Good afternoon. This is the Chorus Call Conference Operator. Welcome, and thank you for joining the Banco BPM Group third quarter 2023 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 the 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 welcome everybody. Before starting, as usual, let me remind that you find the presentation, also the press release on our website in Investor Relations page. The second part, there will be a Q&A section reserved to the financial analyst, and please limit to only two questions for analysts to leave room to each other for some other question. Thank you. I leave the floor to Mr. Castagna. Thank you, Roberto. Good evening, everybody. We will try to be very quick this evening. A very solid, strong set of results. I would say both in terms of profitability and the balance sheet. Nine months in which we have reached 93% or 94% of net profit higher year-on-year. Q3 is 134% higher than Q3 2022, leading to go over the guidance we gave of EUR 0.18 per share and EUR 1.2 billion of net profit. Of course, we'll be more precise about that in the upcoming presentation of the industrial plan early in December. Going down on page seven to the different results, let me stress the excellent results in core revenues, which is higher 26% year-on-year. Pre-provision income is up 31% with the cost income, which is below 50, at 48%, with a Q3 cost income at 46.5%. A good reduction also in terms of loan loss provision, down 23%, leading to a profit before tax of +63%. Very good also the reduction, continuous reduction in NPEs. We are now below EUR 4 billion in volumes and at 3.5% of NPE ratio, which is, one point eight percent of net, NPE ratio. With the EBA, is 3.2, the gross ratio. Good occasion also to stress two good news for us. One is the, upgrade of, S&P, to investment grade for our bank, joining, Fitch and the S&P. We have been granted BBB- with a positive outlook, which for sure will help us, also in the bond issuing, in the next, few months. Also, in terms of capital, a good news, we have, eventually, authorized by ECB to apply the Danish Compromise to our bank assurance company, which of course, will be, will be already inserted in the day, in this common equity tier one ratio at 14.9% pro forma, but of course, will be officially included starting from the presentation of the date of December 2023. This, business model, I would say, is, now, very well integrated also with our digital and ESG strategy. Speaking at digital, on page eight, you can see how much, the branch-based transaction, have been reducing during the years, and at which, even accelerated pace are growing the app mobile-based transaction. Basically three times, the volume of, 2019 before the COVID. Nowadays, as we already know, the transaction on the app are almost 10 million and one-third more than the branch-based transaction. All in all, we have more than 85% of the transaction of the bank through remote and mobile. Also, the sales of our product are now 39% done through remote omni-channel. That means that at least all the sales that are not done completely in the branch are growing more than almost four times the number that we had in 2019, growing considerably year by year. Of course, the comparison between 2023 and 2022 is only between the first nine months of 2023. So our forecast is to overcome 40% by year-end. The same is also for the contact center, our commercial activity, remote commercial activity, starting from only 6% in 2019 of commercial contacts. The other were inbound answer to question made by clients. Now we have completely inverted. Now 55% of the commercial contacts are driven by commercial activity. Page nine, some highlights about our ESG integrated business model. We have, in terms of business, joined Net-Zero Banking Alliance and identified the five priority sector. We have reached almost 60% of green new loans to corporate enterprise out of the target of reaching 65% by the end of 2024. One hundred million new loans to nonprofit sector, EUR 1.5 billion of issuing of green bonds by the bank, which we have had to the two, more than EUR 2 billion than in 2022, in which we're the first bank in terms of new issuing of green bond. In terms of people and community, we are on the right pace to reach 30% of women in managerial position. We started 21% in 2021, and now are above 27%, with an increase of 31%. We have devoted more than 131,000 hours of training or ESG training to our employees, as well as 4,000 hours to our clients. In terms of organization, we have now a sustainability committee at board level, established in April of this year, 2023. We have today published the green social sustainability bonds framework aligned with the taxonomy. In terms of strategy, of course, also for the ESG strategy, the ESG new action plan. This will be fully integrated in the upcoming strategy plan based on four areas of development: risk management, credit, finance and wealth management, and disclosure, of course, in line with the upcoming corporate sustainability reporting directive. Also, in this field, we got three new recognition by the rating agency. MSCI upgraded from BBB to A, single A, our ESG rating, as well as Sustainalytics upgraded from medium risk to low risk, our bank, and Standard Ethics confirmed AA with positive outlook. Let's have a look on page 11 to the main figure. All in all, as I said, net income almost doubled year-on-year, with considerable increase both in core revenues at yearly level and also quarter-on-quarter. 