Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banco BPM First Quarter 2022 Group Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Roberto Peronaglio, IR Manager of Banco BPM. Please go ahead, sir. Thank you very much, and thanks everybody for the attendance for this first call of 2022. Before leaving the floor to Mr. Castagna, let me remind as usual that you can find all the materials on our website on the Investor Relations page. The session Q&A is reserved only for financial analysts. Let me ask you to be so kind to limit only to two questions for each analyst to leave room to the other analysts to make a question. Now I leave the floor to Mr. Castagna. Thank you, Roberto. Good evening, everybody. Happy to be with you to present a very solid, strong set of results for Q1 2022. Very strong profitability at record level, basically in any phase of the profitability before tax, after tax net profit. Coupled with the sound capital position is still improving our asset quality through a EUR 700 million sales, Agos transaction. Let's go through some main figure representing all these different target we have been able to reach already in Q1 2022. Revenues are up 9% QoQ, costs are flat. Cost/income ratio at a very good level of 52.7%, PPI +21%. The profit before tax from continuing operation to almost EUR 400 million with net income EUR 178 million. This is going together with a solid growth in volumes, both in corporate performing loans up almost 2%, 1.9% QoQ, new lending up to 15%, investment product placement up to 14% QoQ. Further improvement, as I mentioned before, in asset quality through a new transaction, a new disposal of almost EUR 700 million, which has already been signed, but which will be concluded during Q2. We will reach EUR 5.6 billion of total NPE with a reduction of 12% QoQ and more than EUR 3 billion compared with the Q1 2021. Gross NPE ratio is finally below 5% at 4.9% and 3.8% following EBA definition. Very good default rate in Q1 at 0.8% allowed us to have a cost of risk at 54 basis points. Common equity tier one at 13.1%, MDA buffer at 462 basis points, with a very good SCR figure and as well as NSFR. All in all, as I was mentioning before, a strong set of results, which put us with a very sound position to follow the strategic plan target which are well on track. Let's go on page seven. Look at some figure compared with Q1 2021 and Q4 2021. Total revenues were up 9% in QoQ and 5% on Q1 2021. Operating costs flat with the last quarter 2021, -3% year-on-year. Pre-provision income for EUR 561 million +21% QoQ and 16% year-on-year. Cost of risk, as I mentioned before, 54 basis points, compared with 78 and 79 in the two quarters we are comparing these results. With a final net income of EUR 178 million, almost 80% more both of Q4 and Q1 2021. Cost/income already at the level of business plan 2024 target, as well as cost of risk following the direction towards the 2024 target, which is 48 basis points. On page eight, some figures representing the solid commercial performance, which also in this case is very close to the target that we have for the 2024 strategic plan. New lending is up to EUR 6.7 billion, almost EUR 1 billion more than the quarterly average of 2021. Asset under management, although slowed by the economic situation, which is for sure not so booming like last year, is still in the same average as to 2021 quarterly result at EUR 4.5 billion. Let's remind that the target for 2024 is EUR 4.9 billion per quarter. Core performing loans, customer loans up 2.1% year-on-year to EUR 101 billion, with 18% of that guaranteed by the state through the different measure we have had the opportunity to granting loans in the last couple of years. Direct customer funding still growing at EUR 107 billion, up 5% year-on-year. Which of course give us, again, the room, the ammunition in order to foster, further growth in asset under management. Some update about, the progress we are pursuing in, digital-driven distribution model. We have been able to reach, 85% of, remote-based transaction on total transaction, and, more important that we have now in Q1 2022 more transaction, app-based rather than the transaction executed directly into the branch. As you can see from the graphics, in Q1 2019, we had 9.6 million transactions in the branch versus 2 million, with adoption of the app. Now we are 5.5 million in the branch, 6.6 million with the app. This shows that our improvement, both in the features and the quality of our app is incentivizing our clients to adopt even more a digital and remote approach, allowing us to pursue the branch rationalization we have already done in a very strong way during the last year. A few updates. We have launched a complete digital fully digital customer journey for SME smart lending. The pilot targeted 3,000 SME, and we have already had 500 loans with EUR 15 million volumes in the first weeks, as well as we received a prize of innovation for our SME app in the financial service arena, in which we were able in few months to enroll already 30,000 SMEs with 900,000 logins since November 2021 when we launched the SME app. Also the digital identity is developing very fast. We have now reached 500,000 clients enrolled on digital identity, which basically represents the possibility to transform the bank in a completely paperless bank for all the activity. In asset quality, we already said in the full year presentation that we were targeting EUR 1 billion of disposal. We have been able, thanks to the low cost risk to foster even more our provisioning and increasing of 200 million our total target of disposal for 2022, which we will confirm will be executed by H1 2022, higher than the total EUR 1 billion we announced. All in all, we reduced from EUR 8.7 billion the GBV of NPE to EUR 5.6 billion, of which EUR 1.9 billion bad loans and EUR 3.7 billion UTP. These of course are figures post- Agos, post Agos- transaction. As you can see, we have already reached the target of EUR 6 billion, which was the target of our strategic plan. Also, in terms of NPE ratio, we are down to 4.9%, 3.8% we did by definition, with only 0.8% net NPE ratio for bad loans. Some quick note on the project Argo. The disposal was of almost EUR 700 million for a total of 400 positions, half bad loans and half UTP, mainly corporate loans with a very high vintage, much higher than the average of our vintage portfolio, for 70% of which was secured with a vintage higher than seven years and 30% unsecured with a vintage higher than five years. The binding offers were received and accepted at the end of April. The closing is expected by H1 2022, results presentation. The positive impacts, of course, are the reduction of the gross NPE ratio to 4.9%, and also the reduction of the average vintage of the remaining portfolio to counterbalance the impact of calendar provisioning to the end of the year. Page 11, the liquidity and funding position. We have already said about a very sound LCR and NSFR ratio. Let me also add that we have now a liquidity higher than EUR 44 billion, and that we have done in the first quarter the transaction that we needed in order to fill the remaining buffer needed for Tier 2 and AT1 to cover the full amount of common equity. In this respect, we have now reached the transaction where the EUR 400 million in January 2022, EUR 300 million in April for 81, and we don't have to perform any other by 2024. Let me add also that we also were able to issue the first green bond of EUR 750 million, is a covered bond, under the new ESG bond framework. You will find other ESG upgrade that we were able to receive at page 41. We are also very proud to announce that in the last weeks we had received from Fitch an investment grade rating, BBB-, which has been for us very good if you consider that last time that we were rated from Fitch, we were BB-. We still have an investment grade from DBRS, and we are having the new rating also from Moody's, but still we haven't yet received. On page 12, you have some upgrade about the bancassurance situation. As you know, bancassurance has been described in our strategic plan as one of the pillar for our growth, and the basis was the internalization and the acquisition 100% of the existing bancassurance JV. This will be in the plan was to be executed by 2023, with the full effect in 2024. We anticipate the decision to internalize one of the two joint ventures in 2022. We have already exercised the call option, and we will be able to execute by July the 100% deal in order to start with this part of our bancassurance, the process of internalization. You can also be aware that we have, in the meantime, received some reverse inquiries and some expressions of interest from many strong insurance companies in order to propose a new joint venture with us. We have decided to evaluate this proposal just to be more flexible and more to have a major understanding of the effect of this potential transaction, which, of course, will be compared with our internalization under the financial point of view, a strategic point of view, and an operational point of view. We will be able, of course, in due time to update you about the potential progress. Let's go to the figures of this Q1. On page 14, as you can see, we have good results, increasing results both in net interest income at EUR 512 million against EUR 506 million in Q4 and EUR 497 million in Q1 2021. Net fees and commission, EUR 480 million, higher than Q1 2021. It is somewhat lower to EUR 460 million of Q4 2021. All in all, considering that in Q4 we had a one-off from one of our product factory, Agos, so EUR 42 million, as you can remember, basically, we had QoQ 0.4% results, and year-on-year, 3.2 Plus 3.1%. Also the net financial results was very sound at EUR 128 million, which brings total revenues to EUR 1,186 million, which is 9% higher QoQ and 5% compared with Q1 2021. Pre-provision income after operating cost, which were the same level of Q4 2021 and almost EUR 20 million better than Q1 2021, set pre-provision income at EUR 561 million, which is EUR 100 million better than Q4 2021 and EUR 80 million better than Q1 2021. Loan loss provision better than both the previous quarter brought us to the profit from continuing operation pre-tax of almost EUR 400 million, which is an increase of 54% compared to Q1 2021, 200% compared to the last quarter 2021. After taxes, after the taxes and systemic charge and others, we reached EUR 178 million compared to EUR 100 million both for Q1 2021 and Q4 2021. Going through some of this figure, I think it's interesting to notice that net interest income was able, in Q1, to be better than both the previous quarter. Particularly important that we were able to deliver better results than Q4 2021, notwithstanding EUR 11 million missing from the two days' contribution characterizing the Q1 versus Q4 2021. This is boosted by a solid commercial banking activity and also from a bond portfolio contribution, which could benefit from an increase of our GOVs portfolio. There is also a slight increase from TLTRO interest of EUR 1.7 million and negative NPE contribution vis-a-vis QoQ of EUR 2.3 million. On the commercial spread, we have a customer spread increasing two basis points, thanks to the liability spread following the bettering of the EURIBOR, and the asset spread only paying two basis points, due of course to the fixed rate part of our loans, which were lower than Q4 2021. All in all, a bettering of two basis points. Let's just say that the EURIBOR average at the end of March was 54 negative basis points, nowadays is 44 negative basis points. So there is still a further improvement to be benefiting our commercial spread in the next quarter. Our sensitivity is still very strong, is about EUR 450 million with a 100 basis point parallel shift and EUR 150 million on 40 basis point parallel shift. On page 16, fees and commissions, a very sound progression despite the worsening macro. Of course, the impact on our management and advisory activity has been impacted by the geopolitical situation. As I mentioned before, we were able to sell investment products for EUR 4.5 billion versus EUR 5.4 billion of Q1 2021, notwithstanding that the fees and commissions coming from the management and advisory business is the same as Q1 2021 and 6% higher than Q4 2021. This is thanks to higher running fees and only a small decrease, of course, in upfront fees. As you know, the higher percentage of our fees income comes from the running fees. Very good results also from commercial banking fees with an increase of almost 4%, vis-a-vis first quarter 2021, and there is seasonal minus 7% of Q4 due to seasonality impact, especially on leverage finance transaction. Let me remind that the contribution again of recurring fees is increasing quarter by quarter, and we also have a better results vis-a-vis the second part of the year 2021, also for upfront fees, of course, not related to the Q1 2021, in which we had the record results in upfront fees. All in all, we have the same results of last year. Operating costs remain in the level of Q4 2021, 3% better than Q1 2021, mainly due to the same figure for ASA, for general expenses. Meanwhile, we have a 4% reduction year on year on cost of personnel due to the early retirement scheme that we foster a couple of years ago, which is going to benefit the profit and loss, especially in 2022. The number of people which are now in the bank is 20,360. Still we have almost 300 people leaving the bank. In the meantime, we have hired 500 people, and by 2023, we will have other 300 people coming on board. Going back to the cost of risk reduction, almost 30% vis-a-vis last year, we already said that 54 basis points were the results. Also a small increase in disposal forecast for Q2. We feel that we are now at a level in which we can easily reach the 2024 target without, in the core cost of risk, even though, of course, for this year, we have some prudent approach due to the geopolitical situation, which in any case is not going to damage our forecast, which were done at the end of the last year, taking in mind the potential negative effect of the moratoria expiring in Q1 2022, which, at the opposite, didn't have any material effect in terms of increasing materially the default or the global default rate of the bank, which is set at 0.8%. The same we can say for the default rate, which is 10%, both these figures below or in line with the 2024 target, as well as the workout rate, which is 21% at the same level we have in 2024 target. All these three indices are much better than our forecast for 2022. Let me say also that we are doing the same exercise we were doing for moratoria in terms of early engagement campaign toward clients exposed to energy cost increase and raw material cost increase. We are targeting thousands of clients for which we are already having a strict staging classification, and to which we will of course propose the remedial action which will be allowed by the intervention of the government, which during this day allowed the bank to make support measures, both in terms of offsetting partially the cost of energy and to sustain counterparties which are materially affected by the geopolitical situation. Just on a final note, let me say that we confirm to have a very negligible exposure to the geopolitical situation in Russia and Ukraine. We have already classified the Stage 2, all the direct exposure, and as I was saying before, basically also a part of the indirect exposure, through the early stage classification for a company exposed to energy and raw material increase. We don't have any bond or other financial instrument linked to that geographical area. Let me also remind that, out of EUR 60 million of moratoria conceded and expired nowadays by the bank, we have had on the two years of moratoria, a default rate of only 1.8%, which is of course higher than the normal default rate, but very much lower than whatever forecast we had done in the past. Going back to the stock of NPE, again, we have a reduction of 36% year-on-year, 12% quarter-on-quarter after Agos, with a share of bad loans, which is going to decrease from 41% - 34%. As far as coverage ratios are concerned, we are still increasing our coverage in order to foster the Agos transaction up to 62% before write-off, 70% with write-off, as far as bad loans are concerned, with UTP at 44% and past due at 26%. We have still a share of secured bad loans at two-thirds of our stock of bad loans. On page 20, some update about our debt securities portfolio. We have completely switched since the merger, the composition of our GOVs portfolio. From 99% of Italian GOVs, when we started the merger, we are now at 49% of Italian GOVs, 17.8 of which are concentrated in the portfolio classified to amortizing cost. So that means that the impact that we had on the FVOCI portfolio, on the reserves of FVOCI portfolio, which we have of course embedded into our capital walk to this quarter, are 99% represented by non-Italian GOVs. This means that of course the bank is still exposed to interest rate, but not to the Italian spread. Let me also say that the 236 negative performance of the FVOCI non-Italian GOVs is very well counterbalanced by a hedging strategy, which allowed us to bring almost EUR 100 million into our profit and loss under net financial results. Going to the capital position on page 21, we pass from 12.7% one year ago to 13.4% at end of 2021 through the performance of this year, the provisioning of dividends and AT1 coupons. Let me remind that we are calculating dividends and with 50% payout, the RWA dynamics link to the increase of our loans portfolio and the effect of the IFRS 9 reserves. We are now down to 13.1% of Common Equity Tier 1 with a 14% phased-in. None of this affected the Tier 1 ratio and total capital ratio because as explained before of the filling the buckets of Tier 1 and Tier 2 with the EUR 400 million Tier 2 issue in January and the EUR 300 million AT1 issue in April 2022, which brought the MDA buffer to a very slight reduction vis-à-vis December 2021 for 470 basis points to 462 basis points compared to 377 in March 2021. All in all, let me say that we think that we can be confident of the results we have reached. We are confident that we can pursue the road towards the full accomplishment of the 2024 target, as well as we are sure that with these results in a normal environment like the one we are experiencing right now. With the complex situation we are living in, we can still say that we can beat 2021 net results and having a solid strong growth toward the results of the strategic plan that you already know for 2023 and 2024. The main potential positive impact to the next quarters will come from the potential increase of NII due to the interest rate increase. As I mentioned before, we have plenty of potential increase due to our situation, but also to the possibility to have opportunity from the TLTRO, which we announced would have been reimbursed for EUR 19 million in June this year due to the lower price to the lowering from the extra price of 50 basis points. We are examining the opportunity coming from the different level of pricing of TLTRO and the opportunity to still draw the full amount, thanks to potential investment with no risk but better yield. We feel that there is room also to improve the good results we have done on NII results. As far as the asset quality, as I mentioned before, we have still some opportunity to increase in the second quarter the reduction of NPE ratio and total NPE. We are pursuing other transaction in order to set our target even below what we have already reached. Of course, we are very confident also of our workout activity, which is above 20%. I would stop here. Thank you for your attention. Of course, we are ready to answer to your question. This is a Chorus Call Conference operator. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and one at this time. The first question is from Antonio Reale of Morgan Stanley. Please go ahead. Hi, good afternoon, everyone. It's Antonio from Morgan Stanley. Three questions from me, please. One on NII, another one on strategy and your views on bancassurance, and lastly, a clarification on cost of risk, please. The first one on NII, I see in the quarter, NII was positively affected by higher contribution from the government bond portfolio. What contribution would you expect from carry trade to NII this year? I see on slide 20 that you've increased your sovereign book in the quarter. If you could sort of elaborate a little bit more on what should we expect from carry trade going forward. That's my first question. The second question, you know, you've mentioned, and you've highlighted on slide 12 the internalization of your insurance operations, which is, you know, as you put it in your words, a key pillar of your business plan, and I would say would contribute to a big shift in the bank towards a capital-light model, which is clearly accretive to your ROE. My question is, what would make you change your views to internalize the business? If you can maybe share the pros and cons, that I think would be extremely helpful. It seems like you would be price-agnostic, especially with the Danish Compromise, you would free very little capital, unless I'm missing something, but you would lose quite a big part of your recurring earnings going forward. You already sit on quite a lot of capital anyway. I just wonder, you know, if you could elaborate a little bit more your thinking there, that would be extremely helpful. My last question is really a clarification on cost of risk guidance for the year. You know, we've discussed it before, you're two years ahead with respect to your NPE targets. Your default rate in early stage is running well below budget. I see you're talking about annualized cost of risk at 54 basis points during your outlook on slide 22. I know there are many moving parts, but is this your, are you feeling comfortable enough to make this your new guidance for cost of risk this year? Thank you. Thank you. Carry trade contribution. We start from the point that, of course, we will miss, from July, 50 basis points from TLTRO, which we said is almost EUR 90 million in total. We feel step by step a bit more confident that through the GOVs portfolio increase and through the action we can still do, again, leveraging on the potential carry trade that we have from the cost of funds from TLTRO, which as you know, is not a fixed cost of funds, but is an average cost of funds. The possibility to invest short-term, either in deposits, simply in deposits or in other, let's say, risk-free opportunity, we think that we can increase and possibly try to recover a good part of the missing contribution coming from NII. Of course, or coming from TLTRO, 50 basis point reduction. Of course, it's difficult to make a clear assumption about that because of course you know that rates are changing very quickly, and still we don't know exactly if the TLTRO will assume the same form that it has right now. For the time being, we think that with the current situation, we can have some very good carry trade contribution also from this aspect. Leverage both on the GOVs that have yield that we bought and we are still buying to replace the maturity. With this arbitrage, we can possibly try to offset the negative side of TLTRO. Let's also remember that we of course through the straight sale that we had, the forward sale that we had end of last year, of course, we have some strong amount of GOVs going down during the year, which we will replace time by time. Second question, bank assurance. We still feel that internalization is a good point. Of course, is very generic to say to speak about bank assurance. They are basically two completely different business, life and non-life. We are going to be week by week, more in depth in the different aspect of this business. Of course, there are Danish Compromise advantage that you can capitalize more on the life rather than on the non-life. Having been object of this interest from a strong insurance company, we feel that is only our interest to explore if there are strategic or financial or operational aspects that can try to beat the business internalization that we have under our business plan. Let's wait and see. Of course, it's not something that we are obliged or forced to do, is an option, and we feel that is good for us to explore all the option. Cost of risk, yes, we are very confident that, last year we said 55 basis points was the core cost of risk. Of course, we reduced it a lot also, the NPE target from EUR 44 billion. We say that this year we had only EUR 1 billion in our of disposal as our target. The inflow rate, the default rate and the inflow coming from performing is very low. This allowed us to provision in something more in order to increase and to have, to match all the opportunity that we feel in terms of single asset disposal. If the situation continue this way, we can really be confident that the cost of risk will be at the level of the first quarter. Let's wait and see, because you know that the situation, the geopolitical situation and the effect of the energy cost increase and raw material cost increase possibly can give some potential problem in the next quarter. Okay, thank you very much. The next question is from Christian Carrese of Intermonte. Please go ahead. Hi. Good evening. Thank you for the presentation. The first question is on the trend seen in the first quarter in terms of product placement and the attitude of customers. I saw that in March the trend in fees was still quite good. Also you placed a quite high level of products. I was wondering if you see a sort of slowdown now that it's two months that the war started or still this could be a trend confirmed in the coming quarters. The attitude of customers looking at government bond yields. Now, the BTP, the 10-year BTP is almost at 3%, so customers started to look at Govies again rather than buying asset management products. The second question is on cost of risk. It's quite low, very low. The default rate has further improved. It's clear the guidance you just gave on 50-55 basis points is underlying the cost of risk. I was wondering why such a good trend, not just for you, but for the sector. What do you think? It's a matter of origination, better origination in the last few years? Government support to corporates? I don't know if you can give some color on that. Finally on bancassurance, I understand you are thinking about the internalization rather than disposal. In case of internalization, there is a phase in in terms of capital impact, phase in compared to fully phased. I mean, there could be a negative impact of more than 30 basis points when you buy Covéa minorities. After having bought the Vera Assicurazioni stake, you will have a release thanks to the Danish Compromise. If you can elaborate a little bit on that. Thank you. Thank you, Mr. Carrese. Basically April was as good as March, because if you consider that April is only 19 working days versus 23 working days of March, you can see that EUR 1.4 billion compared to EUR 1.6 billion is an average of EUR 50 million per day, and we do almost EUR 65 million-EUR 70 million per day. Basically April is even better. May started even better than that because we have an average of more than EUR 70 million in the first week of May. Basically, I don't fear too much the level of investment product placement, also because our target, our plan is not based on a strong increase of investment product placement. They only have to reach in three years EUR 4.9 billion rather than from the conversion of deposit into asset under management. This of course has been slowed down because of the prudent approach of our client during these first months, especially from February, from the Ukrainian crisis. We still feel that there are many products and of course with the right products, let's again thanks to the bancassurance life products that can be offered to clients in a moment in which inflation is at such a peak, and we have to try to defend our client to leave money on current account and basically having the negative effect of inflation versus zero interest rate in our current account. Still we feel that there will be a good attitude from our client. Again, we are also increasing our deposit base so that this is also going to foster possibly this situation. Let's remind that of course, we are very much under the question mark of the evolution of the geopolitical situation. Of course, if this will be stopping some