Afternoon and welcome to BFF Banking Group' s First Half 2025 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, and it takes two minutes. To withdraw your question, please press star, then two. Please note that the event is being recorded. I would like to turn the conference over to Massimiliano Belingheri, Group CEO, and Giuseppe Sica, Group CFO. Please go ahead. Thank you. Thank you, everybody, for joining us today for the reporting of our first half results. Let me, first of all, say that we don't have any direct updates on our discussion with the Bank of Italy, and we'll give an update as soon as we have discussed more information. Let's focus first on our financial and commercial performance. In the first half of the year, we continue improving our financial and commercial performance on the trajectory you set already in Q1. The net profit stands at EUR 75 million, up 6% year on year. Equally importantly, the second quarter profit is also up 6% sequentially and 37% year on year, a good trajectory for the business. Factoring & Lending continues also in positive path. The PBT of the division is up 21% year on year, and the loan booking volumes are the highest first half ever for the group, and I just mention this high from the record balance sheet of year-end. Not only reported the profitability is up, but importantly, the crucial one continues to be up. In fact, our off-balance sheet reserves have grown EUR 93 million year on year, faster than our loan book growth. We continue to deliver on growth while keeping a substantial liquidity. Our loan-to-deposit ratio stands at 77%, and the highly stable transaction services deposits also growing 31% year on year. The risk-to-spread environment continues to support the marching market of our head-to-collect portfolio. Now, deposit is marching market is close to EUR 50 million, an improvement of over EUR 100 million year on year, and this will also support our future profitability. Moving to capital, our CET1 ratio stands today at 14.3%. This is well above the level that we registered pre-credit recertification at the time the capital was 13.5%. We've generated over 200 basis points of capital in the first half of this year alone. We have EUR 114 million of excess capital versus the 12% CET1 targets, EUR 75 million of which are related to our first half adjusted net income. Furthermore, if you look at our SREP level, we have EUR 226 million of excess capital. It's a substantial buffer also towards us. As I've repeated in the past, our dividend policy remains unchanged until we are breaking the removal of the bans of Bank of Italy, as we mentioned before. Looking at past due, we are pleased on our progress on the past due to date. Our past due is slightly towards the government and public sectors, down 10% in the last six months. If we consider only the portfolio we had at year-end, that's a seen reduction of 40%. That gives a sense of how much we're actually reducing the portfolio. The growth of the portfolio of the past due has been driven instead by further purchases of debtors already in past due and a marginal increase in the past due portfolio. Also, what we call the contagion invoices, progress continues. We have downsold to 30% in a year and continue to take action to reduce this portfolio. A few points outside of our numbers. First of all, we have renewed our ICT contract with Nexi, which, as you know, underpins parts of our transactional services activities. This has been renewed until 2032, and it has given us some strategic flexibility into the intellectual property owner's interest on the infrastructure. Second, and importantly, we have obtained further European Court of Human Rights rulings on municipalities in conservatorship, which proves again that the State needs to pay those public exposures. In the meantime, we have filed appeals to the European Court of Human Rights for additional EUR 40 million of capital on municipalities in conservatorship. That's roughly 40% of our NPL portfolio, and another EUR 25 million on past due exposures. Third, finally received the regulatory authorization and the support of our partners. We have launched our deposit gathering starts on the list. This is another step in our funding diversification, and we'll launch a massive campaign in the last part of the year to increase that activity. Finally, you might have seen the logo we have. The presentation is celebrated on the 22nd of July, our 40th birthday. That's an important step in our history, and a history which has seen so many successes, and we wish all of us and all our shareholders many successes to come. If you look at page four on the balance sheet, I would highlight a few things. First of all, the loan book that stands at EUR 5.9 billion. As I said before, it's up 5% year on year. The loan book size is actually the main driver of our interest income together with over-recoveries of LTI. Our head-to-collect portfolio is down 7% year on year. We are managing it down, particularly on the fixed rate side. The market, as I mentioned, is now positive and is increased by EUR 134 million year on year. That means that our official profitability is better as the cost of carry becomes a positive carry over time on the fixed bond portfolio. And importantly, we continue to have a positive spread on our variable rate portfolio. On the liability side, as I mentioned before, transaction services deposits are up 31% year on year. Those are stable. They're driven mostly by the season of our clients on their asset allocation, but importantly, by the volumes of our activity with them. We have strong growth, for instance, in our depository bank activities at 20% year on year growth. Given that liquidity, we've actually reduced our deposits, which are down 39% year on year, and deposits and repos, which are down 13% year on year. Leverage remains strong at 6.1%. Our loan-to-deposit ratio is at 67%, which