Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banca Generali first half 2022 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. Gian Maria Mossa, CEO and General Manager of Banca Generali. Please go ahead, sir. Mr. Mossa, your line is open. Thank you. Good afternoon and welcome to our first half results conference call. First of all, let me start by saying that the overall results are very resilient despite an extremely complex situation. On one hand, the commercial results are solid with high volumes, but of course a more conservative mix. On the other hand, financial results are geared by rising interest rates, a flexible business model, and pretty stable managed solutions margins. Considering this new economic and financial market environment, we are adapting our approach to be flexible, but the overall picture in terms of guidelines and targets for our three-year business plan are confirmed. Now let's start from P age four, financial results and net profit. Net profit for the first half of the year closed at EUR 63 million. Two main components, very strong recurring net profit at EUR 54.7 million or 3% higher on QoQ. For an overall result for the first six months at EUR 107.9 million. If we focus on the second component, variable net profit, let's say that the contribution was very small, EUR 8.3 million for the second quarter, due basically to the market turmoil. Moving on to Page five, we start seeing good news. First of all, net financial income. Net financial income in second quarter jumped to EUR 40.3 million. Also, in this case, two components, an increase in the trading gains, thanks to portfolio optimization and very solid net interest income, which was the second quarter at EUR 29.3 million. Why? Basically, we benefit from the pricing of the investment yield on the financial assets and from a one-off in the inflation-linked securities. This one-off accounts for EUR 2 million in terms of increase quarter-on-quarter. Looking at the margins, net interest income yield standing at 0.75%. It is pretty impressive, the acceleration, if you consider that at the end of last year we were at 0.48%. We say that the overall result in terms of the overall six months is a significant acceleration. Net interest income jumped to EUR 51.8, and we are confident for the second half to close with a contribution higher than the first half. Moving on to total gross fees, we are at Page six. In this case, the second quarter result was marginally lower than the first quarter, so it closed at EUR 234 million. In Slide six, you can see the major global contribution of performance fee at EUR 1.9 million. More interesting is going through the different components because you will see that some initiatives are very resilient to the market meltdown. In particular, Page seven you see management fees. The second quarter closed at EUR 203.4 million, so just marginally lower than the first quarter. This is basically thanks to very resilient margins. The overall management fees margins closed at 1.42%. Here you will see that this 1.42% is well supported by three initiatives. The first one, the overall effect of the price optimization over the last year. Second, the strong numbers on wrappers, more resilient than other asset management solutions to the crisis. Third, a profitable mix in the inflows of funds. For the other components of the gross fees, Page eight, here you have two different behaviors. If you look at the second quarter, the overall result is about EUR 30 million, down 12% with very positive contribution coming from, let's say, the other banking fees and advisory fees, because these are the client sort of ongoing revenues, independent of the client initiatives. Then you see a lower contribution of the, let's say the revenues directly impacted by the activity of the clients. In particular, the front fees were definitely lower due to the market situation, while structured and certificates provided a good contribution to the overall results, are in line with the previous period. In terms of brokerage, volumes are in line with the previous quarter. What really changed is the mix, more focus on bond components, and less interest in equity. In terms of volumes, good news coming from structured products and certificates, say, resilient volumes in brokerage, but with a more conservative mix, so with a negative impact on the overall revenues. In particular, on advisory services, we are confident, thanks to the normalization of interest rates. In the last six weeks, we start seeing a higher interest in such a kind of solution. Page nine is about costs. First of all, if you look at the total fee, total fee expenses on the overall first six months increased by 4%, compared with a +6.5% of the recurring fees. We are now. It worked very well. The business model, very flexible and adjust to the situation. The overall payout ratio to financial advisors closed at 46.6%, with very solid numbers for the ordinary payout ratio below our target of 36%, it closed at 35.6%. You see a slight increase in the payout for growth. Here you have two different explanations. The first one is a seasonality effect. You see also the same pattern in the second quarter of the last year. The second is a sort of base effect because while the ordinary payout is strictly linked to the commission, the incentive scheme is about absolute numbers. If