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Operator: Good afternoon, ladies and gentlemen, and welcome to the presentation of the BNP Paribas Third Quarter 2025 Results with Jean-Laurent Bonnafe, Group Chief Executive Officer; and Lars Machenil, Group Chief Financial Officer; Sandro Pierri, CEO of BNP Paribas Asset Management and AXA IM will present the AXA IM strategic integration within the group. For your information, this conference call is being recorded. Supporting slides are available on BNP Paribas IR website, invest.bnpparibas.com. [Operator Instructions] 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. So good afternoon, ladies and gentlemen. Before we move on to the quarter's results, I would like to just take a moment to share some context related to the decision issued by the civil court in the U.S. case and how we see things moving forward. So this morning, first, we made a public statement, which explain our position on this matter. This verdict is in connection with very old facts relating to banking services that BNP Paribas provided more than 15 years ago. We are highly confident that our planned appeal will demonstrate that this judgment was incorrect. U.S. law has allowed and the court has decided to apply Swiss law to this case. And evidence of such Swiss law has not been allowed to be presented. This application of Swiss law has been confirmed by the Swiss government itself. The applicable laws don't lead to liability acquisition in this case. The banking services that the bank provided didn't cause plaintiffs prejudice and no evidence has been brought to prove that it did. Because the verdict is fundamentally flawed, the bank will pursue its appeal and is confident that the verdict will ultimately be overturned. The appeal case will be reviewed by a panel of 3 professional judges. Now we're aware that this case has prompted some speculation about the precedent it might set. So let me be very clear on this point. The damages awarded were specific to 3 individuals, extrapolation is not permitted. The court has very clearly indicated that any future claims will be assessed on an individual basis. So given the ongoing nature of the litigation, we will not be commenting further on this topic today. BNP Paribas once again is confident in its legal arguments and that the verdict will be overturned on appeal. We look forward to focusing on our discussion today on this quarter's results. So if we move on to Slide 4. Our third quarter results are solid and allow us to confirm our target of over EUR 12.2 billion of net profit for '25. Our revenues are up 5.3% this quarter. Revenues of our operating divisions, excluding AXA IM are up 3.5% and a strong 4.9% at constant exchange rates. CIB revenues posted another record year with 4.5% growth, plus 7% at constant exchange rates, driven by Global Markets and Security Services. Global Banking was resilient despite a more challenging context than last year. CPBS revenues have accelerated and are up 3.1%, thanks to the strong performance of our Eurozone commercial banks with acceleration in net interest income, up 4.5% and an improvement in specialized businesses. Personal Finance is delivering on the strategic plan we detailed in June, and Arval's organic growth is an elevated 9.3%. Finally, IPS consolidated AXA IM for the first time, and I will comment on this later. IPS recorded 2.9% organic revenue growth with a robust performance for Wealth Management, Insurance and Asset Management, also mitigated somewhat by Real Estate and IPS Invest. We remain committed to cost control and we have already implemented most of our targeted EUR 600 million cost savings measures for this year. This results in a two-point jaws effect for operating divisions, excluding AXA IM. At 39 bps, our cost of risk remains within our guidance of less than 40 bps despite a more challenging environment. Lars will elaborate on this later. All in all, our net profit was up 6.1%, meaning we are on track to achieve our target of more than EUR 12.2 billion this year. Moving on to our CET1 ratio at a very solid 12.5%. We have fully absorbed the impact of the AXA IM acquisition of 35 bps. This strong quarterly performance, which Lars will elaborate on shortly, enables us to deliver beyond our pre-FRTB target of 12.3%. Let me pause briefly on this point. We're now concluding a full year regulatory and supervisory cycle, characterized by the finalization of Basel and significant model updates, cycle, which has been particularly heavy for BNP Paribas. This cycle has represented around 160 basis points or EUR 12 billion, equivalent to EUR 3 billion per year. We are now entering a new cycle where risk-weighted growth will primarily be driven by organic momentum estimated at less than 2% per year based on recent historical trends. This is an important and positive message as it naturally opens up new perspectives in terms of capital generation. Moving to Slide 5. Our third quarter performance demonstrates acceleration across our operating division as well as the first time integration of AXA IM. Despite a particularly high FX impact this quarter, our operating divisions generated 2 percentage points jaws effect, excluding AXA IM and posted an increase of profit before tax of 7.5%. The third quarter reaffirms our confidence that the growth trajectory we embarked on is delivering. Moving now to Slide 6. First, our scaled CIB platform is a strong engine of growth, reaching excellent level of efficiency and profitability as illustrated by its strong of 22.2%. We expect it to continue gaining market share while maintaining its proven capital discipline. Second, IPS already benefits from a high room 23.7%, which is expected to improve even further. We also maintained that IPS is set to reach 20% of the group's pretax profit in the coming years. We are creating a European leader in asset management at the core of our integrated model, the impact of the AXA IM acquisition will be substantial. It will add more than 50 basis points to our group return on tangible equity as early as '28, and I will come back to this in a few minutes. Beyond Asset Management, while developing our European Wealth Management platform and IPS will also benefit from both external and organic growth at BNP Paribas Cardif as well as from its strategic partnerships. Finally, CPBS. The Eurozone commercial banks are starting to benefit from a supportive interest rate environment as evidenced by this quarter's performance and we're improving the profitability of each business line where needed. Today, we're announcing a deep dive in the first half of '26 to present the financial trajectory of CPBB in Belgium. We intend to improve the ROTE from 13% in '24 to 20% in '28 and 23% in '30. Together with the plans we have already presented for CPBF and Personal Finance, this means we will improve profitability from 10% drawn to about 18% on 1/3 of the risk weight or 2/3 of CPBS risk weight. BNP Paribas Bank Polska will also host a Capital Market Day on the 11th December. The plan that is coming to an end this year enabled us to implement BNP Paribas model in Poland and the new 2030 plan will bring Bank Polska profitability to the best standards of Polish banks. At Arval, the strong organic growth, plus 9.3% in third quarter '25 will no longer suffer from the buzz effect linked to used car prices. Overall, we will raise group return on tangible equity to 13% as early as '28 and reached a core equity Tier 1 of 12.5% post FRTB in '27. This marked the first 2 steps in the rollout of the future '27 strategic plan. Let me now outline on Slide 7, the significant positive impact of the AXA IM acquisition on our financial trajectory. We expect to generate EUR 550 million of revenues and cost synergies by '29. Thanks to AXA IM, IPS will see its contribution to group earnings rise to about 20% in the midterm, and we expect our return on tangible equity to see an improvement of more than 40 basis points from this acquisition at group level. We expect as well our return on the EUR 2.8 billion of invested capital to reach 18% in '28 and 20% in '29. This is post-tax. This is equivalent to more than EUR 600 million of additional net earnings. We reaffirm on Slide 8, our '26 trajectory, leading to an acceleration in shareholders' returns. I will now hand over to Sandro Pierri, CEO of BNP Paribas Asset Management, to discuss the AXA IM project.
