Executives: Lars Machenil - Chief Financial

Officer
Analysts: Lauren Torres - UBS Tarik Mejjad - Bank of America Merrill Lynch Jean-Francois Neuez - Goldman Sachs Jean-Pierre Lambert – KBW Bruce Hamilton - Morgan Stanley Delphine Lee - JPMorgan Kiri Vijayarajah - Barclays Capital Robin Down - HSBC Flora Benhakoun - Deutsche Bank Jacques-Henri Gaulard - Kepler Cheuvreux Alex Koagne - Natixis Federico Salerno - MainFirst Stefan Stalmann - Autonomous Research Pierre Chedeville - CM-CIC Market Solution Nick Davey - Redburn Partners Anke Reingen - RBC Capital Market Damien Souchet - Morgan

Stanley
Operator: Good afternoon ladies and gentlemen, and welcome to the presentation of BNP Paribas First Quarter 2016 results. For your information this conference is being recorded. Supporting slides are available on BNP Paribas IR website www.invest.bnpparibas.com. [Operator Instructions] I would like now to hand the call over to Lars Machenil, Chief Financial Officer. Please go ahead, sir.

Lars Machenil: Hello fine ladies and gentlemen. Welcome to our first quarter results presentation taking place from [sunlit] Paris. In our usual way, I will take you through the first two chapters of our Q1results presentationand then swiftly hand it over to you for questions. So starting on our key Slide 3, in Q1 revenues of our domestic markets and international financial services help up well, while overall the quarter was affected by a very challenging market environment, and particularly at the start of the year. Globally group revenues came in 2% lower versus last year attributable to our diversified business model.

Moreover, good cost control translated into a 2.3% reduction of the cost base this quarter, while cost of risk marked a significant improvement to stand at 43 basis points in terms of loan outstandings. Overall the group generated €1.8 billion of net income in the first quarter, which in turn lifted once again our common equity Tier 1 ratio by 10 basis points to 11%. The group confirmed its solid organic capital generation even in a particularly difficult market context. So zooming onto the exceptional items of the quarter on Slide 5, you can see that they stood at €319 million, mostly on the back of OCA DVA revaluation. Please also bear in mind the impact of IFRIC 21.

So Q1 actually fully accounts for banking taxes and contributions for the year, including the contribution to the Single Resolution Fund. Compared to last year total IFRIC 21 banking contribution and taxes increased by €75 million. Now advancing to Slide 6, you can see the good improvement of the operating income at Group level and that net income excluding one offs actually stood at 1.6 billion or 4% on last year on a comparable basis. This in turn means that we delivered a 9.4% annualized return on equity, excluding the positive one-offs or 11.2% in terms of annualized return on tangible equity. When calculating coherently with the underpinnings of the 2014-2016 plan based on 10% common equity Tier 1 ratio, the annualized ROE stood at 10.1% in line with our target.

So focusing on revenues of the operating divisions, you can see by flicking to Slide 7 that revenues of the operating divisions were impacted by the particularly tough market conditions of this quarter. For domestic markets it implied a drop in financial fees. In international financial services, the spot effect on the revenues of our insurance business [penalized] revenues, which were actually up 3% if we exclude this effect. And [CIB], we had a sharp drop in global market revenues. Leaping to the following Slide 8, you will see that as I said costs of our operating divisions were affected by an increase in IFRIC 21 related contribution and taxes, which had an impact of one point, so lifting one point of the operating cost.

Expenses this quarter were also impacted by the implementation of new regulation and by the ongoing strengthening of our compliance, but benefited from the ongoing implementation of our Simple & Efficient plan. CIB cost decreased on the back of reduced business activity this quarter. Generally, the quarter saw a continued control over operating expenses. Now shifting to the main point, which is the cost of risk, I would kindly ask you to turn to the three dedicated slides on this theme, and they start on Slide 9, you can see that cost of risk declined significantly to stand at 43 basis points of our outstanding. On the whole, they benefited from the good origination policy of the group and the low interest rate environment, which contributed to a reduction in the cost of risk in several areas as you will see.

Looking at the different businesses one at a time, in corporate banking we had another low-cost of risk this quarter, also on the back of all the proactive management we do. Looking at our domestic market on Slide 10, cost of risk was lower in all three networks, and especially at BNL, where we actually see the continued tapering off of the cost of risk on the back of our repositioning and we also saw a first reduction of the gross nonperforming loan stock at the end of March. In the other retail businesses on Slide 11, personal finance saw a sharp decline this quarter, the effect of the lower rate environment, but particularly the gradual shift towards products with a better risk profile imply a lower cost of risk going forward. To be fair, this quarter this effect was amplified by ride backs on the back of sales of doubtful loans. Europe-Med's cost of risk was at moderate level, while BancWest remained, what else can I say, at the very low level.

Bringing all of these efforts and effects together, you can see on Slide 12 the good performance of our retail and banking and services in terms of pretax income. Pretax income is the way you have to look at it in an environment of a low rate environment and so more specifically, domestic markets delivered 3.7% pre-tax increase and international financial services was up 6.8%. CIB decreased in this very challenging environment at the start of the year. The decrease is more than half if you exclude nonrecurring items, including [Indiscernible], and so as I said on the back basically of the first two months at the start of the year. Moving to Slide 13, you can see the now familiar update on our Simple & Efficient plan, which delivered an additional 179 million recurring cost savings in the first quarter.

I will remind you from this year we no longer incur transformation costs related to Simple & Efficient. So in a nutshell, we are already [bonding] 2.9 billion recurring savings and on track to deliver the 3.3 billion as anticipated. So if we top this off by turning to our financial structure on Slide 15, you can see the further improvements of our common equity Tier 1 ratio that I mentioned at the start. The 10 bps improvement was essentially driven by the Q1 results, of course, setting aside 45% for dividend payment. I will draw your attention to the fact that this was achieved despite the application of this IFRIC 21, which generated the negative impact on Q1 of equivalent to 9 basis points.

For those who are interested in it, our Basel III leverage ratio was stable at 4%, and our liquidity coverage ratio stood at 116%. Last but not least in this introductory part, kindly flick to Slide 16, where you can see how our net book value per share continued to grow as it has done throughout the years. At the end of March, our full book value per share stood at €71.7 as you can see, and if you prefer tangible, it exceeded €61. So finally ladies and gentlemen, and I will now swiftly go through the divisions and let us start with domestic markets on Slide 18. So loan demand continued to recover moderately in the euro zone as portrayed by the 1.2% loan growth of our domestic market.

Deposit gathering remained sustained with a near 4% increase driven by all networks and the development of our Hello bank! continued successfully as we onboarded over 100,000 new clients in this quarter. Moreover as you know, our fleet management business as well is proceeding with the integration of GE’s fleet services that we bought back in November of last year. So looking at the P&L of these domestic markets, revenue reached close to 4 billion, down slightly versus last year due to the combination of the low rates and a drop in financial fee this quarter on the back of the tough market context in the first two months of the year. Costs were 1.5% higher on a comparable basis owing particularly to increase in cost in the growing specialized business such as [Indiscernible] leasing solution and those in particular. Cost of risk in our domestic markets was lower across all the networks, especially at BNL leading to a pretax improvement as I said of 3.7%, leading to €0.7 billion pretax income.

Overall good performance in terms of pretax income for domestic markets, well then particularly French retail showing good income resilience despite the challenging environment; BNL being penalized by a drop in financial fees this quarter, but with an ongoing reduction of the cost of risk; Belgian retail generating a good operating performance and income growth; and to top it off, the specialized businesses delivering good sales and marketing drive and strong income growth. So in conclusion, revenues were impacted by the low rate environment and by the drop this quarter in financial fees. However, those low rates tend to create a more supportive environment and when coupled to our orientation towards the better risks to also provide a supportive environment in terms of cost of risk as a result, so pretax income up 3.7%. If we remain on retail banking and services, but let us flip to Slide 23 and look at the international financial services side of retail, which has showed once more good sales and marketing drive. So personal finance continued its strong business drive and did international retail banking and insurance and wealth and asset management showed positive asset inflow despite tough markets.

