Q2 2026 Banca Popolare Di Sondrio SpA Earnings Call

Speaker #1: The course call conference operator. Welcome, and thank you for joining. The Beeper Group consolidated results as of the 30th of June, 2026, and acceleration beyond B-Dynamic: full value 2027 presentation.

Speaker #1: As a reminder, all participants are in listen-only mode. After the presentation, there'll be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and 0 on their telephone.

Speaker #1: At this time, I would like to turn the conference over to Mr. Nicola Sponghi, Head of Investor Relations of Beeper. Please go ahead, sir.

Speaker #2: Thank you, and good morning, everyone. I'm pleased to welcome all of you to Beeper's conference call, where our top management is going to present Beeper's Q2 and H1 2026 consolidated results.

Speaker #2: And an update on B-Dynamic's projection for 2028: before I leave the stage to Beeper's CEO, Gianni Franco Papa, a couple of important points. Please, note that today's diet set and the press release can be found on Beeper's corporate website.

Speaker #2: I would also advise you to take note of the disclaimer on slide 1 of the presentation document. After the presentation, the CEO will be joined by CFO, COO, and CRO to address any questions that might arise.

Speaker #2: I will reiterate that these are reserved for financial analysts who might will kindly request to ask a maximum of 2 questions each, so that everyone will have the opportunity to contribute to today's call.

Speaker #2: Thank you very much. I will now leave the stage to Mr. Papa, CEO of Beeper.

Speaker #3: Good morning, ladies and gentlemen. It's a pleasure to welcome you all to the— to our event in which we present our first half results and an update on B-Dynamic projection for 2028.

Speaker #3: On the basis of the current perimeter, as you recall, back in 2024 we set ambitious targets for ourselves. We are over-delivering on such targets, while in parallel we have completed the integration of BIPSO.

Speaker #3: That said, today we stand on a broader and even more solid platform: ready to capture our full potential through a selected number of additional initiatives.

Speaker #3: I look forward to meeting with you personally to illustrate the details of this strategic update. Let's move to the next slide. I'm proud to say that today, at approximately halfway into our plan, we are beating our ambitious targets set in 2024.

Speaker #3: I must thank all our colleagues: customers and partners, because altogether we have been able to over-deliver on B-Dynamic and this has been recognized also by the achievement of Italy's Best Bank Award by Euromoney.

Speaker #3: First half 2026 is the best half ever. In the history of the bank, with over 1.3 billion euros of adjusted net profit, representing an almost 15% year-on-year growth.

Speaker #3: The operating and financial performance continues to remain strong, as you will appreciate later in the presentation. Thanks to the business combination with BIPSO, we have created a platform which is ready for enhanced top and bottom line growth.

Speaker #3: Our investment in technology, talents, and capabilities—along with our strong capital position—position us to leverage our operating platform and capture organic and inorganic growth opportunities.

Speaker #3: On top of the ongoing business acceleration, we are raising our ambitions through a number of selected strategic levers, which I will walk you through later in the presentation.

Speaker #3: As a consequence, this will lead to accelerated performance and sustained value creation, which will enable an increasing and very attractive shareholder remuneration in terms of both cash dividends and share buybacks.

Speaker #4: The operating and financial performance continues to remain strong, as you will appreciate later in the presentation. Thanks to the business combination with BIPSO, we have created a platform which is ready for enhanced top and bottom line growth.

Speaker #4: Our investment in technology, talents, and capabilities, along with our strong capital position, positions us to leverage our operating platform and capture organic and inorganic growth opportunities.

Speaker #3: Let's take a couple of minutes to review our historical performance since the launch of B-Dynamic. The net income line trajectory has been remarkable. Despite the significant growth, the cost of risk remained at extremely low levels, and operational efficiency continued to improve.

Speaker #4: On top of the ongoing business acceleration, we are raising our ambitions through a number of selected strategic levers which I will walk you through later in the presentation.

Speaker #3: As you have seen throughout the plan, we have demonstrated a remarkable internal capital generation, totaling 3.6 billion euros since B-Dynamic was launched. The outstanding operating and financial performance has attracted strong capital inflows from active and passive funds, which allows Beeper market capitalization to increase from 4.4 billion euros to over 29 billion euros at the end of July.

Speaker #4: As a consequence, this will lead to accelerated performance and sustained value creation which will enable an increasing and very attractive shareholder remuneration in terms of both cash dividends and share buybacks.