Sandro Pierri: So thank you, Jean-Laurent and good afternoon to everyone. Maybe just a quick intro. I'm Sandro Pierri, I've been the CEO of BNP Paribas Asset Management since September '21, but I spent all of my career, which is now 35 years in asset management before joining BNP, I've been 13 years at Pioneer Investment, where the last 3 years, I've been the CEO. So as we approach the AXA IM integration, and I think we can go to the Slide 10. It's very important because this acquisition enabled us to reach scale in asset management, notably in long-term savings. It strengthened the growth momentum on our IPS franchise but also gives us the critical mass and ambition to become a leading player. We will be, in fact, the third largest European asset manager with EUR 1.6 trillion of AUM and if we focus on long-term savings, we are the leader in European long-term savings with EUR 850 billion AUM. We'll also be the leader in alternative assets in Europe by a significant margin with EUR 300 billion of AUM, which we believe is going to be a very powerful differentiating factor offering significant growth potential, underpinned by our highly skilled and renowned teams. Clearly, the new scope of our asset management platform, combined with the strength of our integrated model, will unlock significant synergies and operational efficiency. By the end of 2029, as Jean-Laurent has indicated, we expect EUR 550 million of profit before taxes from revenue and cost synergies across the entire group. And AXA IM is clearly a catalyst for our long-term growth ambitions, bringing many tangible benefits. First, clearly, we will rely more strongly on internal capabilities of services, leveraging our internal expertise. A good example would be the CIB Security Services. Secondly, clearly, we'll capitalize on the development of new partnership with insurers and pension funds. Thirdly, the acceleration of cross-selling within the group business. Fourthly, the expansion of the group originate-to-distribute model, which will connect our asset manager with asset origination business within CIB and CPBS. And finally, the strong acceleration of our alternative asset distribution, both internally and externally. Now if we move on to the next slide, which is Slide 11. These transactions is not only about scale, but it's clearly about growth. We believe we are very well positioned to capture growth opportunities in Asset Management, thanks to a number of distinctive competitive advantages. First, we have an unmatched breadth of offering in Europe at scale from ETF, money market, active, medium, long term and alternative. The second element is that our group integrated model provides exclusive access to permanent capital with the partnership we also have with Cardif. Origination in partnership with our CIB franchise and strong distribution capabilities, CPBS and wealth. So the ability to leverage our One Bank model is clearly a key differentiating features. From a business perspective, the combined AUM seems to be very balanced, as you can see in one of this chart, both across asset classes but also across distribution network. With both AXA and BNP Paribas channel, but also external distribution and external institutional clients and also a very strong footprint with our joint ventures, mostly in Asia. And lastly, in terms of competitive advantages, we need to flag our leading position in sustainability, which will contribute to long-term investment performance and will also help to better meet client expectations. So if we go into the next slide is really once we have elaborated on the key distinctive competitive advantages, we put -- we laid down a plan, which we think is very clear, and we have a commitment to executing as fast as we can. And the strategy is, in a way, quite simple. On one side, we want to maximize the potential of the 2 investment platforms, the alternative one and the liquid. In alternative assets, our growth potential builds on a solid and very consistent track record. On the size of our blockbuster funds, a full range in coverage, which spans from real estate, alternative credit, infrastructure, private equity, which also includes secondary markets and also on the prerequisite of having a full alignment of interest between AXA, Cardif and third party. On the liquid side, the combination of scale, strong performance culture and results in active strategy, both equity and fixed income, as well as the renewed ambitions for our ETF platform, which year-to-date has been the fastest-growing player in Europe on a relative basis, reaffirms our confidence that we are very well equipped to deliver on our growth ambitions. We have a very clear client focus to ensure that we provide the best-in-class products and services. So the strategy then from a distribution perspective is really focused on institution and retail and wealth. As far as the institutional clients are concerned, we -- our goal is to be the go-to platform for insurers and pension funds, leveraging on our strategic partnership with AXA and BNP Paribas Cardif. In Retail and Wealth Management, we're unlocking the potential of alternatives, the so-called democratization of private assets. And we also aim to expand distribution partnership through innovative digital solutions. So that's as much as I can share at this stage on a very exciting project, and I look forward to seeing you at our deep dive in the first half of 2026, where we'll share more on our strategy, a unique positioning among European asset manager to offer solutions across the full spectrum from liquid to illiquid thus leveraging scale, expertise and innovation to serve all client segments. With that, let me now hand over to Lars, who will walk us through some of the key figures. Lars on to you.