26% year-on-year and 4% increase quarter-on-quarter. Driven, of course, by net interest income, which grew 52% year-on-year and 7% quarter-on-quarter. A very solid result, also in terms of operating costs. We have an increase year-on-year only of 0.8%, well below the guidance of 2%-3% that we gave at beginning of the year. Pre-provision income is up 30% and 6% on a quarterly basis, and the profit from continuing operation, pre-tax profit, are high to 63% year-on-year and almost 7% on the quarterly basis, leading again to a net income at 94% higher than last year. On the right side of the slide, you can see the net interest income, the core revenues, the pre-provision income and net income, compared with the previous two Q3 in 2021 and 2022. And you, as you can see, the net income is more than doubled in the Q3, 2023 and 2022, and more than three times the Q3 2021. On page 12, let's have a look to NII trend. Not only 52% increase year-over-year, but also a very good increase also, Q3-over-Q2 is 7.3%, which allow us to confirm a guidance which will be in the region EUR 3.25 billion. Most probably, we will be a bit over that. Led by the commercial spread, which grew 30 basis points on Q3, driven especially by liability spread, which grew 29 basis points, only one basis point for asset spread, which is still having a good return. As far as the sensitivity is concerned, we confirm and observe the possibility of around 33%, considering both commercial and derivatives. A sensitivity for 100 basis points, 12 months of EUR 300 million, and ready to comply with potential new scenario, let's say, more probably in the second part of 2024. In case of inversion of the rate trend, we have a wide room to limit the NII sensitivity by expanding the size of the replicating portfolio, which is now hedged only for EUR 15 billion. Let's have a look at our franchise in terms of loans, what we want to stress is the quality of our loan portfolio, which is, in turn, of course, shown by the cost of risk and the reduction of NPE. We have almost EUR 100 billion of customer loans, is a bit less than 3% since the beginning of the year. Most of them comes from non-financial corporates. Meanwhile, household are only down EUR 300 million year-on-year, year-to-date, sorry. Financials, public administration and others, instead, are growing 0.5 Q3, leading to a positive results. But what is important to stress is the very low risk profile. Out of these EUR 100 billion, 69% are secured, 41% collateralized, 21% with state guarantee, which, if we go to the household, of course, is much more, is much higher to 95% collateralized. If we go to small businesses, 74% secured, 45% of which with state guarantee. Also, in terms of total non-financial corporates, 57% is secured, 31% with the state guarantee. Also, in terms of real estate collateral, we have three quarters of our real estate collateral located in north of Italy, with a loan-to-value at 60%. In terms of deposit, total customer funding is EUR 205.4 million, slightly below EUR 206 million of last quarter, but almost EUR 6 billion or more than EUR 6 billion higher than year-to-date. Especially, we had some EUR 9 billion of increase in asset under management and asset under custody. Meanwhile, the deposit base decreased over EUR 3 billion, only EUR 3 billion, fostered the growth of asset under management and custody. On the quarter, I would say that in Q3, we have this reduction of EUR 600 million, but let me say that the volume effect is up EUR 1.1 billion. Meanwhile, the market effect is down EUR 1.7 billion. The retail base is huge. We have a deposit guarantee for more than EUR 57 billion. 81% of the household deposits are guaranteed by scheme, guarantee scheme, and out of EUR 100 billion of sight deposits, more than 80% are retail and SME deposits. On page 15, let's have a look to the net fees, a very good results. We were down to EUR 1.408 billion, down from EUR 1.44 billion, growing at 0.5% in terms of commercial banking fees, with a reduction of 5% in term of management, intermediation, and advisory fees. The results, in terms of commercial banking fees, they have to take into account the reduction of EUR 25 million, more cost for EUR 25 million in terms of new synthetic securitization costs, the cancellation of fees on excess liquidity on current account, which happened since the second quarter and will account for EUR 30 million year-on-year. These two negative figures were more than offset by strong