Speaker #4: Let's take a couple of minutes to review our historical performance since the launch of B-Dynamic. The net income line trajectory has been remarkable. Despite the significant growth, the cost of risk remained at extremely low levels and operational efficiency continued to improve.

Speaker #3: Furthermore, if we add dividend payments to the calculation, shareholders have benefited from an important upswing in total shareholder remuneration, reaching more than 460% since the beginning of 2024, significantly better than any other Italian and European peer above 20 billion euros in market cap.

Speaker #4: As you have seen throughout the plan, we have demonstrated remarkable internal capital generation, totaling €3.6 billion since B-Dynamic was launched. The outstanding operating and financial performance has attracted strong capital inflows from active and passive funds, which has allowed Beeper's market capitalization to increase from €4.4 billion to over €29 billion at the end of July.

Speaker #3: Let's turn over to our tangible results of B-Dynamic to date. As you can see, on the left side part of the slide, a remarkable profit-driven internal capital generation allowed for an outstanding shareholder remuneration since the launch of B-Dynamic, cumulative distributions between 2025 and first half 2026 amount to over 3.1 billion euros.

Speaker #4: Furthermore, if we add dividend payments to the calculation, shareholders have benefited from an important upswing in total shareholder remuneration, reaching more than 460% since the beginning of 2024—significantly better than any other Italian and European peer above €20 billion in market cap.

Speaker #3: This is an outstanding achievement, given that during 2025 and 2026 we have been very busy in successfully completing the integration of BIPSO. As you are aware, we have been working together with our colleagues of BIPSO in order to set up and integrate the new operating platform aimed at capturing, in a very short time period, 290 million euros of annual cost and revenue synergies.

Speaker #4: Let's turn over to our tangible results of B-Dynamic today. As you can see, on the left side of the slide, remarkable profit-driven internal capital generation allowed for outstanding shareholder remuneration. Since the launch of B-Dynamic, cumulative distributions between 2025 and the first half of 2026 amount to over €3.1 billion.

Speaker #3: By end 2026, we will have achieved over 25% of total synergies, and we expect to fully reach our target by 2027. That said, we expect further synergy potential in 2028 and beyond.

Speaker #4: This is an outstanding achievement given that during 2025 and 2026 we have been very busy in successfully completing the integration of BIPSO. As you are aware, we have been working together with our colleagues of BIPSO in order to set up and integrate the new operating platform aimed at capturing in a very short time period 290 million euros of annual cost and revenue synergies.

Speaker #3: As you can see, we have migrated almost 1 million clients to Beeper's platform in approximately 7 months. And in a similar way, we have focused on upskilling actions to onboard 3,500 colleagues on our service model.

Speaker #3: And finally, our new operational procedures will render the bank leaner, swifter, and more efficient. Let's move to the next page, which focuses on our operating achievements.

Speaker #4: By the end of 2026, we will have achieved over 25% of total synergies, and we expect to fully reach our target by 2027. That said, we expect further synergy potential in 2028 and beyond.

Speaker #3: This slide represents our progression since the launch of B-Dynamic and our achievements in 2025 as Beeper stands alone. Notably, in the first 12 months of the 3-year plan, we are well ahead of our ambitious targets.

Speaker #4: As you can see, we have migrated almost 1 million clients to Beeper's platform in approximately seven months. In a similar way, we have focused on upskilling actions to onboard 3,500 colleagues onto our service model.

Speaker #3: And let me add that this remarkable results have further accelerated in the first half of 2026. On our first pillar, Unleash Our Clients Full Value, which focuses on capital-like commission income, we registered an outstanding performance.

Speaker #4: And finally, our new operational procedures will render the bank leaner, swifter, and more efficient. Let's move to the next page which focuses on our operating achievements.

Speaker #3: In the first year, commissions already grew by 5%, well on track to achieve the 12% target by the end of 2027. In the context of our second pillar, Capture Our Latent Economies of Scale, which focuses on achieving a efficiency; the bank decreased operating costs by 5.2%, already very close to the 7% reduction target by the end of 2027.

Speaker #4: This slide represents our progression since the launch of B-Dynamic and our achievements in 2025 as Beeper stand-alone. Notably, in the first 12 months of the 3-year plan, we are well ahead of our ambitious targets.

Speaker #4: And let me add that these remarkable results have further accelerated in the first half of 2026. On our first pillar, Unleash Our Client Full Value, which focuses on capital-light commission income, we registered an outstanding performance.

