Good afternoon, this is the Chorus Call conference operator. Welcome, and thank you for joining the Banco BPM First Half 2024 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, IR Manager of Banco BPM. Please go ahead, sir. Good evening, everyone, and thank you for attending the conference call. As usual, let me remind that the Q&A session is just for financial analysts, and possibly with a limit of three questions each. I will now leave the floor over to our CEO, Mr. Giuseppe Castagna. Thank you. Hello, everybody. Good evening. Thanks for being with us till at this time of the day after many presentation that you had to listen this today. I hope this will be a time spent in a good manner. Let's say very happy to present our H1 2024 results. A very solid set of results, leading to a double guidance upgrade, both in terms of EPS and interim dividend update. This is thanks to both an adjusted net income growing to EUR 776 interim dividend update. This is thanks to both an adjusted net income growing to EUR 776 million, 19% year-on-year growth, above the strategic plan trajectory, and as well, a very promising common equity tier one growth at 15.2%, the highest level since the merger, and well ahead of the strategic plan landing point. The guidance has been updated from EUR 0.90 to EUR 0.95 EPS, which means considering the EUR 0.83 of 2023, a total increase of 14%, 2024 and 2023. As far as the interim dividend, 2024 interim dividend, is concerned, we feel that today we can update the dividend. The interim dividend will decide in the board of November to be upgraded to EUR 600 million versus EUR 550 million, which is 9% plus more of the original plan forecast. This is together with a lot of other effective managerial action, which support a positive outlook in terms of profitability with, let's mention a reduction in the interest rate sensitivity, down from EUR 250 million to EUR 200 million. Let me also remind that we still have to experience the income coming from the new product factories set up, which will be progressive deployed with the full steam in 2026. On page seven, let's have a look at some of these promising figure. In many aspects, I would say profit and loss, total deposit, and asset quality. As far as, profit and loss, we have core revenues growing, 8.3% year-on-year to EUR 2.83 billion in H1. A high level of franchise value with the growth of total deposit, direct and indirect of EUR 7.7 billion in six months, with a big contribution of, coming from the investment product placement, 31% higher than, the first half of 2023. Supported also by even better asset quality, which is now down to 1.6% in terms of net NPE ratio, with an annualized cost of risk of 38 basis points, with a reduction in the first six months of the year of another 10% vis-à-vis last year. We already mentioned Common Equity Tier 1. Let's say that of course, we have also a very good increase in MDA buffer, which now is above 600 basis points, 100 basis points better than six months ago. On page eight, some other main figure. Total revenues grew 8.4%. You can see the progression starting from 2021 to 2024, and comparing the 2024 first half results with the average of the first half of our business plan of 2026. As you can see, the figure of 2024 are already higher than the results of 2026, expected in the 2026. The same is for pre-provision income. We are up eleven point eight percent year-on-year to EUR 1,456 million, vis-à-vis EUR 1,375 million of 2026.... Cost income is down to 48%, from 49% last year, with a target in 2026 below 50%. The same, I would say also for cost of risk, we are down 25%, in one year, and we have 38 basis point of annualized cost of risk, vis-à-vis 45 basis point of the financial targets for 2026. Asset quality. We already said, non-performing, the net NPE ratio. Let's have a look to the main figure. We reduced the year-on-year 20%, the stock of NPEs, EUR 400 million in first half 2024, leaving landing on below 3.4%- 3.4 billion, which means 3.2% of NPE gross ratio. Let's say that, as you know, we have started the plan for disposing EUR 700 million, which we already realized that in first half of 2024, for a global amount of EUR 250 million. We now—we can confirm that we will realize the full EUR 450 million by the end of the year, and this should lead to a total NP ratio below 3%. Let me remember that the target of the plan is below 3.5, 3%, with EUR 3.5 billion. Well, on track also in terms of funding capacity, the positive rating momentum, which started in November last year, is still continuing with improving rating from the rating agency. This allowed us, in the first half of the year, basically to complete 2/3 of the entire year emission, which we realized also at a much better spread vis-à-vis the last issuance before the rating upgrade. Just to make some figure, we have issued green senior non-preferred to 235 basis points of spread, compared to 280 basis points. T2, 245 basis points vis-à-vis 340 of the last emission, and AT1 at 455 basis points, compared with 670 basis points. And this, of course, will lead to a much better results also in terms of NII going forward. Let's go on page 12 to the main figure of the net income. As I mentioned before, year-on-year, 20% of the stated net income and 19% in net income adjusted, with a positive figure, basically in all the main drivers. Net interest income, +11%. Net fees and commission, plus 5.5%—4.5%. Core revenues, I said, already say 8.3%, as well as total revenues. Pre-provision income, up 12%, with a reduction of 25% in terms of loan loss provision, which lead to a profit pre-tax of EUR 124 million, which is 22% higher than the 2023 results. On the right side of the page, you can see the progression of the last two year, in which is evident the higher contribution coming from the managerial action of these couple of last year. Core revenues up in two years, 37%. Profit before tax, up 90%. Net income, up 114%. NII is very resilient, thanks also to the sensitivity reduced to EUR 200 million. This is still to make the most effective benefit going forward. Meanwhile, the interest rates will go down. We have already started to work on that in order to take the most of the advantage when the interest rate will begin to go down. As I mentioned before, we are 11% higher than last year. Basically, the Q2 