is an improvement over last year. It compares ample liquidity in the group. We talked already about our CET1 ratio. Again, our very high capital ratio is 14.3% CET1, and plenty of buffer versus our percentile risk in our SREP. If we move on the P&L of slide five, our adjusted net income is at EUR 75 million, up 6% year on year, and 7% versus the second quarter of 2024. Let me speak in more detail later about the drivers of our performance. It's important to stress that the profit before tax of our Factoring & Lending division is actually up a double digit, 31%+ year on year, which underpins the future growth of the business. Also, Securities Services is significantly up 43% year on year. Payments are only slightly down, but it's ahead of budget. We see plenty of opportunity to deliver further growth and profitability in that business. With that, I leave now the floor to Giuseppe to walk you through the details of the numbers. Thank you. Thank you, Max. Let me give you some more details on our Factoring & Lending business on slide six. Gross yield has been not fully resilient. Spread versus ECB rate has, in fact, improved. Let me remind you, ECB rate is the key driver of our cost of funding. So MRO rate is down 135 basis points versus gross yield down [784 basis points. Spread resilience explains, together with volume that we'll talk about in a moment, the 21% increase in the ECB of the division. Reschedulings are normalizing and improving quarter on quarter. EUR 6.2 million in the second quarter versus EUR 12.7 million in the first. Other income is merely driven by continued collection of recoveries. Looking at the past, but also at the future, profit has been reduced. Our off-balance sheet funds have increased EUR 94 million in 12 months. Moving to the commercial performance of the business on slide seven, loan books stand at EUR 5.9 billion, the best first half for loans and the key driver of net interest margin. Our loan book in value continues to grow and is up 5% compared to last year. Spain, on the other hand, is down. It is lost in lower volumes after planned recovery at the end of last year. France's loan book continues to grow. Reflecting on commercial performance, volumes are up 10% year on year at EUR 4.2 billion. Volumes in Italy are up 17% year on year and up 41% in foreign, all being with a dip from recent weeks. Portugal, which was down 6% in the first quarter, is up 9% year on year. Finally, France, even before the future opening branch in the country, and only 12 months after the launch of the business, is already at the same level of growth, which it is growing. Let me move now to slide eight on Payments. Both revenues and number of transactions are up 1% year on year, proving the resilience of the business. The division provides EUR 2.8 billion of deposits to BFF, which are also up 2% year on year. Continuing to invest in the business, we have extended our ICT contract with Nexi to 2032. We have signed an agreement with Nexi and different board lines for domestic intermediation, with intellectual property ownership for critical IT applications remaining with us. We have become an exclusive provider of domestic settlement tax service for different board lines. Next slide on Securities Services. As Max said, the division has recorded very strong performance during the year. Assets under deposits are up 20% compared to one year ago. That means we put the business payer back to payer for level. We continue to be a provider of choice of several alternatives, specialized funds, and pension funds. Savings as a consequence are up 15% versus one year ago. Liquidity provided by the division has now reached EUR 4.4 billion, which is up 62% year on year, allowing an efficient management of our liquidity profile, for instance, as Max said, by reducing our online deposits. Slide 10 on group costs. We maintain our cost discipline while investing in growth. In fact, OpEx and D&A are up 4% year on year, with lower personnel costs and higher D&A, mainly due to meaningful IT expenses. At the divisional level, Securities Services OpEx and D&A are up 6% year on year in relation to the ICT system upgrade. Factoring & Lending at EUR 24.3 million, up 3% year on year. For Payments, OpEx and D&A are only slightly up year on year. As in the first quarter, any variable remuneration for the year would only be assigned after the removal of Bank of Italy funds. Now, let us move to our balance sheet and its strong profile on slide 11. We are pleased with the composition of our balance sheet and continue to work on marginal improvements. The loan-to-deposit ratio remains very strong at 67%, showing ample liquidity and is further reduced compared to one year ago, when it was 69%. The NSFR is 143% compared to 134% one year ago. LCR is also up from 209% one year ago to 249%. In essence, we see liquidity profits remain abundant and diversified. We continue to diversify with the launch of our deposit platform in Greece. Moving to the asset side, our HTC portfolio continues to be managed down and is down almost 10% year on year. Importantly, the market is positive and increased by EUR 124 million year on year, which bodes well for future profitability. Slide 12 on asset quality, showing our low-risk profile is confirmed. Our cost of risk in the first half stands at 4.6 basis points, broadly in line with historical averages. Our NP stock affected by 2024 reclassification is down 10% year on year. I will expand on the underlying dynamics in a moment. Let me stress once again that [NPV] exposure is almost entirely towards public administration, 96%, which is by definition low risk. Looking at the details of our NPLs, also these are largely towards public administration and, in particular, towards municipalities. We are pleased to have received the new ruling confirming the picking of State liability and receivables due by the municipalities in conservatorship. In