Speaker #3: On our third pillar, Leverage Our Strong Balance Sheet, today our CT1 ratio remains well above our target of 14.5%, despite the acquisition of BIPSO and is among the highest in the Italian banking system.

Speaker #4: In the first year, commissions already grew by 5%, keeping us well on track to achieve the 12% target by the end of 2027. In the context of our second pillar, Capture Our Latent Economies of Scale—which focuses on achieving best-in-class operational efficiency—the bank decreased operating costs by 5.2%, already very close to the 7% reduction target by the end of 2027.

Speaker #3: Finally, the last pillar, which focuses on completing the modernization of the bank, has allowed us to make significant progress in terms of technology, ESG, and sustainability, as well as organization and people.

Speaker #3: To modernize our technology since the start of B-Dynamic, we have already invested 230 million euros of the 650 million plan, totaling almost a billion euros since 2022.

Speaker #4: On our third pillar, Leverage Our Strong Balance Sheet, today our CT1 ratio remains well above our target of 14.5% despite the acquisition of BIPSO and is among the highest in the Italian banking system.

Speaker #3: ESG and sustainability remain a must for us. We are determined to remain leading pioneers in this area and we have materially improved our position on ESG ratings.

Speaker #3: Finally, we have made clear progress in upskilling our colleagues in this context; we have empowered 21% of our colleagues with our academies. As I mentioned earlier, ladies and gentlemen, despite current geopolitical risks, macroeconomic headwinds, and accomplishing a swift integration of BIPSO, this first half and second quarter have been the best ever.

Speaker #4: Finally, the last pillar, which focuses on completing the modernization of the bank, has allowed us to make significant progress in terms of technology, ESG and sustainability, as well as organization and people.

Speaker #4: To modernize our technology since the start of B-Dynamic, we have already invested €230 million of the €650 million plan, totaling almost €1 billion since 2022.

Speaker #3: Before I start giving you details of our financial performance, I'm keen to highlight a number of key features of this remarkable first half 2026 results.

Speaker #4: ESG and sustainability remain a must for us. We are determined to remain leading pioneers in this area, and we have materially improved our position on ESG ratings.

Speaker #3: First and foremost, first half 2026 was our best ever 6-month result, with an adjusted net profit standing at over 1.3 billion euros. The strong performance in NII and commissions resulted in reported total revenues of 3.9 billion euros, up 4.5% half on half.

Speaker #4: Finally, we have made clear progress in upskilling our colleagues. In this context, we have empowered 21% of our colleagues through our academies. As I mentioned earlier, ladies and gentlemen, despite current geopolitical risks, macroeconomic headwinds, and accomplishing a swift integration of BIPSO, this first half and second quarter have been the best ever.

Speaker #3: Excluding the positive impacts of the TRS total revenues are up by 1.5%. In line with our plan, commissions continue to have a very positive run throughout the year, given the focus on AUM, life insurance, and bank assurance products.

Speaker #4: Before I start giving you details of our financial performance, I'm keen to highlight a number of key features of these remarkable first half 2026 results.

Speaker #3: We have further strengthened our performance in wealth management, where commissions increased by more than 10% compared to the previous half in 2025. Our profitability remained high, with an adjusted return on tangible equity at a robust 20.6%, or 19.6% excluding the positive impact of the TRS.

Speaker #4: First and foremost, the first half of 2026 was our best-ever six-month result, with adjusted net profit standing at over €1.3 billion. The strong performance in NII and commissions resulted in reported total revenues of €3.9 billion, up 4.5% half on half.

Speaker #3: We maintain a very solid capital position, with a CT1 ratio at 15%, resulting from an organic capital generation amounting to 163 basis points equal to 1.3 billion euros in the last 6 months.

Speaker #4: Excluding the positive impacts of the TRS total revenues are up by 1.5%. In line with our plan, commissions continue to have a very positive run throughout the year given the focus on AUM, life insurance, and bank assurance products.

Speaker #3: Similarly, the liquidity profile of the new group is very sound, with short and long-term ratios increasing and well above regulatory thresholds. And finally, the quality of our loan book continues to stand at the best levels in the Italian banking industry, with the cost of risk of 28 basis points.

Speaker #4: We have further strengthened our performance in wealth management, where commissions increased by more than 10% compared to the previous half in 2025. Our profitability remained high, with an adjusted return on tangible equity at a robust 20.6%—or 19.6% excluding the positive impact of the TRS.