was almost the same of Q1, 0.7% less than Q1, with the evolution of commercial spreads, which give a stable asset spread to 1.54 basis points and a reduction of the liability spread, 5 basis points less than the reduction of the Euribor. Why that? Because we again started many maneuver, which will help us in a lower environment rates. Just to mention some of them, as you know, we have started to increase the size of our replicating portfolio. We started from EUR 50 billion, the target was 25. We have reached EUR 20 billion, with an average yield of 2%, so very interesting fixed income yield, and a duration of only 2.4 years. On top of that, we increased the share of index current account from 24% to 32%, which of course, doesn't give us immediately an advantage in terms of NII, but thanks to a beta higher than 70%, will give us an immediate relief, when interest rate will go down. As I mentioned before, also the improved credit ratings is giving us benefit vis-à-vis the business plan figure. We have a reduction, which now will grow to almost EUR 100 million in terms of, a lower, cost of funding for only new bonds emission, in 2026. And this, together with the other maneuver, allowed us not to, increase the recourse to time deposit at a, higher interest rate, which we forecasted in our business plan, to reach EUR 4.5 billion in 2024, and EUR 9 billion by 2026. As a matter of fact, we have only issued, more or less EUR 400 million per quarter this year, and the total of, time deposit is EUR 1.1 billion. Let me remember that every billion of lower, issuing of time deposit, meaning- means a savings of, EUR 50 million per year. Customer financial asset. The bank was able to attract customer financial assets in all the categories, both direct and indirect, deposit. Core deposit grew to above EUR 100 billion to EUR 101 billion. Let me remember that the target for 2026 is EUR 100 billion, so we're already above. And also we grew in terms of Assets Under Management, EUR 2.1 billion, and in Assets Under Custody, almost EUR 3 billion. Let me also say that this capability to attract deposit, direct deposit, at a very good rates, enabled us to terminate all the customer deposit, institutional customer deposit agreement, which we had in place, starting from the negative rates times. With July, we have reimbursed the last EUR 2 billion of Euribor plus deposit from institution. Now we are coming to get advantage also from this switch from higher to lower spread, deposit. In terms of loans, we have had a reduction of EUR 1 billion, end of June 2024. Let me remember that in June, we have the last, together with December, we experienced the vast majority of reduction in medium long-term maturities. In June, we had EUR 2.4 billion of MLT expiring loans. And I have to say that, starting from May, but especially in July, we are recovering a lot in new lending activity, which already grew more than 10% Q2 and Q1, and in July, had a record of EUR 2.6 billion of new loan granting. Net fees and commissions. On page 15, we have a 4.5% increase year-on-year, which, if we have to give you an effective pace of the commercial activity, is almost 7.6%, if you exclude the fees on current account, which we reduced starting from Q2 2023, which in Q1 2023 were EUR 50 million of higher fees that we cashed in. Together also with the cost of synthetic securitization, which instead are still, of course, part of our net commission, but again, is not a measure of our commercial capability. In terms of investment products, the most of the increase comes from the upfront fees, thanks to the 30% increase in investment product sales. And so we had an increase in upfront fees of 23%, which, a lower pace of increase in running fees of below 1%, but thanks to the attraction of assets under management and assets under custody, which we experience, should give higher results in the forthcoming quarters. Other fees, 2.4%, again, which is equal to 7.4% with the neutralization I was speaking before. Let's say that the best results are coming from specialized activities, likewise corporate investment banking, structured finance, and trade finance. Meanwhile, as I mentioned at the beginning of the presentation, the main sources of revenues from the new product factories are yet to materialize. Cost income down, page 16, is down to 48%. Notwithstanding, of course, the impact of the new labor contract, which account for almost EUR 53 million higher than last year. But thanks to the increase of revenues, of course, the cost income ratios is down from 49% to 48%. If we compare quarter-on-quarter, you can see that both staff cost and other administrative expenses remain basically at the same level. Page 17, some further detail on cost of risk and asset quality. Cost of risk down to 38 basis points compared to 48 last year in fourth quarter in first half of last year. Stage 2 loans at EUR 11.3 billion versus EUR 12.2 billion, full year 2023. Gross NPE, again, down to EUR 3.4 billion, and I mentioned before, below 1 billion -1.6 billion as net NPEs. Very good also, the migration rates, which are still under control, both in terms of default rate, which is still below 1%, and if we consider also the cure rate, the net default rate is below 0.9%. Good news also from the increase of coverage. We increased the bad loan coverage 20 basis points year-to-date, 80 basis points, the UTP coverage, as well as 80 basis points, also the total NPE coverage. Let me remind that in terms of bad loan coverage, if we exclude the loans with state guarantees, which are very well collateralized, and as you know, are guaranteed for more than 80% by the state, the coverage of the loans without excluding the one with state guarantees is increased up to 72%. Let me say that also the vintage of NPE has been reduced from 3.6 to 3.4 years. Let me give the word to Mr. Ginevra for the financial and capital view. Thank you. So on page 18, you see that the trend of our portfolio, the securities portfolio, is increasing to billion in the quarter. Mainly related to the fact that we increased the size to anticipate future maturities during the second half and exploit the opportunities provided by the favorable interest rate scenario in the second quarter, anticipating some of the advantages of the plan. Maturities that we are anticipating for the second