way somewhere, there could be some stronger recovery also in this aspect. Cost of risk, why so low? Basically, we think we have a good prudent approach. It's low but it's not so low vis-a-vis other competitors. Still we have a you know a very prudent default rate in our forecast, which up to now did not materialize. It's almost half of the current default rate is half of the forecast that we put in our budget. We have a lot of room to be prudent should the situation deteriorate or to be very fortunate to have a low cost of risk and fostering net profitability. Could you remind us maybe in the presentation I missed, the overlays you have if you released some overlays in this quarter? Also bancassurance interest rates going up, this means because in the business plan you embedded, basically, if I remember properly, minus 15 basis points EURIBOR in 2024. Interest rates going up faster should help you to make more money on bancassurance. Is it correct? Overlay and cost of risk, of course, we still have what we had with the moratoria scenario. We were provisioning also on the performing loans and on stage two, a good amount of provisioning, which of course we are not moving because of the geopolitical situation is an amount of around EUR 40 million-EUR 50 million. In terms of NII scenario, as you remember, we have only in 2024 a EURIBOR movement towards zero. Meanwhile, in 2022 and 2023, we don't have any embedded positive effect. Whatever comes is all on top of our forecast. I was wondering on bancassurance rather than NII. Interest rates up should help you to make more money or not on life insurance? No, it will depend. Of course, it's a question also of capital, not only of different tools that we have in bancassurance. Normally, if you refer to Ramo Primo, of course, a recovery in interest rates should help and could foster again a recovery in this kind of product. During this last year with lower negative interest rate, we were also able to switch from Ramo Primo to Ramo III and Multiramo, which are also more interesting both for banks and clients. On the phasing of the capital impact from bancassurance, Danish Compromise. Yeah, you are right. The phasing is almost 30 basis points, which then with the Danish Compromise for the first part of course for this, let's say, for the BPM Vita, for the Covéa joint venture then becomes positive 5 basis points with the Danish Compromise. Meanwhile, we feel that another advantage to start the application for Danish Compromise at this stage with incorporation on the first joint venture will give us also the opportunity not to wait too much to get the total Danish Compromise also in time to incorporate Vera. Thank you. Thank you. The next question is from Noemi Peruch of Mediobanca. Please go ahead. Good evening, and thank you for taking my questions. The first one is on GOVs. You bought EUR 4 billion of GOVs in the quarter. That compares to EUR 9 billion of disposals in the last six months of 2021. Do you plan to replenish your portfolio in the coming quarters? And can you give us an update of the common equity sensitivity to 100 basis points or higher sovereign yields? I have a follow-up on cost of risk. Given the change in the macro environment, do you expect to update your IFRS 9 assumption in Q2? And did I understand it correctly that if so, you would not offset it by releasing some COVID overlays? Thank you very much. Let me be more precise about this disposal and what we have already done. I think we have done forward disposal for almost EUR 9 billion. The total concluded maturity of this year will be EUR 12 billion, and we have bought a bit more than half this amount up to now. Sorry for the sensitivity, I cannot give an answer because. Sorry, EUR 7.5 billion out of EUR 12. Sorry for the sensitivity. I'm not in the position to give you a right figure, but I think you can recover a quite fair amount if you consider the loss that we have in Q1 vis-à-vis the option contribution in terms of positive NFR. Also you have the basis points, so I think it's easy for. To have the sensitivity for what we have done. Of course, it's a sort of work in progress, and it's difficult right now to give how much could be the effect, because it's a moving portfolio. The third question is, I believe I've addressed some. Again, we had, I think, further EUR 30 million, I think, in Q1, linked to IFRS 9 for the further disposal. Of course, the one that we already provisioned in Q4 were related to the Agos disposal. Sorry, I am referring to the IFRS 9 macro assumption on the entire portfolio, given the macro environment and GDP downgrades that we are currently seeing. Thank you. As I mentioned before, we had a scenario with the moratoria which, of course, made some provision under IFRS 9. Now we have updated the scenario to the geopolitical situation without releasing any of the IFRS 9. Thank you. The next question is from Giovanni Razzoli of Deutsche Bank. Please go ahead. Good afternoon. I have a clarification and a question on the outlook. The clarification is on the bancassurance. You are starting, you know, an evaluation process for the business, but shall we take for granted that you would go for a JV, or is that just an option that you can activate or not? The second question is on the outlook for 2022. Well, first of all, I was wondering whether, I mean, there are still several moving parts on the NII, higher rates, lower TLTRO benefit, increased contribution from GOVs. I was wondering whether the run rate of the Q1 that was very, very brilliant is, can we consider it sustainable for the next couple of quarters excluding the EUR 90 million of contribution from the TLTRO? More broadly, I'm looking at the guidance that you are giving us, and thank you for that, for the net income in 2022, where you see growth in the net income vis-à-vis the 2021 that was something like EUR 560 million. Consensus is for a decrease in the net income. If I look at Bloomberg, it is EUR 525 million. If I pencil down the cost of this guidance of 55 basis points for the full year, and you do assume some volatility on the revenues here and there, you would seem approaching the 2023 net income target of EUR 700+ million. What I'm missing here? Thank you. Thank you, Mr. Razzoli. You are very optimistic about the scenario. We cannot be able to be so optimistic as you are, but we are very confident in what you said. Of course, the option to increase the profitability are there, and the first quarter shows that we have a big capability and still some ammunition, if you think to NII, for instance. Not so much in relation to last year results, of course, or this quarter results, which was affected by the full impact of TLTRO, but from the possibility to offset the 50 basis points of extra premium with some managerial action and the GOVs portfolio. For sure, we are trying to recover the potential losses that we have from the TLTRO. For sure, also, the EURIBOR is going to still have some good ammunition in order to increase the NII. As well as in terms of cost of risk, we with the current default rate would be able to do much better. We cannot bet on the current default rate because you know that the situation and the forecasts are not that normal as usual, I would say. Good for us that we have been not yet eaten by any situation. Good for us that we are lowering our stock, which of course is a cost in itself, so we are reducing the cost of risk related to stock. Until we will have lower default rates, we will be able to have a very solid cost of risk. Question on the geopolitical situation. Sorry for Banco insurance, I didn't answer because I think it's quite clear what I said. The focus for us is internalization. We have been solicited by many important insurance company willing to propose a potential extraordinary transaction. We will see what they propose, and we will judge if they will be better than a standalone proposition. Until we don't see, it's difficult to give you an answer because we are still working on the internalization. Thank you. The next question is from Adele Palamà of UBS. Please go ahead. Yes. Hi. Thank you for taking my question. I have a question on the capital. If you can remind us the headwind and tailwind that you're expecting for 2022 and 2023. I mean, I know you talk about the 30 basis point or 5, plus 5 basis point for Covéa, on the impact on capital, with or without Danish Compromise. But can you remind us which is the expected total impact from the buyback of, I mean, including also, the joint venture with Cattolica. Can you tell us the coverage that you currently have on your Russia exposure, of the EUR 108 million. The last question is on the hold to collect portfolio on like the government bonds. Can you tell us the average yield of that portfolio, the maturity? I was wondering if you have any flexibility to dispose part of that portfolio every year, if you have an internal limit that you need to comply, or regulatory limit that you need to comply. Thank you. Technical question. I will try to give you some answer. Otherwise, of course, we can then do a more precise job with our Investor Relations people. Let's say that you are right. As I mentioned, 30 basis point would be the impact from Covéa. As I mentioned before, it's just a phase-in impact because at the end of the Danish Compromise will be a tailwind rather than a headwind. The same is going with Vera, because being the potential acquisition for us to be executed in the second half of 2023, we could be also in the position to already have the Danish Compromise if we start July this year with the request for authorization. Coverage of Russian exposure is basically the stage two coverage. As you say, as we said, we have only EUR 80 million of exposure with Gazprom. So stage two is well enough, in our opinion, to cover this risk, and forty-four million of letter of credit of which the vast majority not yet utilized. Putting in stage two, we think that the coverage will be enough in order to cover the potential risk. All in all, it's EUR 140 million of exposure. Frankly speaking, I'm not able. I think I'm waiting for some help from my colleagues. I don't know if we have the average yield, maturity on each of the different category of Govies. I think we can give you some information with our IR. Headwind 2022, 2023, we said. I think that we had until 2024 some 10 points of headwind. Frankly speaking, now I don't remember. I think it would be more in 2023 rather than in 2022. Nonetheless until Basel IV with the beginning of 2025. Okay. Thank you. The next question is from Luigi Pedone of Equita. Please go ahead. Hi. Good evening. Two question from my side. The first one is on inflation. I was wondering which is the effect of the rising inflation on your cost base. The second one is regarding the NII and the sensitivity because BAMI is one of the banks with the highest sensitivity on NII from an increase in rates. But which is your expectation regarding lending volumes, commissions and cost of risk from such a sharp increase of rates? Thank you. Thank you. On cost, we don't have a big expectation of inflation because, you know, we already have the contract for the workforce already concluded, so there are the normal. I think it's almost 2% of increase already now embedded in our figure. Meanwhile, we of course are also exposed to some increase in cost of energy, but is really not so material in terms of affecting the