Lars Machenil: Thank you, Sandro. Let's move to Slide 13 with respect to the numbers underlying this transaction. And as mentioned, by Jean-Laurent, this acquisition will generate over 50 bps to the group's RoTE in 2028. Now the transaction itself will have a return on invested capital of over 18% in '28 and 22% by 2029. How do we get to this return? First, by maintaining strong discipline and efficiency in building this combined asset management platform at scale, as mentioned by Sandro. So we will generate EUR 400 million of cost savings, representing approximately 18% of the combined cost base. These cost savings will be generated as we merge the 3 asset management platforms. So AXA IM, BNP Paribas Asset Management and BNP Paribas REIM with a streamlined product offering, a single front-to-back system and a unified workforce. We'll, of course, optimize our organization, our real estate footprint and our external spending and is leveraging the size of the group and the scale that we can reach. So we expect to achieve full realization of the synergies by 2029 with 2/3 by the end of '27. So that's on the cost. Secondly, we are committed to unlocking the full potential of revenue synergies. We will generate EUR 150 million of these top line synergies and they come in 2 types. First of all, there is the internalization of operations. For example, with the broader use of CIB, Security Services for custodian services across the platform or by leveraging the new asset management platform to better serve internal group clients like Cardif and wealth management and support their growth. Secondly, on the revenues through an accelerated commercial development, thanks to our competitive offering as detailed also by Sandro. Of those revenue synergies, 50%, 50% will be activated by 2027 with a full run at 2029. A few additional elements to understand this full impact. We expect to have EUR 690 million of integration charges and the majority of this will be booked in 2025 and in particular, 2026, with a more limited part in '27 and '28. Finally, as you know, a significant portion of the purchase price comes from the value of the partnership and this generates an annual amortization of the so-called prepaid expense of around EUR 100 million booked in AXA IM. This integration is a catalyst for our strategic ambitions and a turning point for IPS creating a powerful investment platform for the future. So this is the complementary insights on AXA IM, and let's now go back to the group results, and let me take you through the operating efficiency that you can see on Slide 17. You will note that our costs are up a limited of 1% if you exclude the impact of AXA IM. Our operating divisions generated positive jaws of 2 points with CIB and IPS generating over 3 points in jaws and CBPS 0.7 as a result of, on one hand, accelerating NBI, as we mentioned before; and secondly, reducing the drag from car sales revenues at Arval. If with this, I can ask you to go to Slide 18, where we show our regular improvement in the cost-income ratio as we expect to maintain our trajectory in the years to come. So this was the cost. Let's now turn to the cost of risk, and let's turn to Slide 19 and 20. So on Slide 19, our cost of risk this quarter reached 39 basis points, in line with our guidance to be below the 40 basis points, which is the average of the cycle, and we maintain our guidance for the full year. Compared with last year, there were fewer releases in the so-called Stage 1 and Stage 2 provisions. So the cost of risk at group level, excluding these write-backs is stable. If you look at Slide 20, you'll see by division that cost of risk is stable or down, including a Personal Finance in line with our trajectory. Europe Mediterranean is the exception with the normalization from a low level of cost of risk last year due to the higher cost of risk in Turkey on households in the context of high inflation. Cost of risk, they are also stable at CIB with Global Banking close to 0, and we have increased our provisions in Global Markets because of a specific file, which happens every so many years and should not be considered to be recurring. In particular, as it is to be considered as a fraud case. And moreover, it has nothing to do with the private credit environment. So before I move on to capital, let me say a word on the Corporate Center. The quarter, the revenues were impacted by 2 elements. On one hand, the impact of DVA generating a negative EUR 110 million swing. And I don't have to remind you that DVA should be 0 over the life cycle of the derivatives, but can be volatile from 1 quarter to another. There are also -- the lower rates also weighed on the returns of our own equity being redeployed. So with this, let me now conclude on the capital with Slide 21. We are pleased to confirm our stable common equity Tier 1 at a solid 12.5% this quarter, highlighting our capacity to absorb the 35 basis points impact of the AXA IM acquisition thanks to our capital generation. We also benefited this quarter from a positive modeling impact. As mentioned by Jean-Laurent, and as you can see in the bottom left, in the last 4 years, we have been significantly impacted by prudential and supervisory requirements equivalent to 160 basis points over the period of 4 years or 40 basis points, EUR 3 billion per year. So what drives this impact? As mentioned, it's the regulatory and supervisory inflation. Let me shed some light on this by giving an example. As a reminder, I mean, monitoring risk at BNP Paribas is done in a very detailed manner, and it is core to our setup. Doing so allows us to you to have all the data available to use advanced models to successfully track evolutions and reflect this in the related risk-weighted assets. I don't need to remind you that this advanced modeling is the factor constraint by the new regulation. Whilst we cannot predict precisely the impact going forward, we expect our capital generation to be much less constrained in the future, therefore, providing us with a lot more flexibility, as you can see, with like 10 basis points organic capital creation in a quarter, which is the typical run we have on a quarterly basis. From now on, one can assume that the growth of our RWAs will be primarily driven by organic RWA growth, so estimated to be around 2% per year based on recent historical trends. So we will obviously continue to contain this organic RWA growth as we did in the past. So this is the strong point, so that the inflation is behind us. We generate 10 basis points per quarter. And let me illustrate the case of CIB, which is particularly telling. So as you know, we've successfully grown the platform at twice the pace of the market and we've done so at marginal cost. So notably by reducing our cost income from 72% to 60%. At the same time, we've kept organic RWA growth very well contained averaging to around 0.4% per year over the period 2016 to 2024. So overall, we are comfortably on track to reach our common equity Tier 1 target of 12.5% post FRTB in 2027. For here on, I'll let you read for yourself Slide 25 to 30 on the key elements of the quarter as well as the growth drivers of our 3 operating divisions. With this, I'll hand it back to Jean-Laurent.