the denominator decreases, you have a slight increase in the ratio. Part of this increase is definitely driven by this kind of effect. Payout to third parties also these numbers stable and in line with our expectation to stay below 6%. Page 10, operating costs. Overall operating costs staying at EUR 120 million, more or less. Two different effects, an increase in one-off items of EUR 1 million, and then an increase of the core operating costs of EUR 6 million. If we focus on the core components here, first of all, we restated the numbers to include in the core cost also the DG Suite project. You see that a part of the increase is driven by the acceleration of our project. So EUR 1.6 million are driven by this investment. Excluding this component, the increase in core operating costs would have been +4.4%. Considering the other components, the acceleration of G&A is driven basically by ongoing investment to deliver our three-year business plan. Page 11, efficiency. Our ratios of operating cost out of total assets increased slightly, and it is a base effect due to the reduction of total assets. If we focus on cost income, the ratio, the downtrend of this ratio is confirmed. You see that the two lines are almost the same due to the negative contribution performance fee and staying both below 40%. To sum up, first of all, very happy with very solid operating results, excluding performance fees. This is driven by, as we already said, higher interest rates, flexible business model and resilient margins, especially in managed solutions. If we focus on non-operating charges, the overall non-operating charges decrease for two main components. The first one is thanks to lower pension requirements, because we have revised the discount rate, and lower for provision for contractual indemnities. Last, if you look at the tax rate, is a little bit higher than our guidelines. The numbers stood at 23.8%, compared to a guidance of below 22%. This is just temporary due to the very poor contribution of performance fee and so on Luxembourg on the overall results. Moving on to balance sheet, Page 14. The balance sheet expanded by EUR 1.5 billion from the beginning of the year. Basically, this increase has been driven by an acceleration of client deposits, +EUR 1.2 billion. If we focus on interest-bearing assets, also interest-bearing assets increased in the period, +1.4%. It's very important to underline that 62% of interest-bearing assets is linked to floating variable rate. We have also part of the portfolio expiring before the end of the year. The overall, let's say, assets can be taken advantage of the normalization of yields amounted almost 2/3 of the overall interest-bearing assets. Looking at the loans portfolio, the cost of risk is zero for the first six months of the year. Just emphasizing the approach of lending that we provide to our clients with ancillary services. The NPL ratio stands at 4 basis points or a negligible impact. Next page, it dives on our financial assets. Financial assets closed the first half at EUR 11.8 billion. Three considerations. First, the overall contribution of the government bonds in Italy is below 50%. Second, the duration continues to stay very low, very conservative approach, 1.4%. Then, focusing on financial assets, more than 50% is invested in floating rates. On the left, bottom of the page, you see the breakdown of the yield. Starting from the last line, the cost of funding is stable at - 0.05%, including the TLTRO. In terms of the yields, loans to banks at -0.21%, so it's getting better. Loans to clients almost stable, and then financial assets at 0.66%. As I mentioned before, this is the number for the first six months. We saw previously that for the second quarter, the number was 0.75%. Moving on to capital and liquidity ratios. Also on this side, positive news. In particular, CET1 closed the first half at 15.2%. Total capital ratio is 16.3%. The reduction compared to the end of the last year is driven by two reasons. The first one, a very conservative projection of the purchase of treasury shares linked to the remuneration policies. The overall impact is -0.3%, -7%. Having expanded the bearing assets, you have higher risk-weighted assets, and this contributes for -0.6%. Of course, these capital ratios include also an 84% dividend payout ratio as of today. Leverage ratio above 4% and very solid liquidity ratios. It's pretty clear from these three slides that we have a significant opportunity coming from the normalization of interest rates. Moving on, the third section, let's start from total assets. Overall total assets stood at EUR 80.9 million, with banking assets, as we already mentioned, higher EUR 12.6 million. The assets under custody almost stable, so the negative performance was balanced by a positive inflows. The assets under management, penalized by the performance of the market and a more conservative approach in the net inflows. Focusing on assets under management, you see stable traditional life policies. The overall assets under management exposed to risk stood at almost EUR 40 million. It means almost 49.3%. I think that also this number, this ratio for managed solutions out of total assets is positive because it's temporary. It's driven by market performance, market effect, not changes in behavior of our clients. Clients are in the wait-and-see mood. We haven't seen any