P&L, revenues were very visually a tad lower, but in fact they progressed by 1.7% on a like for like basis and particularly a Forex effect, and this thanks to a lower cost of risk, pretax income improved to €1.1 billion, up almost 8% like for like. So let us look at some of those in a bit more detail. Let us start on Slide 24 with personal finance, where outstandings increased significantly driven by higher demand across the Eurozone as the business continued to enlarge in partnership agreements with commercial partners as well as related to car loans. Generally our consumer finance business has been gaining market share on the main European markets. Personal finance revenues were impacted by this foreign-exchange effect during the quarter.

Net of this they progressed on the back of volume growth and a gradual shift towards products offering a better risk profile. The main growth I talked about it is Eurozone, but I can highlight Germany, Italy and Spain. Costs remained under control while cost of risk benefited from the move towards these better risk products that I just mentioned, as well as the low rate environment. This quarter, as I said [Indiscernible] had some material write backs from loan sales somewhat flattening the drop, and so as a result personal-finance delivered a strong pretax income growth, and confirming its good contribution to the group’s result. If we look at Europe-Med on page 25, business development has continued throughout Q1 with good pace of volume growth in both loans and deposits.

Turkey, we are continuing to successfully develop our digital banking, which I for sure pronounce badly, which is CEPTETEB, which has already attracted some 250,000 clients in its first year of operations. In Poland, we are effectively developing our cross-selling, as for example in consumer lending, where credit outstandings were up 9%. Revenues progressed roughly at the same pace as volumes while effective cost control led to interesting [positive]. In Poland, I would like to draw your attention to the fact that we are proceeding with the implementation of cost synergies following the integration of BGZ. So over the past year, this has led to a significant rationalization of the network with 118 branches closed.

Remind you we had a tad more 600 a year ago. Cost of risk marked a reduction this quarter compared to let us say a high level last year. So all this led to a marked improvement in pretax income. We came in almost three times as high compared to last year. If we now switch quickly to the other side of the Atlantic, Slide 26, BancWest maintained strong business drives as it continued to grow deposits and loans.

We also continued to steadily grow our private banking assets under management, which reached $10.4 billion at the end of March. So in a nutshell and given the low level of cost of risk, pretax income marked good progress increasing by nearly 23%. Now if you could kindly flick to Slide 27 on our savings and insurance businesses, which had assets under management totaling €944 billion at the end of March. Assets under management were impacted by the unfavorable markets in terms of performance effect; however, overall we had net inflows of €2.2 billion in the quarter. If we look at the insurance business, it continued to develop its activities as gross written premiums decreased by 1% at constant scope and exchange rates, and so this is a very good indicator for the operating performance.

However, revenues were impacted this quarter by the drop of financial markets vis-à-vis the strong increase of Q1 last year and as you know or may know, a part of the assets of the insurance business is mark-to-market and therefore it gives back some of that volatility. And as I said the underlying performance is up on the back of the increased gross written premiums. Costs reflected continued business development and high regulatory costs. Overall a continued good commercial performance for insurance, but a significant lower pretax income this quarter on the back of these adverse stock markets. Moving to wealth and asset management, revenues proved resilient in a difficult market [context], effective cost control translated into a moderate improvement of the pretax income.

Now if we end this by looking at page 29 on corporate and institutional banking. So revenues were down 15%, excluding FVA as the very challenging environment in Europe in the quarter impacted our global markets revenues. Operating expenses were meaningfully lower in Q1 on the back of lower level of activity and despite higher banking contribution and taxes. We also continued to reap the benefits of Simple & Efficient as well as the first savings from the implementation of our new transformation plan. So given a high level of other non-operating items in the first quarter of last year, CIB’s pretax income came in significantly lower, yet if you net out the impact of IFRIC 21 and FVA the reduction comes out around 23% lower versus last year.

So if we look at it in a little bit more detail, and let us cast your eyes on Slide 30 and 31. So starting with global markets, they were negatively affected by the risk of approach of our clients in the first two months of the year. Client activity actually recovered well towards the end of the period. Fixed income had low levels of activity in Forex and commodities but resisted well in terms of bond issues, where we confirmed our leadership in Euro issues. Rates and credit also had a good quarter.

Equities were down sharply versus a very high comparison base in the first quarter 2016 as you can see from the little bar chart. And in particular on the back of weak demand for structured products, which had [Indiscernible] in lower markets across Europe. Security services continued to gain new mandates, although the decreasing market also weighted slightly on its assets under custody. Nonetheless in terms of transactions it still recorded double-digit growth compared to the first quarter. In corporate banking, excluding the residual impact of the downsizing of our energy and commodity activities in Europe and Asia, which is now almost completed revenues were down just 3.6% in Q1, and in particular fees were down due to the low number of significant deals this quarter.

In terms of transaction banking, we saw however good performance especially from our cash management business, which continued to gain market share in Europe. So to sum it up, our global markets’ activities were the most affected by the rate of market environment although we saw a good recovery towards the end of the period. Corporate banking proved resilient as did our security services. So, on Slide 32, this is basically the end of my introductory remarks of our first quarter, and then if there are four things to take away, the BNP Paribas’ revenues held up well in a particularly unfavorable market environment this start of the year; Q1 saw control of our operating expenses and a significant decline in the cost of risk; and we confirmed the solid organic capital generation, which contributed to further improve our CET1 ratio, which stood at 11%, and we generated an annualized ROE in line with our planned target. So thank you for listening to me.

Ladies and gentlemen it will be my pleasure to take your questions.

Operator: [Operator Instructions] The first question is from Lauren Torres from UBS. Please go ahead.

Lauren Torres: Hi, Lars, thank you for the presentation. Just a quick number question from me, first in personal finance, I think you mentioned that you're moving towards lower with key customers, in which country are you doing this and what source of pressure on margins should we be thinking of because we have seen volumes up about 7%, and revenue up just 2% at constant currency and exchange rate, then my next question will be on corporate banking, could you perhaps tell me what was the contribution of the treasury function to the revenues for this quarter and finally regarding First Hawaiian Bank, what was the contribution of the business to the group’s ROE for the quarter please? Thank you.

Lars Machenil: Lauren, could you repeat the third question please?

Lauren Torres: What was the contribution of First Hawaiian Bank to the group ROE for this quarter please?

Lars Machenil: Lauren, thank you for your questions. So if I start with personal finance, so personal-finance what is this repositioning about. It covers several things. So it covers client segments. It also covers kind of products.

So, for example, products where you have more collateral guarantees, like for example, car leasing and also energy-related things like when people are readapting their homes. They are installing all kinds of battery packs, whatever it is that you want, and that is the kind of stuff that we talk about when we orient ourselves. Indeed that leads typically to some pressure on the margin but as you can see it is more than offset by the cost of risk. So the cost of risk people tend to see it somewhere – I don’t know where, around 200 basis points or something over outstanding. This quarter we are well below that but as I said it is a little bit flattered by some sales of nonperforming loans.

So I think a more realistic impact to show you that it is material would probably be here tending towards 20 basis points less in cost of risk over outstanding going forward. So that basically means that one would see 180 basis points as a trend instead of the 200 basis points that people might be thinking of at this stage, and with respect to your question on treasury for corporate banking. We don't disclose that, but basically they didn't move much between Q1 2015 and Q1 2016 and given well the relatively standard nature of what this does. With respect to the contribution from First Hawaiian I don't have exactly the calculation on it, but I think that the results on a yearly basis this roughly represents some 200 million in pretax income for the full year. So roughly a bit less than a third of what BancWest is, so I will let you do the calculation with that.

That would be my answer, Lauren.

Lauren Torres: Thank you. Just one clarification on personal-finance, that 180 bps is that more like the run rate we should be thinking of for this year and the following year?