Jean-Laurent Bonnafe: Thank you, Lars. So to conclude on Slide 32. Our third quarter performance, driven by the acceleration of our operating divisions is fully in line with our trajectory. Our priority remains the successful execution of the AXA IM integration, which represents a strategic transformation level for the group, thanks to its integrated model. While our growth drivers are firmly established within CIB and IPS, while pursuing disciplined actions to improve the profitability of each business line when needed within CPBS. This year, we started with CPBF and Personal Finance, and we are now continuing with CPBB and Polska. Finally, our core equity Tier 1 ratio of 12.5%, provides us with additional flexibility and the new phase we're entering paves the way for enhanced capital generation. This concludes our presentation. We would now be happy to take your questions.
Operator: [Operator Instructions] First question is from Tarik El Mejjad, Bank of America.
Tarik El Mejjad: It's unfortunate we can't ask a question about Sudan because I think we all wanted to hear how you can frame your potential loss and we are still in the billions kind of area in terms of settlements. But I respect your decision. So two questions from my side. First on the capital, which is very important here for you. I think it's the -- your main kind of way to reassure the market of your capital absorption in the context of the Sudan related litigation. You had a good quarter build -- capital build in the quarter,12.5%. First, I want to understand what is structural there when it's one-off. And I was wondering why you don't change your medium term or your at least '25 target of 12.3%. I noticed that you don't mention that anymore, but so do you expect to end the year at a higher level? And if you do the -- to Jean-Laurent, your comments about 10 bps per quarter, if I take 9 quarters until end of '27, and adjust for the 40 bps for FRTB, I'm already at 13%. So what am I missing there what could be the headwind that will set you back to 12.5%. And then the second question is on the -- so still rates on the capital is what other actions you can do to actually fast track the capital build beyond organically? And if you would consider some nonorganic footprint optimization or something to reassure the markets on your capital absorption? And then the question on the jaws, in Slide 5 in Q2, you were very specific about your jaws in the second half. And in your plan, you target more than 1.5 percentage points for every year of the plan. Do you still stick to this guidance? And how are you comfortable to reach this jaws level with the AXA IM integration in the coming years?
Jean-Laurent Bonnafe: Okay. Thank you for your question. So if you look precisely at what took place since the beginning of the year. So we said at the end of '24, commenting the yearly result of '24. We said that in '25, we will generate roughly 30 bps of capital, and we will suffer, let's say, 10 bps in terms of supervision. So the net would have been 20 bps plus 20 bps. So capital generation, we delivered 10 bps in the first quarter. We delivered additional 10 bps in the second quarter through SRT. Once again, we delivered 10 bps this quarter. So all in all, as of today, we have already delivered the 30 bps. Then if you look at the supervisory, I would say, dimension. We lost 10 bps in the first quarter. We lost 10 bps in the second quarter. And then we got plus 25 in the third quarter. In the third quarter, that 25 is, I would say, based upon 2 very different, I would say, dimensions. One is a kind of, I would say, regular evolution, it can be considered as a normal evolution. The other one that is in the range of 15 bps, 15, is more, I would say, an exceptional evolution. This is the end of a long story of rebasing a quite important model. So these 15 bps, are an exceptional. They're back, they're given to us and the shareholders, and that's it. So now if you look at the -- since the beginning of the year, so we lost 10 in the first. We lost an additional 10 in the second. We're having plus 10 in the second -- in the third. So if you look at the supervises side, I would say, the regular one was minus 10 at the end of the third quarter. So again, since the beginning of the year, we built up 30 bps in terms of capital generation. We suffered 10 bps of supervisory, I would say, burden and we got a positive 15 bps one-off, this one-off is done. This is over. And looking ahead at the fourth quarter, we're not expecting anything significant. So again, since the beginning of the year, we built every quarter, 10 bps in terms of capital generation, one way or the other. We suffered 10 bps of, let's say, supervisory burden, and we got a positive one-off of plus 15 in the supervisory dimension. So this explains why we are already at 2.5% after having absorbed AXA IM and while having 20 bps above the 12.3% pre-FRTB target that was supposed to be the target by year-end. So we are very much, I would say, confident that, that 2.5% is the level we will deliver by year-end. So it's not a question of changing the target for year-end, but we are already at 12.5%, and we do not see anything that would push us down to 12.3%. What we have to understand about the FRTB is that it was supposed to take place beginning of '25. It was postponed 1 year, beginning of '26, and now it's postponed again the second year beginning of '27. And you know, and probably you know, that there are conversations at the level of the European Commission just to neutralize this FRTB for probably a period of 3 years. This is not done, but there is a certain probability, probably more than 50%, that one way or the other, that FRTB is going to be neutralized for a certain period of time. But for the time being, we consider we have to be prepared. This is why we keep those 30 bps. Looking ahead, we said recently, it was in September, I guess, in the Bank of America conference, we said that mechanically, considering the, I would say, the additional profitability of the group by '27, the CET1 post FRTB will reach naturally mechanically 2.5%. So this is again what we said in the presentation. The reality, as you said, is that we're going to exit '25 at a high level, this is a fact. Not only the return on tangible equity of the company is moving up. So we are generating more