Operator: Good afternoon, ladies and gentlemen, and welcome to the presentation of BNP Paribas Third Quarter 2019 Results. For your information, this conference call is being recorded. Supporting slides are available on BNP Paribas IR website, invest.bnpparibas.com. During today’s presentation you will be able to ask your questions. [Operator Instructions] I would like now to hand the call over to Lars Machenil, Group’s Chief Financial Officer.

Please go ahead, sir.

Lars Machenil: Thank you, operator, good afternoon, ladies and gentlemen. Welcome to the BNP Paribas third quarter 2019 results presentation. In the usual way, I’ll take you through the first two chapters of the results presentation, which, I assume, you have under your eyes, and just before handing it over to you for Q&A. But give me just 10 seconds as it is relatively warm in this room.

I’m going to take off my blue tie so I’m already to go. So as you can see in Slide 3, the key takeaways for this

quarter are: First, business activity progress in all three operating divisions with outstanding loans at 5.5%. In Europe, we saw this and particularly in France. On the back of this business growth, group revenues were up 5.3% year-on-year. Two, the group delivered positive jaws and this in each operating division.

This was achieved on the back of the continued implementation of the cost saving measures in line with the 2020 plan. Third, the group cost of risk remained low at 41 basis points over outstanding. And fourth, group net results cropped in at €1.9 billion, down 8.8%, but up 3.4% when you exclude the exceptional items the group had recorded a year ago which I remind you we had €286 million capital came on the sale of 30% of first Hawaiian Bank. And so, lastly, the common equity Tier 1 ratio, which reached 12%, up 10 basis points on last quarter. And all of this has a consequence of BNP Private Bank being a diversified bank.

Looking more broadly, at the first nine months of the year, the group generated €6.3 billion of net income, up 3.9% year-on-year with a positive jaws effect. If we now turn to Slide 5, you can see the exceptional items of the third quarter, which have an impact of minus €178 million net of tax with a difference from last year debt explained, as I mentioned by the impact of the 30% sale in first Hawaiian Bank in the third quarter of 2018. Exceptional items included to 2020 plan transformation cost, restructuring cost of the acquisitions and additional adaptation measures as we announced this year in BNL and asset management, and this to address the evolution of the economic environment for this businesses. If you now swipe to Slide 6, you can see the positive jaws effect. Net income, excluding exceptional items, rose by 3.4%, and as you can see, the nine month net results generated an annualized return on tangible equity of 10.3%, which is equivalent to an annualized return on equity of 9%.

Now moving to the revenues of the operating divisions on Slide 7, we see that they increased by 5.1%. They were up in each operating division with domestic market showing a 0.5% increase on the back of the growth in the specialized businesses, largely offset by the effect of the low euro interest rates. They were up 5.1% at International Financial Services, our engine of growth, and is on the back of good business development and a favourable foreign exchange effect this quarter. Thirdly, CIB delivered a strong revenue performance with a 12% increase on last year and a rise in revenues of all the businesses in CIB. And this attribute to us adapting the business and remain in present for our clients.

If you swipe to Slide 8, you will see that the cost in the operating divisions were up 2.9%, and 1% on a like-for-like basis. If we look in detail, we see the Domestic Markets had its costs up just 0.1%, leading to positive jaws, with a 0.9% cost reduction in the networks and a rise in the specialized businesses of Domestic Markets, accompanying the growth of this activity. When we go to the second one, IFS cost evolution, up 4% and 0.4% on a comparable basis, reflected cost containment and continued business growth of the company by positive jaws effect. If we now turn to the third one, CIB, cost increased by 4.8% on the back of the growth that we discussed before at CIB, and they benefited from the continued and accelerated implementation of cost savings, which lead to very positive jaws effect. To sum up, you can see the impact of the cost-saving measures generated by our transformation plan and a continued focus on delivering positive jaws.

If we look at those jaws as well as the fact that I said earlier that our common equity Tier 1 stands at 12%, you will clearly see that we delivered on what we set forth. Now, if we stay on costs and if you advance to Slide 9, you will have the detail of the implementation of our transformation plan. In the third quarter, we generated an additional €166 million of recurring cost savings taking the accumulated cost savings since the launch of the program to €1.7 billion. As you know, the target next year is to generate a €3.3 billion recurring cost savings. Also, we booked transformation cost for €178 million this quarter, taking the accumulated spending in the first nine months of this year to €568 million in line with a target of €0.7 billion for the whole of 2019.

Also, we confirm that there will be no transformation costs in 2020. So in nutshell, the Bank delivered on its 2020 plan with great success in a digital transformation. Indeed, the focus on cost has stepped in the beginning of the year lead to an offsetting of the Group's natural cost evolution stemming from supporting growth and natural leases. As such our costs remained stable at plus 0.4% on a like-for-like basis, translating into a plus 2%, but mainly due to the strengthening of the dollar. So if with this, we turn to the cost of risk, please flick through the three dedicated slides starting with Slide 10.

As you can see, as I mentioned earlier, it clocked in at a low 41 basis points over outstanding. The increase versus previous quarter is essentially due to significant provisions write-back in those previous quarters. If we take the businesses one-by-one and we start with Corporate Banking. In Corporate Banking cost of risk was low at 23 basis points. It was up on the third quarter of last year on the back of significant provision write-backs in the third quarter of 2018, and one significant file this quarter.

These one off write-back in CIB, last year, lead to a pickup CIB’s cost of risk when we expressed it in of €134 million, and this increase of €134 million on the back of these write-backs is actually the main part of the group effect, which stood at plus 161. So incentive face and I’ll detail it in the second, but in this lower rate environment, we do not see a deterioration of the quality of outstandings. And so if we move to Domestic Markets on Slide 11, cost of risk was low in French retail, very low in Belgium retail, and confronted decrease at BNL in Italy. In the other retail businesses, on Slide 12, Personal Finance saw a low cost of risk over outstanding, up on the second quarter, which had recorded significant nonrecurring provision write-backs. Europe-Med's cost of risk remained at the moderate level, while BancWest's cost of risk remained low.

