the clients, et cetera, we tend to fare well and better, let's say, than average. When it's more commodities or credit-driven situation in a given quarter, we tend to fare less well than the others. I'll make one technical comment on this in a second.

And then -- and lastly, when it's a trend which is -- and remember also commodities is something we don't do anymore in this business like the way we used to 10 years ago. And so these are usually like the discrepancies you will see between our performance and the performance of others depending on what the trend were at the sub-asset class level.

One technical comment. Remember, part of what is in the credit business elsewhere, part of it, like the one which is linked to asset-backed products and securitization in our case, is largely accounted for in the Global Banking business, right? Because historically, this is how we develop this business. And so what you see sometimes is that part of that credit content overperforms at the Global Banking division rather than at the FIC division. It was, for instance, the case last quarter. So that's for that business.

And the ambitions, again, right, I mean, it is to deliver within the range, listen, most likely towards the top end of the range or slightly above the range. When we will update the strategic plan at some point, we will obviously make sure that we update very thoroughly this part of the guidance. Leo?

Sure. So just as a reminder, the corporate center has basically 2 main goals. First, to manage the structural interest rates and exchange rate risks for the group; and second, to steer the scale resources. This is liquidity and capital. In other words, we have the cost of the buffers above the regulatory minimum or the internal targets for both liquidity and capital kept at the group level.

On this regard, we have launched several initiatives to progressively reduce the costs borne by the Corporate Center, by, for example, optimizing the level of our liquidity, which is what we have done in this quarter. We were operating with high levels of liquidity last year. LCR was as high as 160% plus at the end of last year. So we have started to reduce the burn of that excess liquidity, which we don't need to steer our business. We have guided before that we want to run the bank with an LCR in the region of 130%. So what we did this quarter, is we reduced the surplus of cash basically through lower borrowing of very short-term cash by the treasury and a greater consumption of cash by the businesses. So it's the normal activity that we want to foster in the coming quarters, which is to steer in a better way the Corporate Center by reducing the burn of this excess of liquidity and capital.

The next question is from Sharath Kumar of Deutsche Bank.

I just have one left. Can you provide us the USD exposures in terms of revenues and costs? Also, is there any CET1 sensitivity on account of the USD depreciation?

Thank you. I'll leave this question to Leo.

Sure. So basically, we have a sensitivity of around 1, less than 2 basis points for a 10% appreciation or depreciation. Actually, if the dollar depreciates, we have a negative impact of a little bit less than 2 basis points every 10%. And again, if the dollar appreciates, it's the other way around. So we have a positive sensitivity of around close to 2 basis points for this 10% movement.

As for the P&L, actually, our sensitivity to a 10% move, it's less than 2% of GOI, again, in the same direction. Depreciation would be bad for the bank and appreciation would be good for the P&L.

The next question is from Joseph Dickerson of Jefferies.

Firstly, just a point of clarification on the interim dividend consideration. I presume that's for this year's dividend. Can you clarify that?

And then going back to the question on BoursoBank. Clearly, by the end of Q2, assuming similar run rates, you'll be at or above the 8 million magic number for customers. Would you expect in the second half that some of the customer acquisition costs can fall away so that next year, we're still looking at greater than EUR 300 million of earnings? And staying on Bourso, the 16% deposit growth, has there been any amplification in the first quarter from the Bourso first launch in December?

So on the interim dividend, yes, the answer is yes. It's -- this year's business, not -- without prejudice to the decision, but it's this year's business.

In terms of BoursoBank, so the idea is we, again, committed to the growth strategy up until the end of '25 with the idea that we would spend EUR 150 million of negative GOI, so to speak. So we're doing much better in terms of the spend, and we're doing well in terms of acquisition, and we're going to continue to do this until the end of '25. Also because as you implicitly pointed out, remember, the rates are going down, right? So from this perspective, the more customer and inventories of deposits and loans, et cetera, we have, the better for the 2026 performance.

Lastly, in terms of the deposit growth versus client acquisition, I think it's 20% client acquisition, 16% deposit growth, which, by the way, shows you the value creation that happens substantially, right, as we execute this growth strategy, right? It is with high content and not just client numbers. It's with high content because BoursoBank is a full-fledged bank with a deep and wide product offer, right?

Is this helped by BoursoBank? Right now, not yet in a material way at the size that BoursoBank has today. But the first results are very encouraging. And while I'm not going to disclose the number, but the average balance per Bourso first client is very high and more of a, let's say, lower level of retail private banking rather than retail banking, right? So we're very much encouraged, but it doesn't yet show in the EUR 45 billion of deposits for BoursoBank.

So I think there's no more questions. So let me just say two more things before I conclude. One, we have posted a very strong performance, which puts us well ahead of the annual targets, right? So today, we are in a position that in a central scenario, we are likely to outperform them. And in terms of the capital distribution because it was logically a focus of this call, again, right, everything above 13% sustainably is excess. And the core trigger for considering a strategic decision by the Board is the final decision on FRTB, which we expect in Q2. And so based on this market fact, we will move on to make a decision on the excess capital management.

With that, I thank you very much for your time, and I wish you a good busy day and see you, I mean, or talk to you in July for the Q2. Thank you very much. Take care.

Thank you very much.