Lars Machenil: I mean, we were not the kind of forward guiding kind of thing, but yes, the 180 would be something that would be guidance for this year to [Indiscernible], and of course going beyond that as well.

Lauren Torres: Okay, great. Thank you.

Operator: The next question is from Tarik Mejjad from Bank of America Merrill Lynch. Please go ahead. Tarik Mejjad : Hi, Tarik Mejjad from Bank of America, just a couple of questions. I mean last I know that you don't like much the questions about regulatory papers and to comment on them, but I feel I have to ask, so on the latest paper that was more than a month now, what is your read, do you feel that fits – it is getting more precise for you and getting large especially on the [Indiscernible] topic, and also what do you think about this corporate move – I mean, corporate now that has moved from [Indiscernible] would you think that is something that is true eventually and my second question is on the corporate center, I mean, the principal investments contribution to core revenues is quite sizable, what is the way to think about because that is really quiet. I mean you have done a great job to cleaning up the corporate center and distributing that through the business units, but this is probably the last element in revenues to look at, so how should we look at it in sort of a sustainable basis? Thank you.

Lars Machenil: Tarik, thank you for your question. When you talk about “papers”, I suppose you are being very nice to avoid the word Basel IV or whatever it is. So I guess that is what you are talking about. And so the thing is intrinsically, our view is still the same, so on one hand we have the governors of the central banks, who are presiding at Basel, basically say that whatever is being developed is to make the system more robust and shouldn’t materially increase the capital requirement. So that is on one hand.

On the other hand, if you look at some of the papers that are coming out, it seems to be that there is some kind of a list. Now these two things are not necessarily perpendicular because as you know I mean there is still a difference between the metric and your capital requirement. For example, in the market risk you have the VAR, which is defined one way, and then there is a multiplier that leads you to the capital requirement. If you now go into a new metric, which is probably more robust, which is a good thing and which might be higher than the heritage VAR, you could still bring this together by saying well, my multipler, my calibration will be such that I take these things into account. So what is very important now is the so-called QS, or the quantitative impact study, which we will be going where basically Basel will be able to see the estimations of these kinds of evolutions and will then have to take a stance on this.

So this is ongoing and then I’ll remind you that this is then still the Basel process. After that, as you know, this has to pass through the European parliament in order to be cast in gold or particularly to become law. So there is still a lot of due process to be ongoing. So that is what I have to say about these kinds of reflections around Basel on RWA. With respect to corporate center, yes, the thing is, listen; I wish just like you that I could give you a precise guidance on principal investments.

The thing is if I could I would have probably played the lotto as well and won, and I would be, as you know, my expression I would be sailing in the Bahamas, and so it is very difficult to guide. We have guided – we have given an update in our guidance of corporate center. So indeed, we emptied it for some residual effect and then there is still investments, which is in there that we said that in the past we guided towards zero. We updated that and we said that basically we would guide that in a normal year, we should be around 100. So, we had a strong start to the quarter.

So this is not lost. So what is my best thing to say, if you look at our overall guidance, you should expect 60 million to 70 million going forward for each of the quarters, and I think you should consider that the advance that has been taken in the first quarter to stay. So that basically means that the guidance we gave for more like let us say around 250 million for the year you should upgrade that to something like 450 million for the year.

Tarik Mejjad: Thank you. Just a quick follow-up, I mean, about the Basel papers, I was also referring to the [Indiscernible] physical assets as well, which is the most relevant I would say.

Lars Machenil: Yes, but it is the same, right. I mean, overall, when Basel started working both on the market risk, the operational risk and the credit risk, the statement remember made on what was it December 15, is saying that they shouldn't have a material impact and so indeed if you look at some of the tax, they can lead to increases depending on still calibration and the like. So, at this stage it is too early. The process is ongoing. There will be a QIS.

People will look at that and will take it from there.

Tarik Mejjad: Okay, thank you.

Operator: The next question is from Jean-Francois Neuez from Goldman Sachs. Please go ahead. Jean-

Francois Neuez: Hi, there.

I just had a quick question on the French retail business for starters, I saw that the loans were down 1% on a quarterly basis, and I just wondered why that was in comparison to the Bank of France data, which looks to be pointing to stronger loan volumes rather than weaker loan volumes, and in relation to this whether that leaves you comfortable with your kind of flat guidance for the full year revenues in French retail, also in the context that we had the right cut against – for all of these Eurozone based retail businesses recently with ECB. And my second question was on the developments in Italy, you might have seen obviously that there has been some sort of a vehicle setup designed to potentially speed up the recovery or the disposals of NPLs, I wondered what your stance on it is, whether there is any way for you to accelerate disposals and potentially bring forward the decrease in cost of risk in Italy or whether that is more of a distant prospect?

Lars Machenil: Jean-Francois, thank you for the questions. So, on France, so there is two questions, right. There is your question on the volumes, and there is your question on our guidance of revenue flat. Indeed, if you look at volumes and if you compare that with some of the generical figures, it is true that one could observe a little lower figures, now there are several reasons for that actually.

One of them is that it might be that there are differences in origination and it might be that some banks are more cautious regarding their originations, for example, very long-term mortgages at very low rates. So this is something, which can impact volumes. But in our mind, we are cautious on this and we basically favor the long-term profit over the short-term boost of revenues. Now, moreover, let us be very frank, as you know, we have been adapting over the last three years already, our branch networks, and we have adapted it to our – to the new customer expectations. We have in total reduced by 191 our branches; created new branch formats depending on if they are in the high street or in suburbia and the like.

And that is for sure you understand working on our point of sales could also have impacted somewhat the business compared to the overall statistic. But however, we are of course, countering this competitive pressure and we have taken several commercial measures like strengthening the teams and ensuring the smooth adaptation of the different client segments and so that is what is ongoing and we saw at the end of the period the uptake in loan origination. So that is on volumes. When it comes to the revenue, the volumes that we see are basically in line with what we guided for, namely that our top line would be flat. However there is one thing.

I mean, I mentioned that the first two months were a bit rocky in the markets and of course the main impact is in our global markets, but there has been somewhat of an impact on our retail side as well related to the financial commissions. And so, well, the financial commissions that didn’t take place or the transactions that didn’t take place in the first two months, well, are they going to be recuperated over the year, well, on the retail side that is not necessarily sure. So we could be in line with our guidance, but barring maybe that impact on the financial commissions on the first two months. When it comes to Italy, yes there is indeed this private sector initiative which is called under its Italian name Atlante which I am probably also pronouncing not the way it should be and which is something and we indeed looked at. It’s a vehicle which is a bit multi-purpose but which in the end, in our opinion is going to be one to indeed as you say try to help address the non-performing loan situation in Italy.

As you know for us BNP Paribas Group, this NPR exposure we have in Italy is very manageable and so we basically decided to continue to address our NPR situation by our own means. So there would a bit might be a long answer to your two questions. Jean-

Francois Neuez: I just wanted to, I picked up what you said in French retail with regards to commission you [indiscernible], I took it almost as a hint that in this year [indiscernible] you might recuperate some of the loss revenues in the first quarter later in the year, here something you have seen so far in the quarter?

Lars Machenil: I think the difference stands to take into to two. I mean in typically under retail, you have the typical monthly kind of average turn that takes place and so with these transactions didn’t take place at the beginning in one or two months, it is not sure that they will come back. However if you look at CIB the stance might be different.

Lets take for example one of the things which let to uncertainty at the beginning of the year was uncertainty around the regulation, around subordinate the path, right? During the first two months, nobody came out within 81 in the Euro zone, it’s basically BNP Paribas who reopened that market for euro zone back at the end of March. Now the question is, how will the clients react? Do they have total volume in mind for the year and therefore where they do this volume in the 10 months instead of in the 12 months, or will they similar to maybe what you could see in retail behavior just say no, I have divided my total volume by 12 and I do one 12 every month. So that is what one has asked to remain to be seen but of course as I said we did bigger back to the normal trend in the last month of March. So yes there could a differentiated effect but it's just that too early to say.

Operator: Next question is from Jean-Pierre Lambert from KBW.