the quarter, we have appealed to the European Court of Human Rights for (Inaudible) and receivables towards municipalities in conservatorship, which will then be 40% of our NPL portfolio. EUR 14 million, by the way, is only the capital. It's significantly outside from the collection of LTI. As mentioned, let me now give you some more details on the evolution of our past due portfolio on slide 13. First, excluding net new exposure, which we have both in the year, past due has gone down by 40% in six months. This is important as it shows the high churn of our portfolio and our collections. Second, contagion invoices are down by another EUR 41 million in the first half, and we expect more as new regulations take effect. Third, new past due is mostly due to contagion effect, EUR 419 million. New past due generation is limited to EUR 96 million in the six months. As promised, a few more details on our legal activity to port in transactions or judicial collections. By the end of July 2025, we have filed in Italy around 840 injunctions towards public debtors, and this represents around 82% of Italian past due exposure and around 64% of the total past due exposure. We have appealed for EUR 25 million more invoices in past due receivables to the European Court of Human Rights in addition to the appeal on conservatorships. This should and will support further past due reduction. Last but not least, on capital, slide 14. CET1 ratio stands at 14.3% versus 11.9% in the first half of 2024. In the first half of the year alone, we have generated 270 basis points of common equity CET1. This is supported both by past due and above the rate of density reduction and by the profitability of our business. We therefore have EUR 114 million of excess capital versus 12% common equity CET1 targets and EUR 226 million versus SREP requirements. Total capital ratio stands at 17.4%, while MREL requirements are covered in ample buffer thanks to organic capital generation and the two bonds that we have issued last year. As said by Max, the dividend policy remains unchanged, subject to the listing of the dividend done by Bank of Italy. Let me now hand over back to Max for the key takeaways on our business in the first half of 2025. Thank you, Giuseppe, for the deep presentation. Look, if you leave for a second the details, what we are seeing today is a confirmed positive momentum for the group. The double-digit growth year on year, more Factoring & Lending and Securities Services, and good strategic positioning of our Payments business, with recent highest first-ever volumes and group loans for the Factoring & Lending business. Secondly, the reduction of past due is underway, with the total past due portfolio down 10% versus year-end 2024, despite us continuing to buy new receivables towards entities already in past due. We are accelerating legal actions, so we should see an acceleration of the reduction of the overall stock and the contagion portfolio in the quarters to come. Finally, we are in a pretty strong position in terms of capital because despite the still high level of past due, which is far away from where we should be in a normalized situation, our CET1 ratio is at 14.3%. We have EUR 114 million of excess capital versus our CET1 target for dividends. We think we are in a strong position to continue to grow the business, generate further capital, and increase our shareholders. Thank you for listening to our presentation. I will leave the floor to any questions you might have. We will now begin the question and answer session. To ask a question, please press star and one on your touch-tone phone. If you're using a speaker phone, please pick up your handset before pressing the key. To withdraw your question, please press star and two. The first question came from Tommaso Nieddu from Kepler Cheuvreux. Please go ahead. Hello, and thank you for taking my questions. I would have two for now. The first one is on full-year estimates. It seems that consensus is sitting between EUR 175 million and EUR 180 million on adjusted net profits, so would be appreciated some colors on that. Do you feel comfortable with these numbers? The second one is on the contagion portfolio collection. Clearly, the past due exposure is going down, but in the second quarter, your collection of contagion portfolio has been only EUR 16 million. Should we consider it the new run rate? Now that the back book is getting smaller, is it more difficult to collect, or? Yeah, that's it. Thank you. Yeah. On the contagion portfolio, look, there are upper quarter and lower quarter. It depends really on where we are with the discussion with the counterparts, where we are with legal actions. When discounts pinpoint to a specific number that we target, we target to reduce that portfolio, which actually will mean acceleration also going forward. Bear in mind that we are only a year, not even a year away from the reclassification. I think this was a bit late in the last year. We started to change our approach on legal actions at the end of 2024. As we said, we were expecting an acceleration in the second half of this year of the collection of the past due portfolio. In terms of full-year estimates, as you know, we don't give targets for 2025. You should remember that we always have a stronger fourth quarter, which accounts for more than a usual quarter. We are trending towards levels that we think are consistent with our business plan target. Okay, thank you. The next person is from Simonetta Chiriotti of Mediobanca. Please go ahead. Hello. Hi. Good evening, everybody. My question is on volumes. The second quarter is really brilliant in terms of volumes here in most geographies. If it's possible to have a bit more colors, (Inaudible) segment improved a lot in the second quarter. Also, Spain was better than in Q1. Could you just elaborate a bit on this? Thank you. On volume, we are working hard to improve our commercial performance on many fronts. As you know, we can also have a lumping in the decision of customers to sell their receivables. We are overall pleased with the performance of Poland, which is Italy, although it's showing different growth in volume, is still a lot of potential to be expressed. Spain, which is down year on year, pretty down year on year, about 20%, still is impacted by the injection of cash. We've seen by the government in Q1 and Q2 has been less relevant, clearly, because the next step is impacted mostly Q1. Those I would say are the main drivers. We think Portugal has more to go as well since they've grown year on year, but they see more potential. Interestingly, on the smaller markets, you can see France, as Giuseppe pointed out, that they've shown very strong growth, still from a small base, but now in terms of portfolio, it's already at half the size of Slovakia. At this pace, if we reach the size of the smaller markets, pretty slow. We see that as an opportunity, which is driven by the reconsideration people have on the financial conditions of the country, as well as potential risk on the political stability of the country itself. Slovakia, as well as the tiny market, we need to see what happens in the following quarters, but the pattern seems pretty good. We know that there's a market where the budget deficit is quite high, so this should help focusing the customers' attention on it. You certainly completed the question. We have, in the first six months, a 10% growth in volumes and a 5% growth in loans. Can you give us an indication of how the DSO is evolving in the larger market? We're not seeing strong trends. One word, I remember, we buy what our customer gives us. Depending also on when we buy in the quarter, we have a different outstanding at the quarter end. For instance, in the second quarter, we did more purchases proportionately than usual in April and May and less in June. That has skewed the two effects. You have markets also where we buy portfolios which are not necessarily representative of the overall market. If I take France, for instance, we buy portfolios that we paid later than normal DSO. We are not seeing an individual performance of counterparts. It's a significant improvement of the worsening of payment times. I don't think we're making changes to our pricing mechanism to take into account either shortening or lengthening of payment times. The next question is from Davide Giuliano of Equita. Please go ahead. Hi. Good evening, and thank you for taking my question. I have three. The first one on NII. Overall, the interest rate environment was, let's say, good in the first half as your (Inaudible) decreased while LTI rate was fixed at the beginning of January. Now that the LTI rate sits in July and the ECB is expected to cut 25 basis points by year-end, which dynamics do you expect on NII in the second half? The second one on the [Case di Presidenza], when do you expect the tender to start and what margins can we expect on this Monday for the Securities Services division? The third one on capital allocation. I know that dividend is the priority, but there has been some movement in the specialty finance segment and also some things are going on. My question, I was wondering if the excess capital you have accumulating during the dividend ban, do you see opportunities for organic growth initiatives? Thank you. Organic or inorganic? Inorganic. Okay. Look, we look at the M&A as a state development strategy over the past. It depends on the opportunity, the right price, the right moment, the right target. It is not really an incurable capital, so we buy. Capital is there, but it is actually our shareholders' capital. It has an opportunity cost that we need to be mindful of. As we always stated, for us, M&A is an avenue mostly for diversification. We continue to monitor the market in Italy and also abroad. In terms of the [Case di Presidenza], the decree has been actually ready. We know that the undersecretary of the matter, speaking in June that we should expect the publication shortly. We think there is still a bit of a delay. For us, actually, it is a positive because it means that when it will be issued, hopefully, we will get in a position where we do not have the restrictions imposed on us by Bank of Italy. That would take away some concerns that clients might have on us as a trustee of their assets. At the moment, M&A is actually, for us, positive. We expect something to happen in the fall. In relation to NII, I think the movement in interest rates of that magnitude does not really change dramatically our P&L. Frankly, what will drive the NII in the second half is going to be the growth of our loan book and also our ability to collect late-payment interest and the recovery fees. I think one item which I guess is overlooked a little bit in our presentation at times is actually how big and how much it grows our off-balance sheet reserve. If you look at where we are today compared to last year, that off-balance sheet reserve has increased by EUR 93 million to EUR 561 million. Now, EUR 93 million is not a portion of this, but for example, 65% to our average collection rate, which is just high in the long- term of 80%. Let's take 1/3 of that amount, something more, is actually, if you want, normalized earnings that we have deferred. When you look at our results, you need to take into account the fact that we were still deferring a lot of income and continue to accumulate profit reserve that will show up in our accounts going forward. Our ability where we collect the past due is also to negotiate transactions with our debtors where we collect those LTIs and EUR 40 and also allow the interest on interest in (Inaudible). Thank you. The next question is from Antonio Reale of Bank of America. Please go ahead. Hi. Good afternoon. It's Antonio from Bank of America. Apologies if you've answered this question already. I've been in between calls and I missed the first part of your presentation. My question is really around the past due and the contagion invoices, which are down again. I think I spent EUR 41 million or so in the first half. The progression has been quite good on the organic side. My question, I know you've been open to both organic as well as inorganic initiatives for the bank. What would be the pros and cons of you to explore a disposal or a securitization of a big chunk of your contagion invoices? Just because looking at it from the outside and I'm conscious that we don't have the full details, it looked extremely appealing as a way to really put to bed this issue. Any thoughts you can share around just the sort of the quantitative pros and cons of pursuing this option would be super helpful. Thank you. Thanks, Antonio. When we look at our contagion portfolio, we have, at the end of the day, a number of levers where we can collect organically. If we're selling the portfolio, even in a securitization where we would probably hold the junior loss to achieve the consolidation, that for us is a pretty strong capital. As you point out, still, it's the money on the table. We want to be in a position where our collection processes are fine-tuned so that the purchaser of that portfolio will clearly be even more comfortable about those invoices being collected in the usual course, which is interest as well. We are working on that. We're working also on preparing for a potential disposal, which also means thinking what portfolio we might want to dispose of because of that contagion portfolio. A portion has a high multiplier, if you want. If you sell that, you actually get rid of a proportionately larger share of the expected portfolio, so to speak. There are other portions of the portfolio where that effect is not as strong. It probably doesn't make as much sense to sell. In that consideration, the business continues to generate a lot of capital. We think at the moment, we don't really need to put pressure on that. At the same time, we don't want to be in a position where we need to take provision of that portfolio. We want to be already ahead of that to potentially dispose of those assets. If you look at page 13, we take a lot of account for that effect that it is a very dynamic portfolio. The fact that we reduced in six months 40% of what we had at year end, which, by the way, a portion of which was after that we purchased after the reclassification. If you have to look at actually the previous portfolio, it would be gone down even further. Here's a sense of how dynamic the portfolio is. We think we have, with the discriminating legal activity that Giuseppe mentioned before, quite a lot of levers to deliver an actual usable portfolio. We keep the option also of selling things that are synchronized, which is probably the most likely outcome. That portfolio is one of our tools. All the support from a regulatory point of view that makes the privatization of these easier is also welcome because it means actually we can execute on a shorter timeframe than it was normally expected in the past. Thank you very much. As a reminder, if you have a question, please press star and one. Again, if you have a question, please press star and one. The next question is a follow-up of Simonetta Chiriotti of Mediobanca. Please go ahead. Thank you. A question on LTI over recovery and the impact of rescheduling. The negative impact improved, so it's lower in the second quarter, but remains negative and relatively high. Do you expect an improvement on these metrics? I haven't seen already an improvement. Yeah. By definition, as you said, the second quarter is better than the third. Remember that the rescheduling is what you account at the moment of rescheduling, which means the tax rate that's here is better than translating to interest income in the following period. We certainly aim to improve substantially our LTI over recovery. That's not where we should be, by any means. I think the team has a different pipeline, and overall, our level of over recoveries in terms of recovery rate has been exactly in line with what we expected from what we have seen historically. Yes, we expect to do more. Yes, we expect to do more in the second half of the year, and we are aiming to get a pretty good result Q4. That depends not only on us, but the fact that we have moved from ordinary legal actions through injunctions with a speed of those results because we have counterparties that will have less time to actually wait before they have to pay. To conclude our. Sorry. In a first word to it,, it's a bit what I said before on the increase on the off-balance sheet fund. The fact that we actually had a low net over recovery, but we increased our balance sheet fund by EUR 93 million, of which a portion of EUR 15 million over EUR 35 million, which is less than 40%, is what would be our standard over recovery. It means we have created that value that we don't see in that account yet, but would be actually recovered over time. That's something which is helpful to focus on, particularly because now, in the comparison year on year, you see the same level of LTI recognition. That's an important data point that I think gets overlooked, as I mentioned before. This concludes our question and answer session. I would like to turn the conference back over to Massimiliano Belingheri and Giuseppe Sica for any closing remarks. Thank you, everybody, for joining us today, later in the day, and I'm sure later also in your plans for holidays. We wish you a good break for the ones of you who are having one. I'm sure we'll have plenty of opportunities to speak with you and meet you in other investor meetings and calls over the next few months ahead of our Q3 results. Thank you very much. The conference has concluded. Thank you for attending today's presentation. You may now disconnect.