panic selling or any strange emotional behavior. This is very important. It's pretty different from previous crises. Page 19, there is the asset under management breakdown. We have the two main components, focusing on the left, on asset management product. You see how resilient the financial wrappers were in the first six months of the year with overall stock at EUR 8.9 billion. The overall funds decreased. In absolute terms, the third party were the worst contributor at EUR 11.5 billion, and in-house funds stood at EUR 9.1 billion. On the right, you can see the insurance product. We already commented traditional life policies, so looking at insurance wrappers, also here you can see the resiliency of insurance wrappers at EUR 10.3 billion. This behavior, this resiliency of the wrapper is one of the reason behind the resilient margins of assets under management products. We will see the same pattern in the inflows. Page 20. You see the first half closed at EUR 3 billion. That, of course, is a little bit lower than the best result ever for the bank last year, but it's higher as compared with the 2020 when the rates were at lowest level. I consider this result pretty solid. If we focus on the EUR 900 million of assets under management, you see that the highest contribution comes from wrapper solutions, EUR 600 million. EUR 500 million funds and EUR -200 million traditional life policies. Page 21, with the deep dive of funds, you see a contribution of our LUX IM at EUR 200 million. Third-party funds, EUR 400 million because we launched a specific initiatives on loans, and then negligible outflows on other in-house funds. On the right, you see the mix of the net inflows of Luxembourg platform, our LUX IM, and this is again another reason to the resiliency of the margins. Positive net inflows in equity and flexible total return and negative inflows in monetary and bond funds. The same can be said for third-party funds. Last page of this chapter, Page 22. Here you can see the resiliency of the contribution of net inflows of existing networks, 2.4%. You see on the right, the deceleration of recruitment trends, 59 new colleagues compared to 75 the previous year. This is driven 100% by more difficulties in transferring bankers and clients due to negative performance of the portfolios. Again, a very healthy commercial activity and a good mindset of clients. Last chapter is about our three-year business initiatives linked to our three-year business plan. As I mentioned, targets, pillars, and guidelines are all confirmed. What has changed a little bit is the priorities for this year. Basically, we are more focused on staying closer to the financial advisors and bringing also initiatives, new product initiatives for the new environment. All the projects we launched during our three-year business plan investor day are confirmed. From Page 25, we have the deep dive of the three main pillars or the main initiatives. Targeted offer, Page 25. For high-net-worth individuals, we are working to launch private market solutions in partnership with Generali, which should be ready at the end of the third quarter or the beginning of the fourth quarter. We will open up our Luxembourg Generali private insurance platform also to real assets. We have just launched, for private clients, a new financial wrapper called DG Smart Target, with an implicit concept of protection and maturity. We manage in a very innovative way the zero coupon bond component and with a flexible approach also the equity, just to mitigate the time to market of the investment. Last but not least important, we launched our first dedicated initiative to affluent clients. It was launched at the end of June. This offer is an insurance wrapper. The proposition is focused on sustainability, ESG, living a better world and becoming a better planet with dynamic and flexible management of the equity components to reduce volatility. Page 26, you see also the ongoing activity on our Luxembourg platform. We launched two weeks ago the seven funds. Two about cash parking solutions, three about focus on growth and one for specific need. In particular, the last one in partnership with BlackRock. We launched this LUX IM Catholic Value, very innovative solution as well. This is. We should give some support also for the performance fee in the last part of the year. For the second pillar, I move on to Page 27, that is innovation. We continue to work. An important result has been, for example, having transferred all the data lake to the cloud in partnership with Amazon. We are accelerating in the automation of the processes for the financial advisors to free up time. Last, we are very focused on training and communication for cybersecurity for the new environment. You know, there is on one end the focus on the project announced during the three-year plan, so data, automation of the processes, but also on top of that, awareness of some risk. For example, let's just say, cybersecurity is one. Page 28 is about sustainability. Assets are pretty impressive. Very, very resilient also to the crisis. The overall assets in ESG products stood at EUR 6 billion at the end of June. The percentage of the overall ESG assets on total assets, on managed assets increased over time. Now it stands at 15%. For our goal to stay closer to the environment for future generations, we are working on carbon footprint. We had an overall reduction of 46% of carbon footprint by working on the corporate investments of Luxembourg platform, discretionary accounts or commercial wrappers and banking book. We start the initiative to increase awareness on the carbon footprint also for our partner in the asset management. Just before open the floor to a Q&A session, let me highlight why I'm so happy with these numbers. First of all, we are very exposed to any increase of interest rates. Interest rate also in 2023 will, in our opinion, compensate any potential reduction of the, let's say, recurring commission in such a kind of environment of the market. The model is very flexible, there is a Remember that the most volatile component of our P&L, the front fee, are the ones with the higher payout ratio. The payout ratio will adapt to the situation. But not least, all the optimization of the prices and with the price mechanism done last year, the resiliency of the wrapper solution plus, let's say, the mix, so the aptitude of clients to continue with systematic investments in equity and flexible products instead of bond and monetary solution confirm resilient margins in the main solution overall results. For all these reasons, and in particular for a very healthy financial advisory network, we are confident to continue to deliver the targets we announced during our three-year business plan. Now I will leave the floor to a Q&A session. Thank you. This is the Banca conference operator. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up your receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Gian Luca Ferrari of Mediobanca. Please go ahead. Yes. Hi, good afternoon. Ciao, Gian Maria. Three questions from me. The first one is on NII. Since you delivered last time a guidance for EUR 100 million NII in 2022, I was wondering if you are raising this guidance today, and I was even more curious to hear your thoughts about 2023, where NII can go in 2023. Also linked to that, I think there is not a comment during this actual about what could happen on the cost of deposits. We've heard this morning some Spanish banks are already talking about raising the remuneration of deposits. What are your thoughts on this? Do you think it's important to have to offer some returns on the clients, or that is something that we will not see anytime soon? Second question is on recruitment. I think there is basically a difficulty to hire or to recruit advisors from competition. Given your model, you're not very much into graduates or former bank employees and these kind of things, what are you studying or thinking to make it more doable? Any, let's say, review of the portfolios twelve months down the road or things like that to convince clients to leave another network to join you. The third and last one is on certificates. Can you give us the notional of the certificate solution in Q2 versus Q1? What is the guidance for full year 2022? Those certificates, were they the protected capital protection or not? Thank you. Thank you, Gian Luca. First of all, projection for full year results when it comes to net interest income, I'm even more positive than the previous conference call. Now I consider EUR 100 million a floor, and we are closer to EUR 110 million than EUR 100 million. For the 2023, we do expect an increase in the range 15%-20%, closer to 20% than 15%. In terms of cost of funding, first of all, you know, we haven't any kind of automatic repricing, is really important. I think we will evaluate time by time according to market conditions and market behaviors. You know, is dependent by what, for example, Intesa is thinking about. But the projections are based on very conservative assumptions. My personal opinion and that we must see a Euribor at least at 1%-1.5% to start thinking of any significant increase of cost of funding. I think that we are still in the free lunch phase. Recruitment. Honestly speaking, I don't see the case to change the approach. We have great interest by different players and financial advisors, both financial advisors and private bankers. We are only more conservative in recruiting because it's getting more difficult in transferring clients. For example, we are giving more time to transfer assets than in the past, but increasing to be more selective in the first phase processes. Just to select the right professionals. I will say that I'm pretty confident to resume the activity once markets normalize. In terms of certificate, you say that the overall contribution of the second quarter, the first half of this year is pretty in line with the first half of last year. I start seeing an acceleration in protected solutions, so for example, structured bonds. An important part of our certificate historically were with a protection linked to barriers, but most of them are above the barriers, so I don't see critical situation. We are very well diversified, so no concentration in terms of the issuers or in terms of single stock name. Also in this case, we approach in a very diversified way the structured products. Part of course is protected 100%. In particular in the last six weeks, we accelerate on this kind of certificate and structured products than the historical behaviors. Thank you. Do you have the notional of what you issued in the first half and what you expect for full year 2022? Sorry, can you repeat, Gian Luca? Yeah. If we can