Please go ahead. Jean-

Pierre Lambert: Good afternoon, thank you for the call. First question is on BNL. You saw that NII has 10% of fleet and this is related in the presentation to the repositioning of the better or improved corporate clients. I was wondering if you could give an indication of the increase in lending to the new client base and also if you could give some indication about whether we have reached a low point and from here there could be some improvement in revenues.

Second question is regarding the implementation of the CIB plan. There has been news on the wire indicating that you are considering 18% percent reduction of CIB staff in France, can we expect the same kind of same type of proportioning outside of France and also at quite space, we can expect the cost of CIB to fall during the course of the year if it's a front and at backend or if it's going to be progressive? And finally third question is on the preparation of your business plan you're working on, are you going to take into account the impact of lower NII in the size that you will implement further cost reduction to address the further impact which is going to come given the rates configuration. Thank you.

Lars Machenil: Thank you for your question. So let's start with Italy and indeed in Italy as you know very well we have been repositioning ourselves on the better corporates which is one of the reasons why as I said our cost of risk is tapering off.

And so of course typically the margins on these clients are at that lower but as you know if you take the like the larger of corporates, we are a natural bank to them. A natural bank in the sense that we can cross-sale on them and so on and so forth which does not always necessarily fall into the P&L or B&L. Also B&L in particular just like in France and in Belgium we had the impact of the stock markets which led to lower a punctual financial fees. And then thins is that indeed with respect to these better counterparties, there is of course a competition which is ongoing without a players which of course leads this pressure on pricing. So this is where it is.

I mean all of this is expected to have a gradual pick up due to the volume growth, so all of this is expected to improve. However I mean realistically, you should assume that the evolution will remain negative even for the full year. So it will recuperate from the low point where it is now but did all these processes taking time, I think one we will still be facing some negative income evolution. Sorry I have to take a sip of water, I'm a little bit allergic to low interest rates environments. And so yes, and so just I said, I have to emphasize before I lost my voice a bit, so there is a punctual effect of the financial fees which I had typically for what you see how the markets are recuperating.

So this is something that we will recuperate on. Also, as I said on the clients and on the volume growth which is picking up, we should see an improvement. So this is on Italy. On CIB, yes on CIB as you know, we have launched our program which is along three axes. It's an access to focus on specific kind of product.

It's a improved. So it's an improved in cost to serve and it is a growth aspect. So this is what we're doing which basically means that we basically involves some repositioning in some areas and so this means changes in each of those directions where we reactive. And this means everything. It also means that we will hire 200 people in order to guide and implement our digital strategy and this is something on your question on how it is frontloaded or not, this is something of course which we do in the relevant due-diligence of each of these jurisdictions.

So this means that this plans goes jurisdiction by jurisdiction one at a time. So it is more kind of a progressive and then frontloaded kind of approach that we are having on CIB. With respect to your plan 2020, yes I remind you of course indeed that overall in the improved part which is I remind maybe I should us all, so this overall plan aims to improve the pretax return on equity by eight points and five points of those are stemming from the improved parts, the cost saving parts and that is the element that we talked about and that go on as jurisdiction by jurisdiction. When it comes to your plan 2020, as always we make of course plans, in a baseline scenario and in a downbeat scenario, made maybe for our own mental health we should also do a positive one but that's typically how it goes and so it means that we of course have some forward guidance with all the actions being taken by the ECB of the net interest income and so we take those into account. And meaning, taking those into account, what does that mean I think that's very well illustrated, around our first quarter results.

I mean we've all, most of us have already lived low interest rate environments and what you do in such a case is you really have to focus your value creation of the pretax income which basically means that you can work on re-pricing, you can work on pricing, you can work with the own fees and the like, you can work on your cost and you can work on your positioning meaning your cost of risk. And you have seen all that because look at our results, domestic markets pretax income up 4%, international financial services almost 8%. So that is what we are doing. So, yes we do take them into account but of course we focus on the full value creation around the pretax income and we will take as a light motive all of these elements in our reflection process. Jean-

Pierre Lambert: Thank you very much.

Operator: Next question is from Bruce Hamilton from Morgan Stanley. Please go ahead.

Bruce Hamilton: Thanks, three questions if I may. Firstly, on CIB [indiscernible] alluded too much picking up that is the January February sort of run rate and I just wanted to understand what that's been kind of sustained in Q2 and if you could give a little bit more color around which product areas have seen improvement. Secondly on sort of energy related risk.

Since you are provisioning, it is very benign across the business units including CIB but could you give us an update of how you were thinking about risk given that many of your peers have seen some uptick and indicated that there were some risks certainly for the sort of EMP and offshore services areas, have you have seen any negative credit migration or anything else might signal sort of problems to come? And then, third and finally just on regulations. I think, I mean in the past in operational risk has been an area where you felt there could be some movement where EMP was more of an outlaw, is that operational risk still be the area that you think could be a big deal for you relative to the credit flows? Thanks very much.

Lars Machenil: Bruce, thank you for your questions. So, well as I said on CIB we not forward guiding, so it will be my pleasure to talk to you again at the end of July but there are some things to be drawn from the March evolution and as I hinted already and when answering to [indiscernible] that I mean if you look at why was it particularly unfavorable in the first two months, there is a reason there was uncertainty about global growth prospect. There was uncertainty about the regulatory approach to subordinated debt.

And then, there were also concerns about the monetary policy and so these kind of things somewhat let's say crystallized out in that last period because authority said yes, we have to get the regulation involved and as I said that allowed us to basically reopen the AT1 market. We also saw some indications for example, in the Euro zone that the Euro zone is somewhat weathering due to global slow down on the back of resilient domestic demand so there are some indicators that basically made March what it was compared to the first two. So that is a bit what we see. And so, for us it basically means that the clients are there in the market, will they now do 1/12 of what they foresee in the year or will they basically do bit more that is what we will have to see. But indeed, for us it confirms that we have to be there next work line institutional and corporate I mean it was reconfirmed that we are as I said number one in Euro bond issuance, but also in cash management so for us I mean this is what we see.

So but I will be very pleased to talk to you about this in July to see how it will unfold over the full quarter. When it comes to energy related I will remind you couple of things I will be broken records I guess but I reminded you that our expose is relatively limited. It's focused on the all majors and on the national oil companies. We have guided last time I remember that what we expected when we did this stress test remember oil was spot a bit above 30 and forwards, even a bit more and we said that everything would be flat lined at 30 we would be able to have the cost of risk in the normal run of the middle of what we see at CIB. And so, this is basically what you see and I remind you this is a bit the same drill as what we do on cost of risk our cost of risk is low with respect to CIB and of course as I said we do have exposure in oil and gas which I said at the mill, but we proactively adapt that we have been ramping down our oil and gas for example even this quarter our oil and gas exposure has further been reducing so that is basically well you know, how we manage this and this is how you see it in this low cost of risk environment.

And so, now that the oil is well above 30 this guidance that we did of course remains. When it comes to let me take my crystal ball Bruce with respect to your questions on relative impacts between things like operational risk and the likes. Listen I do know if there would be different I mean what is on the table now is an operational risk without also tries to modulate in so memory which also tries to take into account past the things and so forth and so depending on all that modulation I mean bank with a good track records might come out still better than average so honestly whatever I say will be wrong I mean as I said the situation is the governor said overall no major impact and now we have to do the QAS but anyway in operational risk of course for us it well operational risk is dwarf of course and absolute terms compared to credit risk but honestly there is nothing sensible or rational I can say about it at this stage.

Bruce Hamilton: Okay thank you very much.

Operator: Next question is from Delphine Lee from JPMorgan.

Please go ahead.

Delphine Lee: Good afternoon Lars. Just two questions on my side first of all just wanted to come back on the insurance performance on revenue which were quite impacted this quarter I don't know if you can comment on how you see that evolve for the full year and the second question is on equities, it says well where revenues were down for high quarter in last year but if you have any comments on how the demand for structured products is evolving from here that would be quite helpful? Thank you very much.

Lars Machenil: Delphine, thank you for your question on insurance. So yes, what you have, I mean as we are basically presenting our chart of accounts in a bank kind of few shoe horning insurance into it sometimes lead to so migrations as we see here, because as a reminder I mean an insurance what do you look at you look at the gross rate and premium and those are above 1% on annual basis reduce the operating result out of that and that operating result is at over the quarter.

However, some of the assets are marked to market and so for example some of the elements the usage which are used as investments for the general insurance fund is basically going to P&L and so that basically means that in a given quarter you can have the affect of the market. So where will that be at year end. Well, you take into spot effect of what you see of the market and tell me where you believe basically the stock markets will be at year end and I will tell you where that will be. So when I remind you that the overall performance of course is being assessed over the full year and just as a final point you have some of these revaluations which are going to P& of course you have as a total picture parts which are going to OCI and all that has to be bundled when you decide at year end on your overall performance of your insurance contract. So that is on insurance on equities yes if you look at CIB as I said it's impacted the top line by 16% if you look through the [indiscernible] if you look at your [FIC] has I think relatively being doing well.

On equities indeed there is a couple of things so first indeed if you look at the little bars on the chart you see that we had a very strong 2015 with high equity market and then you had but there is a little bit more to it. As you might know and being [indiscernible] to some other houses is basically oriented in its consolidated figures on to derivatives rate of products, so structured products and the like. As a reminder we do have indeed a very nice and very efficient and productive and very good and how it’s called exam but exam is finding its way through the equity accounted activities and not a true the top line. And moreover derivatives activity is mainly focused in Europe and Asia and there we saw much lower demand for those products compare to a very high demand year ago and that is what basically explains this evolution quarter over quarter. So that would be my answer Delphine.

Delphine Lee: Thank you very much.

Operator: Next question is from Kiri Vijayarajah from Barclays Capital. Please go ahead.

Kiri Vijayarajah: Yes. Good afternoon Lars.

Firstly on corporate banking you priced it to 5% growth in client in loans there which is pretty decent but given the oil and gas tickets are probably sinking year-over-year I was wondering what segments were driving the volume growth there in corporate banking. And in terms of the sail of MPLs in personal finance I wonder what was the trigger here was it just an opportunistic sale or you are trying to free up capital to grow the loan book maybe more aggressively in the personal finance and what the scope maybe more disposals of MPLs through the rest of the year please? Thank you.

Lars Machenil: Kiri could you repeat your second question?

Kiri Vijayarajah: Yes, just on the sale of MPLs in personal finance really what’s the thinking behind that what was the trigger for you selling those MPLs it sounds like it seems like you booked you are able to sell them above your carrying value and if it's really about freeing up capital or what’s just opportunistic someone came along offered you a good price just your thinking there really?

Lars Machenil: Yes. So thank you, so yes on corporate banking indeed there is a couple of things so we did saw in the run of the mill, we saw industries and that were performing well I could think of Telco, I could think of media infrastructure so that if that however indeed if you look at our top line you having need to take into account that the energy and commodities have somewhat been ramping down and then also the things that you don't see in the balance sheet or not directly into the balance sheet is that there was an absence of let's say big ticket financing and advisories in the first quarter 2016 whereas we had some of those year ago. So that basically and again for us I mean on this is on track for our plan because we remained very syndicated areas we have a gain market share and things like cash management EMEA, so that's fine.

When it comes to your question on MPL and personal finance this is a bit part of the run of the mill things right I mean payoff as every part of the bank we have to financing we have to meet capital matrix and the likes and so that basically means that you would try to optimize every single day this kind of thing but again optimizing doesn't mean selling at whatever price so at some point in time you can you have a set of things that you can structure that your system allows to off board and for which there is a market which is appropriate and in that case we will do this and indeed in this case they left to selling somewhat above the value we have marketed in our books. But that's Kiri you know it was right that shouldn't surprise you I mean we typically are on the conservative and of the provisioning matrix so that will be my answers Kiri.

Kiri Vijayarajah: Okay great thank you.

Operator: Next question is from Robin Down from HSBC. Please go ahead.

Robin Down: Good afternoon Lars. I have three questions really, the first is just to come back to Jean-Francois question there about front resell. You still shrinking the mortgage book there and my understanding was that your strategy on the mortgage market was trying to avoid the sort of longer dated fixed rate mortgages due to kind of inappropriate hedging cost. But are you planning on getting back into the mortgage market or is there any point in which we are going to see some stability there in terms of what is kind of the core product for you. And the second question is really more on sort of detailed question the 880 million of IFRIC 21 elements you have got, I wonder if you can break those down for us by division just would be helpful? Thank you.

Lars Machenil: Thank you Robin. And with respect to French retail, so yes it is true that we are a bit cautious on the long term once for all the reason that you mentioned like the hedging and the uncertainty around it. But it doesn't mean that we are not interested to go into that kind of activity, but overall the quarter was still impacted by repayment so that is why it's down if you look at particularly as I said at the end of the quarter you saw positive loan origination so it's not that we are out of the market we just careful into how we move into that market. When it comes to IFRIC 21, so if you look at it and this is the IFRIC 21on banking taxes and levies, so a big chunk of that is stemming from the systemic taxes and the resolution front, and so I don't have the numbers here. We will give you a call Robin but what is important to know is that on these cost systemic ones and the resolution fund they are basically calculated on the liabilities and so they are calculated on the liabilities bar the capital and bar that guarantee the deposit so if that part which is in between your bottom part of the right hand side of your tea and the top hand side of your tea.

And so the activities within the bank that have a lot of that let's say of that part are basically getting a larger part of those cost and so we save the business that has not necessarily a lot of deposit guarantees it's basically CIB. And so half of these almost half of these of the increase of these cost are going into CIB but we will give you a call back Robin to give you more details. Robin?

Robin Down: Yes. Thank you.

Operator: Next question is from Flora Benhakoun from Deutsche Bank.

Please go ahead.

Flora Benhakoun: Good afternoon. My first question is on the tax rate I was surprised to see such a lot tax rate specially for Q1 I think it's normally higher in Q1 so the first question is whether you could give us some insight on what kind of tax rate we can expect on a full year basis? The second question is on the order value base the order values were down 7 billion versus Q4 and you mentioned in the slide back that this was mainly due to FX, so actually whether you could tell us how much was the FX impact and whether there was also an FX impact on the cost ratio because I think you normally hedge at the quarter one ratio lever? And the last question please whether you could maybe update us on your exposure to meters, mining and shipping because we have seen provisions that other banks on such exposure? Thank you.

Lars Machenil: Flora thank you for your questions. So on the tax rate yes you are right I mean we guided earlier on towards the 32% corporate tax rate for the year because let's be clear tax rate is something which has to be considered on a yearly basis because indeed every quarter has sporadic events which specific tax treatment and so a given quarter doesn't make the year and I think of things like dividends, sale of equity stakes and the like.

And so, indeed as I said we guided towards 32% and I will give you some elements of why it's lower and I think that with those elements we can guide that 31% and it's probably more realistic tax rate so somewhat lower tax rate for the year than what we have guided for and so what is this. So when we talk about these sporadic events which specific tax treatments there is of course IFRIC 21 or which some elements are having a specific tax impact, and but there is other stuff. There is stuff like the relative contribution in the pre tax income of each business in various geographies and there is also as I said there is sporadic items in the pre-tax income. And if we compare this for example to last year and one of those if we look at those distribution of profit we have a substantially increased relative contribution of profit generated in regions with lower income tax which leads to of course the decrease at the group tax rate an example is I talked about it as Euro Mediterranean which has a tax rate which is more like around 20% than around 40% and as you see in our pre-tax income have gone times three versus the first quarter and then you also have that the tax rate actually over the period has reduced in certain countries. So these effects basically lead to a somewhat lower tax rate and part of it as I guided is structural and so we should, we think that 31% is a better guide on income tax for the year than was previous 32%.