half of the year are around EUR 2 billion. Half of them is Italian bonds. This explains also the slight increase in the share of Italian government bonds, which is now up to 39.8%, well below the threshold of 50%, which is our strategic plan maximum level, and will further decrease in the second part of the year. Share of Italian bonds on the total is mostly concentrated in amortized cost. Only 20.8% of Italian bonds are in fair value of comprehensive income. Page 19, talking about the fair value of the comprehensive income, you see that the evolution of reserves and the contribution to capital is stable during the first half of the year, starting from EUR 488, and is now at EUR 492, and by the way, has been improving in the recent weeks following the reduction in the overall level of rates. Worth mentioning is that we have increased the part of the portfolio invested in fixed rate, so that the BPV is now at EUR 1.6 million, was EUR 1 million 3 months ago. But most of these BPV is related to non-Italian government bonds. The contribution of Italian government bonds to the BPV is only EUR 0.2 million, as at the date of thirteenth of June. Trading income contribution is stable year on year, so EUR 42 million, the same level we had, one year ago, with negative contribution from certificate, stable quarter on quarter at EUR 75 million. Positive contribution from the remaining trading components, other than NFR, was very high, the spike of 84, in the quarter, now is positive at 25. Reduction is due to the negative contribution of fair value of the option-based strategies that we have commented in the slide on NII. Worth mentioning that these strategies are maturing, expiring in the second half of the year, and especially in the current rate environment, we expect them to contribute positively to trading income in the second part of the year. Liquidity, page 20. Cash position of the group is still very high, EUR 45.1 billion, so well above, for example, the level we had at the beginning of the year. We have, during the last quarter, optimized the composition of our liquidity with eligible assets going down from EUR 33 billion to EUR 29 billion. Still, LCR remains at a very comfortable level of 140%, and NSFR at 127%. Worth mentioning on the funding side, the direct funding continues to increase also in the second quarter, so we started the year at EUR 126 billion. We are now almost at EUR 130 billion, thanks to the issuance that we did in 2024, almost EUR 3 billion, with a well-diversified seniority profile, including also EUR 700 million of structured bonds. T2 three is constant as EUR 5.7 billion. The expiration dates are September for EUR 4 billion and December the remaining EUR 1.7 billion. Net ECB position is still comfortably positive at EUR 4.5 billion, and MREL is at 9.4 percentage points above the requirement that we've been given by SRB. ESG strategy, in turning to page 21, we have formalized the targets of Net-Zero Banking Alliance for our five priority sectors that are automotive, cement, coal, oil and gas, and power generation. These sectors represent 75% of the total financed emissions within the 11 sectors that are under the domain of Net-Zero Banking Alliance. For us, the total exposure to these priority sectors is slightly above EUR 3 billion. Lending and risk management, we have introduced a new target, low-carbon new medium and long-term financing, which is connected to the adoption that I mentioned of the new targets for Net-Zero Banking Alliance. For this specific indicator, we have a total target for 2024 at EUR 5 billion. At the same time, we have introduced a new rating, climate rating, that we are using for risk assessment. Organizationally, we have reinforced our organization supporting the activities in transition and sustainability, creating a dedicated unit with one department, one function active for defining and fine-tuning our strategy in ESG. In the second department, to liaise with the business, supporting directly our business activities. From the people perspective, we have improved the gender diversification, with an increase in the number of women in managerial position of 12% versus the level in June last year. On the financial side, on the finance side, funding, as far as funding is concerned, we have issued EUR 750 million of Green Senior Non-Preferred Bond in this half of the year, in the first half of the year. And we have released in July the impact report of the green social and sustainability report bonds framework for 2024. On the asset side, we have increased the share of ESG non-government bonds to 32%. This share was 24% at the end of 2022. The total amount, the absolute amount, has doubled in the last 18 months. Capital, we have continued in our trajectory of improving and increasing, reinforcing the capital position, with a total increase in CET1 ratio of more than 100 basis points, 101 basis points in the first half of the year, and of which 43 basis points achieved in the second quarter. Sixty-seven basis points are related to the performance. 48 basis points is the capital dedicated to dividends and 81 coupons. Limited amount of impact from fair value of comprehensive income reserves and the ordinary organic growth in RWA. Positive impact from new regulatory models that are specifically related to the introduction of these models in a structured finance, especially for the use of slotting criteria. MDA buffer, which was 508 basis points, like for like, at the beginning of the year, is now 609 basis points. Finally, Tier 1 and Tier total respectively are at 17.4% and 20.92%, RWA slightly above EUR 62 billion. Now again, let me turn to Giuseppe for the final part of the presentation. Thank you, Edoardo. So I think that, the results were presented both in terms of, profit and loss and capital, give us, give us the confidence to increase, our guidance for 2024. As I mentioned before, we think all the main drivers, bettered after, Q2. Of course, they were already very good in Q1, but we wanted to wait a confirmation in the second quarter. Now we can see that vis-à-vis last year, we will have better results, in, terms of net interest income, in fee and commission, a cost income lower than last year. A cost of risk, which is, up to now 10 basis points better than last year, and, as you have seen, a very strong Common Equity