Executives: Lars Machenil - CFO Jean-Laurent Bonnafé - CEO Philippe Bordenave -

COO
Analysts: Delphine Lee - JP Morgan Lorraine Quoirez - UBS Maxence Le Gouvello - Jefferies Jean-François Neuez - Goldman Sachs Jon Peace - Credit Suisse Flora Benhakoun - Deutsche Bank Alex Koagne - Natixis Bruce Hamilton - Morgan Stanley Nick Davey - Redburn Jacques-Henri Gaulard - Kepler Cheuvreux Pierre Chedeville - CM-CIC Tarik El Mejjad - Bank of America Merrill Lynch Stefan Stalmann - Autonomous Research Anke Reingen -

RBC
Operator: Good afternoon ladies and gentlemen and welcome to the presentation of BNP Paribas 2016 Full-Year Results. For your information this conference is being recorded. Supporting slides are available on BNP Paribas’ IR website, investor.bnpparibas.com. [Operator Instructions] I'd like now to hand the call over to Jean-Laurent Bonnafé, Group Chief Executive Officer. Sir, please go ahead.

Lars Machenil: Yes, ladies and gentlemen, this is Lars Machenil and I’m just doing a little introduction. So good afternoon ladies and gentlemen, welcome to the presentation of BNP Paribas’ full-year 2016 results. As introduced or let me clarify, I will be joined today by Jean-Laurent Bonnafé and Philippe Bordenave and at the end of the presentation we will be pleased to take your questions. So without further ado I this time hand it over to Jean-Laurent Bonnafé for the group results. Jean-

Laurent Bonnafé: Thank you, Lars.

So on Slide 3, the results presentations starting with key messages. 2016 we delivered revenue growth of 1.1% despite the low rate environment and the lackluster market context during the year. These confirm yet again the effectiveness of the groups integrated and diversified business model. Operating expenses progressed at a lesser pace than revenues reflecting good cost control and as a result gross operating income progressed by 2.6% compared to last year. Cost of risk was significantly lower standing at 46 basis points for the full year due in particular to the continued decrease at BNL and reduction at personal finance.

Each in turn led to 15% rise in the groups’ net income which reached EUR7.7 billion. Excluding exceptional items, net income group share progressed by 6.3%. For 2016, we have proposed dividend payment of EUR2.7 per share in line with our 45 percentile target. Thanks to our solid and recurrent capital generation, in 2016 we improved for fully loaded common equity tier 1 ratio by 60 basis points to 11.5% at year end. So we successfully completed our 2014-2016 plan and we launched our new 2017-2020 business development plan that I will comment later.

Slide 5, turning to the exceptional items, you can see that after-tax they amounted just to minus EUR100 million in 2016 significantly down compared to last year when it was 644 million. For the most part, they referred on the revenue side to the capital gain on the sale of Visa shares and on the cost side, to restriction cost and the contribution to the resolution of four Italian banks. On Slide 6, you can see the P&L of the full-year showing the groups good overall performance. The EUR7.7 billion net income correspond to an return on equity of 9.3% and return on tangible equity of 11.1%. On Slide 7, you can see the strong performance of the group in the fourth quarter, in fact, revenues increased by 2% while costs were just 0.5% implying positive jaws.

Cost of risk continued to evolve favorably resulting in a net income of EUR1.8 billion excluding one-off up 14.6%. Focusing on revenues on the operating divisions, you can see on Slide 8, the breakdown of the performance for the three divisions. Domestic markets revenues were slightly lower due to the low interest rates. IFS showed a rise in revenues and CIB delivered revenue growth on a comparable basis despite the particularly unfavorable market context in Q1. Overall, the operating divisions delivered revenue growth despite the challenging environment.

On the following Slide, number 9, you can see the equivalent breakdown for costs of the operating divisions which were higher compared to last year in particular on the back of rising taxes and banking contributions of EUR172 million and of new regulations and strengthening of compliance. As planned, cost savings occurring from our simple and efficient plan offset the natural cost risk and we also had the first positive effects from the CBI savings plan. So good cost control, the rise in taxes as well as in regulatory and compliance costs. Moving to cost of risk, if you turn to Slide 10, you can see the significant decline of the group's cost of risk which I mentioned before. For the whole of 2016, cost of risk stood at 46 basis points with a reduction of EUR535 million compared to 2015.

If we take the different businesses in turn corporate banking marked another year of low cost of risk. When looking at their yearly evolution, you want to bear in mind that both 2014 and 2015 had benefited from write-backs. Looking at cost of risk, the rest of the book on slide 11, starting from the left side with our domestic markets, it was still low in our French retail banking and even very low in our Belgian retail while it continued to decrease significantly at BNL, which improved by 37 basis points year-on-year. In the other retail businesses, Europe-Med’s cost of risk was essentially stable. BancWest cost of risk remained at a low level while personal finance showed significant reduction thanks to the low rate environment and a growing positioning on products with a better risk profile.

The 2016 result is a bit flattered by some EUR 50 million of provision write-backs that we booked in the first quarter on the back of sales of doubtful loans. Turning now to the financial structure on slide 12, you can see the significant improvement of our common equity tier-1 ratio that I mentioned. The 60 basis point improvement was essentially due to the 2016 results net of the dividend payment. Our Basel 3 leverage ratio increased to 4.4% and our liquidity coverage ratio stood at a high 123%. So to wrap up, in 2016, our core equity tier-1 ratio continued to increase, illustrating the groups’ solid capital generation.

In Slide 13, we show that our net book value per share continued to grow as it reached EUR73.9 at the end of the year, up EUR3 on last year. Since 2008 it has been growing at the compounded annual rate of 6.2% which clearly illustrates the continued value creations for the cycle. To be noted also that our net tangible book value per shares stand at EUR63.3. And to complete this introductory part please turn to Slide 14 where you can see that our full cash proposed dividend payment stands at EUR2.7 per share which in terms of payout is exactly in line with our 45% payout target. At last week’s closing price, it equates to dividend yield of 4.6%.

Now to hand back to Lars who will take you through the divisional results. Lars?

Lars Machenil: Thank you, Jean-Laurent. So ladies and gentlemen let's start with domestic markets and let's start on slide 17. You can see that business activity has progressed well in 2016 and particularly if you look at loan growth of 2.5% on the back of a good pickup in demand in all the networks. Deposit gathering maintained a strong phase with a 6.4% increase across, again, all the networks.

In our domestic networks, we also grew private banking assets under management which marks an increase of 5.4%. Now if we now take a look from after having taken a look at the activities, let's look at the P&L. So revenues stood at EUR15.7 billion, a fraction lower than last year, the low interest rate environment continued to impact the decline financial fee due to the unfavorable market context during the year. However, the good performance of our specialized businesses and Belgian retail offset most of the headwinds. So if we continue into P&L and after having looked at the revenues, let's look at the operating costs, which were moderately higher on a comparable basis, they were up 1.2% net of exceptional items which included for your information the restructuring cost at Belgian retail and BNL and they also included an additional contribution of BNL to the resolution of four Italian banks.

So costs progressed as a result of the business lines capturing growth and due to a rise in banking taxes that benefited from the positive effects of cost saving measures. So given a reduction of the cost of risk as already mentioned earlier, especially at BNL for domestic markets, pretax income increased to EUR3.4 billion, up 1.4% from last year. If we go a bit more - if you look at it little bit more detail of domestic markets first of all, French retail, which reflected the impact on a lackluster environment this year and of the low interest rate environment but a good pick up in the loan origination which was confirmed in the second part of the year. Secondly, BNL improved significantly it’s income contribution thanks to the significant decrease of its cost of risk. Thirdly, Belgian retail conferred good sales and marketing drives delivering good results.

And last, specialized businesses generated a strong rise in income on the back of good overall business growth. In domestic markets we're pressing ahead with the transformation of the branch networks while concurrently developing the digital offering as you can see and illustrated on Slide 18. And particularly we have been optimizing the footprint in our four main markets of domestic markets for some time now. Over the past four years, we have reduced by 12% of total number of branches in our four domestic networks while continuing to roll out new formats and digital tools. Amongst which Hello bank! continues to develop well and in 2016, it increased its client base by 200,000 to reach 2.5 million clients at year end.

The development of our digital offering has also led to first step in implementing new customer journeys in all our domestic networks and the development of new digitized services illustrated by the combination of Wa! and Fivory which was developed by Crédit Mutuel in order to launch later this year a common mobile multi-service payment solution combining payments, loyalty programs and coupons. So having said that let's now move to Slide 23 where you can see that our international financial services division delivered a good performance in 2016. In particular, personal finance showed very good sales and marketing drive, international retail banking good business growth and insurance, and wealth and asset management showed good asset inflows in all business lines. Now if we take again the P&L, revenues progressed by 2.7% on a comparable basis thanks to a lower cost of risk. Pretax income improved to EUR4.9 billion, up 5.8% on a like for like basis.

As I typically do, I would like now to put some focus a bit more on each of the IFS businesses and let's start with personal finance and you can do this by turning to Slide 24. Throughout the year, PF continued to show sustained business activity with outstanding loans increasing by 8.8% on a comparable basis driven by higher demand in all countries and the effect of new partnerships. Car loans businesses also continue to develop do well with outstanding increasing by over 16% year on year. Revenues were up on a comparable basis with good contribution in Germany, Spain and Italy. If we turn to costs, they remained well under control and the business line generated positive jaws.

Cost of risk finally marked a significant reduction compared to last year. All this translated into a sizable increase of pretax income which reached EUR1.4 billion, up nearly 18% at constant scope and exchange. So if we continue in IFS and let's now move to the non-Eurozone retail activity and let’s start with Europe-Med and let's do this on Slide 25. Business activity progressed well in all regions both in terms of loans and deposits. Revenues were up 6% on a comparable basis as a result of these higher volumes.

On a whole, Europe-Med showed positive jaws and its contribution to group’s results increased by 20% on a comparable basis to EUR566 million. If we now cross the Atlantic and we move to BancWest in the US and we do this by going to Slide 26. As you know in 2016 we passed a CCAR regulatory stress test for BancWest and we successfully completed the IPO of First Hawaiian Bank in August. You may have seen that last week we placed a second tranche in the market for an additional 17.9% of the stock which will generate nearly 10 basis points of common equity one ratio in first quarter of 2017. Now back to 2016, BancWest confirmed a very good business drive in a favorable market context with deposits up 7.9% and loans by 8.5%.

Private banking confirmed its good growth with assets under management increasing by 19% to reach US$12.1 billion. If we look at constant and exchange rates, revenues were 5.5% higher on the back of strong volume growth which was however mitigated by lower rates in the US if we look at 2016 and compared to the year before 2015. Costs were higher mainly due to increased regulatory cost, charges also related to First Hawaiian's IPO and investments to strengthen the commercial setup in the US. Given however a very low cost of risk, BancWest pretax income stood at EUR862 million in 2016 which is slightly down on last year. Now turning to our savings and insurance business and you can do this by going to Slide 27.

You can see that our total assets under management closed the year at a record level of EUR1.01 trillion. This good performance was driven by strong asset inflows totaling EUR24.9 billion in the year 2016 with a positive contribution from all the businesses. If you look in particular at one of them namely insurance and we can do so by looking at Slide 28. We see that this business line saw good net inflows in unit-linked policies into 2016. Revenues progressed by 2.7% on the back of higher protection insurance revenues in Europe and Latin America and pretax income reached EUR1.4 billion marking a 3% improvement on the year 2015.

If you know turn to the second part of this element, which is wealth and asset management, revenues showed a good overall resistance in an unfavorable context in Europe and pretax income came in a tad lower at EUR685 million. If we sum up those two slides on insurance, and wealth and asset management, income growth in our insurance business and a good resistance in unfavorable context in wealth and asset management. Now with this we have completed the review of retail banking and services business and let’s now turn our attention to slide 29 where we have our corporate and institutional banking. In 2016, our CIB division showed good recovery of business activity and results after I remind you particularly unfavorable context in first quarter in Europe in 2016. So CIB is actively implementing its transformation plan as you know and in line with its schedule timetable of that plan and cost saving measures have been launched in all regions.

Revenues stood at EUR11.5 billion for the year marking a 1.2% increase on last year at constant scope and exchange rates with a positive contribution from all three business lines. If we turn to operating expenses, we see that they were essentially stable like-for-like implying positive jaws in our CIB. In 2016, we booked the first benefits of the CIB cost saving measures, we generated EUR350 million compared to 2015 but on the other hand, we faced a rise in banking taxes as well as in regulatory cost. So if we now look at CIB’s pre-tax income, it stood at close to EUR3 billion progressing by 3.4% on a comparable basis on the back of solid business growth after a particularly challenging context in the first quarter as I mentioned at the start. Still on CIB, if you could please swipe to the next two slides, which are 30 and 31 to take a little bit of a closer look to each of the three business lines making up CIB.

If we start with global markets, whose revenue progressed overall by 1.6% like-for-like thanks to a significant pickup in activity in the second part of the year with a strong commercial drive and market share gains up to very difficult market conditions in Europe in the first quarter. And particularly if one looks at Q4 2016 versus Q4 2015 we see an evolution of 21.9% revenues. If we look into global markets to fixed income which was the main driver with a good performance particularly in rates and credit and BNP Paribas confirmed its top ranking on all bond issues in euros and Number Nine position for international bonds. The other part which is equity and prime services where lower compared to a high basis in 2015. If we now move to the second part of this, which is security services, you can see that this increases revenues by 2.2% at constant scope and exchange at least on the back of growing outstandings.

Finally, if we look at the third part which is corporate banking, revenues progressed slightly at constant scope and exchange rates marking good recovery after a lackluster context as I mentioned in the first quarter. We successfully strengthened our positions in areas such as trade finance and continued to gain new clients. In particular, BNP Paribas confirmed its number one position for syndicated loans in Europe. Globally, you can see that after a challenging environment in the first quarter in Europe we have consistently delivered growing revenues over the following three quarters of 2016. Having gone through the three divisions I now hand over to Philippe Bordenave for a recap of our 2014-2016 plan.

Philippe Bordenave: Thank you, Lars. Good afternoon to all. With this good year, our plan - our 2013-2016 plan was successfully completed. You remember that we targeted 10% return equity based on 10% common equity tier-1 and we’ve received 10.3%. Let’s look at the different elements of this success starting with Slide 33 the revenues.

Globally progressed at compounded annual growth rate of 4% despite the fact that we faced stronger headwind than anticipated with very low interest rates especially that cut the revenues by 1 billion and downsizing of energy and commodities business in CIB. But revenue growth was sustained by the good development of the business lines, the success of our development plans and the positive contribution of the targeted bolt-on acquisitions. So globally, we delivered 12% cumulated revenue growth over the period, despite a lackluster environment. On the next slide about cost, we successfully completed our simple and efficient savings plan which was launched in ’13. On Slide 34 you can see for the last time the update of this slide which generated a total of EUR3.3 billion recurring savings in ‘16.

These cost savings were delivered by all our operating divisions and you can see the break down. Originally, our target was set at 2.8 billion and I remember that we subsequently raised it to EUR3 billion and then to EUR3.3 billion. And hence on the following slide, you can see the evolution of the cost base of the plan, so beyond the recurring cost savings deriving from simple and efficient from ’14 to ’16, operating expenses were affected by significant new taxes and regulations and this was the big bad news that was not anticipated initially 1.3 billion in ‘16. Net of these operating costs evolved at a lesser pace and revenues leading to positive underlying jaws and increasing on average just by 0.7% per year on comparable basis. On top of this achievements on revenue and cost, group made progress on all the major strategic priorities identified in the plan as shown on the next slide, Slide 36.

As an example, the preparation of the retail banking of the future is showcased by the successful launch of Hello bank! which is already reaching 2.5 million clients and all sorts of development of the digital banks in IRB. In conjunction with this group has continued to adapt its branch networks while continuing to grow its private banking. On the wholesale side, we have also strengthened our market positioning with institutional and corporate clients as demonstrated by our market share gain and good progress especially of our transaction banking businesses. In terms of the adaption of specific businesses to the new operating environment, we had two transformation challenges with BNL repositioning on better corporate clients which was received with success with already tangible benefits on the cost of risk and as far as CIB is concerned with a successful creation of global market merging fixed income and equity derivative together. What we have mentioned is also the successful implementation of the divisional plans such as Asia-Pacific, Germany, and CIB-North America.

In the three cases, the revenues grew by around 50% over the period which is quite significant achievement. And of note, also the good development of our specialized businesses. Conclusion on Slide 37 and summing up, you can see that the group achieved or exceeded its main target delivering the return on equity calculated on the metrics of the plan of 10.3% excluding one-offs above the 10% target. As I said, we significantly increased the group net income which grew over the period by 29% excluding one-offs which were significantly negative in 2013 but certainly slightly negative in 2016 [indiscernible]. And in terms of earnings per share, also excluding one-offs, the leap from EUR4.7 per share in ’13 to EUR6 per share in ’16.

And finally we delivered on our dividend payment objective was a payout of 45%. I now hand back to Jean-Laurent for the new 2020 plan. Jean-

Laurent Bonnafé: Thank you Philippe, so let’s look at our new 2020 business development plan starting on Slide 43. Our new plan confirms the integrated and diversified business model of the group which is three well balanced operating divisions centered on client needs. This business model which is well diversified by country and by business has demonstrated its strengths through the cycle and relies on strong cooperation between businesses and regions.

We’ve build the plan on prudent macroeconomic assumption that you can find on Slide 40 and was taken into account the anticipated impacts on regulatory evolutions in 2020 which will continue to grow over the planned horizon as highlighted on Slide 41. Leveraging our balanced model, the new plan is designed to build the bank of the future by continuing to develop our operating divisions, show differentiated development strategies and by implementing an ambitious program of new client experience, digital transformation and operating efficiency across all the business lines. All these while complying with an ambitious cooperate social responsibility policy. Moving to Slide 44, our far reaching program in all the divisions will leverage the success of the numerous initiatives already launched in our business lines in terms of new products, applications, digital platforms and incubators. At group level, we plan to invest EUR3 billion between 2017 and 2019 to achieve this program which will generate EUR3.4 billion of cumulative cost savings over the same period and 2.7 billion of recurrent cost savings from 2020.

We expect the balance contribution of full group businesses and functions to generate this savings. Turning to Slide 45, you can see the five levers that were identified and that we will be implemented across the different divisions to achieve our program. These are; first, rolling out new customer journeys with new services and digital experience; second, evolving the operating model by optimizing and automating end-to-end processers, simplifying the organization and developing shared platforms; third, upgrading IT systems by integrating new technologies and by promoting agile practices; fourth, improving data usage for customers benefit and reforcing data storage, protection, and analysis capabilities; and lastly fifth, developing more digital collaborative and agile work practices. If we now move to the three operating division that will implement specific development strategies. Starting with domestic markets on Slide 46 and 47.

This division will face an interested rate environment that will only gradually improve and changing client expectations influenced by digital usage. We’re focused on strengthening the commercial approach through new client experiences improving the product offer and making a valuable new services. Domestic markets will also further improve its operating efficiency by continuing to optimize the branch network, transforming the operating model and increasingly its digitalization. Give a favorable risk backdrop, domestic markets will continue to reduce cost of risk in Italy. The combination of these actions led to our 0.5% average revenue growth per year until 2020 as 3 point improvement in the cost income ratio and pretax return in excess of 17.5% in 2020.

Looking now at international financial services on Slide 48 and 49 which is a growth engine for the group. The division will strengthen its positions by stepping up the development through new offers, new partnerships and access to new countries for the specialized businesses. We will also consolidate its leading positions as well as continued to grow retail banking beyond the Eurozone. To improve its operating efficiency especially through an acceleration of the digital transformation and processes rationalization. As a whole, IFS expects to deliver over 5% percent average revenue growth per year until 2020, 5 point improvement in the cost income ratio and a pre-tax return in excess of 20% in 2020.

Finally, turning to Slide 50 and 51, our CIB will capitalize on the promising start of its transformation plan in 2016 which resulted in resources optimization, cost saving and revenue growth. The main drives identified last year would be extended to 2020 with an acceleration of the operating and digital transformation. CIB will strengthen it’s corporate and institutional client base, also develop fee generating activities such as advisory and cash management and leverage its strong regional franchise to further develop international services. It will also accelerate the development of its customer base in Europe. Hence CIB targets over 4.5% average revenue growth per year until 2020, an 8 point improvement in the cost income ratio and pre-tax return in excess of 19% in 2020.

Overall, if we come back to the group as a whole on Slide 52, the main targets of the new plan consists of achieving an average increase in net income in excess of 6.5% per annum over the period, a 12% common equity tier 1 ratio and return on equity of 10% in 2020. In addition, the dividend payout ratio will be increased to 50% for the duration of the plan. The dividend per share should in turn progress by at least 9% per annum during the plan. SO to conclude, the key messages I would like you to retain, the group delivered a good performance in 2016 generating a bottom line of EUR7.7 billion. We successfully delivered our 2014-2016 business development plan making good progress on all our strategic priorities and achieving a return on equity with stated objective of the plan and after the success of our previous plan, we launched a new plan to 2020 leveraging the strengths of our integrated and diversified business model to back of the future by accelerating the digital transformation and with an ambitious corporate social responsibility policy.

Thank you very much for your attention. And we’ll now be pleased to take your questions.

Operator: [Operator Instructions] We have the first question from Delphine Lee from JP Morgan. Please go ahead.

Delphine Lee: Two or three questions from my side if I may.

First of all, just going on your - just on your target for 2019, just wanted to check on the 12% CET1. What kind of assumptions you've taken on the regulatory impact in particular, IFRS 9 and market risk. And also if you could just comment maybe on your [indiscernible] assumptions and some color also on the usage of excess capital if there is any. Secondly on your revenue assumptions for the planned 2.5% growth. I can see that it's based on I would say relatively conservative long-term rates.

If you could provide a bit more color on the sensitivity of your 0.5% growth for domestic markets if we have higher rates and also you know if you could provide a bit of color between French retail and Italy in particular, I saw that there was earlier comments to the press on French retail retuning to positive revenue growth only in late side of the plan. So just wondering if you could give us a bit more color for this year both France and Italy. And then just a quick question on your ROE target of 10%, just wanted to make sure this is not - so you haven't adjusted the denominator so the equity for the 3 billion of restructuring charges. Thank you.

Lars Machenil: Delphine, Lars speaking out.

I’ll take your first question, so when it comes to your target and you specified that the target is for 2020 and so indeed it is we put ourselves at the objective of 12% common equity tier-1. So basically if you look at that it basically covers the evolution of the ROE which is in particular the evolution that we have highlighted initially on our domains, namely the loan growth in particular. We of course take into account that typically the basic rules as we have them now as they are phasing in by 2020 odd ones which are applicable that’s it. Of course under IFRS there is indeed IFRS 9 which as you know is an evolution towards the expected loss which we consider that we will also manage within that evolution. So that’s basically what I would say.

Delphine Lee: So the 12% is basically assuming no impact from regulation basically that’s what you are saying?

Lars Machenil: There is indeed, in our point of view if there would be an evolution if you think of Basel IV for example. This is something in our evolution that is not something that will impact 2020, so it will take time before the discussions go on and if the discussions will lead to something the implementation will be later.

Delphine Lee: And you would be running a 12% with no excess capital is that how we should understand it?

Lars Machenil: Well, the interest is 12%, yes. Jean-

Laurent Bonnafé: We can’t add that - the evolution of the risk weighted assets, you know, if you take the usual capital generation of the group which is in the region of 100 basis points per year, so we would distribute half, 50 basis points. The growing risk weighted assets as we have emphasized growth this time [indiscernible] would take something like 35 basis points.

So the 15 additional basis points are there in order to provide us with some flexibility in case of different known events happening. And this is basically would kind of the balance we have for the capital management.

Operator: Thank you. Our next question is from Lorraine Quoirez from UBS. Please go ahead.

Lorraine Quoirez from UBS, your line is open. Please go ahead with your questions.

Lorraine Quoirez: Actually I'd like to come back on the domestic market revenue group forecast of 0.5% per year as Delphine said, it looks to be based on prudent interest rate assumption. And actually I'd be curious to understand how you see French retail evolving within that 0.5% for the next four years.

Lars Machenil: On the domestic markets, maybe on the 0.5%.

So it is true that if you look at our - plan as we made with the hypothesis that we’re basically articulated September, October and indeed one could say that they might be eventually somewhat prudent. And so if you look at the typical disclosures that we do on the evolutions, you could indeed see that there might be some impact over time which can be 100 or even more million in euro positive, but that is to be seen how it unfolds. So I would leave it to that.

Lorraine Quoirez: And then on French retail banking?

Lars Machenil: Yeah, French retail banking, if you look at 2016 French retail of course have been impacted somewhat in the results by the low interest rate environment that will also be on the commissions because in the markets as you seen in the beginning of the year they were a bit subdued. So we will have to evolve that, see that closely but normally one would assume that even in 2017 the interest rates will still be lower and that the situation will still be relatively subdued on revenues.

So the evolution is more at the end of 2018 or 2019.

Operator: Our next question is from Maxence Le Gouvello from Jefferies. Please go ahead. Maxence

Le Gouvello: My first question regarding BNL, you were guiding for cost of risk to go down in the range of 80 bps, we are still at 118 and your guiding for 50 bps by 2020. Can you give us a bit more color on how you're going to reach this target and how much the topline of BNL is going to be impacted? My second question will be on the French retail.

We have some change in terms of regulation, first on [indiscernible] most likely by December, if you have any color or ideas is more than welcome. And the second element is regarding the fee mortgage insurance. There's been a law that has just been passed is going to give the opportunity for your customers to change on a yearly basis. Do you feel some impact and pressure on your fees for this and going forward. Thank you.

Jean-

Laurent Bonnafé: This is Jean. For BNL, if you remember, end of 2012 beginning of 2013 we changed our strategy for the corporate bank within BNL. So we basically - we say transformed the way we are originating loans and where we are looking at new customers. Based on loan origination we are looking at since then, and once you exit the whole portfolio and that will be done even before 2020 then you get on average 50 bps cost of risk, so the 50 bps cost of risk is the result of the mid long term strategy we started already three, four years ago. So nothing more, nothing less, still is the continuation.

The change of business model we implemented years ago for BNL…
Maxence

Le Gouvello: So that means, it will have you take you seven years to clean the book?
Jean-

Laurent Bonnafé: No, no, it took us some time to change in real life because it’s one thing [indiscernible] certain part of the market and is another thing to be exited to be out of the market, so it took some years and that progressively the cost of risk tend to be - the cost of risk that result from the new policy and this is 50 bps. So if you’re looking at [indiscernible] there is nothing we can say in particular, the new formula is slightly better for the French banking system. It's not a big deal but it’s better. Maxence

Le Gouvello: And regarding mortgage insurance and mortgages?
Jean-

Laurent Bonnafé: It’s a very competitive market. If the new regulation comes then it would be even more competitive.

So the point is that in that type of circumstance there is a kind of I would say transformation of the market. Those customers on a standalone basis deserves a better pricing they get better pricing and those that deserves on standalone basis different pricing meaning larger one, they get ultimately a larger pricing. So all-in-all the market is not going to be that different but the way I would say pricing is going to be applied should different franchises is going to be slightly different. Maxence

Le Gouvello: And today, in you’re - the fees in the French retail, how much is the proportion of mortgage insurance on mortgages. Jean-

Laurent Bonnafé: I’m not going to give a number, we do not give that number, on seeing that, we’ve changed the future of the French retail.

Philippe Bordenave: But maybe one thing we can probably say is that the competition will be more on the credit side than on the distribution side. I mean the mortgage insurance fee is spread between the distribution fee and the insurance P&L and probably the pressure will be more on the insurance side than on the retail side because the placements I mean is something that has to be remunerated.

Operator: Thank you. We have a next question from Jean-François Neuez from Goldman Sachs. Please go ahead.

Jean-

François Neuez: The first question that I would have to like to ask is on CIB. So you've raised the CAGR of revenue from, marginally, still from 4% to 4.5% for the plan despite having had since last year maybe a year that was probably not as good as was at least the linear progression plan. And I wondered what was the driver of these upgrades so implicit upgrade in a sense, not compared to the basis of the CIB whether there is any segments that change profile during the year or anything that could justify this upgrade. The second thing is on the payout ratio, I just wanted to clarify whether the 50% is to be raised progressively or whether it's 50% straight from 2017 given I guess we First Hawaiian potentially the first 10 bps and who knows maybe more during the year, you're likely to be at 12% or you could be at 12% already by 2017. So this would be my two questions.

Jean-

Laurent Bonnafé: On CIB, I can say that we consider that the year, ’16 has been exceptionally bad due to a first quarter that was really dead because of very specific events to remember around [indiscernible] the discussions about the regulation at the beginning of the year. That triggered a real crisis and freeze certain number of market and so we considered that what has not been achieved this year should be caught up in the years to come. And so we -- this is why we have just kept a relatively positive view on the future, having in mind, we gain market share and the time is probably working on our side. And so adding last year to 2020 year was probably an element to push -- to help pushing the average. The payout ratio?

Lars Machenil: No.

The payout ratio is 50 for the duration of the plan. This is the principle of the payout ratio like we had the 45% last year. With this, we see there is some room to maneuver. This is quite obvious. You can see the additional organic growth, the scenario is better compared to our quite cautious scenario factored in the plan or it could be invested in some very disciplined bolt-on acquisition and you’re right.

Potentially, we are 12% already, so there is no question about the core tier 1 equity of the group and that 12% compared to the MDA as of today, that is 10.25%. There is some room, so yes, we start to plan with a very good position, looking at the capital requirements and 50% dividend, this is it. And yes, the group is there, we saw room to maneuver, because yes, the economy could be better. Rates could do better and then I guess, we will stay very disciplined. So don’t worry.

Jean-

Laurent Bonnafé: So it’s in this 50% starting in 2017?

Lars Machenil: For the year. Jean-

Laurent Bonnafé: For the year 2017? Yes. To be paid beginning of 18. Jean-

François Neuez: Okay. Just as a quick follow-up, is there an estimate for the FRTB which has now been finalized, just for the capital planning for your group?
Jean-

Laurent Bonnafé: The FRTB is not taken into account in this Horizon 2020 as in the regulation and the proposed regulation, that is subject to discussion at, in Brussels, I mean in European authorities, it’s the proposal, the insure proposal is to start the phasing in of it, start the phasing in, in 2021.

So it’s 100% sure that there won’t be any FRTB up to 2020. Now, there are discussions about the relevance of including that into the European regulation, because it’s part of the intermarket risk part of Basel 4 and Basel 4 as a whole is currently being discussed. And so, there are lot of questions about that, but even in case it would stay up to the end of the European CRD V, CRR II, it would start being phased in, in 2021. So it would be to be taken into account for the next plan.

Operator: Thank you.

Our next question is from Jon Peace from Credit Suisse. Please go ahead.

Jon Peace: Yeah. Thank you. So my first question is just on the transformation costs and the savings that you outlined on slide 44.

I just wanted to check that 3 billion of transformation costs is the same. So 3 billion are in the subsequent five or six slides broken out by division. And I think just purely looking at 2017, well, you say there's 1 billion of costs and 0.5 billion of savings. We heard last year that the CIB plan was producing 250 million of those costs. So I just wonder what were the savings that we already knew about from the CIB plan.

I'm just trying to work out what the incremental benefit is to 2017? So that was my first question. And then second question is, as we look out to 2020, what sort of run rates can we expect in the corporate center and should we imagine a group cost of risk broadly similar to today. Thank you.

Lars Machenil: Yeah. Jon, Lars here.

I'll take your question. So when it comes indeed to the transaction costs, if you look indeed at what we proposed as the total cost of 3 billion and then if you look at the next slide, how we bring that down by division, you see that there is a little delta of a couple of hundred million, which is for the moment in our group corporate center, because these are cost savings for, let's say, horizontal plans, which are at this stage not yet fully allocated, because the implementation of that and the allocation of that is still being worked out. So there is a part of that, which is in corporate center and which is today not allocated into the businesses. So that is where the difference comes from. And on CIB, on your question what is the evolution of the additional year 2019 to 2020, it basically increases as you can see by 200 million, the savings over that period.

Then on your second question, when it comes to the corporate center, when it comes to revenues, we basically stick to what we have guided, which is like 60 million per quarter. When it comes to the cost, it is a bit of a phasing. So as you know, you will represent the costs of the transformation plan. We will represent them in the cooperate center. So that means that in the next year, you will see the additional cost for next year, for 2017 already, we anticipate that the group corporate center will be more likely to be around 1.7 billion in cost because we had the 1 billion in transformation costs.

So when we phase that into 2020, of course that transformation cost will phase out and so we will find back the more traditional recurring cost of the corporate center, which is around 100 million a quarter, but added then by 2020 when of course the cost of the transformation will be zero again at that stage. Yes. So the cost of risk, sorry your cost of risk question was on the corporate center or was it –

Jon Peace: I was thinking at group level, would the group cost of risk in 2020 be similar to today?

Lars Machenil: If you look at the concept of where we stand, it would be with the two points that or in particular that P&L will have improved to 50 basis points of cost of risk and that personal finance is at a lower run rate than we were before.

Jon Peace: Okay. But other divisions similar then perhaps?

Lars Machenil: Yes.

Operator: Thank you. Our next question is from Flora Benhakoun from Deutsche Bank. Please go ahead.

Flora Benhakoun: Yes. Good afternoon.

My first question was coming back actually to the contribution from the disposal of your Hawaiian Bank. Obviously, the second tranche which you did last week was done at a much higher price than the first tranche. So the first question would be whether you are ready to reconsider the guidance that you had provided initially of 40 basis points positive contribution from the total disposal. My second question is actually also regarding capital, your message is clear on the dividend payout. I was wondering whether you would be open potentially to share buybacks and especially if Belgium was to partially sell some of its stake in BNP.

And just a very quick third question regarding the leverage ratio, which I noticed improved by 40 basis points this quarter to 4.4%. The bulk seems to be coming from a much lower leverage exposure. So I was wondering whether you could explain that move and how sustainable we can expect it to be. Thank you. Jean-

Laurent Bonnafé: So for Hawaii, indeed the price has gone up quite a lot.

On top of that, first, the initial public offering is always a little bit at discounted price in order to that floatation. And so we -- considering the level, it we would sell the rest of the stake at last, the recent price, the 40 basis points would become 55 or something like that. So it means that at the current price, yes, as was said Jean-Francois earlier, I mean, we would, the remaining stake would bring well 50 basis points starting from the end of last year or 40 basis points if you take into account the 10 bps we have already booked in in the first quarter of ’17 by selling 17.5% few days ago. Now about share buybacks, I don’t think share buybacks are really on the table. You know the regulation, it’s still on the mood of building up capital and I, well, we clearly, we’re not going to initiate share buybacks in the near future and the priority is clearly to, the first priority is to allow businesses to grow and to be able to remove the constraints that were say weighing on them recently, because we were obliged to build up the ratios, the capital ratios.

So now that we are almost there, as we have said in terms of total capital ratios, and capital ratios in general, we are going to -- the first thing is to allow the businesses to grow at the kind of spontaneous space without being constrained by the regulation and it’s already a big plus, big satisfaction, and we are not going to buy back shares whatever happens in the next few years probably. And the leverage, yes, the leverage is a result of permanent, well, first, we are adding capital. So when you’re adding capital for it, it improves the leverage ratio as well. And second, we are managing the balance sheet as much as we can in terms of optimization and reduction of balance sheet consumption and so yes, I think the 4.4% is, you can consider that for, while it’s something that is probably sustainable at least for the end of the year. As at the end of the year, there is always a seasonal slowdown of the business and hence the September of balance sheet items are lower than in average during the year.

But in terms of year end, I think it’s clearly sustainable and could even be further improved in the years to come.

Operator: Thank you. Our next question is from Alex Koagne from Natixis. Please go ahead.

Alex Koagne: Yes.

Hi, everybody. Just a few questions from my side. The first one is still on the domestic market. I was just wondering if you can provide the sensitivity of the revenue to an increase in rate by 60 bps. Actually the question was raised, but I'm not sure I catch the answer.

The second one is on the capital again, obviously you’re in a very comfortable position. I'm just wondering whether you can provide us some idea, if you are about to make an acquisition, what is the size of asset you can buy without figuring a potential increase in your buffer. I know it is relative gain, but still I guess you can give us something on that point. And the last question is on your ROE target, just want to check if it is still based on a 12% common equity turn ratio, meaning that without taking into account any excess capital. Thank you.

Lars Machenil: Alex, maybe because I touched a bit on your question on sensitivity, let’s maybe put it in another way. If you look at basically the evolution that we've seen in the past in domestic markets where the lowering of the interest rates has basically had a negative effect on the top line. So one can assume that if that would be reversed, but we would see something similar back going forward. So that is something which is, as I said, it's in the hundreds of millions of euros, but it will take time. So this is not something, which happens immediately.

It is something, if you again look at our reference document, you see that it is three years and it can be 600 million over that period that we can have. So that's on that. On your second question on the ROE, it is yes on 12% common equity tier 1. And on your second question which was related, I'm not sure I fully understood. Could you maybe rephrase your second question?

Alex Koagne: Yeah.

Sorry for that. My take is obviously you would have excess capital, obviously it is not to be used to increase the payout ratio or to make a share buyback. So I just assume that you can use that capital to finance organic growth or external growth. Then the question is, what could be the impact on the [indiscernible]. So what is the size of asset you can buy and add to your balance sheet that would not trigger an increase of your [indiscernible] buffer.

I know that it is a relative game, but still I’m just wondering if you can have an indication on how far you can, what is the size of the bank you can buy today without triggering [indiscernible].

Philippe Bordenave: Okay. So it’s quite simple. If you imagine that, for the term plan 2020, if we were to go for the same kind of acquisition, the bolt-on we made in the last plan, there would be [indiscernible]. All in all, that will not change the picture.

The environment is not that important, so we are talking only of that type of move and that it’s also is nowhere that if we were to do again exactly the kind of move we did globally in the last term plan, there is no way that this can impact the stiffness of the bank and back to the sensitivity to rates, as Lars said, if we were to be back at the rates we were at in ’13, end of 2020, we would have hundreds of millions of euros of revenues on top compared to the current scenario. So to be understood, it’s a potential I would say upgrade still to be seen for the duration of the plan.

Operator: Thank you. Our next question is from Bruce Hamilton from Morgan Stanley. Please go ahead.

Bruce Hamilton: Hi. Good afternoon guys and thanks for taking my questions. Maybe firstly on regulations. In terms of MiFID II implications, what are the main headwinds, is it really transparency driving pressure in sort of asset wealth management and if so is that more on the manufacturing or distribution or a bit of both or is it somewhere else. Secondly, in terms of the ECB’s project trim, can you give any comments around sort of timeframe for impacts and any initial sort of quantification you can give us? And then thirdly, just back on the sort of M&A question.

I understand the point around sort of potential for bolt-ons. I mean how attractive is sort of asset and wealth management as an area of focus or does it depend, I mean to be clear, it’s a reasonably high ROE type of business, but I’m just trying to understand in the new world whether that’s an area that would be in focus?
Jean-

Laurent Bonnafé: So on MiFID, the fact is that the implication of the organization of the bank on the organization of the asset managers of the way we’re originating products, so it’s the whole value chain that is being changed with MiFID. So it’s spread all over the value chain and this impact is factored in the plan and this is one of the large impact or the large headwind, typically domestic markets will suffer. So it’s more concentrated on domestic market than on the asset manager or even the private bank. So this is taken into account in the forecast for the domestic market division.

Lars Machenil: Yeah. On trim, so maybe I'll take, Bruce I'll take your question on trim. So maybe for all of you, trim is an exercise led by the European supervisors, so it is under the ECB, which is basically reviewing the models that are being used under the Basel concept. So that is a process which is going on now. That will take time and we'll have to see that leads to some suggestions.

Normally, we don't expect that to be of such a material degree that it wouldn't that it would change our proposed targets. And your last question Bruce was on M&A, could you re-clarify your question.

Bruce Hamilton: Yes. So I was just trying to assess how attractive sort of asset wealth management was as a potential source of bolt-on M&A, I mean is that a business that is increasing attraction going forward or what's your upside there?
Jean-

Laurent Bonnafé: Increasing attraction going forward. No M&A.

I mean that business that is really, really being -- I mean under pressure at the moment and well, we can't foresee any specific on that at the moment as long as precisely the MiFID is not completely implemented and clarified.

Operator: Thank you. Our next question is from Nick Davey from Redburn. Please go ahead.

Nick Davey: Yes.

Good afternoon, everyone. Three questions please. The first one, a quick one on the dividend for 2017 and the restructuring charges. I think if I look at your slide 44 and the timing of restructuring charges, it looks like there may be a risk that stated earnings fall in ’17 versus ’16. And I just want to understand whether you'll pay your dividend payout ratio from stated earnings or you look through the restructuring charges or if you mind if your stated EPS falls in absolute terms.

Second question is a follow up on one of the earlier questions on French retail revenues. We saw some comments earlier today about compressing revenues in ‘17. Could you just talk in a bit more color about the scale of the problem, we've seen the net interest income pressure building up through the course of the year. So any more guidance on ’17 would be very helpful. And then the third question.

Sorry to come back to capital, but if I put together your guidance of 50 bps for the first Hawaiian stake and I think 15 bps per year in capital build, I get to about a 12.6% core tier 1 ratio in 2020. So I just want to understand the 60 basis points in your mind is that loss to regulation or is that excess capital that we're all now speculating about buybacks and M&A with, I just want to understand I suppose the regulatory risk component to that 60 bps. Thank you.

Lars Machenil: Nick, I'll take your first question. When it comes to dividend, so indeed, when we said that it’s not unlikely that the 50% is to be applicable as of 2017, it will of course, it will be calculated in a technical way.

So on the results including the restructuring charges. So we will have to see how the agreement evolve, but as I said with the First Hawaiian already being there, with the evolution there, as we seen for example in the fourth quarter, I think it is likely that you're going to assume that it will be 50% and that that will be a dividend, which will be evolving in the objective for the overall plan, which is 9% in the year that we would do. Jean-

Laurent Bonnafé: On the capital, the last question, we can’t give you a precise answer, because when you build such a plan for four years, you have so much uncertainties and unknown factors. So it’s a kind of, we have a kind of smaller margin to face what would happen I mean in terms of uncertain events. It can be a blend of different things.

So we prefer not to give any precise answer to that because nobody knows what may happen in such a period. I mean, look at the world around you, I mean, we are the bank of a changing world, and so you need to have some kind of small buffer to be used in the flexible way depending on the circumstances.

Lars Machenil: Yeah. Nick, maybe on your question on French 2017 guidance, as we said, if you look at 2016, it has been impacted by low interest rate. It has also had commissions which were due to let’s say a bit of the uncertainty in the markets which were negative.

So if you look in 2017, as we said, probably the low interest rates are to continue, but it might be that on commissions, we see some improvements. So overall versus the evolution seen in 2016, it can be or it is likely that 2017 will be a tad better although we will still be facing most probably somewhat of a reduction versus 2016.

Operator: Thank you. Our next question is from Jacques-Henri Gaulard from Kepler Cheuvreux. Please go ahead.

Jacques-

Henri Gaulard: Yes. Good afternoon, everyone and Lars welcome back after your accident. Yeah. Sorry to go back on capital again. Assuming that the regulation is effectively reasonably fine and you don't find acquisitions that actually eat too much into your organic generation of earnings, would you be ready to pay an extraordinary dividend if the situations abide by.

That’s the first question. The second question is on slide 44. I have a lot of -- I have a lot of problems with understanding that slide. You have effectively economies of 2.9, 3.4 billion okay, offset by some economies and then I see annual savings of 2.7 billion. Could you like explain to me the process because it's not clear at all and I would like to know also how I should view what has been already announced by CIB in the plan of the beginning of last year and how I should consider what you're announcing today’s accumulative exclusive et cetera.

And the last question, actually out of curiosity, how can we disclose the plan now while you had an investor that effectively do it in a month’s time and why you got so much detail now? Thank you.

Lars Machenil: Okay. I will start with page 44 if you don’t mind to go through the costs. So what we indeed have in the middle of the page, we clarified that there will be 3 billion in transformation cost between 2017 and 19 and we say that in that same period, there will be 3.4 billion savings. So it did have to say that there will be 3 billion savings, which will kind of mentally provide for the 3 billion of investments whereas the bar in the bottom part is saying, what is the kind of recurring savings as of the year thereafter that in the year 2020 that we will see and that is the 2.7 billion.

So it’s a 3 billion investment, during which time, we will save 3.4 and as of the year or thereafter, it will generate a recurring 2.7 billion.
Jacques-

Henri Gaulard: Okay. If I understand well Lars, it means that effectively the negative impact of your investments, of your 3 billion would be minus 400 million, is that the right way to look at it?

Lars Machenil: The right way to look at it is that we have savings of 3.4 billion. So that means that we have savings there of course natural cost risks which are also in place. So it’s not – both are not met.

So you have to see it an evolution versus what we have today and inflation in other environments that we have, if we do 3 billion in extra cost, we do 3.4 billion in savings. Jean-

Laurent Bonnafé: Maybe, if you look at the small picture on the right, the small bar chart on the right, you have year after year both in gray the exceptional transformation cost and in green, the beginning of the savings that are generated by those transformation.
Jacques-

Henri Gaulard: Okay. I see. So it’s actually continuation, the last one is, I get it now.

So 0.5. 1.1, 1.9 and then 2.7?
Jean-

Laurent Bonnafé: And then 2.7.2017
Jacques-

Henri Gaulard: Okay. Got it now. That’s good. Okay, sorry.

Thank you. Jean-

Laurent Bonnafé: Well extraordinary dividend, no, really no. We really tried. We are convinced that we are diversified enough to find opportunities to deploy capital in the meaningful way and the profitable way and so we, and if there is some recovery in Europe, I mean in the period of the plan, I mean we will have these and maybe more capital to deploy. So we don’t expect that the theoretical situation to happen in practice.

And vis-à-vis the CIB previous plan, the CIB previous plan is included in this one. It’s included in this one. So –

Operator: Thank you. We have now Pierre Chedeville from CM-CIC.

Pierre Chedeville: Yes.

Good afternoon. Some question regarding the current between your economic scenario as many as seen as quite conservative, in regard with your ambition regarding risk weighted asset growth, because in the previous period, we have seen that your risk weighted asset growth was around 0.7% a year. And now, you plan if I have understand correctly, more than 3% per year. But in the same time, you are more or less the same GDP growth in the areas where you operate. So my first question is where do you see this growth in loans investments, treasury, I don’t know, because we didn’t see this growth, the demand of loans in the previous period and I don’t see why there would be such a demand in your economic scenario.

That’s the kind of the contradiction. And in the same time, I see kind of contradiction between your view regarding the ECB monetary policy that you express for the evolution of deliver, while in the same time, we don’t see any improvement in economic condition in the year, so why should ECB should ease its solitary, should restrict its monetary policy. If no improvement appears in euro, can you explain that to me very clear. My second question maybe it’s a little bit early to answer, but maybe you have some IDs, we have heard about Mr. Trump is trying to alleviate I would say rules in US, we know that US for you and particularly in CIB activities as far as we understand, you’re very, you’re present in US.

Do you think that it’s something that could be a, that you have considered in your 2020 plan and that should be considered in kind of improvement. How do you see that? And my last question is regarding Turkey, we see that for instance BBVA suffered from its position in Turkey, how do you see the evolution for you in that country as Turkey is quite significant part of your development and how do you see the evolution in Turkey. Thank you very much. Jean-

Laurent Bonnafé: Pierre, let me first take the first question. When it comes to the RWA evolution, so indeed, if you look at the RWA evolution for the plan by 2020, there is of course the evolution of the business.

Now, a similar kind of evolutions were present at a previous plan, but I would like to remind you that there were some events that basically reduced evolution in the previous plan. So there was, for example, the sale of Klépierre and there was which basically reduced the RWA. And secondly, there was also a -- remember in the end of 2014, there was the release of an RWA reserve for regulatory uncertainty, which basically goes to effect basically lower down the RWA evolution. And we don’t anticipate any of those events in the plan by 2020 and that is why we have the evolution that we basically mentioned.

Pierre Chedeville: So you mean that your growth plan will be the growth loan would be similar in the two plans?
Jean-

Laurent Bonnafé: Not necessarily similar, but at least coherent that if you look at the evolutions that we would have in the growth in our domestic markets and in CIB, would be corresponding to the growth that we have in the RWAs.

Lars Machenil: We expect the loan growth to be somewhat higher in the new plan compared with the previous plan because also we are, as I said earlier, we are now a little bit freed from the capital constraints because we're almost at 12% if you take into account First Hawaiian full sale and so now, we ask the businesses to go and work if you want and not to feel constrained by some ceilings that we were imposing in the recent past. And if we want them to grow the revenues by 2.5% per year, we believe that the risk weighted assets growth will have to be higher than 2.5% because there are a lot of pressures on margins everywhere. We have mentioned MiFID, but largely such that usually the revenues are growing a little bit less fast or slower than the risk weighted assets and so the 3%.

Pierre Chedeville: Because in the past, you used to say that actually, BNP Paribas was in capacity to lend and it was more a problem of demand than a problem of offer. You used to say that.

So I was wondering if a better demand that we have actually?
Jean-

Laurent Bonnafé: Yeah. I will tell you that demand and offer are not completely independent from each other also maybe. And then on the monetary policy and the economic conditions, it is true that maybe we have been conservative on both sides, which maybe is slightly the combination of those is maybe slightly over conservative. You know that when we issue a plan, when we issue a plan, we always want to be really sure to deliver it. So we tend to be a little bit conservative and not to exaggerate our work capacities.

So it's true that the economic conditions, we have planned huge from today, especially maybe a little bit pessimistic, but especially for ’17, then we think. With 1% probably today, the participation for ’17 in Europe is more than 1%. And the monetary policy, we have taken the assumption that we would, well, the ECB will be very slow to increase interest rates back to zero, because we’re seeing that, well, there are a lot of pressures from both sides and it's difficult for them to, well, and probably they will wait until they’re sure that there is a real sustainable recovery before speaking -- before taking action on the monetary policy side. So we prefer to be a little bit more conservative in order not to have bad surprises.

Lars Machenil: Yeah.

Maybe on Turkey, on your question, so in Turkey, we do have a strong franchise, strong management and so indeed, there is some left in the cost of risk as we like it, but there is also an improvement in the margins and the top line. So that is of no particular concern at this moment. So that would be the answers to your questions, Pierre.

Operator: Thank you. We have the next question from Tarik El Mejjad from Bank of America Merrill Lynch.

Please go ahead. Tarik

El Mejjad: Hi. Good afternoon, everyone. Just one question actually. So last week, President Trump signed executive orders to review Dodd Frank, I know it’s pure US regulation, but CCAR and IHC are within Dodd Frank, so what’s your view, do you think he’ll attack those two as well.

And if it’s the case, could you quantify what will be the cost saving for you to now have to run IHC or CCAR process and what could be the impact on your LCR ratio, because I understand the high level of LCR you have is probably due to the CCAR process. Thank you. Jean-

Laurent Bonnafé: We don’t dream. I mean, we think that the clearly we have not, we don’t believe in significant watering down of the current regulation. At this stage, we don’t plan to better it.

We consider that it would be a really good news if at the end, the Basel 4 package would be postponed significantly or maybe even in our best dreams, maybe it dropped. And what we, the movement by the President Trump, we don’t want to elaborate too much, but the good thing is that it raises a question that we are already raising for quite some time, we have talked to each other several times and we’re seeing that after having increased the regulation so much, after having strengthened the capital requirements, the liquidity requirements, the reporting requirements, the leverage requirements so much, at some point, it’s right to say, well, let’s look at it. Let's take one step back and compare what we can gain in terms of financial security, with what we could further lose in terms of growth. At a certain point of time, an additional, marginal additional gain on the financial security is not really worse the growth that is lost because of it. And so trying to weigh in kind of impartial and objective manner where we stand now and where is the balance now and maybe coming to the conclusion that it's time to just stabilize things and stop there.

That would already be very good, maybe it's, well, going to do, what's going to happen given the new stance in the US and we don’t expect more than that. And it would be already a very good thing. Tarik

El Mejjad: I mean I agree, but the thing is that for now, there is more evidence of Dodd Frank to be watching down than Basel. I mean Europe can still go ahead with Basel without US if it's an acceptable impact within the 10% RWA or so, so that was my angle, but I agree with you that you in a good word, we shouldn't de-regulate as much, because we get some sense of confidence in terms of financial sector, but so you think that Basel has more chance to be reviewed than Dodd Frank. Okay.

Operator: From Stefan Stalmann, Autonomous Research. Please go ahead.

Stefan Stalmann: Yes. Good afternoon gentlemen. I have a couple of follow-up questions around CIB and the plan for CIB.

The first question, when you presented the plan for CIB last year, you also wanted to achieve a return on normative equity off around about 19% in 2019, but that was after around about 4 percentage points off headwinds and I understood at the time that these headwinds were representing Basel 4 primarily. Now, your plan is based on risk weighted assets and capital built before Basel 4, yet your return on tangible or your return on normative equity in CIB is the same, about 19%. How does that reconcile please? The second question, you are saying today that you have achieved about 300 million of cost saves and about 200 million of revenue growth under this plan that you presented a year ago. So that's about 500 million pre-text benefits, but your pre-tax line in CIB has hardly moved. So there must have been some offsetting factors and I guess you mentioned some.

The question here is, will you catch up on this missing 400 million to 500 million under this initial plan or is there a risk to the end point of this plan. And the final question here on CIB, you did mention that normally if you want to achieve revenue growth, you would probably have to budget with risk weighted asset growth that's a bit higher than the revenue growth and you're budgeting 4.5% revenue CAGR in CIB. Does it mean that you are now expecting risk weighted assets CAGR in CIG of more than 4.5%, maybe 5% to 6%, which I think would be quite different from the methods that you presented a year ago when your plan was to run CIB essentially on unchanged risk weighted assets of about 200 billion. Thank you very much.

Lars Machenil: Stefan, thank you for your questions.

I take them one by one. On your first question, it is true that the objectives that we announced, they are in a slightly different environment. So it basically means the environment with an equity of one of the group, it is 12%. So that is basically the shift that we have for the group and that we have in what we allocate in notional equity to the business. So that is the real strategy behind that.

And when it comes to savings, it is true that we announced in savings in regulations, the 200 million. It is also true that there are evolutions on the regulatory front, which kind of mitigates somewhat this effect. So that is what we face with. Then if you look at your last point, which is the RWAs, so remember that when we announced at the beginning, there were three blocks that we were using to improve the plan and one of those blocks was basically to mitigate somewhat our RWAs. And so that remains the case in the plan.

So that's why, in total our RWAs for CIB are a tad lower versus what the average of the group is, because there is a specific dedicated effort to do so. So Stefan that will be the answers to your questions.

Stefan Stalmann: So your risk weighted asset growth in CIB would be closer to, let's say, 3% to 4%.

Lars Machenil: Even a bit lower.

Stefan Stalmann: Even lower.

And how do you get then to the group risk weighted asset growth of about 3.5% because in the domestic businesses, you're saying that you're growing very disciplined probably means maybe 2% to 3%. The macro business growing so rapidly.

Lars Machenil: Yes. If you look at for example, as a beacon, if you look at our results of the balance sheet give evolution of this year, you can clearly see that that is just kind of the speed at which we grow. So we do expect for the moment indeed that there will be a pick-up in the demand in international financial services, but also in our domestic markets that will lead to that evolution.

Operator: Thank you. Our last question is from Anke Reingen from RBC. Please go ahead.

Anke Reingen: Yeah. Thank you very much.

Two questions please. Firstly, on slide 41, just the 12% core tier 1 ratio, I’m trying to square this with the add-on for total capital, the 3%, a lot of them 3.5, am I right in assuming that 12% target basically includes 50 bps for the capital at only being 3% rather than 3.5. And then I was wondering over the business plan under 2020, what should we expect in terms of increase in tier 1 costs that going affecting EPS, but also I guess tier 1 issuance, although I guess with your corporate center revenue guidance you already sort of indicated, not much of a change, if you could be a bit more specific. Thank you very much.

Lars Machenil: Anke, this is Lars.

I’m not sure I fully grasped your concern. So let me give the answer and then you reorient the other way. So what I observe is when you look at the page 51, which has the objectives in total capital and your second question is a concern about the 81 that we would do for and eventually the costs that we would go for. So as you see the objective in our plan is to have tier 1 and tier 2 to be around 3%, which is roughly where we are today. So it is not that we have a massive plan of updating the 81.

Actually, we think if you look at what we’ve done in 2016, we’re well ahead and we will basically pivot a bit more in to the TLAC kind of insurance than the 81 in the tier 2 insurance. Does that answer your question?

Anke Reingen: And what should I assume in terms of solution, really assume an increase or a meaningful increase in 81 cost or TLAC affecting the P&L?

Lars Machenil: Yeah. Maybe if we look at the issue of the cost, Anke, so the main one that will have to do now going forward is TLAC. So we basically, I’ve said that we would do roughly 10 billion of that a year. Now, TLAC to be very fair, it’s more closer to the instruments which are not capital related insurance.

So which are more around 50 basis points of extra costs. So all of these, but it's more looking at 50 million kind of costs and more than anything else and the same is true roughly if you talk to -- if you would look at 81 and so on. So these are not massive costs, it’s more in the order of magnitude of the 50 million that we took it.

Operator: Thank you. Ladies and gentlemen, this concludes the call of BNP Paribas 2016 full year results.

Thank you all for participating. You may now disconnect.