Good morning. This is the Chorus Call conference operator. Welcome and thank you for joining the MPS Group second quarter and first half 2022 results presentation. 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. Luigi Lovaglio, Chief Executive Officer and General Manager. Please go ahead, sir. Good morning, everybody. My warm welcome to all of you. Many thanks for joining us for Monte dei Paschi first half results. It's a pleasure to have also the opportunity to share with you the good progresses in our plan execution. Let me start with some highlights on our results. The profit, to start, at EUR 27 million. In Q2 was EUR 18 million. Year-on-year comparison is not effective because there are some gains on security and there was a lower level of provision in the last year. The first half results are has benefit we have also benefits of a strong contribution from gross operating profit. Let me show you at 12.6% year-on-year. With a slight higher growth, also in net interest income, that gave a big contribution to the results. Operating costs ar e under control. What is important, we already executed the step for our business plan by selling EUR 900 million of NPAs portfolio. This was also done ahead of the scheduled plan. This was for the end of this year. We successfully implemented action in order to get it already done at the beginning of August. First half cost of risk at 57 bps and is already incorporating the impact of the sales of portfolio. Fully loaded CET1 at 10.8, stable versus Q1. The CET1 phase 8 is at 11.7. Now just to give also some updates regarding the execution of the business plan. This isn't something that we would like to keep as a sort of a regular path while we are presenting. First important information that is already available, but I think was one of the key for us in order to go towards the increase of capital transaction, was the DG Comp authorization that gave the extension of the restructuring period and completed the revision of the commitment related to the bank. As we were already mentioning when we were presenting our business plan, the commitments are consistent with our business plan. On the 4th of August, we successfully completed an agreement with trade unions for the 3,500 voluntary exits through the Solidarity Fund. This is another important step because through this transaction, and we are going really to implement the key of all the actions of our plan. Other important achievement, we extended the syndicate for our underwritten capital increase of EUR 2.5 billion. Four other banks joined the team, and today we have eight banks supporting Monte dei Paschi for the capital increase. The shareholder meeting was called for the 15th of September, and will be the shareholder meeting that will approve the rights issue and the related resolutions. Now, as I was mentioning, first half profit, EUR 27 million, as I said at the beginning, is not comparable with the previous year because last year we had EUR 80 million higher capital gains, and then the level of coverage of provision was EUR 60 million lower. We had also additional benefit in terms of tax that this year are much lower. Gross operating profit. I think this is one of the first positive message. On comparable basis, we have an increase of operating income. Operating costs are slightly down. Combination of the two is enabling us to have gross operating profit growing by 3.4% quarter-on-quarter. If we move to the six month, you can see that we reported in terms of operating income, an important growth, 2.8% year-on-year. You will see that mainly was thanks to the performance of the interest income. Costs were kept flat. Thanks to that, we have a double-digit growth in operating profit on comparable basis, means if we exclude the capital gain that we had last year and the one that we had at the beginning of this year. Interest income, you know that we are one of the banks that will benefit the most of the increase of interest rates. We are already observing some signal. We have, in the second quarter, net interest is up more than 10% year-over-year and 4.3% quarter-over-quarter. We have an improvement of the spread, thanks particularly to the decrease of the funding rate. If you look at the performance, in after six months, we have 12.8% growth year-over-year, and this is again is thanks to the cost of funding, the decrease that will be kept as advantage for us for the remaining part of the year. In terms of volumes, we are keeping the growing in retail. That is the strategic part of the loans where we want to grow the most. We are also enjoying some growth in terms of good business. That is the second segment on which again is focused on the business plan. As you can see, we have a growth year-over-year of 1.5%, while on retail, we have a growth of 0.8%. Funding composition, we are slightly decreasing our retail, but just because we have term deposit down, because they are the most expensive. This is part of the strategy of decreasing the cost of funding. We have a selective growing corporate. This is connected also with some additional business we can get by customers that are using the current account to make transactions. Portfolio, we are keeping and we will go ahead in keeping this low profile. We want to have the risk under control. As you can see there, the part of portfolio that is most sensitive has a very short duration, and because 50% of the maturity of the portfolio is less than nine months. Fees and commission, here, I want just draw your attention on the aspects of the fees and commission that are the one that we call more connected with the customer activity. What we call banking fees, we are resilient, so we are keeping the level of last year, even adding a slight growth quarter-on-quarter. On the wealth management fee, we are keeping the level of EUR 100 million per quarter. This is something that is showing the quality of the revenues of this bank. Clearly, we are suffering, I think, as all banks in what we call upfront fees, due to the volatility of the market that is still present on the market. After 6 months, it's just a confirmation of what we said before, resilience on banking fees, slightly growing on what we call continuing fees, and down in what is much more connected with the market volatility. This is another important slide that is showing the size of our what we call indirect funding. We are slightly going down, but we are really following the market effect. We are even slightly better if we see bancassurance. The market was going year-on-year -9%. We are just going slightly below, -8%. We are trying really to be focused on what is one of the key pillar of our strategy. Cost, we are showing year-on-year total cost flat, slightly down quarter-on-quarter. This will be a sort of tendency that we would like to keep for each quarter. The decrease is mainly due to the non-HR costs in this quarter. Hopefully, we are going also to have some savings on HR costs. After six months, the trend is the same. Total cost is slightly down. HR costs are slightly down. In this case, we have non-HR costs slightly up, but the trend of quarterly decrease will also influence these dynamics in the next presentation. NP stock, particularly through the sales, we decreased by 25% the stock of our NP. Today, it is EUR 3.2 billion. We improved significantly our gross NPL ratio, down by 100 bps. What is also important is that we really reduced the amount of bad loans just above EUR 1 billion. I think this is an important achievement, giving also comfort in our projection in terms of cost of risk, and is also allowing us to be focused much more on a likely to pay portfolio, where probably through a specific focus we can have also some benefit in the future. Coverage across the risk. The coverage ratio is 45.6. It is clearly down after the sales, but we are almost at the same level of last year. We are sure that we are going to recover higher in the coming months, but it was important for us to really drop the stock of NPL, NPAs, NPE by 25%. Cost of risk is at 58%, is already incorporating the cost of the sales that was already included in our results, and clearly is also influenced by the sale. But the current environment and what we did and what we are now observing in terms also of the default rate is keeping us comfortable on the projection of the coming months, and we are somehow planning to keep the cost of risk under control. Capital fully loaded CET1 is at 10.8, plus 18 bps year-on-year, flat quarter-over-quarter. The phasing is down, mainly to IFRS 9. Risk-weighted assets slightly down and stable year-over-year and stable quarter-over-quarter. Now, let me elaborate a bit on this slide. We reported an increase of what we call extrajudicial claims, is also something we can call reservation of rights. These are the simple letters that are sent to the bank with an amount of claiming that most of the case is characterized by lack of documentation, lack of legitimacy, and causal nexus. Moreover, these extrajudicial are sent by the same consultant company on behalf of some institutional investors. It's a sort of serial claims. As we are a serious institution, we are treating that. Whatever is coming from the bank seriously, and we analyze deeply what is coming. In this case, we ask also some external legal experts to give our opinion, and according to this bank legal expert, such kind of claims are generating strong doubts in terms even of accounting obligation for the bank to make provision. Despite that, the bank created provision. The fact that these are serial claims, I just repeated to you, are coming from the same consultant company. We got also the beginning of August another claim. Due to the nature of this kind of claims, the fact that we observe in most of them even a sort of indetermination on the amount in that is written on this letter about the dimension of the claim, the timing when this claim is addressed. Moreover, all of them don't have documentation proving anything. That's why this time we decided to give mandate to the lawyers to evaluate any legal action to protect the rights of the bank. Now, just to add some additional consideration to the position of the bank, we were already saying that the bank has a very rigorous approach in managing all the claims. The track record that we are experiencing in the last month is confirming that we are on the right path. Just from the beginning of 2022, we have Florence court decision in favor of the bank, Milan appeal court in favor of the bank on the 6th of May. Moreover, in May 2022, there was this appeal court judgment that fully discharged the former chairman and general manager in the criminal court case 2008 to 2011. That is an important portion of all the claims that we have. This may pave the way for fairer development in all civil cases. That's why the reason, even if we have some, and one in particular, extrajudicial claims for financial information, that is the one where Vigni and Mussari were practically discharged. One of these case is moving to the court phase. Now, let me just conclude by recapping. We reported a net profit after the disposal of EUR 900 million of NPEs, dropping by 1/4 the total stock. The operational activity of the bank is showing resilience. We are moving at a pace of double-digit in a year, and net interest income is giving strong comfort that the assumption of our plan are even more conservative. NPE ratio went down to 3.9, and the coverage ratio is 45.6, slightly below the previous year, but is also giving a sign that the sales portfolio will allow us also to restore a better coverage in the coming months. We have a stable position in terms of CET1, 10.8. What is also important, we are progressing in the execution of our business plan. I think it's really important to underline that we presented the plan 40 days ago, and in 40 days we achieved it. We signed agreement with unions for 3,500 voluntary exit. We sold the portfolio. DG Comp authorization came. We already filed ECB application for the general meeting of shareholders that was called for the mid of September. Are all signals that the bank is progressing, not only on the commercial activity, but full steam in order to implement the plan. We are confident that we will be successful, and will be difficult to stop our determination. Thank you very much. We are available for questions. Excuse me, 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 touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question from the conference call in English is from Alexey Gogolev with Bank of America. Please go ahead. Thank you very much for the call. It's very good to see that you remain profitable quarter- after- quarter. My question is about the capital increase the government committed to participate at least proportional to the size of the government stake. Now is not the best time for maybe the bank's equity raises in case private sector doesn't contribute enough. Do you think there can be a greater support from the government in excess of this proportional participation? Hello? You know, just as you know, the condition for the increase of capital should be a market-based increase of capital. We don't foresee any situation where the government should increase its portion. Despite that the environment quite difficult, we are confident, and we are progressing and making everything that is necessary in place in order to get there and to start our easy plan. I see. Okay. Says thank you very much. The next question is from Giovanni Razzoli with Deutsche Bank. Please go ahead. Good morning to everybody. Three questions. The first one is on the fee generation in the second quarter. You've commented that the, you know, quarter-on-quarter decrease was mainly due to a slowdown in upfront fees. I was wondering whether in the second half, do you plan to revise a bit your commercial strategy or whether you will, you know, follow the market evolution to remain more defensive in terms of commercial approach or so to have an idea of the second half trend for the fees. The second question, clearly we asked this question to all the banks. If you can please provide us with, you know, guidance of the NII for 2022 or 2023 as we're entering into a significantly different context this year of NII compared with the last 10 years. You've mentioned you may benefit significantly from the reduction in the cost of funding, so if you can share this with us. The last question, I apologize for this, but, you know, I'm absolutely not familiar with the legal risk, legal environment, so on and so forth. So if I take your slide number 21, and I see three bullets, I will try to put it as simple as possible. So, shall I read it, is that the first two bullets or the court decision in May and the previous one are favorable of the role of the overall, you know, position of the bank, while the August 2022 is not? Is my understanding correct? Thank you. Okay, Giovanni, I will answer on the first and the last. In terms of strategy, you know, already we presented in the plan the idea that we want to be focused on the asset of this, the world of wealth management. That's why we are also changing the business model by increasing the number of what we call Premium Advisor, revising the portfolio, the composition of portfolio, also optimizing the platform that we have, it's called Athena, for better understanding the needs of customer and having a value proposition that better fit the customer profile. Are all things that I believe, we believe, that will give additional boost to the growth of this kind of business where, you know, Monte dei Paschi is really a champion. You know, it's not because of me, it's because of them, because I just joined the bank, and I can enjoy the strong position that this bank has in terms of capability in asset management, bancassurance activity. Now, about this slide, probably we were not clear enough. The two sentences are in our favor. The third one in May 2022 is in our favor. What we are just connecting the last two bullet points is that we had. There was a positive judgment discharging totally the former chairman and general manager for what we call this criminal court case, 2008, 2011. We are just saying that one of these extrajudicial claims on financial information was transformed into a judicial case, but covering the same topic for which there was the total discharge. We wanted just to connect how this kind of bills that are unfortunately consuming a lot of time in the bank. It is necessary for this kind of, how to say it, of matters, really, to be clear and to expose in a very strong way how we are determined to solve this issue, at least to address in a proper way and to make our reason valid to defend in front of everybody, right? Now, on technical things regarding net interest income, I will ask Andrea. Thank you. Ciao, Giovanni. On net interest income, there is, let's say, a mix of effects that we can expect in the next few quarters, starting from, let's say, the simplest one to forecast, on the TLTRO. On the one hand, as planned, we will not have any more the fixed contribution coming from the spiral of the special period on the 28 of June. On the other hand, the increase of the ECB deposit rate by 50 basis points will reduce the cost of our deposit with ECB, and so this will be a positive. This is about our position with ECB. All in all, given these conditions, the expectations are better than we initially anticipated. Coming instead to the commercial dynamics, they look positive. First of all, the Euribor, the six-month Euribor, which the bulk of our variable loans are indexed, is almost at the level that we were envisaging in the plan for 2024. Now it is daily 0.6% +, roughly. Of course, this will have a positive impact. Already in July, the average rate on loans is 30 bps higher than previously because the rate, the base rate has started increasing in June. Also on the new business, we see spreads that are above the benchmark. The combination of all the effects makes us optimistic as we were expecting the NII might be a good surprise compared to the expectations that were embedded in our business plan. Thank you. The next question is from Jakub Lichwa with Goldman Sachs. Please go ahead. Hi there. Thank you for holding the call. A few questions from me. The first one is about the agreement or rather the business plan you agreed, I think a little over 4,000 exits. That's on a gross basis, I believe. Actually, on net basis, you have agreed with the FABI 3,000 on the gross and under 2,000 on a net basis. Could we please reconcile these numbers? That will be question number one. The second question is about the nature of the pre-underwriting agreement. If I'm honest, I'm a little surprised that, you know, you have... Well, positive for you obviously, but a little surprised that you've got quite a lot of banks joining the exercise in the context of the operating environment. I was wondering how committed, I suppose, the banks are at this stage, and what are some major conditions attached to it? Then a third question is on the legal claims. I mean, you seem to be adding them right now at not a very convenient time, I suppose. What would you say are the chances of resolving some of those claims ahead of the capital raise, please? Maybe a final question, I'll just on that slide 20, 21 with regards to the claims. You are saying that one claim has evolved into a judicial one in the court case, and then you also added EUR 0.8 billion of extra-judicial ones in August. I suspect these are separate things. That's it from me. Thank you. Thank you. I would like to answer to the first question. The agreement with the union is covering this voluntary scheme. We have a plan, 3,500 people to leave the bank according to the special conditions that are connected with this plan. The number of people eligible for this fund, 4,084. In our plan we assumed sort of acceptance rate, substitution rate of around 80%. According to our estimation, this 80% will bring a benefit of EUR 270 million per year in terms of lower costs. In order to promote this exit, we plan to have extraordinary expenses for EUR 800 million. Now, the agreement with the union is an agreement where we like also the idea of injecting the bank new energy. But the conditions are set in a way that there is a commitment to meet during the plan period in order to define a plan of hiring once the conditions to do it are in place. We will monitor it, we will be closely analyzing with the union, but at the current stage, we have just to have this action consistently connected with the development of the plan in a positive way. Now, about the last point. Okay. Just... Sorry, apologies for jumping in. Just to agree, you're essentially partially addressing the 4,000 exits for the time being, to have some sort of breathing room, if you will, and you will address the rest over the course of the plan with the unions. Is that correct? No, no. Just to be clear, this voluntary scheme expires at the end of November. We agree to have 3,500 that, putting it this way, out according to this scheme, and this will happen within this year because the fund expires at the end of November. Okay. In our plan, we have additional turnover, that is the natural turnover of the bank. At the end of the plan, we plan to have more than 4,000 people out. Right. I don't know if it's clear, no? Okay. Okay. About the. Underwriting. Yes. No, the right thing I will ask, Andrea. Yeah. Should I answer? No. Yes. Okay. Take the last one. Okay. On the underwriting syndicate, again, as you mentioned, the extension of the syndicate to other four primary financial institutions is a testament literally of the interest that there is in the market towards our bank. The terms and conditions of this underwriting agreement that were extended to these four banks, I mean, these are the same that were announced on the 23rd of June when we presented our business plans. So these are standard conditions with the conditions precedent and information rights that are in line with the ones of previous comparable transactions. Of course, a signing of the underwriting agreement is expected at the time of the launch of the rights issue. On the last question. The last question, just to clarify, this, the last point is a transformation from extrajudicial to judicial, but will not change the number of cases. It is one, changing the position that, as it happened in August, is not in our table in the right place, but will not change it at all. Okay. There is just that extra EUR 0.8 billion on top? Great.