Tier 1, with, capital generation in six months. If you consider also what we have put aside for the dividends of almost 200 basis points. This allow us to increase to EUR 0.95 from EUR 0.90 our guidance. Let me remind that we were one of the few banks, or maybe the only bank, to increase it in 2024 at the beginning, the guidance vis-à-vis 2023. So if you consider all of both the increase, we are now up 14% versus earnings per share of 2023. Which still is very frustrating, because I see that with the current price earnings, we are below 6x, but hopefully better times will come with a better consideration of our stock. Let me also mention some figure in terms of ROTE. We are. We were at 13% with the 90 cents of EPS. We are now almost 14% with the new guidance. And if we consider common equity one at a normalized 13%, the return on tangible equity will be almost 16%. All of these, again, basically overcoming the results of 2026, we know very well that there would be some switch from interest rate to commission, and this is yet to prove. We are very confident. We think that having almost closed the gap between 2023 and 2026 gives us a lot of confidence in confirming to make a net profit in 2026 over EUR 1.5 billion, and confident that this will be a sustainable long-term profitability outlook, starting since, I would say, the current year. Let me also say something in terms of the total shareholder remuneration. In this, we have also the support of this increase in Common Equity Tier 1. So we think that we can increase the interim guidance from EUR 550 million to EUR 600 million. Of course, this will be approved in November by the board of directors. This guidance update is calculated as 50% of the total remuneration expected for full year 2024. At this, with this dividend, the annualized expected dividend yield stands at 14%. If you include the dividend paid in April of EUR 850 million vis-à-vis the forecast of EUR 750 million, we are now EUR 100 million above the planned trajectory. What we can say is that the total shareholder remuneration that we promised of EUR 5.4 billion for the period 2023 to 2026 is ahead of the plan for EUR 100 million, leaving the possibility to exceed our EUR 4 billion strategic plan target. Now, I give you back the floor in order to start the Q&A session. Thank you very much. Thank you. This is the 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 touchtone 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 Giovanni Razzoli, Deutsche Bank. Please go ahead. Good afternoon to everybody. Three questions, very quick. The first one, if you can please elaborate again on the 30 basis points of positive regulatory impact that you have recorded in this quarter. I think I've missed your comments, which were referring to some new models applied on some areas. And connected with that, if you can also provide an indication on the impact from Basel IV in 2025. My perception is that you've been extremely prudent so far with the regulatory wins. So if you can also share with us the year's data. And the last question is: what is the contribution in terms of yield of the replicating portfolio, which has been increased in terms of size in this quarter? Thank you. Okay. So, first question. On the 30 basis points of regulatory impact, this is the effect or the fact that we adopted new models for the structured finance part of our portfolio, which has impacted both on RWA and on shortfall, leading to an improvement in our capital position for a total of 30 basis points. Basel IV in 2024, what I would confirm is that we expect a phased-in impact in the order of magnitude of around 70-80 basis points. While in terms of the total impact, we prefer to be very prudent, I mean, given also that we have a significant capital buffer, we are working now on some optimizations. But for the time being, what we can say is that we confirm the overall fully phased-in impact, throughout the plan horizon of regulatory components of 130 basis points. One point which I believe at this stage could be worth mentioning, is that, throughout the, the plan horizon, we have also plenty of, capital that can be, either during the plan horizon or later on, that can be, can be deployed, coming from either DTAs or from, fair value of comprehensive income, Reserves that through pull to par will progressively transform themselves into capital. Contribution- Sorry, if I may, out of the 130 basis points, how much is the operational risk component, if it's significant? Yes, it is significant. It is in the area of 20 basis points -30. Thank you. The next question is from Domenico Santoro, HSBC. Please go ahead. Hi, good afternoon. Also, a couple of questions from my side. When I go back to your page six, about the change in the NII sensitivity, the way this is written is that affects not only the NII, but also the cost of certificates. So given that, you're reducing here the sensitivity, I wonder how we play out on trading profit going forward, if we should still expect that line to be in red by more than EUR 100 million, which was, if I remember correctly, the guidance in the plan. You mentioned also some positive from the unwind of the hedge on the certificates in the second part of the year. So, if you could also quantify if we have already an idea, because I guess also this might be one of the reasons to upgrade the guidance. Then a curiosity from the about the upgrade of the company. Where does it come from? More from NII fees, or you basically are probably more positive on the credit quality. And about the one-off that you're gonna charge in the second part of the year related to the personnel layoff. I was just wondering whether you can give us an update on the number in absolute terms. Thank you. Okay. So on NII sensitivity, yes, you... It's correct. We have included in our sensitivity, as we have done in the last quarters, also the positive contribution, the mitigating contribution from certificates that are representing sort of cost of funding included in the trading income. We confirm the guidance for the trading income on a full year basis of around EUR 100 million, which is the result of the current 75 per quarter from certificates. We expect these to decline progressively in line with the trend in market interest rates. The remaining component from trading may provide