If we now swipe to Slide 13, to look at financial structure, you can see that our common equity Tier 1 reached 12% at the end of September, up 10 basis points from the previous quarter, and this due to the effect of, on one hand, the third quarter results after, of course, as Euro taking into account 50% dividend pay-out, and secondly stable risk-weighted assets at constant exchange rate, thanks to the more significant effect of securitization this quarter. As a reminder, certain securitizations were deferred in Europe from the first half of this year. And so we have that more in the third quarter of this year. When we look at the other metrics, the leverage ratio was standing at 4.0%, and the Group’s immediately available liquidity reserve totalled a massive for a lack of the better word of €351 billion at the end of the third quarter. The evolution of these ratios illustrates a very solid financial structure of the Group.

If we sum up the Group overview on Slide 14, you can see that our net book value per share stood at €78 at the end of September. Looking at the period starting from year end 2008, the compounded growth rate stands at 5.1% per annum. This Slide basically highlights the BNP Paribas continued value creation through the cycle. I leave you to peruse the next two slides of the introductory part, Slide 15, our ambitious policy of engagement in society with very concrete examples such as our early commitment towards the principal of responsible banking in line with the United Nations’ sustainable development goals as VG, and Slide 16 summarizing the continuous reinforcement of the Group’s internal control and compliances. So with this, I kindly ask you to move on to the results by division.

And so there are three. Let’s start to the first, which is Domestic Markets and that is slide 18 to 24. As you can see, in the third quarter, Domestic Markets showed increased business activity with loan growth at 4.1% in the retail networks as in the specialized businesses with growth, in particular, in corporate loans, besides, private banking saw net inflows at €1.6 billion in the third quarter. Domestic Markets has continued to expand its footprint in digital banking services as evidenced by the increase in mobile usages with over 78 million connections to mobile apps this quarter alone, up 35% year-on-year. Besides, Domestic Markets has simplified and digitalized its mortgage loan application process in Belgium, France and Italy.

Now if you look in terms of P&L, revenues were up 0.5% at €3.9 billion on the back of increased business activity and a good drive in specialized businesses, offset by the impact of low interest rates on the retail metrics. Operating costs were up just 0.1% year-on-year with a 0.9% decrease in the three metrics. This generated a positive jaws effect, which has been achieved, thanks to the ongoing implementation of the digital transformation as well as the new operating models illustrated, for example, by the adaptation of the three branch networks, which have already been reduced by 356 since the launch of 2020 plan. Cost of risk at Domestic Markets remained low with a continued decrease at BNL, and in total, pre-tax income was up 2% at €975 million, so for Domestic Markets, that is a good evolution. Looking now swiftly at each country and business, I’d like to highlight,

in particular: First, French Retail Banking continued to show good business drive with revenues at tad lower and positive jaws on the back of cost-saving measures.

Second, we are now continued to gain market shares in the corporate segment. Despite a slight decrease in overall loans, revenues were slightly on the rise, thanks to higher fees and pre comp income was up 23.7% on the back of our continued decrease in cost of risk. Thirdly, Belgium Retail Banking, a chose esteem business activity where as revenues continued to be impacted by the lower rate environment. The business adapted its costs, which were down significantly, thanks to the effect of the transformation plan and resulted in positive jaws. Fourth and final, the specialized businesses, continued to deliver sustain business growth with positive jaws and a significant rise in income.

So if we sum up our four divisions, Domestic Markets, delivered positive operating jaws and rise in income in the context of low interest rates attributed to our diversified set up. If we now advance to the second decision, International Financial Services, Slide 25 to 32. You will see that this division confront good business growth in the third quarter with loans up 9.3%, 4.5% on a like-for-like basis, and assets under management at 4.1% year-on-year in our savings business. IFS businesses have continued to implement their digital transformation. For example, the continued rollout of the e-signature had Personal Finance with over $1.3 million contract signed electronically, and 28 million monthly statements made available electronically to customers.

Second, the development of new self-care features, which contributed to the development of mobile usage with 70% of Wealth Management customers being registered to uses of myWealth, the new online private banking tool and 62 million self-care transaction undertaken by customers at Personal Finance. If you now turn to the P&L, we see that revenues were up at 5.1%, clocking in at €4.2 billion, bit of positive for an exchange effect, and up 1.9% on a like-for-like basis. Given effective cost control, operating jaws were positive leading to a pre-tax income of €1.3 billion, up 6.7% year-on-year, and 5.7% on a comparable basis. Now, like the other divisions, let me zoom quickly on the main components of IFS. If we start with Personal Finance, Slide 27, it continued to show business growth with revenues up 4.1%, while costs evolved at a slightly lower pace thus translating into positive jaws and a pre-tax income of €434 million, up 2.4%.

If we now switch to Europe-Med, Slide 28, loans were slightly down on a comparable basis with a decrease in Turkey due selective positioning, but growth in Poland and Morocco. On a like-for-like basis, revenues were up 1.5%, while costs were quarterly flat, thanks to cost savings thus generating good positive jaws. Cost of risk was lower year-on-year and pre-tax income was up 15.5% on a comparable basis and 26.3% at historical scope and exchange rate, thanks to their appreciation of the Turkish lira. If we now turn to BancWest, Slide 29, on a like-for-like basis it shows moderate loan growth compared to last year, private banking assets under management continued to progress at €15.3 billion. On a comparable basis, revenues were at that lower due to the less favourable interest rate environment, and costs were down 4.2% as BancWest is continuing to right size its headcount, near shore and mutualised support junctions.

