Q2 2026 Banco BPM SpA Earnings Call

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Speaker #1: Good evening. This is the Coral School Conference operator. Welcome, and thank you for joining the Banco BPM group first half 2026 results presentation. As a reminder, all participants are in listen-only mode.

Operator: Good evening. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banco BPM Group H1 2026 results presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Arne Riscassi, Head of Investor Relations of Banco BPM. 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. Arne Riscassi, Head of Investor Relations at Banco BPM. Please go ahead, sir.

Speaker #2: Good afternoon. Thank you for attending the conference call for the H1 2026 results, which will be presented by our CEO, Mr. Giuseppe Castagna, and our Joint General Manager and CFO, Edoardo Ginevra.

Arne Riscassi: Good afternoon. Thanks for attending the conference call of H1 2026 results, which will be presented by our CEO, Mr. Giuseppe Castagna, and our Joint General Manager, CFO, Edoardo Ginevra. All the materials, so presentation, the press release, are available on our website under the Investor Relations section. Of course, as usual, please limit yourselves to maximum two questions each. Now let me hand over to Mr. Castagna. Thank you.

Speaker #2: All the materials of the presentation and the press release are available on our website, under the Investor Relations section. Of course, as usual, please limit yourselves to a maximum of two questions each, and now let me hand over to Mr. Castagna.

Speaker #2: Thank you.

Speaker #3: Good evening, everybody. Happy to be here to present a very strong set of results for our first half of 2026, which allow us, first of all, to boost shareholder returns and to announce a new commitment of remuneration, going up from €6 billion to €7 billion over the planned horizon up to 2027.

Giuseppe Castagna: Good evening, everybody. Happy to be here to present a very strong set of results of our H1 2026, which allow us, first of all, to boost shareholder returns and to announce a new commitment of remuneration going up from EUR 6 to 7 billion over the plan horizon up to 2027. We will go further into detail immediately. Let's say that the performance of this first year, and in particular our Q2, was really fantastic. We have record profitability in terms of net income with the highest level of net profit at EUR 1,060 million, improving revenue mix, cost income, and cost of risk.

Speaker #3: We will go further into detail immediately. Let's say that the performance of this first year and particularly of Q2 was really fantastic. We have a record profitability in terms of net income with the highest level of net profit at 1 billion 60 million, improving revenue mix, cost income, and cost of risk.

Speaker #3: Record asset quality, going below 2% for the first time ever in terms of gross and P/E ratio. And record capital generation, which allows us to have a common equity RO1 ratio at 14.40%—140 basis points above the planned minimum threshold, and 240 basis points in the last 18 months since year-end 2024.

Giuseppe Castagna: Record asset quality going below 2% for the first time ever in terms of gross NPE ratio, record capital generation, which allow us to have a Common Equity Tier 1 ratio at 14.40%, 140 basis points versus planned minimum threshold, and 240 bips in the last 18 months since year-end 2024. These results allow us to confirm and to increase the net income guidance from 2026, above EUR 1.95 hundred billion, for a total expected of DPS equal or higher to EUR 1.

Speaker #3: These results allow us to confirm and to increase the net income guidance for 2026 above €1.95 billion, for a total expected DPS equal to or higher than €1.

Speaker #3: Let me remind you that, with these results—which are, of course, in line with the planned target—we will exceed the original plan by almost €100 million this year. This is due to external headwinds that you may remember, coming from the fiscal law and the Banca Progetto deal, which together accounted for €100 million.

Giuseppe Castagna: Let me remind that with these results, which is of course in line with the plan target. This year we will overcome practically of EUR 100 million, the results of the original plan because of the external headwinds that you may remember come from the fiscal law and the Banca Progetto deal, which amounted for EUR 100 million, and were not taken, of course, in consideration when we did the original plan. Let me say that we will also raise the interim dividend guidance to EUR 750 million, which means EUR 0.50 of dividend per share, up from EUR 0.46 last year, meaning EUR 700 million of distribution. This give also us room to enhance remuneration of our shareholders through a mix of buyback and additional dividends, which will be announced officially after we will have the ECB approval.

Speaker #3: And were not taken, of course, into consideration when we did the original plan. Let me say that we will also raise the interim dividend guidance to €750 million, which means €0.50 of dividend per share, up from €0.46 last year, meaning €700 million of distribution.

Speaker #3: And this also gives us room to enhance the remuneration of our shareholders through a mix of buybacks and additional dividends, which will be announced officially after we have ECB approval.

Speaker #3: Let me say that, through this combination, we will have a cumulative remuneration target which, I would say, goes back to €7 billion in the planned horizon from €6 billion, which is back to the planned maximum level before the Anima transaction.

Giuseppe Castagna: Let me say that through this combination, we will have a cumulative remuneration target, which I would say go back to EUR 7 billion in the plan horizon from EUR 6 billion, which is back to the plan maximum level before the Anima transaction. You may remember that we announced it in the first time in February 2025, the possibility to distribute EUR 7 billion, if the goodwill Anima wouldn't be the deduct from our capital. You know very well that we did obtain the Danish Compromise. We were obliged to reduce dividend distribution to EUR 6 billion. Nowadays, we can be able again to raise these targets to EUR 7 billion, which from now on will be the target that we have for the cumulative four years, which means EUR 4 billion in the next two years, 2026 and 2027.

Speaker #3: You may remember that we announced in the first time in February 2025 the possibility to distribute 7 billion if Anima wouldn't be the goodwill of Anima wouldn't be the deduct from our capital you know very well that then we didn't obtain the Danish compromise and we were obliged to reduce dividend distribution to 6 billion.

Speaker #3: Nowadays, we are able, again, to raise this target to €7 billion, which from now on will be the target that we have for the cumulative four years; which means €4 billion in the next two years, 2026 and 2027.

Speaker #3: This is thanks on page 7 to a very sustainable and constant long-term value creation, we have again one first half net income record, and we wanted to show you the progression of these results through the difficult years of this restructuring after the merger of the bank, the consolidation after the pandemic, and the starting of the new transformational strategy started in 2023 with the taking on board the new product factories in 2023 related to Banca Assurance, in 2024 the new Numia deal for payment system, and in 2025 the acquisition alignment.

Giuseppe Castagna: This is thanks on page seven to a very sustainable and constant long-term value creation. We have, again, one H1 net income record. We wanted to show you the progression of these results through the difficult years of this restructuring after the merger of the bank, the consolidation after the pandemic, and the starting of the new transformational strategy started in 2023, with the taking on board the new product factories in 2023 related to bancassurance, in 2024, the new Numia deal for payment system, and in 2025, the acquisition of Anima. Since then, we have been increasing our net profit from EUR 650 million in 2023, EUR 770 million in 2024. Let me remember, in 2024, we had 1.74 Euribor higher than the current one. Notwithstanding that, now we have reached 1.077, 1.060 stated, which means a strong increase through the non-NII interest.

Speaker #3: Since then, we have been increasing our net profit from €650 million in 2023 to €770 million in 2024. Let me remember, in 2024 we had a 1.7174% EURIBOR, higher than the current one. Notwithstanding that, now we have reached 1.077%, 1.060% stated, which means a strong increase through the non-NII interest.

Speaker #3: We will come back soon also with some more detail, which means a net income adjusted CAGR of 18% since 2023 and, again, the capability to offset more than 100 basis points of reduction of EURIBOR with always stronger net profit results.

Giuseppe Castagna: We will come back soon also with some more detail. Which means a net income adjusted CAGR of 18% since 2023, and again, the capability to offset more than 100 basis points of reduction of Euribor with always stronger net profit results. Let on page 8 to talk and to show you how our total revenues changed during the last two years. In 2024, we had non-NII revenues for EUR 1 billion 70 million, which represented 38% of the total revenues. In 2026 H1, we are having almost EUR 600 million of non-NII revenues on our total revenues, which represent 52% of the total revenues, with an increase of 55% on a two-year time. An important increase year on year comes from the product factory that 2026 on 2024 H1 grew EUR 77 million, which is 10% higher than the last year result.

Speaker #3: Let's move on to page 8 to talk and to show you how our total revenue changed during the last two years. In 2024, we had non-NII revenues of €1.07 billion, which represented 38% of the total revenues.

Speaker #3: In the first half of 2026, we have almost €600 million of non-NII revenues on our total revenues, which represents 52% of the total revenues, with an increase of 55% over a two-year period.

Speaker #3: An important increase year on year comes from the product factory that in the first half of 2024 grew €77 million, which is 10% higher than last year's result.

Speaker #3: Of course, these revenue increases were coupled with very strong cost control, both in terms of cost/income—we went down from 48% to 43% in the first half of 2026—and a cost of risk, which went down from 38 basis points in 2024 to 31 basis points this year.

Giuseppe Castagna: Of course, this revenues increase was coupled with a very strong cost control, both in terms of cost income. We went down from 48% to 43% in H1 2026, and a cost of risk, which went down from 38 basis points in 2024 to 31 basis points this year. Talking of NPE, let me remind that we were able, since the merger, to reduce the gross NPE ratio from 24% to below 2%. We are now 1.96%, which net is 1.03%. Let me remember, without any share issue during this 10 years period. Excluding the NPE with state guarantee, we have now a net NPE ratio of 0.53% and a net bad loan ratio at 0.1%. Very good performance also in default rate, which is down to 0.73%, down from 0.84% last year.

Speaker #3: Speaking of MP, let me remind you that since the merger, we have been able to reduce the gross MP ratio from 24% to below 2%. We are now at 1.96%, which net is 1.03%.

Speaker #3: Let me remember, without any share issue during this 10-year period. Excluding the NP with state guarantee, we have now a net MP ratio of 0.53% and a net bad loan ratio at 0.1%.

Speaker #3: Very good performance also in the fourth rate, which is down to 70.73%, down from 0.84% of last year. We have also been able to reduce the share of stage two, which now represents 7.4% of total performing loans versus 8.1% last year.

Giuseppe Castagna: We were also able to reduce the share of Stage 2, which now represents 7.4% of total performing loans versus 8.1% last year. The strongest impact comes from the capability of the bank through profitability and management action to build up a strong capital position. We now reached 14.4%, which means 240 basis points higher than in the last 18 months. We position also the reduction we had to absorb, in 2025, through the acquisition of Anima without the Danish compromise. This accounted for 240 basis points, which coupled with the regulatory headwinds, add to 300 basis points of deduction that we had to rebuild during these 18 months. As a matter of fact, being at that level, we now think there is room to enhance shareholder remuneration through allocation of buyback or dividends to be determined exactly following ECB approval and of course, shareholder meeting approval.

Speaker #3: But the strongest impact comes from the capability of the bank through profitability and management action to build up a strong capital position. We now reached 14.4%, which means 240 basis points higher than in the last 18 months.

Speaker #3: We position also the reduction we had to absorb in 2025 through the acquisition of Anima without the Danish compromise. This accounted for 240 basis points, which coupled with the regular headwinds add to 300 basis points of deduction that we had to rebuild during these 18 months.

Speaker #3: As a matter of fact, being at that level, we now think there is room to enhance shareholder remuneration through the allocation of buybacks or dividends, to be determined exactly following ECB approval.

Speaker #3: And of course, shareholder meeting approval. We will be able to maintain our target level of common equity Tier 1 above the 13% threshold, thanks to, again, the internal capitalization that the DTA reduction still to come in the next two years, and the managerial actions, which we are always able to manage in order to build up more capital.

Giuseppe Castagna: We will be able to maintain our target level of Common Equity Tier 1 above 13% threshold, thanks to, again, the internal capital generation, the DTA reduction still to come in the next two years, and the managerial action, which we're always able to manage in order to build up more capital. On page 12, let's have a look to the Q2 results. We have an increase in net interest income Q/Q of 4.6%, a slight increase in net fee and commission, and an increase of 3% of core revenues. If we go after net financial results and other net operating items, the total revenues grew 9% Q/Q and 7.7% year over year. Operating costs were down year over year 1.2%, up on the last quarter 2.9%, bringing pre-provision income at 13.8% and 15% higher Q/Q respectively and year over year.

Speaker #3: On page 12, let's have a look to the Q2 results. We have an increase in net interest income Q1Q of 4.6%, an increase slight increase in net fee and commission, and an increase of 3% of core revenues.

Speaker #3: If we go after net financial results and other net operating items, the total revenues grew 9% Q1Q and 7.7% year on year. Operating costs were down year on year 1.2%, up on the last quarter 2.9%, bringing pre-provision income at 13.8% and 15% higher Q1Q respectively and year on year.

Speaker #3: We had also a very good result in terms of loan loss provision, which amounted to 76 million, with a decrease year on year of 14%, which contributes to have a pre-tax profit 18% higher year on year and 15% higher on last quarter.

Giuseppe Castagna: We had also a very good result in terms of loan loss provision, which amounted to EUR 76 million, with a decrease year-over-year of 14%, which contribute to have a pre-tax profit 18% higher year-over-year and 15% higher on last quarter. Going down, of course, we will see also net income adjusted 13% higher year-over-year and 23% higher Q/Q. The evolution of the Q2 results are shown in the right side of the page, where you can see the last two Q2 quarters in 2024 and 2025. You can see how our strategy implemented all the main figure, in order to get the final results. Total revenues grew 22% in two year. Cost-to-income ratio down from 49% of Q2 2024 to 42% in Q2 2026, which is our best ever results.

Speaker #3: And going down, of course, you will see also net income adjusted 13% higher year on year and 23% higher Q1Q. The evolution of the Q2 results are shown in the right side of the page, where you can see the last two second Q quarter in 2024 and 2025.

Speaker #3: You can see how our strategy implemented all the main figure in order to get the final results. Total revenues grew 22% in two years, cost income down from 49% of Q2 2024 to 42% in Q2 2026, which is our best ever results, we already talked about loan loss provision and pre-tax profit grew 52% from 600 million to 900 million.

Giuseppe Castagna: We already talked about loan loss provision. Pre-tax profit grew 52% from EUR 600 to 900 million. Let's go through some detail of the profit and loss. Net interest income back to increasing Q/Q 4.6%, with, of course, Euribor, which is growing Q/Q of 15 basis points. The contribution is coming both mainly from commercial banking activity, but also from the Govies portfolio. We were able to manage the increase of Euribor very well, especially in liability spread, which grew more than Euribor average, which brought our liability spread from 1.44 to 1.60, reducing only two basis points the asset spread. The total commercial spread grew from 2.89 to 3.03. No main news about the sensitivity, more or less is the same as last quarter.

Speaker #3: Let's go through some detail of the profit and loss. Net interest income back to increasing Q1Q 4.6%, with of course a new report which is growing Q1Q of 15 basis points.

Speaker #3: And the contribution is coming mainly from commercial banking activity, but also from the Gov's portfolio. We were able to manage the increase of Euribor very well, especially in liability spread, which grew more than the Euribor average and brought our liability spread from 1.44 to 1.60.

Speaker #3: Reducing only two basis points, the asset spread. The total commercial spread grew from 2.89 to 3.03. No main news about the sensitivity. More or less, it is the same as last quarter.

Speaker #3: We are still with the small increase of replicating portfolio vis-à-vis the target of 25 billion, but we will be reduced in the second part of the year.

Giuseppe Castagna: We are still with the small increase of replicating portfolio vis-à-vis the target of EUR 25 billion, but we will be reduced in the second part of the year. Meanwhile, we started to reduce from 37% to 35% the indexed current account in view of the increasing Euribor environment. Another very good news comes from lending volumes. We are continuing commitment to support our clients, even though preserving our loan book quality, as I mentioned before. The new lending H1 is EUR 13.8 billion, of which EUR 7.6 billion in Q2, which is 22% higher than Q1. The loan book is growing 1.8%, which is exactly in line, even higher than the total growth for 2026. This growth is coming especially year-to-date from the non-financial corporates, which grew almost 3%.

Speaker #3: Meanwhile, we started to reduce the indexed current account from 37% to 35% in view of the increasing Euribor environment. Another very good news comes from lending volumes.

Speaker #3: We are continuing commitment to support our clients even though preserving our loan book quality. As I mentioned before, the new lending first part of the year is 13.8 billion, of which 7.6 billion in Q2, which is 22% higher than Q1.

Speaker #3: The loan book is growing 1.8%, which is exactly in line with, or even higher than, the total growth for 2026. And this growth is coming especially year to date from the non-financial corporates, which grew almost 3%.

Speaker #3: The quality of the portfolio is secured by the location of our clients—72% are located in the North of Italy—and by the collateral and guarantees which support our stock. Forty-seven percent is secured, basically half and half, through state guarantees and collateralized loans.

Giuseppe Castagna: The quality of the portfolio is secured by the location of our clients. 72% are located in the north of Italy, and by the collateral and guarantee which support our stock. 47% is secured, basically half and half through state guarantee and collateralized loans. This 47% grow to 61% if we talk about SMEs. On the right side of the page, you can see the record level of EUR 7.6 billion, which is the best new loan growth that we are experiencing. I have to say that July was even better. In only one month, we were able to grant EUR 3.3 billion. A good news comes also from the profitability coming from the new loans, which grew from 1.42% of the new loans granted in Q2 2025 to 1.57% linked to the new loans granted this H1.

Speaker #3: These 47% grow to 61% if we talk about SMEs. On the right side of the page, you can see the record level of 7.6 billion which is the best loan new loan growth that we are experiencing but I have to say that July was even better in only one month we were able to grant 3.3 billion.

Speaker #3: A good news comes also from the profitability coming from the new loans which grew from 1.42% of the new loans granted in Q2 2025 to 1.57% linked to the new loans granted this first part of the year.

Speaker #3: Net fees and income from insurance also in this case we are at a record level of 1.500 million the 3.2% higher than last year of which 51% are represented by product fees from investment sales.

Giuseppe Castagna: Net fees and income from insurance, also in this case, we are at a record level of EUR 500 million. 3.2% higher than last year, of which 51% are represented by product fees from investment sales. On the right side of the slide, you can see that the investment product fees grew 70.5% versus H1 2025, and almost 15% vis-à-vis Q2 2025. This growth comes from the very strong and solid results from Anima, which grew 15%. I would say this is quite new for us, a very good performance in terms of running fee, which grew 5% vis-à-vis H1 2025. Also, in terms of investment product placement, we were able to overcome the very strong results of H1 2025, reaching EUR 12.2 billion of sales.

Speaker #3: On the right side of the slide, you can see that the investment product fees grew 70.5% versus first half 2025 and almost 15% vis-à-vis Q2 2025.

Speaker #3: This growth comes from the very strong and solid results from ANIMA which grew 15% and also I would say this is quite new for us a very good performance in terms of in running fee which grew 5% vis-à-vis first part first half of 2025.

Speaker #3: Also in terms of investment product placement we were able to overcome the very strong results of H1 2025 reaching 12.2 billion of sales notwithstanding there was an increase also in the placement of BTP which is of course considered apart from the 12.2 billion of products.

Giuseppe Castagna: Notwithstanding, there was an increase also in the placement of BTP, which is, of course, considered apart from the EUR 12.2 billion of asset management products. Also for the other fees, meanwhile, we have a reduction 1.8% year on year due to the reduction of the Ecobonus, which of course this year is much lower than last year. If we compare Q2 2026 to Q2 2025, we have a growth of 3.8%, coming particularly from the increase that we have from the product factories, 4%, and the strong recovery of the specialized activity, which mainly are represented by structural finance fees and trade finance fees, which grew respectively 34% versus Q1 2026 and 20% versus Q2 2025. All results are growing and leave us room for better results in the second part of the year.

Speaker #3: Of asset management products. Also for the other fees meanwhile we have a reduction of 1.8% year on year due to the reduction of the ECO bonus which of course this year is much lower than last year but if we compare Q2 2026 to Q2 2025 we have a growth of 3.8% coming particularly from the increase that we have from the product factories 4% and a strong recovery of the specialized activity which mainly are represented by structural finance fees and trade finance fees which grew respectively 34% versus Q1 2026 and 20% versus Q2 2025.

Speaker #3: So all results are growing and leave us room for better results in 2000 in the second part of the year. Let's talk about the other side of the balance sheet.

Giuseppe Castagna: Let's talk about the other side of the balance sheet, total customer financial asset. We grew EUR 7.6 billion in Q2 versus Q1, EUR 4 billion year to date, of which EUR 1.1 billion in current account, and the rest in indirect funding, for which we register a positive net flows of almost EUR 2 billion. Meanwhile, the rest, of course, is a market effect. These results are bettered also by the Anima performance. As we mentioned before, Anima contribution to total revenues of the group is 18% higher than the pro forma of 2025. You remember that we brought on board Anima only in Q2, but we have a pro forma as it was here in Q1 2025, and 27% of net income at EUR 145 million higher than H1 2025.

Speaker #3: Total customer financial asset. We grew 7.6 billion in Q2 versus Q1. 4 billion year to date. Of which 1.1 billion in current account. And the rest in indirect funding for which we register a positive net flows of almost 2 billion meanwhile the rest of course is a market effect.

Speaker #3: These results are bettered also by the ANIMA performance. As we mentioned before, ANIMA's contribution to total revenues of the group is 18% higher than the pro forma of 2025.

Speaker #3: You remember that we brought on board ANIMA only in Q2, but we have a pro forma as if it was here in Q1 2025.

Speaker #3: And 27% of net income at 145 million higher than the first part of 2025. Total group customer financial asset adding on our own and ANIMAS excluding of course 55 billion in ANIMA which are coming from BPM is much is very close to 400 billion of total financial asset.

Giuseppe Castagna: Total group customer financial asset, adding on our own and Anima's, excluding, of course, EUR 55 billion in Anima, which are coming from BPM, is very close to EUR 400 billion of total financial asset. Let me pay some attention to slide 17. This is the real change that we did during the last couple of year. As you may remember, we built up the strong activity in product factory starting from 2023, starting having results basically from H1 2024. In H1 2024, we reached EUR 456 million of the contribution from product factories. This amount is now, after two years, EUR 822 million. Completely targeting and overcoming the target 2026, which the average of year was EUR 800 million, and very close to the target that we have for 2027, which is EUR 860 million.

Speaker #3: But let me pay some attention to slide 17. This is the real change that we did during the last couple of years. As you may remember we built up the strong activity in product factory starting from 2023 starting having results basically from the first half of 2024.

Speaker #3: In the first half 2024 we reached 456 million of the contribution from product factories this amount is now after two years 822 million. Completely targeting what and overcoming the target 2026 which the average half year was 800 million and very close to the target that we have for 2027 which is 860 million.

Speaker #3: The share of total revenues from the product factory grew from 16% in 2024 to 26% in the first part of this year. On the right side of the slide, you can see how we are a sort of unicum among our competitors.

Giuseppe Castagna: The share on total revenues of the product factory grew from 16% of 2024 to 26% of this H1. On the right side of the slide, you can see how we are a sort of unicum amongst our competitors. We have only one competitor which has a share of net fees and insurance very close to our 47%. The other peers are very much with a figure which are very much smaller than ours from 42% to 32% of contribution on net fees. You know how much is important to have a solid contribution from fees independent from the volatility of interest rates.

Speaker #3: We have only one competitor which has a share of net fees and insurance very close to our 47%. The other peers are very much with figures which are much smaller than ours.

Speaker #3: From 42% to 32% of contribution on net fees. And you know how important it is to have a solid contribution from fees, independent from the volatility of interest rates.

Speaker #3: Coming to the cost side again cost income 43% in six months and 42% in Q2. Is a 1.6% lower of first half 2025 thanks to the staff cost reduction of 4% year on year which take benefit from the solidarity fund saving of last year which reduced the cost of personnel of 49 million only partially offset by 10 million of new labor contract cost.

Giuseppe Castagna: Coming to the cost side, again, cost income 43% in H1 and 42% in Q2, is 1.6% lower of H1 2025, thanks to the staff cost reduction of 4% year-on-year, which takes benefit from the solidarity fund savings of last year, which reduced the cost of personnel of EUR 49 million, only partially offset by EUR 10 million of new labor contract cost. We can envisage that H2 will not that different from H1. In terms of ASA, we have an increase of 2.9% because we have accounted some extraordinary cost in H1. We envisage a better H2 in order to reduce the increase year-on-year. We already spent some words, it's worth to mention the very strong results in terms of credit management.

Speaker #3: We can envisage that the second part of the year will not be that different from the first part of the year. In terms of ASA, we have an increase of 2.9% because we have accounted for some extraordinary costs in the first part of the year.

Speaker #3: We envisage a better second part of the year in order to reduce the increase year on year. We already spent some award but is worth to mention the very strong results in terms of credit management.

Speaker #3: Cost to risk down to 31 basis points. MP ratio below 2%. MP coverage up to 48%. And if we exclude the MPs with state guarantee, we have a coverage which is almost 60% as total coverage and more than 81% in terms of bad loans coverage.

Giuseppe Castagna: Cost of risk down to 31 basis points, NPE ratio below 2%, NPE coverage up to 48%. If we exclude the NPEs with state guarantee, we have a coverage which is almost 60% as total coverage and more than 81% in terms of bad loans coverage. Let me hand the word to Mr. Ginevra, which will continue on the financials.

Speaker #3: Let me hand the word to Mr. Ginevra so we can continue on the financials.

Speaker #1: Thanks a lot Giuseppe. So also the contribution of our financial business to the results have been has been a very excellent has been really excellent in these half year.

Edoardo Maria Ginevra: Thanks a lot, Giuseppe. Also the contribution of our financial business to the results has been really excellent in this H1. On the left side of this slide, you see that the reserves, the contribution to capital of reserves has improved. Now we have negative reserves of EUR 256 million, down from negative reserves of almost EUR 300 million at the beginning of the year. This in parallel with the risk reduction in the risk of the government bond portfolio, whose basis point value went down from EUR 2.4 million to EUR 2.15 million in H1. The riskiness interested also Italian government bonds down from EUR 0.83 million to EUR 0.69 million. Debt securities are at EUR 47.6 billion, 29% is Fair Value of Comprehensive Income, 71% is amortized cost, with very limited exposures in terms of capital to market fluctuations.

Speaker #1: So, on the left side of this slide, you see that the contribution to capital of reserves has improved. Now we have negative reserves of €265.56 million, down from negative reserves of almost €300 million at the beginning of the year.

Speaker #1: These in parallel with the risk reduction in the risk of the government bond portfolio whose basis point value went down from 2.4 million to 2.15 million in the the first half of the year.

Speaker #1: The risking as interested also Italian government bonds down from 83 point 83 to 2.69 million. Debt securities are at 47.6 billion 29% is fair value comprehensive income 71% is amortized cost.

Speaker #1: So with very limited exposures in terms of capital to market fluctuations. Italian gobies share on the total of the banking book is or gobies supranational to be to be more precise is 38.4%.

Edoardo Maria Ginevra: Italian Govies share on the total of the banking book is, or Govies supranational, to be more precise, is 38.4%. Improvement has been reported also in the yield of this portfolio, which is now above at the level of 250 and 55 basis points in H1. On the right side, NFR that is shown in the previous slide improved 62.3% in H1, both thanks to the contribution of cost of certificates, which went down from EUR 92 million to EUR 58 million, thanks mostly to the declining rate scenario, Euribor. On top of it, also you have that improvement over on credit spread. The other NFR components improved their contribution from EUR 180 to EUR 202. Half of this element is represented by dividend on NPS is flat versus last year.

Speaker #1: Improvement has been reported also in the yield of this portfolio which is now above at the level of 250 55 basis points in the first half of the year.

Speaker #1: On the right side net financial result that has shown in the previous slide improved 62.3% in first half of the year both thanks to the contribution of cost of certificates which went down from 92 to 58 million thanks mostly to the declining rate scenario euribor but on top of it also an improve you had an improvement of our own credit spread.

Speaker #1: The other NFR components improved their contribution from 180 to 202. Half of this contribution after this element is represented by dividend on MPS, which is flat versus last year.

Speaker #1: The improvement in general is driven by the contribution of global market activities and by the dynamic management of market positions. Liquidity and funding have improved, both in terms of cash and account assets, which are now at €53.5 billion.

Edoardo Maria Ginevra: The improvement in general is driven by the contribution of global market activities and by the dynamic management of market positions. Liquidity and funding has improved both in terms of cash and unencumbered assets, which is now at EUR 53.5 billion, back to the level of December, basically. In terms of debt funding, which went up from EUR 133.7 to EUR 144.1 in the quarter, mostly driven by increase in the items of repo financing. SCR is at 143%, NSFR is at 123% with high quality liquid assets at a very comparable level of EUR 31.3 billion. Capital. The position in June has been already illustrated in the first part of the presentation. The work that leads us at this level is illustrated on page 22, where you see how we started from 13.59. Contribution from P&L performance is 98 basis points.

Speaker #1: Back to the level of December basically and in in terms of direct funding which went up from 133 to 144 133.7 to 144.1 in the quarter.

Speaker #1: Mostly driven by an increase in the items of repo financing. LCR is at 143% and SFR is at 123%, with high-quality liquid assets at a very comfortable level of €31.3 billion.

Speaker #1: Capital – the data on the position in June has already been illustrated in the first part of the presentation. The work that leads us to this level is illustrated on page 22, where we started from – where we see how we started from 13.59. Contribution from performance is P&L performance, which is 98 basis points. Dividends reduced the level of capital, or of CET1 ratio, by 83 basis points, bearing in mind that here we have a level of dividend implied in this calculation at €140 million, so higher than the one that we have set as the level of interim dividend, which creates additional comfort on our capital position.

Edoardo Maria Ginevra: Dividends reduced the level of capital, of CET1 ratio by 83 basis points. Bearing in mind that here we have a level of dividend implied in this calculation at EUR 840 million, so higher than the one that we have said is the level of interim dividend, which creates additional comfort in our capital position. Fair value of comprehensive income and DTAs improved the capital position, improved CET1 ratio respectively over 60 and 30 basis points. The growth in our business dynamics implies a reduction of 24 basis points. RWA now at EUR 68.8 billion. MDA buffer is at a very comfortable level of 187 basis points. MREL, including the Tier 2 we issued in July, the buffer is at 468 percentage points. As usual, we have also highlighted the future contribution to capital coming from progressive reduction in deduction from DTAs and fair value OCI reserves.

Speaker #1: Fair value comprehensive income and DTAs improved capital position improved CT1 ratio respectively of 60 and 30 basis points. The growth in our business business dynamics has implies a reduction of 24 basis points.

Speaker #1: RWR now at 68.8 billion MDA buffer is a very comfortable level of 487 basis points. MRL including the tier two issued in July is at the buffer is at 468 percentage point.

Speaker #1: As usual, we have also highlighted the future contribution to capital coming from the progressive reduction in deduction from DTAs and fair value comprehensive income reserves.

Speaker #1: This contribution is as high in the future as 150 basis points, of which 70 basis points are expected to mature within the plan horizons in the next 18 months.

Edoardo Maria Ginevra: This contribution is as high in the future as 150 basis points, of which 70 basis points are expected to mature in the plan horizons in the next 18 months. I hand over again to Giuseppe for the conclusion for the final remarks.

Speaker #1: And now I hand over again to Giuseppe for the conclusion for the final remarks.

Speaker #2: Thank you Eduardo. Please go to slide 24. The a brief sum up of the results we announced. So we have very strong set for profit from continuing operation.

Giuseppe Castagna: Thank you, Edoardo. Please go to slide 24. A brief summary of the results we announced. We have a very strong set of profits from continuing operation, growing 32% in the last two years, and the results of this H1 of the year is already above the H1 average of 2027, which is our plan target of the four-year target we presented. Also, in terms of net income, we are growing massively and constantly because if you adjust 2024, 2025, 2026, we will see that there is a growth of almost 10%, again, also in 2026, because we have to remember that the guidance EUR 1.95 billion is considering EUR 100 million less of more cost, which without them would have represented a growth of almost 10% vis-à-vis 2025, giving us a good pace to reach also our target in 2027.

Speaker #2: Growing 32% in the last two years and the results of this half of the year is already above the half yearly average of 2027 which is our plan target of the four year target we presented.

Speaker #2: Also in terms of net income we are growing massively and constantly because if you adjust 24 25 26 we will see that there is a growth of almost 10% again also in 26 because we have to remember that the guidance of 1.95 is considering 100 million less of or more of cost which represent without them would have represented a growth of almost 10% vis-à-vis 2025 giving us a good pace to reach also our target in 2027.

Speaker #2: The very good news is on the left down side of the page in which we have basically reached the composition of the net income that we envisaged in the presentation of the strategic plan.

Giuseppe Castagna: The very good news is on the left-down side of the page, in which we have basically reached the composition of the net income that we envisaged in the presentation of the strategic plan. You may remember we started with Wealth Management Protection, 24% of net income, specialty banking 11%, and 65% coming from commercial banking. Nowadays, we have 35% of Wealth Asset Management Protection, which is already in line with the target of 2027, 9% versus 10% of specialty banking, and 56% versus 50% to 55% of commercial banking. ROTE is going up from 16% on 2024 to 20.3% of this H1 of the year, and more than 21% next year. All these set of results enable us to upgrade the guidance, but more important, to boost shareholder remuneration.

Speaker #2: You may remember we started with wealth management protection 24% of net income specialty banking 11% and 65% coming from commercial banking. Nowadays we have 35% of wealth asset management protection which is already in line with the target of 27.

Speaker #2: 9% versus 10% for specialty banking, and 56% versus 50–55% for commercial banking. ROT is going up from 16% in 2024 to 20.3% in the first half of this year, and more than 21% next year.

Speaker #2: All these set of results enable us to upgrade the guidance but more important to boost shareholder remuneration. Higher the combination of main drivers like higher revenues improved efficiency and lower cost risk give us the confidence to overcome the 1.95 billion of results.

Giuseppe Castagna: The higher combination of main drivers like higher revenues, improved efficiency, and lower cost of risk give us the confidence to overcome the EUR 1.95 billion of results, which is ahead of the strategic plan, notwithstanding the EUR 100 million, give us the opportunity to upgrade the dividend guidance to equal or higher or EUR 1 per share, starting from the interim DPS, which grow from EUR 0.46 to EUR 0.50, meaning a total interim dividend coming up from EUR 700 to 750 million. More important, we have been authorized from our board to start all the regulatory procedure to increase the distribution target through further remuneration of share buyback, which will bring from EUR 6 to 7 billion, the total remuneration of the plan. Again, this would mean to distribute EUR 4 billion in 2026 and 2027, after 2027 results.

Speaker #2: Which is ahead of the strategic plan. Notwithstanding, the €100 million gives us the opportunity to upgrade the dividend guidance to equal to or higher than €1 per share, starting from the interim DPS, which grows from €0.46 to €0.50. This means a total interim dividend coming up from €700 million to €750 million. But more importantly, we have been authorized by our board to start all the regulatory procedures to increase the distribution target through further remuneration via share buybacks, which will bring the total remuneration of the plan from €6 billion to €7 billion. Again, this would mean distributing €4 billion in 2026 and 2027, after the 2027 results.

Speaker #2: Frankly speaking we are very happy to show this figure because again once we had the disappointment about Anima not deduction from capital we were obliged to reduce from 7 billion to 6 but we always say that if we would have had the opportunity to build up more capital we would have returned to the 7 billion target and this is the case that we are very happy to announce to you.

Giuseppe Castagna: Frankly speaking, we are very happy to show this figure because, again, once we had the disappointment about Anima not deduction from capital, we were obliged to reduce from EUR 7 billion to EUR 6 billion. We always say that if we would have had the opportunity to build up more capital, we would have returned to the EUR 7 billion target. This is the case that we are very happy to announce to you. Thank you very much. I leave the floor for your Q&A session.

Speaker #2: Thank you very much. I leave the floor for your Q&A session.

Speaker #3: Thank you. This is the Chorus Call Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

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 and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use handset when asking questions. Anyone who has a question may press star and one at this time. The first question is from Giovanni Razzoli, Deutsche Bank.

Speaker #3: To remove yourself from the question queue, please press star and two. We kindly ask you to use handsets when asking questions. Anyone who has a question may press star and one at this time.

Speaker #3: The first question is from Giovanni Razzoli Deutsche Bank.

Speaker #2: Good afternoon, everybody. I have two questions—actually, two clarifications. The first one is on the evolution of the lending portfolio. New business origination was extremely strong in the quarter, reaching the highest level in many quarters now.

Giovanni Razzoli: Good afternoon to everybody. I have two questions. Actually, two clarifications. The first one is on the evolution of the lending portfolio. The new business origination was extremely strong in the quarter, reaching the highest level since many quarters now. Still, I do see the stock of loans at the end of the period up only 1%, if I look at the end of the period data. I was wondering whether there are other components like maturities, like financial components, which penalize the end of the period data. For example, if there are, I don't know, some state-guaranteed loans which came due in this quarter and in 2026, which penalize the trend of the stock. The second question is on the income, and especially in the trend of the H1. We've seen a strong acceleration, a very good performance.

Speaker #2: Still I do see the stock of loans of the end of the period up only 1%. If I look at the end of the period data so I was wondering whether there are other components like maturities like you know financial components which penalize the you know the the end of the period data or for example if there are I don't know some state guaranteed loans which came due in this quarter and in the 2026 which you know penalize the trend of of the stock.

Speaker #2: The second question is on the income and especially on the trend of the first half. We've seen a strong acceleration and very good performance. If I am not mistaken, there was also a relatively strong contribution from the performance fees of Anima in the first half. If you can, please elaborate about the trend that you would expect in the second part, for the second half of the year, in terms of the evolution of the fee income.

Giovanni Razzoli: If I'm not mistaken, there was also a relatively strong contribution from the performance fees of Anima in the H1. If you can please elaborate about the trend that you would expect in the H2 of the year in terms of evolution of the fee income. Thank you.

Speaker #2: Thank you.

Speaker #1: Thank you, Giovanni. Let me say that as far as lending, of course, as you know, June and December are when we have the vast majority of loan maturities, with the different installments concentrated in these two periods.

Giuseppe Castagna: Thank you, Giovanni. Let me say that as far as lending, of course, as you know, June and December, we have the vast majority of maturity of loans with the different installments, which are concentrated in these two maturities. For instance, in June, we had already accounted, of course, in the number I gave to you, EUR 2.2 billion of maturity. Meanwhile, in March, we are EUR 1.5. There is always something more, which of course depressed a bit the Q2 and the Q4 results in terms of loans. But again, with a 1.8% year-to-date, we are very happy because we have this target for the whole year. The pace of the loans is growing. I mentioned EUR 3.3 billion in July. Most possibly we can envisage better results also for 2026.

Speaker #1: So for instance in June we had already accounted of course in the number I gave to you 2.2 2.2 billion of maturity meanwhile in March we had 1.5 so there is always something more which of course depress a bit the the second quarter and the fourth quarter results in terms of loans but again with a 1.8% year to date we are very happy because we have this target for the whole year the the the pace of the loans is growing I mentioned 3.3 billion in July so most possibly we can envisage a better results also for 26 but don't forget that there is a balanced combination in which we have to grow but we have to maintain a very good credit quality and at the same time we have to try to increase the spread and as I mentioned year on year we increase the spread of the new issue in 15 basis point so all in all is a part of our results which we frankly speaking like very much after some year of very slow growth in loans if not reduction.

Giuseppe Castagna: Don't forget that there is a balanced combination in which we have to grow, but we have to maintain a very good credit quality. At the same time, we have to try to increase the spread. As I mentioned, year-on-year, we increased the spread of the new issue 15 basis points. All in all, it's a part of our results, which we, frankly speaking, like very much after some year of very slow growth in loans, if not reduction. In commission, we have, of course, strong ambition in our plan. Let's say that we think we'll be much better than last year, this year. We have a further growth of more or less EUR 100 million for next year. I don't think there is room for upgrading because we already have very strong results.

Speaker #1: In commission, we have, of course, strong ambition in our plan. Let's say that we think we will match—we'll be much better than last year this year, and we have a further growth of more or less €100 million for next year. So I don't think there is room for upgrading, because we already have very strong results—basically €78 million better this year over last year, and another €100 million for next year.

Giuseppe Castagna: Basically EUR 178 million better this year for last year and another EUR 100 million for next year, which will come again from the setup and full power of the product factory and the good pace we're having in the financial product sales.

Speaker #1: This will come again from the setup and full power of the product factory and the good pace we are having in financial product sales.

Speaker #1: Thank you.

Giovanni Razzoli: Thank you.

Speaker #3: The next question is from Elena Perini. In this San Paolo.

Operator: The next question is from Elena Perini, Intesa Sanpaolo.

Speaker #4: Yes. Good afternoon and thank you for for taking my my questions. I got two two questions. The the first one is on your credit credit quality because it was one of the best surprises in my in my view.

Elena Perini: Yes. Good afternoon, thank you for taking my questions. I got two questions. The first one is on your credit quality, because it was one of the best surprises in my view, in this set of results. I was wondering about your guidance for the cost of risk for this year and if possible for next year, too, if there are some changes considering the positive evolution that you are experiencing. The second question is, again, a follow-up on commissions, because I see also from the results of your peers that there is a contribution of placement fees in this H1. What is the outlook for this component, which cannot be considered as much as recurrent for the H2 of the year? Thank you.

Speaker #4: In this in this set of of results. So I was wondering about your your guidance for the the cost of of risk for for this year and if possible for for next year too if there are some some changes considering the the positive evolution that you are experiencing.

Speaker #4: The second question is again a follow up on on commissions. Because I I see also from the the results of your of your peers that there is a a contribution of of placement fees in this first half.

Speaker #4: So what is the the outlook for this component which cannot be considered as much as as recurrent for the the second half of the of the year?

Speaker #4: Thank you.

Speaker #1: Okay. I'll start with the first question, then, please. Can you repeat exactly what you need to understand better on the commission side? But for cost or risk, of course, we are doing better than the business plan.

Giuseppe Castagna: Okay. I'll start with the first question, please can you repeat exactly what you need to understand better of the commission side? For cost of risk, of course, we are doing better than the business plan. Of course, the business plan was done with a sort of, let's say, prudent approach on terms of default rate, which now is being constantly below 1% for the last four, five years. Every time, I think all of us think that there could be a deterioration. Maybe we are too much prudent also in that, because the capability which we now spend in managing, granting the loan, monitoring the watchlist, detecting the early warning, allow us to be very efficient in timing and capability to sell and dispose and starting to reduce exposure where we feel to be at risk.

Speaker #1: Of course the business plan was done with a sort of let's say prudent approach on terms of the full rate which now is being constantly below 1% for the last four five years.

Speaker #1: And every time I think all of us think that could be a deterioration. But maybe we are too much prudent also in that because you know the capability which we now spend in managing granting the loan monitoring the the watch list detecting the early warning allow us to be very efficient in timing and capability to sell and dispose and starting to reduce exposure well we feel to be at risk.

Speaker #1: So all in all, I can say that for sure we will do better than business plan guidance, which were, if I remember well, 43 basis points for 2026 and 40 basis points for 2027.

Giuseppe Castagna: All in all, I can say that for sure we will do better than the business plan guidance, which were, if I remember well, 43 basis points for 2026 and 40 basis points for 2027. Also because, as you remember, having now a stock which is so low and almost very much guaranteed from state guarantee is very difficult to envisage cost of maintenance, and only cost will come from default rate increase. Can you repeat on commission? Sorry.

Speaker #1: Also because as you remember be having now a stock which is so low and almost very much guaranteed very difficult to envisage cost of maintenance and only cost will come from the fault rate increase.

Speaker #1: Can you repeat the question on commission? Sorry.

Speaker #4: Yes, sure. Well, my question was referring to slide number 15, in the sense that you have investment product placements, so they were basically stable in the first half of '25 and the first half of '26, too.

Elena Perini: Yes, sure. Well, my question was referring to the slide number 15, in the sense that you have investment product placements. They were basically stable in the H1 of 2025 and the H1 of 2026, too. I was wondering about the outlook for the H2 of the year for this small component. Also, if I may add, if you consider a significant amount of upfront fees also for the H2 of the year. Thank you.

Speaker #4: So I was wondering about the outlook for the second half of the year for this small component, and also, if I may add, if you consider a significant amount of upfront fees also for the second half of the year.

Speaker #4: Thank you.

Speaker #1: No not really. I mentioned before that you are very happy to show that we are basically having a first half of the year with upfront fee which are in line with last year and coming exactly from the same investment product placement amount which is around 12 billion.

Giuseppe Castagna: No, not really. I mentioned before that we are very happy to show that we are basically having a H1 of the year with upfront fee, which are in line with last year, and coming exactly from the same investment product placement amount, which is around EUR 12 billion. Meanwhile, we have an increase of 5% year on year of running fee, which for us is very important. In terms of H2, again, we expect a bettering year on year 2026 on 2025. Investment fees account now for more than 50%. For sure, we will have a good result, but let's remember that it's impossible to double for two, because, of course, in the H2, there is August and December, which are always slower than the other part of the year. This, of course, is for investment product.

Speaker #1: Meanwhile, we have an increase of 5% year-on-year of running fee, which for us is very important. In terms of the second half, again, we expect a better year-on-year for 2026 and 2025.

Speaker #1: Investment fees account now for more than 50%. So for sure we will have a good results but let's remember that is impossible to double for two because of course in the second half there is August and December which are always slower than the rest part the other part of the year.

Speaker #1: So this of course is for investment product. Meanwhile we think we can be very good as I mentioned before in covering from the other commission.

Giuseppe Castagna: Meanwhile, we think we can be very good, as I mentioned before, in recovering from the other commission, as we did Q1 in many of these items that I mentioned before.

Speaker #1: As we did in Q2 and Q1 in many of these items that I mentioned before.

Speaker #4: Okay. Thank you very much.

Elena Perini: Okay. Thank you very much.

Speaker #3: The next question is from Iñasio Largui, BNP Paribas.

Operator: Next question is from Ignacio Ulargui, BNP Paribas.

Speaker #5: Thanks much for taking my questions. I have two questions. I mean the first one is in terms of capital distribution I mean could you help us to understand a bit if there could be other measures besides capital distribution in order to improve the operating profitability such as additional retirement programs or any other efficiency measure.

Ignacio Ulargui: Thanks so much for taking my questions. I have two questions. The first one is, in terms of capital distribution, could you help us to understand a bit if there could be other measures besides capital distribution, in order to improve the operating profitability, such as additional early retirement programs or any other efficiency measure? Linked to that, you have improved the cost-to-income by around 3.5, 4 percentage points in the last 12 months, which is a remarkable performance. How much do you think you can continue improving that cost-to-income in the coming quarters? Thank you.

Speaker #5: And linked to that, you have improved the cost-to-income ratio by around three and a half to four percentage points in the last 12 months, which is a remarkable performance.

Speaker #5: How much do you think you can continue improving that cost-to-income in the coming quarters? Thank you.

Speaker #1: Inasio thanks for the questions. Capital distribution. So if I understood correctly the question is about what are if you can continue to implement actions managerial actions to improve capital position and generate additional efficiency in capital absorption.

Giuseppe Castagna: Ignacio, thanks for the questions. Capital distribution. If I understood correctly, the question is about if we can continue to implement managerial actions to improve capital position and generate additional efficiency in capital absorption. Definitely, we are very active, as you know from also previous presentations in the area of synthetic securitizations. On top, we-

Speaker #1: Definitely, we are very active, as you know from previous presentations, in the area of synthetic securitizations. On top of that, we are deploying a number of levers to help generate additional capital, not only from P&L, but also from other sources.

Edoardo Maria Ginevra: We are deploying a number of levers to help generating additional capital, not only from P&L, but also from other sources. I underline again the 70 basis points that we have out of a total 150 of additional capital to be generated over the plan horizon from DTAs and fair value other comprehensive income reserves. We are in a position to be very confident we can tackle further opportunities to generate additional excess capital, which already is, I would say, quite significant when you compare the 14.4% we have to the 13%, which is, I would say, a very conservative threshold, and with almost EUR 69 billion of RWA. Just these numbers is very close to EUR 1 billion, if you make the math.

Speaker #1: I underline again the 70 basis points that we have, out of a total of 150, of additional capital to be generated over the plan horizon from DTAs and fair value and comprehensive income reserves.

Speaker #1: We are in a position to be very confident we can tackle further opportunities to generate additional excess capital, which already is, I would say, quite significant when you compare the 14.4 we have to the 13%, which is, I would say, a very conservative threshold. And with almost €69 billion of RWA, just these numbers—it's very close to €1 billion if you do the math.

Speaker #5: Of course, on cost to income, if it is all right for you, the—the.

Giuseppe Castagna: On cost-to-income, if it's all right for you, the-

Speaker #1: Yeah, no, I was also thinking whether you could.

Ignacio Ulargui: No, I was also thinking whether you could use the excess capital and the very strong capital position for other things that could improve further managerial and the cost-to-income by early retirements, if you see a space on the cost side linking to the second question.

Speaker #5: I mean use the excess capital and the very strong capital position for other things that could improve further managerial I mean the cost to income by early retirements if if there is if you see a space on the cost side linking to the second question.

Speaker #1: No, I think that we are very focused on distributing excess capital and using it efficiently for managing the expectations of our shareholders. At the same time, we are extremely confident that the process of generating excess capital is still ongoing and may continue to give us additional flexibilities going forward, until at least the completion of the plan.

Edoardo Maria Ginevra: No, I think that we are very focused on distributing excess capital and using efficiently for managing expectation of our shareholders. At the same time, we are extremely confident that the process of excess capital is still ongoing and may continue to give us additional flexibilities going forward until at least the completion of the plan. If we have in front of us opportunities to deploy capital differently or to use it for risk reduction, we are confident we can have it. For the time being, we're not planning additional usage of this excess capital. Coming back to cost-to-income ratio. Of course, is very much better than our forecast, mainly due to staff cost reduction, as I mentioned before, but we have some further possibility to reduce the other administrative costs. We are confident that we can beat the anticipation we gave.

Speaker #1: So, if we have in front of us opportunities to deploy capital differently or to use it for restructuring, we are confident we can have it.

Speaker #1: But for the time being, we're not planning additional usage for this excess capital.

Speaker #5: Thank you.

Speaker #1: Okay. Coming back to cost-to-income, of course it is much better than our forecast, mainly due to staff cost reduction, as I mentioned before.

Speaker #1: But we have some further possibility to reduce the other administrative costs, so we are confident that we can beat the anticipation we gave. And, again, 43% is a record for us.

Edoardo Maria Ginevra: Again, 43% is a record for us, it's better than the plan. Notwithstanding that, we did 42% in Q2. I don't know. If we are able, as we did, to maintain costs at the level they are, as it looks like to be possible for this year, increasing revenues will give us a better cost-to-income ratio.

Speaker #1: It's better than the plan. But notwithstanding that, we did 42% in Q2. So I don't know if we are able, as we did, to maintain costs at the level they are. As it looks likely to be possible for this year, increasing revenues will give us a better cost to income.

Speaker #5: Thank you.

Ignacio Ulargui: Thank you.

Speaker #3: The next question is from Luis Pratas, Autonomous Research.

Operator: The next question is from Luis Pratas, Autonomous Research.

Speaker #6: Good afternoon, everyone. Thank you for taking my questions. My first one is on NII. There was this impressive increase in the liability spreads, from 144 basis points to 160.

Luis Pratas: Good afternoon, everyone. Thank you for taking my questions. My first one is on NII. There was this impressive increase in the liability spread from 144 basis points to 160. This actually means that liability costs essentially remained flat despite the higher arrival. I wanted to ask you, how did you manage to keep these deposit costs flat? Whether there were any strategic actions. Going forward, how do you expect the liability spread to behave? Maybe more generally, if you could also provide to update the NII guidance for 2026, please. My second question is related with M&A. There has been plenty of speculation about the potential combination between Crédit Agricole, Italy, and Banco BPM. I wanted to ask you whether you think this combination could result in value generation to Banco BPM shareholders.

Speaker #6: And this actually means that liability costs essentially remain flat despite the higher arrival. So I wanted to ask you, how did you manage to keep these deposit costs flat? Were there any strategic actions? And going forward, how do you expect the liability spread to behave?

Speaker #6: And maybe more generally if you could also provide the NI to update the NII guidance for 2026 please. And then my second question is related with with M&A.

Speaker #6: There has been plenty of speculation about a potential combination between credit agricole Italy and Banco BPM. I wanted to ask you whether you think this combination could result in value generation to Banco BPM shareholders and how do you assess the government attitude towards the potential move by credit agricole to take control of Banco BPM.

Luis Pratas: How do you assess the government attitude towards the potential move by Crédit Agricole to take control of Banco BPM? Do you think it's a transaction that can be politically acceptable? Thank you.

Speaker #6: Do you think it's a transaction that can be politically acceptable? Thank you.

Speaker #1: Yeah. Good evening Luis. Thanks for your questions. On NII if you observations yes correct we were effective in preserving liability spread this and also on the areas of asset spread is important to note this point there are also some second order effect in terms of delay in cost of indexed instruments to adjust to the behavior of rates on top of that needless to say we have been very effective in how to say it steering the deposit base to to take the the maximum opportunities in of opportunities in an environment of declining rates.

Edoardo Maria Ginevra: Good evening, Luis. Thanks for your questions. On NII, a few observations. Yes, correct. We were effective in preserving liability spread. These, and also on the areas of asset spread, is important to note at this point. There are also some second order effect in terms of delay in cost of indexed instruments to adjust to the behavior of rates. On top of that, needless to say, we've been very effective in, how to say it, steering the deposit base, to take the maximum of opportunities in an environment of declining rates. You can observe, for example, as reported in the presentation, that we have now index current account at 35%. This number was 37, if I'm not mistaken, six months ago. Of course, the share of indexed on total is the most expensive in our deposit base.

Speaker #1: You can observe, for example, as reported in the presentation, that we have now indexed current accounts at 35%. This number was 37% not long ago. Of course, the share of indexed on total is the most expensive in our deposit base.

Speaker #1: Guidance for the rest of the year is, we prefer to be prudent. So even without factoring in a further increase in base rates from the ECB, still, of course...

Edoardo Maria Ginevra: Guidance for the rest of the year is, we prefer to be prudent. Even without factoring further increase in base rates from ECB, still, of course, we can have improvements versus Q2, both in the term and.

Speaker #1: We we can have improvements versus the second quarter both in the third and in the fourth. This improvement can be even more evident in case of rates in case of ECB raising rates in the next meetings in the coming in the forthcoming meetings.

Giuseppe Castagna: This improvement can be even more evident in case of ECB raising rates in the next forthcoming meetings. Okay, Giuseppe answering for the second part related to M&A. Let me say, first of all, that all this speculation starts maybe from the fact that was emphasized a sort of declaration from Crédit Agricole that they didn't see value on the transaction we should have done with Monte. Let's be clear that the decision of not going ahead in the potential opportunity represented by a merger between us and Monte dei Paschi was decided only by the board of the bank. The board of the bank, of course, as you know, include four board member appointed in a list supported by Crédit Agricole. This was unanimous. Everybody decided for this decision.

Speaker #6: Okay. Giuseppe answering for the second part related to M&A. Let me say first of all that all these speculation starts maybe from the fact that was emphasized a sort of declaration from from credit agricole that they didn't see value on the transaction we should have done with Monte.

Speaker #6: Let's be clear that the decision of not going ahead with the potential opportunity represented by a merger between us and Monte Paschi was decided only by the board of the bank. And the board of the bank, of course, as you know, includes four board members appointed in a list supported by Crédit Agricole.

Speaker #6: And this was unanimous. So everybody decided for this decision. I explained in our press release that after months of waiting we wouldn't we were not able to understand which kind of transaction which which kind of number which which kind of value for our shareholder this transaction which we consider very important and profitable opportunity unfortunately did not materialize.

Giuseppe Castagna: I explained in our press release that after months of waiting, we were not able to understand which kind of transaction, which kind of number, which kind of value for our shareholder, this transaction, which we consider very important and profitable opportunity, unfortunately, did not materialize. At that point, we decide also because after our letter, as you know, materialize also the official offer from Intesa. We decided for timeframe limits, we were not anymore in the position to pursue in August or September, maybe, a transaction which would arrive before the Intesa Sanpaolo public offer. I don't think any of the interpretation of Crédit Agricole about our transaction with Monte are true. Of course, you can ask them.

Speaker #6: At that point, we decided, also because after our letter, as you know, materialized also the official offer from Intesa, we decided, for time frame limits, we were not anymore in the position to pursue in August or September maybe a transaction which would arrive before the Intesa Sanpaolo public offer.

Speaker #6: So I don't think any of the interpretations by Crédit Agricole about our transaction with Monte are true. But of course, you can ask them.

Giuseppe Castagna: As far as our declaration related to us that they would prefer to have a merger with us, this has always been a possibility that since, I don't know, two, three, four years, since they became our shareholders, was a potential opportunity on the table. We would examine this potential opportunity, if becomes true and possible in the interest of all the shareholder of the bank. I have to say that from an industrial point of view, I think that is a very solid merger, of course, we have to find a solution that make happy all the other shareholders of Bank, if this transaction would, at a certain time, materialize. I don't know, frankly speaking, about the position of the government. There are rules and opportunity to respect, I don't want to enter into such things that are not related to what I can try to decide.

Speaker #6: As far as our declaration related to us, that they would prefer to have a merger with us, this has always been a possibility, since—I don't know—two, three, four years, since they became our shareholders, was a potential opportunity on the table.

Speaker #6: We would examine this potential opportunity if it becomes true and possible, in the interest of the old shareholders of the bank. I have to say that from an industrial point of view, I think that is a very solid merger, but of course we have to find a solution that may satisfy all the other shareholders of Bami if this transaction would, at a certain time, materialize.

Speaker #6: I don't know frankly speaking about the position of the government. There are rules and opportunity to respect and I don't want to enter into such things that are not related to what I can try to decide.

Speaker #6: Thank you very much.

Luis Pratas: Thank you very much.

Speaker #2: The next question is from Andrea Lisi, Equita.

Operator: The next question is from Andrea Lisi, Equita.

Speaker #6: Good evening. Thank you for taking my questions. The first one is on the increase of shareholder remuneration, where you have come back with the additional €1 billion.

Andrea Lisi: Good evening. Thank you for taking my questions. The first one is on the increase of shareholder remuneration, where you come back with the additional EUR 1 million. You indicated that you have the choice between increasing the dividend payout and the share buyback. Can you provide some color about which will be the rationale for you in selecting between an increase in the dividend payout and the share buyback? Under which situation do you think could be preferable, one case or the other? The second question is on Anima. In particular, I want to ask you if you can provide any update on this front, in particular, considering that the stake listed is still at 10%, you retain 90%.

Speaker #6: You indicated that you have the choice between increasing the dividend payout and the share buyback. Can you provide some color about what would be the rationale for you in selecting between an increase in the dividend payout and the share buyback, and under which situations you think it could be preferable to choose one over the other?

Speaker #6: And the second question is on Anima in particular. I want to ask you if you can provide any update on this front, in particular considering that the stake listed is still at 10%.

Speaker #6: You obtained 90%. Clearly, we have seen what happened with Monte, and if this could in some way change a bit your position regarding what to do with the minorities of Anima.

Andrea Lisi: Clearly, we have seen what happened with Monte, if this could, in some way, change a bit your position regarding what to do with the minorities of Anima. Thank you.

Speaker #6: Thank you.

Speaker #1: Okay. So basically we announced the increase the the borrowing popular joke 67 in the distribution of in the total plan horizon but at the same time we need to to abide to the rules from ECB that say that announcements of buybacks have to be precise only can be precise can be done in an amount only after an authorization is granted in case as the one we're talking about of buyback on top of ordinary payout distributed by the bank.

Giuseppe Castagna: Okay. Basically, we announced the increase, the borrowing, popular joke, six, seven in the distribution of the total plan horizon. At the same time, we need to abide to the rules from ECB that say that announcements of buybacks have to be precise, only can be precise, can be done in an amount, only after an authorization is granted in case, as the one we're talking about, of buyback on top of ordinary payout distributed by the bank. Basically, this is where we stand now. We need to start the authorization process. Once we obtain the authorization, we will be able to disclose the amount, and in due course, we will communicate to the market. Okay. For Anima, of course, let's start from the second part, which, of course, is very important also for the first part of your question. What happened to MPS Anima?

Speaker #1: So basically, this is where we stand now. We need to start the authorization process. Once we obtain the authorization, we will be able to disclose the amount, and in due course, we will communicate it to the market.

Speaker #1: Okay. For Anima, of course, let's start from the second part, which is also very important for the first part of your question.

Speaker #1: So what happened to MAPS Anima? We have a contract lasting up to 2030. We are confident that Monte Paschi, stand-alone or Monte Paschi in whatever situation, will end up with respect for the contract that they have with us.

Giuseppe Castagna: We have a contract lasting up to 2030. We are confident that Monte Paschi standalone or Monte Paschi, in whatever situation will end up, will respect the contract that they have with us. Let's remember that this is not a wholesale deal, but is a B2B2C business in which, of course, there are, I don't know, hundreds of thousands of clients in Monte who buys our product, Anima product, and I am sure that whoever will be deciding what to do will have attention and care in not disappointing their client, obliging or forcing them to change the investment product they are used since, I don't know, 15 years, 20 years to use. We are very confident about that until 2030, then we will discuss with whoever will be in charge at that time.

Speaker #1: Let's remember that this is not a wholesale deal but is a B2B2C business, in which, of course, there are, I don't know, hundreds of thousands of clients in Monte who buy our product, Anima product, and I am sure that whoever will be deciding what to do will have attention and care in not disappointing their clients, obliging or forcing them to change the investment product they have used for, I don't know, 15, 20 years.

Speaker #1: So, we are very confident about that until 2030, and then we will discuss with whoever will be in charge at that time. For the 10%, of course, let us understand better where Monte Paschi will be at the end of this consolidation, the offer process, and of course, we will decide consequently.

Giuseppe Castagna: For the 10%, of course, let us understand better where Monte Paschi will be at the end of this consolidation, the offer process. Of course, we will decide consequently.

Speaker #6: Thank you.

Andrea Lisi: Thank you.

Operator: The next question is from Hugo Cruz, KBW.

Speaker #2: The next question is from Hugo Cruz, KBW.

Speaker #7: Hi. Thank you for your time. First, a question on capital. You have this 60 basis points of benefit from fair value CI reserves. Was this all from Monte Paschi and mark-to-market, and was there any impact from hedges that I think you have related to this stake?

Hugo Cruz: Hi, thank you for the time. First a question on capital. You had these 60 basis points of benefit from fair value OCI reserves. Was this all from Monte Paschi and was mark to market, and was there any impact from hedges that I think you have related to this stake? That's my first question. Going back to the buyback topic. Can you confirm that if you do a buyback, would you cancel the shares? If you do cancel the shares, mechanically that would increase Crédit Agricole's stake. What do you think about that implication? Finally, also the timing. It's almost one extra billion of distributions, even versus consensus, I think it's an extra 800 million. Would you do it in one go, or would you split it between 2026 and 2027? Thank you.

Speaker #7: So that's my first question. And then on the going back to the buyback topic so can you confirm that if you do a buyback would you cancel the shares and would that and if you do cancel the shares you know you know mechanically that would increase this you know credit agricoles stake so you know what do you think about that implication and finally also the timing you know it's almost when you know when extra billion of distributions you know even versus consensus I think it's an extra 800 million so would you do it in one go or or would you split it between 26 and 27?

Speaker #7: Thank you.

Speaker #1: Okay. This increase improvement in February comprehensive income you probably have seen that in the slide where we presented the financial the contribution of the financial components to the results slide 20 reserves net reserves have reduced negative net reserves have been reducing.

Giuseppe Castagna: Okay. This increase improvement in Fair Value through Other Comprehensive Income, you probably have seen that in the slide where we presented the contribution of the financial components to the results, slide 20. Negative net reserves have been reducing. This is the contribution of Fair Value through Other Comprehensive Income, on top of which you have to add the tax, the DTA component. The remaining part that adds up to the 60 basis points is mark to market of MPS, of equity holdings that we have in Fair Value through Other Comprehensive Income, including, but not limited to MPS. A couple of additional points to note. You asked about the hedging contribution. The hedging contribution has been unsurprisingly negative in this quarter. We have some protections from the downside, which is already included in the P&L. The total net financial result would have been higher if in case of absent hedging.

Speaker #1: So this is the contribution of fair value of the comprehensive income on which you have add on top of which you have to add the tax the DTA component.

Speaker #1: The remaining part that adds up to the 60 basis points is mark to market of MPS as you correctly or MPS of equity of equity holdings that we have in fair value comprehensive income including but not limited to MPS.

Speaker #1: A couple of additional points to note. You asked about the hedging contribution. The hedging contribution has been surprisingly negative this quarter. We have some protections from the downside, which are already included in the P&L.

Speaker #1: So the total net financial result would have been higher in the absence of hedging. But, of course, this would have been much lower than the capital contribution of MPS.

Giuseppe Castagna: Of course, this has been much lower than the capital contribution of MPS. The only point is the asymmetry between MPS capital contribution, which is directly in Other Comprehensive Income, not going through P&L, and the negative contribution of hedges, which goes through P&L in the financial result. On timing of potential share buyback. If we get the authorization, as I said, we will be able to communicate an amount and timing. We expect this, given it is our inaugural transaction of this case, will take a few months. Difficult for us to say end of this year or early next year, but this is the best expectation we can give and provide at this stage. In any case, it's 4 billion in two years, whenever it will be. Let me say about the share buyback cancellation. Of course, we'll do a cancellation.

Speaker #1: The only point is asymmetry between MPS capital contribution, which is directly in other comprehensive income not going through PNL and negative contribution of hedges, which goes through PNL in the financial result.

Speaker #1: On timing of potential share buyback: so, if we get the authorization, then, as I said, we will be able to communicate an amount and timing. We expect this, given it is our inaugural transaction of this kind, will take a few months.

Speaker #1: So difficult for us to say end of this year or early next year but this is the best expectation we can give. We can provide this any case it's 4 billion in two years whenever it will be.

Speaker #1: Let me say about the share buyback cancellation of course we'll do the cancellation. Of course our shareholder all the shareholder will be I would say more or less 3% higher in term the terms of their stake.

Giuseppe Castagna: Of course, our shareholders, all the shareholders will be, I would say more or less 3% higher in the terms of their stake. I think whatever will be the kind of shareholder remuneration, we will make happy all the shareholders, including Crédit Agricole, which has always been declared to be a happy shareholder of MPS. Of Banco BPM. We don't think to put in any embarrassment anybody, if we do this kind of transaction. We don't know if they stay at the current level, 29.2%, or they would grow to 29.9%. They already had the authorization. We don't know exactly what is the figure for which we could avoid, if we have a share buyback, Agricol to increase. But practically speaking, they will be in the same position of today. They will find themselves maybe above 30%.

Speaker #1: I think that whatever will be the kind of shareholder remuneration, we will make all the shareholders happy, including Crédit Agricole, which has always been declared to be a happy shareholder of Banco BPM.

Speaker #1: So, we don't think to put any embarrassment on anybody if we do this kind of transaction. We don't know if they stay at the current level, 29.2, or if they would grow to 29.9.

Speaker #1: They already had the authorization. So, we don't know exactly what is the figure that we could avoid if we have a share buyback at Agricole to increase.

Speaker #1: But practically speaking, they will be in the same position as today. So, they will fund themselves, maybe above 30%. If they don't want to launch, they have a certain period of months in order to reduce the participation.

Giuseppe Castagna: If they don't want to launch, they have a certain period or months in order to reduce the participation. If they want to launch a compulsory offer, they will do, as well as they will do if they stay at 29.9%. I don't think anybody will be embarrassed, but I hope all the shareholders, including Agricol, will be happy of this further remuneration, which shows the strength of the bank in rebuilding capital and make profit.

Speaker #1: If they want to launch a compulsory offer, they will do as well as they would if they stay at 29.9%. So I don't think anybody will be embarrassed, but I hope all the shareholders, including Agricole, will be happy with this further remuneration, which shows the strength of the bank in rebuilding capital and making profit.

Speaker #5: If I may add a very— I mean,

Edoardo Maria Ginevra: If I may add a very technical point. The impact of any share buyback on the ownership of the bank depends on the amount, which is currently undefined, given that we will need to wait for the authorization of ECB for that.

Speaker #1: A technical point: the final impact of any share buyback on the ownership of the bank depends on the amount, which is currently undefined, given that we will need to wait for the authorization of the ECB for that.

Speaker #7: Thank you very much.

Hugo Cruz: Thank you very much.

Speaker #2: The next question is from Adele Palama, UPS.

Operator: The next question is from Adele Palama, UBS.

Speaker #8: Yes. Hi. Good afternoon. I have two questions, please. One is on the fees. So, running fees are basically stable quarter on quarter. And I have seen, I mean, the AUM is up 5%, probably because of market performance.

Adele Palama: Yes. Hi, good afternoon. I have two question, please. One is on the fees. Running fees are basically stable quarter on quarter. I've seen the AUM is up 5%, probably because of market performance. I was wondering, basically, the margin is down a little bit. What is driving that decrease? Is it asset mix? Just to understand that decline. On capital, can you remind us the sensitivity of the OCI reserve to the BTP? Thanks.

Speaker #8: So I was wondering, basically, the margin is down a little bit. What is driving that decrease? I mean, is it just mix? I just want to understand that decline.

Speaker #8: And then, on capital, can you remind us of the sensitivity of the OCI reserve to the BTP? Thanks.

Speaker #1: Reserve sensitivity to BTP, I have to dig a little bit. I don't have it on top of my mind. As far as running fees are concerned, this is in part a matter of composition, but basically we are increasing the component of running fee from mutual funds.

Edoardo Maria Ginevra: Reserve sensitivity to BTP, I have to dig a little bit. I don't have it on top of my mind. As far as running fees are concerned, this is in part matter of composition. Basically, we are increasing the component of running fee from mutual funds. There is a small reduction in assets under administration. That explains the stability. I'll come back soon with the number of the sensitivity.

Speaker #1: There is a small reduction in assets under administration that explains the stability. I'll come back soon with the sensitivity number.

Speaker #8: Okay. Thanks.

Adele Palama: Okay, thanks.

Operator: The next question is from Noemi Peruch, Morgan Stanley.

Speaker #2: The next question is from Noemi Paruk at Morgan Stanley.

Noemi Peruch: Good afternoon. I have a follow-up on the additional remuneration. You say it could be a mix between dividends and buyback. When it comes to the dividends, would you consider increasing the ordinary payout, or are you just thinking about an extra dividend? On capital for H2, and sorry if you mentioned this before, I was wondering about the moving parts. How much the benefit of the DTA would be, and also, if you can remind us some capital headwinds maybe, and potential SRT benefits. Thank you.

Speaker #8: Good afternoon. I have a follow-up on the additional remuneration. Because you say it could be a mix between dividends and buybacks. When it comes to the dividends, would you consider increasing the ordinary payout, or are you just thinking about an extra dividend?

Speaker #8: And then for capital for the second part of the year—and sorry if you mentioned this before—I was wondering about the moving parts.

Speaker #8: Whether so, how much the benefit of the DTA would be, and also, if you can remind us of some capital headwinds, maybe, and potential SRT benefits.

Speaker #8: Thank you.

Speaker #1: I said what we said: we are going to increase up to €7 billion the total dividend distribution—the total shareholder remuneration. I think we have been quite open to make you understand which kind of authorization we're going to ask.

Giuseppe Castagna: Said what we said. We are going to increase up to EUR 7 billion the total shareholder remuneration. I think we have been quite open to make you understand which kind of authorization we're going to ask. We don't have so much time to think what will be in case there would be a different form of remuneration. Let's stand on to what we have said already.

Speaker #1: So we don't have so much time to think what will be in case there would be a different form of remuneration. Let's stand by what we have said already.

Speaker #1: On age two guidance per capita, let's say that we expect it to stay stable apart from any impact from authorizations in buyback. So, the ordinary part will be stable.

