Lars Machenil: Thank you. Good afternoon, fine ladies and gentlemen, trust you are doing well. And in the usual way, I'll take you through the first two chapters of the results presentation, which I trust you have under your eyes and then hand it over to you for Q&A. So looking at our first quarter key messages on Slide 3. BNP Paribas businesses activity progressed in all three operating divisions, which if you look at loans outstanding are up 4.2% year-on-year.

At the beginning of the quarter, the market backdrop was still affected by the extreme market condition that we have seen at the end of 2018, but showed a gradual improvement towards the end of the period. Group revenues were up 3.2%, compared to the first quarter 2018, or up to 3.9% taking them at constant scope and exchange rates. Revenues of the operating divisions programmed by 4.4% on the back of a significant drive in IFS, an increase in CIB, driven by the pickup in client activity during the quarter and which confirms the positive impact of all the adaptations we applied as of 2018. Domestic markets revenues were basically stable due to the low rate environment. If we now turn to costs, we see they evolved by 2.3% compared to the first quarter a year ago, delivering a positive jaws effect.

Taking them at a constant scope and exchange rate and excluding the lift and excluding the €1.1 billion impact of annual taxes and levies that you know are almost all accounted in Q1 under the new accounting rules. And if you do this, costs were up 1.2% accompanying the uptick in business activity. If we then take it to the other elements of the P&L, which is the group costs of risk, which stood at the low level, which is 38 basis points over outstanding. It was higher than the first quarter a year ago, which I remind you, had been particularly low due to write back in CIB and in personal finance. Now after taking into account the capital gain of the sale of 14% of SBI Life as well as goodwill impairment, the group net result came in at a good level of €1.9 billion or up 22.4% on the same quarter a year ago.

So now if you turn to Slide 5, you can see the exceptional elements that I talked about, which had an impact of €330 million net of tax, whereas they had been slightly negative net of tax in the corresponding period a year ago. Besides restructuring and transformation cost included this quarter to €838 million capital gain from the sale of 14.3% of SBI Life, as I mentioned before, as well as the goodwill impairment for €318 million. I mentioned before the impact of IFRIC 21, here you can see that the total taxes and contribution booked in the first quarter and the fact that they increased by €30 million compared to a year ago. Now, if you now go forward and you swipe to Slide 6, you can see the performance of the group in the first quarter where the top-line up 3.2% and positive jaws effect as such translating in a 6.2% increase in gross operating income. Moreover, excluding exceptional items in the first quarter of the year, the group delivered an annualized return on tangible equity of 11.2%.

If you now move to the revenues of the operating divisions, which is Slide 7, and the revenues of the operating divisions, they increased by 4.4%, or at constant scope and exchange rate of 3.6%. They were just low by 0.2% at domestic markets due to the still low interest rate environment, which was mostly offset by good growth in the specialized businesses. Revenues were up 9.5% at IFS on the back of very good growth as well as a positive scope effect, mostly related to Raiffeisen Bank Polska, which as you know we've added to the P&L. CIB’s revenues progressed by 3.5% as the 2018 adaptations that we announced earlier allows for capturing the progressive upturn in client's activity during the quarter. If we now flick to Slide 8 and we look at the costs of our operating divisions, they were up 3.1% or at constant scope and exchange rate 1.3% and domestic markets just up 0.4% with the rise in the specialized businesses, which accompany the growth of this activity.

And all in all that activity delivers of course positive jaws. Nevertheless cost went down 0.4% on average in a three retail networks and domestic markets. And this not off the IFRIC 21. Now turning to the second one, which is IFS and its costs evolution reflected continued business growth and the development of new products also had a positive jaws effect. And CIB cost increased due to the development of the activity but benefited from the implementation of cost savings which also led to positive jaws.

In synthesis, you can see the benefit of the cost saving measures generated by our transformation plan and to focus on the bank of delivering positive jaws in the first quarter of 2019. Now if we stay on costs and advance to Slide 9 you have the details of the progress we are continuing to make on the implementation of this transformation plan. In the first quarter, we generated an additional €169 million of recurring cost savings, taking the cumulated cost savings since the launch of the program to €1.3 billion. We expect an additional €0.5 billion to accrue by year-end. So these are additional savings.

We booked transformation costs for €168 million this quarter. Reflecting the lower spending and visit for this year, that should total €0.7 billion for the full year 2019. So in a nutshell, the implementation of our transformation plan with the reviewed and even more ambitious targets is in line with our roadmap. If we now turn to the cost of risk, and I would kindly ask you to flip to the three slides on the subject, which start on Slide 10. You can see as I mentioned that it stood at the low level of 38 basis points over outstanding.

It was higher than last year, but this increase is not meaningful. As I remind you that in Q1 last year we had booked the write-backs in CIB personal finance. Now if we take the businesses one-by-one in corporate banking, cost of risk was low at 10 basis points, whereas in the corresponding period of 2018, it had been zero with, as I mentioned, the write-backs offsetting the cost of risk. Now, if we turn to domestic markets on Slide 11, cost of risk was low in France retail. It's very low in Belgian retail and continued to decrease at BNL despite the impact of a specific file this quarter at BNL in Italy.

In the other retail businesses on Slide 12 personal finance, saw low cost of risk compared to a particularly low base in Q1 2018 as I said. Europe-Meds cost of risk was pretty much stable, at would deem a moderate level while BancWest’s cost of risk was low. If you now swipe to Slide 13 on the financial structure, you can see that our common equity tier one stood at 11.7% at the end of March, in-line with pro forma level at the beginning of the year after taking into account a 10 basis points impact from the application of a new IFRS rule, IFRS16. Net of this IFRS introduction impact the stability of the ratio, which is quite typical for first quarter, right? If you go a year ago, it was the same thing and this is due to a combined effect. The combined effect of the following, the first quarter results excluding both IFRIC 21 and the exceptional non-operating items and after allowing of course for a 50% dividend payout added 20 basis points.

