Good morning, this is the Chorus Call Conference operator. Welcome, and thank you for joining the MPS Group second quarter and first half 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 and zero 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 2023 second quarter and first half results presentation. We are now well beyond the turning point in our strategy to be a clear and simple commercial bank. We are on a fast lane. After 12 months since the launching of our business plan, we have achieved very good results. More than EUR 600 million profit in 6 months, firmly on the way to cross EUR 1 billion at the end of the year. EUR 1 billion lower in NPE stock, with a new disposal of EUR 250 million just finalized. EUR 160 million lower cost, with cost-income ratio at 49%. CET1 fully loaded at the record level of 15.9%, that proves the bank's capability to generate capital organically and give us the confidence to be well-equipped, even in a very adverse scenario, as it is proven by our almost 12% CET1 fully loaded results in the recent EU stress test exercise. As I was mentioning, we have earned now a straight line and set the right speed to accelerate on our targets. Let me now move on to some additional highlights of the second quarter and first half results. We reported in the second quarter a net profit of EUR 383 million, up by almost 63% quarter-on-quarter, leading to the six months net profit of EUR 619 million. Nearly 12 times the results achieved in the first half 2022. Net operating profit in the first six months reached EUR 734 million, almost 3 times compared to the last year, with a strong contribution to the second quarter, up by 38%, thanks to higher core revenues, continuous cost discipline, and stable cost of risk. Looking at the core revenues, the net interest income is up by 14.6% quarter-on-quarter, driven by improved commercial spread and lower impact from ECB net position. Commissions are also up by 2% quarter-on-quarter, thanks to increasing banking fees and resilient wealth management fee. Excellent results in cost management. The positive trend in cost savings has continued also in the second quarter, with a decrease of 3.3% compared to the previous one, mainly thanks to further reduction of non-HR costs, down by 8.2% quarter-on-quarter. The total saving in the first six months reached almost 15% year on year, thanks to both HR costs, down by 19.4%, fully benefiting from last year FTE reduction, and non-HR costs, down by 6.2%. Our cost-income ratio continues to improve, and in the first half, reached 49%, so we have done better and faster versus our business plan. As regard to asset quality, the gross NPE ratio on pro forma basis is down quarter on quarter at 4%, and that's after the just finalized disposal of EUR 250 million of NPE. This is another step in the implementation of our strategy. Coverage ratio pro forma, after the impact of the sale, almost at 50%, higher than at the end of 2022. The cost of credit after six months is stable at 54 bps. Excellent results in our capital position, with CET1 fully loaded ratio in June, increasing to 15.9. Almost 100 basis points versus the first quarter 2023, thanks to the organic capital generation. We have a buffer on Tier 1 ratio requirement of more than 500 basis points. We reached one of the highest capital ratio in the Italian banking landscape. The total commercial savings were up by 0.9% quarter-on-quarter, contributing to the increase of the stock by more than EUR 1 billion since the beginning of the year. We keep a sound liquidity position with LCR ratio above 180, and net stable funding ratio above 130%, even after TLTRO June reimbursement. Let's go now through more details of the result. As I just mentioned, we reported in the quarter EUR 383 million of net profit, which is higher by 62.6% quarter-on-quarter. This result was strongly supported by an acceleration operating performance, allowing to reach EUR 619 million after six months, almost 12 times the net profit of first half of last year. Quality of the results and performance capability are reflected in the net operating profit dynamics. In the second quarter of the year, we reported EUR 426 million on net operating profit, which is 38% higher compared to the previous quarter. After six months, net operating profit reached EUR 754 million, almost 3 times last year's result. Key drivers of such positive dynamics were growing core revenues, effective cost management, and stable cost of risk. Now, let's move to the operational performance. Gross operating profit reached the level of EUR 523 million in the second quarter, and is up by more than 26% quarter-on-quarter, supported by double-digit growth of revenues, 10.6% quarter-on-quarter, and decreasing operating costs, -3.3%, despite inflation. After six months, the gross operating profit reached EUR 957 million, almost twice compared to the first half of last year. This growth was driven by both higher operating income, up by more than 19% year-over-year, and significantly lower operating costs, down by 15% year-on-year, further improving the KPIs. The structural cost reduction and the revenues enhancement brought the cost-income ratio down to 49%, versus 69% reported in the first half of last year, and the level achieved is already better than the 2026 target of the plan, set at 57%. Now, let's look at net interest income evolution. In the second quarter, net interest income kept showing a positive trend, reaching EUR 578 million, up by almost 15% quarter-on-quarter, continuing to benefit of improved commercial spread, up by 15 bps in the quarter, thanks to proactive margin management. After 6 months, the