additional positive contribution according to the evolution of rates. For, if I understood correctly, the third question on personnel... No, maybe, Giuseppe, you want to- Okay. Yes, layoff, I mean, you are meaning personnel reduction. We have- Yes S till our program to reduce of totally the 800 people in and out, so reducing 1,600 people, either with early retirement or with pre-pension scheme, which we already started. We had more than 500 people accepting to retire before the maturity. We are still in negotiation with the unions in order to define properly how many of the remaining 1,100 will go out, in which of the two scheme I mentioned before, and of course, how many people will come in. All in all, will be again 800 people, and the number that we mentioned in Q1 are already, are always valid. The only thing is that having increased the number of people accepting to retire before time, this of course reduce the cost of the early retirement scheme. So all in all, we will have a better stated results vis-à-vis our initial guidance. I am not sure that I understood the question about credit quality. When you say maybe positive in terms of, No, the question was more the change in the guidance. Where does it come from? Yeah. Better optimism, you know, more optimism about NII fees or maybe credit quality. And if you could just quantify, I know that probably it's too soon, how much it could be the one-off, if I understood correctly, on trading from hedging strategy expiring of the certificates in the second part of the year? It depends on how... I can give you some more detail, but of course, we don't have the precise figure for the guidance in every aspect. All in all, we think that we can matter of EUR 0.05, the total revenues, the total profitability, coming from the many things I mentioned before. We will have better revenues, a better cost income ratio, a reduction in cost of risk, and all in all, this is not basically so much different from what you experienced in Q1. But of course, after seven months, we are much confident that we can reach better results in terms of EPS split amongst all the main drivers that I mentioned before. On the- Replicating portfolio? Yeah, on replicating portfolio, we didn't answer. Sorry, Mr. Razzoli, to your second question. So the contribution on replicating portfolio only, for the deposit part of the replicating portfolio is around EUR 90 million negative to NII in the quarter. The next question is from Ignacio Ulargui, BNP Paribas Exane. Please go ahead. Thank you very much for the presentation and for taking my questions. I have two, if I may. I mean, the first one is a bit on getting your thoughts on: How do you see lending growth evolving? You have made a comment about new lending accelerating, so I just wanted to get a bit of a sense of how do you see lending growth evolving from here. And also, I just wanted to understand a bit better, how should we think about organic capital generation going forward, in the light of, a very solid capital print? How do you see your, your capital evolving from here? Thank you. Thank you, Ignacio. Lending growth, as we expected, basically, at beginning of the year, a very cautious first four months of the year, with more or less below EUR 6 billion in four months of new lending growth. And then in the last three months, May, June and July, we exceeded EUR 6.5 billion of new lending, so an increase of 15%-20%. This, of course, will bring to some update of our new lending for the end of the year. I cannot already say that this pace that we are experiencing in July will go forward the same pace, but for sure- Fifty million The potential, Negative in the quarter. Sorry. Sorry. The potential reduction also interest rate, which we are talking a lot during these days, if this will be confirmed in September, we expect some increase in, new lending growth. Organic generation, I think you are talking about capital. As I mentioned before, we are experiencing a very good pace, of growth in, Common Equity Tier 1, 100 basis point or 200 basis point, if you consider the dividend and, the AT1, payment. The only, question mark, of course, is the Basel III. We will see beginning of next year, how much will be the impact. As you know, is also a phase-in impact. Edoardo was already talking about our forecast of 130 basis point, of course, which will not deploy all in one, but will be gradually deployed over the next year. So we still think that notwithstanding that, we can have a very good capital generation, very much above the 2026 target. We think we can be in the region. The next question is from Hugo Cruz, KBW. Please go ahead. Hi, thank you for the time. I have really just one question: the new interim and what that means for the full year. Can you clarify what is the total payout that you assume for the full year? Yes. The payout is always 67%, as we mentioned during our business plan presentation, in which we changed our guidance for dividends distribution. That's mean that we think we can go in the region of EUR 1.8 billion. Of course, this means also that in any case, we have enough capital to comply. If I don't know, what we were talking before about layoff, or other issue will arise, we feel comfortable in the possibility to distribute EUR 1.2 billion for 2024. Okay. And those 67 is on reported earnings, right? Yes. Not, not- Yes. Yes, on reported earnings, but I believe that the key guidance we wanted to convey is EUR 600 million, which is 50% of the total expected distribution for the full year. Yeah, very, very helpful. Thank you. Yeah. The next question is from Andrea Lisi, Equita. Please go ahead. Hi, good evening. Thank you for taking my questions. The first one is on the product factories, in particular on the insurance business. We have seen an income from insurance business of EUR 5 million in the first quarter, EUR 10 million in the second quarter, but my feeling is that you are still below your expectation. So just wondering to understand how is going on with integration of the product factory, and when should we expect to be at a run rate at which is a level of or a rate that should we expect from the insurance business? The second is if you can repeat your guidance for trading for the year. That was not so too clear to me. And the other is indication on if you can provide us more color on the Stage 2, that, if I'm not wrong, increased by kind of EUR 1 billion quarter on quarter. Just to understand the reason why and what do you expect here? Thank you. Okay, thank you very much. Product factory, as I mentioned also in Q1 result, we have not yet the possibility to integrate. Because as I mentioned before, we have the Vera Vita activity, which is still run by Generali. This will require still another possibly 12 months from their side in order to complete the IT migration. So we are in a situation in which we cannot substitute with new products our commercial activity in life insurance. We have, of course, BPM Vita products, which we are deploying, but yet in terms of Vera Vita, we cannot do that much. Luckily enough, in September, we will have a new product from Generali, which is, of course, what we requested. This will help us to offset the potential reduction in terms of early retirement from the product requested by our client. And this will adjust immediately what is the last component affecting negatively the value with IFRS 17, the value of our participation in the insurance company. So basically, it's not a question of integrating or not, it's a question how quick we will be to produce new results with new product offsetting product that are redeemed by our client. We have no problem in that. We are doing very well with the other insurance, but we need products, and we are confident that starting from September, we will be able to compensate the very slow pace of this first quarter. In a sense, of course, we are also happy that this is not yet on board, because this give us the possibility to compensate with the new commission and new stakeholding value the potential reduction in AI in the forthcoming quarter. On NFR, sorry, maybe it was not very clear. We said around EUR 100 million as a conservative guidance for 2020, for negative, of course. So, with the negative contribution, based on negative contribution from certificates, not in full offset by the other components. On stage three, please? Yeah, sorry. On stage two, yes, we have experienced an increase, which is based on the run of statistical models that capture a number of components that we conservatively include among stage two. But really, we don't believe this has to be interpreted as a signal of weakening of the credit portfolio, more as the outcome of statistical simulations that at the end of the day leave the overall coverage need on the credit port... performing portfolio fully unchanged. So it's a mix between stage one and stage two, but only at the margin with no material impact. Very clear. Thank you. The next question is from Pamela Zuluaga at Morgan Stanley. Please go ahead. Hello, good afternoon. Thank you very much. I have a follow-up question on your comments around the contribution improvements that you're expecting from the new product factories. I know you already talked about insurance, but I was wondering if you could also please give us some color around the contributions you're expecting from the payments business. How soon can we see those increased contributions flowing through the PNL? And the second one is in capital. You said that you're willing to explore the optionality of excess capital after you've booked Basel IV impacts. This quarter, you even presented a target for ROTE that is adjusted for the excess capital above a 13% target. So could we see that potential excess capital distribution as soon as next year? Is this what you're considering when you are saying that you will exceed the EUR 4 billion cumulative target? Thank you. Thank you, Pamela. Let me try to answer to your first question. Basically, as I mentioned before, we are having better contribution for the existing product factory. Specifically, a much better contribution from Anima, good contribution from BPM Vita and Agos Ducato. Unfortunately, not yet contribution from the PayCo, because you know that we will close the contract in the third quarter, so basically we didn't start yet. And as I mentioned before, of course, we don't have yet such a pace of growth in the income from the evaluation of our bank insurance product for the reason I explained before. We count to reach a comfortable EUR 80 million-EUR 90 million from bank insurance by the end of the year... Edoardo, maybe you want to expand on excess capital? Yes. So, I think we've been consistent after we published the plan, that we had a final trajectory arriving at 14%, but this doesn't have to be interpreted as a capital target for the group. We believe that this leads to excess capital, definitely, that we will later on, during the progress of the plan, decide how to use in the interest of our shareholders. So I would say here, from the perspective of shareholder remuneration, is only that we are confirming the strength of the group, the ability to even probably exceed this trajectory. We are ahead of the trajectory, as a matter of fact, in the first part of this year. In terms of distributing excess capital, the turning point will be the first impact, initial impact of Basel IV implementation, after a number of—how to call them? Optimization actions have been deployed, so that we'll be able to be more precise in measuring the potential outlook for capital and then decide how to move on. Perfect. Thank you very much. The next question is from Fabrizio Bernardi, Intermonte. Please go ahead. Hi, good evening. You answered my question about shareholders' remuneration and potential dividends versus buyback. So my question would be, would be, if you may use the buffer of capital that it is evident in the presentation today in order to make some, let's say, PNL kitchen dressing, like posting some one-off, some, let's say, PNL kitchen dressing, like posting some one-off charges by year-end in order to, let's say manage another part of your, let's say, NPEs, which are already low, or, let's say, one-off cost. The question would have been, why don't you do a buyback? Because this is the question that we will be made tomorrow, because you made a top up in terms of cash dividend for the interim payout. But I guess I know already the answer. But in any case, if you could elaborate more on the fact that your free capital is growing, and there is not just, but there is a cash dividend distribution instead of a buyback. Thank