rapidly equity capital but on top of that, as Lars mentioned it. We're exiting a cycle, a phase that has been very, I would say, negative for BNP Paribas. Once again, we paid over the last 4 years, a tribute of 160 bps. If you add the completion of Basel and supervisory, I would say, approach basically model updates. This is 2.5x, I would say, average I would say, benchmark. So the peer group was on average in the range of 60 bps, and we were at around 160 bps. And on top of that, we are going to pay potentially for that FRTB. In total, what to build up EUR 15 billion in those 4 years. And now if you look closely, at the evolution of the risk weight at BNP Paribas over the past 4 years, we're only at 2% average by year. So in fact, the model is not extremely high in terms of risk weight consumption. And looking at because we're exiting that very adverse, I would say, cycle, considering the situation of BNP Paribas looking up, now the risk weight will, I would say, progress very much in line with the operational risk weights, which is comparing to the last period at a much lower level. And once again, what we suffered is not linked because we had poor models or an approach that was not relevant. It's just because the new supervision, the new regulation was a very adverse to advance modeling. So this is one very important point. So we're exiting '25 with, I would say, an additional 20 bps compared to the 12.3% by '27, we'll be at 12.5% because of the company generating more, I would say, profits. On top of that, we are exiting a cycle that was quite negative or adverse to BNP Paribas. And the future is going to be very much along the operational risk weight, I would say, evolution. All in all, you are telling us 13 bps -- 13%, why not? I mean this is just a rapid computation. But this is the situation, not only the company is going faster in terms of profits, but we're exiting a cycle that was very negative. And on top of that, we're exiting '25 at a high level. And to be confirmed, CET1 consumption for AXA IM is 35 bps full stop, which also give some, I would say, additional good news. So this is the equity. To some extent, capital absorption. Looking at the jaws, you noticed that we suffered in the third quarter of the FX 1.3% in terms of total revenue and the swing in the DVA, plus 16% last year, minus 55% this year. So this is a swing of roughly 0.9%. So in total, we suffered 2.2%. 2.2% and 2.4% are 4.6%. So this is very much what makes the difference in between the consensus that was at around 4.1%. We said the top line we provided only 2.4%, but because of two headwinds, one was the FX. One was the DVA. So looking ahead, probably in the last quarter, we will suffer the same, I would say, FX headwind. Why? Because this is the result of the U.S. dollar on the yearly evolution. And second, the Turkish lira basically in the third quarter. So half, that was the result of these two evolutions. Looking ahead, in the fourth quarter, it's going to be very much the same but we are not going to suffer the DVA in the fourth quarter. Normally, it's going to be close to null and the bad effect used to be negative. So it's very different from the situation in the third quarter. And then ultimately, in the fourth quarter, we have not anymore any base effect based upon the Arval used car business. So this is in the range of EUR 100 billion. So if you get rid of 0.9% that are the DVA in the fourth -- the third quarter. And if you get rid of the base effect in the fourth quarter, you get an additional 0.8%. So in the fourth quarter, rising 1.7%, that is going to more than rebalance the FX effect. So this is why the fourth quarter ultimately to some extent is going to be slightly easier than the third quarter. Looking at the jaws effect, if you look precisely at the operational division, which are basically, I would say, the dimension that is providing the group with the jaws effect, we are during the third quarter at 2%. So we are moving up comparing this jaws effect to the first half of that year. And this is very much linked to the acceleration you are seeing within CPBS, especially Domestic Market and Personal Finance. And this is going to continue. So you will see in the fourth quarter an additional, I would say evolution in the positive direction. So at the end of the day, the 2.5% for the second half is our target and it remains our target. But again, the fourth quarter and the third quarter in terms of, I would say, impacts to some extent, external impact, impacts that are not linked to the operational division. They are very different. The third one is quite negative, and the fourth one is quite neutral. So this is my answer for the jaws.
Operator: Next question is from Giulia Miotto, Morgan Stanley.
Giulia Miotto: I have two. The first one is on AXA IM. So how will the structure work? Will BNP Asset Management be consolidated within Cardif then? Yes. Because I thought AXA IM was being bought by Cardif, but then it's getting consolidated into BNP Asset Management. So I would be interested to understand that structure. And then separately, I have a question on your Stage 3 coverage ratio, which is going down from 70% to 66.6%. 70% it was in March. Should we read anything into that? And perhaps to expand on the question, what are you seeing in terms of asset quality deterioration in France? Is there any early warning?
Jean-Laurent Bonnafe: So on the first point, I would say, Cardif bought AXA IM and BNP Paribas was merged into Cardif. So in fact, the merger in between BNP Paribas Asset Management and AXA IM is done under the Cardif umbrella. So the new asset management platform belongs to the insurance company.
Lars Machenil: And on the second question, when it comes to the doubtful loans over the gross outstanding and/or your Stage 3 coverage ratio, so it evolved from 68% to 66.6%. The main thing what you see here is that there are new entries has happened so often, which have low provisioning level given the high collateralization. So that's the kind of elements that you see. You can see it's the same in the doubtful loans versus the gross outstanding. But that is the typical evolution that you have. And then when these things are worked out, there is compensation when it moves into the -- has the effect of Stage 1 and 2. So intrinsically, that's how you should see it.
Operator: Next question is from Delphine Lee, JPMorgan.
Delphine Lee: The first one is, just to understand on the revenue side, because if we look at in retail in Eurozone, CPB in Eurozone, I think your guidance is more than 3%. But so far, I think the trend is trending a little bit close to 2%. So what are you expecting in Q4? And where is the kind of acceleration coming from? Doesn't seem to be BNL, but is there something in Belgium? Or do you see at the moment an improvement in France, which could lead to that more than 3% for the whole year? And then my second question is just a very quick clarification. I don't know if you can say anything on sort of the provisions and the, let's say, the one-off elements that you took this quarter, whether that's the provisions in Global Markets or the day you had in BNL what was that related to? Or in the Corporate Center, just to explain a little bit more kind of like outside of the DVA impact, what was the impact from rates and funding cost of AXA? Just want to understand a little bit like how to forecast for future years.
Jean-Laurent Bonnafe: On the revenue side, for the Domestic Bank within the Eurozone, we set a target of 3% for '25 and we keep that target. So for 2025, we very much believe we are going to deliver those 3%. And if you look at the profile of those divisions altogether, moving up, in particular because Belgium and France are accelerating. So yes, we stick to the 3% target for '25 for those Eurozone commercial banks. On the Global Market provision, this is a specific situation. This has nothing to do with any other situation that occurred recently in the U.S. with regional banks, private credit and so on, this is totally different. It happens unfortunately from time to time. We tend to say BNP Paribas every 4, 5 years, you would get something at the Global Market. If you take that out of the third quarter, our third quarter is very much aligned with the first half of 2025. So basically, in the third quarter at BNP Paribas away from that very specific situation. Nothing happened compared to the first half of '25.
Lars Machenil: And Delphine, on your two other questions. So with respect to BNL, what we have is basically a revaluation of the participation. And as you know, we, from time to time, have these things, and it basically helps us to compensate in the bottom line, the impact of restructuring. We typically said we have like EUR 400 million kind of restructuring costs, and we aim to have capital gains realized or revaluations in order to compensate that. So that's basically this. And then when you talk about the general account where you have a question, if you look at the general accounts, specifically in the third quarter, so as mentioned, there is the DVA, which is EUR 50 million negative, whereas it was EUR 50 million positive over last year. Then if you look at AXA IM, there is like the EUR 60 million of restructuring costs which was basically 0 last year. And then you also had the impact of own funds which the redeployment happens in lower rates. So that's a bit of those kind of effects. Let me remind you our overall guidance on the Corporate Center over the full year. So intrinsically, we say that over the year, our NBI is 0. When I mean 0, that means it can be between minus 100 and plus 100. And you basically see that's where we are in particularly what we guided that in the fourth quarter, we think it will gravitate around 0. When you look at cost, the run of the mill cost Corporate Center, are basically EUR 400 million. And on top of that, comes the restructuring costs. In a normal situation, basically that we'll also be gravitating around EUR 400 million. What we now basically say is that also given the overall restructuring we have with AXA IM, it's going to be around EUR 600 million in '25, and it's going to be around EUR 800 million in '26. And then it should taper back to where it was before. So that's basically Delphine on the general account.
Operator: Next question is from Stefan Stalmann of Autonomous Research.
Stefan-Michael Stalmann: I would like to come back to the credit quality issue in Global Markets and the increase in stage or actually in doubtful loans as you label them. You had this increase of almost EUR 1.5 billion in doubtful loans during the quarter. And it happened at a time when you actually describe the credit quality situation in basically all of your operating businesses is very stable. So is it fair to assume that this increase largely relates to Global Markets and largely relates to this one case that created the provisions? And is it then fair to assume that you have basically provisioned a fairly large lumpy exposure at around 10% to 15%. And if that's all correct, roughly, I think you hinted in an interview that there may be some context with payments or payment companies or payment counterparties. I'm struggling a bit to see how that would fit into a Global Markets context. Is there anything else that you can add in terms of color about the counterparty here that will be great? And then the second question on AXA Investment Management. I'm curious whether you could maybe give us the share of passive and ETF AUM in the EUR 1.6 trillion.
Lars Machenil: I'll take it Stefan, I'll take your question on credit quality. So indeed, part of the impact that you see is indeed related to that file. But generically, it's the evolution that in the current environment the new entries that we have seen, which are collateralized have low collateralization. So when it comes to the file, we don't give names and the likes, but what we said, it is not the usual suspect. And the field in which you should basically see it, which is a Global Market field is in the domain of receivables financing. So that is the domain, that is why it is part of Global Markets. And that is the domain. But we leave it to this, Stefan. I'm not going to give you more insights on that.
Sandro Pierri: What was the question on ETF, sorry, if you can say it again?
Stefan-Michael Stalmann: I was just curious, roughly what proportion of the EUR 1.6 trillion is actually in passive and ETFs.
Sandro Pierri: Sure. So today, ETF and index is approximately EUR 55 billion. So the percentage is close to 7%, more or less -- sorry, to 3.5%. Clearly, it was a bigger percentage on a BNP PAM stand-alone because AXA IM, they only recently started an active ETF business. So clearly, the percentage has been diluted by the acquisition. But I can also confirm that as part of the plan, ETF is a renewed ambition. We clearly have significant ambitions which we will be happy to detail more in the deep dive in the first half of next year to, as a minimum, bring it back to the percentage that we have before the dilution coming from the AXA IM transaction.
Operator: Next question is from Sharath Kumar, Deutsche Bank.
Sharath Ramanathan: I have two. Firstly, a clarification on the 2025 revenue guidance. I noticed that you achieved only 2% in the third quarter versus your guidance of plus 5% for the second half which is excluding the contribution from AXA IM? I acknowledge bulk of the mix was driven by Corporate Center, but can you reconfirm this guidance? That's the first one. And the second one is on Arval. How can we draw comfort on the residual value risk for Arval. I asked this in the context of the i.e. organic growth seen in Arval in the last several quarters versus a more cautious approach by your main competitor. Related to this, can you give an indication of the current EV mix within your fleet?
Lars Machenil: Listen, I think we guided on the revenues, Jean-Laurent has broken it down. What is the impact of why the deal fill divisions, it is at that lower it's basically the impact of ForEx and the impact of DVA. So I'm not going to come back to that is what you see. On Arval, so on Arval there has been the impact when you compare the results with last year of the residual value of the car. So there was a lift that was still available in the first 9 months, and that's basically coming to an end. The remaining contribution in the fourth quarter year ago was EUR 50 million. So it's basically a nonmaterial on that. For the rest, the growth in the fleet that we continue to see, again, which is balanced between on one hand, EV and ICE that growth that we see is the intrinsic demand we see in the market, and we feel comfortable with it.
Operator: Next question is from Andrew Coombs, Citi.
Andrew Coombs: If I could follow up on actual AXA IM and then perhaps touch upon banking. So in AXA IM, you talked in depth about the cost synergies, the revenue synergies. Could you just touch upon whether there are any dis-synergies anywhere across the combination of the businesses? And separate to that can you just provide the phasing of the EUR 690 million restructuring costs. Separate to that, on banking down 4% Q-on-Q, down 3% year-on-year. I appreciate that transaction banking is included within that and you're going to be impacted by rates and FX, but it looks like your Capital Market activity was perhaps slightly light compared to U.S. peers. I think you talked about adviser being flat year-on-year. So anything you can say on why you might have underperformed than peers. Is it just a regional bias? Anything you can add?
Sandro Pierri: Maybe I'll take the first one on the synergies. If I understood well, the questions on the AXA IM, it's a pretty quick answer. We don't foresee any dis-synergies out of the transaction.
Lars Machenil: Yes. And when it comes to global banking. So there is the effect of the tariff, there is the effect of the rate and there is the effect of ForEx. And so that's what you see. So if you look through the ForEx, it's basically stable. And then there is indeed a different dynamic. There is the dynamic which continued to grow in the U.S. dollar, and there is a wait-and-see attitude in Europe. So the pipeline is there, but there is a wait and see how these things will crystallize. So that's basically how to read Global Banking.
Jean-Laurent Bonnafe: Just to give, let's say, some additional color. I mean, if you look at Global Banking platform and if you isolate the U.S. part at BNP Paribas, this one is up by 21%, which is very much in line with the U.S. banking platforms. Unfortunately, in EMEA and Continental Europe, we are not having that some kind of evolution. So it's very much linked to the in between situation in Europe. A lot of company are postponing transactions. And the pipe is there, again, but still to be seen. So this is the only business if you look closely at BNP Paribas that third quarter that is below expectation, slightly below expectation instead of being plus 4%, 5%. It's below minus 2.6%. So this is the only one that is slightly I would say, behind the curve for obvious reasons. And again, it's not a question of competitiveness throughout the platform.
Andrew Coombs: That's very helpful color. It's just the regional mix, which is what I thought it might be. And Just following up on the EUR 690 million restructuring charge phasing.
Lars Machenil: Can you repeat the question, sorry, because I lost it.
Andrew Coombs: Yes. Of course, sorry, you flagged EUR 690 million of restructuring charges to deliver the synergies in AXA IM. Could you just provide the phasing of the restructuring charges, you provided a split of the timing of the synergies, but not the restructuring charges as far as I can see.
Lars Machenil: No. Listen, we cannot give the total detail but the big chunk will be this year and next year. That's what you should assume. And the biggest part will be next year. And why we basically said, if you want to roughly the cost, they will fall, how they fall, but you could assume there is like EUR 100 million this year, EUR 400 million the year thereafter and then EUR 100 million the year thereafter. So that is roughly how you should see it.
Operator: Next question is from Jacques-Henri Gaulard, Kepler Cheuvreux.
Jacques-Henri Gaulard: Two questions for me. You've announced such a very interesting partnership with UniCredit on Security Services, I think, in the course of the quarter to have a little bit of off color on that would be great. And UniCredit just announced as we speak that they were taking off all the money from Amundi by mid-2027, would you be interested in that new investment management concept to effectively pitch for that? That's the first question. And the second question is on Slide 7 where you've announced when you bring back your increase in ROTE. I think it's the first time I saw the Belgium and Polska plans. Is it something that you've added afterwards to enable you to actually get to that 13% ROTE '28 or is it on the other hand, something that could enable you to increase further that 13%, 2028 and 2030?
Jean-Laurent Bonnafe: So about UniCredit, yes, we won the RFP for the Security Services business of UniCredit, both in Italy and in Germany with HVB. There is some time to implement. We see the effect in '27. That is 1 year to go to say it very, very simply. Looking at the situation again with UniCredit. Of course, we are open to any kind of partnership with any kind of platforms, commercial bank, private bank platform that would need I would say, highly quality assets, asset management, I would say it's a normal game. And obviously, we can provide UniCredit potentially with all products that would be, I would say, efficient of interest, that's it. So clearly and I do not know again how UniCredit will move. I mean they have recently, if I understand well, we built in-house some capacity within the Asset Management space. But for sure, there will be some room for new partners I don't believe for a number of reasons, they potentially, but I don't know that they would consider, I would say, another global partner for everything. But probably there is room for some asset classes and probably our new platform, looking at the alternative universe could be very well positioned. So yes, we're interested and probably will compete and probably having a good relationship. We might have someone but this is a normal business situation, nothing more, nothing less.
Lars Machenil: On the -- on your question on Slide 7 on the plans. So indeed, in that 13% ROTE that we've given by 2028. The evolution, of course, of Belgium, Polska and AXA IM are included. But these plants, they will continue well beyond and that's basically the update that we will provide. And I understand that I didn't answer the question on the Arval organic growth. So this is 10% that we have. That's two questions back. Would there be any remaining questions?
Operator: Next question is from Anke Reingen from RBC.
Anke Reingen: Two small questions, please. Firstly, on the capital. You said that the regulatory headwinds are now coming to an end. I think previously you guided to a potential 20 basis points headwind in 2026. Is it fair to assume at this stage that this will no longer be hitting your core Tier 1 ratio? And then secondly, on Belgium, I would have expected NII to see a bit more of an uptick in Q3 or is it basically the benefit of the stronger recovery you only expect to start from Q4 onwards on NII in Belgium.
Lars Machenil: Yes. So if I take on the net interest income, indeed, the net interest income, as you mentioned, we said there would be a phasing in pickup, yes. So we announced that in France, it would happen in the second quarter. You will see it happening and that the pivot would be start to be visible in Belgium. So that's what we have. And so the impact will continue and in particularly also in the fourth quarter on those 2 entities. So when it comes to the headwinds, so we basically said the majority of the headwinds are behind us. And when we give a guidance going forward, we have like a kind of a placeholder, so we will wait and see. That is what we assumed that would happen. But here, what we do see is we see these headwinds tailing off. And so it's rather a placeholder more than anything.
Operator: Next question is from Pierre Chedeville, CIC Market Solutions.
Pierre Chedeville: I had a question of methodology regarding the objective of ROTE at 12% in 2026 because you don't say around 12% or above 12%. But in the meantime, you mentioned that your return on invested capital was increased by 4 points. You also mentioned that Personal Finance and the French retail will have an impact on the ROTE above 0.5 point. You also mentioned that we will have a deep dive and Belgium and Polska, and we hope that you will announce probably that you try to better than a post-tax run below 10% and the cost of equity. So I was wondering that if you have all these intermediaries objectives that are improving, why the global objective, the global group ROTE remains at a fixed 12%. And another question, which is related to that is regarding AXA IM. Regarding the synergies that you plan and the fact that probably BNP Paribas Real Estate will improve when they are another for you. What would be, in your opinion, a decent cost income ratio regarding the size and the mix of this new entity.
Sandro Pierri: So look, I'm going to take the questions on the cost income, a reasonable level of cost income for that platform. Look, if I -- if I look at the business mix, including the fact that the starting point of BNP Paribas Asset Management, there's a larger share of external distribution, which clearly comes with a higher cost. We plug all the different elements. I think the 60% cost income is, I would say, on average year in year out would be, I think, a realistic target to have in mind.
Lars Machenil: And with respect to the impact of the improvements, several of the improvement that we mentioned you have to see the effect is being like in '28. So for example, when you look at Personal Finance and BCF, basically by '26, it will be 0.5 point is the impact. The same is true for AXA. The impact comes over time by '28. So that is -- it's -- you should see the phasing of the impact over time by '26 and by '28, and then you get to those numbers.
Pierre Chedeville: So we have no -- but to improve the 12% in 2026.
Jean-Laurent Bonnafe: You can have hope in banking, of course, but the reality is that the trajectory and the commitment is to deliver 12% return on tangible equity in '26. Again, Personal Finance and the French Domestic Bank, we provide 50 bps in between '25 and '26 and again, an additional 50 bps in '27 and '28. Then AXA IM, because of the, I would say, restrict cost in '26 basically is not going to improve the return on tangible equity. '27 is going to be still a bit shy and you will see full speed in '28 and even more in '29 and are probably more looking at '30. So this is progressive. The Belgium Bank started this year will accelerate next year, but this is '27, '28 and Polska remember that we have to pay next year a level of tax that is slightly higher than this year. I mean, they pushed up the rate that was around 30-something from [ 18 ].
Lars Machenil: Yes. So next year, we're going to pay EUR 50 million to EUR 100 million more in Polska, it will...
Jean-Laurent Bonnafe: So all these levers are in place. 12% is the target from '26. If we can deliver a better target, we'll try. We'll do our best, but 12% is the target. '28 we're having 13%. This is the target. And '30 so probably is going to be at 14% because as you -- as you remember, I mean, we're moving the group up by 2 percentage points of return on tangible equity every midterm plan. This one is from 10% to 12%. The previous one used to be from 8% to 10%, and the previous one was to be from 6% to 8%. And probably, the next one is going to be about 12% to 14%...
Lars Machenil: But you have to come back in '27.
Operator: Gentlemen, we have no more questions registered at this time.
Jean-Laurent Bonnafe: So thank you, and we'll deliver. Thank you so much. Take care.
Lars Machenil: Thank you. Bye.
Jean-Laurent Bonnafe: Thank you so much and have a good day.
Operator: Ladies and gentlemen, thank you for joining. This concludes the call of BNP Paribas Third Quarter 2025 Results. You may now disconnect.