net interest income is exceeding EUR 1 billion, growing by almost 64% year-on-year, supported by 165 bps of spread increase. Now, moving on to volumes and starting from loans. As we can see, performing loans are almost stable since the beginning of the year in small business and medium enterprises. While retail volumes were affected by lower new mortgage production, not fully replacing maturities in such a high interest rate environment. Moving on to savings. As you can see on the slide, commercial customer direct and indirect savings increased since the beginning of the year by more than EUR 3 billion, supported by more than EUR 1 trillion growth in the quarter. We continue to be focused on managing the market trend migration from deposits towards assets under custody, and successfully, we kept the growth pace on more than EUR 1 billion per quarter, as it is visible on the slide. It is also important to mention that based on the last data available of May, we are gaining market share on sight deposit, both versus March, 1 basis point, and versus December, 14 basis points. Volumes of indirect funding reported in the quarter showed the same positive trend, with an increase of 2.3% quarter-on-quarter, driving the growth of the stock by 7.1% since the beginning of the year. We keep to be number one in Asset Gestione ranking for net inflows for the so-called Gestioni Patrimoniali, confirming once again the strength of our network. On this slide, we are presenting the stock of our Italian bonds portfolio that shows in the quarter a reduction, both of the duration and of the credit spread sensitivity of the fair value through OCI portfolio. At the end of June, there was a temporary increase, already reduced at the beginning of July, in the trading portfolio that relates to market making activity on Italian government bonds. Now, moving on fees and commission income, let me spend a few words on that. If we consider the overall level of the quarterly fees, I mean, total banking fees and total wealth management fees, we reported a positive dynamic of +2%. It results from a 4.4 growth of banking fees on homogeneous perimeter and a 2.3 growth on wealth management fees. With this respect, we are observing also in this quarter, a certain resilience of the continuing fees, while upfront fees are still affected by market volatility and customer preferences for investment in fixed income securities. Similar dynamic we are observing after 6 months, with banking fees fairly stable compared with the previous year, resilient with management, continuing fees, and the upfront fees still under the pressure. Now let's move on cost, starting with the quarterly evolution. Operational efficiency continues to improve. We reduce significantly our structural cost base, thanks to the 4,000 staff reduction realized at once on the first of December of last year. Structural cost savings are confirmed also in the second quarter, with total costs further down by 3.3%, compared with the first quarter. That mainly thanks to a strong cost discipline on other administrative expenses, down by more than 8% quarter-on-quarter, that despite the inflation pressure. The impressive scale of structural cost reduction, we can see on the next slide, with an early comparison. In the first 6 months, total operating costs are down by 15% year-on-year. We are speaking about around EUR 160 million of savings, thanks to both HR costs lower by 19.4%, fully benefiting of the December staff exit, and non-HR costs, decreasing by 6.2%, thanks to the new cost governance model and the zero-based approach introduced in the bank. I would like to underline also today that the cost discipline is at the center of our strategy, as we want to be well equipped to support with further gain in efficiency, our operational profitability when interest rate will normalize. Now, a few words on asset quality. Yesterday, the bank has signed an agreement for a disposal of EUR 250 million of NPEs portfolio. Factoring in the disposal on pro forma basis, total amount on non-performing loans at the end of June amounts to EUR 3.2 billion, down compared to the end of March and versus the end of December. I believe it is worth to underline that since the launch of our business plan, the stock NPE decreased by EUR 1 billion. The gross NPE ratio on pro forma basis is at 4% and is lower both quarter-on-quarter and compared with December. It is also important to point out that the impact of the disposal transaction is already fully reflected in the healthier financial results of the bank. After the sale, the pro forma coverage of non-performing loans amounts almost, almost to 50%, higher compared to the 41.1% reported at the end of December. The cost of risk for the first half is stable 54 basis points, incorporating also an increase in the management overlays. I would like to confirm also in this quarter that at the current stage, no particular signs of portfolio deterioration have been observed. A few words on extraordinary litigation and extrajudicial claims. The gross petitum is unchanged since last presentation. By the end of this year, we could have important development, as some significant judgments are scheduled. We keep observing a positive evolution of the situation, given several favorable verdicts in judgments up to now pronounced by different Italian courts, the last one on the thirteenth of July. As I was mentioning in the previous presentation, our balance sheet is well equipped to face any potential scenarios. Moving to the next slide, capital. CET1 ratio is increased by almost 100 basis points in the quarter, reaching the record level of 15.9, confirming