And when it comes to your question on order value, so yes indeed we typically have kind of a hedge in place between the evolutions of the common equity one and the RWAs and so that is why when I explained the common equity one ratio evolution I basically don't mention it, meaning the two offset each other and you can read the effect of the intrinsic evolution as being the driver. And so, the intrinsic evolution of the RWAs is basically stable and so the intrinsic evolution of the capital is up on the back of course of the 1.8 billion of bottom line generation of course -45% of dividend and the likes. So that is the rational so what is with respect to the RWAs basically being flat that's two things there is of course as you have been some growth which is reflecting on the RW but what you have also seen is that we are improving significantly of course the risk which is therefore also translating in some of the parameter which are to some extend providing the compensating effect. So that is where we stand on our RWAs, on the exposure so as I said oil and gas is basically down metals and mining is basically stable and shipping is small and there is no specific mention observation about that to be made. So that will be my three maybe a bit long answer to your questions Flora.

Flora Benhakoun: Thank you very much.

Operator: Next question is from Jacques-Henri Gaulard from Kepler Cheuvreux. Please go ahead. Jacques-

Henri Gaulard: Yes good afternoon gentlemen. Three questions.

The first one you are talking about the capital gains on BancWest quest revenues and on the principal investment operation. Would it be possible to quantify that? I guess the second question little bit wider considering the importance of principal investment it's been out for over the last quarter over the last year I would even say wouldn't it make sense to effectively turn it into a proper business line and effectively segregate it something to consider maybe in your next plan and lastly I know you have given the guidance on the corporate center but can you please go back to the rational making the guidance going from 250 to 450, I am not sure if it was the revenue level or the capital gain level just to make it little bit proof on the Tuesday afternoon? Thank you Lars.

Lars Machenil: Jacques I thank you for your question and so on the capital gain for BancWest quest so indeed if you look at it and you see that the volumes are at BancWest are roughly at some 7.5% whereas the top line is up some 15%. So let me add the complement that basically the margins are relatively stable so that means that if the margins are relatively stable you would have your volumes being represented for your intrinsic top line evolution and the delta being the impact of the one of sales. So basically I would say half of the evolution standing from that.

And so that is on BancWest. On principal investments I take your suggestions I will incorporate that in the reflection of evolution of [indiscernible] and our plan. When it comes to bullet proofing the corporate center so the corporate center we basically said that after we have cleaned it we basically anticipate an average year to be an average year of full quarters to be clocking in around 250 million standing for apart of principal investments at we basically put at hundred something million so what I have guided at is saying if you look at the first quarter which almost is basically that results sort of 250 basically means that you would have 60 million – 70 million every quarter. So what I have guided at is well the gains are there so you can look in the first quarter I cannot guide today about any further evolution or ramification principal investment because you have one good quarter that you have two good quarters so my suggestion is take look in what you have in the first quarter and take the guidance of 60 million to 70 million a quarter for the next quarter and that basically leaves at to let's say 450 million or so for the year. Jacques-

Henri Gaulard: Okay, understood, thank you.

Operator: Next question is from Alex Koagne from Natixis. Please go ahead.

Alex Koagne: Yes hi Lars. Just have few questions remaining the first one is just on what you said regarding re-pricing if we look at the revenue then the cost excluding the corporate center revenue are down 6% year-on-year and cost are down only 1.4% year on year. So the question is I guess you might be working on a new cost initiative but when we talk about the re-pricing do you really think that we can see re-pricing happening when rate are so low, this is my first question? The second question is on the cost of risk at the group level should we expect this level to be let's say stable or the run rate going forward or do you think that there might be some increase in the coming quarters and I mean those one are my last two questions? Thank you.

Lars Machenil: Thank you Alex and so yes, with respect to re-pricing, well re-pricing to some extent is working I mean as we said for example in France we announced that we would charge for services and so this is what you see. Of course this quarter in particular I said there is a bit, the impact of the first two months having a kind of compensating effect, but you do see that re-pricing is something which takes place. Now your analysis being correct but I mean I have to give you some guidance on two elements. So of course, the first quarter is in particularly impacted by the list of IFRIC 21, I mean you can do whatever you want but I mean I get these number late this is the increase with days, I cannot within that quarter or outside it so this is something you have to see on a yearly basis. And the same is true and this is relevant right this is providing 1% of risk of those cost I mean this is not something I am not saying we except this as an act of god but it takes it take the year to basically work on that.

The second thing is with CIB and CIB you have this punctual drop I mean there is things that you can crawl back on your cost but you have a set of fixed cost that you cannot crawl back and that you do not want to crawl back because the business is basically bouncing back by the end of the period. So that would be that but if your concern is re-pricing I think you can clearly see that in Belgium where we price with that pricing interest and we adapt the pricing in other areas like for example also in the US. So from that point of view it is a lever, but again I cannot stress this enough when making a plan it's the pre -tax income which counts as a value creation so there is re-pricing there is fees, there is cost and there is cost of risk. And that brings me to your last question on the cost effect so indeed when we said there is a significant drop at the cost of risk there is a big part which is basically because we work at it and working at it means positioning ourselves on the better counter parties as you see in Italy I mean that is tapering off. As it is in personal finance that is tapering off.

Yes there is a little bit of reject. There is a little bit of flattering but it's intrinsically going down. Then there is CIB, I mean CIB we said it CIB we also act upon it I mean when oil and gas start to become a concern, we ramp it down we continue to ramp it down. We basically actively manage these exposures so that's what it is and then let be fair the fact that we have an environment of low interest rate makes that in an environment like France, Belgium, US well you can see pose that this low cost of risk assisting and these are material numbers on the bond of the group I mean as I said personal finance we guided for down from the 200 basis points to 180 basis points. For Italy over the turn we said we have guided to 80 basis points but going from the current to 80 basis points means versus 2015, 600 million less cost of risk so yes I mean it is something that we work on and it is something that you see in our cost of risk and something we take into account and I take it, you take into account in your overall evaluation of the value creation of BNP Paribas, so that will be bit long answer to your two questions Alex.

Alex Koagne: Thank you.

Operator: Next question is from Federico Salerno, MainFirst, please go ahead.

Federico Salerno: Hi Lars. Quick question on liquidity please you had a significant increase in your liquidity reserve in the quarter more than 10% more than 100 billion Euros however the HCR failed by 8% point if I am correct could you provide an explanation for these seemingly awkward trends. Thank you.

Federico Salerno: Yes well it's not seemingly awkward it is just the effect of the regulatory stress so the two metric one of them is a real life kind of matrix by saying what is the liquidity that is being deposited and this immediately being available. And there is indeed a pickup of it, but I mean what do you want I mean in the way that ECB is transmitting its monetary policy there is a lot of still liquidity which is finding its way and which is implicitly a bit finding its way back into the banks while it waits to be finding its way into the economy. So that is why you see in real life you see a pickup of these kinds things. Now at the same time when you look at the LCR, the LCR is a metric which is basically a stressed metric which they seem to account the different natures of the kind of the deposits and the redeployment thereof and sometimes treat the redeployment of that in a metric particularly when we think about some elements in market. So yes, there is no simple link between them it's just the same thing with the leverage ratio which you have been very kind all of you not to mention too much about so I appreciate that but it's the same thing.

You see evolution is a leverage exposure which are not necessarily directly linked to the balance sheet so these two metric each have their purpose one is clearly indicating the flushed liquidity that we have that is available and the other one is stress parameter to show how much liquidity in your current configuration and in your current deployment is available in after 30 days stress.

Federico Salerno: Thank you.

Operator: Next question is from Stefan Stalmann from Autonomous Research. Please go ahead.

Stefan Stalmann: Hi Lars.

I have two questions left please coming back to this wonderful vehicle in Italy, Atlante, are you actually going to take a stake in that and if so what do you expect the accounting of that look like and the second question regarding the US I guess you have already setup your intermediate holding company it is already clear how that has to be capitalized? Thank you.

Lars Machenil: Stefan thank you for your question. So as I said on Atlante and which is a private initiative right. I mean if the private initiative which started to say that on one hand we want to use part of the capital to provide capital increases to banks but then they said we quickly want to get out of this so that the fund can basically be oriented itself to the non-performing loans. And so, as I said this is very good initiative but on the boundaries of BNP Paribas Group the non-performing part is something which is very manageable in size and in impact and so we basically continue to operate in our, to address these in our own way.

When it comes to handling these if you would go into that how does it work well it depends I mean do you have more than 20% or not so is it something you would have to consolidate or not do you have between 10% and 20% then you wouldn't consolidate but you would have to take it in your prudential metric of the small franchise so it depends a bit all on that and then it's something which prudentially you should look at in a look through basis so meaning for example NPL that is risk weighing above 1000% so that is a bit context of this fund and as I said we given the scale of things, we continue to address them by all means you have seen it of course the risk is tapering off so we are addressing it in a good way. And more over we keep on fueling a lot of let's say resources into Italy, into our clients you might have seen as I mentioned our personal finance our lending is up in domestic and you have also seen that for the pure retail part, the loans are up in this quarter. So we’re really standing by Italy to win its clients, with our clients and we continue to address the non-performing loans by our own means. On IT, so the thing is on IT, it works a bit different right I mean if you look at the way for the Euro zone, the SSM managers capital requirements it is part of a basket of things. So it looks at your internal capital requirement.

It looks at your business model it looks at your governance. It looks at the stress, it looks at all of these things and then in the end it basically says this is where I put your pillar too. Now in the US that doesn't exist as such, the pillar too doesn't exist as such and the capital requirements are not necessarily a basket of things and so you have much more, your [CCAR] kind of test where as you know a bank operates at a certain kind of level of capital provides with that snapshot of the capital of its balance sheet, detailed data which then basically the US authorities run stress storm and basically say fail or pass. And so, in order to do this you basically have to file your CCAR data and basically have received the best fail or not as you might know, BancWest is the one who is already as of now has [indiscernible] which what we have done on April 5, and so we will have to see but as long as we don't have a return there is not much we can say and for the IHC for all of our American, for all of our activities on entities on American soil that is happening two years down the road so too early to say Stefan.

Stefan Stalmann: Alright.

Thank you.

Operator: Next question is from Pierre Chedeville from CM-CIC Market Solution. Please go ahead.

Pierre Chedeville: Yes good afternoon now. Just few questions, just one regarding your life insurance business.

Apart from the situation in the net-banking income which doesn't mean a lot. Could you give us little bit color regarding your financial margin in your life business because if you look at AXA or alliance we can see they maintain a financial margin around the 80.1 British pound even when the interest rate are decreasing so it is the case for BNP Paribas, are you succeeding in maintaining your financial margin stable despite this low interest rate environment? My second question is about asset management we are seeing that [indiscernible] develop a lot with partnership in Asia and we can see that your net outflows in these part of business this quarter could you give us little bit color regarding your activity in asset management in Asia this quarter? And last question, and so each – but maybe I probably missed something, I don't understand the evolution of your expenses in the center because that far I was -- I thought that it was around 300 million Euro that quarter which is not the case this quarter so do we have to change our guidance or do I miss something? Thank you very much.

Lars Machenil: Ched, thank you for your questions. Listen when indeed, when it comes to life insurance or in general everything which is a bit hinging towards commercial data, well we basically do not disclose. The one thing is that from the yearly disclosures on related topics you can clearly see that we have a track record when it comes to the use of providing reserves for the things like in through PP and the likes.

We have always been very prudent from that point of view. And when it comes to asset management as you know our asset management is has a different strategy than I’m -- so as you know we have basically decided couple of years back that we keep this in-house because we want to be half among sort of the control about understanding of the product being provided to our clients. Nevertheless, at the same time we had an asset manager which was stemming from an influx of different asset managers, one heritage BNP, one heritage for this, let's not forget ABN AMRO, which had different strategies some had strategies outside of Europe, some had strategies institutional, some has strategies to niche players. And we basically said this is not what we are, and so we have adapted the strategy in selling off several of these specialized players in order to basically focus on the assets and the activities that we know well which are basically European equities and CLO related kind of activities. So for us, the main thrust is around this and it's in that area and so there is nothing material on it with respect to Asia.

However, in general it is true that if we look at our asset management, the monetary kind of part has been going down however and this is in-line with what we orient ourselves when it comes to equity and diversified, we had a pick up from that point of view this is in line with what we had in mind. When it comes to the expenses on the corporate center, Santos, thank you for allowing me to clarify. We are indeed guided to a full year impact of 1.2 billion because there was indeed the impact of the transformation cost related to CIB but as I mentioned to, I think Jean-Pierre is that these transformations given the impacts of what they have to do, given that they have to go through each of the jurisdiction kind of due-diligence, they are not frontloaded. And so part of those costs in the current quarter have been relatively limited and so you can expect the ramp up of the CIB transformation cost to come later in the year. And as a reminder costs are 300 million for the year 2016.

Pierre Chedeville: So you have maintained the guidance at €1.2 billion.

Lars Machenil: Yes we do.

Pierre Chedeville: Ok. Thank you very much.

Operator: Next question is from Nick Davey from Redburn Partners.

Please go ahead.

Nick Davey: Good afternoon everyone, two questions please from my side. The first one on TLTRO 2 please. I remember you didn't communicate too much about your intentions for the previous TLTRO that I just wondered if you could at least talk in general terms about how you view TLTRO 2, specifically if you could just reference whether you feel this is a way for you to increasingly self fund BNL? Or whether you think there is opportunity for other businesses and other geographies to take up TLTRO 2? And if you really think any impact about how the on credit pricing will have a big impact on credit growth or credit demand? Just a bit of an overview of your thoughts there. And the second question please on funding.

Slide 70 and your target to issue about €10 billion TLAT eligible debt this year. I remember you mentioned this Q4 already, I just wondered if you could talk about the star on the page really this depending on opportunities in market conditions just to get give us an idea really of how you're thinking about that? Is this a pricing point, is there is a premium you're willing to pay on this TLAT eligible debt relative to, say the senior that you've already issued this year. Just a bit more color on that plan. Thank you.

Lars Machenil: Nick, Sorry I started then I forgot to unmute.

So I gave all the answers but I'll start again. So when it comes to TLTRO 2, it is just that too early because the ECD still has to clarify the details of how that works. That is something that typically happens with the other ones as well. But this is something to look at carefully why because intrinsically the cost if I can say because it's negative, it’s really depending on the view, on the volumes that it helps to fund so it is really conditionally priced kind of instrument but with at least if all the conditions are met basically mix the intrinsic ECB funding positions. So from that point of view, we'll definitely have to look at it how exactly where will we be able to redeploy it and where can we meet the criteria to do so.

We will definitely look into that and we'll seal that in our reflections also towards the plan because it's a multi-year kind of initiative listing it in the end until 2020 actually. So yes, it's interesting, it is conditional, so it could serve the purpose I have to look at the details and see how we can best used it. When it comes to the funding, yes, the thing is the star on the page is basically saying, so we have a funding but that funding is not something that we have to do to the billion specifics. So this is a guidance of what we do and we take into account. If the markets are right, if the prices are right that mean we're not going to go out to necessarily as price which is very high, we don't want to have a discount of a concentration by doing very high volumes which then basically come at a high cost as well.

And so for the moment, I mean even if the first two months where it bit rocky, we've basically on track you saw I mean we've been open to is single handedly reopened the 81 market. On the TLAT there is indeed the thing that it still has to although detect, I still think it's extremely good for the friend's floor but it still has to be voted. But as not that bad I mean, we have to do all their instruments like tier 1 and tier 2. S we're focusing a bit with the half of the year on 81 and tier 2 as you seen we've already done in March, right? We reopen basically both. So also 1.6 billion of tier 2, 1.3 round of 81 and so that's what it basically means, it means that we are not obliged to do that billion.