Edoardo Maria Ginevra: On H2 guidance for capital, let's say that we expect to stay stable, apart from any impact from authorizations in buyback. The ordinary part will be stable, meaning that capital creation from DTAs, which will be similar linearly to what happened in this quarter, and from retained earnings, is compensated by expansion in business. SRT, yes, we are planning to proceed with one additional transaction.

Speaker #1: Meaning that capital creation from DTAs, which will be similar to what happened in this quarter, and from retained earnings is compensated by expansion in business.

Speaker #1: SRT: Yes, we are planning to proceed with one additional transaction.

Speaker #8: Thank you.

Noemi Peruch: Thank you.

Speaker #2: The next question is from Marco Nicolai at Jefferies.

Operator: The next question is from Marco Nicolai at Jefferies.

Speaker #7: Good afternoon. First question is on the BMPS stake. Can you just remind us how the capital is impacted by the stake? I guess by now it's in deduction.

Marco Nicolai: Good afternoon. First question is on the BMPS stake. Can you just remember us how the capital is impacted by this stake? I guess by now it's in deduction. If the shares go further up, you don't have any impact on capital. At the same time, you have the hedging impact in your P&L. Can you also remind us what type of hedging you have? How much of it is hedged? This is the first question. Second question is on the traditional banking fees. These were down year-on-year in Q1. They recovered quite a bit in Q2. What's driving this, and what's the outlook for this line in the coming quarters? Thank you.

Speaker #7: So if the shares go further up, you don't have any impact on capital. But at the same time, you have the hedging impact in your P&L.

Speaker #7: Can you also remind us what type of hedging you have and how much of it is hedged? So this is the first question.

Speaker #7: And the second question is on the traditional banking fees. These were down year-on-year in the first quarter, but they recovered quite a bit in the second quarter.

Speaker #7: So, what is driving this, and what's the outlook for this line in the coming quarters? Thank you.

Speaker #1: Did I understand, sorry Marco, the second part of your question?

Edoardo Maria Ginevra: Didn't understand, sorry, Marco, the second part of your question.

Speaker #7: The second part was about the traditional banking fees.

Marco Nicolai: The second part was about the traditional banking fees.

Speaker #1: Okay.

Edoardo Maria Ginevra: Okay.

Speaker #7: So, the banking fees. I was just wondering—they recovered quite a bit in the second quarter if I look at the year-on-year number.

Marco Nicolai: The banking fees. I was just wondering, they recovered quite a bit in the Q2 if I look at the year-on-year number. What's driving and what do you expect in the coming quarters?

Speaker #7: So, what's driving this, and what do you expect in the coming quarters?

Speaker #1: Okay. So no I would say Montepaschi it's non financial sorry it's a financial stake below 10% and I mean I can go back to CRR rules and explain that these stakes are risk weighted up until the moment where the total of such stakes is below 10% of total capital.

Edoardo Maria Ginevra: Now I would say, Monte Paschi, it's a financial stake below 10%. I can go back to CRR rules and explain that these stakes are risk-weighted up until the moment where the total of such stakes is below 10% of total capital. Any additional amount is deducted from capital. This is calculated net of short positions. Hedging that we have help reducing the total level of the stake to be accounted, to be included in the calculation. The only point I can add is structures that are quite out of the money, far away from the current market price and designed on purpose to be like that. Of course, the dynamics of the price of this asset is such that when it increases, we have a capital benefit.

Speaker #1: Any additional amount is deducted from capital. These is calculated net of short positions. Hedging that we have help reducing the total level of the stake to be accounted to be to be included in the calculation the overall these hedges I mean the only point I can add is a structures that are quite out of the money far away from the current market price and design and on purpose to be like that.

Speaker #1: Of course, the dynamics of the price of this asset are such that when it increases, we have a capital benefit. At the same time, we could have either an increase in the risk weight or an increase in the deductions, depending on the total level of participations below—financial participations below 10%.

Edoardo Maria Ginevra: At the same time, we could have either an increase in the risk weight or an increase in the deductions depending on the total level of financial participations below 10%. Okay, Marco, for commercial banking fees, as we mentioned before, we are recovering very much vis-à-vis Q1 and also vis-à-vis Q2 2025. There's been a strong recovery in what we call specialized activities, which mainly are structured finance, trade finance, and investment banking, which basically recovered all the gap vis-à-vis the H1 2025, with a strong increase in Q2 and Q1. Let's say that the situation now is doing very well. Product factories contribution is good and will continue to be good. The only backfire is that, as you know, in the second part of the year, normally including August and December, there is normally a small reduction in total fees.

Speaker #7: Okay, Marco, for Commercial Banking, as we mentioned before, we are recovering very much vis-à-vis Q1 and also vis-à-vis Q2 ’25. There has been a strong recovery in what we call specialized activities, which mainly are structured finance, trade finance, and investment banking.

Speaker #7: Which basically recovered all the gap vis-à-vis the first half of '25, with a strong increase in Q2 and Q1. Let's say that the situation now is doing very well.

Speaker #7: Proud of factor is contribution is good and we’ll continue to be good. The only, let’s say, backfire is that, as you know, in the second part of the year, normally including, over stand December, there is normally a small reduction in total fees.

Speaker #7: But more on investment fees rather than on commercial fees. So we expect a tenor of all these different items.

Edoardo Maria Ginevra: More on investment fees rather than in commercial fees. We expect a tenure of all these different item.

Speaker #1: Thank you.

Marco Nicolai: Thank you.

Speaker #2: The next question is from Sophie Peterson at Goldman Sachs.

Operator: The next question is from Sofie Peterzens, Goldman Sachs.

Speaker #8: Yeah, hi, this is Sophie from Goldman Sachs. Thanks a lot for taking my question. It's very helpful that you gave the net income guidance for 2026, but I was wondering why you put only €1.95 billion.

Sofie Peterzens: Yeah. Hi, here is Sofie from Goldman Sachs. Thanks a lot for taking my question. It's very helpful that you gave the net income guidance for 2026. I was wondering, why did you put only EUR 1.95 billion? It looks quite unambitious. If you look at the EUR 580 million that you already printed this quarter and close to EUR 500 million in Q1, the full year run rate is already above EUR 2 billion. Maybe if you could just talk why you didn't put the more ambitious net income guidance for 2026. Similarly, how should we think about the 2027 target? That also looks quite low considering the numbers that you printed. Then my second question would be on going just back to net interest income. You give very helpful guidance that your rate sensitivity is EUR 150 million for 100 basis points parallel shift.

Speaker #8: It looks quite unambitious if you look at the €580 million that you already printed this quarter, and close to €500 million in Q1.

Speaker #8: So, the full-year run rate is already kind of about €2 billion. So maybe if you could just talk about why you didn't put a more ambitious net income guidance for 2026, and similarly, how should we think about the 2027 target? That also looks quite low considering the numbers that you printed.

Speaker #8: And then my second question would be on going just back to net interest income. You give very helpful guidance that your rate sensitivity is 150 million for 100 basis points parallel shift how quickly do you see these rate sensitivity come true?

Sofie Peterzens: How quickly do you see this rate sensitivity come through? Is it within 12 months or 24 months? If you could just talk about the dynamics on how quickly you can reprice the asset side. Thank you.

Speaker #8: Is it within 12 months or 24 months? If you could just kind of talk about the dynamics on how quickly you you kind of can reprice the asset side.

Speaker #8: Thank you.

Speaker #1: Yeah you know as far as as far as the NII basically this is a quarter where we will see more more clearly the impact of increasing your IBOR in the asset side because most of our index portfolio index loan portfolio which is more or less two thirds of the total reprices in June.

Edoardo Maria Ginevra: Yeah. As far as the NII, basically this is a quarter where we will see more clearly the impact of increase in Euribor on the asset side, because most of our index loan portfolio, which is more or less two-thirds of the total, reprices in June. The level of rates 3 months, 6 months Euribor in June will drive the repricing of index part of the portfolio in H2. Part of the repricing is reiterated in Q3, but most, as I said, of the portfolio is priced twice a year. Now in June and in December.

Speaker #1: So the level of rates three months six months your IBOR in June will drive the repricing of index part of the portfolio in the second half.

Speaker #1: Part of the repricing is rate rated in the third quarter but most as I said of the portfolio is priced twice a year. So now in June and in December.

Speaker #2: Sophie, for the first part of the question, now you don't have to be so negative. It's normal, and if you compare also the results done by the other banks in the first half, they are not replicating the double in the second part of the year.

Giuseppe Castagna: Sofie, for the first part of the question, you don't have to be so negative. It's normal. If you compare also the results done by the other banks in H1, they are not replicating the double H2. Of course, especially in Italy, I would say there is August and December, which accounts a lot in terms of fee production. For us, on top, there is also the situation that in April we have the dividend coming from Monte Paschi, which, of course, is not replicating H2. Let give me this advice, try to compare last year, H2, and make something on, and you will find that you will be happy of the total results.

Speaker #2: Of course in Italy especially in Italy I would say there is almost in December which accounts a lot in terms of fee production. But for us on top there is also the situation that in April we have the dividend coming from Monte Baschi which of course is not replicating the second part of the year.

Speaker #2: Let me give you this advice: try to compare last year's second half and make something on it, and you will find that you will be happy with the total results.

Speaker #8: That's very clear. Thank you.

Sofie Peterzens: That's very clear. Thank you.

Speaker #1: I think that—sorry, coming back to the previous question on the sensitivity to BTP of our reserves—I think that the key number is already provided in the presentation, actually, which is this €700k, 6.9, €690k basis point value for Italian government bonds in the fair value comprehensive income component.

Giuseppe Castagna: Sorry, coming back to previous question on sensitivity to BTP of our reserves. I think that the key number is already provided in the presentation, actually, which is this 700,000, 690,000 basis point value for Italian government bonds in Fair Value Comprehensive Income component.

Speaker #8: Thank you.

Sofie Peterzens: Thank you.

Speaker #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.

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.

Speaker #1: So, thank you very much. Sorry, is there somebody else?

Giuseppe Castagna: Sorry, there is somebody else? No?

Speaker #2: No, there are no more questions registered at this time.

Operator: No, there are no more questions registered at this time.

Speaker #1: Okay so thank you very much. Have a great holiday period and we'll see each other in September. Thank you.

Giuseppe Castagna: Okay. Thank you very much. Have a great holiday period, and we'll see each other in September. Thank you.

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

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