contribution for basically all the remaining components of the commercial banking activity, in particular from cash management and payment service, which grew year-on-year 30%. In terms of quarter results, you see that in terms of commercial banking fees, we have a result which is higher than Q2, notwithstanding EUR 8 million of higher costs on synthetic securitization. Meanwhile, we still have a reduction in terms of management advisory fees, led especially by lower production in terms of funded SICAV, almost offset by other higher fees on certificates and asset under custody products, basically, BTP. In terms of total investment product sales, we are up EUR 500 million, nine-month 2023 to nine-month 2022. Let me stress that, we had both Q3 2023 with a solid performance of EUR 4.1 billion of investment product sales, but especially in October, we had EUR 1.4 billion of placement, to which we have to add EUR 1.2 billion of BTP Valore placement. I would consider very good also the performance of the cost control, of course, the cost income, which went down to 48% from almost 55%. Year-on-year, we went up only 0.8%, and quarter-on-quarter, we are reducing Q3 on Q2, both staff cost and also let's say we had a result which is equal in terms of other administrative expenses and depreciation and amortization. This shows us the strict control, cost control is embedded, I would say, in the bank, and we are, of course, preparing all the potential offsetting of increase in cost of personnel and administrative costs also for the new business plan, for which, of course, we will be more precise in December through the presentation of the plan. Let's pass on page 17 to the asset quality. We already say that we can say that the turnaround is now complete. We have been reducing, during these 6.5 years, more than EUR 35, EUR 34 billion of NPE, passing from EUR 30 billion + EUR 8 billion matured, of new inflow to NPE from 2017 to now. Now we are below EUR 4 billion. EUR 3.9 billion is the level at in September 2023. We have so reached 3.2%, as per by definition, and 3.5% of NPE ratio, go down to 1.8% of net NPE ratio, with bad loan ratio down to 0.6%. Also, the cost of risk, of course, has been reducing over 2023, with a constant cost, which is now around 47-48 basis points. Let's say in terms of, of comparison with our target of the current business plan, that the EUR 3.9 billion of net, of NPE, gross NPE volume of NPE, has to be compared with the forecast of EUR 6 billion that we had for 2024, and the gross NPE ratio, which was 4.8%, meanwhile, now, as I said, is 2, is 3.5%. We have also increased, charging already the cost of risk, to EUR 900 million, the target of disposal of NPE, of which from EUR 700 million, EUR 500 million which have been already executed by, the third quarter 2023. The remaining, EUR 400 million will be done, for a part in, the fourth Q, and a more significant part in 2024. On page 18, the prudent policy that we are applying for our provision, the quarterly LLPs, as you can see, are on a basis of around 45 basis points. The migration rates are still very well under control, with below 0.9%, annualized in the nine months, 2023. Cure rate around 5%, net default rate 0.75%. The disposal of small-ticket unsecured brought the bad loan coverage a bit below the previous numbers. We are now 59%, and which is 68%, including the write-offs. Meanwhile, the UTP coverage grew from 42% to 43.1%. Of course, the disposal of unsecured small tickets led us to have now a share of secured NPE, which grew from 66%-69%. In terms of Stage Two, we have an increase to EUR 12.8 billion, coming by a different methodology, following the application, the threefold effect, and the new automatic trigger in the watchlist of our trade portfolio. More severe, of course, trigger. Edoardo, would you want to continue on? Sure. Thank you, Thank you, Giuseppe. Good evening, everyone. So let's go to page 19, which as usual, shows the evolution of our debt securities portfolio. In the last quarter, we had a small increase in the total volumes, EUR 600 million, mostly concentrated in the amortized cost component. The share of amortized cost component remains stable at around 72%. On the right side of the same slide, you see the composition by counterparty, with, where the most important information relate to the share of Italian Govies, being below 39%, as opposed to a strategic plan target or threshold of 50%. Important to underline that the share, of, Italian government bonds in OCI comprehensive income is as low as 20.8%, while the remaining part is, concentrated in the amortized cost part. Another point, which we always like to emphasize, is that, at the merger date, the share of Italian Govies was slightly above 99%. Page 20 shows the contribution to capital via comprehensive income, via PNL, of the trading activities and of the bond portfolio. So, our reserves on debt securities are now EUR 565 million negative on an OCI basis, with very low sensitivity that is confirmed. We keep hedging the whole of the portfolio using swap strategies, so that we remain only exposed to the spread between the market rates, the government bond rates, and the risk-free rates, the swap rates. On the right part of this slide, you see that the total net financial reserves went down from EUR 8.4 million to EUR 22.8 million, but it is the result mostly of the certificate cost. We explained in the August presentation, in the second quarter presentation, that certificates contribute for accounting from due to accounting constraints to the net financial results, but their contribution to the PNL is quite similar to a negative component of NII. So the reduction from 63 to 76 is simply the effect, the pure effect of the increase in market rates in average level of arrival during the quarter. Turning to page 21, this is snapshot of our liquidity and funding position. First of all, on liquidity, we keep maintaining an overall cash position above EUR 40 billion, even after reducing central exposure down to EUR 16.7 billion, and while maintaining a positive net ECB position of EUR 5.6 billion, thanks especially to the deposit of EUR 22.3 billion. Funding is continued. Our activity to tap the wholesale funding markets also in this quarter, with the EUR 750 million of covered bond issues. Needless to say, this is the area, the area where we expect important tailwinds, important future contribution to our PNL, owing to today's new investment grade assignment that has been announced by Standard & Poor's, A3 short-term, BBB-, so with positive outlook as far as long-term is concerned. On the right of this slide, the right part of this slide, we show LCR and NSFR. LCR, 160, as opposed to a planned target, that was to keep it above 140%. NSFR at 127, as opposed to the target, which was to keep the NSFR indicator above 100%. And I think that, page 22 is, a very strong, picture of the evolution of our capital. So we increase capital base since the beginning of the year of 150 basis points, mostly because of organic capital generation, and this is before the application of Danish Compromise, which adds on top of this 150 basis points, additional 60 basis points. Coming to the, to the, this last quarter, no big, movements, apart again from the Danish Compromise, with Q3 performance contributing for 60 basis points, 34 negative basis points from dividends and 81 coupons. The nine basis points, due to the February comprehensive income and debt reserves, correspond to what we have already commented in the dedicated slide, and then there is a mixture of additional effects that is negative for nine basis points. The authorization for the Danish Compromise has been received a few days ago from ECB, for application of the Danish Compromise on November seventh. Worth also highlighting the level of MDA buffer, which is on a stated basis at 559 basis points, and once the Danish Compromise is considered, on a pro forma basis, is 620 basis points. Capital ratios are consistent with the evolution of Common Equity Tier 1. We have a Tier 1, 16.7, and total capital ratios at 19.7%. Finally, short mention to the windfall tax, where the board, as we have observed also the rest of the market, has resolved to submit to the approval of General Assembly the proposal to set up a dedicated undistributable reserve, which is quantified in EUR 378 million. This reserve is, of course, fully accountable or fully included in CET1 capital. The final part, let me turn again to Giuseppe. Just a quick word to consolidate the number and the figure that we have announced up to now. We, we believe, we are confident that solid track record of these years, and of course, especially of these last nine months, together with the capital generation, enable us to provide a growing shareholders value creation, which of course, will be, explained in more detail, in terms of ambition from profitability and, shareholders remuneration in the, in, December 12 with a new strategic plan. Let me just only stress that we are well above, the results that we announced. We are, EUR 143 million is, very much in line, a bit above the guidance trajectory, which in turn is almost 75% above, 2022 results, as well as the guidance that we gave for 2024, and of course, that will be,... ...specified in the business plan, is already 12.5% higher than 2023 results. In terms of over delivery of the plan, we have already, I think, expressed all the figures that we have summarized in the middle part of these slides. Let me stress only that, what are, for us, the potential upside to be included in order to better, even better the performance we are engaged to do. First of all, the resilient NII, the higher for longer rate scenario, together with the improvement of the investment grade, will enhance our capability to produce NII also for the next quarter. The improved diversification, for which we have built up the base during 2023 with the bancassurance and payment service business. That also, I would say, with the strong room for improving our asset under management strategy with the increase of EUR 6 billion of indirect deposit this year. The strict cost discipline, we have been able not to grow in terms of cost. We are determined to be able to continue to have a very good cost structure, also in view of the next increase of the new contract. Together, of course, with the very solid low risk profile, which is benefiting not only from the material de-risking we have done, but also from our capability to enhance through guarantee and collateral, our loan portfolio, together with the proactive credit management activity, which allow us to detect and intervene immediately for any potential new inflow of NP. All in all, profitability, capital generation, good portfolio, and I would say a very solid track record from this management team would, I hope, and we are confident, that we'll be able to convince that it's worth to wait for the next months in order to understand what we will announce as potential results for the next three years. So that's all for the time being. I will leave the floor to you for your question, and together with Edoardo, we are ready to answer to your question. Thank you very much. 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 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 Noemi Peruch of Mediobanca. Please go ahead. Good evening, and thank you for taking my questions. The first one is on NII. If you could give us some color on the evolution of NII in 2024, and in this context, if you could just share with us your expectation for beta and also your strategy on deposit, because we are seeing the time deposit when actually down, while for the rest of the sectors, they are up, vis-à-vis 2022. And then, I have a question on insurance. Clearly, the contribution has been a bit volatile, probably due to IFRS 17, and if you could give us a bit of color on the expected contribution from this business going forward, it will be very helpful. And lastly, what do you see as risk or opportunities from the digital euro implementation? If you would consider investment in this regard, probably in your next business plan. Thank you very much. Thank you, Noemi. Let me say, as far as NII, we think the forecast for 2024 is to have an average EURIBOR, which will be higher than 2023, because, of course, the starting point is higher. Most probably will be higher until the second part, the final quarter of 2024. Why we say that, most probably, again, I don't want to go into detail for 2024 because we will present the number in one month's time. But of course, we feel that NII will be a strong part of our presentation. We think that we can use the better forecast of NII to devote some of the EURIBOR average increase to lose a bit of beta. We want to... We are still at 30%. We think we don't have—we haven't used at all, any time deposit. We have all sight deposit. Our strategy for this year was basically to stay strict to the zero point something of time deposit, not increasing our cost. Notwithstanding that, we were able to keep in line, I would say, or even better of some beta of our deposit base. If you consider the increase in indirect deposit, we are on a positive, very much positive side. So, basically, if we consider that we can have 2024 in line with 2023, there is room to foster some new deposit in time deposit, spending a bit of beta in this regard. For the rest, we think the beta is really stable, will be even more stable, due to the fact that we don't expect further increase in EURIBOR by ECB, and this should have, bring some, advantage in terms of volume for us. Insurance contribution expected, I, again, I, I cannot say anything for 2024. You will, have all the details, in one more time. For this year, we had, of course, as you know, we don't have yet half, two-third of the company, and we have a contribution of around EUR 40 million. So we expect that the, figure that we gave, when we presented the first business plan to be deployed in the 2024, will be almost the same during, the new business plan. Risk opportunity for digital euro. Frankly speaking, something we are not yet concentrated in terms of waiting for exactly what is to come. We know that the limit of EUR 3,000 should, in some way, protect the deposit base of the bank, but let's wait and see how this will be applied, when will be decided. And of course, our digital attitude will, in my opinion, help us to be reactive also in this respect. But it's a bit too early to have some figure about that. Thank you. The next question is from Giovanni Razzoli of Deutsche Bank. Please go ahead. Good afternoon. Two questions. One, clarification on your commercial performance. If you can please repeat, what was the subscription of the BTP Valore, and if you can give us an idea of what were the amount of placement of certificates. I haven't found them in the presentation, but they were around EUR 5 billion in the Q2, so you are, pretty much, strong into this, and, so we'd like to know what was the contribution in the, in the third quarter in terms of volumes. Another question is on the capital. What regulatory wins do we expect for the Q4? Because, if I look at your capital position, and I include also the already disclosed benefits from the, JV in the payments, you are running basically with a CET1 ratio of 15.5%. You just mentioned that in 2023, you booked something like 150 basis points of cash flow generation. So, it seems to me that the trajectory of the CET1 is approaching 16%, which is clearly well above consensus of 15%. So I'm wondering whether the regulatory wins in the Q4 will be higher than expected, or my understanding is more or less correct? Thank you. Good evening, and thank you for your question. BTP Valore, we had on top, again, of the placement that we shown on our page 15 slide, two different amount. EUR 1.2 billion, I would say, in October for the recent BTP Valore, and the one in April was EUR 1.1 billion. These EUR 2.3 billion have to be added to the EUR 12.2 billion, which you find in the nine months, 2023 indication on page 15. Meanwhile, certificates are included in the investment product placement, and in the nine months were EUR 1.4 billion. Capital is a bit too early to say that we are above 50. First of all, because we are 14.9. But secondly, because as you well know, we were expecting two things. One was positive, and this, the Danish, which we are very happy to consider now a matter of fact. The other is the headwind; we don't know if it's why you are perceiving could be higher, I don't know. We don't have a clear idea, but we expect, as we already said, that will be in the region of the positive coming from the Danish. So I would say that a more precise figure is in the around 14.3, 14.4 currently, including the headwind. So this is our indication. Of course, also, this 14, above 14, give us room to have different strategy in the remuneration of our shareholders. Thank you. Thank you. The next question is from Adele Palamà of UBS. Please go ahead. Yes. Hi, good afternoon. A couple of questions from me. So the first one is on NII. I'm trying to understand if you think that the third quarter, so, today results is the peak NII that you have, given that you had a pass-through on loan of 95%, since first quarter 2022 until today. So I mean, I understand you don't wanna guide on a precise number on 2024, but can we expect that the NII will go down versus 2023, excluding the contribution from the replicating portfolio? And then, regarding the replicating portfolio, could you give us some details on the size, the maturity, the exit yield, or like the contribution that you expect from that portfolio in 2024? That's it. Thanks. Good evening, Adele. NII, many, many parts, I would say, in this question, so let's talk about the positive one. As I said before, we think NII will be, generally speaking, higher because of the entering point of EURIBOR in 2024, which will be, 40-50... As an average, it will be 40-50 basis point higher than 2023. Another positive, I would say, comes from the possibility to utilize the replicating portfolio, but this will come only when the interest rates will start to go down. Otherwise, it doesn't make much more sense to lose money, applying to a stable interest rate, some different policy. Third, the positive is the issuance of our bonds, in general, or our paper, because thanks to the investment grade from the third rating agency, we then we think that we can reduce the cost of issuing. What is negative? I would say generally only the level of volume that we want to reach. So if we decide to push on the accelerator to increase our deposit, we will utilize more of this room generated by the positive, in order to increase the volume of our deposit, and to pay some time deposit, for instance, which up to now, we basically didn't apply yet. All in all, I don't see how could see lower than 2023, frankly speaking. But again, this is something that we can expand a bit more in the presentation of the plan. I hope I've been clear, I have been clear. Okay, but, but the guidance for the full year 2023 is implying a lower NII in fourth quarter. No. Why you think it would be lower? I don't think so. I think it's more or less stable. If you add the same result of 2024 of Q4 to Q3 to the first nine months, you will reach a bit higher of the guidance we have we have given. So I don't think that is... And which is about, so I think that EUR 10, 20, 30 million on EUR 3.2 billion doesn't make such a difference. Okay. And sorry, can I add another question on, cost? Is the guidance, for the full year 2023, 2.6 or around 2.6, including, in the fourth quarter, some top up for the national contract, so some one-off? We haven't. Of course, the contract is not concluded, so we didn't give any provision already done. We think that, if, as we all hope, the contract will be concluded by the year-end, there will be room in our cost base to accommodate one month or two months