Good afternoon, this is the conference operator. Welcome, and thank you for joining the Banca Sistema 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. Gianluca Garbi, CEO of Banca Sistema. Please go ahead, sir. Thank you. Good afternoon to all participants. I'm, as usual, here with Carlo and Ilaria, and we will present the first half result using the presentation that has been made available. Let me start by saying that I'm very pleased with the second quarter result that has been able to score a pre-tax profit, which has been double compared to the same period of last year. Moving to the slide and looking at the performance, the factoring turnover was up to 27% on a year-on-year basis, after a robust growth in the last quarter last year and the first quarter of this year. The CQ outstanding is stable on a year-on-year basis at EUR 966 million. The pawn loans, which 98 million in terms of outstanding with the turnover growth of with the outstanding growth of 18% on a year-on-year basis. And the net interest income is up to 16% at the level of EUR 44.6 million. We have also reached probably the bottom, I would say, of the cost of funding at a 0.1%. The total income is equal to EUR 54.8 million, which is 9% up compared to the previous year, thanks to the good net interest income performance. The cost of risk is in line with our usual cost of risk, at 36 basis points, which is also a little bit lower on a year-on-year basis. The total operating cost is equal to EUR 31.3 million, which is pretty much stable, with an increase of 3%. The net income is equal to EUR 12.2 million, with the 44% growth on a year-on-year basis. The wholesale funding is down and rather it's now 34%, simply because we have reduced our exposure to the government bond portfolio, which is financed through the wholesale market. The total assets are equal to pretty much EUR 4 billion, which is a little bit down on a quarter-on-quarter basis, due to the lower government bond portfolio, as I mentioned, I just mentioned before. The Core Tier 1 ratio is at 13%. The total capital ratio is at 16.4%. Applying these transitional rules that allow to partially reduce the impact of the negative mark-to-market for the Government Bond Portfolio on the Held to Collect and Sell. The Core Tier 1 ratio, excluding this reduction, so on a fully loaded basis, is in any case up at 12.5% versus the 11.9% of the previous quarter. Let's move to the next slide. As you can see, the factoring outstanding is up thanks to the strong growth of turnover. As I mentioned, and this is coming from last year, but also the first quarter of this year. What is important to notice is the tax receivables continue to well perform particularly well, and represent today 25% of the total outstanding, which imply a growth of 53%, almost double, compared to what was usually be the percentage of outstanding that was in the past, around 13%-14% of the total. Moving to the next slide, some comments on the CQ and the pawnbroking. As you can see, the CQ turnover, which exclude if we exclude the purchase of the portfolio from BPM, was up on a year-on-year basis. In particular, the direct distribution of the product has moved from EUR 27 million of last year to EUR 104 million of this year. The security division is working to continue to strengthen the agent and intermediary network, and selectively, we continue to look at some portfolio to purchase as this is not our priority, as I mentioned already in the previous. Thanks to the organic growth, the pawnbroking activity has registered an 18% growth with a stronger second quarter, also following the purchase of a small portfolio in April. Now, let me leave the floor to Ilaria to go through further details, and then I will come back for some comment on the capital and then to take the Q&A. Thank you. Thanks, Gianluca. Good afternoon to everybody. We now move on to slide five, where we have more details on the balance sheet. As you can see from the table, total assets are up 4% versus year-end 2021, but slightly down quarter-on-quarter, mainly due to the reduction of the held to collect bond portfolio. In particular, we have loans at amortized cost, has almost reached EUR 3 billion and is up quarter-over-quarter, thanks to the growth of our core businesses. In particular, factoring and the SME lending, which are part of the same division, have both increased, especially factoring, thanks to the robust origination of fiscal credit, as Gianluca just mentioned. CQ assets have also grown, thanks to the strong direct origination and the purchase of a portfolio of EUR 113 million of loans from Banco BPM, as just mentioned, that have more than compensated the sale of EUR 70 million of assets. Pawn loans are up 6%. govis portfolio is now equal to EUR 643 million, and is down quarter-over-quarter, with an average duration of now 33.5 months. Deposits from banks, quarter-on-quarter's slight increase is driven by interbank, while the CB funding is stable. Deposits from customers decrease, it's substantially driven by decrease of in the same period compensated the decrease