So I'm not going to do it at a one price, and I'm not going to do jumble deals which are very expensive. Well, we want to do that in a frugal way and that's what we want to say with star on the page.

Nick Davey: Very helpful. Thank you.

Operator: Next question is from [indiscernible] from Jefferies.

Please go ahead.

Unidentified Analyst: Good afternoon I have a few questions. The first one would be follow up on Philippe’s question regarding liquidity. Can you give us a little bit of guidance of where you feel comfortable because today it’s 198 billion, it’s a quite a huge amount and with an LCR at 116, what would be the right of all and where do you invested? Is it mostly in NCBR? Also, you also putting in around order from retail bank? The second question will be a follow up on trade question regarding the ride back of provision. Can we have a breakdown of what has been passed on the personal finance and also in CID and the last one, will be on your a corporate banking.

You mentioned that you are very pleased about your performance in Asia. Can we have a bit of figures and the amount of months on that side? Thank you.

Lars Machenil: Okay, Maximus thank you for your question. Yes, on liquidity I agree it's a lot right. I mean the read is a bit all that stimulus which is taking place, yes it is displacing a liquidity within corporates and institutional which at this stage basically return it with us.

And so let's say in the part of the immediately available, what is that there is liquidity that comes into the store in the form of short term. So short term liquidity can not necessarily be fully redeployed and so that is kind of liquidity that yes it has a tendency there to find its way back into the central banks. Think is the thing. The regulation basically says that a short term kind of liquidity is basically discarded into the LCR, so it's put at zero percent but on the other hand if clients come and they basically deliver, they pay for that money what else can we do then to basically put it at Central Banks because we cannot redeploy it in an LCR friendly way Somewhere else. So yes, there is a 100 billion of that which is too much and which we would like to be redeploying differently.

But that would require probably a stance on the regulatory front. So that it's on to pure liquidity. When it comes to the LCR which stands at 116 it's basically too high. I mean the regulation today says that we have to be at 70% of LCR ramping up to 100%. So honestly what is the right level while 100% plus a little bit of a cushion of course to be there.

So again this is all an indication that there is a lot of liquidity which is somewhat sophisticated through the regulation and not entirely finding its way back, for the rest I mean if we can fuel it into things like growth on personal finance, on our retail activities like Belgium or France which have very good profitability but that is of course what we would want to do with pleasure. So that is on that. On the right backs, yes so the right backs particularly our own personal finance as I said where personal finance also has funding programs, capital programs. It's an activity which is a little bit more up-sided towards the assets. So basically makes sense to do some of these securitizations or other kind of stuff.

So it's part of what they do in a traditional thing and as I said from time to time, you can basically outflow them at prices which are different at which you have them in the book but that's basically things that happen and it is true that it is particularly strong this quarter.

Unidentified Analyst: And for the investment bank?

Lars Machenil: For PNB sold in the investment bank…

Unidentified Analyst: You have a significant right back of NPLs into the investment banks, so is it the one-offs and if it is, can you quantify it? Which sector? By any chance?

Lars Machenil: There is a little bit of that which is happening on global markets. Which is not a seal of NPL. Its basically right-back owner file which basically turned less slower than it was anticipated, then it was anticipated to be. But you have that from time to time.

It is not very material and it’s more remarking reflecting some evolutions of course some typically heritage kind of a institutional positions. And when it comes to corporate banking in Asia so again our corporate banking and/or activities in Asia, let’s be fair I mean we have a presence following our clients and developing with some more legit client but this remains, let’s say on the margins of the group, not necessarily fully material kind of activity and that corporate banking, the evolution was basically stable compared to the first quarter of 2015.

Unidentified Analyst: Thank you, have a good day.

Operator: Next question is from Anke Reingen from RBC Capital Market. Please go ahead.

Anke Reingen: Good afternoon. I just have two questions please. The first is on your CIB restructuring. The fact that the restructuring charges which is more in the quarter which is also indication that firstly [indiscernible] in terms of cost reduction and probably also on the risk that is run down on the prior quarters, so most of it to come, and then secondly I just understand of [indiscernible] what are the implications if you would not pass that. I mean I guess what I understand for this time but as it is depending might not be always about it easy to pass the test.

Does that any implication on intra-good capital liquidity, how should I look at it? Thank you.

Lars Machenil: Anke, thank you so much for the question. So on CIB, so there is indeed two things. If you look at focus part which indeed is a company by a ramping down of let’s say RWAs which are no longer product in the current regulatory environments. Half of them being replaced a new, better marked kind of product.

But this is something that we said that would happen over to two to three years. So we said that if there would be an opportunity just like the NPLs that we talked about to sale them at a right price, we basically get out for the rest, they basically get extinct over the next two and half years. So we are not going to force it if the prices not right because they basically go well and get extinct over the time. And with respect to the improved part which is indeed the cost reduction parts, as we said we guided to a 300 million transformation cost. As you observed correctly the first quarter that there has been a small fraction of that, only a small fraction of that into the corporate center.

The reason as I said is that there is this plan which we have to now basically crystallize for each of these jurisdiction with each of the local due-diligences social regulations where we not and that of course takes time. And so as I said earlier, this is not something which is front loaded, it is lot of progressive and so while we are doing for steps now and we still guide towards having the full 300 million impact of the transformation cost having done in. And so as I said, yes the fact of those where we progressive in over time. When it comes to your question on CGAR, this is the first filing that we have done, so we have to see. I don’t have a crystal ball the only thing that I do know is that until the last year Bank West was basically governed by so called defector, which is a stress test which comes basically with the rating between one which is extremely good and like may be two banks have it and four which is probably not where you want to be and we basically first Hawaii in came at one and Bank of the West came in at two.

So again, this is the idea I see that it doesn’t mean anything for the stress test. So as you can imagine, as we say that for us to US is an important franchise, we are located a lot resources to it, you might have observed that in the coast line of Bank West and so we filled in due time and now we have to see, we have to see if we get remarks, matters with them immediately. We will have to see, it is now in the hands. I think we set all sales to do so, we filed as I said on time, we will now have to see what [indiscernible] when we get it.

Operator: Next the last question is from Damien Souchet, Morgan Stanley.

Please go ahead.

Damien Souchet: Quick question from me please. The first one regarding the disposal of First Hawaiian Bank. If we look at the share price of the domestic comparable like Bank of Hawaii, we have seen quite a good performance here to date. So I was wondering if you could have any impact of the way you think about pricing for the disposal or IP for First Hawaiian and the 40 basis points capital benefit you guided to in December.

And my second question is if we expect any one of gain from Visa Europe transaction in the second quarter and could you please quantify it.

Lars Machenil: Damien, thank you for your questions. On First Hawaiian, I have to invoke the fifth amendment. I cannot incriminate it myself. So in line with the authorities we cannot comment, you know what we announced, we've guided on some impact this is a guidance.

So you'll hear from me when you hear from me. So when it comes to Visa Europe, I remind you that, we already had to mark as the contracts do contain, they are not fully certain but they contain elements of a certain degree of tangibility. And so that means that we already reflected that in our OCI, so the revaluation. As this was an asset that we build from the ground up of course now there is a price that we have to the signed deals and so it's already reflected in our OCI and therefore in our capital. Now that doesn't mean that the final price will be exactly that so there might be a little bit off the plate and then also at the moment of the sale [indiscernible] the rates will go away.

So it cannot be excluded that visa will provide still a foot or lift off some five basis points in the common equity one ratio but you shouldn't expect that a before the summer it's more going to be something from the way I see it after the some.

Lars Machenil: Ladies and gentlemen, I thank you so much for your interest on this sunny day. You have seen the results of the Bank. I don't have to identify them again but you saw that the revenues held up well. Cost of risk is significantly down and common equity tier 1 at 11% NROE in line with the plan.

Thank you so much, have a very good day.

Operator: Ladies and gentlemen, this concludes the call of BNP Paribas first quarter 2016 results. Thank you for participating. You may now disconnect.