of potential cost of the contract for the first year. Okay, thanks. Thank you. The next question is from Andrea Lisi of Equita. Please go ahead. Hi, and thank you for taking my question. The first one is again on the increase in Stage Two. You have explained that you have also changed the methodology. If you can provide a bit more color on that, and if it is also to be assumed that some increase in overlays or if they should be considered stable versus the previous quarter. And the second question is again on the insurance business. We have seen that in the draft of the budget law there is the possibility of the introduction of a guarantee fund for the life insurance business. If you have already quantified the potential impact for you. Thank you. Here we are. Thank you for your question. So Stage Two, now, is exactly what I said. So we think that we have changed the methodology. Sorry, I'm looking for the right page. Is this one? Okay, this one. The EUR 1 billion more in the Q3, which is again below the 1 year ago, comes from a very volatile effect. The increase of Stage Two comes from the threefold effect, which is the rule for which if a rating deteriorated of 3 grade, even though it comes from 1, so the better, to 4, which is still a very good rate, you have to consider it into Stage Two. The second is some new penalizing automatic trigger in the watchlist, which of course help our credit manager to detect any position at the first moment to anticipate, of course, an intervention. On the other side, of course, we have reduced of about EUR 2 billion the increase that was present in the second quarter. So as you can see, there is a very volatile situation. Maybe going far forward, we can better understand the volumes, but we think it would be not so much different from this one. In terms of overlays, we are stable. We are exactly at the same level, around EUR 200 million. As far as the insurance is a very small impact, should be in the region of EUR 3 million for BPM Vita. Thank you. The next question is from Marco Nicolai of Jefferies. Please go ahead. Hi. Thanks for the presentation. I wanted to ask a question on default rates. So if I'm not wrong, it decreased again from the previous quarter. I wanted to know if you could explain, you know, somewhat the different picture that comes from some macro indications. For example, the Eurostat bankruptcy indicator, which is showing a worsening trend in terms of bankruptcies since already a couple of quarters, and the message that you and the other banks actually are giving in terms of default rates. So what could explain the difference, why default rates are still improving compared to a macro picture, which is worsening somewhat? Maybe we are learning from the past mistakes. It's just, you know, a guess, but I think that, as I tried to explain many times, we have now a completely different set of control in place for all the life along of our credit portfolio. So we have monitoring, detection, anticipation of potential default trigger, and so on. So what I feel is, normally the banking system catch inflows, normally some months later than the real deterioration of the economy. But having said that, I think that in this case, after 10 years of continuous of continuous practice on reducing, tackling since the beginning, the credits portfolio management, we have been able to improve our performance and possibly to intervene early, rather than wait for deterioration. The next question is from Hugo Cruz of KBW. Please go ahead. Mr. Cruz, your line is open. Please go ahead. Hi. Sorry, sorry, I was on mute. A couple of questions. One, on replicating portfolios, if you could give us a bit of more clarity, what you can do there. Would it be increasing hedges, or, you know, is there room, for example, to increase the size of your Govis portfolio, given that it's quite a decent shape of the yield curve there? And second, if you could clarify on the regulatory headwinds, if you could give us a bit more, you know, timing or the size of the potential impacts over the next couple of years, it'll be great. Thank you. Yes, this is Edoardo Ginevra. Replicating Portfolio. So the starting point is our deposit base of around EUR 100 billion. The stable component of the deposit base is some 55% of this number, so in the area of EUR 55 billion. The current size of the replicating portfolio is around EUR 15 billion. So theoretically, we can fill the full gap between 15 and 55. More realistically, we have room to increase quite significantly, almost double the 15 billion, bearing in mind all the various constraints, regulatory, especially in terms of supervisory outflow test. This is a tool we didn't want to use to invest too much in the current rate environment because of the negative curve, the negative slope of the curve, because of the expectation of stable interest rates. We are in a sort of vigilant position to be able to exploit the inversion in the curve, a more regular curve, or expectations of nearer changes in rate scenario in order to produce an effort in this direction. Good point, you said in terms of balancing this strategy, also using fixed rate Govis or securities; this is an alternative we can consider. As you have seen, we didn't increase significantly the balance in the Govis portfolio. We have room there to invest a little bit. On the question of headwinds, we are in discussions with ECB, as also the CEO said; we are waiting for a decision from them, which is expected to come around year-end. But we are confident that this impact is absorbed in the numbers that we've shown, or put it more precisely, more or less comparable to what we have in the pro forma impact of the positive impact of the Danish. Thank you very much. For any further questions, please press star and 1 on your telephone. Mr. Castagna, there's a follow-up from Andrea Lisi of Equita. Please go ahead. Yeah, just about the potential impact of regulatory headwinds on capital. Just to understand if you have room to optimize your risk-weighted asset in order to offset this. Just this. Thank you. Well, we have room in managing our capital structure, of course, which we have done up to now. We have built up quite consistent Common Equity Tier 1, which will be abundant to accommodate any potential headwind from ECB. We are still, as I mentioned before, we are increasing also our securitization program, which of course is costly in terms of commission, but is very effective in terms of building up capital. So we are, of course, we have also, of course, some, because as you know, when there is an inspection on model, this last for months, sometimes years, and of course, in the meantime, we are able to adjust to the indication of ECB, also their request. So that's why we cannot say that we expect such a consistent figure coming out from the model. Many thanks. The next question is from Pamela Zuluaga of Morgan Stanley. Please go ahead. Hello, good afternoon. Thank you very much. Just to follow up on the deposit betas over all your NII guidance, you were mentioning that you might increase your appetite for deposit volumes, which could result in higher deposit yield offerings. So could you give us an idea on how much could we see deposit betas growing under this type of scenario? And then another follow-up: how do you see that second issues of BTP Valore impacting the main revenue lines in Q4, if we take into account that the October issuance raised almost EUR 17 billion? Thank you. Oh, sorry, I cannot really be more precise on beta. We are, we are only saying that, we think we have room to foster some increase in volumes because we see that the beta is quite consistently in the region of 20 basis points as, or as far as the commercial activity is concerned, 30, if you consider derivatives. So, I don't know. There is room to go up to 40, if we would like to give a push to our deposit volume, which again, is still something that is good, because in turn, when the interest rate will go down, likewise, the BTP would be ammunition to convert into asset under management. So for us, the growth in volume of deposit, direct or indirect, is very important. That's why we are happy we've grown EUR 6 billion this year. We think that in 2023, we have been very good at maintaining a solid base of deposit without utilizing interest rate or basically time deposit. You take also in account that we have Webank, which was one of the first digital bank, which is very good at using interest rate in order to increase the deposit size. And so we will opportunistically exploit also this opportunity, basically sacrificing some few points in terms of price to get possibly more volume. But this is just a I would say a tactical strategy. It's not something that is going to change the balance sheet, the P&L of the bank. BTP Valore, I don't think will have any impact in Q4 because I don't think there is an issue in Q4, no? I think in October, I already said. Yeah, there were 11 in October, yeah. Ended in the sixth of October. It's EUR 1.2 billion, but they are not going to impact on the capability of the bank to place investment product in the region of possibly even more than 4 billion, starting from the 1.4 billion of October. But, I mean, if the question is on the P&L of Q4, you have on one side, the positive commission, which is a one-off of 50 basis points, and on the other hand, you have the cost, the opportunity cost for deposit that transformed into assets under custody, which given that this happens only for two and a half months, is more or less, it's difficult to match the 50 basis points of the one-off. Thank you very much. Mr. Castagna, there are no more questions at this time. Thank you. So let me thank you all the people linked to our presentation, and this time, I'll hear... The new meeting will be in only one month time, so I hope to have you, all of you again in December for the business plan presentation. Thank you very much. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.