capability of the bank to organically generate capital. We have a buffer on Tier 1 requirements of more than 500 basis points, among the highest in the Italian banking system. Such strong capital position give us the confidence to be well prepared to face even very adverse scenarios, as it is confirmed by the stress test exercise, we are commenting one of the following slides. At the same time, give us also much more ground to anticipate the distribution of dividend with the profit 2024. Another evidence of our balance sheet strength is presenting the next slide. I'm referring to our liquidity position. We count, in fact, on a very solid, sound liquidity position. Counterbalancing capacity increased to about EUR 26 billion at the end of June. Liquidity Coverage Ratio, about 180% after the reimbursement of EUR 11 billion of TLTRO in June, and is well above the target of 160%. net stable funding ratio, firmly above 130%. In line with the strategy highlighted in the business plan, we are progressively reducing the reliance on ECB funding, that now represents 13% of our total asset, and we are anticipating the achievement of the 2024 business plan targets. Let me now take the opportunity of this call to comment on the results of EBA stress test for Monte Paschi. The outcome of this exercise is the best ever for the group. We reported 11.998% CET1 in the best scenario, considering the benefit generated by HR cost savings related to the 4,000 staff exit concluded on the first of December. Due to some methodological constraints, cost savings stemming from such a reduction were not considering the projection, and therefore the nominal results reported was 10.13%. Positioning, however, our bank among the best of the peers. Such results is the confirmation of the strong solidity achieved by the group and its capacity to generate sustainable profitability. Now, let me give an update of 2023 guidance on main items. On net interest income, we believe that the result achieved in the first half give us comfort for a guidance above EUR 2.1 billion net interest income for the end of the year, leveraging on the still high rate environment and considering some increase of interest expenses due to pressure on deposit and expected bonds issues. Fees are planned to be about EUR 1.3 billion, counting on resilience on banking fees and some positive development on wealth management. On costs, the guidance is to be below EUR 1.85 billion, as we believe that we can replicate the good performance of the first half. Considering the inflationary pressure and some seasonality of the end of the year for non-HR costs. The cost of risk is expected to be stable around the 55 basis points of the original guidance. Pre-tax profit is planned to be higher than EUR 1 billion. CET1 ratio, fully loaded guidance set at the level of around 16.5%. Just a few closing remarks before moving to the Q&A session. Pre-tax net profit at EUR 619 million, on the way to cross EUR 1 billion at the end of the year. Accelerating on operating performance with gross operating profit at EUR 957 million, almost doubling compared to the previous year, and expected to keep supporting the net profit generation, thanks to both revenues and lower costs. Cost of risk at the end of 6 months, 55 bps, expected to be kept at the same level at the end of the year. Strong solidity with 15.9% CET1, fully loaded at the end of June, confirming the bank's capability to generate capital organically and supporting the guidance of CET1 around 16.5% at the end of the year. I firmly believe that this achievement and the set of ambitious goals for the end of the year are the outcome of a new attitude regained by the bank, which now enjoys in the day-to-day business, the healthy taste for competition, focusing on services and solutions for clients. It is from such an attitude that a healthy organization can generate sustainable value for all stakeholders and create the basis for the right market evaluation. Thank you very much. We are ready to answer to your question. 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 device. 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 is from Giovanni Razzoli with Deutsche Bank. Please go ahead. Good morning to everybody, and thank you for taking my question. The first one is on the, on the capital. It's one of the most, positive surprise around this strong set of results. I was wondering whether you can share with us now that the Danish Compromise framework has been finalized with the possibility to a permanent adoption of this benefit. If you can share with us what would be the capital consumption in terms of impact on the CET1 from the possible, repurchase of the minority, of the majority stake on your insurance JV, and what would be the impact on the profits? We know that there are pre-agreed conditions, for a multiple of the better value, so what would be the, the capital consumption, in, in that case? Another question I anticipate, probably a question from my colleagues. You've been extremely clear in the guidance for 2023. I am pretty much sure that everyone wants also to know the 2024, if you can have an idea of the trajectory of the NII in 2024. The last question, if you can remind us what the residual ECB exposure that is incorporated in your business plan targets for 2025, in terms of percentage of total assets. You are 13% now, what do you expect in 2025? Thank you. ... excuse me, Giovanni, can you repeat the second question? Because that, that one we missed. Sorry, it's, the trajectory of the NII in 2024. Okay, thanks. Okay, let's start with the point in May relating to the insurance, right? Let me just say that we are not at the current stage considering this scenario, but given the strong capital position, we believe that also this kind of option can be easily absorbed by our bank. Now, in terms of net interest income for 2024, let's start saying that clearly we expect an increase of the cost on deposit. At the same time, we are going to expect to have, as well, an increase of income due to the still positive rate environment that we envisage in the year. Clearly, the combination of the two will bring to a relatively lower level on net interest income. That we believe we can partly absorb better performance in terms of fees commission. What is much more important for us is that as we used to say, we are fully committed on what we call gross operating profit. It is the way how we always try to manage the bank. It means that despite the different scenario and the different expectation in terms of net interest income for 2024, as, as I said, a slight decrease, we believe that we can almost absorb also this gap, with other action we have in mind, in order to preserve a similar level for 2024 of the gross operational profits of the bank. As regards the last question, we compare to our business plan, yeah, we plan to further optimize our exposure to ECB funding. As of 30 June, as we anticipated, we partially replaced TLTRO with MRO funding, slightly below EUR 7 billion. Just to, to give you an idea, the, the recent, the most recent exposure is more like EUR 5 billion, so we have already reduced. We plan to further optimize as we progress with our funding plan. Thank you. The next question is from Andrea Lisi with Equita. Please, go ahead. Yeah, thank thank you for taking my, my question. The first one is on, on the guidance you, you provided there for, for the full year, that is to overcome EUR 1 billion. You already achieved more than EUR 600 million in the first half, potentially leading to a level that is higher than, than EUR 1 billion. You have elaborated then, the, the different moving parts, if you can tell us where you see maybe the potential room for upside, also the margin of conservatism that you, you kept on, on the guidance, whether you think that you can be in a position to, to do, to do better. The second question is on cost. In particular, in the second quarter, I was impressed by the reduction in cost in non-HR cost. So is this a level that has to be imagined as recurrent of non-HR costs overall, so the year in the next years? The last, if you can, you have partially already answered to the previous question, but about the trend of NII, if you expect that the second quarter is a level of peak of NII and then decreasing. Thank you. Okay, let's start by make some comments about our outlook. The second quarter was a very good quarter, as I mentioned, also for each line, because really we enjoy a very positive trend in terms of the top line. Still, we believe that it's not the peak on total net interest income, so we can have the positive results, marginally, but in the third quarter, then, clearly the fourth quarter is expected to drop. We are mentioning this about EUR 1 billion pre-tax profit. Clearly, we count to, to-... But putting this way to be well above. Clearly, we have to be successful in keeping managing the net interest margin, keeping performance well on well management. Have in mind that we have the Easter season that is not the best one in terms of flow of asset management. On one item, we are almost very much confident, is the capability to keep efficiency in terms of cost management quarter by quarter, because this is a trend, especially on non-HR cost, that we want to keep following. Having in mind that also the exit of 4,000 people are not fully reflected clearly in this first part of the year, and we count optimize this, starting from, I believe, the last quarter, and then in the next year, despite, as I mentioned, pressure of inflation. Clearly some benefits in terms of lower cost connected with some telecom contracts, a rational and logical reduction in all the stationary position and the connected expenses that are related to the fact that we have practically 4,000 less place on seats in the office. Saving on space management that are not yet fully reflected, will be the focus of our action in line with the business plan, so we have nothing to be invented. Fortunately, we changed the organization of the bank. We have a new manager that is running the cost management to improve also the capability of procurement. Cost should be, as I said, at the center of our strategy, because net interest income, we are very conscious of that, cannot keep growing at this level, and so we want to be ready in 2024, 2025, to keep delivering almost the same results in terms of profitability, especially on the side of operational result. Thank you. Welcome. The next question is from Alexei Lougovtsov, with, Bank of America. Please go ahead. Good morning. Thank you very much for a great quarter for investors. Just a couple of quick questions. One is, do you have any update on your funding plan on issuing bonds? The second question, do you see competition from government securities for deposits? I mean, deposit outflow driven by Italian households buying BTPs at your branches. Okay. On first question, we reply on the funding plan, actually, we are reviewing on an ongoing basis our funding plan, since as we generate more capital, and as a overall stable funding needs for MREL purposes decrease. The latest estimate based on guidance at thirty-first June after results is that to meet our updated MREL targets, we will most likely need just slightly above EUR 1 billion issuances that we think we can comfortably do in the next few months, and this will be senior preferred issuances. Relating to the question for savings, let's be very clear, we didn't observe up to now, and I think at least looking at the performance of the bank also last year, any significant outflow, especially on the segment where we are particularly focused on, I mean, retail, small business. Especially on individuals, what we are managing is the conversion of deposit in generally in Govies. It is quite visible in the presentation because we have a significant growth on assets under custody. Practically, if you consider together the assets under custody and the deposit, and I think we are putting in the slide also a quarter-over-quarter dynamic, we are growing. Quarter-over-quarter, 1.1%, and versus December, 2.3%. I was mentioning that also we are keep gaining market share on sight deposit. As you know, we are not very much exposed on time deposit. Even if I have to say that for the second part of the year, especially starting from September, we believe that we can also use the strong potential of our network even to attract additional deposit. I have to say, without spending rate above the competition, because I, I, I think we have a base of customer that in some way are familiar with the bank, and we try to attract from this customer deposit that they have eventually in other banks. Solid base, thanks to two main drivers: strong customer base, very loyal at Monte Paschi, and a strong capability of our network. Okay. That's very clear. Just to double check, EUR 1 billion of senior preferred until the end of this year, that, that's it for 2023, right? Is that? I'm- Yes. It's EUR 1 billion plus slightly, but let's say EUR 1 billion from now until year end. This is for 2023. Yeah. Okay. Okay. Thank you very much. As a reminder, if you wish to register for a question, please press star and one on your device. The next question is from Noemi Peruch with Mediobanca. Please go ahead. Good morning, and thank you, for taking my question. I would like to ask you indeed, what is, what was your kind of differentiating strategy to attract new customer in the deposit market in H1, and also indeed from September? If it is indeed, just a matter of pricing, in long-term deposit or if there are something, other conditions, in particular that you want to flag. Then I would like to ask you, what was the deposit beta in Q2, and what are your assumptions, underlying your guidance, both in terms of beta for 2023, and in terms of rate, rate scenario? I would also like to ask you, whether you plan to further increase your Italian bond portfolio. Thank you very much. Okay. As I was mentioning in the first half, we were particularly focused on existing customer base in order to be sure that despite a very strong competition and the offer of higher rate from other banks, and also fintech institution, customer was staying with us. The idea to follow their preferences in terms of goals, were in some way, you know, followed also by our network. This is extremely clear in the dynamic of the presentation, because from 22 we moved to 27 asset under custody. Practically it's EUR 5 billion, EUR 4.5 billion, while deposits are dropping by almost EUR 3 billion. Time to time is not only a matter of rate, because looking especially on duration of some deposit, we can be as well competitive, offering even something below the other. I think it's also a matter of a total relation in the business model you are using, in managing especially the affluent, upper affluent and private banking customers. We don't expect a significant change in our funding cost relating to individuals in the second part of the year, even if we should use a tactical approach, especially on the customer that have with us, together with deposit, also other assets that are majority of our customer. Personalized relationship, a sort of maintenance, with a sort of escalation in order to be sure that we are not losing the customer because we can offer- we can't offer what is asking, and this is part of a normal business model and organization of a bank. So nothing special, if not, a strong focus on the commercial. There's also some scheme of incentivize model that we are going also to introduce for the last part of the year. Okay, on your additional questions, on deposit beta, actually, the evolution, I think, is in line with what our expectations were. Actually, lower than normally you can find in models. In the second quarter, 2023, the beta was historical 1, 12%, so quite low. For 2023, we expect an increase, but towards 20%, but below also because now we are in August, so there is a simply mathematical constraint. In 2024, these, I mean, we expect a further increase, but not, to be honest, a material one. As regards the interest rate scenario, actually, we are incorporating the latest increases by the ECB. When making your calculations, you have to bear in mind that we work on average, and so the average of 2024 base rates will most likely be higher than the average of 2023 rates. Finally, as regards the Italian bond portfolio, we do not expect to increase it. As mentioned several times, we are positioning our banking book on Italian Govies between EUR 9 billion and EUR 10 billion. I remind our strategy to remix, to switch from a fair value to OCI to amortize cost, to further limit the potential sensitivity on capital. Thank you. Once again, if you wish to ask a question, please press Star and One on your device. 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. See you in November for the third quarter presentation. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephone.