Good day. Thank you for standing by. Welcome to the Mediobanca first quarter 2021/2022 results conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press Star and One on your telephone. I must advise you that this conference is being recorded today. If you require any further assistance, please press Star Zero. I would now like to hand the conference over to your speaker today, CEO Alberto Nagel. Please go ahead. Thank you to everybody for joining the call. I should say that we have started quite well this new fiscal year, with all business segment trends ahead of expectation. This was particularly true on wealth management, thanks to larger distribution scale and improved offering. The Private and Investment Banking model is increasingly effective and is taking more market share. The Investment Banking revenues in general were particularly robust, the news is that also consumer banking ahead of the schedule is bouncing back in terms of new loan production, coupled with excellent asset quality. We have had also a steady improvement in our ESG profile. The results are such that revenue were up 13%, net profit up 31% with all-time high fees. We have had more than EUR 200 million fees in a quarter, which is all-time high, driven by wealth management with EUR 96 million, which is quite a strong contribution, and robust CIB client business. Another important element was NII back to growth. We have been always a bank whose main feature has been, among others, the NII growth. You remember that this was halted by COVID and now is back to the previous trajectory of growth. Strong asset quality, default rates at minimum, gross NPE on loans at 3.1% with highest coverage. This then led to an increase of 30% in GOP and net profit, which is the best-ever quarterly banking performance. If we strip out the component of PI, this quarter is the best of our history in terms of GOP and net profitability, which translate into a ROTE of 11% on capital ratio, which stay in the region of 16.1% phase-in and 15% at fully loaded. As said, ROAC of each business, every single business improved the metrics and the trajectory quarter-on-quarter, which is, I think, even more impressive if the increase of contribution and ROAC of wealth management. We were at 20% ROAC last year. Now we are at 27%. We have increased 77% and we have also basically reduced also the cost income. ROAC of consumer banking, it's very, very high, 34%, and is the results of NII growth and cost of risk. ROAC of CIB is 15%. It's quite good and is, I would say, the consequence of robust revenue trend coupled with efficiency in capital allocation. I want to comment with you slide number seven, because it's giving the sense of what we are doing. We say here that the group today has a totally different revenue generation capability, and it is much bigger than the pre-COVID. We have compared here the last quarter revenue, EUR 706, with the pre-COVID, which was on average EUR 642. We are 10% above of the pre-COVID. A bank that has a materially higher revenue capability and a positive to come, which is consumer, because if you see the breakdown, in this increased capability in terms of revenue, the biggest contributor is wealth management, because we have EUR 172 as opposed to EUR 142, so 21% increase above the pre-COVID. We have a good increase also in CIB with 15%, but we are still stalling compared to in consumer banking. This is the nice news in the sense that with the recent new loan production, we do expect this to happen also in the coming quarters. The business model, which is based, as you know, on a specialized banking approach with a focus on value-added product and service, is increasingly effective because it translates into a superior capability to generate net new money. Compared to our size in wealth management, it is able to rebound in terms of new loan production in consumer, thanks to very strong, I would say, distribution proprietary system in Compass, and has a reinforced market position in CIB, thanks to the model of private and investment banking. NII back to growth. We had a 6% increase of consumer banking NII, which was not expected in terms of size. It is a mix of both new loan and lower prepayment. This translates to a +4%, but we are still having a room to be catch up because the NII of the pre-COVID in consumer, as I said, was EUR 235, and now it's EUR 226. The loan book was EUR 13.7 billion, and now is only EUR 13.1 billion. Room for further improvement is visible. The different component of this uplift in NII is mainly consumer, but also CIB and wealth management, as well as ALM optimization, because we continue to manage down our COF, our cost of funding. Fees, as I said, more than EUR 200 million, first time in our life, positive, but even more positive the breakdown. Why? Because a big component is coming from wealth management. Wealth management is definitely the biggest contributor of fees in the group. If you see then the quality of these fees is as good as it comes because EUR 75 million are management fee, so are to be considered more sustainable, more stable over time, depending on the now, of course, but recurrent as opposed to performance or to upfront. CIB, another very good quarter where we managed to substitute certain big-ticket of last year with an equally strong advisory contribution, EUR 39 million as opposed to EUR 41 million, and a good contribution coming also from other business in CIB. Asset quality, further improvement here. We have been managing down the outstanding moratoria to less than 1%, to EUR 500 million. consumer totally out of this issue. Mortgages and leasing having a very low amount, less than EUR 200 million, the first, less than EUR 300 million, the second. Every single moratoria has been classified either in stage 2 and stage 3, we have done already some provisioning. We do expect that some positive news may come after the December 21, because there will be an expiring date for both mortgages and leasing. The information we have from clients are such that we think that an important part of this, if not the biggest part of this, may come back to bonis already at the end of the next quarter. Prudent staging, you see them on page 12 here, 3.1 as opposed to 3.2, a notch down. Net NPEs at 1.1, which is even more important, I would say the performing loans coverage is going up to 370, we have created good overlays and buffer for the future. Cost of risk reduced to 51 basis points, with no overlays reversed and record coverage ratio. Here is a mix of a very low cost of risk, depending of excellent trend of consumer under 60. I would say CIB with very low cost of risk, enjoying some small write-backs linked to repayment, the rest wealth management is at 12. Very low cost of risk, as a reflection of very solid underlying trend. Positive asset quality trend in all division on page 14. I won't spend much time on this. On CET1, the dynamic of CET1 was basically starting to use more capital to RWA growth and doing the buyout, the acquisition of Bybrook, 20 basis points. There is a transitional impact of the higher book value of Generali, which will be reversed in this quarter because they paid the dividend. The news that we know is that we're going to have another buyback, depending on authorization by our general meeting and by ECB, up to 3%, which will have an impact estimated in 65 basis points on CET1. Very important achievement in ESG, where Mediobanca has been mentioned among the top 40 companies ranked in the new MIB ESG Index. Even more important, we have had a double upgrade in Morgan Stanley index from double B to single A. We have done a step ahead also in our disclosure on last year in consolidated non-financial statement and asked with alignment on SASB and TCFD request. We have also made important step ahead on calculating our economic value generated and distributed to all stakeholder, we have also made a further improvement in disclosure in our group's tax strategy. Environmentally, we are supporting heavily our clients targeting climate change with important new loan production in green credit product, in asset management product, where now we have 39% of our qualified fund are ESG rated. DCM, we have gained quite an important position in becoming a leader, clear leader in placing ESG bonds, ESG-linked bonds or green bonds in the market. We continue to support with more conviction, even after the COVID, so was possible more activity with our community, Mediobanca Sport Camp, new rugby pitch inaugurated as part of the Together in CMS social inclusion project. We have been also working with our colleagues to improve the environment, planting 2,000 trees in the Milano area. In governance, both in remuneration and in governance, we have done some step ahead. Part of them are subject to a general meeting, which is going to be tomorrow. Divisional results. Here in wealth management business, we are getting to a larger scale. This is a mix of important push in distribution. We have had another 20 salespeople added to our total number of 1,100. We have been working also in a product upgrade. We have done a major new project with BlackRock, Mediobanca BlackRock Co-Investments, which has achieved a very important size of EUR 1.4 billion, much higher than the original target. This is an evidence of the ability of Mediobanca to structure tailor-made product that suits well with demand of sophisticated clients. We have launched also other funds, MB Target Maturity, new thematic customized investment lines for Mediobanca Private and CheBanca!. We have concluded the acquisition of Bybrook, we see the progression in net new money, which was EUR 1.8 billion in Premier and in Private, and equally divided between AUM and deposits. Deposits are growing a lot because we are managing the vast majority of the closing of investment banking transaction, mostly generated by Mediobanca, but also third party. We have an edge in getting to a nice position towards clients that have to manage liquid assets and convert them into managed assets. It was forecasted that the last tranche of the optimization of some institutional mandate in exit, which was EUR 400 million. TFA up 17% year-on-year, and 5% Q-on-Q to EUR 75 billion, driven by an important growth in AUM, in assets under administration, and this reverted into a steady and important increase in net profit. 48% increase year-on-year and 24% Q-on-Q. We want to also highlight that this trajectory of TFA has had an important contribution from organic growth, as well as the selected acquisition that we have done in the last five years also have contributed heavily to these results. You see it on page 19, where this CAGR of 18% is part of EUR 27 billion of organic growth and EUR 22 of external growth. Basically, in five years, we have tripled our TFA, and this is the outcome of internal growth and external growth. Premier and Private segment are contributing nicely with important trend in net new money and also in improvement in marginality, because we have also improved the marginality of this business. We continue to enhance the distribution and the offering. We told already about the increase of relationship manager and financial advisor. We continue to register very good productivity. CheBanca! CheBanca! ranks second in the market in terms of the best productivity, in terms of AUM, net new money per capita. This is important because the growth that we are doing and the future growth is associated with a good marginality and productivity. As well as I said, it's very important to continue to reinforce the wide private markets platform we have already developed in this year. This year we will have new products that alongside, for instance, the tech and the real estate activity and the private equity activity with BlackRock, can be replicated even in different asset class. Consumer, page 22. Ongoing distribution announcement. We are now having 233 branches. Some are proprietary, the vast majority, 54 run by agents and 49 are Compass Quinto, the salary guaranteed. Solid rate of digital distribution. Now we reach 26% of direct personal loans. Personal loan that are generated through the web. And we have launched Compass Link. Compass Link is a new distribution tool that we have developed in order to sell not only personal loan, but also other product associated with personal loan, also in a different situation compared to the branches. Outside of the branches and also in retailers. New loans 1.8, close to the pre-COVID was 1.9. An important increase, what is also notable is the fact that the mix is different, because personal loan are now 47% of the total new loans. They were 42% in the previous quarter, and they were 52% pre-COVID. We have still some room to improve this incidence of personal loan, but we are on the right track. Q1, in terms of net profit, one of the highest of the history of Compass, EUR 90 million, up 43%. Revenue, quite stalling because we had to catch up, as I said, the NII, but we are there. Loan loss provision, which are going down to EUR 160 million, with more than EUR 200 million overlays already set aside in previous quarter, and we continue to slight beef up this number to cope with the situation after the COVID. Asset quality is at best ever level, NPEs on loans down to 1.6%. We continue to devalue our non-performing to provision them to a very low level of book value, and we are also this year continuing to sell NPEs. We plan to do another sale of NPE out of Compass from here to the end of the year. As I said, we are devoting more and more emphasis, capital and commitment to the digital upgrade, where of course, digital upgrade is important, but is important to give a smooth customer experience. For this reason, we are investing in upgrade from transactional to relational tool, integration of different channel, simplifying and enriching payment methods. Credit card, web or shop by dedicated barcode. Compass investment, in this field, have one specific goal, which is minimizing time to yes, and give a superior service and product to the customer. For this reason, you can see here on slide, in this quarter, we have processed 80% of loan application in one day and 40% in one hour. We continue to improve this. We have given us a very demanding target to arrive to the end of the plan with most of the request processed in one hour and limiting the dropout, which are linked to process rather than credit merit reason. We have now launched in 2021, in this quarter, the PagoLight. PagoLight is a Buy Now Pay Later Compass solution. We have now more than 2,000 point of sale served, and we are rolling out this initiative, which we have been working on with Nuza as a partner already since two years ago. Asset quality at its best ever level. You see not only the core, but the ongoing asset trend in early risk indicator, which are very low. Further decrease in net NPL stock. We have another drop of 12% of NPEs from EUR 235 million to EUR 206 million. Coverage ratio, which are going up to 78 and 3.17 in terms of performing. CIB, as I said, very positive news from the industrial different footprint of our CIB, which is basically already 90% a client business, but today is more diversified than before. Is more diversified because we have added another important market like France, and we have added another important customer segment, which is mid-corporate in Italy, and in future, not only in Italy. This created the opportunity to generate EUR 40 million fees in advisory, quite a good activity in acquisition finance and in DCM. Good contribution in capital market solution on the back of quite interesting volatility in equity market. ECM is going to have a more robust quarter in the coming months because of calendar of IPOs. Core at 8%, 8 basis points. The only difference compared to last year was that last year we had a one-off of write-backs of Burgo, net of which the results are pretty equal to the very high first quarter of last year. We have retained or improved an important position in the markets in IB. In M&A, you have seen that we are managing quite a high volume of transactions. Since January 2021, we are managing more than EUR 27 billion of transactions, and this is true also in ECM and also in DCM. Principal investing, a positive contribution because of ordinary trend of Assicurazioni Generali, as opposed to last year when we had a negative extraordinary. Also a positive contribution from holding function because we have reduced the loss, thanks to higher contribution from treasury and cost control. Funding stock up 3% Q-on-Q because we have issued, we have found a good window of opportunity to place senior non-preferred. We have managed to have another chunk of TLTRO, and we have had an increase in deposits of wealth management because of liquidity event that I mentioned before. COF is in the region of 60 basis points flat Q-on-Q and 5 basis points below average 2021. All indicators of liquidity are pretty good. As a closing remark, I would say that this quarter shows the ability of the group to have an increased capacity of generating revenue, and three businesses that are contributing in a positive way also in the quarters to come. Where we do expect, assuming that we have a normalized scenario, so we don't have a restart of the COVID restriction and/or a major correction of the financial market, we assume that the growth in profitability will last in terms of both TFAs and new loans driven by consumer banking and wealth management. The growth in revenue will continue with NII, which is already bottomed out, and now going to a better trajectory. Fees that will benefit from intense activity in wealth management and CIB. I would say we will take the opportunity to continue to invest and to speed up the digitization of the group. Flat cost income and core that should continue to enjoy a positive industrial trend as in the first quarter. The news is that we will, as you know, if authorized, we will do the new buyback basically when we are authorized. We will start ideally from November, hence this will bring down a bit our capital ratio for 65 basis points. Thank you very much. I leave now the room for you for questions. Thank you. As a reminder, you will need to press star and one on your telephone to ask a question. To cancel your request, please press the hash key. Once again, it is star and one on your telephone to ask a question. We will now take our first question from the line of Antonio Reale at Morgan Stanley. Please go ahead, your line is open. Thank you. Good afternoon, everyone. It's Antonio from Morgan Stanley. I have three questions, please. One on Generali, one each on NII and fees, respectively. The first one, if I look back since 2003, under your mandate, Mediobanca has significantly reduced the exposure to listed stakes. You've improved the free float after dismantling some of the historical shareholders pact. I think the progress has been clear, the direction of travel similarly. How should the market read the increase in borrowing in your Generali stake, ahead of the board renewal? That's my first question. Also, do you anticipate any changes to your capital treatment of financial investment from the Basel III proposal? It's just been published. I don't know if you've had a chance to look at it and you can comment. My second question is on NII. As you mentioned, a number of good news. It was interesting for me to see particularly that you've been able to deliver a margin expansion despite the very benign cost of risk, which, on risk-adjusted metrics, your origination is implying a very nice profitability. My question for you is, do you think this is sustainable or competition will eat into that margin going forward in your view? We've seen a number of banks flagging their intention to gain market share back in consumer, it feels that unlike the past cycle, asset quality is no longer a competitive advantage for you. What would you expect overall you can deliver in terms of NII growth this year? Lastly, on fees, the agreement you signed with BlackRock on private markets, I think has gone a little bit under the radar screen. You mentioned deposit contribution, I've seen, especially on upfront fees this quarter, visibly the numbers. How much of this do you think is recurring, and what growth shall we expect from group fees overall this year in light of your comments on CIB and wealth management? Thank you. Thank you, Antonio. First question on the security lending about Generali. It doesn't change at all our strategy. Our strategy is that the contribution of actual Generali stake is important in order to meet our financial target at the end of 2023, and in general, every single year. What we did is only meant to remove or to reduce the execution risk in terms of delivering the financial targets, which are embedded in our plan. Sustainable NII and NII growth. I have to say, we were a bit surprised this quarter of the magnitude of the rebound. To give you more color why it happened and what's behind this, basically, I would say that all contributed positive, but of course, consumer did more. Why it did more, because of two elements. New loan production, good level in terms of size and marginality. The second, it's a lower prepayment, the stock was higher compared to what we have forecasted. Now, is it sustainable? I think if we have visibility for the next quarter, it is sustainable in the sense that new loan production is going well also in October. Of course, at the end of December, we need to see the prepayment, which is the other element of the equation. I would say that, in general, if Compass goes this way, we can revise our guidance on NII from flat to positive. Of course, the entity of this positive is still to be assessed because basically will be a plus. If it is going to be something like this quarter or something more, we need to look at with more clarity and more, I would say, precision at the end of the first quarter, the next quarter. I think the NII trajectory is sustainable and will lead to a growth at the end of the year, and not a flattish trend. Fees. BlackRock has contributed here, and you see in the upfront. The upfront was a touch higher compared to last year. What is more important is the management fees component. It's very important, the growth that we have had in one year. We have grown the management fee in a very steady way. This is happening again, because basically, even this month, we are having quite a good net new money, not only from Premier, but also from private. I do expect even in fees that we can stay higher than last year. We need to see also, as I said, for investment banking and wealth management, equity market trend is very important. We need to see not a major changes in the tone of the equity market, but definitely also in fees, we can deliver better trend than last year. Thank you. We will now take our next question from the line of Azzurra, Citigroup. Please go ahead, your line is open. Good afternoon. A couple of questions from me. One is on your plan and profitability. You're really running at around the level of 2023 target in all your division at a group level. As I was hearing your comment about the consumer credit and the trends in some of the divisions, could there be some upside to this target already? The second one is on capital. Capital remains strong. You have a generous dividend policy. I just wanted to clarify a little bit your position relative to BS, because if I understand well, asset quality and sustainability are going to be two big topics coming forward, and you probably are at a better place compared to peer. If you can elaborate a little bit on, I don't know, impact of calendar provisioning, ESG, climate impact, if you can. The last one is on the revenue opportunity. You have mentioned opportunities from climate, ESG, as well as buy now, pay later. I guess they're still small at this stage, but probably they are an indicator that you are still trying to identify opportunities that come from all the possible spectrum of revenue. Am I correct? Ciao, Azzurra. I try to answer because the line was not so clear, so the voice was not so easy to listen to. In terms of plan, it's true what you're saying in the sense that in some segment, we are definitely doing better than the plan. This is coming from a smaller revenue line compared to what we have forecasted two years ago. In terms of, I would say, a bit NII and a bit also profit from trading, which is always very difficult to forecast. At the end, the cost impact and the cost of risk is such that at the end, we are having better overall results. We need to see whether, in terms of revenue, in particular on NII, we can close a bit the gap knowing that we lost one year in NII, which is the COVID year. We need to see how fast we can rebuild the NII of Compass this year and next year in order to meet those targets, which are, thanks to lower cost, already partly met. Capital, yes. Capital strong. I totally share your point. In the new environment, also with the activity of ECB and SSM, it's very important not only to have strong capital buffer, but also to have strong asset quality and level of provision which are adequate. The combination of these two, I think, will put the bank in a better position to distribute back to shareholder. I think Mediobanca is very well-positioned because asset quality continue to improve. The fact that we sell every year the non-performing warehouse in Compass keeps the balance sheet of Mediobanca in consumer completely clean. Today, basically, we don't have non-performing in Compass because once they go to stage 3, we sell them and before we start to provision. I think it's sustainable, for Mediobanca, this trend, and coupled with healthy capital ratio will make the case of our distribution policy, I think, easier and more likely to happen. If I got it well, the third question was related on M&A to support revenue. I think we continue to look at opportunity to beef up our wealth management in terms of distribution capacity and product enhancement with transaction that may be also small or mid-size. As I showed in the slide before, they clearly contribute to the TFA and to the progression of revenue. As well as you mentioned, if we find a platform or enabler to speed up our buy now pay later solution, we call it PagoLight, we will go for that because we think that it's going to be an important evolution of the market as customer will ask more and more delay in payment. Also getting their profile in terms of repeat business for personal loan is going to be very important. It's what we do normally. Compass is very strong. It's number 1 or 2 in the market in finance. Why we want to develop this, because normally you get an important database of clients on which you can do repeat business with personal loans. You can then pitch them after they have repaid the first loan, which is linked to the purchase of a certain good, and you can offer them personal loan for the future. Buy now, pay later, in particular, if you get in contact with final client, can be an important application also for the personal loan. With our capital ratio, as you know, we have forecasted every year to do some M&A, we will continue to do this along our plan. We will now take our next question from the line of Giovanni Razzoli at Deutsche Bank. Please go ahead. Your line is open. Good afternoon to everybody. Thank you for taking my questions. The first one is on the business. I've seen that the Compass, one of the good news of this quarter, is the cost of risk. I was wondering whether you can update us with what is the run rate through the cycle and the cost of risk that in the past should have been in the region of 180 basis points. Would you now be ready to decrease it to a lower level given the change in the mix and the better production? Secondly, on the CIB, I've seen that there are still a lot of landmark transactions still in pipeline, if they were to close, I was wondering what kind of contribution shall we expect on the fee in the coming quarters. Another question regarding your strategy. I've seen that you've been a relatively big investor into NPL recently. I was wondering whether this is an area that you can be interesting into scaling up or developed further on the NPL investing. Last question, I was wondering whether, as a main shareholder of Generali, how would you see an involvement of Generali as an anchor investor in the recapitalization of Monte Paschi, as some newspaper seems to suggest today. Thank you. Please. Thank you, Giovanni, for your question. The run rate through the cycle core of Compass, it's a very difficult question to answer because basically, it's true that we are every year upgrading the technical skill of Compass with an improved scoring system, more tools, and, which is also as important as the first one, capability or different capability and system to collect. I may think that the run rate, which was clearly above 200 basis points, between 200 and 300, my sense is that as we see today, is more on the region of 200 rather than 300. This is honestly a perception we have, given the fact that the trend is pretty positive. The marginality of Compass is such that, of course, we can have less profit or more profit, but even with a swing of cost of risk, the profitability will stay very, very high. CIB, I do think that the contribution of next quarter will be as good as this one. Still, it's a business that is having its own volatility. We do expect good fees from acquisition finance because we have closed a number of very nice deal, which will go to termination to execution at the second quarter. We are doing a lot of M&A, normally at the end of the year, you have some closure of M&A, both in large and mid-caps. We do expect another solid quarter. NPL. We would be a more convinced buyer of NPL in MBCredit Solutions should the rules of calendar provisioning change, because we consider applying the calendar provisioning to an activity which has not generated defaulted loan, but which has bought a discount defaulted loan totally out of any sense. I know that my position is shared by the other operator in the market that have the same situation of MBCredit Solutions. We did some tactical acquisition of portfolio, but we need to have more clarity on the CRR and calendar provisioning on this activity in order to do more. I have no clue about your fourth question, because I don't know anything about Monte Paschi and Generali. Okay. We have no clue as well. I've just read them on the newspaper today. That's why I was asking. Thank you. We will now take our next question from the line of Domenico Santoro at HSBC. Please go ahead, your line is open. Hello. Hi, good afternoon. Thanks for the presentation. A number of follow-ups on the business in particular. First of all, can you quantify the amount of COVID-related provision or overlays that were due to models? I was wondering if there is any plan in the near future to revise the model and maybe to release a little bit of this provision going forward. The second question is on the asset management. You already mentioned why the upfront fees, they were up quarter-on-quarter, but also the management fees and the margins were significantly up. I was wondering whether there is also a little bit of contribution from the target products that you potentially have distributed in the quarter and how much there are revenues attached to this. In absolute terms, instead, your margins, now you are remaining pretty much below the other Italian wealth managers that we know very well. I know that everything in wealth management is conditional upon any acquisition that you might do in the sector, but I'm just wondering whether there is some project to internalize more the production in Mediobanca in order to boost a bit margins that remain below the other peers. On fees, I'm quite surprised about the amount of fees that you are booking quarter-on-quarter, even without the large contribution from big deals and large tickets. I'm just wondering whether this is also due to the diversification and all the projects that you have in the SME segment, in terms of ECM and DCM. My question is, if next year we see the large tickets instead coming back in the banking sector, if your fee level should be much, much stronger than what we have in our model is, of course, the activity with the SMEs remains there. Thank you. Thank you, Domenico. COVID-related provision overlay. In a nutshell, we are having something like EUR 300 plus, EUR 310, EUR 300 million. Vast majority is on Compass, the rest is divided with the others. Basically, as we said, EUR 200 in Compass and the rest are split. Now, understanding we have to do, at the end of the year, solar year and fiscal year exercise about IFRS 9, basically scenario, and then we have to see the overlays. I think we need to fine-tune this with what I said before. I think that we need to see the post-COVID entrance in the new normal, so phasing out of state support, and how fast are they, and if they are going to impact the ability of our clients to repay. We need to do this in parallel, with the overlay reassessment. We need also, as I said, to be considered a bank that has done all the homework and has still a prudent buffer, because I do think that this will favor banks in terms of capital repatriation or distribution. As we are having already quite a good trend in terms of cost of risk and very good profitability, I think we will have to decide on overlays in the coming quarters, but with no urgency. I definitely think that you are right in the sense that we have had quite an important management fee uplift, but this was not linked to distributing one specific product. It is part of a long-dated exercise, where we have repositioned, and we are repositioning CheBanca! in the premium segment, which means that we are exiting mass market exposure, and we are improving product, differentiating prices in terms of service, and all this is generating an increase in marginality. We are also working on what you said, internalizing more. Here again is a process which takes time because it's true that we were, a year ago, at one of the lowest levels of equity into portfolio and one of the lowest levels in terms of penetration of products. We need to do this with attention, and with the maximum respect for me, fit and for client. It's something that we're going to see in the next two, three years, as long as our capacity and ability to build new product for our customer base is going to be completed and enriched, also clients are more keen to take equity product or more sophisticated product as opposed to simple product. I see that this is something that, in terms of management fee, is not having one-off in upfront. By definition, you have some one-off of different kind, but not in management fee. I think, the second part of your question about fees for CIB is very difficult to answer in the sense that, of course, we can have also the scenario that we are mentioning, where big transactions are coming back, in particular in Italian market. I think at that moment, we are very well positioned to take part of this. Of course, it's very difficult to predict them. Hello. Thank you. We will now take our next question from the line of Britta Schmidt at Autonomous Research. Please go ahead. Your line is open. Yeah. Hi there. Thanks for taking my questions. I've got three questions, please. The first one is on the fee outlook. The press release says that you expect the flow of fees in line with the performance recorded in Q1, pointing to a run rate. Shall we presume that this will include Bybrook, can you maybe update us on the contribution of Bybrook that you expect for this year? The second question is on, just coming back to capital, do you see any regulatory impacts on capital to come? Do you have any update on Basel IV impact potentially? The third one would be on PagoLight. Is there any way that you can help us size the potential opportunity of the buy now, pay later scheme itself as well as the associated cross-selling? Thank you. Sorry, Britta. Thank you for your question. Unfortunately, the third one, the line was not good. I will ask you to repeat the third question, please. Sure. Apologies. Can you hear me better now? Yeah. I think you should speak not too much close to the microphone, otherwise. Okay. Okay. Try again. All right. The question was on PagoLight, whether you can help us size the opportunity for the buy now, pay later business itself, as well as any associated cross-selling that you expect over the next one to two years. Yes. Bybrook. As you said, we are not seeing the contribution in this quarter because we started to consolidate only two months. One month, sorry. It's a company that will definitely improve the number of Kern because it's having a different marginality. To give you the sense, the marginality of Bybrook is in the region of 100, 110 basis points. Low-cost income, it's quite complementary to what we have because will lead to important uplift in terms of contribution of the combined entity. Basel IV, we don't have anything to add because we have also given a fast review on the recent publication. If I am right, it was published today at 1:00 P.M. We reviewed it before this call, and we came to conclusion that nothing is happening to us because the impact is going to be quasi zero. We will have, as I mentioned, maybe another call or through our IR department, some inflation RWA in equity but some deflation in operational risk RWA. Net is going to be a non-event for us. The potential of buy now, pay later is still. We think is going to be something over time important, but honestly, we are not ready to give guidance, which are fact-based because today is still in the Italian market, I would say, not material. What I can tell is that all these new product are important also to increase the ability of our distribution network. I give you one example, which was mentioned today in our board. The fact that more than a year ago, we started Compass Rent. Compass Rent is another project, which is meant to the new consumption. As you know, cars are not bought anymore, if any, are leased and then so rented. Hence, we have started the Compass Rent more than a year ago. What you see is that our dealers, in terms of the car sector, knowing that we have this project of Compass Rent, they start to give us more business because we have a product that today is very much in demand. This buy now, pay later, Compass Rent, new kind of product, are not only important because they open new avenues, but because they reinforce the actual business with additional business from existing client. Thanks. Thank you. We will now take our next question from the line of Hugo Cruz at KBW. Please go ahead. Your line is open. Hi. Thanks for the time. Just two quick questions. One, I've noticed the net equity fell quite a bit Q on Q. I couldn't understand the reason, if you could clarify that. Then on the consumer side, can you tell us what% of new lending is coming from the third-party banking channels? Thank you. I start with the second. The banking channel in Mediobanca in Compass today compared to some years ago has been reducing a lot, in the sense that today we have the Monte Paschi agreement, which we forecast going down already in the plan, and we have planned to substitute this with new opening. To give you the sense, in terms of volume is something like EUR 500 million, EUR 600 million, all the third-party distribution network. It is not proportional in terms of profitability, because Monte Paschi itself is EUR 400 million, and then we have Post, and we have others, but I think those are more stable in terms of agreement. In terms of profitability, as I said, we have less than half in terms of profitability compared to the loans which are distributed by Compass branches. We have basically, the Monte Paschi agreement is something that contributes in the region of EUR 20 million every year, and is going to have a phase out of three to four years. It is not going to be one day zero, it is going to go down, if and when it is terminated, and in the meantime, we can, as we have already, and this is in our plan to substitute this with new loan production done internally in Compass new branches. The difference in the net equity is only related to the dividend distribution. It is a EUR 500+ million of the dividend distribution, which is going to be paid in some weeks. Okay, perfect. Thank you very much. Thank you, Hugo. I need also to answer one question by Cordara, which he sent through an email because he cannot be in touch, he is asking whether we have still pressure on margins. We have enjoyed today quite a stable situation in terms of marginality. Margin tends to be stabilized at a good level, both in consumer, thanks to personal loan, and also into CIB. We will now take our next question from the line of Luigi De Bellis at Equita SIM. Please go ahead. Your line is open. Yes, good afternoon to everybody. Two quick questions from me. The first one is a general question. Do you expect that the full restart of the calendar provisioning may represent a threat on the cost of risk for the banking sector in general and for you in particular, compared to your current good RAM rate, especially considering some potential increase in default rate at the expiry of moratoria? Can you remind us which initiatives did you put in place to address this risk? The second question on wealth management, can you elaborate on your strategy and target for new recruitments of new bankers and financial advisors for this year, and the cost of recruitment now on the market, if you are seeing an increase of competition or not? Thank you. Well, I have to say that I'm still convinced that calendar provisioning can generate some impact overall in the system, not only in the Italian banking system. On top, take into consideration that there can be a sort of hardening in the application of the calendar provision. It's not only the calendar provision, it's also the way it can be applied, in particular, for the loan generated before the calendar provision introduction, and the possibility to have the comply or the explain. If we assume, for instance, that there can be only a comply and not explain, hence we will see a greater impact in the years to come. Honestly, I think that some automatism are not helping the recovery of the economy, because it's clear that if we have to continue to help clients which are classified, for instance, in stage 3, unlikely to pay, we think that those clients may go back to bonis. If we have to give additional credit, and this credit automatically is going to be then a provision or a third for the next three years, the incentive for banks to lend more money to this situation will be lower. Basically, I don't think that this automatism, and the way it can be applied, is not helping the recovery of the economy. Wealth management, Luigi, we have, I think, a unique position today in the market. Why? We are, I think, the only institution which offer to a wealth management banker, and even to investment banker, the possibility to have these two business very strong under a very important brand, working very well together. Why is important? It is going to be very important in the future, because, as you know, in order to get access to net new money in a money motion event, you are totally in a different position if you dominate those kind of events, either because you are managing them in terms of IPOs, M&A, or because you have a brand which is a synonym of solidity. We are now having a huge amount of money motion event under our management. This is happening because we have either strong investment banking franchise, or we have wealth manager, and then private banker, which are connected with our IB. How we recruit? First of all, we offer an experience and an environment which is unique. Of course, we need to pay also market price. Having such an important selling proposition, our recruitment is and is going to be even more easy in the future. Thank you very much. We will now take our next question from the line of Fabrizio Bernardi at Bestinver. Please go ahead, your line is open. Hi, everybody. As you may imagine, many investors are asking about the consolidation process in Italy, M&A, Monte dei Paschi, and so on. I know maybe this is not a comfortable question. Probably I understood the answer you gave to Giovanni before. Maybe there is any color, any flavor that you may be willing to share with us about Monte dei Paschi and what can happen in the next year, or about anything about consolidation that may involve Monte dei Paschi and the role of the Minister of Finance. Well, I do think that the government is doing a lot to favor the consolidation, because thinking only to the DTA and the flexibility showed to find a good solution, I think it's a very important step change compared to the past. What it seems that DTA may be prolonged, also next year. This is going to be another strong technical supporting factor to further consolidation. In particular in Tier 2, I'm still convinced that one way or the other, it should materialize in 2021, 2022 more likely. It's needed because basically, if you are in a universal bank model, you can really not easily come up with a plan saying, "Okay, I cut 30% of my branches and I do a lot of layoff." If you have someone which is paying for that with DTA, it is totally different. In order to do this, you need to do M&A. Which is another element of saying, "Okay, we have a good exercise to review the cost base, to review the branches, to review the IT." We can support bigger investment in digitalization. There are a lot of good, I would say, reason to do consolidation. We shouldn't be afraid that one attempt has failed and this is the end of the game. I think it's only the start of the game. Okay. Thank you. One more question, if I can. Are you happy with the physical franchise of Mediobanca, or is there any reason why we should believe you may want it bigger? No, I'm very happy. Fabrizio, I'm very happy with that, and I see a lot of potential in the group. I see the potential of having a truly omni-channel distribution with a right touch of small, high-end physical branches with an important digital tools in selling with agents. So I see a lot of potential in the group, and I don't think that those potential should be hammered with taking on a large undifferentiated distribution network, all type of banking. I clearly am a fan of a specialized banking model. In particular- Very clear as usual. Thank you. In particular, if I can add, in a period of interest rates negative, and negative interest rates, and digitalization in selling basic product. For this reason, you may need, or you need private bankers coming from Mediobanca or from other important brand, which give you the sense of professionality, trust, confidentiality. We need to stay If I can, I can do a comparison. In banking, you need to decide whether you want to be a Zara or you want to be Hermès. There is no doubt that we don't want to be a Zara. Thank you. Thank you. As there are no further questions, I would now like to hand the call over to the CEO, Alberto Nagel. Please go ahead. Thank you very much for your kind participation. We hope to have you all in February, when we will have our second quarter results. This concludes today's- Sorry. It's very important also that you may attend at our ESG roundtable, which will be on the 16th of November. We'll have representative of institutional investor setting the scene of the engagement also with the corporates. Thank you very much. Bye. This concludes today's conference call. Thank you for participating. You may all disconnect.