in current accounts. Sorry, Ilaria, I think that there are some problem with your microphone. You cannot hear me? Yeah, no, yes. Now we can hear you. Okay. Let me know if it happens again. Thank you. That securities increase is driven by the higher funding through ABS as collateral, in particular, the funding instrument for fiscal receivables. We now move on to the next page, where we discuss the P&L. We start from interest income, which is up 6% year-on-year, especially thanks to the higher contribution from pawn loans for EUR 900K, and from SME guaranteed loans for EUR 1.2 million. Factoring accounts for EUR 26.7 million of total interest income, and represents a relative share of 53%, which is down from 62% in first half 2021. Lower year-on-year contribution by factoring is mainly due to lower LPI from legal action, which is now equal to EUR 6.8 million, down from EUR 12 million in the first half last year. Within the LPI, the breakdown is now the following: accrual is EUR 3 million, compared to EUR 5.9 million in first half 2021. Extra collection is EUR 3.8 million, compared to EUR 6.1 million in first half 2021. There was no sale of LPI in the quarter. Lower factoring LPI contribution was partially compensated by a particularly strong contribution from tax receivables, which have registered a good performance, both in terms of P&L accretion, as well as origination of new credits. As a result of the different performance among the various factoring segments, factoring income margin is slightly down year-on-year, as it now sets at 4.2%, compared to 5.1% in first half last year, and to 4.9% for full 2021. In line with Q1, the main element driving the factoring margins down is the weak performance of LPI, although we should remember that the comparison versus the first half 2021 is, in LPI terms, also impacted by the fact that LPI had a particularly strong first quarter last year, due to a non-recurrent extra collection on a position vis-à-vis a Spanish local healthcare organization. Having said that, it's true that in 2022, this segment of the business has registered some weakness also in the accrual component, due to the reassessment of the expected time to collection on a few positions. It has also impacted the fact that we do not execute any sale of LPI in the first half, while we had some sale of LPI in the first half last year. Again, in line with Q1, something that we've discussed already in Q1, another element affecting the factoring marginality is the higher weight on revenues of tax receivables, which are typically carrying a lower margin compared to other factoring margins. Moving on to the CQ. In the CQ space, interest income has been positively impacted by the accrued interest of the portfolio purchase from Banco BPM, and by the gain from the sale of a portfolio of EUR 70 million assets that was finalized at the beginning of June. Including these two components, CQ margins are flat at 2.3% year-on-year. Moving on then to pawn loans, its contribution continues to be in line with expectations on a growth trajectory. The margins have been higher in the first half, due to the effect of the repricing of the contracts that already started in Q4 last year. So pawn loans margins now set at 15.9%, which is up from 15.2% in first half 2021. So overall, total adjusted income margin is slightly lower year-on-year from 4.3% - 4%, but it's up, slightly up, on a quarter-on-quarter basis. We now move on to the slide seven, where we discuss total income. First half, total income has grown a good 9% year-on-year, despite a decrease in other income and net commissions. The net interest income has significantly grown year-on-year, mainly driven by the increase in interest income, which we have just commented, and the significant saving in interest expenses. Indeed, as Gianluca mentioned, our total cost of funding is now equal to 0.1%, compared to what it was in the first half 2021, at 0.5%. Net commissions is down, it's slightly down year-on-year, due to higher CQ fees paid to agents, and to lower factoring commissions, which were partially compensated by higher pawn loans commissions. Moving to other income, this item includes EUR 1.3 million gain from the sale of a factoring portfolio, a sale of a portfolio of private credits, in first half 2021, and at the time generated EUR 1 million. The other income also includes EUR 1.5 million gain from the sale of the CQ portfolio that we mentioned. So overall, this component is worth EUR 2.8 million. The govis portfolio did not contribute to other income, as we had almost NIL trading revenues in both quarters, compared to a profit of EUR 2.8 million in first half 2021. However, the govis portfolio has confirmed its positive contribution to the NII, with EUR 3 million contribution compared to EUR 0.8 million in 2021. Now, in the pie chart below, we show the usual breakdown of the total income contribution of the three core businesses. The weight of the factoring business relative to the others is slightly lower compared to a year ago, accounting now for 66% of total income, with respect