you, Mr. Bernardi. No, we never say that we don't want to make a share buyback. In order to make a buyback or to distribute dividends, we have, first of all, to make a very good profit and loss. Secondly, to have a good capital generation. We, I think we have proven also in this last quarter, that this space is growing at an expected pace, vis-à-vis the business plan we presented. Now, we have maybe the last step, which is, our capability to reduce the impact of Basel III. This will be one of the major headwind that we will have to face, and, after, we will decide what we can do in terms of distribution. Up to now, we have been happy to increase, quarter by quarter, basically, the guidance for earnings and guidance for increasing dividends. I don't see others that have done the same as we have as we did. And then, I think in the first part of 2025, we will give also a better understanding of our strategy in terms of shareholder remuneration. But what I think is undoubtedly, that we have a very good capital generation, very good result, so there is, of course, more money in order to make happy our shareholders. Thank you. The next question is from Adele Palama, UBS. Please go ahead. Yes. Hi. I have a couple of questions, please. One is on 2025. So if you can give us guidance on the evolution of the NII, that you're expecting, the fees and the cost of risk, and if you can give us also the assumption on rates that you are assuming. And then, I have another question on the fee print, on the running fees. I mean, the AUM has increased more than 1%, quarter-on-quarter, but the margin has compressed a little bit. So you have basically a lower running fees, quarter-on-quarter. Do you expect a better evolution from the margin going forward? Can you give us a guidance on that? And then the last one, sorry, the sensitivity on capital of, on the basis point, BTP change, BTP spread, change in spread. Sorry. Thanks. Okay, let me try to answer to the first question. Of course, we didn't give you any guidance for 2025. We just deployed our 2024 guidance. Maybe you are a bit too early to give you some assumption for 2025, other than what we said in the business plan, that we think we can reach. And this is even more confirmed, and we are committed to do that, to reach, as soon as possible, the target of EUR 1.5 billion. I think we are not that far away also for this year. And then, of course, considering that depending on the interest rate evolution, we will have a reduction of interest rate, but possibly an increase in commission, and the stabilization of cost of risk, we expect to be very close to our final target of 2026, also for 2025. But I, we don't have any assumption and any guidance to give you on the single driver. Yes, running fees, we expect that thanks to the increase of asset under management and asset under custody, the global volume will bring us some positive, also in terms of running fees and not only in upfront. But upfront was a very good opportunity to get, thanks from the request of investment sales product in the first quarter of this year. We did, you remember very well that, the run to start to fixed rate income because of potential reduction of Euribor, that eventually did not materialize in the first six months, but was the name of the game in the first quarter. So that's why we also had that performance in that period. Now, we'll see, after summer if this situation will be again possible. But for sure, now we have a pace of investment sales product that allow us to choose better the, you know, the perfect investment for our client, for our customer client. If I understood correctly, the final question, this is on the sensitivity of our capital, of our position, to an increase in spread, in spread on Italian government bonds. This sensitivity is in the area of 1 basis point of CET1 for each 5 basis points of increase in the spread, if this was the question. If I may add a comment, we may also on the previous questions on the scenario, for example, we are confident we can confirm our targets for the plan with the scenario of Euribor in 2026, in the area of 2.6. And this, with a trajectory that for 2025, with an encouraging trajectory for results in 2025 of Euribor at the, at the level of 2.7, if this 2.7-2.75, if, if this was a part of your question. Okay, thanks. The next question is from Delphine Lee, JP Morgan. Please go ahead. Good evening. Thanks for taking my questions. Just two quick ones. Just on the to clarify your on capital on your message on Basel IV. So your day one impact on first of January 2025 is 80 basis points, or is it 130 basis points? And then you have mitigation action, so the DTA, the OCI, et cetera, which, you know, basically will reduce that impact from 130 basis points towards 80 basis points, you know, further down the line. 80 basis points is the phase-in impact that we expect to have day one, in, after Basel IV implements. Okay. Okay, understood. And then, on my second question, which is going back to NII, sensitivity, do you mind just explaining, you know, the improvement to EUR 200 million? What are the underlying assumptions that you're using on deposits, pass-through? And, if I remember your full-year presentation for your 2023 presentation, I think the expectation is to reduce the sensitivity to rates and mitigate, to reduce that to only EUR 50 million - EUR 70 million. EUR 70 million. Just wondering, you know, what kind of pace- No, sorry, never say that EUR 50 million - EUR 70 million. EUR 70 million. I don't know. We always want to reduce sensitivity. But, and the contribution of sensitivity to your first quest- to your first part of the question on deposits, basically, this is based on the split between indexed and non-indexed. So the indexed deposits, as Giuseppe said during the presentation, have a sensitivity of around a beta, sorry, of around 70%. Non-indexed deposit have a single digit beta, around five percent. Given the shares of the two, the weighted average is around 25%, which is our pass-through assumption for the sensitivity, so I would say quite conservative. Great, thank you very much. And on the impact of your mitigation actions, I mean, how much should we expect in terms of, you know, how much, you know, it would reduce, I mean, improve NII in the next year or so? Yeah. You know, probably the most important point to mention is the expected increase in replicated portfolio, for which we confirmed the plan target of EUR 25 billion, even if this target we could been flexible in implementing the strategies throughout the plan horizon. This compared to the current level of EUR 20 billion is a contribution per se in reducing the sensitivity of around EUR 50 million. Great, thank you so much. Yep. The next question is from Noemi Peruch, Mediobanca. Please go ahead. Good evening. I have two systemic questions. The first one is on provision. So, if you could, Speak closer to the mic. We don't hear you. Is it better now? Yes. Yeah. All right. So if you could give us some color on the usage of EUR 70 million of overlays in the quarter. And the second one is: how much of a support could synthetic securitization be to common equity post-Basel? And how big could the benefit from the absorption tax loss, tax loss carry forward be by 2026? Thank you very much. Okay. On overlays. So, overlays is also consistent with the recent communications from ECB, are basically to be defined as all the adjustments that you apply to your statistical models that are plugged into the credit procedure, on top of them, to arrive to a level of expected loss on the performing portfolio, consistent with all the risk that insist on that portfolio. So the more the statistical models are accurate in terms of measuring these risk, the less you need to apply overlays. Overall, the coverage ratio of our performing portfolio is unchanged, if not slightly increased, in the quarter. The way we arrive to this final level of coverage ratio on the performing portfolio, up until the last quarter, until Q1, was relied more on overlays and less on the basic models, on the statistical models. Now we are switching towards a heavier and more accurate use of statistical models, and so we need less overlays, given the overall coverage of the performing portfolio, which has not been reduced over the quarter. The second question is, I mean, for synthetic securitization, we continue to produce overall periodic efforts for that, where we put in the market single portfolios. For example, in the second part of the year, we are almost ready to announce new securitization, which will provide us a relief well above 10 basis points. This is similar to what we expect to do also in the following years. Thank you. And on tax loss carry forward? Uh, sorry? On tax loss carry forward absorption by- On DTAs. On DTAs, first of all, all our DTAs are currently in the balance sheet, so we don't have P&L occurrences from write backs of DTAs. The DTAs may be impactful only from a capital perspective. So DTAs that we currently deduct from capital, over time, will start to be recovered. What I can comment is that based on our current position, the amount of capital which would be created if we avoid to deduct, to deduct DTAs, is around 250 basis points. This is an amount which will be progressively being be deployed, starting from, especially, mostly from 2026, and then progressively over the following years. Thank you. The next question is from Fabrizio Bernardi, Intermonte. Please go ahead. Sorry, a very, two quick questions. The first is, you presented the business plan, in December, half of December, and it seems that, now it's August, and you are already ahead of the, the targets at the end of the business plan. So apart from, adjusting today, the target for 2024, about EPS and DPS, I was wondering whether we may expect, sooner or later, to have a, an update, a full update, of the business plan? And then another small things about, the capital gain, regarding the digital payments, which I think, should be booked, in, in the third quarter, if I'm not mistaken. Should we expect this to go down to the bottom line in the full year? Or maybe that, maybe the usable part would be used in order to, let's say, make the next year easier, so in order to offset the cost or loss provision, or make securitization, whatever it is? Let's say that, of course, we are not ready to make an update of the business plan. As you know, there are still a lot of issues to overcome, both in terms of our operation, because we have to confirm with our work and with the next quarter, the capability to increase massively the weight of commission and stakeholdings revenues coming from our new joint venture and our new bancassurance business. Of course, going forward, we will be happy to update you, but of course, we don't have not even an update, then you ask also for a full update. That means that the business plan would not work at all. We still are confident, and we still are confident that the increase to EUR 1.5 billion can be appreciated and can be recognized by the market. And for the next quarter, we will be happy to have this as a target. For digital payment, yes, this should come in Q3. The only things that we will deduct, as we mentioned already with our business plan, is the potential maneuver for the layoff, so the early retirement scheme. And if the two of them will materialize in the same quarter, you will see a figure contributing to the net stated profit, which will be the results of EUR 500 million less the cost of the early retirement scheme. Excuse me, before the next question, I just want to come back, come back to the question asked by Mr. Phine from J.P. Morgan on NII sensitivity, because I didn't stress the point that we calculate our sensitivity based on a shock of 100 basis points. Maybe that, I mean, by means of comparison with what other banks disclose, the number that was mentioned was consistent more with the final ending point of a shock of 50 basis points, which is more or less half of the level we could arrive after implementing the EUR 25 billion replicating portfolio. It's just a guesstimate, but I wanted to put it on the table. On Mr. Bernardi's question, I may, if I may add, we would get welcome also an upgrade in the consensus, so. Okay. If there are no other question, I want to thank all of you for being with us in the sixth of August. Time to make a bit of holiday to... for everybody. So of course, we will be tomorrow at your disposal for any clarification, then our IR team will be always available. And hope to see all of you in September. Thank you very much. Ladies and gentlemen, thank you for joining. The conference is now over.