Good morning. This is the Chorus Call Conference operator. Welcome, and thank you for joining the MPS Group first quarter 2023 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 0 on their telephone. At this time, I would like to turn the conference over to Mr. Luigi Lovaglio, CEO of MPS. Please go ahead, sir. Thank you very much. Good morning, everybody. Many thanks for joining us for Monte Paschi first quarter results. I'm pleased to present today a very good set of results. Monte Paschi is back, and in good and healthy shape, and the business plan targets are really concrete and at sight. The fifth quarter of last year, when we charged the one-off extraordinary costs relating to voluntary exit of more than 4,000 colleagues on the fifth of December, it was the Monte Paschi turning point. The fourth quarter, we started to report 1 month of such structural benefit. Today, with the first quarter results, we provide facts about our sustainable profitability that makes easily understandable what could be the return for shareholders starting from this year. Let me now move on to some highlights on the first quarter results. As I mentioned, this was the first full quarter after reduction of 4,000 headcount, and therefore a quarter where the bank had the possibility to deploy its full potential. We reported a net profit of EUR 236 million versus EUR 10 million in the first quarter of last year and versus EUR 156-60 million achieved in the fourth quarter of 2022. In the first quarter of 2023, we have already achieved one-third of the 2024 business plan target. The net operating profit reached EUR 309 million, plus 52% quarter-on-quarter, 2 times the results achieved in the first quarter of 2022. The gross operating profit reached over EUR 400 million, almost 25% up quarter-on-quarter as a result of higher revenues and lower costs. Further improvement quarter-on-quarter on net interest income despite the expected TLTRO negative one-off. The net interest income dynamic year-on-year is above 50%. Rebound of fees up by 7.3% quarter-on-quarter, driven by both wealth management and banking fees components. The costs are significantly down. In particular, HR costs are decreasing by almost 20%. As I was anticipating, in this quarter, we started to fully benefit of the staff exit realized in the last December. This was one of the main initiatives of the business plan. We realized such initiative rapidly and with the well-thought preparation, thanks to which it went smoothly with no impact on bank's commercial capability. Our cost-income ratio is now at 53%, down by 7 percentage point versus December 2022, and more than 15 percentage points versus first quarter 2022. Quality of the asset confirmed at very good level with gross NPL ratio at 4.1%, still improving versus December and better than 4.8% of last year, Q1. The cost of risk is stable at 55 basis points, while the NPL coverage improved by more than 200 basis points. Very good up capital ratios. The Q1 fully loaded, including a profit of the period and after full implementation of the internal model review, reached 14.9%. Such impact on risk-weighted assets of the internal model review is lower than what was expected in the business plan. Last highlight on liquidity, hot topic of the last weeks. 3 positive messages. At the end of March, the raw stock for direct and indirect commercial savings increased. The LCR crossed the 200%, the net stable funding ratio stays firmly above 130%. Let's go now through more details of the results. As I just mentioned, we reported in the quarter EUR 236 million net profit, up more than 50% compared to the Q4. In Q1 last year, the net profit was just EUR 1 million. This is the second quarter in a row of positive results. We generated in the last two quarters almost EUR 400 million of profit, this underscores the rebuilt bank's capability to deliver sustainable performance. With a looking forward view, I believe that this quarter could give a grounded direction of yearly returns potential. Quality of the results and performance capability are reflected in the net operating profit dynamics. As you can see on the next slide, we reported more than EUR 300 million net operating profit, twice the level of last year and more than 30% compared to last quarter. Key drivers of such dynamics were operating performance, improving spreads, and stable cost of risk. Focusing now on operational performance, this slide shows how operating income and cost were significantly improving the goals. Operating income reported almost 5% growth quarter on quarter, supported by both interest income and fees and commission. The year-over-year dynamic was close to 1%, underscoring our franchising potential and operating capabilities. Similar positive dynamics on cost down by 8% quarterly and by almost 14% yearly, reflecting the positive change in the bank's structural costs. As a result, gross operating profit crossed EUR 400 million, increasing by almost one-fourth versus last quarter, and more than doubled year-on-year, excluding last year capital gains. The structural cost reduction and the revenues enhancement bring the cost-income ratio down to 53%, better than the 2026 target of the plan set at 57%. Such achievement in the operational efficiency gives comfort as regard the sustainability of our first quarter results in the coming quarters. With this respect, let me focus on net interest income evolution. The net interest income kept on showing a positive trend, growing by 1.2% in the quarter. It reflects on one side the positive sensitivity to higher rates of our balance sheet, some loans growth, and active margin management. On the other side, it reflects the negative impact of TLTRO compared to the positive one of the previous quarter. Just excluding such negative effect, the net interest and dynamic of the quarter would exceed +20%. We succeed in our proactive margin management with twofold approach. The beginning of the quarter, continuing to focus on margin, remaining selective on corporate, and following customer retail request of higher fixed rate via conversion into bonds. The gradually repricing deposit was put in place in the second part of the quarter. Spread improved by 71 bps in the quarter. Side deposit market share grew according to February last data available. Total commercial customer direct and indirect savings volumes increased. Looking forward, I believe that this quarter net interest income level can be a good guidance on average for the coming quarters. Moving on to volumes, you will see in the next slides some dynamics which I have already anticipated. Let's start with loans. As set in our business plan, we keep our focus on retail customer as small and medium enterprises. We increased during the quarter the stock by almost EUR 700 million, while preserving our conservative standards in underwriting, considering as well the increasing rates environment. According to the latest February figures available, we also increased our market share. We are progressing in building up our in-house consumer lending capability, we count in the second part of the year to deliver some concrete effects of such actions. Moving on to savings, as you can see on the slide, commercial customer direct and direct savings increased in the quarter by almost EUR 1.8 billion. The mix of savings throughout the quarter reflects the twofold approach mentioned while commenting the net interest income evolution. It is well visible in the monthly mix dynamics we present on this slide. As you can see, we reported a constant growth in assets under custody over the last 6 months. By the way, we were gaining market share on site deposits, both in January and in February. Thanks to our proactive margin management, we entered the quarter with the month of March showing a positive dynamic also of the deposit base. This trend was continuing also in April. We have a powerful network, which over the years succeeded in building up strong relation with our clients, ensuring to Monte Paschi a solid and loyal customer base. We are confident that such strength will support the development of the bank also in the future. The positive network performance is reflected on these slides, where positive influence in both assets under custody and assets under management contributed to the increase of the stock. By 4.7 quarter and quarter, and 6.6 since September. In addition to the already mentioned good performance in assets under custody in the 1st quarter, we reported the highest net flows over the last 12 months, also in the overall asset under management products. Such level net flows supported as well the performance of the in-house so-called Gestioni Patrimoniali, positioning the bank as number 1 in Q1 as Assoreti ranking for net inflows. Our resilience on customer funding enabling us further improve our liquidity position, as you can see on the current slide. We can rely on a solid and loyal customer base, with 75% deposit coming from retail, as small and medium enterprise clients eligible for LCR purpose. Resilience is reflected in market share on said deposit trend, increased by 5 basis points also in the quarter. For lean, we succeeded to further enforce our LCR ratio, crossing the level of 200 the end of the month of March, while keeping the net stable funding ratio above 130%. We can count on a counterbalancing capacity of more than EUR 25 billion, which gives further confidence about the structural strength of our liquidity. Let's move on to the next slide relating to the Italian Gov's portfolio. The world stock is at EUR 10 billion, with a slight decrease versus December 2022. There was also a mix following the maturities from fair value for OCI to the amortized cost portfolio, in line with the business plan strategy, aiming at reducing PNL volatility. Credit spread sensitivity remains stable at EUR 700 million, while slightly longer duration is the result of the maturities in the quarter. We reported in the quarter a positive dynamic of the fees, as you can see on the slide, both on banking fees and wealth management. Together, fees are up by more than 7% compared to the previous quarter. The dynamic of wealth management fees, up by 12%, is the result of the positive network performance with a record highest gross flow in the last 12 months. Let's move on costs. We reduce significantly our structural cost base, thanks to the 4,000 staff reduction realized at once on the first of December 2022. The HR cost went down by almost 20% year-on-year, and by 12% compared to the Q4, when a month of the benefit was already booked. We keep reducing also non-HR costs down, both in the yearly and quarterly comparison, despite the inflation pressure. Costs with our zero-based approach are persistently at the center of our strategic focus, as it must be for any healthy organization. We want to be ready and well equipped to support our operational profitability when interest rates will normalize. That's why the level of cost of this quarter is the challenge we would like to face for the coming quarters, despite the inflation pressure. A few words on asset quality. We had in the quarter an additional confirmation of the overall quality of our loans portfolio. The NPL ratio stock, the NPL stock remains stable at the level of EUR 3.3 billion. The gross and the net NPL ratio went slightly down quarter on quarter at 4.1 and 2.1% respectively. NPL coverage, now at 50.2%, has increased by 210 basis points quarter on quarter. The cost of risk of the quarter is at 55 basis points, stable versus the previous quarter, and allowing us also to increase some overlays. At the current stage, no particular signs of portfolio deterioration have been observed. That's why we can confirm our guidance of the cost of risk for the full year, not higher than the previous year. Now only a few words on the extraordinary litigation and extra judicial claims, as there are no changes to what we're disclosing during February full year results. Gross petitum for legal proceedings related to financial information is unchanged since then. I just would like to underline that only three cases count for about 90% of the amount of EUR 1.6 billion of their own litigation, excluding civil parties, and that there is an additional positive judgment since our last presentation. Now on capital. The quarter one pro forma ratio, including net profit of the quarter, is at 14.9%, fully factoring and increasing risk-weighted assets for EUR 3.7 billion due to the regulatory headwinds. As I mentioned, the overall impact was lower than previously expected. The ratios are well above the prep requirement and also above the 2024 business plan target, the set level for quarter one at 14.2%. We have the capability now to generate further capital going forward. Given our first quarter high level, we feel confident to revise upwards our previous guidance to higher than 50%. Just a few closing remarks before moving to the Q&A session. The net profit of the quarter confirms a new capability of the bank to generate sustainable returns. Based on the current evidence, we reasonably expect to replicate this performance over the next quarters. Operating dynamic has improved. Gross operating profit is up by 20%, 25% quarter-on-quarter, this 2 times versus first quarter 2022. This thanks to both higher revenues and strong commitment in reducing costs, with a significant improvement of cost income now at 53%, already ahead of the plan for 2026. Quarter one fully loaded at the sound level of 14.9%, despite the EUR 3.7 billion increase in risk-weighted asset for regulatory headwinds, confirming the bank's capability to generate capital through performance. The bank relies on a solid and loyal customer base that keeps supporting us and ensuring high level of liquidity. This is the time, finally, we can start to generate value for all our stakeholders, creating the basis for an adequate valuation of the bank. This is the time of results and not only commitment and expectation. The business plan targets are at sight. Thank you very much. Thank you. This is the Chorus Call conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone with a question may press star and one at this time. We will pause for a moment as callers join the queue. The first question is from Noemi Peruch with Mediobanca. Please go ahead. Good morning. Thank you for taking my questions. I have a few. The first one is on NII. How do you see the competition in the deposit market evolving? After the recent rate development and the deposit people served, would you be in a position to give us some more color on your expectations on NII for 2023 and 2024? On capital, thanks for sharing the guidance for the year. Throughout the year, do you also expect some other great efficiencies, efficiency measure, such as synthetic securitization, or would you expect the retainer needs to be the main driver? Lastly, on legal risk, can you share with us the most important dates on future judgment? Thank you very much. Okay. Unfortunately, there was not a perfect possibility to hear, and I'll try to answer. If we miss something, please let us know, right, and repeat the question. Competition on deposit. The competition is quite high, and we have two kind of competition, of course. One is with banking in terms of rates that you have to apply to deposit to customer. The second one is competition with what is offered in the market in terms of bonds with a very attractive interest rate. I believe that this is the competitive advantage of Monte Paschi. We have a strong network capability and a loyal customer base. As we were showing from the beginning of the year, despite slight decrease in switching from deposit to asset under custody, our market share increased. Competition is high, but we are well equipped, and we keep, as I was mentioning, in growing on deposit base and also the last figures available are showing that this positive trend is confirmed. Capital, we don't plan any particular action because we are quite strong, and we count a lot on our capability to generate capital. Through performance, that's why we were mentioning about the upwards guidance relating the capital. The bank is now in a process that, as we used to say inside with our business people, the capital, you cannot buy capital always. You should be capable to generate it. We think Monte Paschi is showing this capability. With the reduced cost or the structural cost of the bank, I think the profitability is becoming a strong evidence of what is our capability about performance quarter by quarter. Legal risk. About legal risk, right. Clear, we are following all the criminal litigation that are on progress. Time frame is quite differentiated. We have a sort of hearing before the Supreme Court for what we call the case of period 28/2011, and this is scheduled in October of this year. The second degree of judgment regarding what we call the proceeding 9/55, relating Profumo Viola, has been starting on the 31st of March, and it will continue on, and probably it will be completed for the end of the quarter, on the end of the 3rd quarter. There is the preliminary hearing on the issue of the bad loans, and this is scheduled for the 12th of May. We are following of these cases, I believe the approach we adopted is putting us in a very comfortable position, especially because what is happening up now in terms of judgment of the court. The overall situation is putting the bank in a confident position. Also in connection with the future development of all these criminal proceeding. By the way, I want to stress once again that our balance sheet is very well equipped to face any development of this kind of criminal proceeding. Thank you for the color. I just have a follow-up question on NII. If you could just update us on your expectation for NII in the year 2023, 2024 with the current rate environment. Thank you very much. Okay. I was trying to be clear when I was presenting, and I try to be even more now. We said that, the level of first quarter is on average a good guidance for the coming quarters. I think it's just a matter to make a simple calculation. This is a result of expectation in terms of interest rate. The fact that the TLTRO in the first quarter had a negative impact, we don't expect the same in the coming quarters. Third one element is quite important as well. We show a strong capability in margin management, combined and having a strong, also view in terms of trade-off, making some preferences on retail deposit. I think this is rewarding us in, as you can see from the LCR ratio. That's why we keep confidence that, confident that if we are continuing this action and with an effective margin management, we can stick to the guidance I just mentioned before. Thank you. The next question is from Corinne Cunningham with Autonomous. Please go ahead. Good morning, everyone. Could I ask a question, please, about MREL, what your current ratio is and what your plans are in terms of issuance going into the year-end? I'm sorry to come back to NII, does this mean, does your guidance mean that if we get further rate rises from here, the benefit of those would basically be passed on to depositors and would not drop through to the bottom line? Is that your guidance as well? Would higher rates actually give you some further benefit? Thank you. Okay, I'm just answering about Net Interest Income. answering about Net Interest Income. Andrea will say something about PRIMA. Yes, we still expect to have a positive trend in terms of coming from the rate. That's why Net Interest on the side of income is expected to keep growing. Clearly, gradually, we are going to put in place a process of repricing of deposit. We already started. That clearly will increase the base of interest expenses. Overall, as I mentioned, if we look at an average of the next three quarters, it's clear that the first quarter is a sort of threshold of the average that will come from the coming quarters. On MREL, the ratio actual as of first quarter, at 31st of March 2023, is 24.7%, which gives us comfort for the achievement of the target to January 2024. This will likely give us the possibility to reduce the size of our funding plan, below EUR 2 billion as regards MREL eligible liabilities for 2023, of course. Thank you. The next question is from Andrea Lisi with Equita. Please go ahead. Hi. Thank you for the presentation. The first question is on fees. We see a rebound versus the bottom reached in the first quarter, but still obviously below on a year-over-year level. Just to if you can provide us an indication of which are your expectation for fee going on, and especially also on your strategy regarding upfront fees and recurring fees, how the mix should be seen. The second question is on the direct funding mix. We have also in the presentation, we saw a strong increase in repos, some normal decline in current accounts. Just if you can provide some color on that and, which are your expectation going on, also considering, the repricing strategy you put in place. Thank you. Okay. Sorry. I start with fees about the question on fees. As I mentioned, in the first quarter, we reported two important achievement. One is the record, the highest inflow, gross inflow in the last 12 months and as well the highest net flows in the last 12 months. I just want to recall that we put in place a new organization of the bank with 14 regions focused on retail, starting from the 5th of December last year. It's clear that from the commercial activity now, we had a short slow starting, but now in the last two months of the quarter, as I mentioned, we were observing a very good improvement of the performance. That's why I believe that this level of performance can continue and further improving because our commercial organization with what regime, and I'm expected to be more and more efficient coming forward going forward. We count to keep a pace of growing slightly growing, but we are keeping growing in especially in wealth management fee. On what is the banking fees, clear that these are less dynamic growing because it's connected much more with the customer base because new customer are not influencing too much the level of these fees. Anyway, we keep also, we are confident that, especially through some fees connected with foreign transaction, where we are reporting a significant improvement on what is the trading activity of the bank, we will also confirm the good level at the good pace that we reported in the first quarter. For deposit, I'm just saying it's clear that the trade-off between cost and volumes is for us very important. On retail, we want to keep growing. That's why also in the forecast and the guidance on net interest income, we took in consideration some additional costs we can report due to the fact that we want to increase especially retail customer base. But I believe the volumes should grow. Andrea. Yeah. On specifically on funding sources diversification, first of all, on repos, the trend is not necessarily a guidance on funding sources diversification, because then you should match it with repos on the asset side, is more related to market making activity of our investment banking operations. While on funding strategy overall, we confirm the sources we have in the business plan, so mainly commercial deposits, as the CEO was saying, plus our funding plan, not only MREL-eligible liabilities, but also covered bonds. Now the market is reopening for Italian banks. Finally, we confirm the strategy to partially replace the TLTRO with MRO when TLTRO will expire, will mature. Thank you. The next question is from Hugo Cruz with KBW. Please go ahead. Hi. Thank you for the time. I have quite a few questions. First on NII and the TLTRO, you mentioned a one-off in Q1. I just wanted to understand if that's, you know, the decline Q1 of the contribution, or if there was an actual negative one-off in Q1, and if you could quantify that. Second, you know, the CT1 ratio, you mentioned you want to go above 15%. Is there any room to use that capital, which is quite strong, to buy back shares from the government rather than having the government put shares into the market? Third, you know, you have the government as a main shareholder. Perhaps you have more visibility on the bank levy than other banks. What are your thoughts on that? Do you think we could see a bank levy from the Italian government this year? That's it. Thank you. Okay, I will hand over the question relating to the buyback and this potential levy on banking. About the levy, honestly, we don't have any information about that, let's see what is going to happen, right? I think it's too early to comment on that. Second, I think about capital and clearly the excess of capital we have. First, we would like to have some excess of capital. As I said, looking forward, clear we have the capability to generate further capital going forward, right? As I was mentioning in one of my previous presentation, I believe that this capability, as the capability to generate capital significantly quarter by quarter, creates the room for the consideration to anticipate the dividend distribution already with the profit 2024. We are much more focused on that than any buyback. Andrea, now TLTRO. Yeah. On TLTRO, in the first quarter, due to the increase of the CA rate, we had around EUR 30 million negative one-off impact. Of course, we will have something also in the second quarter because of the increase, even if the increase is lower than what happened in the first quarter. All right. Thank you. The next question is from Giovanni Razzoli with Deutsche Bank. Please go ahead. Good morning, thank you for taking my question, that are very quickly. The first one is if you can provide us with the target LCR ratio post TLTRO repayment. The second one, sorry, the clarification on your CT1. I mean, I have misunderstood your figures. If I look at the press release, you mentioned that the fully loaded CT1 is 14.4%. If I look at the slide number 18 of the presentation, I see 14.9. I'm a little bit confused with those two numbers. Thank you. Okay. The target LCR, as you remember, we were saying that in the plan, we have a target that is about 160, and I think we should go from this target. About the 14.9, I think, as I mentioned, the 14.9, and we have in the executive summary, includes the profit of the period. This is the difference compared to 14.5. Thank you. The next question is from Alexei Lougovtsov with Bank of America. Please go ahead. Hi. Hello. Thank you very much for a great quarter for Monte Paschi investors. A quick question for you, if I may. What's your TLTRO repayment schedule in the next 12 months, and how are you planning to replace that funding with something else? We have to repay EUR 11 billion in June, another EUR 3 billion in September, and the remaining EUR 5.5 billion in the first half of 2024. We will repay thanks to liquidity we have on the asset side, plus, as mentioned before, we will withdraw some billion of MRO. Over time, we plan to further minimize the reliance on ECB funding, thanks to our on this. I see. LCR, you mentioned would go down because you will use some of your existing liquidity, right? Yeah. As planned, and as, so, being our business plan target- Yeah. we're trying to converge to 160%. I mean, above 160% as mentioned- Oh, 1, 160. Yeah. I see. Sorry, I'm not sure I got the number correct. EUR 11 billion in June, EUR 10 billion in September? EUR 3 billion in September. Oh, EUR 3 billion. It's 19.5 overall, 11 June, 3 September, 5.5 first half next year. Okay. Okay. Thank you very much. Pleasure. As a reminder, if you wish to register for a question, please press star and one on your telephone. Mr. Lovaglio, there are no more questions registered at this time. Excuse me. There is a question from Gilles de Bourrousse, Octo Finances. Please go ahead. Yes, good morning. Thank you for taking my question. Just one quick follow-up about asset quality. I wanted to know what is the size, the current size of the overlays for, in terms of loan loss provisions. Loan loss reserves, sorry. Thank you very much. I'm sorry, but I mean, I think the volume was low. Could you speak louder because. Sorry, sorry. I didn't catch the question. My question related to cost of risk, I was wondering what was the current size of the management overlays or the extra provisions you booked, for example, during the Covid and after for the shocks into the energy crisis, something like that. Thank you. Yeah. We increased our overlays compared to the previous period. Now, the overlays are above EUR 140 million. Thank you very much. You're welcome. Mr. Lovaglio, there are no more questions registered at this time. I turn the conference back to you for the closing remarks. Thank you very much. Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.