to 69%. The difference has been, of course, covered by both the pawn loans and the CQ. We now move on to page eight to discuss costs. Total operating costs are now only marginally up year-on-year by only 3%, where the increase is in line with expectations. In particular, personal expenses are stable year-on-year, driven by a higher than expected release of the bonus relative to 2021. This release is worth around EUR 1 million. All other expenses trend is in line with expectations. We report a lower contribution to the Single Resolution Fund for EUR 400,000 and a higher provision for risk and charges. Then we move on to the next slide on funding. As mentioned already, a few times, our cost of funding is lower year-on-year and also quarter-on-quarter. The trend in the split wholesale retail confirms what observed in previous quarters, where we registered a relative increase in retail funding compared to wholesale. The weight of the retail funding is now 66%. The retail funding has increased also quarter-on-quarter due to the increase in term deposits, which occurred at a stable cost. On the other side, the wholesale component has decreased quarter-on-quarter due to the over reports related to the govies portfolio decrease, which was only partially compensated by higher collateralized funding, which mainly within the collateralized funding, mainly by the tax receivable ABS component through the vehicle BSBA. We now turn to slide 10 to discuss asset quality. As you can observe from the graph, gross non-performing exposure is down quarter-on-quarter, mainly due to a past due decrease. We have indeed registered the lowest level of past due over the last four quarters. First half cost of credit risk stands at 36 basis points and is lower year-on-year. We should remember that in first half 2021, the cost of risk was had impacted by the non-recurrent provisions related to exposures versus cities in conservatorship, which, of course, have driven the cost of risk up. Finally, the NP ratio decreases to 7.8% from the 9.3% at year-end. I now hand the floor back to Gianluca. Thank you, and I move to the slide 11. As already mentioned before, the Core Tier 1 ratio moved from 11.9%- 12.5%, if we do not include the possibility that is allowed to reduce the negative mark to market for held to collect and sell portfolio, which means an increase of 50 basis point, and the total capital ratio from 15% - 15.9%. If we include these, as we did, we actually gain another 50 basis point, at 13% in term of Core Tier 1, and 16.4% in total capital ratio. The regulatory capital also include the EUR 2 million of a calendar provisioning that has been put in the filter. This Calendar Provisioning that applies to our credit will have only an effect on capital because we will collect all the money regardless of the fact that we have to apply the filter. As you can see, the reason why the total capital ratio and Core Tier 1 has improved is because the RWA has been reduced regardless of the fact that the total outstanding has increased. And the two drivers for RWA decrease are first, the fact that with an increase of tax receivables, the tax receivables at 0% RWA, and therefore as more tax receivables will be due, as better is the RWA density. Second is because, as I already mentioned in the previous call, our aim is to improve the usage of capital, and for this reason, we are putting at the minimum the level of private entity for factoring, which means that we continue to purchase and generate turnover on private factoring, but we resell it. Typically, we buy this type of receivable with a guarantee and with the possibility of resell. For this reason, we don't own a big portion of receivable that have a risk weighting of 100%. So these two components have allowed us to improve to reduce the RWA density, which- In other words, also imply an increase of regulatory capital ratio and increase at the same time the return on capital. Now, I end, I stop here, and now I leave the floor for any question. Excuse me, this is the commercial conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the 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. The first question is from Nicholas Binda of Intermonte. Please go ahead. Hi, good afternoon. Thank you for the presentation. I have four question. The first one is on the NII. Could you describe the items which have led to the quarter increase in the NII? And how much has been the one-off contribution from the Banco BPM portfolio? The second one is on the outlook. Could you please provide us your expectation for the second half, and which is your tax rate you forecast? The third one is the drop in the past due. So if you could explain the motivation. And finally, on the factoring business, I was wondering if the customers' behavior is changing due to the different interest rates environment. Thank you. Okay. I will take some of the question, and then I leave the other question for Ilaria. So in term of outlook for the second half, clearly the fact that we continue to generate a strong turnover imply that the outstanding remain high, so the interest that are the top line should be should remain at least in line. We don't expect a on the second half any drastic increase of cost of funding which allow us to maintain the margin in line. We continue to see a good production in even in July, the turnover continued to remain particularly strong. Maybe then Ilaria, if Ilaria she would like to add something more, I will leave it to Ilaria. On the past due, as clearly some of the mitigant that we have put in place that started after some clarification from the regulator start to produce the result. On the other hand, if the outstanding is increasing thanks to the VAT receivable, so tax receivable, the tax receivable don't have any problem of past due. So it's more tax credit, means it's less past due in general, because the central government never will have a past due. So, mitigants that are on now that are on an ongoing basis, and second, the mix of the portfolio that more VAT receivables means zero past due for this component. In terms of customer, clearly, we have seen two trends, which probably one more strong than the other. One is connected to some perception, higher perception of Italian risk. So multinational companies are coming back, asking to buy receivables from local healthcare or, in general, against government because they would like to reduce some risk from Italy. Also the political situation certainly didn't help the behavior, the spread widening also did not help this behavior. So multinational companies are selling a bit more than in the past of receivables. Second is the fact that thanks to the increase of interest rates, companies with large debt are certainly more focused than in the past in managing their net financial position, meaning that they are more keen to sell a receivable to improve the net financial position. And this continue to remain the driver. The VAT receivable piece is particularly connected with the fact that there was certainly more activity in the past, and that generate more revenue for corporates that suppliers to public administration imply more VAT receivables. Going forward, also thanks to the PNRR and the investment of the government, we continue to expect that there will be even more spending from government, which imply more credit, both the VAT as well as commercial credit. I will leave then to Ilaria to comment on the NI and the one-off component about the Banco BPM, which I don't think that was particularly significant, but I will leave to Ilaria to comment. Yeah, sure. Thank you, Luca. Yes, and then there was a question on tax rate, which I will start from because it's the quickest. We expect the tax rate for the second half to be roughly in line with what we had for the first half, at around 32%. So moving to NII, there were different drivers of the dynamics within the NII. As we could see from the presentation, the contribution of factoring to the interest income was likely less than what we had in the first half last year. And that was due to a combination of factors, so the combination of different performances among the various business subsegments. In terms of commercial receivable, the contribution was more or less aligned with last year. We had some weakness within the LPI segment. As you could have seen from the breakdown that I've given, we are missing some income within the LPI, both from the cash collections as well as from the accruals. But the weakness on the LPI front was partially compensated by a very strong performance of fiscal receivables. Indeed, we've commented that fiscal receivables not only contributed significantly to the turnover origination, which will, of course, have some positive impact on future revenues. Of course, also fiscal credits had a very significant contribution to the NII to the income statement due to collections on outstanding exposures. That's pretty much it for the factoring. In terms of CQ, the CQ you could see from the graph had a slightly increased contribution to P&L with respect to last year. The contribution of the one-off component from Banco BPM, the accrued interest, is worth EUR 1.5 million. The other positive contributions to the NII are coming from the SME lending, which has a stable growth, although as we've mentioned many times, this is not part of our core business, however, it's providing a good contribution to P&L on a regular basis. And then we have the positive contribution coming from the pawn loans. The pawn loans is still smaller on a relative basis with respect to factoring and CQ, but considering its stellar yield at almost 16%, its contribution to P&L is starting to be significant, and that's increased from last year. And then we had a better contribution than last year coming from the government portfolio in terms of bond yields, as well as a higher contribution coming from the repos financing the bonds portfolio. Although we had a smaller amount of repos, however, we managed to gain a higher carry from the overall portfolio activity. Finally, in terms of positive contribution to the NII, explaining the growth, we had a saving, a significant saving, from, in terms of interest expenses, and that was due in comparison to last year, that was due to the fact that, last year we had some, private placement outstanding, which is now, which has been redeemed. And also by, by the fact that, we replaced, term deposits at, lower rates with respect to what we had, in the first half 2021. So all these, components all together explains, explain how we managed to achieve a 6% growth in terms of, interest income, and a, 16% growth in terms of NII. The only. Let me add only one small comment, that, lower LPI collection is not necessarily bad news, because, you know, LPI collection means, doesn't mean that we do not collect, it means that we continue to accrue LPI. And, since last week, the new rate moved from 8% - 8.5%, as the LPI are ECB + 8%, and now the ECB rate is 50 basis points. So the fact that we didn't collect mean that, when we will collect, we collect even an higher LPI compared to the past. So, and as has been mentioned before, we didn't sell any LPI to the market, so there were not even any transaction on the first part of the year. Thank you. If I may, just to follow up on the government portfolio contribution to NII. I saw a higher contribution, EUR +1 million. I was wondering if this is related to the variable component? Because overall I saw the reduction in the overall government portfolio. Thank you. Yes, there was a reduction, overall reduction in terms of size, but we managed to increase the average yield of the portfolio by selling a few bonds occurring a lower coupon, and buying bonds with a higher coupon, considering the movement that we have registered in the market. That's the reason why, in terms of NII, we have registered the higher contribution from this activity. Yeah, we look at the volatility on the government bond market portfolio was an opportunity that allow us to reduce the portfolio on one end and to buy asset with a higher yield on the other side. Thank you very much. The next question is from Manuela Meroni of Intesa Sanpaolo. Please go ahead. Good afternoon, and thank you for the presentation. A few questions on my side. The first one is on the risk-weighted assets. Clearly, they declined a lot in this quarter, you mentioned a couple of reasons for that, and you also disclosed the strategy to reduce substantially the factoring to private through the reselling of the receivable. I'm wondering if this strategy will go on also in the next quarter, and so what could be the potential benefit that you may achieve in the next couple of quarters coming from this strategy? The second question is on past due. Again, during the Q&A, you mentioned some mitigation action that you agreed with ECB. I'm wondering if you have done all what you had to do, and so if we can expect the past due to remain probably stable going forward, on top of what you are going to produce as a new business, or if you still have some room to further reduce the stock of past due. The third question concern the interest rate increase. In one of the last conference call, you mentioned that you are positively sensitive to interest rate increase, so I'm wondering if you can provide some numerical guidance on what could be the positive impact for you coming from higher interest rates. And I'm also wondering if an increased rate on LPI is going to change your model of accrual. So if we are going to see some sort of one-off in the next quarters in order to incorporate the higher LPI that you are accruing on the stock of LPI. And actually, last question, if you have an update on the new definition of default. Okay, let me try to take quickly some of the questions. So RWA. Yes, I confirm we continue to, in our strategy, we continue to buy and sell, private, and, when we look at, this activity, the return is, quite significant because, if I look at the, of the profit, thanks to the buy and sell, on the average, on the average, outstanding, we are talking about, a return that is even higher than the one of, of the factoring. It's like a, a trading type of activity, which, we continue to do. The mix, in theory should remain stable, but that pretty much depend also how much, VAT receivable we buy going forward. Clearly, usually the VAT claim, the annual VAT claim, are in the second quarter of the year, because is when company, they do their tax return, and after the tax return, they sell the tax claim. During the other quarter, is only the quarter VAT, which is smaller, so I don't necessarily expect that this split will further increase, so probably remain stable at the 25%. In terms of past due, well, we continue to maintain this conservative approach versus our peers. If you compare the past due compared to the peers, we are the one that still have the highest past due compared to the other. This is due to a different interpretation of the legislation that has been given by the regulator. There's not much to say that cover also your last question. We continue to push asking the regulator to clarify and to create a level playing field, which is not the case today, so potentially there can be some room for improvement. In the meantime, we use the mitigants that are bulletproof, let me say. And thanks to these mitigants that we have started, now they are getting to ongoing, to a regime situation, and I think that the past due can remain pretty much at this level. Clearly, if we buy less or more, or if we buy. or if we have less or more VAT receivable, VAT receivable has zero past due anyhow, and therefore, this the level of past due may increase, decrease, simply because of the mix and not because of the policy. LPI accrual change, well, don't think that there will be any change on accrual. So the ECB has increased 0.5% from the day of the increase, so that means that we continue to maintain the same level of accrual. We know that from last week the component starting from last week, so if we have some receivable that has been due in January, from January until last week it would be 8%, and so we are taking a percentage of this 8%. From last week onward, it would be the same percentage of 8.5%, so it's not a change on the model, it will simply be a more accrual, because there is 50 basis point more, but these are not backdated, so the 50 basis point more is from the day of the decision of the ECB. I will leave maybe to Ilaria to further comment on my answer, and also to give you the answer on the interest rate increase. The only comment that I will do on interest rate increase, as already mentioned during the last call, we already started to reprice. You remember that I mentioned that we have done a first round of 25 basis point, with a second round of other 25 basis point, and we did start in this direction, even when the ECB expected the increase of interest rate was only 25 basis point, which surprised the last few day in the last few days, and that could be 50 basis point. So, thanks to the fact that our average duration of the portfolio is 11 months, we already started to reprice the portfolio, and we think that the 50 basis point are inside the new asset that we are purchasing since the last quarter. But maybe, because you asked some for more details, then I will leave to Ilaria to provide you with details. Yeah, sure. In terms of exposure to, following on with, from what Gianluca just mentioned, in terms of our sensitivity, you know, to an increase in interest rates, we confirm that we are positively exposed to an increase in interest rates, but we have not quantified the size of our sensitivity. We can confirm that, based on the new outlook from interest rate for interest rates, we can confirm the outlook that we have provided earlier on in terms of income statement and earnings for year-end. So, that means that we will be able to pass on through customer the increase that will, in a way, suffer on our funding cost. The reason why we have not quantified the sensitivity to interest rate in a different way relies on the fact that the only automatic link that we have to an increase in interest rates is on the funding side, on a few instruments, which is the TLTRO and a few contracts in the wholesale funding space, which are linked to Euribor. All the other funding sources, as well as the purchasing pricing of the assets, will have or can be adjusted, but there is no specific time for the adjustment to occur. On the liability side, on the funding side, we are clearly monitoring the market, and we are ready to adjust interest rates, specifically on the retail funding side, but we haven't done so yet, because so far we haven't felt the need to do so. So the timing of the increase in interest, in the interest rates offered, clearly will have an impact on what we call our sensitivity, you know, to an increase in interest rate. On the other side, as Gianluca mentioned, the repricing of the assets, of the new assets to be purchased, have already started, has already started, but there isn't an automatic time for this repurchasing to occur. We'll have to clearly monitor how the origination activity is performing with the new indication of prices. So, what we can say is that putting all these elements all together, we are in a position to be able to confirm the outlook to year-end, but we are not in a position to provide the sensitivity in numerical terms because we believe it's not that applicable to our, you know, business model. Maybe last comment on my side is that the this increase of this repricing of the asset, so meaning that we are charging more, with a higher discount to the client, did not have a negative effect on turnover. As you saw, our turnover was up by 27%, so to a certain extent, I think that the market it was expecting an increase of cost. So we will continue in that direction. Thank you, very clear. As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one. Mr. Garbi, there are no more questions registered at this time. Thank you very much. Thank you to all the participants to this call, and let me wish for the one that are taking Sunday off, some, a nice holiday. We will talk in autumn. Thank you. Bye. Thank you. Bye-bye. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.