have the exit data on the issuance of certificates in the first half. Okay. I will hand over to Tommaso to give you the numbers. My impression is that we say that this half was a little bit lower than the previous one on year-over-year basis, and I do not expect say acceleration in the second half. We say that they were more almost in line. No significant impact in the first half, and I do expect the second half just slightly lower than the first one. I will hand over to Tommaso if it is. Thank you. Yeah, in terms of new issues, the first half has been more or less in line with the first half of last year, but it was lower than the second half of 2021. Moreover, we are in terms of new issuance in the range of EUR 400 million-EUR 450 million for the first six months of 2020. A similar amount we would engage in the first half of 2021. While in the second part of 2021, we had around EUR 700 million of new issuance in the second part of 2021. Okay. Thank you very much. Just to complete. What is happening is that, especially in July, we are seeing an acceleration in advanced advisory services providing very well-diversified bond portfolios. For example, so far in the first, say, three weeks, we are close to EUR 150 million of new advisory contract. There is a great increasing interest in structured products with just a little bit lower commissions. We agree that the certificates are, you know, a little bit lower than the average, the weekly average of the last 12 months. We will foster and accelerate in advanced advisory services on structured, say, bond portfolios. We will accelerate in the structured bond with protection, of course, and we will maintain, let's say, numbers and structured certificates, but lower than the average of last year. Got you. Thank you. The next question is from Alberto Villa for Intermonte. Please go ahead. Hi, good afternoon, and thank you for taking my questions. A couple of questions. Apologies if I ask something you already mentioned during the call. I couldn't follow entirely the speech. The first question is on inflows. You mentioned in the press release that July flows were positive. I was wondering if these are still concentrated into administered assets, or you're starting to see some, let's say movements from cash and liquidity into managed assets. And in general, if you are expecting this to happen in the second part of the year, or if this will be very much depending on the market conditions. The second question is on operating cost trends. If you can remind us if the guidance is confirmed, and what you see in terms of growth of operating expenses also for 2023. The last one is an update on the securitization issues. You won the ruling with the London Court. I was wondering if you can provide us an update on how the situation is unfolding, and if you had the chance already to have more information about the exposure, and eventually the risk underlying these products. Thank you. Thank you, Alberto. Let's start by commenting July inflows as of today. Very solid net inflows. We are close to EUR half a billion also this month, as of today. The mix is changing. As I mentioned before, advanced advisory service is accelerating, I would say, 30%, 40%, more or less of the overall net inflows. Current accounts are negligible or negative. The managed solution continue to stay lower than the, let's say, average, historical average, but positive around 20% of the overall net inflows with positive performance, in particular, wrappers, insurance wrappers and financial wrappers. I do believe that to see a re-acceleration of asset management, we must see some stabilization of the financial market, but the need is turning positive. Less interest in current account and more interest in, let's say, advanced advisory services and wrappers. This is just to sum up what we have been seeing for the last six weeks. In terms of securitization, you are right. We won the dispute in the court, in the U.K. court with CFE to receive complete disclosure of the document from CFE. We have been receiving plenty of documents in different tranches. We must receive additional documents to have the set of information to work out the price of this instrument. At the moment, we haven't all the elements to confirm the price of the securitization. At the same time, the reimbursement is continuing of the three securitizations that mature. The initial amount, nominal amount was around EUR 340 million. The reimbursement has been more or less 50%. We say that things are going in the right direction, but we haven't complete the analysis because we have to receive still some information. Thank you. Sorry. I confirm what I said last time. I don't see at the moment reason for any provision and within there is no intention to change such a kind of asset. Also because market condition changed significantly in the last six months. Thank you. Okay. Thank you. On the operating cost side, any comment on the trends there? Sorry, costs. Sorry about that. For costs, we confirm the guideline in the 5%-6% range of core operating costs, including DG Suite project. Excluding DG project, it will be definitely lower. Of course, we are confirming all the three business planning initiatives. We know there is some flexibility and some margins, but at the moment we are confident to continue to invest, thanks to solid results, in particular in the recurring components of our P&L. Okay. Thank you very much. The next question is from Domenico Santoro of HSBC. Please go ahead. Hello. Good afternoon. Thanks for the presentation. Just want to come back a bit on the NII, because I just want to reconcile the guidance that you gave on 2023 with the sensitivity to rates that you gave a couple of calls ago. Because my impression is that the number for next year it might be in fact significantly higher than what you're guiding. And since I know this line now is getting bigger and bigger for you as well, I just wanna get a sense of how we should work it out, you know, expectation for next quarter, given the yield curve where it is. My understanding is that you have EUR 2 billion, 50% of floating. You have also a duration adjusted for the hedge lower than the actual maturity of the book. That means that you are swapping those parts of the portfolio into variable rates. What should we look at in order to gauge the way NII will move going forward? The BTP only, or the rates, the Euribor three-month, six-month? What's your NII linked to? Having considered that, given the yield curve where it is at the moment, whatever is the rate reference that works for you shows that, you know, expect 2023 given the Euribor six- and three-month, yeah, it's more than 100%. 100 basis points should expect this to be significantly higher instead in NII in 2023. Also, what's your expectation for margins going forward? If we should expect some more deterioration or the next wave, if we should have certain products suggest that they have developed properly. Thank you. Thank you, Domenico. I will start with some considerations on net interest income and then I will hand over to Tommaso to complete the answer. Basically, if you consider third and fourth quarter for the year, I do expect a pretty strong fourth quarter and a stable to slightly lower third quarter compared to the second one. The overall effect will be higher compared to the first half. I mentioned that we will be closer to 110% than 100%. This is for, let's say, the year. The fourth quarter will be stronger and no reason to expect something different for the next year. We said 15%-20%, closer to 20% than 15% because the sensitivity we provided was about markup, you know, so excluding markdown. As I said, there is some conservative approach in estimating the markdown. You are right, there is some room to have positive surprise. As usual, we want a consistent projection and be conservative on this. Also because there is some variability and volatility on the path of Euribor and ECB rates for the next year. On margins, and then I will hand over to Tommaso. We said if you have in mind a second wave of correction for financial markets, of course margin could be hurt. Some structural trend will definitely mitigate the impact. Brokers are here to stay, and brokers offer higher margins than the average customer solutions. The mix will continue to be in favor of equity, in my opinion, thanks to systematic investment, so savings plans, basically. Probably you will see lower inflows in monetary and bonds products, the traditional ones. Of course depends on your expectation of the performance of the market in the next 12 months, because, as I said, as you said, clients are in the wait and see mode, are pretty calm, and I haven't seen any sort of panic behaviors. That depends on your projection of the market. We are more resilient than others in, and I'm pretty convinced and sure of that. On net interest income for some guidance for next year, I will hand over to Tommaso. Let's say that, coming back to what Gian Maria was saying before, first of all, we don't have any automatic repricing on the liabilities. That's why the sensitivity is not included. In our forecast for 2023, we are also including some repricing on the liabilities, which will be, I mean, not compulsory, but we need to observe what will be the movement of the market. If you want, in the computation, we have been very conservative from this point of view. When we see the rates, our internal forecast is based on what we see in the market now, so we expect Euribor to stay in the range between 130% and 150%. Let's say that the rate that we have we need to have to have in mind is mainly Euribor six months to reprice our portfolio, which is in the 80% or the 50%, which is a floating rate, for the 20% on this in the always in the available rates. This is how we have forecasted our new guidance for 2024. Of course, we could have positive also surprise because as we said, we were saying before, we don't know how the market will react on the increase of rates and how much will be given back to the client. How we were saying before, we don't have any automatic repricing, so it's something that we can decide, and we will do according to our clients and what will be the practice in the market. Can I ask you just a follow-up on this? In case I understand your expectation in terms of the Euribor six months, which is the one implied in the curve. Just talking extreme, in case you run your model with a deposit beta of zero, what would be the outcome in terms of NII for 2023? I mean, we have used very conservative assumption in terms of beta input. If you put a zero, of course, the repricing is very important because of course it's similar to what happens in the sensitivity, you know. But of course, we think that in this case we should have also to include some, I mean, some cost on the liability side. That's why I think that overall we can manage to stay in the guidance that we give. To be more precise, we need to wait to see how will be affected the rise of interest rates in the market because we saw that there is a lot of volatility on that. Of course, what also the other players will do on the liability side. Yeah. That even if it's just a theoretical exercise, you would double the net interest income basically or else. That basically makes more sense. Thank you. Thanks. The next question is from Giovanni Razzoli of Deutsche Bank. Please go ahead. Good afternoon to everybody. A couple of follow-up. The first one is on your updating the product mix with the launch of private market solutions. I was wondering whether you can share with us what is the medium-term target in terms of product penetration on client financial assets. The second question is on clarification on assets under custody, because you reported EUR 600 million of inflows in the quarter with the stock of assets under custody down by EUR 900 million, which implies that there was a quite negative market effect in the quarter, which is quite significant also relative to the performance of the assets under management under the same metrics. I was wondering whether there is an explanation for this trend. How shall we look at this going forward in the context of the recurring fee generation? You mentioned that you do expect a relatively stable AUM margin on financial assets going forward, but if you can share with us what could be, you know, the impact of these trends going forward. The last question, sorry, clarification. I've seen that there is something like EUR 7 million of other income contribution in the quarter, if I'm not mistaken. Can you share with us what is the underlying item? Thank you. Okay, thank you. In terms of private market, we have a very structured program by launching a new platform in Luxembourg, in the first phase powered by Generali. A partnership with Lion River for private equity and Generali Real Estate for real estate and Generali Global Infrastructure for infrastructure. We already selected some external asset managers. The product is very structured and pretty innovative, but we don't have specific targets in terms of inflows. We will continue to work also on alternative PIR in Italy as well. We prefer to not give any specific target in terms of volumes. On the asset under custody, consider that you have at least two negative effects on the stock. The first one, of course, is about the market impact. We have almost 40% of equity, of which the greatest part is in Italy, and the performance has been pretty bad. The second one is about the coupon and dividend payment, because in our numbers these outflows are counted as negative in terms of overall assets. If you work out, let's say, a coupon of 2%, just to give you a number, you will see that at least EUR 200 million comes from the payments of dividends and coupons. For other incomes and some more information on assets under custody, I will hand over to Tommaso. I mean, on asset under custody, we said, I mean, we think that the performance is in line with the equity performance. The 40% of asset under custody are invested in equity, and of this, 70% is in the equity, Italian equity. The performance in the second quarter in the Italian equity has, of course, been very negative, and that's the explanation of this, the overall negative performance, which in the quarter is in line with 10%-11%. The main part is the RB exposure and partially also the structured products, which have a material impact in terms of performance. In addition, in the second quarter, there are EUR 300 million more or less the coupons and dividends paid, but of course they are paid back to the current account, so they make up the calculation, and you will see it there. Other income? Can you repeat the question on other income, please? Yes. In the income statement below the operating margin, there is something like EUR 7 million, if I'm not mistaken, of other operating income. I was wondering if you can tell us what is it made up. I mean, we can work on that. Checking the details, we give you the answer. Okay. Thank you. In the meantime, we can take another question. The other income is above the operating line, you mean. Mm-hmm. Correct? No. Okay. Just, we are just checking, like, checking the numbers, and we will be back with the answer. In the meantime, we can take other question. The next question is from Angeliki Bairaktari of Autonomous Research. Please go ahead. Good afternoon. Thanks for taking my questions. First of all, with regards to the fee margin, which has been pretty resilient in the second quarter, shall we expect the 142 basis points to effectively be at a floor also for the third quarter? Or could we see a bit more erosion in Q3 because of the carryover of the lower June AUM marks, and July hasn't really done that great either. I guess I'm looking for some guidance, more short-term guidance on the management fee margin for the next quarter. In terms of the higher rate environment, for the past few years, we've obviously seen a shift out of traditional policies, insurance policies and into unit linked. Do you expect that this could reverse at some point, assuming interest rates keep increasing? Have you had any discussions with regards to sort of the strategy on insurance with your parent, Generali? Third question, in August the initiative is going to change to include a questionnaire on the sustainability preferences of investors. How are your financial advisors preparing for this change? Thank you very much. Thank you. First question on margins. We say that, I don't expect significant changes just for the AP effect of the recent weeks. One point forty-two should be maintained. It's about this much, but as I said, if you look there, 1.42%, so it should be sort of floor at the, as of today market effect. For the traditional life insurance, of course, we are considering the opportunity in the future to relaunch this kind of initiatives, because I believe that it could be an opportunity to better our advantage in the future. Let's wait. Let's see the market and let's wait for the right window of opportunity to relaunch this kind of solutions, but always in the idea to be part of a more complex solution to provide advisory. I think that at the end of the day, you can increase the percentage of traditional life insurance, but in a sort of wrapper-first idea of products. In terms of ESG preferences, you know, here, I think that we do have a competitive advantage. We are incorporating ESG preferences in know your client questionnaire. Since we already trained our financial advisors in providing, say, an alternative approach, starting by ESG and SDGs, I don't see disruptive impact in our business model. I see probably another further opportunities to accelerate. We have a competitive advantage. We are... We have very well prepared financial advisors trained on this topic, and we already provide a very powerful digital experience in starting from ESG, SDGs preferences. At the end of the day, if I have to give you my flavor in terms of impact should be positive. Thank you. In the meantime, we have information on other incomes. It's a miscellaneous, very slight. The most important is that we had an adjustment in the acquisition of Nexi, which was on the amount. It's a positive impact on that. Then there are some other minor items that we recovered from clients or other Okay. Fixed probably initiative regarding items that are accounted in that item. The other point is that is a transaction between which is called the Mm-hmm. Vendita di portafoglio. It's a transaction where a financial advisor can buy the asset from another. We have the cost in the payout and the revenues in the Mm-hmm. I mean, they are exposed in two different line, but then the cost of the bank is almost zero. Basically you have the same item with different sign in the payout and in the other income. Okay. The next If you are interested, we can send you an email with the details. Okay. Next question, please. The next question is from Luigi De Bellis of Equita. Please go ahead. Good afternoon to everybody. I have three questions. The first one is on the CET1 risk-weighted asset leverage ratio. Very clear the explanation, on the variation in first half compared to the end of 2021. Can you give us an indication on the trend that you expect at the end of 2022, also considering your investment portfolio strategy, do you expect an improvement going through year end? The second question on the Swiss initiative, can you give us your color and an update on the BTPs projects where we are as of today? The last question on the asset allocation of your total financial assets, can you provide us an update on this, how much you invested in equity, govies and mortgages both? Thank you. Okay. CET1 and risk-weighted asset, we say that considering some seasonality on the numbers of the second quarter and the cumulative effect of the net profit, we do expect an improvement in CET1, and I do not expect increase in the risk-weighted asset. Second, Swiss initiative, which is so far so good. I mean, we are in the middle of the process, authorization process. We expect to receive the license, say, at the end of this year, perhaps at the beginning of next year. We took the first board of directors of the team in the new bank. So to say that we already built and hired most of the top managers, the board members, and. We have already selected the IT provider. We say that all the initiatives, HR, IT, organization, and are well ahead of our projection, but we depend mostly on the formal authorization process of the regulators, Swiss regulators. I don't see reason to expect a delay, and I will give you more color on this in the next conference call. I think that it's even more important to continue to focus on this project also for some more challenges of our country and some clients' expectation on that. Last is about asset allocation. I would say that the overall history is around 25%, and liquidity stands at 20%, just to give you the two main aggregates. Of course we have plenty of liquidity ready to be reinvested, and equity is basically being Has been penalized by a market effect. Thank you. Thank you very much. As a reminder, if you wish to register for a question, please press star and one on your telephone. Mr. Mossa, there are no more questions registered at this time. Okay. Thank you for having attended our conference call, and I hope you will enjoy summer. Thank you. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephone.