His son released. Meeting government officials as they try to quell growing government anger over emissions. Oh caroline welcome to bloomberg daybreak europe. From here in the city of london, on anna edwards. With got commerzbank reporting a secondquarter net loss, 630 537ion euros, a loss of million. That lost a bit wider than what we expected. They are giving us guidance in 2017, saying they see it slightly positive net result. This is germanys secondlargest listed bank. That antly found out company disclosed owning 5 , making his business the second largest shareholder after the german government, which bailed out commerzbank. Byy plan to cut 6000 jobs 2020, to free up cash in other areas. Sticking with the banking theme, we have numbers out of Societe Generale. Profits down 28 . Litigation clouds lingering over this international dealings. The products business helping the trading to outperform some of their rivals. They are also grappling with litigation. That is, to some extent, overshadowing the underlying performance. This is frances thirdlargest banking business. On the trading side, interesting to note that they slightly trailed expectations. Quite the opposite of what we saw with b. N. P. Paribas. Manus in 50 minutes time, we will have a little bit more from the Societe Generale ceo. He caught up with caroline last night. Lenders,biggest dutch delivered their numbers. Profits, 3. 7 billion. Beat. A nice in terms of guidance, they are on track to hit their strategic milestone. Ing, joiningcfo of us for his first interview. It is a beat on the underlying profit. You are on track to hit those strategic milestones. What were the standouts for you in this quarter . Good morning. We had a good quarter. I think what stands out is we actually welcome 36 million clients in total. Comparedhis quarter as to the last quarter. Our primaryat customers, the ones who do their daily banking, in total, we have 10. 1 million right now. A yearoveryear increase of 10 . Those clients did more business with us so we have 6. 4 billion more loans. They entrusted us with more deposits. That part is good. If i look at the client side, you can see that, in more than half of the countries, we are number one in terms of appreciation of service. They bought more products from us. In our Commission Income and all of this that led to a result of war than 1. 3 billion of more than 1. 3 billion for the quarter. Quarter, isd a good how you would characterize it. What do you see for the european economy at the moment . The strength of the recovery, how strong does the eurozone look right now . Koos if you look at the eurozone, we are in a beneficial period. Frenchctions in elections, good outcome, most likely good outcome in german elections. The atmosphere in europe is quite positive. We have a bit of momentum and that results in Consumer Confidence as well as investor confidence. What you see there, actually, is an economy growing. We have a 2 growth in the economy at the moment. At 1. 3 , whichon is kind of ok. ,t could be a little bit higher but it doesnt look that bad at the moment. Manus confidence is high. Levelsack at precrisis all the way around europe. That is a big tick in the right hand side of the column. Lets talk about loanloss provisions. Wouldwould dictate you update us in terms of the level of loanloss provisioning . These are sort of abnormal times in terms of the low point that we are at. Overall, andu see probably our bank is not unique in that, that the overall amount of loanloss provisions is still way below the longterm average. Nevertheless, it starts to pick up a little bit and that is not so much because we get new inflow of loans, it is more because we have worked our way through the old loans through the previous crisis where, in general, if you work them out, you get releases. See that you have less loanloss releases right now and you have a normal inflow. Overall, you start to see a gradual pickup. I wouldnt say that is because an economy is turning bad, it is more because of the oil prices depleting. Brexitan i ask you about preparations that your business . See theteresting to news that ing was planning to move trading to london quite soon after the brexit vote to place. Do you still plan to do that . Have you done all of that already . Do you think the dutch government should be doing more to attract banking business and Financial Services business . Overall, what we did on the trading side was, we were having overlaps between three dealing rooms pretty close to each other in the netherlands, belgium, london. We said lets move some jobs more to london. That was not a real big operation but we still felt the talent pool is there, the people are there. Nevertheless, if you look overall at ing, we are headquartered in mainland europe. We have a Branch Operation in the u. K. We are serving global clients from there. What we would like to do is continue that operation and serve as a normal branch. Then, we would continue to follow our clients. In terms of a legal setup, i would say that we are flexible to follow our clients in terms of our business. Netherlands,t the yes, European Countries are, right now moving in to moving some operations from london banks onto the mainland. There is some success of that in london as well. Manus one of the statements that you make this morning is about hitting your strategic goals. Obviously, part of that is cutting 7000 positions and 9 Million Euros in savings targets. Can you update us in terms of those strategic targets and how close you are to achieving them and any adjustments for the market . The we Just AnnouncedStrategic Initiatives last quarter, 2016. Why are we doing this . We are basically saying that there will be convergence of platform products so you can start to serve your clients with simpler products and from one platform rather than a number of platforms. That is what we are preparing for. That is a fouryear operation to do that. Last year, we outlined what we do. We are taking the first steps right now. We will continue to work on this and we will start more and more to report on this separately over the next quarter because these programs are taking place. In the first quarter, we had the announcement on what would happen with the jobs over time. We are in the process of executing that right now. Manus one final question, margin is a critical thing for a bank like yours. Rates, weveising seen quite a dramatic move in fiveyear, 10 year, benchmark. What are you expecting from the ecb . How are you looking at the spreads as we go into the second half of this year . Koos overall, what i see is a yield curve in europe steepening. There is quite a lot of anticipation for Interest Rates to go up. What you see right now is even euro ratesation in to go up then the u. S. There is quite a lot of Interest Rate expectation expected in the market, in that sense. I would say may be market is getting a bit at head of itself. Overall, its a big change in sentiment. Thank you very much for your time this morning. Koos timmraments i thehe ceo of executive Vice President of ing bank in group. Manus at 7 00 a. M. , Lundin Petroleum. Theres an interview. Juliette u. S. President job trump was involved donald was involved in crafting a statement from his son about involvement in a meeting with a russian lawyer. He said he waited as any father would based on the limited information he had. It conflicts with assertions made by the president s own lawyer two weeks ago. The u. S. Senate has confirmed Christopher Wray as the new director of the fbi. It was confirmed 925. President donald trump fired his predecessor, james comey, over the criminal probe into russian meddling in the 2016 election. Apple shares are on course to open at a record high in new york. A revenue forecast highlighted resilient demand for the iphone. The Technology Giant said to 62 would be 49 billion. A new model later this year. Deutsche banks most likely scenario has been shifting about 4000 jobs to Continental Europe over four years. They said no plans have been finalized and the actual jobs transferred could be higher or lower depending on the outcome. F the negotiations with the eu a Deutsche Bank official declined to comment. Global news, 24 hours a day, powered by journalists and analysts. You can find more stories on the bloomberg at top. Apple suppliers in asia rallying today. Holding at its highest level since the year 2000. In taiwan, about 6 10 of 1 . In hong kong, up 6 10 of 1 . You have seen a switch out of these Raw Materials that has been holding the msci asiapacific index up. Commodity markets like australia are weaker today. They are watching, of course, these apple suppliers. A Technology Company in hong kong is a quite sharply in the hong kong session. Up by 6. 3 . Many coming under pressure. After the bill yesterday. It came through with that strong firstquarter numbers. The forecasts have been seen as quite conservative. In after theing bell in sydney. The market expecting very strong dividends and underlying profit of about 4 billion. Watch any signs of a strong payout. Manus coming up, more exclusive conversations. Bankshe ceo about the secondquarter earnings. Manus its just to go 6 18 a. M. In london. Breaking news is our theme. Frances thirdlargest bank is still grappling with litigation costs overshadowed by a jump in demand for structured products and games and consumer banking. It has increased its provisions to 300 Million Euros. We had an exclusive conversation with the ceo, Frederic Oudea. First of all, we posted in the first quarter, the impact on the net profits. What we had to do in the Second Quarter is to account in detail that we have no impact on the net profits. Second, what we decided to do to theadd provisioning general litigation provisioning. There is no Significant Development of litigation. We still have to put behind us on wellknown litigations potentially libor, and potentially on the lia in the u. S. We tried to put that behind us. We saw Investment Banking difficult for some of the rivals in europe and the u. S. What makes Societe Generale more able to upset the difficult market environments . Frederic we saw the Second Quarter, for example, less activities on the slow business. Investors were more in the wait and see mode. We benefited from activities. It was pretty diversified, which i think is wellsuited for the new framework. We are able to make progress with our clients, to make progress, hopefully in terms of profitability. We have costs that are down thanks to all the efforts we made. All in all, our return on equity, despite the environment being less favorable. Do you want to wait and see if the attitude is going to continue in the second half and what can make the Investment Banking revenues increase more in the second half . Frederic the economies are better. I think we could see activity on the corporate side. Investments, acquisitions, whatever. On the markets, we have had very low volatility, also because people were waiting for some elections. When the clarity would be even think on elections, i things could potentially improve with more flows and more volumes. We have new Political Risk that seems to be behind us in france for now. What impact have you seen on your french retail . Have you seen a pickup in activity toward the end of the Second Quarter . Frederic i think there is a better mood in france. For example, we saw in the Second Quarter, an increase in our longterm investment loan, and increase by 10 . We saw also, as you know, gdp growth figures pretty solid for france as well as for europe. We had a growth rate of around 2 . I think it definitely reflects the confidence level improvements and im free positive for the im pretty positive for the output provided there are reforms and there are new steps toward building eurozone. I think Continental Europe can do pretty well. Anna that was Frederic Oudea giving us the latest on Societe Generale. Giving us his Global Market strategist at jpmorgan. Great to have you in town with us. Lets talk a little bit about the banking story in europe and what we see in europe more generally. European banks, have they lived up to expectations . Are they living up to rising expectations . They have been behind the u. S. To some extent. That may be a product of the yield curves in the u. S. , some potential deregulation, trading revenues. We started to see, in the First Six Months of the year, european banks starting to close the gap a little bit. For the second half of the year, we are starting to favor european banks of the u. S. Banks , mainly because were looking at a steeper yield curve in europe that helps interest margins. Were also starting to see some potential and how far they have come in regulatory terms. We have seen reform in terms of regulation for european banks and now we are going to see some of the dividends pay off. We dont think structural changes need to happen Going Forward. Gen had more provisions today. We just caught up with the cfo of ing and he suggests that the market is fairly priced. Alex it is not something i would personally agree with. The european bond markets, one third of government bonds in the eurozone, trade with negative yields. In a time when we think the ecb will be stepping away from the market, that means there is a lot of pricing that needs to happen in the next six to 12 months. We believe the ecb rather than the fed is the bank to be watching in the second half of this year. Few moretart seeing a clues, we could see some volatility. Anna are we beginning to expect too much, too quickly from the ecb . I ask this because inflation in the u. S. And the u. K. The inflation number in the u. S. Is not up to where the fed wants it to be. We have seen some tightening but the Federal Reserve, its been hard to generate that inflation. Even harder, i guess, in the eurozone, where the recovery is behind the curve. I think there has been a ramping up of pressure on the ecb to do something, mainly because there are members of the eurozone who dont believe in the policy. Rather than shifting into full on tightening comedy ecb youre mode,from tightening the ecb are going from easing they are maybe discussing bringing Interest Rates backup, at a minimum. Manus the basis would be a bullishness on european equities. We had a little weaker data in the u. S. Yesterday. This is European Economic surprises first surprises versus the u. S. Economic surprises. I ask everybody this. You are bothered by a high euro . Alex im not. When the euro was falling and people were talking about the benefits, it never really showed up in the data. We never saw a massive change in trade balances. Im not seen the benefits from it. Anna currency wars dont work . Alex exactly. This is why, on the flipside of that, a high euro is not going the dollar. Y derail anna the pace, not the dollar. Manus the velocity. Anna european equities more generally, which bits . Im not that as concerned about what the euro does to the overall European Economic recovery, i would still be pivoting away from the International Companies in europe and focusing more on the domestic cyclical companies. We like industrials, we like the consumer and financials. They are the areas we are seeing is having the most room to run considering the Virtuous Cycle of growth we are starting to see pick up. Anna thank you. Global Market Strategist at jpmorgan, he stays with us on the program. Manus this is one of the Board Members saying that the board discusses policy adjustments as they need them. Policy can change at every boj meeting. Anna plenty of big business names talking to bloomberg. Is this a phone . Or a little internet machine . [ phone ringing ] hi mom. It makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. [ laughing ] so all you pay for is data. See how much you can save. Choose by the gig or unlimited. Call or go to xfinitymobile. Com introducing Xfinity Mobile. A new kind of network designed to save you money. S is Koos Timmermans bloomberg debris europe. Waiting for a few numbers to break this morning. Manus lets kick it off with lufthansa, and they have delivered their numbers, net income of 740 Million Euros area they must continue to cut costs and margins according to the cfo, they have reaffirmed their fullyear forecast for the ebit to rise. Ebit would be above the previous year, they said. They delivered slightly below. Slightly low was the guidance. There was a warning about capacity and the sustainability of demand Going Forward. Wing has costso that are slightly ahead of the likes of ryanair. Ofo wing had every prospect making evening. Pensione the negotiations and Wage Negotiations with staff. We are off the nineyear highs in the stock. Can you and your in terms of the . Osts and the revenue