Q2 2026 Banca IFIS SpA Earnings Call

August 4, 2026

[Analyst]: Don't think me unkind. Words are hard to find. There are only shapes I've left unsigned. In the banks of chaos in my mind.

Speaker #5: From the banks of chaos in my mind. And when they eloquence escapes me, their logic ties me up and wraps me. Doo doo doo, the da da da, that's all I want to say to you.

[Analyst]: Their logic ties me up and racks me. Yeah, doo doo doo. Da da da da. Is all I want to say to you. Doo doo doo. Da da da da. The innocence will pull me through. Doo doo doo. Da da da da. Is all I want to say to you. Doo doo doo. Da da da da. The meaningless and all that's true. Poets, priests, and politicians have words to sell for their positions. Words that scream for your submission. No one's jamming their transmission. When their eloquence escapes you, their logic ties you up and wrecks you. Yeah, doo doo doo. Da da da da. Is all I want to say to you. Doo doo doo. Da da da da. The innocence will pull me through. Doo doo doo. Da da da da. Is all I want to say to you. Doo doo doo.

Speaker #5: Doo doo doo, the da da da, their innocence will slow me through. Doo doo doo, the da da da, that's all I want to say to you.

Speaker #5: Doo doo doo, the da da da, their meaningless and all that's true. Poetry and politicians have words to thank for their positions. Words that scream for your submission.

Speaker #5: No one's jamming their transmission. And when they eloquence escapes you, their logic ties you up and wraps you. Doo doo doo, the da da da, that's all I want to say to you.

Speaker #5: Doo doo doo, the da da da, their innocence will pull me through. Doo doo doo, the da da da, that's all I want to say to you.

Speaker #5: Doo doo doo, the da da da, their meaningless and all that's true. Doo doo doo, the da da da, that's all I want to say to you.

[Analyst]: Da da da da. The meaningless and all that is true. Doo doo doo. Da da da da. Is all I want to say to you. Doo doo doo. Da da da da. The innocence will pull me through. Doo doo doo. Da da da da. Is all I want to say to you. Doo doo doo. Da da da da. The meaningless and all that is true.

Speaker #5: Doo doo doo, the da da da, their innocence will pull me through. Doo doo doo, the da da da, that's all I want to say to you.

Speaker #5: Doo doo doo, the da da da, their meaningless and all that's true.

Speaker #1: Good afternoon. This is the Coruscal Conference Operator. Welcome and thank you for joining the Banca IFIS first half 2026 results conference call. As a reminder, all participants are in listen-only mode.

Operator 2: Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banca IFIS H1 2026 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. Frederik Geertman, Chief Executive Officer of Banca IFIS. Please go ahead, sir.

Operator: Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banca IFIS H1 2026 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. Frederik Geertman, Chief Executive Officer of Banca IFIS. Please go ahead, sir.

Speaker #1: 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.

Speaker #1: At this time, I would like to turn the conference over to Mr. Frederick Gertman, Chief Executive Officer of Banca IFIS. Please go ahead, sir.

Speaker #2: Thank you, Madam, and good afternoon, everybody. Welcome to our summer conference call, where we present the first half 2026 results. As usual, I will give a brief presentation and then take your questions.

Frederik Geertman: Thank you, madam, and good afternoon, everybody. Welcome to our summer conference call, where we present the H1 2026 results. As usual, I will give a brief presentation and then take your questions. I am joined today by our Chairman, Ernesto Fürstenberg Fassio, who is listening in, and by my team, the CFO, Roberto Ferrari, and the investor relations representative, Martino Dario, who will assist me in taking your questions. I would take you right away to page four and dive into the presentation. Financial performance. We have posted the H1 2026 net profit of roughly EUR 8 million. We are clearly in profit, and this includes roughly EUR 84 million of provisions that I will now set out to detail. Out of these EUR 84 million of provisions recorded in the H1 2026, EUR 73 million were recorded in the Q2.

Speaker #2: I'm joined today by our Chairman, Ernesto Fürstenberg-Facio, who is listening in, and by my team, the CFO, Roberto Ferrari, and the Investor Relations Representative, Matteo D'Ario, who will assist me in taking your questions.

Speaker #2: I would take you right away to page four and dive into the presentation. Financial performance. We post the first half 2026 net profit of roughly 8 million, so we're clearly in profit, and this includes roughly 84 million euros of provisions that I will now set out in detail.

Speaker #2: Out of these 84 million of provisions recorded in the first half 2026, 73 were recorded in the second quarter. Around 30 million reflected the findings of the on-site inspection conducted by the Bank of Italy.

Frederik Geertman: Around EUR 30 million reflected the findings of the on-site inspection conducted by the Bank of Italy, and the guidance communicated on 25 June also included roughly EUR 40 million additional expected provisions in illimity, of which four are already booked in the Q2, and the remaining will be booked in the H2 of the year following the definitive update of the reports of the non-core NPL Special Purpose Vehicles and given the expected defaults of the b-ilty portfolio. Capital. CET1 ratio of 13.4% at 30 June, excluding, as always, the earnings of the semester, providing a solid buffer for a bank of our scale, well above the current requirements by Bank of Italy, which are at 9.9%, including 1% Pillar 2 guidance.

Speaker #2: And the guidance communicated on June 25th also included roughly €40 million of additional expected provisions in Illimity, of which €4 million are already booked in the second quarter, and the remaining will be booked in the second half of the year, following the definitive update of the reports of the non-core NPL special purpose vehicles and given the expected defaults of the built-in portfolio.

Speaker #2: Capital. CT1 ratio of 13.4% at June 30th. Excluding, as always, the earnings of the semester, providing a solid buffer for Bank of our scale, well above the current requirements by Bank of Italy, which are at 9.9%, including 1% bidder two guidance.

Speaker #2: We remain, of course, focused on capital management, and I will come back on it, and we'll closely monitor capital ratios throughout the integration, the derisking, and the NPL portfolio deconsolidation process that we will discuss.

Frederik Geertman: We remain, of course, focused on capital management. I will come back on it and we will closely monitor capital ratios throughout the integration, the de-risking, and the NPL portfolio deconsolidation process that we will discuss. We have a new MREL requirement effective from 31 March 2026. It is set at 13.13 of TREA, including the CBR, and set at 4.67% of the LRE, fully met through CET1 capital, as you can see, and broadly unchanged compared to the previous requirement. There is an increase of 1 basis point. I underline that the previous requirement was before the illimity acquisition, so it is not my place, obviously, to comment on decisions by the central bank, but we find the substantially unvaried number encouraging. Proactively de-risking and integration is going on in 2026, laying the foundations for stronger profitability and value creation from 2027 onwards.

Speaker #2: We have a new EMRO requirement effective from the 31st of March 2026. It's set at 13.13 of TREA, including the CBR. And set at 4.67% of the LRE, fully met through CT1 capital, as you can see.

Speaker #2: And broadly unchanged compared to the previous requirement. There's an increase of one basis point. I underlined that the previous requirement was before the Illimity acquisition.

Speaker #2: So it's not my place, obviously, to comment on decisions by the central bank, but we find the substantially unvaried number encouraging. Proactive derisking and integration is going on in 2026, laying the foundations for stronger profitability and value creation from 2027 onwards.

Speaker #2: Page five, the path towards long-term value creation, what we do in these last months. So we're fully on track with the integration of IFIS and Illimiti.

Frederik Geertman: Page five, the path towards long-term value creation. What did we do in these last months? We are fully on track with the integration of Banca IFIS and illimity. We are laying the foundations to deliver confirmed EUR 75 million of annual cost and revenue synergies in 2027 and onwards. illimity completed the disposal of Hype, ARECneprix, and Abilio, significantly simplifying group's operating structure and balance sheet. We also completed the renegotiation of illimity's IT contracts as a key part of the integration process. A new long-term agreement strengthens this partnership with Finwave and delivers, as we discussed, significant recurring cost savings. As part of this agreement, Finwave will acquire full ownership of Altermind Banking, while Banca IFIS and Finwave will continue their strategic partnership through a company focused on AI. We started the competitive process for the deconsolidation of our NPL business.

Speaker #2: We're laying the foundations to deliver confirmed €75 million of annual cost and revenue synergies in 2027 and onwards. Illimity completed the disposal of Hype, AREC, Netbricks, and Abilio.

Speaker #2: Significantly simplifying groups operating structure and balance sheet. And we also completed the renegotiation of Illimiti's IT contracts as a key part of the integration process.

Speaker #2: A new long-term agreement strengthens this partnership with Finomnia Fibonacci and delivers, as we discussed, significant recurrent cost savings. As part of this agreement, Finomnia will acquire full ownership of Outer Mind Banking, or Banca IFIS and Finomnia will continue their strategic partnership through a company focused on AI.

Speaker #2: We started the competitive process for the deconsolidation of our NPL business. This is progressing in line with our expected timeline. I can report strong interest from a broad range of potential counterparties, including domestic and international investors, specialized NPL operators, financial institutions, and private equity firms.

Frederik Geertman: This is progressing in line with our expected timeline. I can report strong interest from a broad range of potential counterparties, including domestic and international investors, specialized NPL operators, financial institutions, and private equity firms. We are on a clear strategic direction. We are proactively reshaping the business model towards a well-rounded SME banking specialist, ensuring proactive alignment with the regulatory environment through the disposal of the NPL business and the risk profile of the group. The illimity acquisition and the Fürstenberg division mark concrete milestones of this long-term transformation focused on sustainable value creation that will be fully articulated in the new business plan that we will start to think of in the end of the year. Cost of funding reduction and the consequent margin development are on track, notwithstanding a moderate increase in base rates. Page six.

Speaker #2: We are on a clear strategic direction. We're proactively reshaping the business model towards a well-rounded SME banking specialist, ensuring proactive alignment with the regulatory environment through the disposal of the NPL business and the risk profile of the group.

Speaker #2: The Illimiti acquisition and the Fürstenberg division mark concrete milestones of this long-term transformation focused on sustainable value creation that will be fully articulated in the new business plan that we will start to think of in the end of the year.

Speaker #2: Cost of funding reduction and the consequent margin developments are on track, notwithstanding a moderate increase in base rates. Page six: a bit of detail on the execution of some of the transactions I mentioned.

Frederik Geertman: A bit of details on the execution of some of the transactions I mentioned. We secured the cost synergy run rate from 2027 onwards of EUR 50 million. EUR 30 million operating cost reduction secured, completed the IT contract renegotiation, as I mentioned. Also, we streamlined the illimity cost base through centralized procurement and efficiency measures. We can now report that we have a 650 FTE reduction already completed, both through the early retirement program at Banca IFIS and illimity, which is fully subscribed, and through further work for streamlining delivered through the disposals of the two non-core subsidiaries, and the voluntary exits at illimity, which proceeded ahead of plans. We have EUR 35 million revenue synergies activated. We believe that is now totally in reach. Revamping illimity's core SME business across structured finance, factoring, and turnaround. We are currently moving factoring contracts onto the Banca IFIS platform.

Speaker #2: So we secured the cost synergy run rate from 2027 onwards of 50 million. 30 million operating cost reduction secured, completed the IT contract renegotiation, as I mentioned, and also we streamlined the Illimiti cost base through centralized procurement and efficiency measures.

Speaker #2: And we can now report that we have a 650 FTE reduction already completed, both through the early retirement program at Banca IFIS and illimity, which is fully subscribed, and through further work for streamlining delivered through the disposals of the two non-core subsidiaries.

Speaker #2: And the voluntary exits at Illimity, which have proceeded ahead of plans. We have €25 million revenue synergies activated. We believe that is now totally in reach.

Speaker #2: Revamping Illimiti's core SME business across structured finance, factoring, and turnaround. We are currently moving the factoring contracts onto the IFIS platform. New lending origination has been aligned with our risk standards, and the integration is progressing in line with the planned organizationally, the control functions, initiatives on culture.

Frederik Geertman: New lending origination has been aligned with our risk standards. The integration is progressing in line with the plan. Organizationally, the control functions, initiatives on culture, risk culture especially, is all going as we planned. We now look at the rest of the year in a simplified group structure. The non-core subsidiaries have been spun off. The IT service perimeter has been streamlined. I'm speaking about executed transactions, so these are beyond binding offers. These are now closed transactions. Therefore, we can state with confidence that the synergies on costs and non-revenues are activated. Page seven. A little focus on these transactions. On IT, we completed this IT agreement. Realigned the Altermind partnership structure that was originally 52% Fenomia and 48% illimity.

Speaker #2: Risk culture, especially, is progressing as we planned. We are now looking at the rest of the year with a simplified group structure. The non-core subsidiaries have been spun off.

Speaker #2: The IT service perimeter has been streamlined. I'm speaking about executed transactions. So these are beyond binding offers. These are now closed transactions. Therefore, we can state with confidence that the synergies on cost and on revenues are activated.

Speaker #2: Page seven, a little focus on the transactions. So on IT, we completed this IT agreement. And realigned the Outer Mind Partnership structure. There was originally 52% Finomnia and 48% Illimiti.

Speaker #2: Finomnia Group will acquire 100% of Outer Mind Banking, which is focused on selected IT banking services and a digital banking platform designed to accelerate the digital transformation of third-party financial institutions.

Frederik Geertman: Fenomia Group will acquire 100% of Altermind Banking, focused on selected IT banking services and a digital banking platform designed to accelerate the digital transformation of third-party financial institutions. That's their business. The long-term service agreement with Banca IFIS has been correspondingly amended with annual payments significantly reduced to achieve those cost synergies. We remain partners with Fenomia Group, who are making a joint investment in Altermind, 52% Fenomia and 48% illimity, company focused on AI. We will leverage the Altermind platforms and know-how to develop AI-driven banking solutions with a specialized technological partner. We believe that it's certainly advantageous to speed up our capabilities in this area. Disposal of ARECneprix. We completed it. We sold it for EUR 30 million. It generated 10 basis points on our CET1 ratio. The transaction enhances the operational efficiency through a strategic partnership with a leading servicing platform.

Speaker #2: That's their business. The long-term service agreement with Banca IFIS has been correspondingly amended, with annual payment significantly reduced to achieve those cost synergies. We remain partners with Finomnia Group.

Speaker #2: We're making a joint investment in Outer Mind: 52% Finomnia and 48% Illimiti. The company is focused on AI. We will leverage the Outer Mind platforms and know-how to develop AI-driven banking solutions with a specialized technological partner.

Speaker #2: We believe that it is certainly advantageous to speed up our capabilities in this area. Disposal of AREC Netbricks—we completed it. We sold it for €30 million.

Speaker #2: It generated 10 basis points on our CT1 ratio. The transaction enhances operational efficiency through a strategic partnership with a leading servicing platform. It is being integrated, as you know, into a much larger company, with long-term servicing agreements in place to ensure continuity in the management of our NPL portfolios, which we will continue to tactically unwind as opportunities arise.

Frederik Geertman: It's being integrated, as you know, in a much larger company with long-term servicing agreements in place to ensure continuity of the management of our NPL portfolios that we will continue to tactically unwind as opportunities arise. Disposal of Abilio. We sold Abilio. It was 82% owned by illimity and 18% by COIMA, to Servizilegali.net, specialized operator, longstanding experience in the judicial disposal sector. They will be certainly able to valorize this company and relaunch their business. This disposal does not include the real estate agency, Quimmo, which following this transaction, will be owned by COIMA, majority stake of 60%, the natural owner, we think, to lead the next phase of their development. We remain with 40% and will revisit this file once this development has taken shape. Page eight, deconsolidation of the NPL business, surely an area of interest.

Speaker #2: Disposal of Abilio, we sold Abilio, it was 82% owned by Illimiti and 18% by Coinma, two servizi legali.net. Specialized operator, long-standing experience in the judicial disposal sector.

Speaker #2: They will be certainly able to valorize this company and relaunch their business. This disposal does not include the real estate agency Quimo, which following this transaction will be owned by Coinma, majority stake of 60%.

Speaker #2: We think the natural owner should lead the next phase of their development. We will retain 40% and revisit this file once the development has taken shape.

Speaker #2: Page eight, deconsolidation of the NPL business, surely an area of interest. You will remember we announced at the start of the year the activation of a study phase in which we were going to explore strategic options.

Frederik Geertman: You will remember we announced at the start of the year the activation of a study phase in which we were going to explore strategic options. We announced to the market the decision to deconsolidate. We can report that the process is underway. We are offering a leading integrated platform for small tickets NPL investment and servicing, supported by a disciplined investment approach and definitely a strong track record. Unparalleled technology, processes, pricing capabilities, unparalleled data, and unparalleled capacity to valorize the data. Strategic rationale is, of course, for us to deconsolidation. Therefore, given the regulatory outlook, improve capital efficiency. Also secure the best long-term value-creating solution, not just for IFIS, but also for the NPL business.

Speaker #2: We then announced to the market the decision to deconsolidate. Now we can report that the profile the process is underway. We are offering the leading integrated platform for small tickets NPL investment and servicing.

Speaker #2: Supported by a disciplined investment approach and definitely a strong track record. Unparalleled technology, processes, pricing capabilities, unparalleled data and unparalleled capacity to valorize the data.

Speaker #2: Strategic rationale is, of course, for us to deconsolidation. Therefore, given the regulatory outlook, improved capital efficiency, and also secure the best long-term value creating solution not just for IFIS, but also for the NPL business.

Speaker #2: We believe that the development of this business long-term is better placed in an ownership structure where you don't have the regulatory headwind that is clear at present and that in the next years will only increase.

Frederik Geertman: We believe that the development of this business long term is better placed in an ownership structure where you don't have the regulatory headwind that is clear at present, and that in the next years will only increase. Timetable on the right of page eight. June and July, high level teasers were prepared, and the NDAs were signed. We got those quite numerous bidders joining us of very high level players, domestic and international. We expect non-binding offers in H2 of the year. We will immediately make them the due diligence available, and we expect the binding offers towards the end of the year, always in H2. Towards the end of the year, hopefully getting us to sign and close in H1 2027. A proactive strategic action in response to the new calendar provisioning situation.

Speaker #2: Timetable on the right of page eight. June and July, high-level teasers, and we're prepared and the NDAs were signed. So, we got those quite numerous bidders joining us, of very high-level players.

Speaker #2: Domestic and international. We expect non-binding offers in the second half of the year. We will immediately make the due diligence available. We expect the binding offers towards the end of the year—always in the second half, but towards the end of the year—hopefully getting us to sign and close in the first half of 2027.

Speaker #2: So a proactive strategic action in response to the new calendar provisioning situation. Page nine, the results of the quarter. 190 million revenues. And minus 23.5 million net results in the quarter.

Frederik Geertman: Page nine, the results of the quarter, EUR 190 million revenues, and EUR -23.5 million net results in the quarter. As I mentioned in the semester, a net positive result. This obviously on the back of the provisions. Just to explain the Q on Q evolution, Q1 2026 includes a positive contribution from the turnaround business, which was in illimity by the successful early repayment of an exposure to a mid-corporate. It was a very good transaction for us. You could consider it a one-off, but I would encourage you to consider this partly recurring. It is typical of the turnaround business that these exits happen periodically. That's the way it works.

Speaker #2: But as I mentioned, in the semester, a net positive result. This is obviously on the back of the provisions. Just to explain the Q-on-Q evolution, the first quarter of 2026 includes a positive contribution from the turnaround business, which was in Illimiti.

Speaker #2: By the successful early repayment of an exposure to a mid-corporate, it was a very good transaction for us. You could consider it a one-off, but I would encourage you to consider this partly recurring; it is typical of the turnaround business that these exits happen periodically.

Speaker #2: That's the way it works. It doesn't happen every quarter. So you can't really smooth it. But I think we will see more of these kinds of results in the future coming out of that business as the good transactions mature.

Frederik Geertman: It doesn't happen every quarter. You can't really smooth it. I think we will see more of these kinds of results in the future coming out of that business as the good transactions mature. Q2 2026 includes the EUR 30 million of provisioning arising from the internal review performed following Bank of Italy's on-site inspection, as well as the first tranche of provisions due to updated recovery expectations on certain non-core assets, which we discussed also on 25 June. The EUR 4.2 million loss or gain on disposal of investments, in our case, gain, is the net result of the disposal of ARECneprix and Abilio. Page 10, asset quality. Gross NPE ratio 7.4%, net NPE ratio 4.9%. First, a few words on what you see here as an increase and then an outlook.

Speaker #2: The second quarter of 2026 includes the €30 million of provisioning arising from the internal review performed following Bank of Italy's on-site inspection, as well as the first tranche of provisions due to updated recovery expectations on certain non-core assets, which we also discussed on June 25th.

Speaker #2: The 4.2 million loss or gain on disposal of investments in our case gain is the net result of the disposal of AREC Netbricks and Abilio.

Speaker #2: Page 10, asset quality. Gross NPE ratio 7.4, net NPE ratio 4.9. So first few words on what you see here as an increase and then an increased by roughly 152 million, mainly driven by reclassifications following the assessment based on the Bank of Italy inspection.

Frederik Geertman: The NPEs increased by roughly EUR 152 million, mainly driven by reclassifications following the assessment based on the Bank of Italy inspection and higher b-ilty non-performing exposures. The first is worth roughly EUR 112 million, the second, roughly EUR 25 million. I remind you that, of course, b-ilty is assisted by public guarantees for about 80%, and the rest, EUR 15 million, is other portfolio dynamics. We also classified another piece of the pharma book, which is in runoff, using even more stringent criteria based on the evolution of the market, if you will, and the practice that we are observing in the market. The total book is now worth roughly EUR 100 million. That's always decreasing. As you remember, we exited the business. In the last years, it was reduced to less than a fifth of what it was.

Speaker #2: And higher built-in non-performing exposures. The first is worth roughly 112 million. The second roughly 25 million. I remind you that, of course, built-in is assisted by public guarantees.

Speaker #2: For about 18%. And the rest 15 million is other portfolio dynamics. We also classified another piece of the pharma book, which is in runoff, using even more stringent criteria based on the evolution of the market, if you will, and the practice that we are observing in the market.

Speaker #2: The total book is now worth roughly 100 million. So that's always decreasing, as you remember, we exited the business in the last years. It was reduced to less than a fifth of what it was.

Speaker #2: And I, looking forward, can report we are in ongoing discussions for the sale of roughly 60 to 80 million. Actually, I would estimate this a bit higher.

Frederik Geertman: I, looking forward, can report we are in ongoing discussions for the sale of roughly EUR 60 to 80 million. Actually, I would estimate this a bit higher, probably closer to EUR 90 all in all of generated NPL. We are managing these ratios downwards towards the end of the year. Page 11, capital ratios. We end up at 13.39%. Very minor variations due to the calendar provisioning and some intangible asset deduction. Then we have an effect of RWA increase due to, I would say, very healthy development in Banca IFIS, significant increase in RWAs due to business development, partially offset by a lower RWA in illimity as we restructure the business. In illimity, you have now a mixed bag of things that are looking to increase, which are commercially what we like and stuff that we are allowing to run off.

Speaker #2: Probably closer to 90 all in all of generated NPLs. So we are managing these ratios downwards towards the end of the year. Page 11, capital ratios.

Speaker #2: We end up at 13.39%. Very minor, variations due to the calendar provisioning and some intangible access deduction. And then we have an effect of RWA increase.

Speaker #2: Due to, I would say, very healthy development in Banca IFIS, significant increase in RWAs due to business development, partially offset by a lower RWA in Illimiti as we restructure the business.

Speaker #2: And in Illimiti, you have now a mixed bag of things that are looking to increase, which are commercially what we like, and stuff that we are allowing to run off.

Speaker #2: Page 13, I want to focus a few slides on the quality of our commercial banking business, future of the group, right? If you look at quarterly revenues, in aggregate, right, you can see commercial and corporate banking revenues at 87 million.

Frederik Geertman: Page 13, I want to focus a few slides on the quality of our commercial banking business, future of the group. If you look at quarterly revenues in aggregate, you can see commercial and corporate banking revenues of EUR 87 million. There was EUR 81 in Q1, EUR 83 in Q2 of last year. It reflects solid commercial momentum, which I will show later. Continued pricing discipline and the good seasonality in structured finance. We had EUR 48 million of NPL revenues. Was EUR 47 in Q1 and EUR 76 last year, exceptionally positive, reflecting lower purchasing activity ahead of the portfolio deconsolidation. That makes sense, I would say, and a strategic shift towards forward flow agreements. Also, a slightly lower use of recognition of model revenues in the light of the upcoming disposal. A prudence in revenue recognition that you can see in those numbers.

Speaker #2: There was 81 in the first quarter, 83 in the second quarter of last year. It reflects solid commercial momentum, which I will show later.

Speaker #2: Continued pricing discipline and the good seasonality in structured finance. We have 48 millions of NPL revenues. Was 47 in the first quarter and 76 last year, exceptionally positive.

Speaker #2: Reflecting lower purchasing activity ahead of the portfolio deconsolidation—it makes sense, I would say—and the strategic shift towards forward flow agreements. Also, there's a slightly lower use of recognition of model revenues in light of the upcoming disposal.

Speaker #2: So a prudence in revenue recognition that you can see in those numbers. Non-core and GNS revenues at 21 million. Benefiting from strong performance of the proprietary finance portfolio.

Frederik Geertman: Non-core NGNS revenues at EUR 21 million, benefiting from strong performance of the proprietary finance portfolio. The NPL business, a bit of a deep dive. We remain on Page 14, registering very solid cash collection. The models have been consistently outperformed. We focus, as we mentioned, forward flow agreements we now have with the most prestigious consumer finance players and one of the largest banks in the country, two of the largest banks in the country, actually, forward flow agreements in place that lead to the acquisition of low vintage portfolios aligned by what we think is a market trend, which is the move by major originators towards earlier disposals. With a priority on assets offering a quicker resolution. We increased the use of extra-judicial recovery, and we continue to dispose of tail portfolios.

Speaker #2: The NPL business—a bit of a deep dive. We remain on page 14, registering very solid cash collections. The models have been consistently outperformed. We focus, as we mentioned, on forward flow agreements.

Speaker #2: We now have, with the most prestigious consumer finance players and one of the largest banks in the country—two of the largest banks in the country, actually—forward flow agreements in place.

Speaker #2: That leads to the acquisition of low-vintage portfolios, aligned by what we think is a market trend, which is the move by major originators to towards earlier disposals, right, with a priority on assets offering a quicker resolution.

Speaker #2: We increased the use of extra provisional recovery. And we continue to dispose of tail portfolios. I remind you that we took 12 billion euro of gross book value off the books gross book values.

Frederik Geertman: I remind you that we took EUR 12 billion of gross book value off the books, gross book values in 2023 and H1 2026. We are lowering portfolio vintage, and we're significantly decreasing the complexity in the book because all this gross book value with very limited net book value, I remind you, these are tails. They don't have a lot of balance sheet weight in terms of net book value, but they give a lot of complexity. In all these transactions, we book moderate, but we book small gains on the transactions, so we tend to sell at or slightly above the book value. We register small decreases in net book value and large decreases in gross book value. EUR 94 million cash recovery in the quarter, EUR 98 million last quarter.

Speaker #2: In 2023 and the first half of '26. Thereby we are lowering portfolio vintage. And we're significantly book. Because all this gross book value with very limited net book value, I remind you, these are tails, right, they don't have a lot of balance sheet weight in terms of net book value, but they give a lot of complexity.

Speaker #2: And all these transactions, we book moderate, but we book small gains. On the transactions. So we tend to sell at or slightly above the book value.

Speaker #2: We register small decreases in net book value and large decreases in gross book value. 94 million cash recovery in the quarter, 98 million last quarter.

Speaker #2: Roughly the bank continues to deliver between 350 and 400 million cash recovery on these portfolios. Reliably, consistently, and out of a small tickets portfolio.

Frederik Geertman: Roughly, the bank continues to deliver between EUR 350 million and EUR 400 million cash recovery on these portfolios reliably, consistently, and out of the small tickets portfolio. Page 15. Interest margin evolution. This is the commercial banking interest income. I mentioned the strength and the quality of the business. We are now seeing, as we mentioned a few times, that we were expecting the overall margins increase. As the base rates increase and as the prices increase, average gross interest income in commercial banking reached 4.8% in Q2 2026. Cost of funding has remained flat at 3%, notwithstanding the base rate increase. It's a net result of very sizable reductions in the spread, and the spread that we pay, obviously, on the funding and the base rate.

Speaker #2: Page 15, interest margin evolution. This is the commercial banking interest income. I mentioned the strength and the quality of the business. We are now seeing, as we mentioned a few times, that we were expecting, right, the overall margins increase.

Speaker #2: As the base rates increased and as prices increased, average gross interest income in commercial banking reached 4.8% in the second quarter of 2026.

Speaker #2: Cost of funding, as you mentioned, flat at 3%. Notwithstanding the base rate increase. So it's a net result of very sizable reductions in the spread.

Speaker #2: And the spread that we pay obviously on the funding. And the base rate so what happens, you see it on the right. Plus 20 basis points base rate.

Frederik Geertman: What happens, you see it on the right, +20 basis points base rate, aggregate interest income +20 basis points, aggregate cost of funding stable, net effect on the margin, 20 basis points. We now reach 1.8% again, which we last saw in Q1 2025. Page 16, costs, EUR 118 million. We increased EUR 10 million Q-on-Q. I wouldn't read too much in it. Q1 benefited from the release of EUR 3 million previously accrued costs that did not materialize. The remaining seven are a bit due to seasonality. In the proprietary finance business, there were dividend withholding tax effects, Tobin tax, that unfortunately translates into the cost line, so it blurs it a bit, but that's where it came from. The cost linked to NPL recovery, notwithstanding the excellent cash collection, is in line with the previous quarter and personnel is roughly flat.

Speaker #2: Aggregate interest income plus 20 basis points. Aggregate cost of funding stable. Net effect on the margin 20 basis points. So we've now reached 1.8% again, which we last saw in the first quarter of 2025.

Speaker #2: Page 16, costs. 180 million. We increased 10 million Q1Q. I wouldn't read too much in it. The first quarter benefited from the release of 3 million previously accrued costs that did not materialize.

Speaker #2: The remaining 7 are a bit due to seasonality. In the proprietary finance business, there were dividend withholding tax effects, Tobin tax, that unfortunately translates into the cost line.

Speaker #2: So it blurs it a bit. But that's where it came from. The cost linked to NPL recovery, notwithstanding the excellent cash collection, is in line with the previous quarter, and personnel is roughly flat.

Speaker #2: Focusing on commercial activity, factoring, 3.4 billion turnover in the second quarter. Nice growth relative to the first quarter with a very strong focus on profitability.

Frederik Geertman: Focusing on commercial activity, factoring EUR 3.4 billion turnover in Q2. Nice growth relative to Q1 with a very strong focus on profitability. Average spread at 3.4% on top of the base rate, well above market average. Net revenues over average customer loans, 5.7%, and loan loss provisions that obviously you see them high there on the slide. They include EUR 17 million of the precautionary provisions following the Bank of Italy inspections. Those 17 are part of the 30 that we mentioned. Page 18. How this business made. You can see on the left-hand side that we have 21% market share in active clients and 6% share in turnover in the country. What does it mean? It means that we serve the SMEs. We don't pursue large accounts with huge turnover and very moderate spreads of the largest firms in the country.

Speaker #2: Average spread at 3.4% on top of the base rate—well above market average. Net revenues over average customer loans: 5.7%. And loan loss provisions that, obviously, you see are high there on the slide.

Speaker #2: They include €17 million of the precautionary provisions following the Bank of Italy inspections. Those €17 million are part of the €30 million that we mentioned. Page 18—how is this business made?

Speaker #2: You can see on the left-hand side, that we have 21% market share in active clients. And 6% share in turnover in the country. What does it mean?

Speaker #2: It means that we serve the SMEs. So we don't pursue large accounts with huge turnover and very moderate spreads. Of the largest firms in the country.

Speaker #2: We pursue SMEs and help them with a very useful, I think, tool to manage their liquidity. And on the right-hand side, you can see how the revenues are skewed towards small companies between 10 and 15 million euros.

Frederik Geertman: We pursue SMEs and help them with a very useful, I think, tool to manage their liquidity. On the right-hand side, you can see how the revenues are skewed towards small companies between 10 and EUR 50 million. They now make up 70% of the overall revenues that we make in factoring. Therefore, risk fragmentation, therefore, a very good risk-return profiles because we finance the SMEs, but we risk in factoring, as you know, the large corporates that they serve. Very good risk return profile. Page 19, leasing. EUR 179 million new business underwritten. Q2 was strong. We remain true to our mantra. You can see here that we reach net revenues over average customer loans of 4.1% today in the stock.

Speaker #2: They now make up 70% of the overall revenues that we make in factoring. So therefore, risk fragmentation, therefore, a very good risk return profiles because we finance the SMEs, but we risk in factoring, as you know, the large corporates that they serve.

Speaker #2: So, very good risk-return profile. Page 19, leasing: €179 million of new business underwritten; the second quarter was strong. We remain true to our mantra. You can see here that we reached net revenues over average customer loans of 4.1%. Today in the stock.

Speaker #2: So this is different from any other leasing business that you will see in large universal banks, which will typically include real estate leasing; it will typically include nautical leasing.

Frederik Geertman: This is different from any other leasing business that you will see in large universal banks, which will typically include real estate leasing, nautical leasing, very long-term contracts with a significant risk component in it. What we have here is mostly operational, mostly instrumental, mostly equipment and automotive. Once again, risk fragmentation, higher margins, and on a very significant part of the portfolio, I believe it is 80%, we have remarketing agreements in place when we underwrite. In case the asset becomes ours, we know the price at which we will sell it when we underwrite the loan for sure. Therefore, risk very well managed in that portfolio. Page 20, corporate banking and lending. EUR 433 million new business underwritten in the quarter. Very solid result.

Speaker #2: So it will include very long-term contracts with a significant risk component in it. What we have here is mostly operational, mostly instrumental, mostly equipment and automotive.

Speaker #2: Once again, risk fragmentation, higher margins. And on a very significant part of the portfolio—I believe it is 80%—we have remarketing agreements in place when we underwrite.

Speaker #2: So, in case the asset becomes ours, we know the price at which we will sell it when we underwrite the loan, for sure. Therefore, risk is very, very well managed in that portfolio.

Speaker #2: Page 20, corporate banking and lending. 433 million euros new business underwritten in the quarter. Very solid result. Structure finance roughly 30 to 40 transactions annually with an average deal size of about 12 million.

Frederik Geertman: Structural finance, roughly 30 to 40 transactions annually with an average deal size of about EUR 12 million. You can see that there too, we fragment the risk. We have a conservative leverage profile. It doesn't usually go over 3. There's a component of state-guaranteed lending. There's a component of the pharmacy business, and then there's Capitalfin. Capitalfin, which in the second quarter of the year underwrote EUR 160 million of salary loans. That's become one of the larger salary loan businesses, consumer credit business in the country today, and it has zero legacy issues. Meaning that we started the relaunch of this company when the regulatory environment was clear. We have zero issues with the way the contracts were underwritten in the past in much of the market, which today leads to, obviously, some needs to adjust certain portfolios in certain other players. Page 21, credit.

Speaker #2: So you can see that there, too, we fragment the risk. We have a conservative leverage profile; it usually doesn't go over three. There's a component of state-guaranteed lending.

Speaker #2: There's a component of the pharmacy business. And then there's Capital Thin. Capital Thin, which in the second quarter of the year, underwrote €160 million of salary loans.

Speaker #2: So that's become one of the larger salary loan businesses, consumer credit businesses in the country today. And it has zero legacy issues, meaning that we started the relaunch of this company when the regulatory environment was clear.

Speaker #2: So, we have zero issues with the way the contracts were underwritten in the past in much of the market, which today leads to, obviously, some need to adjust certain portfolios in certain other players.

Speaker #2: Page 21, credit. We keep seeing no signs of widespread macro credit risk materializing in the commercial business. Therefore, you have also a bit of forward-looking feeling on how things are going.

Frederik Geertman: We keep seeing no signs of widespread macro credit risk materializing in the commercial business. Therefore, you have also a bit of forward-looking feeling on how things are going. You can see that the provisions already seen Q2, they were very significant, but they were due to extraordinary items. Like for instance, the recognition of the future provisions in illimity. If you look at the quality of the book, this is Banca IFIS payment days flat, Stage 2 loans going down. In Q3 2025, we had 9%. Today we have 7%. Rating migrations roughly balanced. Probability of default slightly increasing, and that's mostly in the NCC book where, as you know, we have government guarantees. I have finished the slides that I want to present, and I will now take your questions on anything that might require some further clarification. Thank you for your attention this far.

Speaker #2: You can see that the provisions obviously in Q2, they were very significant, but they were due to extraordinary items, like for instance, the recognition of the future provisions in Illimity.

Speaker #2: But if you look at the quality of the book, this is Banca IFIS payment days, flat, stage two loans going down. In the third quarter of 2025, we had 9%.

Speaker #2: Today, we have 7%. Rating migrations are roughly balanced, with probability of default slightly increasing. And that's mostly in the MCC book, where, as you know, we have government guarantees.

Speaker #2: I have finished the slides that I want to present, and I will now take your questions on anything that might require some further clarification.

Speaker #2: Thank you for your attention this far.

Speaker #1: Thank you. This is Socorro's co-conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone.

Operator 2: Thank you. This is the Chorus Call Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on their touchtone telephone. To remove yourself from the question queue, please press star 2. Please pick up the receiver when asking questions. Anyone who has a question may press star 1 at this time. The first question is from Manuela Meroni, Intesa Sanpaolo.

Operator: Thank you. This is the Chorus Call Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on their touchtone telephone. To remove yourself from the question queue, please press star 2. Please pick up the receiver when asking questions. Anyone who has a question may press star 1 at this time. The first question is from Manuela Meroni, Intesa Sanpaolo.

Speaker #1: To remove yourself from the question queue, please press star, then two. Please pick up the receiver if you have a question. Anyone who has a question may press star, then one at this time.

Speaker #1: The first question is from Manuela Meroni in Tisa, San Paulo.

Speaker #3: Good afternoon, and thank you for the transparency and the level of disclosure provided. I have a few questions. The first one is on the provisions.

Manuela Meroni: Good afternoon. Thanks for the transparency and the level of disclosure provided. I have a few questions. The first one is on the provisions. Out of the EUR 70 million additional provision expected that you communicated on 25 June, you recognized EUR 34 million in this quarter. What are the key drivers for the remaining provision expected in the second half of this year? The second question on provisions. Why were the EUR 40 million additional provision on illimity assets not identified during the PwC due diligence process, and what has changed since then? Third question on the non-performing loans of illimity. I am wondering if you can share what is the remaining net book value of illimity's NPL portfolio and how much has been written off till now. Fourth question on the outlook. Can you provide a guidance on the loan loss provision for the full year 2026?

Speaker #3: Out of the 70 million additional provision expected that you communicated on the 25th of June, you recognize that 34 million in this quarter. What are the key drivers for the remaining provision expected in the second half of this year?

Speaker #3: The second question, again on provisions: Why were the €40 million additional provisions on Illimity assets not identified during the EPWC due diligence process? And what has changed since then?

Speaker #3: Third question on the non-performing loans of Illimity. I'm wondering if you can share what is the remaining net book value of Illimity's NPL portfolio.

Speaker #3: And how much, has been written off till now? Fourth question on the Outlook. Can you provide a guidance on the loan loss provision for the full year 2026?

Speaker #3: And finally, on dividend, what is your best estimates for 2026 dividend per share at this stage? Thank you.

Manuela Meroni: Finally, on dividend, what is your best estimates for 2026 dividend per share at this stage? Thank you.

Speaker #2: Yeah, thanks, Manuela. Very clear. So, I'll take them in the order in which you asked them. Timing of provisions: Based on the revised guidance that we gave for '26 at the end of June, the expected provisions were increased by approximately €70 million versus the original forecast, right?

Frederik Geertman: Thanks, Manuela. Very clear. I will take them in the order in which you asked them. Timing of provisions. Based on the revised guidance that we gave for 2026 at the end of June, the expected provisions were increased by approximately EUR 70 million versus the original forecast, right? Hence the revision of the guidance. Of this increase, around EUR 34 million was already recognized in Q2. That is EUR 30 million from Bank of Italy and EUR 4 million illimity. The remainder is EUR 36 million of that increase that we expect to take in H2. This will arrive within 2026. You saw that in Q2, we had EUR 73 million provisions. EUR 30 million of those were Bank of Italy. Whilst this process is still ongoing, we decided to reflect these adjustments already in Q2 results, right?

Speaker #2: And hence the revision of the guidance. So, of this increase, around €34 million was already recognized in the second quarter. That's €30 million from Bank of Italy and €4 million from Illimity.

Speaker #2: So the remainder is 36 of that increase that we expect to take in the second half of the year. So this will arrive within 2026.

Speaker #2: You saw that in the second quarter, we had €73 million in provisions—€30 million of those were for Bank of Italy. And whilst this process is still ongoing, we decided to reflect these adjustments already in the second quarter results, right?

Speaker #2: In line with our approach to risk, given that they had become rather certain. The remaining €4 million we recorded in the second quarter are Illimity's SPVs, as I said.

Frederik Geertman: In line with our approach to risk, given that they had become rather certain. The remaining EUR 4 million we recorded in Q2 are illimity's SPVs, as I said. The EUR 36 million that remain, EUR 36 million increase, I should say. They are the current best estimate based on the information we have today on the illimity portfolio. This reflects a substantially updated recovery of assumptions, both in terms of timing and in terms of quantity based on the preliminary indications that we received from the external services. It also includes some expected defaults in the b-ilty portfolio based on the performance we observed during H1. As I mentioned, all this is going to come in Q3 and Q4. A little bit in Q3, and a little bit in Q4. That is what you should expect.

Speaker #2: And the 36 that remain, they are the best 36 increase, I should say. They are the current best estimate based on the information we have today on the Illimity portfolio.

Speaker #2: So this reflects a substantially updated recovery assumption, right? Both in terms of timing and in terms of quantity, based on the preliminary indications that we received from the external services.

Speaker #2: And it also includes some expected defaults in the built-in portfolio, based on the performance we observed during the first half of the year, right?

Speaker #2: And as I mentioned, all this is going to come in the third and fourth quarter—a little bit in the third and a little bit in the fourth.

Speaker #2: That's what you should expect—due diligence. Why wasn't it captured in the due diligence? So, that was carried out in the second half of the year on the basis of the numbers at June 2025, right?

Frederik Geertman: Due diligence, why wasn't it captured in the due diligence? That was carried out in H2 of the year on the basis of the numbers at June 2025. The additional provisions we shared with the market reflect the incorporation of new information. The updated assumption. Since the due diligence was concluded, we have received updated recovery reports from external services. We have observed a deterioration in the expected recoveries for other portfolios. We recorded, as I mentioned, in b-ilty, higher than expected default trends, and this was simply not visible at the time of the due diligence, and therefore, it required a new reassessment of the risk portfolio. The most significant component are the SPVs managed by external services. Obviously, the cash recoveries for these assets depend on judicial processes, insolvency processes, restructurings. Timing and expected recoveries can evolve, obviously over time.

Speaker #2: So the additional provisions we shared with the market reflect the incorporation of new information, right? The updated assumption. We have since the due diligence was concluded, we have received updated recovery reports from external services.

Speaker #2: We have observed a deterioration in the expected recoveries for other portfolios. We recorded, as I mentioned, in built-in higher than expected default trends. And this was simply not visible at the time of the due diligence.

Speaker #2: And therefore, it required a new reassessment, right, of the risk portfolio. So the most significant component are the SPVs, managed by external services. Obviously, the cash recoveries for these assets depend on judicial processes, insolvency processes, restructurings.

Speaker #2: So, timing and expected recoveries can obviously evolve over time. We have not yet received the formal reports, but the preliminary expectations indicate lower recoveries.

Frederik Geertman: We have not yet received a formal report, the preliminary expectations indicate lower recoveries, and these arrived just in the last month. Mostly in the month of June, actually. Both low recoveries and longer periods, as I mentioned. Overall, I would like to add that the additional provisions represent our best expectation of illimity's portfolio's risk and the expected recoveries based on the most recent information available today, and the prudent assessment of the underlying credit dynamics. You asked about the total remaining size of the illimity NPL book. That is roughly EUR 900 million today, EUR 930. That excludes b-ilty. b-ilty is in run-off, it's not in this number. Roughly EUR 750 of that is held in SPVs. If you go back in time, I'll give you another number.

Speaker #2: And these arrived just in the last months, right? Mostly in the month of June, actually. Both low recoveries and longer periods, as I mentioned.

Speaker #2: Overall, I would like to add that the additional provisions represent our best expectation of Illimity's portfolio risk and the expected recoveries, based on the most recent information available as of today. Right?

Speaker #2: And the prudent assessment of the underlying credit dynamics. You asked about the total remaining size of the Illimity NPO book. That is roughly 900 million today, 930.

Speaker #2: That excludes built-in. Built-in is in runoff, but it's not in this number. Roughly 750 of that is held in SPVs. And if you go back in time, I'll give you another number.

Speaker #2: Since the first half of '24, right, the aggregate, the risking in these portfolios has been roughly 250 million, right, of cumulative write-downs. Outlook on the loan loss provisions.

Frederik Geertman: Since H1 2024, the aggregate de-risking in these portfolios has been roughly EUR 250 million of cumulative write-downs. Outlook on the loan loss provisions. Well, as you know, we don't like to give guidance on individual line items. We give a guidance on the net profit, not on individual line items of the P&L, try to help you a bit. Loan loss provisions, in H1, you know. We will add roughly EUR 36 of the remainder of the increase, you can add to that a normal run rate without the expectation of any surprises. I think you can work out a reasonable number on the basis of those elements.

Speaker #2: Well, as you know, we don't like to give guidance on individual line items, right? We give a guidance on the net profits, but not on individual line items of the P&L, but try to help you a bit so loan loss provisions in the first half, you know.

Speaker #2: We will add roughly 36 of the remainder of the increase, and you can add to that normal run rate without the expectation of any surprises. So, I think you can work out a reasonable number on the basis of those elements, right?

Frederik Geertman: If you just take the provisions of H1 that you find in the presentation, you add EUR 36 and you add a bit more, you end up roughly where you want to be. Finally, dividends. Yeah. Question came up last time as well. We will decide on the 2026 dividends towards the end of the year when we have the definitive results of the Bank of Italy inspection and also some visibility on the economics of the NPL transaction. No decision today, no guidance today, dividends are and will continue to be a key component of our equity story, and we remain committed to delivering an attractive level of remuneration to our shareholders, which we believe our balance sheet will permit in the years to come. I think I got them all.

Speaker #2: Should you just take the provisions of the first half that you find in the presentation, you add 36 and you add a bit more and you'll end up roughly where you want to be.

Speaker #2: Finally, dividends. Yeah. Question came up last time as well. We will decide on the 2026 dividends towards the end of the year when we have the definitive results of the Bank of Italy inspection.

Speaker #2: And also some visibility on the economics of the NPL transaction. So, no decision today, no guidance today, but dividends are and will continue to be a key component of our equity story, and we remain committed to delivering an attractive level of remuneration to our shareholders, which we believe our balance sheet will permit in the years to come.

Speaker #2: I think I got them all.

Simonetta Chiriotti: Yep. Thank you.

Manuela Meroni: Yep. Thank you.

Speaker #3: Just thank you.

Speaker #2: Thank you, Manuela.

Frederik Geertman: Thank you, Manuela.

Speaker #1: The next question is from Simonetta Kiriotti, Mediobanca.

Operator 2: The next question is from Simonetta Chiriotti, Mediobanca.

Operator: The next question is from Simonetta Chiriotti, Mediobanca.

Speaker #3: Yes, good afternoon. So, my question regards the Bank of Italy inspection. Have you received any preliminary feedback on this, and when do you expect the final supervisory report to be issued?

Simonetta Chiriotti: Yes, good afternoon. My question regards the Bank of Italy inspection. Have you received any preliminary feedback on this? When do you expect the final supervisory report to be issued? Thank you.

Speaker #3: Thank you.

Speaker #2: Yeah. Well, naturally, it's up to the regulator to speak for themselves, but we expect to receive the draft findings before the end of September.

Frederik Geertman: Well, that's naturally up to the regulator. I won't speak for them, but we expect to receive the draft findings before the end of September. Hopefully at the start, but I would say before the end. As it's customary in these reviews, Simonetta, the process involves that you get an initial report that's followed by an opportunity for the bank to provide its observations and supporting evidence before the final report is then issued. As a result, the overall process is likely to extend into September, October, and won't close formally before the next couple of months. I can't comment further on the point. We will need to wait until we receive their report.

Speaker #2: Hopefully at the start, but I would say before the end. As it's a customer in these reviews, Simonetta, the process involves that you get an initial report that's followed by an opportunity for the bank to provide its observations and supporting evidence before the final report is then issued, right?

Speaker #2: So, as a result, the overall process is likely to extend into September or October, and won't close formally for the next couple of months. I can't comment further on that point.

Speaker #2: We will need to wait until we see their report. Let me just add that our approach here has been to remain objective, forward-looking, and prudent, and very much compliant with the regulator.

Frederik Geertman: Let me just add that our approach here has been to remain objective and forward-looking and prudent, and very much compliant with the regulator, acting proactively on what we know, and we will wait until the rest arrives in written form.

Speaker #2: I think proactively on what we know and we will wait until the rest arrives in written form.

Speaker #3: Yeah, thank you. And speaking of deadlines, has the Bank of Italy given you any deadline for the disposal of the NPL business, or is the regulator not involved in these specific processes?

Simonetta Chiriotti: Thank you. Speaking of deadlines, has the Bank of Italy given you any deadline for the disposal of the NPL business, or is the regulator not involved in this specific process?

Speaker #2: Yeah. I want to say this very clearly: the Board did not decide to dispose of the NPL business on the basis of specific expectations from the central bank, okay?

Frederik Geertman: I want to say this very clearly. The board did not decide to dispose of the NPL business on the basis of specific expectations from the central bank. Okay. In fact, there is currently no regulatory indication or request or specific deadline from the Bank of Italy to dispose of this business. The key strategic consideration reflects long-term effects of the calendar provisioning framework, yeah. As we assess long-term economics and strategic value of our businesses, we have to take into account a fully phased-in regulatory regime, right. Calendar provisioning progressively increases capital absorption, and it will therefore influence negatively the risk return profile of the NPL investments. It's a disciplined and objective approach. It's proactive. We evaluate all strategic options, right. Try to ensure proactive and full regulatory alignment.

Speaker #2: So in fact, there are currently no regulatory indication or request or specific deadline from the Bank of Italy to dispose of this business. The key strategic consideration reflects long-term effects of the calendar provisioning framework, yeah?

Speaker #2: So, as we assess the long-term economics and strategic value of our businesses, we have to take into account a fully phased-in regulatory regime, right? As we look forward.

Speaker #2: So calendar provisioning, progressively increases capital absorption and it will therefore influence negatively the risk-return profile of the NPL investments. So it's a disciplined and objective approach.

Speaker #2: It's proactive. We evaluate all strategic options, right? Try to ensure proactive and full regulatory alignment. But there is no specific indication from the regulator in any shape or form.

Frederik Geertman: There is no specific indication from the regulator in any shape or form.

Speaker #3: Thank you.

Simonetta Chiriotti: Thank you.

Speaker #1: The next question is from Lorenzo Giacometti, Intermonte.

Operator 2: The next question is from Lorenzo Giacometti, Intermonte.

Operator: The next question is from Lorenzo Giacometti, Intermonte.

Speaker #4: Yes. Good afternoon. Thank you for taking my question and thank you for the disclosure. So I have a few questions on the NPL business.

Lorenzo Giacometti: Yes, good afternoon. Thank you for taking my question, and thank you for the disclosure. I have a few questions on the NPL business. I think we saw in the local newspapers some news about potential candidates, but I was wondering if you can share with us the potential level of interest received by the potential investors and if you can disclose or assume a potential impact of the deconsolidation of this kind of business. The second question, always on the NPL business, is if you can provide us some color on what are your assumptions about the NPL contribution going on in 2026. That's it. Thank you.

Speaker #4: I think we saw on the local newspapers some news about a potential candidates, but I was wondering if you can share with us the potential level of interest received by the potential investors and if you can disclose or assume potential impact of the deconsolidation of these kind of business.

Speaker #4: And the second question always on the NPL business is if you can provide us some color on what are your assumption about the NPL contribution going on in 2026 and that's it.

Speaker #4: Thank you.

Speaker #2: Yeah, Lorenzo, very clear. So, on the disposal, the process is progressing in line with our expected timeline. And I won't hide—we are quite encouraged by the high level of interest that we have received.

Frederik Geertman: Yeah, Lorenzo, very clear. On the disposal, the process is progressing in line with our expected timeline. I won't hide, we are quite encouraged by the high level of interest that we have received. We're currently engaged with a broad range, I would say, of potential counterparties, including, as I mentioned, right, domestic and international investors, specialized players, financial institutions, holding companies, actually, private equity firms, the largest names you can imagine globally. Process will remain competitive. We expect to receive non-binding offers by the end of September, following binding offers before the year-end. It's bit early to comment on valuation or transaction structure for that matter. I would just say that this interest we received reflects the strength of the franchise and the quality of the servicing platform.

Speaker #2: So we're currently engaged with a broad range, I would say, of potential counterparties, including, as I mentioned, domestic and international investors, specialized players, financial institutions, holding companies actually, and private equity firms.

Speaker #2: The largest names you can imagine globally. The process will remain competitive. We expect to receive non-binding offers by the end of September, followed by binding offers before year-end.

Speaker #2: It's a bit early to comment on valuation, or transaction structure for that matter. I would just say that this interest we received reflects the strength of the franchise and the quality of the servicing platform.

Speaker #2: We think it is a unique opportunity to enter the market in Italy really as a key player. So we remain focused on achieving the best possible outcome for all the stakeholders ensuring also business continuity and the smooth transition.

Frederik Geertman: We think it is a unique opportunity to enter the market in Italy really as a key player. We remain focused on achieving the best possible outcome for all the stakeholders, ensuring also business continuity and the smooth transition. That includes, by the way, employees, clients, the servicing partners, the counterparties. We think, as I mentioned, that a different ownership setup in the long term will be beneficial for the companies as well, right? The servicing and the investing companies. This is as much as we know today, but I will keep the market informed as new information arises that we are able to share. I would stop at this. In terms of contribution, it remained broadly stable in Q1. It's largely in line with our expectation. It reflects, I would say, a deliberate and disciplined approach to new portfolio acquisitions.

Speaker #2: And that includes, by the way, employees, clients, the servicing partners, the counterparties, we think, as I mentioned, that a different ownership setup in the long term will be beneficial for the companies as well, right, the servicing and the investing companies.

Speaker #2: This is as much as we know today, but I will keep the market informed as new information arises that we are able to share.

Speaker #2: I would stop at this. Then, in terms of contribution, it remains broadly stable in the first quarter. It's largely in line with our expectations.

Speaker #2: So it affects, I would say, a deliberate and disciplined approach to new portfolio acquisitions. We've been rather rigorous in pricing also lately. We've seen a few auctions where we saw some behavior we found not entirely rational, and then, given also the context that we are in, we decided to keep our discipline.

Frederik Geertman: We've been rather rigorous in pricing also lately. We've seen a few auctions where we saw some behavior we found not entirely rational. Given also the context that we are in, we decided to keep our discipline. We think it's consistent with how you should manage operations in the light of an upcoming M&A transaction. We're prioritizing cash recovery, as you saw, and operational efficiency, while maintaining the selectivity that I mentioned. Also in the light of the possible deconsolidation where we recognize lower model revenues based on future recovery expectations. That has historically been a part of the business. It's typical of amortized cost accounting. You also see prudence in revenue recognition in the light of the transaction that's coming up, right?

Speaker #2: We think it's consistent with how you should manage operations in light of an upcoming M&A transaction. So we're prioritizing cash recovery, as you saw, and operational efficiency.

Speaker #2: While maintaining this selectivity that I mentioned, and also in light of the possible deconsolidation, we've recognized lower model revenues based on future recovery expectations that have historically been a part of the business.

Speaker #2: It's typical of amortized cost accounting so you also see prudence in revenue recognition in the light of the transaction that's coming up, right? So altogether, expect the NPL business to continue performing for the remaining quarters roughly as you've seen it in the first two quarters, yeah?

Frederik Geertman: Altogether, expect the NPL business to continue performing for the remaining quarters, roughly as you've seen it in Q1 and Q2. Yeah. It's just a matter of, I would say, responsible housekeeping before the transaction arises. I hope I was specific enough, Lorenzo.

Speaker #2: It's just a matter of, I would say, responsible housekeeping before the transaction arises. I hope I was specific enough, Lorenzo.

Speaker #4: Yes, very clear, but maybe I'll just add another one, which is on one-off items. So, should we expect further one-off items deriving from the Bank of Italy inspection and the non-core portfolio of Illimiti?

Lorenzo Giacometti: Maybe I'll just add another one, which is on one-off items. Shall we expect a further one-off items deriving from the Bank of Italy inspection and the non-core portfolio of illimity? What are your assumption on that when looking also at the full year 2026 guidance, which, if I'm not mistaken, is not considering this kind of impact. Thank you.

Speaker #4: I mean, what are your assumptions on that when looking also at the full-year 2026 guidance, which, if I'm not mistaken, is not considering this kind of impact?

Speaker #4: Thank you.

Speaker #2: Yeah, you're correct. So, first of all, with respect to the inspection, the inspection was on Banca IFIS, not on Illimiti. So you don't need to assume any impact of the inspection on Illimiti.

Frederik Geertman: You're correct. First of all, with respect to the inspection, the inspection was on Banca IFIS, not on illimity. You don't need to assume any impact of the inspection on illimity. Secondly, on illimity, we think that the current values really reflect the latest available information taken into account in the most prudent way. Also, months ahead, as you might have noticed, we've shared with the market this perception we have of these portfolios. Back to IFIS, with respect to the inspection, we cannot speak for the regulator, we really need to wait until we receive the final report. I really don't have a lot to add. With respect to the impact of the deconsolidation. I think in your question, you asked if that was inside the numbers and inside the guidance. No, it's not.

Speaker #2: And secondly, on Illimiti, we think that the current values really reflect the latest available information, taken into account in the most prudent way. Also, looking months ahead, as you might have noticed, we've shared with the market this perception we have of these portfolios.

Speaker #2: Back to IFIS, with respect to the inspection, we cannot speak for the regulator, so we really need to wait until we receive their final report.

Speaker #2: And I really don't have a lot to add, right? With respect to the impact of the deconsolidation, I think in your question, you asked if that was inside the numbers and inside the guidance.

Speaker #2: No, it's not, right? It's really too early to quantify potential facts or effects on capital, which should be highly beneficial, as these will automatically depend on the structure that's selected, the perimeter, and the execution terms.

Frederik Geertman: It's really too early to quantify potential effects or effects on capital, which should be highly beneficial, as these will ultimately depend on the structure that's selected, the perimeter, the execution terms. We will remain as transparent as possible in the next couple of months as information becomes available, both on the inspection and on the transaction. We will share it with the market when we can. This is as much as I can say, Lorenzo, at present.

Speaker #2: So, we will remain as transparent as possible in the next couple of months as information becomes available, both on the inspection and on the transaction.

Speaker #2: We will share it with the market when we can. This is as much as I can say, Lorenzo, at present.

Speaker #4: Thank you. Thank you so much.

Lorenzo Giacometti: Thank you so much.

Speaker #1: The next question is from Sharada Patel, Citi.

Operator 2: The next question is from Sharada Patel, Citi.

Operator: The next question is from Sharada Patel, Citi.

Speaker #5: Hi. I have two questions. So the first one being on the kind of cost of funding. What are the sensitivities and the outlook there just in the face of kind of rate hikes?

Sharada Patel: Hi, I have two questions. The first one being on the kind of cost of funding. What are the sensitivities, and the outlook there just in the face of rate hikes? Obviously, it stayed stable this quarter. You're thinking over there. The second question is just more technical clarification. The upcoming illimity Tier 2 that's coming open to call. Can you receive approval to call that potentially from the Bank of Italy once the draft report comes in September? Or is it only after the full process closes in October or possibly later, as you said? Thank you.

Speaker #5: Obviously, it’s stayed stable this quarter. You’re thinking over there. And then the second question is just more technical clarification. So, the upcoming Illimity Tier 2 that’s coming open to call—can you receive approval to call that potentially from the Bank of Italy once the draft report comes in September, or is it only after the full process closes in October, or possibly later, as you said?

Speaker #5: Thank you.

Speaker #2: Yeah, Sharada, I will turn—thanks for your question. I will turn the first one over to the CFO, which will address cost of funding.

Frederik Geertman: Yeah, Sharada. Thanks for your questions. I will turn the first one over to the CFO, who will address cost of funding, and then I'll take the second one on the Tier 2.

Speaker #2: And then I'll take the second one on the tier two.

Speaker #6: Okay, thank you for asking, Sharada. Our sensitivity in terms of net interest income is around a €10 million positive impact for a 50 basis point increase over a 12-month horizon.

Roberto Ferrari: Okay. Thank you for asking, Sharada. Our sensitivity in term of net interest income is around EUR +10 million impact for 50 basis point increase in 12 months horizon.

Speaker #2: Is that adequate, Sharada? Was that your question?

Frederik Geertman: Is that adequate, Sharada? Was that your question?

Sharada Patel: Rather just NII generally, on the deposit funding, how you see that, is it a one for one in terms of the deposit beta going forward?

Speaker #5: Not just on NRI generally, but on the deposit funding, how do you see that? Is it kind of a one-for-one in terms of the deposit beta going forward?

Sharada Patel: Rather just NII generally, on the deposit funding, how you see that, is it a one for one in terms of the deposit beta going forward?

Speaker #6: Yeah, actually, it incorporates the deposit beta. You have to remember, actually, that mainly we have more time deposits than current accounts. And in our model, actually, a 50 basis point increase in rates—clearly risk-free rates—means around €10 million increase in net interest income.

Roberto Ferrari: Yeah, actually, it incorporates the deposit beta. You have to remember actually that mainly we have time deposit more than current accounts. In our model, actually, a 50 basis point increase in rates, clearly risk-free rates, means around EUR 10 million increase in net interest income.

Speaker #5: Okay. Thank you.

Sharada Patel: Okay. Thank you.

Frederik Geertman: Keep in mind, Sharada, if you're trying to model cost of funding looking forward, keep in mind that a very relevant effect there is that previous term deposits, which were taken in when the rate scenario was much higher, at 4%, they are maturing in these quarters, right?

Speaker #2: Sharada, if you're trying to model cost of funding looking forward, keep in mind that a very relevant effect there is that previous term deposits, which were taken in when the rate scenario was much higher, at 4%, are maturing in these quarters, right?

Speaker #2: So regardless of the base rate, they're being substituted with much cheaper new term deposits at around 2.5 to 3%, okay? So the cost of funding reduction on the retail side still has legs.

Roberto Ferrari: Yeah.

Frederik Geertman: Regardless of the base rate, they're being substituted with much cheaper new term deposits at around 2.5% to 3%, okay? The cost of funding reduction on the retail side still has legs. Also, getting to bonds, some more expensive bonds will expire, right, in the next years. There, too, regardless of the spreads, you will see some stuff disappearing. For instance, Banca IFIS is Tier 2, right? That is currently very inefficient, frankly. Okay? There are base rate effects and the sensitivity that Roberto explained to you.

Speaker #2: Also, getting to bonds, some more expensive bonds will expire, right, in the next years. So there too, regardless of the spreads, you will see some stuff disappearing. For instance, Banca IFIS's Tier 2, right?

Speaker #2: That is currently very inefficient, frankly, okay? So, there are base rate effects and the sensitivity that Roberto explained to you, which is around €10 million for a 50 basis point move, right?

Roberto Ferrari: Yeah.

Frederik Geertman: Which is around EUR 10 million for a 50-

Roberto Ferrari: Basis point

Frederik Geertman: That's on aggregate interest margin, right? That's overall, it's not just on deposits, right?

Speaker #2: And that's on aggregate interest margin, right? So that's overall—it's not just on the deposits, right? So the aggregate effect on the overall interest margin is €10 million.

Frederik Geertman: That's on aggregate interest margin, right? That's overall, it's not just on deposits, right?

Roberto Ferrari: Yeah.

Frederik Geertman: Aggregate effect on the overall interest margin is EUR 10 million. You have these replacement effects, which are, in fact, I think, more powerful given what's going on, right? On Tier 2, once again, I need to be very careful. I can't speak for the regulator. Normally, in line with regulatory practice, when an inspection is underway, no authorizations are given. Right? We would need to look at the conclusion of the inspection and then hopefully an authorization for the call on Tier 2. Both the timing and the actual decision are not up to us, right? What we see a possibility of getting the authorization in time to call it.

Roberto Ferrari: Yeah.

Speaker #2: And then you have these replacement effects, which are, in fact, I think, more powerful given what's going on, right? Then, on Tier 2, once again, I need to be very careful.

Speaker #2: I can't speak for the regulator. Normally, in line with regulatory practice, when an inspection is underway, no authorizations are given, right? So we would need to look at the conclusion of the inspection, and then hopefully an authorization for the call on Tier 2.

Speaker #2: So both the timing and the actual decision are not up to us, right? What we see is a possibility of getting the authorization in time to call it.

Speaker #5: Thank you.

Sharada Patel: Thank you.

Speaker #1: The next question is from Davide Giuliano, Equita.

Operator 2: The next question is from Davide Giuliano, Equita.

Operator: The next question is from Davide Giuliano, Equita.

Speaker #4: Hi. Good afternoon and thank you for taking my question and thank you for the detailed explanation. The first one is on the MPL division.

Davide Giuliano: Hi, good afternoon, and thank you for taking my question, and thank you for the detailed explanation. The first one is on the NPL division. Are there any updates on how you intend to deploy the capital that is likely to be freed up by the disposal of the NPL business? More broadly, on how you plan to replace the earnings that have historically been generated by the business. The second one on CET1 ratio, if you can confirm year-end CET1 ratio in the region of 13.5%. The last one on asset quality, excluding the extraordinary provision, loan loss provision were still higher than what I expected. Could you comment on asset quality and explain what drove this higher provision? Is this something broad-based that we should expect going forward, or is it related to specific situations? Thank you.

Speaker #4: Are there any updates on how you intend to deploy the capital that is likely to be freed up by the disposal of the MPL business, and more broadly, on how you plan to replace the earnings that have historically been generated by the business?

Speaker #4: The second one on CET1 ratio: if you can confirm a year-end CET1 ratio in the region of 13.5%. And the last one on asset quality, excluding the extraordinary provision, loan loss provisions were still higher than what I expected.

Speaker #4: Could you comment on asset quality and explain what drove these higher provisions? Is this something broad-based that we should expect going forward, or is it related to specific situations?

Speaker #4: Thank you.

Speaker #2: Yes, thank you. So, thank you for the first question. The question concerns a subject we'd like to explore: the potential and development of our business as we move forward.

Frederik Geertman: Yeah. Thanks. Thank you for the first question, a question on a subject we'd like to explore, the potential and the development of our business as we move forward. We mentioned we are going to increasingly focus on SME lending and done in the way that I just presented, right? Where there is margin, right? It allows us to build on our capabilities, which is small tickets financing, deepen relationships with SMEs, high quality SMEs. We expect, first of all, a growing contribution from factoring structured finance and also consumer finance, which are all well-established components of the business model. We think they offer clear opportunities for profitable growth. They're complementary to each other, and together they provide also a diversified base for future earnings generation. Contrary to many other specialized finance players, we have a diversified type of business mix.

Speaker #2: So, we mentioned that we are going to increasingly focus on SME lending, done in the way that I just presented, right? So, where there is margin, right?

Speaker #2: It allows us to build on our capabilities—which is small-ticket financing—deepen relationships with SMEs, high-quality SMEs. So, we expect, first of all, a growing contribution from factoring, structured finance, and also consumer finance, which are all well-established components of the business model. We think they offer clear opportunities for profitable growth.

Speaker #2: They are complementary to each other, and together they also provide a diversified base—diversified base, right?—for future earnings generation. Contrary to many other specialized finance players, we have a diversified type of business mix.

Speaker #2: Factoring, especially, as you know, is a very distinctive area of expertise for us. So we can continue to leverage that, as well as the operational and risk management know-how, which is extremely specific.

Frederik Geertman: Factoring, especially as you know, it's a very distinctive area of expertise for us, so we can continue to leverage that. Also, the operational and the risk management know-how, which is extremely specific. Structured finance allows us to serve more sophisticated client needs, and consumer finance adds another source of recurring business with great risk return expectations. These are the engines, right? I want to remind you that between 2021 and 2026, we've actually built one of the larger salary backed loan businesses in Italy, in Capitalfin. Today, we are on a rate of over 400 million of annual underwriting. As I mentioned, no legacy issues, 100% compliant to today's environment. We believe this business has legs because this distribution system that is today allowing us to underwrite 400 million of high-quality salary loans could very easily be leveraged for personal loans and other products.

Speaker #2: Structured finance allows us to serve more sophisticated client needs, and consumer finance adds another source of recurring business with great risk-return expectations. And these are the engines, right?

Speaker #2: I want to remind you that between 2021 and 2026, we've actually built one of the largest salary-backed loan businesses in Italy, in Capitalfin.

Speaker #2: Today, we are on a rate of over €400 million of annual underwriting. As I mentioned, no legacy issues—100% compliant to today's environment. We believe this business has legs because this distribution system that is today allowing us to underwrite €400 million of high-quality salary loans could very easily be leveraged for personal loans and other products.

Speaker #2: So that's what is probably going to happen in the next years. And the combination of these things, we think, in the presence of space on the capital side after the consolidation of the MPL business, right, gives us, we think, a very solid outlook and future.

Frederik Geertman: That's what's probably going to happen in the next years. The combination of these things, we think, in presence of space on the capital side after the consolidation of the NPL business, gives us, we think, a very solid outlook and future. Over the long term, because this will take a bit more, we expect a commission contribution from the first impact division. Not primarily net interest income, but mostly commission income, in the wealth management business. It may not be the main driver in the near term, in the next couple of months, but it does represent an additional level of diversification and value creation in the midterm. Also with the investment banking activities that is placed in the first impact division. CET1 at 13.5, yeah, confirmed. We'd like to hover around 14.

Speaker #2: Over the long term, because this will take a bit more time, we expect a commission contribution from the Fürstenberg division. So, not primarily net interest income, but mostly commission income.

Speaker #2: In the wealth management business, it may not be the main driver in the near term, right, in the next couple of months, but it does represent an additional level of diversification and value creation in the mid-term, also with the investment banking activities that are placed in the Fürstenberg division.

Speaker #2: CT1 at 13.5, yeah, I confirm. We'd like to hover around 14. We had some loan growth this quarter, but once again, we have to see at the end of the year what happens with the consolidation, because that might really significantly, positively alter the capital situation of the group.

Frederik Geertman: Once again, we have to see at the end of the year what happens with the deconsolidation, because that might really significantly positively alter the capital situation of the group. Take 14 as our target. We might end up at around 13.5 at the year-end, but then we have the NPL effect, the divestment effect we hope. Asset quality, where does it come from? You rightly point out that there's also a little bit more outside of the one-offs. It's mainly attributable to a limited number of specific exposures. It's not a broad-based deterioration. We have EUR 10 million related to b-ilty, which we mentioned. EUR 10 million associated with illimity credits, legacy illimity NPLs, and roughly EUR 7 million linked to two specific factoring positions, one in the furniture business and one in the yacht manufacturing sector.

Speaker #2: So, take 14 as our target, and we might end up at around 13.5 at year-end, but then we have the MPL effect, right?

Speaker #2: The divestment effect, we hope. Asset quality—where does it come from? You rightly point out that there's also a little bit more outside of the one-offs.

Speaker #2: So, it's mainly attributed to a limited number of specific exposures. It's not a broad-based deterioration. So, we have €10 million related to built-in, right, which we mentioned.

Speaker #2: €10 million associated with illimiting credits—legacy illimiting MPLs—and roughly €7 million linked to two specific factoring positions: one in the furniture business and one in the yacht manufacturing sectors.

Speaker #2: So, with the whole rest spread across a large number of smaller positions, it's broadly consistent with the trends that I showed you in the presentation.

Frederik Geertman: With the whole rest spread across a large number of smaller positions, broadly consistent with the trends that I showed you in the presentation. I hope to have given you the backup for that.

Speaker #2: So I hope to have given you the backup for that.

Speaker #4: Thank you.

Davide Giuliano: Thank you.

Speaker #1: The next question is a follow-up from Simonetta Chiriotti at Mediobanca.

Operator 2: The next question is a follow-up from Simonetta Chiriotti, Mediobanca.

Operator: The next question is a follow-up from Simonetta Chiriotti, Mediobanca.

Speaker #5: Yes. Thank you. Again, on provisions, 17 million of the provision related to the Bank of Italy are in the factoring segment. This is a bit surprising to me.

Simonetta Chiriotti: Yes. Thank you. Again on provisions, EUR 17 million of the provision related to the Bank of Italy are in the factoring segment. This is a bit surprising to me. Asset quality in factoring has been extremely strong in the last quarter. Can you elaborate a bit more on this? I used to think of factoring as a very fragmented business. Why these one-off provisions on these segments? Thank you.

Speaker #5: Asset quality in factoring has been extremely strong in the last quarter. Can you elaborate a bit more on this? Also, I used to think of factoring as a very fragmented business.

Speaker #5: So why these one-off provisions on these segments? Thank you.

Speaker #2: Yeah, Simonetta, I don't have the backup for that right now. I'm looking at Martino. He's telling me it's one or two large positions where we had an issue.

Frederik Geertman: Yes, Simonetta. I don't have the backup for that right now. I'm looking at Martino, who's telling me it's one or two large positions where we had an issue with the final debtor. We're going to take this question and maybe feed that back to you in the next call or at the earliest occasion. It's, according to Martino, one or two large factoring positions. One, I mentioned the yacht. One, I mentioned the furniture. You are right to point out that there's the Bank of Italy aspect. Well, there's one thing I need to check, is whether the loan loss provisions that you see there don't actually include the pharma business. If that was the case, the difference is explained. Okay?

Speaker #2: With the final debtor. So, we're going to take this question and maybe feed that back to you in the next call, or at the earliest occasion.

Speaker #2: It's according to Martino, one or two large factoring positions. One I mentioned—the yacht. One I mentioned—the furniture. But you are right to point out that there's the Bank of Italy aspect as well.

Speaker #2: There's one thing I need to check: whether the loan loss provisions that you see there actually don't include the pharma business. If that was the case, the difference is explained.

Speaker #2: Okay?

Speaker #5: Okay. Thank you.

Simonetta Chiriotti: Okay. Thank you.

Speaker #2: Let us check that, please. I’d rather not say something that’s inexact in an earnings call. Okay?

Frederik Geertman: Let us check that, please. I'd rather not say something that's inexact in an earnings call, okay?

Speaker #5: Thank you.

Simonetta Chiriotti: Thank you.

Speaker #1: As a reminder, if you wish to register for a question, please press star one on your telephone. For any further questions, please press star one on your telephone.

Operator 2: 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. Mr. Gerfen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Operator: 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. Mr. Gerfen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Speaker #1: Mr. Gertman, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Speaker #2: Very well, thank you. There are no closing remarks, so I thank everybody for their time and attention. I wish everyone a nice summer holiday.

Frederik Geertman: Very well. Thank you. There are no closing remarks. I thank everybody for their time and attention. I wish everybody a nice summer holiday. I look forward to the next opportunity to meet and to discuss the bank. Thank you.

Speaker #2: And I look forward to the next opportunity to meet and to discuss the bank. Thank you.

Speaker #4: Thank you.

Andrea Martino Da Rio: Thank you.

Roberto Ferrari: Thank you.

Operator 2: Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephones.

Operator: Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephones.

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Q2 2026 Banca IFIS SpA Earnings Call

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