Then there is the net impact of the SBI Life sale capital gains and the goodwill impairment, which adds another 10 bps. Now there is the impact of IFRIC 21, which reduces by 10 bps as I said earlier, and then there is the increase of the risk weighted assets as we've seen in the growth of the volumes, which adds another minus 20 basis points. I remind you on this risk weighted assets increase is about half of it. That is 10 bps on the back of the postponement of securitizations that were scheduled for this quarter to the coming quarters as well as the syndications that are in the process of being completed. All in all, if we go to other metrics like the leverage ratio, which stands at 4.2% which is well above where we have to be, and the groups immediately available liquidity reserve totaled a whopping €335 billion at the end of the first quarter.

The evolution of these ratios illustrates a very solid financial structure of the group. If we now go to Slide 14, and look at an net book value per share, which stood at €76.7 at the end of March, showing a compounded annual growth rate of 5.2% since year end 2008. And this basically highlights BNP Paribas continued value creation through the cycle. And I'll leave you to peruse the next two slides of this introductory part which is basically on Slide 15, our ambitious policy of engagement in society and Slide 16 which summarizes the continuous reinforcement of the internal control and compliance. So with this, I would kindly ask you to advance to the results by division, which starts with domestic markets on the Slides 18 to 24.

And in synthesis, as you can see, domestic market showed good business drive with good loan growth in the retail networks, as well as in Arval and in leasing solutions. Deposits were also up on the back of good growth in all countries. And particularly in domestic markets, we continue to implement or digital transformation and to develop customer experience, as you know, the core of our ramping up to 2020. Thanks to those changes, the number of active mobile customers continues to rise at a fast pace with plus 20% this quarter, compared to a year ago. Domestic markets is on top of that simplifying while digitalizing the onboarding processes with significant savings in terms of speed of execution and reduction in complexity.

Moreover, domestic markets is also simplifying and optimizing its branch networks in order to improve client service and reduce costs. Since year end 2016, we've closed almost 300 branches in France, Belgium and Italy, and we successfully delivered the regional setup in the French network in 2018. And BNP Paribas Fortis in Belgium has announced this quarter the closure of 267 branches by 2021. Now if we switch to the P&L, revenues were at that lower at close to €4 on the back of the low rate environment and the impact on financial fees at the beginning of the quarter of the still unfavorable market conditions which, however, picked up progressively during the quarter. And this was partly offset by the increased business activity that I mentioned just before.

If we now look at costs were a bit higher due to the growth in activity of the specialized businesses, which none the less displayed positive jaws. Rest assured in the retail networks, cost continues to decrease, like for like domestic markets showed positive jaws this quarter. Cost of risk remained low but higher than in the first quarter 2018 which had been very low and BNL continued to decrease despite the impact of a specific file this quarter, on the back of this pretax income stood at €608 million marking a 7% reduction. Looking swiftly at each country and business, I'd like to highlight

the following: first, French retail banking continued to show good business drive with revenue slightly up, given good cost control. Thanks to the impact of cost saving measures, France retail delivered positive jaws.

Regarding BNL, business activity was essentially stable in a lackluster economic context which weighted on revenues this quarter together with some non-recurring items. Given this backdrop BNL is successfully implementing its cost saving initiatives. Turning now to Belgium, it showed sustain business activities, but as revenues were impacted by the low rate environment. Finally, the specialized businesses within domestic market, continued to deliver good business drive with positive jaws and significant income growth. To wrap up, domestic markets saw higher business activity and revenue resilient despite the low interest rate environment and the impact at the beginning of the quarter of the drop in financial markets that we saw at the end of 2018.

With this, if you now advance to Slide 25, you'll see international financial services, which continued its role as growth engine. In particular, loans progressed well especially at personal finance and assets under management of our insurance and savings business increased by 2.3%. The division is actively implementing its digital transformation, and new customer experiences across all its businesses. It is optimizing client experience by for instance, extending the rollout of e-signature. In personal finance, over half of the contracts already signed electronically.

That's the e-signature. IFS is also developing new technologies and innovative products with already more than 200 robots operational in different business lines. If we now turn to the P&L, revenues stood at €4.3 billion, up 9.5% with the scope effect of Raiffeisen Bank Polska in Europe-Med. They were up 7.8% at constant scope and exchange rates. Costs were up 6.3% or again at constant scope and exchange rate 2.9% and this on the back of business development and if you look at both delivering positive jaws.

As a result, pretax income stood at €1.3 billion, up 4.7% or at constant scope and exchange rate 13%. Zooming now rapidly on the different businesses one at a time. And if you start at Slide 28 on Personal Finance, that continued to show good business drive in the first quarter with outstanding loans up 12%, thanks to still high demand and the positive effect of new partnerships. In terms of P&L revenue progressed by more than 5% in connection with higher volumes, costs grew by 6% as a result of business growth. Thanks to the ramping up of the cost saving measures through the year.

Personal Finance confirms its target of positive jaws for the full year. Cost of risk stood at a low level but was up compared to the first quarter of 2018, which as I said before, benefited from provision write-backs. Hence pretax income reached €340 million down 8% on last year. To recap, Personal Finance continued to show good business drive in the first quarter. Moving to our international retail banking and let's look first at Europe-Med on Page 28, the integration of the core banking activities of Raiffeisen Bank Polska is going well.

The resulting new entity in Poland will operate under the BNP Paribas brand. And in terms of business activity on a comparable basis, Europe-Med loans were up 2.2% and deposits increased by 3.9%, driven in particularly by Turkey. We're also continuing to strengthen the digital offering and we already have 2.5 million digital customers in Europe-Med geographies. At constant scope and exchange rates, Europe-Med revenues were up 12% with an increase in all regions. Costs were at that lower, thanks to good cost control and the first synergies in Poland where we've closed 97 branches this quarter.

As a result, the business line generated significant positive jaws this quarter. Overall given an essentially stable cost of risk, Europe-Med pretax income was up 76% in the first quarter on a comparable basis. However, at historical scope and exchange rate, pretax income was down slightly due to the strong depreciation of the Turkish lira and the high base of non-operating items in Q1 2018. If you now turn to the other part of our international retail banking activities to BancWest on Slide 29, and BancWest showed moderate loan growth year-on-year, whereas deposits were stable. Private banking’s assets under management progressed by 8% to stand at US$14 billion with net asset inflow in the quarter.

Still at constant scope and exchange rates, revenues went down 1.7% due to lower interest income, partly offset by better fees. Costs were kept well under control and decreasing by 1.1%, thanks to headcount reduction and the transfer of some support functions to Arizona, a lower cost state. On the whole cost of risk remained low and BancWest pretax income decreased by 10.7% on a comparable basis. Given a favorable ForEx effect, it was just minus 1.5% had historical scope and exchange rate. If you’d now swipe to Slide 30, on our insurance and savings businesses that show assets under management increased to €1.75 trillion at the end of March.

Focusing on insurance first, Slide 31, revenues increased by 32% on the back of the strong rebound of financial markets compared to year-end 2018 as a part of the assets that are mark-to-market and on top of that, a good level of business activity. Costs were up 6%, reflecting business development enhance pretax income marked in year 41% increase to stand at €520 million in the first quarter. If we now move to the other part that is Wealth and Asset Management on Slide 32, which was awarded the Best European Private Banking for the third year. And in it, Asset Management continue to simplify its organization and launched its global sustainable strategy. The third one in that domain is real estate, which made good progress in real estate funds management, especially in France and Germany.

If we now switch to the P&L, the combined P&L of Wealth and Asset Management and particularly its revenues were down 3.7% impacted by the lingering effects of the sharp fall in markets in the fourth quarter, which were reflected in low transaction levels by Asset Management as well as Wealth Management client and this compared to a high level in the first quarter of 2018 when it comes to real estate. However, there was a gradual upturn in business activity towards the end of the quarter. If you now look at costs, they increased by 4.4% or 3.7% excluding the impact of IFRIC 21 this quarter. The increase mostly on the back of development costs of our Wealth Management, for example in Germany as well as the industrialization costs in our Asset Management. As a result, pretax income was 29% lower in the first quarter.

To wrap it up, Wealth and Asset Management was impacted by the unfavorable context at the beginning of the quarter with a gradual uptick in activity only towards the end of the quarter. With this, we’ve done the first two of our three domains and basically the first two forming retail banking and services. And if I can now draw your attention to the Slide 33 and beyond on Corporate and Institutional Banking, which marked an upturn in client activity, despite is still unfavorable market context at the beginning of the quarter. The operating division was well prepared for this client upturn leveraging the transformation implemented last year. In particular, it is implementing the announced acceleration of this transformation with the creation of the Capital Markets platform.

This Capital Markets platform joins the forces of Corporate Banking and Global Markets to better cater for corporate clients financing needs by bringing the banks issuer and investor clients ever closer together. On another hand, there was a discontinuation of Opera Trading proprietary activities as well as the commodity derivative businesses in the U.S. And then as a third element in this transformation plant, there was of course the implementation of new cost savings. So all in all, if we do now look at the P&L, revenues top €3 billion, up 3.5% compared to the first quarter last year with strong FIG and equities impacted by the gradual market recovery. Corporate banking had good growth, and security services was basically stable.

If you look now at the costs for CIB, they were up 3.1%, a company that business pickup and scope increases in security services in total generating positive jaws effect. Costs were up just 0.8%, if we look at the constant scope and exchange rate and they benefited from the cost efficiency measures regenerated an additional €65 million savings this quarter in CIB. And this derived from the increased use of shared platforms, the implementation of end-to-end digitalize processes and the automation of operations. On the back of this gross operating income was up 5.5% this quarter. If you now look at the cost of risk, it remained low, but increased compared to the first quarter of 2018, which I repeat myself where it had net provision write-backs.

And CIB generated €514 million of pretax income marking a 7.9% decrease versus the fourth quarter, which as I said benefited from write-backs. If we now browse through the next three slides, that’s 34 to 36 and we look at the three businesses within CIB. If we start with global markets, Slide 34 revenues increased by 1.7% and that was the transfer of activities related to the setup of the new capital market platform that I talked about, revenues progressed by 3.8% on the back of that pickup in client activity. The first quarter saw a contrasted performance with increased activities on rates market in Europe and a gradual normalization of equity markets following the extreme market conditions at the end of last year. As a result, FICC revenues were 28.5% higher with a strong performance in all segments, most notably on rates and forex.

In fact, we started seeing this quarter the effect of the adaptation of this business started last year, as well as the good development of our customer base. We confirmed our strong positions on bond issuance, where we ranked number one for all bond issues in euros, as well as for green bonds and number seven for international bonds. If we now turn to equities, the revenues were down 29.5% compared to a high base in the first quarter 2018, but marked a strong but gradual rebound compared to the fourth quarter 2018. During the quarter, the normalization of inventories valuation, partially compensated the recovery in client activity that occurred only gradually through the quarter. If we now move on to Slide 35, corporate banking, where revenues increased by 8.6% with an increase in all regions and benefiting from the successful client onboarding over the past couple of years.

We saw continued growth of cash management and trade finance, where the business line retained its leading positions in Europe. Corporate banking also confirmed strong position in syndicated loans, where it ranked number two for the EMEA region. Now if you flick to the third part of CIB security services, where revenues were quasi stable at €516 million in the light of the slight decrease in number of transactions, due to the market drop that I mentioned earlier, as well as the ramping up impact of new mandates. Indeed, security services continued to gain new mandates as for instance with the online broker CMC markets across 11 countries in Asia. More importantly, it’s successfully migrated $100 million of assets from Janus Henderson.

So to wrap up, a good overall performance for our CIB that is benefiting from the amplification of its transformation and the good development of the client base. This basically concludes my introductory remarks for the group’s first quarter 2019. And in a nutshell, I would like you to retain that. In Q1, we delivered business growth in all three operating divisions. The group showed a positive jaws effect and the rise in income and we’re making significant progress in the implementation of the digital transformation throughout the group and we actively rolling out new customer experiences.

On the back of all this, we are basically in line with the plan that we reviewed in February. With this, over to you.

Operator: [Operator Instructions] We have first question from Mr. Jean-Francois Neuez from Goldman Sachs. Sir, please go ahead.

Jean-

Francois Neuez: Hi, good afternoon. Jean-Francois from Goldman Sachs. I have three quick questions, please. The first one is, I wanted to know whether you would be willing to give us an idea of [indiscernible] by your end, if you have one. And so that we can understand the securitization and [indiscernible] annual growth appetite.

My second question is on fixed income, I would like to understand better, what was that playing in the quarter, so over the past four quarters of last year. The FICC growth rate was below that of the rest of the peers on the industry, this quarter it was markedly better. I just wanted to understand whether you saw the changing competitive dynamics, notably with some of your peers being subject to heavy headlines. And thirdly, just to focus on Bank West, I was looking at longer-term comparison to a peer group of more than 10 regional banks there. And for the last five years, the gross income of Bank West has risen by almost 10 points that of peers have fallen by 5 points and that has come a lot from much lower revenue margin that Bank West.

I just wanted to understand what behind this sort of chronic under performance versus what we can see at peers for Bank West. Thank you very much.

Lars Machenil: Jean-Francois, thank you for your three questions. First of all, if we look at the risk weighted assets, so if you – what we anticipate for example, is that on an average quarter, if I express the impact on the common equity Tier 1, that would be clearly to a 5 basis point reduction in the growth. On top of that, as you've seen, if you go back to the 20 basis points increase on RWA is in the first quarter.

So that basically bring – would bring it back by 5. And then also we saw an uptick as we've seen for example, syndicated loan business, meaning syndication has to happen and it's going on. And therefore that will basically have another 5 basis points impact. So that is why in general, in the first quarter you have relatively stable evolution, which is what you see. And in the next quarters you basically have the bottom line, which is out growing the RWA and therefore generating capital.

So that is why we feel confident that we will ramp up in Q2, Q3, Q4 towards the 12% common equity Tier 1. So that's on the risk weighted assets. When I look at FICC, and you're right, I mean, in 2018 and particularly in Europe, we noticed that there was pressure on the overall revenue pool. And so basically the bank decided that it really wanted to accelerate and deepen its adaptation. And that adaptation basically meant that we had to further digitalize, so the transactions that could be digitalized, where the interaction with the customer could be digitalized.

That is what we would need to do and that can be – we developed it ourselves. If we don't have the scale, we have to do it in a joint venture with somebody else. And then we also had to get out of some of the activities to redeploy the capital. That's the first thing. The second thing is we bolstered also our digital aspects and then we created capital markets.

So capital market is basically bringing together the global markets and the corporate banking to really bring together origination, structuring and distribution. Bringing that closer together and therefore also bringing issuers and investors closer together. In order to do this, well you have to have – to do the investments, you have to have the skills in order to bring them together. And that is basically what we have done and that we bear the fruits as we've seen the evolutions in the first quarter. On your third question, with respect to our Bank of the West activities.

If you look at it, there is a couple of things. Yes, let's not forget that this activity has gone depending a bit on the size with whom you compare. But there has been a set of regulatory steps that had to be involved in. And the second thing is that, we orient our Bank of the West just as we oriented also our European retail players. So that basically means when in an interaction with a customer we also want to serve him on his corporate needs or in his personal needs or his personal finance needs, on it leasing needs.

And in order to do this well, that takes time of ramping up, yes, you can send somebody from personal finance in France to California, which is what we've done. But then you basically have to build the skill, you have to build the data in order to do that. And that is what we keep on doing. So it's fast forward, I would be a bit maybe long, three answers to your questions. Jean-

Francois Neuez: Thank you.

Operator: Next question comes from Tarik El Mejjad from Bank of America. Sir, go ahead. Tarik

El Mejjad: Hi. Good afternoon, Lars. This is Tarik from Bank of America.

So a couple of quick questions. First of all, I would like to come back on the FICC significance performance versus peers. I understand your arguments about the capital markets platform. But I'm still puzzled that's actually it's all happened around one quarter. So, my question here is there – is this performance really driven by better connectivity or mainly by actually trading that was boosted at the bank in Q one? Second question is related to the FICC.