On the whole, BancWest delivered a largely positive jaws effect as well as the pre-tax income, up 7.4% on a like-for-like basis, or 10.5% at a historical scope and exchange rate, and this, of course, given the dollar appreciation. Lastly Slide 30, our savings business, which saw assets under management, rise with slightly over €1.1 trillion at the end of September, and, particularly, due to a positive performance effect as well as net inflows of €13.8 billion since the beginning of the year. There are two main two parts in this, the first Slide 31, insurance business continued to show continued growth, especially in international savings and protection insurance business. Revenues rose by 2.7% with costs up 5.6% as a result of business development. As you typically do in insurance, you have to look at the year-to-date and actually even the full year effect, and if you do, you will see that after nine months, there is a positive jaws effect in that activity, and pre-tax income was slightly higher year-on-year.

If we now end with Wealth and Asset Management, Slide 32, revenues were up 1.5%, driven in particular by Real Estate Services and Wealth Management. Costs decreased by 0.8%, thanks to the effect of cost saving measures, in particular, in Asset Management. As already mentioned, this business line is implementing additional measures to streamline its products offering, regional organization as well as entities, and this to result an additional cost reduction. So overall, Wealth and Asset Management delivered positive jaws and pre-tax income, up 18.3%. To wrap up, IFS showed continued business growth and rise in income in the third quarter.

With this we’ve reached the third division. And so we switch to Slide 33 on Corporate and Institutional Banking. Indeed CIB has stepped up the implementation of its transformation plan. To illustrate, this it has achieved €62 million of additional and recurring cost savings this quarter on the back of its continued industrialization. Besides, it kept up a selective growth on targeted clients with, for example, the signing of the agreement with Deutsche Bank to provide service continuity to their prime brokerage and electronic execution.

Also, CIB presumed the streamlining of its activities, which is illustrated by the recent signing of an agreement with Allfunds, a leading wealthtech platform in fund distribution services, whereby CIB will contribute fund distribution businesses to Allfunds in exchange for a 22.5 strategic stake. If we now look and particularly in Q3 to CIB how its further strengthened its leading client position and gain market share as evidenced by its number one position for all bonds in euro and syndicated loans in EMEA. These let CIB’s revenues to clock in at €2.9 billion in the third quarter, marking a 12% year-on-year increase. And this increase basically in all three of its sub businesses. Costs were up just 4.8% on the back of sustained business activity, leading to a 7.2 positive jaws effect, and benefited from the cost-saving measures as well as from the implementation of end-to-end digitalization process.

As a result, CIB generated €834 million of pre-tax income, marking a €13.5 million year-on-year increase. As I said, this positive evolution is witnessed in the three business of CIB, so if we take them one at a time, and let's start on Slide 34 with Global Markets, which delivered again, a sustained business and revenue growth with revenues up 14.7%, and even up 17.2%, when we exclude the effect of the creation of the capital markets platform. On that basis, FICC revenues were up 38.7% with a sharp rise in primary markets and credit, and a rebound in forex and emerging markets, where as equities revenues were down 15% with a lacklustre market on flows partly offset by structured products, and a slight increase in Prime Services. As I mentioned before, Global Markets has now signed agreement with Deutsche Bank to provide continuity of service to the fund manager clients over the global prime, finance and electronic equities. If we now turn to the second part of CIB, which is Corporate Banking.

Revenues increased by 11.7% and 8.7%, excluding the effect of the creation of the capital markets platform, and this on the back of growth in the three regions and, in particular, strong business development in Europe, year one being the U.S and Asia, and this driven up by a ramping up of the new capital market platform with a significant number of transactions in the third quarter. Finally, if we go to the third part of CIB, Security Services, delivered business growth with revenues up 6.4% on the back of increased volumes, which assets under custody and under administration up 10% year-on-year. So this concludes the three divisions. And in a nutshell, a good performance for our CIB, which delivered revenue growth, positive jaws and a strong rise in income. So with this, ladies and gentleman, this concludes my introductory remarks for the Group's third quarter results.

The main takeaways from today's

presentation are: in Q3, we continued to successfully implement new digital customer experiences. The Group enjoyed revenue growth and positive jaws in the operating divisions, besides the Group generated an annualized ROT of 10.3%, and our CET1 ratio increased further to 12%. I thank you so far for your kind attention. And now, I'll be pleased to take your questions.

Operator: [Operator Instructions] We have a first question from Jon Peace from Credit Suisse.

Sir, please go ahead.

Jon Peace: Yes. Thank you. Good afternoon, Lars. So my three questions please,

would be: number one, could you just remind us what do you think the potential revenue benefits might be in the timing of the prime purchase from Deutsche Bank? And then, the second question is on the outlook for French Retail Banking was doing a little bit negative this quarter, I'm wondering your peers have guided to negative growth for next year.

I mean, how do you see the outlook there? Would you still expect to see cost of revenues in 2020? Thank you.

Lars Machenil: Jon, thank you for your questions. If we take the first one, so, as you know, we are very pleased to be able to on-board the prime brokerage activities. As you know, the deal still has to be closed, which will happen soon. And then we start a phase of transition.

So it’s a transition where that is gradual and that will take time. So let be fair. I mean, it will take a year or bit more before we have the full transfer. And what we anticipate at once this is done, the full-year effect, for example, on the top-line would be around €400 million. Then, if we go to your second question on the French Retail, so what we see is in this low interest rate environment, we see that there is growth in France, so we captured that growth.

At the same time, as you know, we serve our clients with more than just lending products. We provide them servicing products. And we -- so they -- if you look at it today, after nine months, you will that, overall, the top-line is flattish, and that is the guidance for this year that we have given. For the moment, we are in the process of doing the budgeting to see what the latest updates and orientations of the ECB will be. And so, at this stage, we stick to our outlook and we will be able to give you an update once we’ve done all this process.

So those will be my two answers Jon.

Operator: Thank you. We have another question from Lorraine Quoirez from UBS. Madam, go ahead.

Lorraine Quoirez: Good afternoon, Lars.

Few questions from me. The first one is -- should we expect more adaptation costs in the next quarter? And still on costs, I'm guessing given you have we're getting closer to the end of this plan, could you confirm exactly what's your absolute cost target for 2020 before the benefits of potentially additional adaptation costs? Thank you.

Lars Machenil: Lorraine, thank you for your questions. And on the line, let be fair, if you look at the overall -- so what exceptional kind of costs. So we, of course, we have the transformation costs, which we are accompanying our 2020 plan with, and basically those costs will end this year.

So we will not have them next year. At the same time, we have had some adaptation costs in areas where we had to adapt ourselves given the economic situation. So this is what we have in Asset Management and BNL. So we are continuously looking at the situation what we can adapt. So it cannot be excluded that there will be some of those adaption costs to come, but if you look at the size compared to that with what we have on the transformation costs, it’s totally not comparable, and on top of that, these adaptation costs, they lead to savings.

And so they lead to savings of 1.5 times typically the investment and they come fast. So it’s a different nature than the transformation costs. It’s really adaptation costs that we have. And when you look at your overall costs, what we do, as I said, we guide on what the reduction is on costs. For the rest, there is, of course, the traditional kind of wage structure there, and then there are variable costs of the business that we are accompany.

So intrinsically, the cost savings that we have are definitely there to compensate the typical wages and evolutions. So Lorraine, those will be my two answers.

Operator: Thank you. We have a next question from Jacques-Henri Gaulard from Kepler Cheuvreux. Sir, go ahead.

Jacques-

Henri Gaulard: Yes, good morning, Lars, afternoon actually. Two questions from me, obviously, you’ve delivered -- results are really good considering the really bad environment you have. Now on the back on what Jon was mentioning at the very beginning about the revenue and the impact of negative interest rates on the domestic retail, the outlook you give on that is really not exactly at French Retail level, but it’s small, really at the beginning of the press release, right, when you said that the new monetary policy measures appeared at the end of the quarter will produce their full effect on 2020. So the question is you’ve given revised targets of plus 1.5% key count between 6 and 20. Wouldn’t it be wiser at this point to just give up on this revenue target? That’s the first question, and irrespective of how good you can do but the environment is what it is.

And the second question, I was quite surprised to see on Page 31 of your press release, how much the balance sheet is really increased significantly. And it seems to be linked to financial instruments of fair value and repo line as short up by like €200 billion. I know that those are just fix photographs from one tier to another. But it would be helpful to know where those increases were coming from? Thank you, Lars.

Lars Machenil: Definitely, thank you for your questions.

With respect to the targets, it is true that when we provided those targets, the overall market outlook of rates and the likes, where are they different. One assume that there was going to be a rate pickups somewhere at the beginning ‘20, which is maybe a bit different now. However, if you look at our results after nine months, if you look at it at the bank, you can clearly see as I said, the credits are up by 5%, and so at the top line, which is bit of attribute of being a diversified bank, because, yes, I know we have twice Paris in our name, but French Retail is 13% of our balance sheet. So we are a diversified bank, which in an environment of today, basically plays out because some elements are impacted by lower rates, but others are impacted on the other side, on a positive side on it. So for the moment, it is too early.

We're looking at what the current elements of the ECB, and the elements to come where they are going to be? What is basically means on pricing? What is basically means on the economy? As of today, we're actually going through the budget process to see what it would mean? What we can adapt and how we can optimize? So it is that too early to make a statement on those targets. That’s the first thing. Secondly when it comes to the balance sheet, yes, the balance sheet has grown, but you've also seen that there is one business and particularly that has grown, right? So you’ve seen that CIB has been there accompany the clients, and that basically led to also some growth in the balance sheet, but that’s basically -- if there is nothing more to say. So Jacques, that will be my answers.

Operator: Thank you.

We have a next question from Jean-Pierre Lambert from KBW. Sir, go ahead.

Lars Machenil: Jean-Pierre?

Operator: You’re still on line. Your microphone is open. You can ask your question.

Lars Machenil: Let’s take the next one.

Operator: Okay. We have the next question from Stefan Stalmann from Autonomous Research. Sir, please go ahead.

Stefan Stalmann: I have two questions please.

The first one on M&A. Sometime earlier this year, I think, it was you basically ruled out bolt-on deals for the rest of the medium term plan. But now it seems that mBank [ph] in Poland is becoming available. Would you consider making exception for looking at mBank [ph] please? And the second question regarding Belgium, where top line momentum continued to look quite weak. And I think from the days that you can – that you provide you can back out that the net interest margin in Belgium has contracted by about 20 basis points year-on-year, which is worse – much worse than in France.

And I know you say that it’s coming from the impact of low rate environment. But could you maybe add a bit of colour on what exactly is driving this whether this is coming through more on the assets side or the liability side, and whether you think this erosion will continue or whether it’s now at a point where it will stabilize? Thank you.

Lars Machenil: Stefan, thank you for your questions. And when it comes to the M&A, we're not interested in bold-on acquisitions, for example, the things like branch networks. So we basically said that the growth, we're much more interested in doing the digital developments, which allows us to attract customers without needing to buy branches.

And that is basically what you see, for example, the discussions we had with Deutsche Bank or the one that we had with Allfunds, are basically allowing us to strengthen our business position without buying branch network. So that’s basically where we stand. When it comes to your question, on Belgium, on the top line, let's not forget, I mean, if you look at the impact of the low interest rate, country to country it can be quite different. For example, if you look at France and if you look at Belgium, they are a bit on the opposite sides of how the behaviour happens. If you are in France where the facility to buyback your loan is quite different, totally different actually.

You can have a relatively rapid impact on what is happening on reprising whereas in Belgium, it basically takes more time. And so that’s basically the dynamic we see. We see France, which is now picking up again as we said earlier, and Belgium is still having the impact of those lower rates on its book. So Stefan, those will be my two answers.

Operator: Thank you.

We have a next question from Omar Fall from Barclays. Sir, please go ahead.

Omar Fall: Just a couple of questions from me. So firstly, can you let us know the exact amount of securitization benefit though CET1 you have this quarter? I think, in Q1, it was about €10 billion that have been of risk-weighted assets that have been delayed worth of securitization. Is that roughly in the right ballpark? Second, is it a concern that ex-SBI Life disposals there has been no organic capital generation year-to-date? And then lastly, sorry, I ask this every quarter, and I'm hoping this time it’s different given the importance of the topic right now, but it would be very helpful for a modelling to know how much of the deposits for the Group reinvested of their effective duration either via replication portfolios or bonds, and what the average duration is? Maybe even if you give us the figures for the Domestic Market retail units that would be very helpful given the thoughts most people are talking about.

Thanks.

Lars Machenil: Omar, thank you for your questions. And so, if we look at your first question of the common equity Tier 1 -- so, as you know, we typically caring the evolution we generate profit. Half of that profit is basically going into the shareholders, and the other part is basically strengthening the capital. So that is -- as we have €6.3 billion of profits after nine months, half of that is basically strengthening the capital.

Now, by doing this at the same time, of course, we grow our balance sheet. As you’ve seen, again, we've grown it for 5% this quarter. Growing balance sheet also means growing RWAs. And so what we aim to do is that we aim to compensate a part of that RWA growth through securitization. And we basically said that our overall objective is to have the equivalent of five basis points per quarter.

So every quarter we securitize to reduce the impact on the common equity 4, 5 basis points. What we said is at the beginning of the year, the first two quarters; there was a review by the supervisor to make sure that all the new concepts were applied with. And so there was, in Europe, a slowdown, actually even in the first quarter, a halt of the securitizations going on. So the five basis points that we said, we would do every quarter, so like four times. Well, we are now crystallizing a bit more of it in the third quarter.

So instead of doing the five basis points, we typically do, we have them at 10 basis points. That's it, so that’s basically that behaviour. So on the run rate we see on that five basis points, which allows us year-after-year to strengthen our common equity Tier 1. As you have seen, after nine months, we started the year at 11.7%, and after nine months, we are at 12% common equity Tier 1. And so that, basically, I also answered to your second question, right? When you say if there is a capital generation by SBI Life, as I said, we have a dividend policy of 50% of earning.

We have there is also policy of earnings going up. And so that basically means that we strengthened the capital that way. When it comes to your question on models, allow me, as you know, we are very willing to share many things, the things which are a little bit in the domain, which are also domains of interest for our competitors. I will refrain from answering that one. So, Omar, that would be my answers.

Operator: Thank you. We have a next question from Matthew Clark from Mediobanca. Sir, please go ahead.

Matthew Clark: So couple of questions from me. Firstly, on transformation costs, you said none in 2020.

Should we expect none in 2021 too, or will this be back again? Just trying to work how if this kind of €3 billion of the last plan is the one from the lifetime cost or is it going to come back in a couple of years? Next question is on the CT1 ratio, it looks like you had a fairly large OCI benefit this quarter to IFRS shareholders equity. Was there any benefit to impact on the CET1, or this better will get offset in the regulatory adjustment? And then the final question, just could you give any update on TRIMS, some of your own competitors have seeing some drift upward in that guidance, which will impact just one to check whether you have been sticking with your 20 basis points impact? And if you have any move visibility on timing of there? Thank you.

Lars Machenil: Matthew, thank you for your questions. And to anticipate, I’m a happy camper. So that should be fine.

Now, if we look at it first on the transformation costs, so the transformation costs that we basically booked centrally, we’ve done it, and you’re right, we’ve done it in this plan, and we’ve done it in the previous plan. Why, because both plans have a central team. So the plan – the previous plan had a central team of simple and efficient. We really wanted to streamline that. The current plan has also, as team, which goes across the businesses of digitalization.

So those were the two teams that basically made it for a central approach. At this stage, honestly, I don’t see any of those central things on the horizon. So that would basically be my answer on that. When it comes to the common equity Tier 1, and your question of OCI, it is true when we track the evolution of the common equity Tier 1. We’ve bring it down to it’s really core elements.

So that is, we take the net income generated, we divide it by two, and that’s strengthens our capital. And then we look at the evolution of RWAs at constant exchange rate. And why is that, because the effect of exchange rate. You can see it in the OCI, and that’s basically what you mentioned. So if there is an exchange rate, you can see that in evolution of these OCI, and typically as we are booking our activities where we are generating results, you basically see that about impact on OCI is basically compensated by the similar impact on the other utilities.

And so that is why we always mentioned, as I said, the impact of the RNPG, so of the net income, and the impact of the RWAs, excluding Forex. And, yes, and so there is basically no other effects because the interest rates do not have that kind of impact on the evaluation. So that would be that. And then, on your third question of TRIM, listen, I don’t have a crystal ball. Let’s not forget TRIM is not something, which is universal, right? It’s not like saying, hey, I have a new way of looking at liquidity or looking at -- and that basically applies to all.

TRIM is a review of the mobiles. And so it can have different impact at different banks because the facing of the reviews are different or the status is different. As we said, when we look really at the TRIM exercise, for us, at this stage, the impact is limited, but again it’s not done. And honestly, we’ve guided that there could be an impact of 20 basis points. That’s also not forget, the 20 basis points, that is not one shot right, that’s the thing that can spend from several kind of analysis, and that can – that will be probably spread over time if it comes anyway.

So that would be the point. So Matthew, those will be my three answers.

Operator: We have a next question from Jean-François Neuez from Goldman Sachs. Jean-

François Neuez: Hi, good afternoon. Jean-François Neuez from Goldman Sachs.

I just wanted to ask with regards to the CIB, which has had a strong performance in FIIC as has been noted, but also in the corporate banking part. And for the fixed income, in particular, it was noted that this was of low base last year as one of the reasons behind the strength, in particular, versus competitor. But even if you took a two-your stack, it’s still a fair bit of outperformance. And I just wanted to know whether you would be able to elaborate a bit more to where the drivers where maybe by business line or by a region in a little more detail? And also on Corporate Banking, so the revenue growth has outperformed loan growth and in particular risk-weighted assets growth. And just wanted to understand as to why the productivity of these risk-weighted assets is increasing so much? And the second question, I wanted to ask you, again, with regards to the transformation and restructuring costs then this is really into next year, but simply speaking in the fourth quarter of this year, is there any lump that could come because your net income is likely to be above, in particular, due to low fourth quarter last year that you might use as a budget if you want, and just a housekeeping question here.

Thank you very much.

Lars Machenil: Housekeeping. Thank you, Jean-François. If we look at CIB, first of all, let's not forget. If you look at CIB, Corporate Banking to start with, we’ve been doing -- at first, to really stay close to our customers to provide them with services, that’s, for example, why we created a capital market to be able to bring all kind of solutions and services together.

And what we've seen is in indeed we’ve been able to step a growth, in particular, in EMEA. And so that basically means you will step up the growth, and then the other services basically take a bit of time after the quarter to come in. And so that is why there is this evolution that you saw on the credit side and the RWAs side, but that’s basically a temporary one. When we go to CIB on FICC, and yes, so basically the business is good, and when you say on a low base, while the low base was in particularly on Forex and not necessarily on the other part. And so what is it? For me what we see in FICC is attribute to all the changes we’ve done.

Let me very fair. If you look at what we've done is that we've changed. In the past, to be frank, the FICC kind of activities where I would call them averagely be spoke. Yes. And so what has happened is that they now have become are very industrialized or very be spoke.

And so that means that you really have to change a set up, you have to digitalize, and you have to be able to really deliver those book products. And that is the changes that we have been doing, that also meant that we have to do quite some changes. We have to digitalize, we have to bring down the costs, and that is what we have done. So that basically means that when we have that interface, which is customer base, we're able to provide several services. And as I said, bode in the standard digital kind of way, and in the more sophisticated way.

And so, that is what we do, and this is why indeed see the positive evolution in FICC, we see the positive evolution in Corporate Banking, and let’s not forget we also have that evolution in secret resources, so we have on the tree. And if you look, in particular, it’s in the secondary, but also in the primary. If you look at -- in the rankings, we're number one in EMEA, when it comes to bonds or the fixed-income. So from that point of view, it’s a bit, honestly, attribute to the changes we have been doing. And so has allowed us to step-up our market share since the beginning of the year, so it’s not only -- while we don't have the October or the September numbers, but if you look until the data that is available you see clearly that we step up our market share.

Then when it comes to your last question of the transformation costs, so, yes, there is the remainder of transformation costs to come in the last quarter, but that is basically planned. And then, your question is on loan costs, it’s a bit what I said earlier is that we are looking at -- continuously looking at how we have to adapt ourselves to be adopting to the interest rate environment to grow and so forth. And so from time-to-time this can lead to a kind of adaptation plans to be launched. That might happen. But then again, the size of the adaptation related costs are nothing compared to the transformation costs.

And as I said earlier, we are -- the things we do is we stick to the metric that we set forth. As you saw, we set operating jaws -- we have four of those in a raw -- operating jaws. We set forward 12% common equity Tier 1. You see that we are there. And we also have the growth of the bottom-line and the likes too, that we have in the wings, and that is what we stick to.

So Jean-François, that will be my two answers.

Operator: Thank you. We have the next question from Geoff Dawes from Societe Generale. Sir, please go ahead.

Geoff Dawes: Hi, it’s Geoff Dawes here from Societe Gen.

A couple of questions from me. First of all, I just wanted to follow up from the earlier question on balance sheet growth, and hopefully get a bit more detail on that. I mean, it’s a very large jump up in the asset base, several hundreds of billions over the last two or three quarters. And I just wanted to get a feeling whether that permanent, weather that’s transitory, whether any revenues attached to it, and really matter how -- why we're seeing such a bigger inflation of the asset base? And the second question from me is on the French Retail business, domestic current accounts have increased quite substantially as well. And I just want to get a feeling from you whether that's deliberate or whether it’s just customer behaviour coming through? And what the kind of profitability impact of that is? Or this increase in domestic current accounts good thing for the top line or is that a bad thing? Those are the two questions.

Thank you.

Lars Machenil: Geoff, thank you for your questions. So when it comes to the balance sheet growth, as we basically said, the balance sheet grew on one hand because the credits grew, so that's one thing. But then, the major step came from two other reasons. So first of all there is, as I said, the dollar.

So the dollar appreciation which basically inflates your balance sheet, so that's also a point. And then, the last part is also that I said the step-up in CIB Global Markets activity. And then, your question is -- are there new revenues attached to it? Why don't you look at revenue evolution at CIB? And you will see that there are indeed revenues attached to it. And so, that's basically on that. When it comes to French Retail, yes, there is indeed a pickup in those current accounts.

That is basically what it is. Current accounts are capped to basically zero and that's it, but we serve the relationship with the retail customers. So, Geoff, those will be my two answers.

Geoff Dawes: And perhaps is a quick follow up on the French Retail point. We noticed a significant rise in revenues in Macau, and that was captured elsewhere in the P&L in the divisionals.

But can you just give us an idea of the revenues there? How much is that significant rise in revenues was the base, any kind of metrics around that?

Lars Machenil: If you look at the overall evolution as far as of the other domestic markets, and as we said, we are stepping up materially the customer base. Again, as I said, this is an activity which is also looked in by other syntax and other banks. So it is something at this stage, which we do not detail more except that this is double-digit rise and it remains overall small. So that would be the colour I can give you.

Operator: Thank you.

We have a next question from Flora Benhakoun from Deutsche Bank. Madam, go ahead.

Flora Benhakoun: Yes, good afternoon. The first question is regarding the solvency to ratio in the insurance business. I was just wondering whether if you could tell us ideally where you stand at the end of Q3, whether there has been a decline just at the beginning of this year.

And if so, how you can potentially offset that? And the second question is regarding potentially charging negative deposits rates, just wanted to have your view on this. What you are already doing? How much more you think you can do on that? Thank you.

Lars Machenil: Flora, thank you very much for your questions. So first of all, when it comes to insurance activity, as you know, we are -- our solvency is well above 100%. And if we publish it on a yearly basis, because as I said earlier, the overall stands, if you look at insurance, also how -- if you look at it from a bank’s perspective what it means on top line, what it means on costs is a bit -- remains a bit peculiar.

So we have to look at it on a yearly basis. And so we were well above 100%, so there is nothing else to mention on it. Also that we, the insurance at the BNP Paribas, we are for a big part international, so not French. And on top of that, we are for a big part non-life. And even if what it is life, there is a lot of health, which is driven by usage.

So from that point of view, if you cannot consider that, the risk with respect to the volatility, would be very high. So that is why we are comfortable with that. And when it comes to negative rates, so on the negative rates, let be very clear. When it comes to the retail environment, we are seeking to it, when it comes to the institutional, we charge, and when it comes to corporate, it basically if it is related to investments, we consider it also a bit different, so that’s basically our expense. So Flora, that would be the two answers to your questions.

Operator: Thank you. We have a next question from Tarik EI Mejjad from Bank of America Merrill Lynch. Sir, please go ahead. Tarik

EI Mejjad: A couple of questions please, first on capital. Would you review priorities in terms of capital build allocation now that you reached 12%, there are discussions that Basel-IV might be delayed, and you can watch it down, maybe you can give your view on that? And do you have clearly an ambition now to grow in CIB and to take market shares.

So would you expect CT1 to remain at around 12% where you’ll be opportunistic about bolt-on in CIB and growth? And second question is in CIB, are we -- I mean, do you have this revenue losses from the leveraging you announced in Q4 or is it something that you manage to offset somehow so you shouldn’t expect a loss in revenues from this deleveraging? And last question on CIB, you mentioned €400 million incremental revenues from the Deutsche Bank deal, but I heard somewhere that ROE for the business would be above 20%. So how do you manage that, and what did Deutsche Bank missed in this business? Thank you.

Lars Machenil: Thank you for your questions. And if we take the first one, so we're at 12%, and there are discussions about, well, they call it now finalizing by about €3 billion that was younger. It was basically called Basel-IV.

And so I want to stay in a stance where I’m relaxed and I don’t have to think about everyday and we can continue to do the business. So that’s basically why until its get clarified. We keep on accumulating capitals so that if there is these fondle inflation as we anticipated for us at 10%, we will be at 12%. Now it can be that there is a different stance because on one hand there are some reflections of saying the RWA will be inflated, but at the same time, there is an European commission that are saying there is enough capital in the banking system that doesn’t have to be anymore. So how could those two things come together? And it’s a bit -- the comparison with thermometer.

If you use the thermometer to measure the temperature of your body temperature, if you're European one and you measure it, and you look on a machine and it says 37. And so 37, you know, that’s helped and that’s okay. And all of a sudden you change your thermometer by a U.S. one, you put it under your arm, you look at it and you see 100, so you get very, very scared, but then you noticed that your body temperature is basically unchanged and that the only thing is this steel that you have to change. So that is why overall, I mean, we keep on being ready for whatever might come, but what will be the form, once we know it, we might guide differently, but now we're on a conservative stance so that we can focus on delivering the business, growing the business, being rid of customers.

When it comes to your question on CIB, the thing that we have stopped and one of the things that you seen is – it’s like Opera. Opera is not a singing kind of context, but it was the proprietary trading that we have stopped and there are some activities also in the U.S that we have stopped. But intrinsically, these were good businesses, they were business that maybe did not lead to cross-sell other activities, and so we said maybe there is a more logical kind of owner. And that is why the impact that you have seen above these are not the negative impacts you might have expected. And then, on your third question, when it comes to the prime brokerage activities, yes, indeed the return on equity that we anticipated from it is like around 20%.

So what is the difference maybe from one to the other bank, is one of the differences that we observed is that the cost of funding between banks being different, and so that’s basically Tarik, the three answers to your question. Tarik

EI Mejjad: Last just a follow-up on the revenues on CIB. I wasn’t mentioning Opera, and the other small businesses stopped. That was more likely, I think, you guided by €200 million or €300 million revenues from lower €5 billion exits in businesses. I was more referring to that part.

Lars Machenil: Yes, but, as I said for the moment, we gave a conservative outlook, and for the moment, we're relatively away from that impact. So we will keep you updated, and there would be one.

Operator: Thank you. We have a next question from Kiri Vijayarajah from HSBC.

Kiri Vijayarajah: Can I just come back to the rapid growth in the repo and the derivative balances on your balance sheet? My question is more forward-looking, can you sustain that pace of growth because I'm looking at growth rates of over 20% year-over-year on the repo line and on the derivative line.

It's kind of important because as you alluded to it’s a big driver of the thick revenue market share that you've delivered. And secondly, just sticking with the CIB, on the prime brokerage transfer, I think, you've previously gave guidance that it was in capital consumption 5 bps of your CET-1 ratio and 10 bps of your leverage ratio. Is that guidance still valid now that you started the migration process with Deutsche Bank? Thank you.

Lars Machenil: Kiri, thank you. First on the second one, yes, our guidance for the prime brokerage remains the same.

But one thing, technically we haven't started yet the transfer, right. I mean, it’s typically kind of close somewhere before the year end and that’s the moment when it will – I mean, it will start. But, yes, we stay good our outlook. When it comes to the repo, let be very fair, if you look at the third quarter, and remember that, I don't know exactly where you were in August, and at the beginning of September, but there was a little demand. And sure, what happened is that the last couple of weeks in September is where it picked up.

And so this means that what you saw in the balance sheet at the end of September is a bit inflated, because again all the deals that we don’t deal were not unwound, they were not put into the market and so forth. So what you see as a volume is a little bit stated by the fact that all those activities happened towards the end of September. And as you can see first, the one thing is if you look at it -- the one thing for us that is important is that the leverage ratio remains fine, and that is what you see even with that pick up, it remains fine. So there is no concern about that.

Operator: Thank you.

We have a next question from [Indiscernible] from Bank of Canada. Please go ahead.

Unidentified Analyst: I just wanted to come back to your earlier comment about -- you are just going through the budget. And I just wanted to understand what is potentially could mean for your 2020 target that you put up at the beginning of the year. So I was thinking about an overview or that is fine tuning or I’m just -- I mean, are we stepping away from the 10.5%? How would you target? And then, on the Investment Bank, on global markets and Corporate Banking, clearly very strong revenues, is there a risk that in Q4 there will be a cost true-up because your revenues have been stronger than you expected.

And I'm sorry, just lastly because this entity make some kind of three questions. The increase in the liquidity buffer, quite surprising, any reason? Thank you.

Lars Machenil: [Indiscernible] can you repeat your second question please?

Unidentified Analyst: Yes, on the Investment Bank, so is there a risk that there we see an increase in costs in Q4 because may be you accrual and of course the year have been quite low and yet your full year performance has been stronger on the revenue side, so you have to do some true-up in Q4 costs. Thank you.

Lars Machenil: Okay.

Thank you. Let me answer that one first. I mean, if you look at the evolution, if you look in Q3, you see in Q3 there is a pick up in the top-line of CIB of global markets, but there is also a pickup in costs. It is true that as the other elements are being worked on to reduce costs, you might have the impression if you look at rapidly that indeed the costs do not evolve in line with revenues, and therefore, probably your question would have been alignment. But as I said, this is stemming from the fact that we are reducing the costs materially in all parts of CIB.

So these evolutions are aligned, so that’s basically fine. When we look on your first question, so what we do see is that the overall outlook of rates is a little bit different than what we anticipated before. But now we have to see -- and that is the budget and precisely doing right now, is what -- is then the longer-term kind of rates going to be? What are the adaptations that we’re doing, for example, we announced some adaptations going on in several of our activities. What are the adaptations when it comes to drive the extra drive on the businesses that are positively impacted by the lower interest rate environment? So that is where we’re seeing and what this total, basically means. So there are pluses and minuses, and we are doing that in the budget and we will come back to you once we’ve done that finalize.

When it comes to the liquidity buffer, as you know, one of -- as you see in our evolutions and if you look at the volume of pickup in deposits versus the loans, you see what the pickup on the liquidity business, but there is nothing else to mention on that. So Anka, that will be my three answers.

Operator: Thank you. We have a next question from Jean-Pierre Lambert of KBW. Sir, please go ahead.

Operator: Mr. Lambert your microphone is open. You can ask your question.

Lars Machenil: Jean-Pierre, we cannot hear you. Jean-

Pierre Lambert: Hello?

Lars Machenil: Jean-Pierre?
Jean-

Pierre Lambert: Yes, can you hear me?

Lars Machenil: I can hear you now.

Jean-

Pierre Lambert: Okay, sorry about that. I had a problem with battery. So the question I had earlier was the Basel-IV 10% puts us inflation. Can you give an indication of the allocation between output factors and input factors? And whether this would represent the constrained for you in terms of acquisition policy for the moment? You have no bolt-on acquisition policy. Is this Basel-IV development is a constraint for you in the future? And also related to that other 10% -- is this is before mitigate or after mitigation? Thank you.

Lars Machenil: Okay. Jean-Pierre, with respect to the details on Basel-IV, there are so many moving parts into it that it’s a bit generic impact that we have. The question is, is it basically a constraint? And as I said earlier, it’s not a constraint, so one of the things that we said is we are in process where we strengthen our capital. Look, we are at 12%, and we are at 12% a year before we wanted to be there. And so that basically means that over time we will accumulate further capital in such a way that at some point in time Basel will become clear.

And as I said, if it is, we might think it is in the current text that will be an inflation of 10%, the capital will be there. And at the same time that Basel-IV is a company by reduction of the capital requirement, and we will see what we do with this capital. If in the end, Basil-IV is in a different form than what it is today leading to a lower impact, it will be the same question and we will ask again and see how we can best use that capital at that point in time. So that’s where we stand. So it still adapted too early to get more clarity, but the important thing is we are positioned in such a way that it doesn’t hamper the business.

The business can basically grow, and for the rest, we're ready to handle Basel when it comes. So that would be my answers, Jean-Pierre.
Jean-

Pierre Lambert: Thank you very much. And on the acquisition part if you did freeze on the bolt-on, is there a firm and day-to-day like this end of this year?

Lars Machenil: No. As I said, on the bolt-on and in general, I mean, buying branch networks and alike is not what is in the wing.

We want to continue to do digitalization circuit like that. And if from time to time, we can strengthen a bit the business, for example, in the deal that I mentioned with Deutsche Bank or in a deal with Allfunds, that is then what we will do. But again, as I said, buying a branch network is not in the wings.

Operator: Thank you. We haven't anymore questions.

Mr. Machenil, back to you for the conclusion.

Lars Machenil: Thank you so much. So thank you for staying with us. And as you’ve seen the main takeaways for today's presentation have been that in the third quarter we have continued to successfully implement the new digital customer experiences.

We have witnessed volume growth, revenue growth, positive jaws, and this in all three of the operating divisions. We have an ROT at 10.3%, and a common equity tier 1 ratio that further improved to 12%. So with this, I thank you very much. Have a good day. Bye, bye.

Operator: Ladies and gentlemen, this concludes the call of BNP Paribas Third Quarter 2019 results. Thank you for your participation. You may now disconnect.