Welcome to this digital conference. Operator, welcome everyone for joining the Banca IFIS 2024 Results Conference. 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 the operator by pressing star and zero on their telephone. At this time, I'd like to turn the conference over to Mr. Frederik Geertman, Chief Executive Officer of Banca IFIS. Please go ahead, sir. Thank you, Madam. Good morning, everybody. Welcome to our 2024 Results Call. It's a special call today. We also closed the last quarter of our three-year plan. We have some slides on this. I'm joined today by our Chairman, Mr. Ernesto Fürstenberg Fassio, and by my team, Martino Da Rio, Roberto Ferrari, and the Investor Relations team to see how we'll assist you in this call. If you agree, we'll take you directly to page four and dive right into the presentation. On page four, the results for 2024 in the fourth quarter. We closed the fourth quarter with a net income of EUR 35 million, and the full year 2024 with EUR 152 million net profit. It's slightly up year on year, despite a more challenging macroeconomic environment. As you may recall, the second half of results of 2024 came out very strong, benefiting from a more of a macro environment. Second half of 2024 results represent the usual seasonality. This is remarkable. This is especially maintained in a declining rate environment, and this is working with further improved coverage. This reduces the sensitivity to declining rates. We've significantly increased our covered bond portfolio to expand the share of our direct business, especially in Govies, and we're in the third quarter of the report. We have a very robust financial position with EUR 1.4 billion in cash and cash equivalents that includes the counterbalancing capacity, so we have a CET1 ratio of 16.1%, very solid. The book reports total dividends for 2024 of EUR 111.5 million, EUR 2.12 per share, including the 2024 and 2025, 0.90 euros per share on the 26th. On page five, I mentioned the business plan and the closing for this quarter. Of course, we want digital, open, efficient, and sustainable. We think the business plan was fundamentally delivered and, from a financial point of view, achieved. Our reason is this slide with you because we think the statements are important. Banca IFIS confirms a track record with reliable execution and value creation with a successful completion of the 22-24 business plan. Sustainable recurrent profitability driven by our core business. Net profits have been above target every single year of the plan. Very solid capital base and highly prudent liquidity position was maintained throughout the plan. We recall that we maintained the profile and maintained prudent liquidity position throughout. We want an introduction to ESG. As expected, we had the new S&P external ratings and the MSCI, which currently represent the industry benchmark, especially in the S dimension of the ESG framework. We commit to shareholder remuneration through consistent semi-annual dividends. payout ratio is confirmed very close to 70%, both in 2023 and in 2024. Digital transformation of the bank is completed. Banca IFIS has new front-end platforms, and internal processors have positioned it at the forefront of digital customer service. We believe we have fully accomplished the digital business plan in terms of platforms and investment. And as testified by these points, Banca IFIS is a controlling shareholder as a strategic and industrial vision for the group and presents a long-term value creation opportunity for all shareholders. I'm looking at the shareholder now, and I think I can confirm. Financial results exceed the business plan targets, just a few financials. We presented these in the last call, but now they are actual numbers and not projections. So let me just very briefly take you through them. Net income accumulated EUR 463 million in the three years of the plan, with plus 11% compared to the targets. And that increased with a progressive semi-annual dividend policy. The payout rate is close to 70%. That's more than 20 percentage points ahead of the business plan. Leading to dividends of EUR 295 million over the plan, and that's 47% versus the target. The CET1 ratio, even considering this decrease in payout ratio and in dividend payments, comes out at 16.1%. And that's a full 100 basis points north of the target that we had, giving us the strategic flexibility to evaluate the growth options that we've shared with the market in the last weeks. Page seven, a few words on the transformation of the bank. I won't read every single word on this slide. We just wanted to share with the market the depth and the scope of the digital transformation that was carried out from origination, where you see some numbers on our multi-channel lead generation, the way we attract customers. The numbers you see there have an industrial scale. We are now 100% in the cloud with 160 products. And that's an instant onboarding process for retail clients, including a credit assessment. I have seen this in multiple places. According to this credit assessment, we're automating processes consistently for easy decisions, including automated decision-making for the easier decisions, making significant part of our credit decisions. The numbers you see there being made instantly today. And therefore, we're reducing the pressure on customers. That's significantly reduced the after-sales of client development. And here you see the numbers of our current active customers, the interaction with the bank platforms. I think that, especially on the factoring side, you will appreciate that utilizing after-sales is a very relevant thing because there's a lot of continuous work, obviously, around the invoices, around the store approval, and that sort of stuff. A lot also of time reduction in the sales process. I wanted to give you a taste on some of these industrial elements, if you will. We could have made a similar slide with the NPL business. It's also on certain regulatory investments that we made, where we invested in IT and in systems. We won't take additional time. We hope you can take our words from it in any case. We are a transformation of the bank on these industrial elements. Bringing you to page eight, the numbers, revenues. Net revenues in the fourth quarter at EUR 167 million, that's slightly down year on year. We're impacted by the rate scenario and the steepness of the cost of funding, which was partially upset by a very nice commercial effectiveness in the fourth quarter, both of commercial banking and in NPLs. Commercial banking revenues at EUR 82 million. Comparison with the third quarter was, you must recall that the third quarter, of course, is to be impacted by a one-off in factoring. NPL revenues, EUR 81 million. The fourth quarter results reflected a very nice, we would say, development in the judicial workload, especially on the Revalea portfolio, which was brought onto our systems. Therefore, we need to make a significant contribution. None of our MGS at EUR 5 million. Page nine, we give you an update on the rate sensitivity that came up in the Q&A a few times, so we should go to the slide clip. You see that by now, the scenario of a 50 basis point decrease in reference rates leads to EUR 68 million of net interest margin impact. Further reduced compared to a few months ago. It was 7 to 9, I believe, the last time we presented. The way we are going about it is increasing duration of the proprietary portfolio and, where possible, originate with fixed-rate products that don't expose us to derisk. Remember that it's fairly short. So when you take these policies, you can't want the policies to impact overall stock, rather. Page ten, commercial activity, specifically either in the market or representing the market still, maintaining the trend of the diversified approach towards pricing from the leasing, factoring. 4% down turnover year on year, with an average spread at 3.5%, including commissions. So very profitable business. The market did a bit less, a bit minus five. Leasing overall growing 5% year on year, more than even with the market, but did 6% on equipment and technology. We see some contribution in the fourth quarter. You see the acceleration to EUR 131 million underwriting. That's also due to tax incentives. Probably, we still see an underlying trend of some delay of CapEx decisions of the SMEs. So it's not less plain in this quarterly effect, which, in our opinion, is probably mostly driven by the tax situation for the SMEs. There's still some caution on CapEx investments on the side of the SMEs. Finally, on the right, new leasing in the automotive segment. Significantly above the market. The market is -9%, while we grew 6% year on year. We always reiterate that we have a strategy there where we focus on premium segments, margin discipline, and make sure that we don't have significant risk in terms of the underlying assets on our board. We finance businesses to have pre-marketing agreements in place. Page eleven, the development. Quarterly cash collections EUR 90 million in revenues. Revenues, as I mentioned, are EUR 82 million. We concentrated, if you will remember, starting early 2024, on the Revalea purchase and integration. We concentrated on the purchase and integration of portfolio acquisitions. Revalea has started contributing now EUR 8 million in the last quarter of 2024 in terms of revenues and EUR 12 million in terms of cash production. The bank is behaving slightly better from the perspective, very positively. Finally, the fourth quarter and the subsequent quarters will benefit both from the Revalea contribution and from the new NPL acquisitions that have restarted. We are back in the auctions. We are winning auctions in the last week. We have started re-seeding, sorry for the English, our board again, as we did before. Revalea is back and we are back to normal. Page 12, costs. Probably costs are down year on year. We have a new run-rate of EUR 107 million. It is not feasible that the seasonality is at the first start. We are looking forward to costs of EUR 107 million. We are looking forward to a flat trajectory. Minus EUR 1.8 million in the Revalea recovery costs. On the green bar, EUR 5 million we want to use for the first seasonality. That is recovery. That is obviously connected to the revenues. And then the cost of personnel of EUR 2 million we want to use for the group employees and for variable compensation. So 2023, we are seeing the total cost nicely down by EUR 5 million. Page 13, average. It's a decrease. You can see the percentage of the cost is still quite positive. That's a significant increase. 45% of the costs are in terms of fixed costs. It's a very solid number. And the number of purchases in Q4 were EUR 9 million. If you look at the revenue costs, you see the cost is greater now by 4%. If we exclude the lump sum of the NHS of 2020, we have to see that it's 5%. The new SREP decision is 9.6%. 5%. That's the last portfolio. And the public health sector assistance and stock is definitely over the last quarter. Considering that we are in a de-risked bank, that's a reasonably significant percentage of the CET1 ratio. We can expect another 10 bps reduction close to the three-year plan with between 5% and nor even 3.5% discount in the net CET1 ratio in the SME segment, easy to flex correctly. Influence of Banca IFIS's approach to credit. On page 14, an evergreen, as you would call it. We keep this slide in the presentation, although I won't comment on it in detail. You've heard it in the previous quarters. We try to share with the market the indicators that might indicate, right, a more widespread deterioration in the Italian risk scenario. We have this quarter as well, no indication that things are significantly deteriorating. You can see the performing-based and factoring being rather flat. It's actually being low until we're in 2022. The risk of migration and credit loss is reassuring. We have more upgrades than downgrades. No strange developments in the states too long, and the rate of recall is flat-ish. So once again, a fairly beneficial, I would say, scenario in the performing book. Page 15, capital ratios. So CET1 in September, when we lost the principal, 16.43%. It's down to 16.1%, mostly due to very welcome risk-weighted asset increase as we developed some business. So obviously, the size of the book increased. So the denominator increased a bit. You can see the risk-weighted assets growing by about EUR 140 million to EUR 9.836 billion on the bottom of the slide. And therefore, a very nice 16.1% CET1 ratio, which, as you will recall from two slides back, represents a 100 basis points excess compared to what the plan was. Page 16, the last slide I will comment before handing over to questions. Our expectations for next year. We think we're ready to face Italy's macro environment for 2025. We expect a moderate loan demand. In Q2, we have quite a comfortable long-term funding position, and we don't see the economy accelerating significantly, and we react to that by being focused on profitability, maintaining the overall spread, and growing our RWAs by 2% year on year, while the market improves by nearly 1% year on year. You might expect a decreased risk of the ECB, as is broadly assumed. Starting from the first quarter to next quarter, we have significantly decreased our sensitivity to that scenario. In the event of some signs of asset quality deterioration that might happen in specific sectors, we actually also saw that. You may recall the comments we've done on it in Q3. We have allocated some overlays to specific exposures and we remind everybody that our asset quality risk is significantly mitigated by oversupply situation, a prospective higher cost risk focus, by the prevalence of short-term lending, and by a very robust collateral management approach, both in factoring, which we might consider the impact of the collateral with extra special leasing and in lending. Finally, the market dynamics in the NPL business. It's a well-known fact that there are some opportunities like these loans are being offered, right, so following our acquisition of Revalea, I already mentioned it. We had reduced our purchases because we were focusing on the integration. We have now restarted our stock, and we are close to activating the structures that we were used to assess addressing the cost calendar provisioning, so overall, on this basis, we're keeping these comments to the next week. Slightly more substantial than we expect broadly net income performance in 2023 for results, assuming, with the disclaimer we always need to make, no significant deterioration in the macro scenario and in the geopolitical environment. I would, at this point, hand over to your questions, as we always do. I'm happy to take them, and thank you for your attention this far. Thank you. This is the 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 touch-tone telephone. To remove yourself from the queue, can you 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. The first question is from Irene Rossetto, Banca Akros. Please go ahead. Yes. Hello, everyone. I have a question. The first one is in 2024. H1 came in not very strong, and the second half was slightly weaker. Can you describe the main trend underlying the result? Shall we expect 2024 to be more like H1 or H2 result? In the last conference quarter, you cited the projected net income of around EUR 250 million in 2027. This is the sum of 2024 net income of IFIS, Illimity, and Synergies. Does this mean that you don't expect to have the growth? Finally, do you see any sign of a macroeconomic environment? Thank you. Thank you, Irene. Very clear. Yeah. First half 2024 versus second half, there were, I think, two effects. The first was the risk scenario developing as it did. The second one was a little bit of increase in risk. The third one is what you would expect, classical Q3 seasonality, right? It's always been quite pronounced in Banca IFIS. It's also in previous years. Both the factoring and the NPL business have a summer seasonality, which is quite marked. As we mentioned on the slide that we gave to the results for 2025 that you asked for, there are some effects. Certainly be present in 2025. On the other hand, you've seen that we've also put in place some reaction with respect to those and some management action that we think is effective with respect to those phenomena. For 2025, can you expect the first half or the second half? We think you should account for this, right? On average, that is logical because 2025 will have its seasonality like 2024 will have it, with some headwinds, but with our capability to compensate it in the ways that we discussed, and that's how we made the guidance. The broad main reaction is a fair play, right? We're reading the start of the year, but the broad main line is 2024 in terms of performance and assuming the discount is not remarkable and no geopolitical shocks, as we've always underlined it. Then the second question was around the income of the two companies. It's obvious that we made an offer on the basis of an outside-in assessment. There can't be a detailed due diligence when you do a public tender, so we developed an expectation for our profitability of the profitability of the target and the synergies for 2027. On that basis, we have no elements today that would change that. What you must factor into those numbers is a combination of macro effects, synergies, and management action. We really don't have a lot to add to that today. Obviously, we will monitor how things develop in the next months. Maybe this is your third question. The slowdown in the economy. Yeah. Macroeconomic slowdown. Yeah. As we mentioned on the last page where we gave some guidance, we don't see a macro risk deterioration today, but we don't see a very strong economic growth either, right? We expect loan growth to be subdued in the country, and we expect modest GDP growth. On that basis, we factored in those expectations into the guidance that we gave. So more as a continuation of what we saw in 2024, keeping in mind that the rate scenario obviously will develop, right? So that's something that's ongoing and that we expect to continue as rates decrease. I hope I answered your questions, Irene. Thank you. We have questions from Manuela Meroni at Intesa Sanpaolo. Please go ahead. Good afternoon. Thank you for taking my questions. Actually, I have four questions on your offer on Illimity. The first question is on the timing. So why did you select this timeframe? Why did you decide to launch this offer right now? The second question is on the exchange ratio. Could you please explain how your exchange ratio will adjust for dividend paid by the NPL and IFIS? The third question is on the acceptance rate. What will you do if the acceptance rate fell below 66%? This is also considering the quite fragmented structure of the shareholding base of Illimity, and the last question, what reaction did you expect from Illimity? Thank you. Okay. Thank you, Manuela. So on timing, it's very simple. We were at the end of our three-year plan. We were in a good place. We had a significant capital buffer and an opportunity to stay available. So that's what led to the timing, as we know, the last time. It worked very nicely, given our own projected agenda, given our own three-year plan, which was completely completed, and once again, given the capital buffer that we maintained throughout this plan. Just, you know, that's the last to add in terms of timing. In terms of exchange ratio, yeah, we placed a—which we believe is a market-friendly position inside the offer. The share ratio is correct for dividends, meaning that if one of the two entities is totally centric today, right, then the exchange ratio will be adjusted. So it's really true to the same formula. For an entity share, right, you would have 0.1 Illimity shares plus EUR 1.414 as the offer as it was made, plus 0.1 times the dividend paid by Banca IFIS minus one times the dividend paid by the Illimity, plus a symmetric correction in a totally symmetric way of the dividends that will be paid out in the next months. The acceptance rate, well, we are confident that the entity shareholders will see the logic of this transaction, will see the potential also of combined entity given the share components of the transaction. At this point, we don't have a lot to say beyond reminding everybody that the synergies obviously require a good degree of integration, but I would not comment further. Nothing to add, nothing to add when we communicated this offer. What reaction do we expect? I just replied. We think that the offer has some industrial logic. We think that the synergies are absolutely reasonable, given the fact that the businesses are similar and complementary. There was a slide in the presentation we made to show exactly this concept, right, where you see that in the SME focus, we have slightly different flavors, if you will, and in the NPL business as well. We have good synergies and a nice complementary business. There's a lot of valuable skills in Illimity. So we think that the industrial logic of this offer is sound, and we believe that rational minority shareholders will have a lot of good reasons. So nothing to add on the transaction we expect, except that we have always stated our industrial logic. So that's it, Manuela. Thank you. Thank you. The next question is from Simonetta Chiriotti, Mediobanca, please come on. Please go ahead. Hi, good afternoon. A couple of questions on the NPL activity, and in particular on the start of the purchasing activity. So if you can elaborate a bit more on what is happening on the market and on the activity that you are doing. And what would be the adequacy of the structures that are needed to operate during the COVID-19 pandemic? I think I think that you are at the point of the activation of the structures. It's quite important in the COVID-19 pandemic. And secondly, the reasons for the criticality in the fact that there was a big increase in the loan loss provisions of EUR 5 million was wondering why these, or in general, on loan loss provisions in the last quarter and finally cost of funds in 2024, if you can share the average cost of funding this year? Thank you. Yes. I'd like to ask the last question first because it's the easier one. So in Q4, we had an aggregate cost of funding of 3.8%. That was nothing to see the cost of funding decreasing, right, is going down. We'd like it to go down obviously, and we're doing what we can to make sure that the decrease is as fast as possible. There's a little bit of stickiness in there, right? So in terms of what we expect for 2025, if we had the target to be below 3.8% average over the year, okay? I guess that is about as specific as we can be. And then your question, the top three questions you asked about restarting the activity from the MPL, what's going on there? Well, it's very simple. We made a transaction with the purchase of EUR 6.8 billion gross book value. It was from Banca IFIS, a very significant portfolio, which also required some integration of the companies because we bought a legal entity, including the colleagues who came with it. And so it was quite, first of all, a critical commitment, and secondly, operationally, it was really quite a big onboarding effort, right? Now, in that context, it gives a bit less priority to being present in every office and to be present in every possible opportunity to acquire NPLs. We became a bit selective with it, though. We did some transactions, but smaller ones. So there was no any strategic decision to stop. It was just, realistically, saying, "Okay, I completed the acquisition target for NPLs for the plan. Let's make sure we do well before we add further acquisitions." Now, obviously, the integration is now behind us. It went rather smoothly. In Q4, we went back into the market and participated in a series of auctions, both secondary and primary, both venture stock and consumer credit stock, and we've been successful in those auctions. So we're very happy to be back in the auctions. The activation of structures is, well, when we're ready, we will share this with the market, and we're not actually expecting to be successful. I wouldn't overemphasize the importance of our current capital position. We can quite easily, as we've already seen, buy some loans that have some supervision here and then absorb the importance of a bit of capital on that. So that's something that's important to consider. I estimate within 2025 to have an inefficient NPL because within the meantime, we are active on the market, and we are currently buying loans in groups to do some loans and some of the provisioning, and we will manage that over time. You had a question on almost manufacturing that we understood, but it's easier to put it on board. Unless you want to answer with your hands, then maybe we can ask it, but I'm not quite sure what you asked. Yeah. I'm just looking at the 2020 loan loss provision thing in the last quarter. Thank you. Okay. I take that we think it's probably overall as well. Do you expect the spreads to partially recover next year or will you continue favoring volumes? And the second one, on trading, how repeatable is the performance on trading next year? How much do you expect next year from dividend exit investments with private equity and other sources of revenues? Thank you. Thank you for the question. So yes, on the transactions, we have 3.5% spread on top of the base, right? Then there's also a commission component. So we expect obviously the baseline to decrease further. We don't think we will significantly decrease spreads if we had the opportunity to do it. Sometimes in basically decreases, you can create a bit of space with the client to increase the spread a little bit with the overall cost for the client to come down. But on the back of that, expect to shift towards the long-term banking? Not really. The core of the bank and its core people has always been in factoring. We love factoring as a business. It has a very good risk-return profile, and it keeps the balance sheet short. If we wanted to give a lot of medium-to-long-term revenue in the last years, especially in the government guarantees, it would have been possible to do it. It would have cost us more. A bit of product will keep the consolidation so long and also so much exposed to the resilience of the macro environment without being able to react. So we think a relatively short balance sheet in 2020, especially in the leasing and also in the leasing segment, not only in the factoring segment, is one of our strengths. And so we know that we would have expected to shift towards medium-to-long-term lending. And in terms of market dynamics, we expect the next couple of years to be actually quite nice for factoring because we come out of a situation where the market was, how should I say, inundated with cheap long-term lending. And that is typically difficult if you're selling short-term lending, right? It's difficult to keep your volumes up, right? So we come out of a very challenging couple of years where the corporates had access to long-term lending at very cheap rates that were offered by many banks, and they used it to finance not just investments, but generally cover their financing needs. This will be absorbed in the next couple of years, and you can see the overall loss in the country declining. We think that we will go back to a more normal situation, and that will be, we think, beneficial to our factoring business. With respect to your question about the sustainability of the equity business, I give the floor to Roberto Ferrari, who will ask you all the questions. Thank you. Good afternoon. Yes. Actually, I'm turning to the margins increase or the current return profile. With that, we can perform a similar return in 2025 compared to 2024, also thanks to the increase in duration that we built. At the same time, we also considered the recurrence of our executive return. So we expect that we have a budget where our return on private equity is similar to 2024, and in our budget, we'll be a bit higher than 2024. I would say in our end of 20%-25% higher than this year. Thank you for asking, Davide. So I take the opportunity to come back to Simonetta's question. Martino, what was your question, Simonetta, on the loan loss provisions? Thank you. Okay. Good morning, Simonetta. So the number that you see is just a sum of different items. Partially is due to the increase of overlays. As we mentioned in the previous two quarters, we are allocating overlays against specific risks. The other part of the figure is explaining the risk model between stage one and stage two. Thank you. Thank you. Good afternoon. One question left, regarding the overlays, how much overlays do you still have available? Where are you allocating them? In which sectors do you see most pressure on the asset quality? And when do you think to use the remaining ones, all this year or most spread over time? Thank you. Yeah. So on overlays, we gave the following information in the last quarter, and we don't have anything additional to say. So we started allocating them, that is, using them in the middle of 2024, as was expected. You will remember that we had them against concentration risk, against circumstantial risk, mostly. We started considering that we believe that there will be more that could be used in the next 15%-20% of the floor that we are retaining by the end of 2025, okay, maybe early 2026. We have not given a detailed update on the single overlay line items to the market because we actually think it's more detailed for credit-related than for leasing from the decisions of. This is very detailed information. We won't be able to give a quarterly update on factoring once we've released the market information back. How much we've been able to use that from other segments of sector. Where they were used in terms of sector, we had, I think, two macro areas, one is steel, and especially the SMEs that work with the Italian steel sector, and especially one, as you can imagine, very significant steel company in South Italy, and the second one is automotive, where we've had quite a slowdown in demand and production from the various automotive players leading to some stress, especially in their supply chain and the smaller companies of the supply chain, so no issues with the large automotive players at all, but some issues in the supply chain, and those were the two areas where some overlays went to. You had a second question that I didn't fully get through. Can you repeat it, please? No, you already answered my question. Thank you. Okay. Thank you. As the markets in the next couple of months, I'm sure, as quarters of 2025 start and as the offer is to mature. For now, thank you very much.