cost base. All in all, thanks to reduction of cost of work, the cost we think will be lower, of course, over last year. The NII sensitivity, again, I mentioned the figure is 40 basis point is EUR 150 million, and 100 basis point is EUR 450 million, to which we could also add some further tens of basis point if we have an active portfolio management on the exploiting the TLTRO opportunities, leveraging on the lower cost of funds and the possibility to invest at higher cost. This opportunity would even inflate a bit more the sensitivity to NII. As far as the effects on our clients up to now, of course, there was a sort of running towards lending, both in terms of mortgages and in terms of customer or corporate loans, because everybody fearing a further increase is very willing to fix the rate. As you were seeing in our figures, we had a record of new loans granted this quarter, and still the situation is this way. Now we have to see also if the measure from the government recently, a couple of days ago, announced will have the same effect of the moratoria and of the loans granted for the pandemic. Still too early maybe to understand. For sure there are a lot of loans that have to be refinanced, and also some loans granted under the pandemic that has to be refinanced. Up to now, a good situation, but again, it's difficult to have a clear forecast with such a complex geopolitical situation. Okay, thank you. The next question is from Hugo Cruz of KBW. Please go ahead. Hi, thank you. Sorry to insist on the M&A and the bancassurance, but just two questions there. On the bancassurance, do you have a deadline to finalize your review? You know, is it gonna be just beginning of next year when you can exercise the remaining call options, or will you give clarity to the markets before then? And then I've noticed that there's been some press speculation around the potential sale of the merchant acquiring business. If you could comment on that would be great. Thank you. Okay. For bancassurance, of course, to exercise the second call, we have the first half of 2023. From January to June, we can exercise the call in order to start and internalize the activity from July. We don't have any set maturity for the potential process of joint venture, of course. Meanwhile, as well, we don't have any news about the merchant acquiring. We have been also in this field approached in recent weeks, in the last months, maybe, by many potential reverse inquiry. We have seen a lot of movement characterizing both Italian banks and international banks. We still have to understand what is better for us. For sure it's important to know that we have another potential strong ammunition to increase our profitability or our capital base. This is a lever that we will exercise after we will have decide the final discussion in bancassurance. Thank you. The next question is from Marco Nicolai of Jefferies. Please go ahead. Hi, everyone. I've got a couple of questions. The first one again on bancassurance. Now that you exercised one of the options, do you have a clearer idea of what level of synergies you could expect on the internalization of the full bancassurance perimeter? And, again, on this, you reiterated the EUR 125 million net income contribution. When do you expect to share the revenue impact of this consolidation and also the cost related to it? Second question on distributions. Today, one of your competitors announced the approval of a buyback tranche, showing that regulators are still open to approved plans when capital levels are adequate. In light of this, and also in light of the sensitivity you showed at the latest result presentation, the one regarding the 70% payout and CET1 sensitivity, could you please update us on your thoughts around buyback and distribution in general? Thank you. Okay. Of course, for bancassurance, we are not yet in the position to give you all these details. What I can say is if you make reference to EUR 125 million, we already say that the anticipation of the internalization of Covéa will bring, I think, something like EUR 30 million in 2023. Of course, in 2022, we will have half a year, but there will be also some impact from the PPA when we will have the fair value on the final acquisition. It's difficult to make some forecast, but it's, I would say, negligible for this year. Not yet many details about the split between synergies in revenues and cost. This is something that we will be also eager to understand in exploring potential external opportunity. Buyback is an old story. I say that, of course, we will, when we present the full year 2021 results, we said that we will be very much able, provided that the fair level of capital would have been 12.5% to increase our distribution to shareholders both through increase of payout and also potentially through buyback. As I said the last time, being the first year that we are able to contribute a 50% payout, very important for us. For the first year, we were not in the position to examine the option of the buyback. If we will be able to be so consistent as we have been in the Q1, also for the second part of the year and for the year to come into the plan, we say that we will explore also the buyback. Is a question that depends, of course, on the price to book of the bank, of the different situation that we will be able to examine. But right now, I can only say that is for sure a good opportunity, but has to be examined when is the right moment. Mr. Castagna, there are no more questions registered at this time. Thank you, everybody, for being with us, and I hope to see you directly during the next week to go deeply into this set of results. Good evening. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.