Good evening, this is the Chorus Call Conference Operator. Welcome, and thank you for joining the full-year 2023 Banco BPM 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. Arne Riscassi, Investor Relations Manager of Banco BPM. Please go ahead, sir. Good evening, thanks for joining the conference. As a reminder, the results documentation is available on our website in the Investor Relations section. As you know, the Q&A session is reserved for financial analysts, possibly with a limit of two questions each. Now I'll leave the floor to our CEO, Mr. Giuseppe Castagna. Thank you. Thank you, Arne. Good evening, everybody. Welcome to the full-year 2023 presentation of Banco BPM. Very glad to present our results. This time I think we are the last bank to present results, so maybe it could be also easier for you to make comparison and look at the result with a full picture of the banking system. Let's say we are satisfied of our performance, which not only is better than guidance, but it's also very close, much closer than only three months ago versus the business plan target. We were able to end the year with a +85% of net profit year-on-year, beating the guidance of EUR 1.2 billion and reaching EUR 1,264 million, with an ROTE of 12.4% versus 7% in 2022. Common Equity Tier 1 ratio is higher, 132 basis points, at 14.2 versus a guidance of 14% with a very comfortable MDA buffer of 542 basis points. Most of all, it's important to notice that we have built the possibility to give to increase, the shareholder remuneration from EUR 750 million to EUR 848 million, leaving, 67% as our payout ratio, with a proposed dividend per share of EUR 0.56. I remember then in 2022 we were able to distribute EUR 0.23, so it's, more than 140%, as, dividend distribution. On page seven, let's, look also having a view not only to the results but also to the roadmap to the business plan. Let's say that we are not only in all, the main, item above the guidance but also much closer to the target results. Core revenues are EUR 4,340 million, almost EUR 9 million above guidance, and only EUR 110 million below the target 2026. The same for operating costs. We are EUR 30 million below guidance and EUR 130 million below target 2026. Pre-provision income, we are EUR 120 million above guidance and even over the strategic plan target of EUR 2,750 million. Cost income is down to 48%; previous last year's was 54% with a guidance of less than 50% as well as the strategic plan target. Cost of risk is 53 basis points compared to 62 in 2022 and 45 basis points as a target for 2026. Let's say that out of these 53 basis points, 9 basis points are related to the front-loading of new disposal of NPE targeted by the plan, already front-loaded, so the real cost of risk would be 44 basis points for 2023. Our business model is very well diversified. You can remember that we stressed in the business plan how much we will change our scheme with the recent product factory maneuver that we had done last year related to the bancassurance and the payment system. Let's say that the result on page eight of the product factory contribution in revenues is EUR 863 million compared to EUR 800 million of the guidance, and with a gap to the target of EUR 380 million because the target plan is EUR 1,180 million. If we want to include pro forma the Vera Vita results, which was only incorporated at the end of December 2023, we increase our results for 2023 to EUR 924 million. This means that the difference vis-à-vis the target of the business plan has been reducing by EUR 125 million, from the target of 2026. We are very confident that with the incorporation of the product factories and the new joint venture in Monetics and in P&C, we'll be reaching the target of the plan easier than we forecast three months ago. On the right side, you see the state of the art for our product factory. As you know, we have already confirmed our shareholding in Anima, in which we are the main shareholders, in Agos where we have a joint venture with Crédit Agricole. On the bottom part of the slide, you see the new bancassurance life that basically started from the 1st of January 2024. We will own, we will fully own 100%. Of course, the implementation of the joint venture of the new company will come during 2024 with full steam of the all new product factory, especially boosting 2025 and 2026 results. As far as Vera, P&C, bank assurance, the strategic alliance with Crédit Agricole started again in December in January 2024. We are already experiencing some good results, and we will keep you abreast of the potentiality of this joint venture during the next quarter's presentation. As far as the payment system, we have signed the deal with FSI and Iccrea for the new payment company, which the closing is expected in the first half of 2024, from which we will give you updated information about the new opportunity arising from the new activity. On page nine, let's have a look to the reduction of cost of risk. It was 81 basis points in 2021, 62 in 2022, and 53 in 2023 with what I said before, that almost 9 basis points out of 53 comes from the new disposal target already front-loaded in 2023 cost of risk. The net NPE ratio is now below 2%, 1.8%, and 0.6% is the net bad loan ratio. Needless to remember that, as you know very well, we have been able to reduce more than EUR 26 billion starting from the merger, and at the time of the merger, the NPL stock was almost EUR 35 billion during these seven years. The gross NPE is now EUR 3.8 billion. If we consider already the disposal target of EUR 700 million, we are basically already at the target of our strategic plan at lower than EUR 3.5 billion and 3% NPE ratio. Strong capital base, very good liquidity and funding position. As I mentioned before, we are already above the target of the guidance for 2023 for 10.2%, even after increasing the payout to 67% versus 50% last year. Last year, let me remember that, end of year, the common equity was 12.8%, so a massive increase. The strong contribution comes mainly from organic performance, 300 almost 330 basis points gross coming from the organic performance. 151 basis points is net of dividend. We started the year with a very important issue in wholesale bonds. Last year, we were able to issue EUR 3.8 billion, of which EUR 2 billion green and social. In January, we already issued EUR 1.5 billion, half of which is green and social. Let me remember that in November, we got full recognition by all the rating agencies of investment grade, and we are already taking advantage with the new emission of the new standing with a much lower cost of funding. NSFR and LCR are comfortably at almost 130 basis points and 187 basis points. Total liquidity is at almost EUR 42 billion at year-end 2023. Let's go on page 12 to the set of results. On the left, you can see the comparison year- on- year. We have net interest income 42% better than 2022, core revenues 22.5% better, total revenues 14%, cost, which stands with an increase of only 1.3% considering including the cost of labor increase, as far as 2023 was concerned related to the increase of the national contract. The pre-provision income is 29% higher than last year. With the reduction of a loan loss provision, we stand at 458% better than last year in profit before tax. The tax rate is still 30%, so we were able to have a net profit from continuing operation 63% better than last year. After the systemic charge and PPA, we stand at EUR 1,264 million versus EUR 685 million, which means almost 85% better in one year. On the right side, you can have the evolution of the last three quarters of 2021, 2022, and 2023, and you can see the evolution constant evolution, the pattern that will give us also a good set for having better results, and continue this pattern also in the next year. On page 13, let's make some consideration about NII. We stand at EUR 3,289 million, the guidance better almost EUR 40 million than the guidance of 2023, and 42% better than last year. The quarterly trend is stable, quarter-on-quarter. Of course, it's 20% better in relation to last quarter 2022. The commercial spread has been increasing during the year. Now we have a commercial spread which is 441 basis points, with the starting point in end of 2022, which was 294 basis points, mainly, of course, driven by the liability spread, which increased up to 287 basis points versus an asset spread, quite constant at 154 basis points. The overall cost of the deposit in 2023 was 73 basis points. The sensitivity for 100 basis points of rates reduction is EUR 250 million considering NII and NFR. As you know, a part of the contribution to NII is into NFR related to the certificates that we issue. And including the certificates, the static sensitivity is EUR 250 million. On page 14, we will try to give you some more information in order to consider the figure that we have in mind we are presented in our strategic plan presentation. We started with the guidance of EUR 3.25 billion for 2023. As we mentioned before, we are EUR 40 million ahead, and we had the target for 2026 of EUR 3.05 billion. This was, of course, with an interest rate scenario that at that time we considered feasible, considering reduction year- by- year of the Euribor, 4% in 2024, 3.5% in 2025, and 3.1% average in 2026. Let's consider now an alternative negative adverse case which will bring down interest rates starting very soon, which is not what we really imagine but is just a worst-case scenario that we want to illustrate to you in order to make clear that our target is really possible. Even if we consider a Euribor ending 3.2% in 2024 and 2.5% in 2025 and 2026, this will bring a potential reduction in gross revenues in terms of NII of EUR 170 million in 2026. Let's say that, of course, starting from this situation of quicker and faster reduction of interest rate, we can exercise some mitigation action very effective. Just to mention some of them, the bond issuance in which we plan to issue EUR 50 billion at fixed rate, and, of course, we consider in the business plan the historical average of our cost of wholesale funding. In the alternative case, we could mix the 75% fixed and 25% floating, and, of course, taking into consideration the new spread that we had with the issuing in January this year. Certificates, the same. We are considering the plan the historical average, as far as our spread is concerned. The new spread is much lower. The time deposit, of course, considering a faster reduction of interest rate, we imagine in the plan to issue in the three years, EUR 9 billion of time deposit at, or 50 basis points below, Euribor. The reduction and the possibility to issue less time deposit, also only for EUR 1 billion less, could bring a considerable advantage in terms of reduction of negative effect of the reduction of rates. Lastly, the new lending, normally each year we issue we lend EUR 15 billion per year of floating rate loans. It would be enough to convert 15% into fixed rate at origination or through swaps to our client. And the global consideration of all these, very simple maneuver would reduce to EUR 50 million-EUR 70 million the impact of a faster reduction in the terms we mentioned before. Imagine that we have already EUR 40 million of advantage at the end of 2023. It's easy to understand that, also considering the further mitigation action related to the increasing commission coming from a new environment of lower interest rate, the NFR contribution, and the potential cost of risk reduction in an environment more favorable, these allow us to be very consistent and committed in confirming our strategic plan figure and, of course, the consequent remuneration targets. Let's go to the balance sheet. We have been growing year-on-year EUR 11 billion in terms of total customer funding, of course, mostly concentrated into assets under custody driven by the BTP. The real growth in volume was almost EUR 5 billion. The rest is market growth. Our deposit base is very much fragmented. There is a strong retail base. The guaranteed deposit contributed to EUR 57 billion out of EUR 98 billion of deposit. 82% of our household deposits are guaranteed. Let's go on page 16 to the loans. We have experienced this year for the first time in 10 years a reduction in loan growth. We are now at EUR 97.3 billion, EUR 2 billion reduction since last quarter. Let's say that we have been very much concentrated as considering the difficulties due to the interest rate to increase the loan growth. We were concentrated on reducing the high-risk loans. And out of these EUR 2 billion, EUR 1 billion comes from mid-high-risk categories. The year started a bit better with an increasing stock of EUR 700 million, even though we cannot yet consider a growth for this year in which we consider the stock will remain more or less at the same level of last year. Let's say that, again, we are concentrating our new lending, which was EUR 19.4 billion in 2023, versus the best rating classes, 95% is versus low-mid categories, and three-quarters of the new loans are concentrated in north of Italy. On page 17, there is the trend in fees, which is 1.3% lower than last year. Let's consider that this year we had EUR 45 million in lower fees from current account coming from the removal of fees on current account related to the negative interest rate. So like-for-like, we grew 3%. And in commercial banking fees, we grew 8% like-for-like. Meanwhile, versus last year, we grew EUR 1 million net. In the management and advisory fee, we have a reduction of 3.2% year-on-year, which was 5% after 9 months 2023. So we are already re-experiencing an increase in the asset under management activity starting from last quarter and increasing, massively in January this year. Let's say that, out of the, investment product placement, which was EUR 4 billion in Q3 of 2023, EUR 3.9 million in Q4 of 2023, in January 2024, we have already reached EUR 1.9 billion, which is a record, target, 47% more compared to January 2023. And also in terms of commission, we are experiencing, the double of upfront commission in 2024 vis-à-vis January 2023. Let's say that, fee and commission have been also, paying higher cost of synthetic securitization for EUR 37 million year on year compensated by better fees on lending, payments, fiscal credit, and, other service like, trade finance. Cost control was very effective, 1.3 the increasing cost considering EUR 50 million of new impact, from the new contract of, national contract of labor. As you see on the right side, the last quarter, 2023 was EUR 60 million higher than Q than the average of the first Q3, three-quarter. But even considering these, we are only increasing 1.3% below very much below inflation thanks to a strict control both in administrative expenses and, in D&A. These allow us to reach, a decrease of 600 basis points, 6 full points in terms of cost income, reduced to 48% starting from 54%. We already mentioned some, figure about, NP and cost of risk. Let's, here remember that, out of the 53 basis points, 38 basis points are related to the, the default rate, which is, in line or below the average of the banking system, 0.93%, not, not withstanding debt. The cost of new inflow is still at a very good level of 38 basis points, which we consider very prudent and efficient in terms of good coverage of new income in the default rate. 9 basis points, as I mentioned before, are related to the upfronting, and the rest is the maintenance of a very low stock, which now has been reduced to EUR 3.8 billion starting from EUR 4.8 billion end of 2022. We were also able to increase our coverage both in bad loans in UTP, and the share of secured NP stands at almost 70%. Stage 2 loans remained below 12% at EUR 12.2 billion. Edoardo, do you want to go ahead on, Pleasure. Thanks. Hello to Giuseppe. So on the debt securities portfolio, you see on in page 20 that the overall level remained at around EUR 37.5 billion with only limited changes in composition between amortized cost and fair value comprehensive income. Amortized cost continuing to cover a percentage share on the total of 70%. Italian government bonds are at 36.1%, well below the strategic plan limit of 50%. They are mostly concentrated in the amortized cost component of the portfolio. Only for three-quarters of them, only one-quarter, 26% of Italian government bonds is in the fair value comprehensive income. Worth mentioning is that in the outset of this bank, in the merger period, almost 100% of the portfolio was composed of Italian bonds. ESG corporate bonds now cover a share of 29% of the total, where 24% at the end of last year. While now on page 21, the evolution of overall reserves has been positive, from -626 at the beginning of the year, to 488, with an improvement, linked to the evolution of the overall rates on our bonds. Sensitivity remains very low with an overall DPV below EUR 1 million, close to zero for Italian Govies in the fair value comprehensive bond portfolio income portfolio. This portfolio contributed to generate an overall net financial result which, in the end, in the last quarter of the year, has been positive for EUR 61 million if we exclude the component related to certificate cost of funding related to certificates, and negative EUR 13.8 billion if we include the cost of funding of certificates. Overall, during the year, the overall net financial result has been -EUR 79 million, of which -EUR 262 million for certificates and other components +EUR 184 million. Page 22 for liquidity and funding, we keep a very abundant level of cash and income assets, almost EUR 42 billion, of which EUR 17 billion represented by deposit facility with ECB, and almost EUR 20 billion eligible securities, and EUR 4 billion other marketable securities. In our bond issuance has been very successful, not only last year but also at the beginning of this year, as already mentioned by our CEO in the initial part of the presentation, was mentioning the two issuances of EUR 750 million each in January, one green senior non-preferred and a covered bond. This liquidity position is reflected in very solid indicators, regulatory indicators. LCR is at 187%. NSFR it is 129%. These, despite the acceleration in the reimbursement of TLTRO, you see, in that we had EUR 39.2 billion at the peak in end of 2021, and now we are at EUR 15.7 billion, more than compensated by the deposit facility of EUR 17.4 billion, allowing us to stay in a very comfortable position, with an outlook of a progressive reduction of the liquidity indicator during 2024, taking into account the overall liquidity and rate environment. On top of these indicators, we also gave indications on MREL position where the buffer versus the total requirement expressed in terms of RWA is as high as 8.9%, considering the 2023 level of requirement, or 6.9% if we go for 2024 level of requirement. Page 23 on capital. Capital has been progressing very significantly over the year from 12.8 to 14.2 with 132 basis points of capital generation, allowing us to increase significantly the dividend payout up to 67%. The most important components of the moving parts of capital have been P&L performance, 245 basis points, dividends and 81 coupons, negative 476, the evolution of fair value comprehensive income debt reserves, synthetic securitization allowing us to add additional room of maneuver for our RWA density and absorption, the application of the Danish Compromise on bancassurance, which accounted for most of these 125 basis points of improvement that is reflected in this chart, and the regulatory headwinds from the adoption of new probability of default and loss-given default models that has been estimated in December using conservative assumptions and would be finalized in March at a level which is already represented in these 141 basis points. Other components account for 11 basis points. You see the important part of this slide also that year one and total capital ratios are well above minimum requirements. Now, I give the floor again to Giuseppe for the conclusion. Yes. Thank you, Edoardo. Final remarks. Let's say that summarizing a very strong 2023, which allow us not only to confirm the net income guidance for 2024 but, moreover, and most important, to improve our shareholder remuneration for 2024. The net income growth of 85% and the potentiality to increase of almost EUR 100 million the dividends for this year, which means to reach an ROT of 12.4%, which would be 13.4% with the target Common Equity Tier 1 of 13%, give us the opportunity to confirm the EUR 0.90 for 2024, which will grow to EUR 1.1, more than EUR 1.1 including one-off. You remember the one-off are related to the transaction with of the Monetica joint venture of the payment system joint venture, and reduced by the cost of the agreement that we will have with the union in order to have an early retirement scheme of another 1,600 people as we announced in our business plan. Let's give us some guidance, I would say qualitative guidance about these results for 2024 with envisage a slight bit of an NII and a good bit in commissions year-on-year, with a cost discipline in the general cost part, which will allow us only to partially increase the cost of the headwinds related to new contract. The provision will be resilient thanks to the upfront of the cost of risk that we have done for the new disposal, which will allow us both to reduce the NP ratio but at the same time to try to maintain at a very good level the cost of risk, also considering a prudent approach in terms of forecast as far as the default rate in which we envisage a slight increase, related to the 0.9% of this year. So all in all, the most important thing is adding the EUR 550 million of the interim dividend to which we confirm. We are able to raise to EUR 1.4 billion the dividend distribution in 2024, which, let me remember, is equivalent to almost 19% remuneration over the current market cap, and is a good boost in order to reach the EUR 4 billion distribution over the three-year plan. Let's go on page 26 to the comparison among the results we reached, the guidance we gave, and the target 2026. As you can see on the left side, in all important items, we are well ahead of guidance and very close to the target 2026. This is for us a strong representation of a strong commitment in order to confirm all the figures that we gave to you in December, which means three times net income over the plan horizon, which means, compared to the previous plan, confirm a 67% payout ratio over the plan horizon, and the remuneration to shareholders, which will be 5.5 times higher than the previous plan, reaching EUR 4 billion out of EUR 6 billion of net profit. Let's say that if we will be able during this year to show that the EUR 1.1 over 1.1 of EPS will allow us to distribute by 2020 by the first year of the plan, exactly EUR 2 billion out of EUR 4 billion, which is our commitment for 2026. So, I think a very promising start, a very solid set of results which comes from our story of not having surprise or items which are not consistent with our story and what we say that would be in our strategic plan and based on the maximum contribution that we expect from the new product factory, all the management team is, again, committed and engaged to deliver the result we promised. Thank you, and we leave the floor to you for Q&A. This is the conference call 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 your question from the question queue, please press star and two. We kindly ask you to use handsets when asking questions. Please limit your questions to two per analyst or investor before reentering the queue. The first question comes from Giovanni Razzoli of Deutsche Bank. Good evening to everybody. Two questions. The first one is a clarification on the regulatory headwinds that you are showing in the slide, which were 142 basis points during the full- year 2023. I was wondering how much of these were in the Q4 and how much of these were related to the EBA guidelines because in the business plan, you guided us even of taking 230 basis points from the EBA guidelines. So, I was wondering if you can answer the consulting with those two figures and if you have any updates on the timeline of those EBA guidelines. And the second question is a clarification on the NII for 2024. You are guiding for an increase in NII in 2020, 2024. If I see your slide, can you share with us what kind of rate assumptions are behind the year's target? Thank you. Let me start with the NII, then I'll have Edoardo giving you an answer on the headwinds. Confirming, of course, the base of our strategic plan, we have a quite consistent increase in NII. If we consider the sensitivity that we show to you today, in our slide related to a faster reduction of interest rate, we still feel that we can be more or less in line with the 2023 results. As I mentioned, we have enough counterbalance measure both in terms of NII but, of course, also in terms of net profit, which will allow us to match the results. Yes. On the headwinds question, they were concentrated in the last quarter of the year. You may have noticed that we already tackled this issue when we presented the strategic plan in December, anticipating headwinds for an amount which was estimated at that time at a higher level, and then so now has been optimized to an extent. We all of them are related to EBA guidelines. The 142 are all EBA guidelines, right? 141, but yes. Okay. Thanks. The next question, sir, is from Andrea Lisi of Equita. Hi. Thank you for taking my, my questions. The first one is a clarification on the measures you intend to implement in the slide. You said you have shown in, in slide 14, in my understanding, these are actions that are so are aimed to mitigate the impact of lower rates but are not something that you can start and stop immediately, no? So require some-sometimes of implementation. So it is not clear to me if you're already starting with these actions or, or not. So if you can elaborate on, on this. Then the second question is, given the current environment and the and the expectations of interest rates, if you have changed your assumptions as regards certificates and if you can provide us some indication on the impact of certificates on the trading line in the following, following years. Another element is, what is your expectation of volume evolution for the next year? Thank you. Thank you. Let's say starting from the mitigated cash one. Of course, with the assumption for the mitigating option is the interest rates go down slower faster than we what we expect. And, as we expect, we don't think that before the end of Q2 is envisaged the possible reduction of rates. Having said that, of course, some of that are already in place. When we talk about historical average spread on bond issuance and certificates, of course, we are already experiencing a good reduction in the spread. In terms of bond, I think it's almost 70 basis points lower if you compare the new issuance this year to the comparable issue before the increase in the investment grade. And the same is, of course, also for the certificates and the bond we are issuing, starting from January. As far as time deposit, we didn't start yet to issue time deposit. So it's not something; it will depend when we will start. And again, time deposit is a measure that we want to implement if we see that the interest rate are consistently high. So if there is no reduction, of course, we will start to implement also a tracking deposit through time deposit. This is not yet the case. As soon as we should experience some reduction in interest rate, we could decide to reduce the size of the time deposit that we will be issuing during the next year. The new lending, of course, again, until interest rate don't go down, it's difficult that we can convert rates into fixed because, as you can expect, clients want to stay on floating rates, until they don't see a consistent convenience in terms of which the rates. So in a sense, this is something that we are, it's very easy to implement. The, the it doesn't take times to implement, but there should be the right condition to implement this measure, not talking about, of course, the potentiality to do better in other component of profitability like commission and FR and so on. So it's something that we will we have already in our, let's say, tools, but yet, we wait for under now interest rate in Europe, it's still at 3.9%. So there is no difference since when we started and we presented the, the business plan. But we are ready to face potential, even dramatic, reduction in the interest rate. Edoardo, do you want to? Yes. On certificates, thanks for the question, as we also we already said when we presented the plan, the contribution of certificates is -EUR 300 million in the final year of the plan, with progressive decline, that is driven by the reduction in rates. As it is clear from page 14, this includes some margin of conservatism, in terms of the spread that is used and, of course, will reflect an assumption on rate which may be different, may be reduced. In this case, will smoothen the sensitivity of NII. As far as the volume are concerned, in terms of stock on the loan stock, we think we will stay stable, as I mentioned before, in 2024, but we envisage an increase in loan granted, during the year, in order to phase, a higher maturity of loans during this year. So, basically, the in terms of granting, there will be a growth of, 5%-6% this year compared to the EUR 90 million of last year. Thank you. In terms of total deposit, they will be stable, basically, during the year. Many thanks. Growing in terms of asset under custody because of the opportunity to still subscribe other govvies. The next question is from Fabrizio Bernardi of Intermonte. Hi, everybody. I have a simple question regarding the capital gain you are going to book on the digital payment business. As far as I remember, this is EUR 500 million, and there are EUR 300 million going to the community. So, given that you are in a comfortable situation regarding your capital position, I was wondering if this gain in terms of community will be used to offset headwinds from a regulatory point of view, or maybe we can assume that the top up in the dividend payment that you made in this quarter can be replicated even in 2024. Well, no. If I may, thanks a lot for the question, Fabrizio. Our total amount of EUR 6 billion net profit that has been declared as a target in the plan includes the EUR 500 million. The distribution, of course, is two-thirds of this, so whatever is the source, this will be included in the distribution. Conversely, on the other hand, we didn't factor into this calculation the sort of headwind in capital. So the EUR 500 million is fully available for the distribution without carving out the EUR 200 million that is deducted, not included in CET1. Let me add that, as far as capital guidance for this year, we imagine, quite consistent growth in terms of Common Equity Tier 1 towards 15%. So much higher than the 14% that you are projecting in the business plan? As you can imagine, we started from 14.2, and the guidance was 14, so we still think that the increase for the business plan remains the same. So, at least for 2024, we don't have any headwind to include, and the capital generation is still at a very high level. Okay. Thank you. The next question comes from Hugo Cruz of KBW. Hi. Thank you for the time. First, a clarification. You gave an NII sensitivity now of EUR 250 million, which includes the impact of the certificates. In the plan, I think you were talking about EUR 300 million moving towards EUR 200 million. So I just wanted to know if this is on a comparable basis or the plan didn't include the certificates. And also, you know, on a comparable basis, are we seeing a decline in the sensitivity versus 3Q already or not? And, you know, what are you doing to decrease that sensitivity? And my second question was, you know, you've had the plan. You've done your marketing around the plan. You know, are there any you know, can part of the dividend be in the form of buybacks, you know, in the future in the next few years? If you could clarify your thoughts on that. Thank you. So on sensitivity, Mr. Cruz, it's comparable to the previous one. We preferred to include also the NFR component and make it explicit to avoid any misinterpretation. So, 100 basis points of reduction in rates, from a point-in-time perspective, static calculation, provide reduction in NII, EUR 300 million, and an increase in NFR of EUR 50 million. The total is a net of EUR 250 million. And this is quite stable from; it's been quite last quarters. You may probably remember that we announced that during the plan, we will undertake a number of ALM measures, the most important of which is an increase in the hedging of deposits or, if you prefer, the replicated portfolio, which is currently at EUR 15 billion and is expected to go to EUR 25 billion during the current year. This action is confirmed. It's not been explicitly mentioned in the mitigation the mitigating actions manual list of page 14 because these actions are on top of the plan should a different scenario materialize. But we confirm that the actions, including the plan to mitigate sensitivity with specific reference to the replicating portfolio, are still part of the manual. Thank you, Edoardo. As far as buyback, we confirm what we said in the plan. We assumed the first release related to 2023 and the interim dividend to be paid as a dividend. So the former EUR 1.3, now raised to EUR 1.4 will be in the form of dividends. And then we have all the opportunity to share the shareholder remuneration both by dividends and share buyback. Thank you. The next question is from Noemi Peruch of Mediobanca. Good evening. Thank you for taking my question, sir. I have a clarification on your NII guidance up year-on-year. Which rates are you assuming and which deposit beta, please? And in terms of cost, we have seen sizable reduction in the G&A cost in Q4, and I was wondering if we could consider this the new run rate for 2024. And then I have a final question on deposits. We have seen the deposit base going down further in Q4. And I was wondering if you could give us some color about the competition you're seeing in deposits. And what is, in your view, the trade-off between keeping deposit beta low and deposit outflows? Thank you very much. So, thank you for the questions, Noemi. So, when we drafted the plan, we assumed two rate cuts during 2024, starting from second half of the year, so from beginning of the fourth quarter. Now we are switching to three rate cuts during the year of 25 bips each, starting from again more or less mid of the year, a little bit earlier than it was assumed in when we drafted the plan. Deposit beta, so it has to be distinguished. As far as current accounts are concerned, we have the usual split that we already gave transparency of which on which we gave transparency already to the market, represented by indexed components of deposits, some EUR 22-23 billion on average during the year, which has a very high beta, around 80%. Then we have the part that is non-indexed, that is the remaining, something like, EUR 75 billion, that has low beta, similar to what we experienced during this year, but, of course, in an rate reduction environment, this, in this case, means sticky interest rate cost on our P&L. And this very low beta is in the area of 10%. On top, we expect during the year to increase time deposits. As Giuseppe Castagna mentioned earlier, this type of action didn't start yet. We didn't have commercial constraints to raise deposits due to competitive pressure. In the guidance, we have factored that this instrument will be issued. This will have a contribution on costs on deposit costs as well to a level, which end of the year should be around EUR 4 billion-EUR 4.5 billion. Thank you for the other two questions, yes. I think I mentioned that if I don't, I will give you the answer now. On D&A, we had, but it is also written on page 18, a one-off benefit of EUR 70 million, not replicable in the future, also considering that we are increasing, as we mentioned in the business plan, our investment base. So we have increased it by EUR 100 million investment over over the next three years. So I would assume more the previous quarter rates rather than the Q4 rate. As far as deposits are concerned, of course, what you see on the final day of the quarter is could be very different. I frankly speaking don't agree that we see an outflow in deposits. We are having a different deposit base, asset under custody, asset under management, and deposit, which is something that we try to manage altogether in order to maximize the willingness of the client to invest in some different asset, and our opportunity to still increase the total deposit base. If we take, as of today, for instance, the EUR 198.8 billion in deposit is already above EUR 100 million. So we are not, billion, sorry. So we are not every day, you know, modeling our deposit. We see the trend, and in case of a potential outflow that we are not experiencing, we will deploy the time deposit, as Edoardo was mentioning, in order to retain a higher deposit base. As of today, starting from January 24, we are experiencing again a growth in direct deposit base. And so the cost of deposit is still basically the same, last year, last quarter. Thank you. I have a difficult follow-up. I can see the EUR 18 million of positive one-off for D&A. But I was wondering also on the other administrative expenses that have improved a lot in the quarter. I was wondering if this is the new run rate or not. Thank you very much. Let's say that, EUR 10 million are real savings. We have a reduction in the energy cost in last quarter, 2023, and hopefully, we'll try to get the most also in 2024. Meanwhile, EUR 6 million were of lower amount of invoices received, which is something that happened in the last quarter of the year. So it's not replicable every quarter. Thank you. Very clear. The next question is a follow-up from Mr. Hugo Cruz of KBW. Hello. Hello again. Thank you. Going back to the slide with the mitigating actions, slide 14, can you talk about the timing? So if the rates are lower, do you have the impact, you know, faster, and then the mitigants take, you know, until the end of the plan to work? So, you know, do you have an impact, an immediate impact, say, you know, if we talk about 2025 because it's easier, right? You had a plan with 3.5, and now if you assume 2.5, that's 100 basis points different, right? So do we have the impact immediately, and then the mitigants take three years to work out, or actually, the mitigants can have an impact much faster? How, how does that work? Depends on the type of mitigating action. So some of them may have an impact, starting from now in any interest rate scenario. Here, I'm talking about the spreads on bond issuances and the spreads on certificates. Similarly, time deposits, as long as we reduce the pace of conversion from low-cost current accounts to higher-cost time deposits, they have an impact starting from now. And this is what's happening since the beginning of the year. Other ones are more gradual, such as the recombination of fixed and floating between issuances and, at the same time, in lending. But for example, for issuances of bonds, we already split 50/50 instead of going fixed rate. I'm talking about the new issuance in January. Okay. Thank you. The next question is from Carlo Tommaselli of Société Générale. Yes. Good evening. Thanks for the presentation and taking my questions. I have two, please. The first one is on the NPE coverage, which strengthened in the fourth quarter. You are front-loading provisions in view of 2024. And despite the potential increase in the default rate, I was wondering if you are thinking also about any chance of provision overlays release in terms of a write back. This is the first topic. Also on provisions, I was wondering if we could expect additional adjustment on real estate into 2024. The last question, if I may, about the mitigation actions again. Can you give us a sense of the sizes of each single contribution to this EUR 100 million of breakdown, please? You can always ask. It's difficult to give a precise answer. But, let's start from the first question, if I understood well what you were mentioning. I think we were talking about utilizing overlays, in terms of increasing further coverage or maybe to keep the cost of risk very low. Normally, we don't use this kind of maneuver. We think over as we mentioned many times, our understanding of overlays is that, if you want to utilize them when the times are difficult, you are in the wrong side because, of course, the overlay increase due to the model when there is a worst scenario ahead of you. So, we think that is a prudent approach to keep overlays as they are and don't utilize overlays for coverage of NPE. So basically, we don't think, especially in a scenario in which prudently, we can imagine an increase in the cost of risk, slight increase, I would imagine, of 0.9% in 2023, an increase up to 1.2% in 2024, which, of course, is the banking industry approach, I feel. So what we see on the forecast of next year of this year. So we think that, on the opposite, we can leverage on the upfronting that we have done this year in order to maintain, even in case of the cost of risk increase, a total cost of risk which is not higher than what we realized this year. In terms of real estate, basically, again, we have a very comfortable balance sheet this year. As you know, we mentioned in our business plan that we want to dispose over the plan horizon up to EUR 700 million of real estate assets. So basically, we are, let's say, paving the way to be able during the next quarter to start with this disposal, which, of course, some of them come from the old merger between the banks even before the last merger in 2017. We have now EUR 2.4 billion of real estate, and we want to reduce massively this amount. And having a better result than expected, we are trying to adjust the evaluation in order to be ready to have disposal. And of course, we were very, very prudent in the also in the evaluation approach. The mitigation action, of course, we have some figure, but I leave Edoardo maybe can give you more detail. Yeah. It's like giving the Coca-Cola formula, no? But it's easy in this case. It's more or less the part that we define is linked to the spreads accounts for around 50% of the total of the mitigating actions. For the remaining 50%, we gave ideas of actions that can be readjusted in terms of the total impact. So, for example, we can readjust the mix fixed and floating. We can push more or less on the accelerator for conversion in time deposits and similar, again, remix new lending between fixed and floating. So at the example levels that we gave in the presentation, the split is 50/50, or the mitigation effect between the spread and the other levers. If we want to create additional mitigations, we have the options to consider to switch to more fixed on the liability side or more floating, or more fixed on the asset side or more floating on the liability side, for three levers of bond issuance, new lending, and time deposits. Okay. Very clear. Thanks. Let me say, I understand that for you, it's not that easy to model, I think, this maneuver that we were able to have in order to mitigate potential downside. But it's the day-by-day work that we do, basically. And the capability of a bank to forecast potential difficulties in the environment and to anticipate through flexibility and capability and through a very strong customer base, I think, is what makes a difference between a bank and another. The consistency of the result that we anticipate every year at almost almost by seven years to you, I think, gives proof of the capability of the bank to manage all these items, time for time. Brilliant. Thanks again. As a reminder, if you wish to register for a question, please press star and one on your touch-tone telephone. The next question comes from Adele Palama of UBS. Yes. Hi. Good evening. I have one question on the regulatory headwind that are still pending. During the business plan, you said you have Basel IV plus the new definition of the Danish Compromise. It's an enter basis point plus around 100 basis points related to the RWA dynamic. I'm just wondering if these headwinds are still in place or if they are lower now. Then, a clarification on the NII for 2024. You said you expect NII to go up year-on-year. I just, sorry if I repeat this question again. But so your cost of funding is expected not, not cost of funding, but the cost of deposit expected is expected, basically, to remain stable versus the fourth quarter 2023 in 2024. This is what you are saying? Okay. No. Yeah. Headwinds, we have already provided, I think, enough clarity on our plan. So really, no need for us to provide additional details. What you have in the plan is a clear outlook of what we can experience with a conservative highly conservative estimate, as usual in our case, for the expected headwinds coming from Basel IV. To tell you very clearly, we don't expect any problem on our capital position to maintain the capital position that we have anticipated in the plan and on which we are already 20 bps ahead despite increasing the dividend of EUR 100 million. So on cost of funding, I think you gave me an opportunity to clarify better the overall impact of the various beta assumptions that earlier Noemi Peruch cast. The point is that at the end of the day, the combination of the various maneuvers leads us to have a cost for our retail funding, increased of an order of magnitude of 30 basis points, versus what we experienced in 2023. Okay. Very clear. Thanks. You're welcome. For any further questions, please press star and one on your telephone. Mr. Castagna, there are no more questions registered at this time, sir. So let me thank you. Let me thank you all the participants and the colleagues who gave an answer to our presentation. Again, let me say that it's a good occasion to confirm our commitment to deliver all the results that we anticipate to you. And I think next quarter will be even more understandable starting to deliver more commission for any event for any potential downside in terms of NII, which basically we still don't consider. Thank you very much. Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.