So you announced in Q4 deleveraging of optimization of 12% of RWA is including €5 billion exits and attached to that there is €250 million or €200 million to €300 million revenues loss. So is that already start to happen? When would that happen and do we should expect softening in the revenues from that exits. Thank you.

Lars Machenil: Tarik. Thank you for your questions.

But when it comes to FICC, yes, let's be clear. I mean there are some elements, as we are FICC player in particularly in Europe. And there has been a pickup somewhat in that European environment. So that is driving it. And another thing is a change that you've done and that we see it's the ForEx related which picked up well.

So that is also driving the overall boost. And so due to – and your suggestion because you some said, is it proprietary? It's not proprietary, as you know the proprietary trading which was called Opera, it basically one-down. So it is client-related business that picked up, and as I said, focus on Europe, focus also on the ForEx related. And that is the pickup that we saw and that we prepared for. When it comes to your second question on CIB exit, it is something that we review well.

As I said, it's looking at if there is a product that is typically taken by a limited set of clients and the clients do not take other product that is the review that we do. We end up doing discussions to see if it can be lumped other products. If not to be it might ramped down, so it is a process where we take the due time to review. Tarik, that will be my two answers.
Tarik

El Mejjad: Can I follow up on the last one very quickly? I presume that given – even given the very good Q1 on fixed income, you will still keep your discipline on reviewing all these businesses, products, other products, I guess, all right.

Lars Machenil: Tarik, you know, we are disciplined. So the review process and the cost reduction process remains focused. No worries. Tarik

El Mejjad: Okay, thank you.

Operator: Next question comes from Stefan Stalmann from Autonomous Research.

Please go ahead.

Stefan Stalmann: Good afternoon, Lars. I have two questions, please. One regarding the results coming back to Bankwest, please. There was quite a noticeable shift already for a couple of quarters.

Now away from commercial real estate and consumer lending and towards mortgages, is that strategy? Is it's structural? Or is it a bit more random, depending on what clients want to do? And is it fair to actually blame the revenue weakness year-over-year on this mix effect? Or are the other factors that play? And the second question regarding personal finance and not really related directly to the results, but I was curious if you could give us a rough indication of how much of the personal finance loan book actually relates to France. I think the last disclosure on this dates back a couple of years, it was a 40%. I was wondering if that's very different today. Thank you very much.

Lars Machenil: Stefan, thank you for your question.

And so first of all, Bank of the West, so it is the key thing of what we're doing is shifting more and now that we can – more into the model as we have it in Europe. And so it's not a chance. So we're not standing like on the markets and saying who owns this product and who owns this product? That is not what we do. We really brought in our skills. So for example, as I said, for personal finance, we send people who are experienced in personal finance, we bring them in.

They basically adapt the skills that we had in Europe. In the U.S. market, we are ramping up gathering the data, because in personal finance it is – that's really core of what we do. And so that is what we keep on doing. So it's not by look that one product or another is picking up, who's really focusing on, as I said, personal finance, it's the corporate banking kind of elements that we really structured and setup also managerial structures in order for it to grow.

On your number of France in personal finance, I don't have exact number with me. It is – it has gone down. It is 30%, sorry for that.

Stefan Stalmann: All right. Thank you very much.

Operator: The next question comes from Azzurra Guelfi from Citigroup CIB. Please go ahead.

Azzurra Guelfi: Hi. Good afternoon. I have a quick question on trend domestic revenue, we have seen the still, very strong volume, but also and first uptick of margin.

Would that be something that you expect would continue or do you expect some additional margin pressure to come in the second part of the year given the rate environment. And the second one is on the CIB. You said you're still going ahead with the review of the business, sees has per plan. Can you give some indication on the what we could expect in coming quarter. Is there any area in particular that you are targeting for 2019? Thank you.

Lars Machenil: Thank you for your questions. First, if we look at trends, yes. we foresee the revenue to remain in this kind of situation where we are. So we guided t that it would be a kind of established evolution. And so this evolution is on the back indeed in an environment of low margins.

However, the volumes are there and there is also the fee business that we are stepping up. So that is the kind of things that we look at. And so it established, but let's not forget, in that environment we focus on costs, we reduce them. And so we have positive jaws. And then on the second question on CIB, listen, we are overall – we are reviewing this, and so we'll give you a regular updates.

And as I said, we are reviewing on some activities if we can streamline it, do it in joint venture with others. And at the same time it can be like for example in security services that we step up mandates with others. So this is the overall process we are looking at. We'll give you some updates. So for example, we told you Opera Trading, we told you commodities, and we've also said that we have basically run down our activities in the Philippines.

So we'll give you an update every time there is something to announce. Thank you.

Azzurra Guelfi: Thank you.

Operator: The next question comes from Matthew Clark from Mediobanca. Sir, please go ahead.

Matthew Clark: Good afternoon, couple of questions. Firstly, on the goodwill right down. Can you give us some more information on what business that related to, and why that was taken in the first quarter rather than with the full year order, please. And then second question is just on personal finance, and the trends there, it still looks like your revenues are growing much slower than your volume. Is that still the case that that's due to a mix shift or is there any underlying margin pressure going on in any products or regions? And then secondly, I understand that there are costs saves to come through as the year progresses, but it's still a bit startling, that the costs are growing so much on a gross basis.

So could you just explain why costs are up about 5% or 6% a year-on-year even before considering the cost cuts, that kind of come through later? Thank you.

Lars Machenil: Thank you for your question. If we look at the goodwill and indeed in the first quarter, we impaired, an old goodwill. As you know, goodwill has to be validated on a regular basis. And as this goodwill stamps from almost 20 years ago, a validating the initial assumptions is not straight forward an every year adds complexity.

As such, we took a conservative stance in quarter and we impaired some €300 million of goodwill. But as a reminder, goodwill impairments are booked in the corporate center and this quarter it doesn't weigh on the results given it being offset by SBI Life. And so that is basically it. And, this one, as I said, is like 20 years old and it originated in consumer finance. So that would be the stance on goodwill.

If we look at personal finance, has the fact that the evolution of the margins are at that slower than the volumes indeed the focus on the quality. Let's be very fair, in these moments, as you know, we're always a very conservative bank in these low interest rates environment. It is important to be focused on the good quality product in order to protect the cost of risk going forward. And so that's basically what we keep on – what we keep on doing. And on the cost, yes.

I mean we have this overall plan that we have in doing to adjust – to deliver a positive jaws. And at the moment, as I said, we are – they are starting to ramp up the delivery of those and that is what we will get over the year. So we confirm that there will be positive jaws when it comes to the cost evolution and personal finance in 2019. So Matthew, that would be my three answers.

Matthew Clark: Thanks.

Can I just follow-up on the jaws? I think – should we think that the natural rate of growth cost inflation and personal finance is that kind of 5%, 6% level that we’ve been yet today so that once this current cost plan is over in 2020, we then need to worry about 5%, 6% in 2021 and another 5%, 6% in 2022 or do you think you’re structurally changing the operating leverage in this business with your current program?

Lars Machenil: It’s a big boat, is in indeed let’s not forget our personal finance part of ISS, is the engine of growth of the bank. And so that basically means if you have that engine on growth, if you say, I want to step up delivering also, for example in Scandinavia that means that you have to start-up with the cost base in order for that business to start. And so there is a combination of things. So the overall – the overall cost evolution is somewhat negatively impacted by that kind of start-up growth. And so there we will have be into a steady state, we will have cost reductions kicking in and that is why we feel comfortable on the positive jaws.

Matthew Clark: Thank you.

Operator: The next question comes from Omar Fall from Barclays Capital. Sir, please go ahead.

Omar Fall: Hi, good afternoon, Lars. Could you give some more color on the delay in securitizations, which isn’t something I’ve heard you call out specifically before, I’m sorry to be simplistic, but usually there’s a revenue or earnings impact linked to these in-securitizations and risk transfers at other banks because obviously you’re no longer the owner of the assets cash flows.

So is the implication therefore that you’ve booked revenues this quarter that then go away as the in securitizations are implemented because it seems a sizable amount implied here. It’s €10 billion of RWAs. And then secondly, just saw on the fee performance in those French and Belgian retail. Could you give us a sense of the amount of impact of the – I guess this is initial and related fee reductions on poorer and more fragile customers in France and then the impact of the higher retrocession fees in Belgium, Israel is the Latin more like a one off factor or just a lower base we should expect going forward given the branch reductions? And then last – third question, one of your peers, one of your French peers last quarter disclosed once that leverage ratio would be an under a kind of daily averaging effect of the balance sheet later like what the U.S. and UK banks do.

You wouldn’t happen to have that number at all. I’m sorry if it’s a bit of a left field question? Thank you.

Lars Machenil: Omar, thank you for your questions. So when it comes to securitization, securitization was part of what we announced in our plan and our plan update. So I remind you that we basically set, for example, in CIB, we want to keep our RWAs flat over the period of the plan and that amongst others we will realize true securitization and show that is basically what was initially foreseeing the plan, which was in our outlooks.

So from that point of view, there isn’t anything material to say. When it comes to your question on France and Belgium. Yes. So on the fees, while the yellow jersey stats that France overall there has been a slight impact when it comes to the costs with respect to the impact that we have on lowering the banking charges for the more fragile customers, which is an impact overall on €9 million in the first quarter. When it comes to Belgium, in Belgium, what we’re doing is indeed shifting into independent distributors.

And so what we saw is that that is intrinsically staying, but the impact in Q1 2019 versus Q1 2018 is indeed the up in those branches. And as you’ve seen, we have announced to reduce further intrinsically the branches. So that is something that could still have some impacts from time to time. But as I said, should be compensated also by the effect of the reduction in branches. If we look at the leverage, as I said, I mean look at where we stand.

I mean if you look at, for example, or derivatives or loans, they are respectively up at the end of the first quarter and our leverage ratio clocked in at 4.2 and we have to be above 3.75 if you’d be. So for us, as you know, it’s a backstop metric. but even if you would apply the kind of – if you would add $100 billion, I’m exaggerating, we had 100 billion of derivatives. We would stay above the 3.75, which is the benchmark going forward. So Omar, that would be my three answers.

Omar Fall: Great. And just as a very quick followup. So, just the concern, are there revenues that hasn’t been big for this quarter, that will no longer be – that will no longer be present following the securitizations.

Lars Machenil: Listen; there will always be some parts of the costs that we will have, just as we have like cost of funding and things like that. But it is not something that we expect to be material versus our plan.

Omar Fall: Got it. Thank you very much, Lars.

Operator: Next question comes from Anke Reingen from RBC. Sir, please go ahead.

Anke Reingen: Yes.

thank you very much. Three brief questions, the first is on TRIM, sorry, did I miss any guidance? There’s still the 10 to 20 basis points for the rest of the year. And then secondly, your Slide 35 on the corporate client penetration looks very interesting. But I guess it would be useful to see on the – on the competitors what the penetration was capital markets products is in order to see what the additional potential is. So would you have anything while we couldn’t say what this penetration could increase? And then lastly, on the volume goals you saw in the retail divisions is all quite impressive.

But then looking at the NII, it’s the – yes, down to flat. So, do you think NII performance in the domestic markets can’t be better until interest rates go up? Thank you.

Lars Machenil: Okay. Thank you for your three questions. And that’s when it comes to TRIM.

So, the targeted review of internal models, which is a relevant exercise conducted by our supervising. In 2017, already the ECB had completed its review on market risks and we have included some minor adjustments into our RWAs at the end of 2017. In 2019, for example, we had a negligible impact of those reviews. So honestly, I do not know what the impact is. So for the moment, so we – the only guidance we can give is that yes, it could be around 20 basis points looking forward as we said earlier.

but your guess is as good as mine. with respect to corporate clients and your demand penetration and data, it’s a very good question, if you could give a call to Greenwich, which is basically the provider of the data that could be good for you. And I will piggyback on that one. And then when it comes to…

Anke Reingen: While you want to convince…

Lars Machenil: Yes. Yes.

We’ll try. We’ll try. We’ll try. So that that’s on that and when it comes to – when it comes to retail and, yes, I mean in the environment, where we have, you still have, depending a bit on country to country, you have some loans rolling off, which are dating from before that period, so that keeps on issuing pressure on the top line. Let’s not forget that on top of when you look at the first quarter and there is this pressure in deed on the net interest income, but the first quarter also had some pressure on the fees and commissions.

Let’s not forget what I said. at the end of 2018, there was quite some turmoil in the market. The clients returned into the more equity and the fees business slowly into the first quarter. So, normally, you would see a compensation of what is with pressure on net interest income. You would see that compensated in fees and commission, which was a little bit lower in this first quarter.

So, Anke, that would be my three answers.

Anke Reingen: Thank you. Mainly, just clicking on Italy.

Lars Machenil: Yes.

Anke Reingen: Can you comment anything on the outlook for revenues here?

Lars Machenil: The thing is if you look at Italy at our first quarter, it has been a lackluster environment.

So we keep on being focused in addressing our products. So we stay on loans that are for example core to us. So it's corporates which are internationally oriented. So we keep on working on that. We also – so that is what we keep on working on.

And then we also keep on working on the cost suit in order to have positive jaws. And then we also keep on working on the cost of risk. So that's a bit the environment. And as I said, as long as that environment remains a bit lackluster, we will continue this focus. So focusing on the core clients that we have, focusing on the costs to warrant operating jaws and ensure the cost of risk going down.

Anke Reingen: Thank you.

Lars Machenil: That will be my four answers to your questions.

Operator: Next question comes from Kiri Vijayarajah from HSBC. Sir please go ahead.

Kiri Vijayarajah: Yes, good afternoon.

It's Kiri from HSBC. Firstly, can I just come back on the securitizations? I'm just trying to understand what's going on there. So it's resulted in an increase in RWA. So you are actually trying to build market share in the securitization business when the securitization space as a product or is it purely just a tool for you to try and optimize your RWA? And then secondly, just one still on RWA, just the closure of the prop desk during the quarter what was the benefits in terms of the RWA because the market risk on RWA looks likely they had been flat during the quarter, just those two questions please. Thanks.

Lars Machenil: Kiri thank you. No, on the securitization and basically it is a tool. It's a tool as we said, for example, NCAB we want to have over the plan our risk weighted assets stable. But at the same time, of course, we want to continue developing our clients. So we basically securitize what we put into the balance sheet for our clients and we put that in the market.

So that's kind of originate to distribute, which basically is what we have at the core of what we want to do. When it comes to your question of looking at the market, the risk and related factor, if you look at the slide 65, you'll see that the bar is again at way too low. I would say low level at € 23 million, which is basically on the back of, for example, those activities which are Opera Trading, which is out of the books. So that's basically how you can see it. So Kiri that will be my two answers.

Kiri Vijayarajah : Thank you.

Operator: Next question comes from, Flora Benhakoun from Deutsche Bank. Madam, please go ahead..

Flora Benhakoun: Yes. Thank you.

Good afternoon. I have two follow-ups, please. One on the TRIM and one on the goodwill impairment. So regarding TRIM maybe let me ask you the question differently. I think you said in the past that the portfolios that have been reviewed so far, market risk and then the French credit risk.

So could you tell us if during Q1 all the portfolios have been a completely reviewed? And the second question is regarding the goodwill impairment, I know you talked about it already, but could you give us some more details because basically it's just a bit surprising to see suddenly asset that is 20 years old being impaired this quarter, [indiscernible] asset is, should we read there that potentially you're looking at additional disposals. Thank you.

Lars Machenil: Flora, thank you for your questions. Yes, on TRIM indeed. The ones that have been finalized, we said the impact is limited.

In the first quarter, there are ongoing reviews, for example, what is happening in Belgium and so forth. And at this stage for us, there has been, we didn't increase our requirement to cover those. So that's basically where we stand. So when it comes to the goodwill, for us as you know if there is goodwill, we basically don't allocate that into the businesses. So this is something that we consider is not related to the business and that is why, this impairment was booked in the corporate center.

And that's basically all there is to say about it. And as I said, it is almost 20 years old. So validating exactly the assumptions that we had made at that time for activities which are then maybe have evolved, have tuned or cooperating with others. That's the only reason what happened. So it's not an indication of something that will follow.

So Flora, that will be my two answers.

Flora Benhakoun: Thank you.

Operator: Next question comes from Jacques-Henri Gaulard from Kepler Cheuvreux. Sir, please go ahead. Jacques-

Henri Gaulard: Yes.

Good afternoon. Just one quick question on consolidation, remember that last time we mentioned it with your CEO, you was saying that was very complicated. It was not necessarily interested by launching himself into any sort of Pan-European consolidation. Obviously, your regulatory is becoming much more enthusiastic referred to the speech of Mr. [indiscernible] yesterday.

So I'm just wondering if anything has changed since February and there'll be the only question which will enable me to average with I’m going head a two and a half question per head. Thank you.

Lars Machenil: Hi Jacques, thank you for taking my average same questions where – no, I mean for us nothing has changed. We remain in our plan ramping up to 2020. What is very important is digitalization.

Because digitalization is the way that customers want to interact and basically an interaction that leads to lower branches. This is what you've seen. We've reduced branches tremendously in an environment where people really hit on the digitalization, like for example. Belgium, you'll see that there's more than 250 branches that we will be able to close going forward. And so that is basically the focus that we have.

That is the focus that we keep. So nothing else to add on that one.
Jacques-

Henri Gaulard: Okay. Thank you.

Operator: Next question comes from Bruce Hamilton from Morgan Stanley.

Sir, please go ahead.

Bruce Hamilton: Hi afternoon, Lars. Just a couple circling back on a few topics have been touched on. So Bank of the West I understand that, the plan is to replicate what you do in Europe in terms of offering different products, but with the pretax we had around 7%, how much time would you give yourselves before determining whether that business unit should really be noncore? Secondly, just on capital to clarify the securitization impacts you'd expect should be Q2 without any further delay. And then thirdly on fees, some useful comments around the impact from fragile customers and so forth, do you expect any further pressure committed to transparency through both wealth management and through sort of distribution fees in places like French retail or is that already in your mind kind of in the numbers? Thank you.

Lars Machenil: Yes. Thank you, Bruce. So if you look at the Bank of the West, so yes, as I said, we stepping up and building the expertise in the more specialized kind of products and that of course take some time. Yes, it takes some time to build, to have a good view of what the behavior is of a customer to basically be able to. Just for example, in personal finance, the ideas that in the point of sale, we can have a decision and therefore that takes time.

So as we said for us, we were ramping up to 2020 and that is the kind of horizon where we look at the progress on these things. On securitization, yes. That's something for this quarter and when you look on them, your questions on MiFID that is basically behind us, that’s basically down there. So Bruce, that would be your average of three questions.

Bruce Hamilton: Thank you.

Operator: The last question comes from Jean Pierre Lambert from KBW. Sir, you can go ahead. Jean

Pierre Lambert: Good afternoon, Lars, three questions. The first one is regarding the plan cost saving. You are at 1.3 versus 1.8 for the target for 2019.

When we look at the target of 2020, which is 3.3, does it mean that your front ending or do you could revise upwards the 3.3 as you have a track record of doing that in previous plan. The second question is regarding insurance revenues fairly high this quarter, 874. What is the underlying, if we exclude the market movements, so that we have an idea of the sustainability. And then the third question, IFRS 16, can you explain the movements, if this going through risk with assets? Is it going to a particular division or if you could pinpoint where we can find it into divisional breakdown? Thank you.

Lars Machenil: Yes, Jean Pierre, thank you for you – the three last questions apparently, if we look at the cost savings, so you're absolutely right.

So we already delivered 1.3 billion, it's going to go up to 1.8 billion by the year end and 3.3 billion thereafter. Now, let's not forget that this is already revised upwards. In the initial plan, we said that we would have 2.7 billion recurring savings that we've now brought up to 3.3 billion. So that's the first thing. Why does these costs ramp up? It's because those costs basically come from activities that are accompanied by some double run.

So for example, if we move some activities which are spread over Europe and we move them into one country, that move is not just lifting it and dropping it in another country. You basically have dual runs, and then after that dual run, you’ll basically capture the savings of that transaction. So that is a better trend, so it lifted already from 2.7 billion to 3.3 billion, it's a bit stepping up for the reasons of being just sure in the dual run, that’s what we basically do. When you look on your question on fees, it is true there's two things, when I said on one hand that the fees that are related to the retail, they are basically gradually building up because our customers, they stepped up their demands within the quarter. However, there is also the effect in insurance which is a picture at the end of the quarter.

And so in insurance you saw the end of the quarter, which was fine, in the fees in retail, you saw the ramping up over the time. So that is basically how you can bring the two together. And when you look at IFRS 16, so what it basically means that is that the elements that you put that you have in leasing for example, that are now having to be put in the balance sheet in that element and basically also translate into your common equity Tier 1. So that is basically where you can find it. So Jean Pierre, those will be the three questions – the three answers to your three questions.

Jean

Pierre Lambert: Yes, just to come back on the second one, the insurance, the revenues 874 is fairly high. So my question was what considered a sustainable or normalized, excluding the market movements?

Lars Machenil: Yes, it's a bigger thing, if you go back, when we saw the growth of – in the Q4, so there is a part in insurance which is basically held at fair value. And so when the markets move rapidly as we saw in the fourth quarter of 2018, you had somewhat reduction in the revenues. And now that the market swing back to more kind of natural territory at the end of the quarter, you basically recuperate those. And so that is a bit the swing and when you look at the average rate, so maybe the run rate in insurance is a bit higher because of that, however, as I said, the run rate in the retail is a bit too low because they are ramping up.

So overall, if you look at the combination of those two, we are basically in the right run rate. So Jean Pierre those would be the answers, and operator. Jean

Pierre Lambert: Thank you very much. A -

Lars Machenil: My pleasure. So with this I disclose the last question.

I thank you very much for your kind attention and I would like to take away that we had business growth industry operating divisions. I've probably said it too often that positive jaws and we had a significant progress in the digital transformation panel of this in line with the plan. Thank you very much. Have a good day.