Speaker #3: Let's move on to the net profit drivers on slide number 7. The quality of our revenues remains outstanding thanks to our very strong commercial performance.

Speaker #4: We maintain a very solid capital position, with a CET1 ratio at 15%, resulting from organic capital generation amounting to 163 basis points, equal to €1.3 billion in the last 6 months.

Speaker #3: NII has proven to be very resilient both half on half and quarter on quarter. I remind you that in Q1 and Q2, almost 1,000 employees were busy at work in supporting the integration.

Speaker #4: Similarly, the liquidity profile of the new group is very sound with short and long-term ratios increasing and well above regulatory thresholds. And finally, the quality of our loan book continues to stand at the best levels in the Italian banking industry with the cost of risk of 28 basis points.

Speaker #3: Despite the integration efforts, commissions between Q1 and Q2 were basically flat. As such, I'm extremely satisfied about the progress which can be seen on a growth rate of almost 5% half on half.

Speaker #4: Let's move on to the net profit drivers on slide number 7. The quality of our revenues remains outstanding, thanks to our very strong commercial performance.

Speaker #3: Costs have continued to come down thanks to our focus on operational excellence. Which we have identified as one of the key targets of B-Dynamic Full Value.

Speaker #3: LLPs increased by 3.3% half on half. In the quarter, LLPs were slightly higher due to a realignment of our credit framework post-integration. We will touch on this later in the presentation.

Speaker #4: NII has proven to be very resilient both half on half and quarter on quarter. I remind you that in Q1 and Q2, almost 1,000 employees were busy at work in supporting the integration.

Speaker #4: Despite the integration efforts, commissions between Q1 and Q2 were basically flat. As such, I'm extremely satisfied with the progress, which can be seen in a growth rate of almost 5% half-on-half.

Speaker #3: As you can appreciate, our record first half and Q2 bottom line result was achieved gross and net of the positive effect of the TRS, another market effect.

Speaker #3: In the pages to come, we'll provide you with an in-depth review of each and every item. Let's move on to slide number 8, which touches on 2026 guidance.

Speaker #4: Costs have continued to come down thanks to our focus on operational excellence, which we have identified as one of the key targets of B-Dynamic Full Value.

Speaker #3: A quick glance at our guidance for the current year is important as we have improved two KPIs. Given the current developments, we have bettered the outlook for 2026 on NII and cost-income ratio.

Speaker #4: LLPs increased by 3.3% half on half. In the quarter, LLPs were slightly higher due to a realignment of our credit framework post-integration. We will touch on this later in the presentation.

Speaker #3: Let's move to the next slide on first half 2026 results. Among the main drivers of total revenues in the quarter, I would highlight record NII and higher loan volumes, a good performance in commission income despite the integration process, as customary in Q2, a strong contribution of dividend income, and the strong contribution from the TRS and other market effects.

Speaker #4: As you can appreciate, our record first half and Q2 bottom line result was achieved gross and net of the positive effect of the TRS and other markets effects.

Speaker #4: In the pages to come, we'll provide you with an in-depth review of each and every item. Let's move on to slide number 8 which touches on 2026 guidance.

Speaker #4: A quick glance at our guidance for the current year is important, as we have improved two KPIs. Given the current developments, we have bettered the outlook for 2026 on NII and cost-income ratio.

Speaker #3: As you can see, first half core revenues reached 3.6 billion euros, and finally, I would like to underline the continued solid trend in productivity with a net revenues to risk-weighted assets ratio which increased from 8.7% to 9.5% between Q1 2025 and Q2 2026.

Speaker #4: Let's move to the next slide on first half 2026 results. Among the main drivers of total revenues in the quarter, I would highlight record NII and higher loan volumes, a good performance in commission income despite the integration process, as customary in Q2, a strong contribution of dividend income, and the strong contribution from the TRS and other market effects.

Speaker #3: Let's move on to the next slide, which focuses on net interest income. The performance of the net interest income line was exceptional in Q2, posting a record figure at over 1.1 billion euros, driven by positive commercial dynamics.

Speaker #4: As you can see, first-half core revenues reached €3.6 billion, and finally, I would like to underline the continued solid trend in productivity, with a net revenues to risk-weighted assets ratio which increased from 8.7% to 9.5% between Q1 2025 and Q2 2026.

Speaker #3: As you can appreciate in the slide, the main driver in the quarter was volumes. Despite the integration, commercial actions to increase quality loan volumes have been extremely effective.

Speaker #3: Spreads slightly improved in the quarter. Finally, I would like to highlight that our NII sensitivity to 100 basis points movements amounted to approximately 200 million euros in the quarter, versus 225 million euros in the previous quarter.

Speaker #4: Let's move on to the next slide, which focuses on net interest income. The performance of the net interest income line was exceptional in Q2, posting a record figure at over €1.1 billion, driven by positive commercial dynamics.

Speaker #3: Now, let's move to the development of net commission income on slide 11. The performance of commission income half on half progressed according to our plan at plus 4.8% and plus 5.9% year on year.

Speaker #4: As you can appreciate in the slide, the main driver in the quarter was volumes. Despite the integration, commercial actions to increase quality loan volumes have been extremely effective.

Speaker #3: Reaching more than 1,350,000,000 euros despite the integration effort, which was carried out in second quarter 2026. The most important contributor, which represents more than 50% of commissions, are banking services fees, which almost reached 700 million euros.

Speaker #4: Spreads slightly improved in the quarter. Finally, I would like to highlight that our NII sensitivity to 100 basis points movements amounted to approximately 200 million euros in the quarter versus 225 million euros in the previous quarter.

Speaker #3: Wealth management fees, which increased by over 10% six months on six months, are rapidly playing a more important part as a percentage of total commissions.

Speaker #4: Now, let's move to the development of net commission income on slide 11. The performance of commission income half on half progressed according to our plan, at plus 4.8%, and plus 5.9% year on year.

Speaker #3: These were mainly driven by high-quality AUM fees. Fees from bank assurance continue to register strong growth rates up by over 13% compared to first half 2025.

Speaker #4: Reaching more than €1.35 billion, despite the integration effort which was carried out in the second quarter of 2026. The most important contributor, which represents more than 50% of commissions, is banking services fees, which almost reached €700 million.

Speaker #3: This impressive pace in commission income growth results from one of our key pillars of B-Dynamic Full Value. As such, our commission income to total revenues ratio continues to improve.

Speaker #3: Excluding the effect of the TRS, the ratios have improved from 34.8% to 35.9% half on half. This is due to our persistent focus on capital light, high-quality non-interest income products.

Speaker #4: Wealth management fees, which increased by over 10% six months on six months, are rapidly playing a more important part as a percentage of total commissions.

Speaker #4: These were mainly driven by high-quality AUM fees. Fees from bancassurance continue to register strong growth rates, up by over 13% compared to the first half of 2025.

Speaker #3: Let's move to the next slide, which focuses on the progression of total financial assets. In the quarter, total financial assets increased by over 13 billion euros to almost 425 billion euros, whilst year on year, TFAs increased by 18 billion euros.

Speaker #4: This impressive pace in commission income growth results from one of our key pillars, B-Dynamic Full Value. As such, our commission income to total revenues ratio continues to improve.

Speaker #3: It is important to note that the loan-to-deposit ratio stood at 77.6%, stable quarter on quarter. This will enable us to continue to grow the loan book and to transform client liquidity into AUCs and AUMs.

Speaker #4: Excluding the effect of the TRS, the ratios has improved from 34.8% to 35.9% half on half. This is due to our persistent focus on capital light, high quality non-interest income products.

Speaker #3: Let's move to the evolution of costs on slide 13. We continue to be extremely determined on operational efficiency. Total costs were down by 3.9% half on half, further reducing the cost-income ratio from 45 to 41.4%.

Speaker #4: Let's move to the next slide which focuses on the progression of total financial asset. In the quarter, total financial assets increased by over 13 billion euros to almost 425 billion euros whilst year on year TFAs increased by 18 billion euros.

Speaker #3: Please note that the cost-income ratio would stand at 42.6 excluding the TRS. HR costs increased by just over 1% half on half, while non-HR costs decreased by approximately 77 million euros.

Speaker #4: It is important to note that the loan-to-deposit ratio stood at 77.6%, stable quarter on quarter. This will enable us to continue to grow the loan book and to transform client liquidity into AUCs and AUMs.

Speaker #3: In terms of the combined group, total headcounts stood at 22,500, with a decrease of approximately 500 people, mainly related to the exit of temporary workforce hire to support BIPS integration in Q1 26.

Speaker #4: Let's move to the evolution of cost on slide 13. We continue to be extremely determined on operational efficiency. Total costs were down by 3.9% half on half, further reducing the cost-income ratio from 45% to 41.4%.

Speaker #3: As a final note, the strong improvements on non-HR costs in the last 12 months is the result of our relentless focus on cost efficiencies.

Speaker #4: Please note that the cost-income ratio would stand at 42.6%, excluding the TRS. HR costs increased by just over 1% half on half, while non-HR costs decreased by approximately €77 million.

Speaker #3: Let's move to slide 14. As you can see, the cost of risk was almost flat on at 28 basis points half on half thanks to positive dynamics in asset quality.

Speaker #4: In terms of the combined group, total headcounts stood at 22,500 with a decrease of approximately 500 people mainly related to the exit of temporary workforce hire to support BIPS integration in Q1 2026.

Speaker #3: LLPs increased by almost 10 million euros in the quarter, this allowed us to increase the total NP coverage ratio from 52.8% to 54.1% in order to maintain a thorough control on the high quality of the loan portfolio, including an alignment of coverage framework post-integration.

Speaker #4: As a final note, the strong improvements in non-HR costs over the last 12 months are the result of our relentless focus on cost efficiencies.

Speaker #3: In this particular context, I would like to underline that in the last 18 months we have increased the total NP coverage ratio by almost 7 percentage points, from 47.3 to 54.1%.

Speaker #4: Let's move to slide 14. As you can see, the cost of risk was almost flat at 28 basis points half on half, thanks to positive dynamics in asset quality.

Speaker #3: Needless to say that our coverage ratio remains one of the highest among Italian peers, and will act as the father buffer against any potential deterioration in asset quality.

Speaker #4: LLPs increased by almost €10 million in the quarter. This allowed us to increase the total NP coverage ratio from 52.8% to 54.1% in order to maintain thorough control of the high quality of the loan portfolio, including an alignment of the coverage framework post-integration.

Speaker #3: Last but not least, do note that following our alignment of coverage framework, our overlays in Q2 26 amount to 230 million euros, increasing by over 50 million euros quarter on quarter.

Speaker #4: In this particular context, I would like to underline that the in the last 18 months we have increased the total NP coverage ratio by almost 7 percentage points from 47.3 to 54.1%.

Speaker #3: Our conservative approach is further confirmed as we report on Q2 coverage ratio on performing loans at 0.6%. Once again, this ratio is among the highest in Italy.

Speaker #4: Needless to say that our coverage ratio remains one of the highest among Italian peers and will act as a further buffer against any potential deterioration in asset quality.

Speaker #3: Let's move on to asset quality on the next slide. Asset quality continues to be outstanding, one of the best in the Italian banking system.

Speaker #3: Gross NP stock was almost flat both quarter on quarter and year on year. Between Q1 and Q2 26, the increase of 100 million euros in bad loans was due to the complete realignment of our credit framework post-integration.

Speaker #4: Last but not least, do note that, following our alignment of the coverage framework, our overlays in Q2 2026 amount to €230 million, increasing by over €50 million quarter on quarter.

Speaker #4: Our conservative approach is further confirmed as we report on the Q2 coverage ratio on performing loans at 0.6%. Once again, this ratio is among the highest in Italy.

Speaker #3: Similarly, the net NP ratio remained flat at 1.1%, underlining the very healthy state of our loan book. This further confirmed by an important an improvement of stage two classifications, mostly due to the credit framework realignment post-integration.

Speaker #4: Let's move on to asset quality on the next slide. Asset quality continues to be outstanding—one of the best in the Italian banking system.

Speaker #3: Let's move to page 16 to elaborate on our capital position. Post-integration, we stand at a very comfortable CET1 ratio of 15%. We maintain our path of generating quarter by quarter a substantial amount of internal capital which allows us to be ready for potential headwinds, competitively strong, and financially prepared for any inorganic growth opportunities should they arise.

Speaker #4: Gross NP stock was almost flat both quarter on quarter and year on year. Between Q1 and Q2 2026, they increase of 100 million euros in bad loans was due to the complete realignment of our credit framework post integration.

Speaker #4: Similarly, the net NP ratio remained flat at 1.1%, underlining the very healthy state of our loan book. This is further confirmed by an important improvement in Stage 2 classifications, mostly due to the credit framework realignment post integration.

Speaker #3: It also allows us to be very forthcoming in terms of shareholder distributions. In this context, yesterday, the board agreed on a proposal to discuss at the next board meeting scheduled for Q3 results the distribution of an interim dividend of approximately 700 million euros.

Speaker #4: Let's move to page 16 to elaborate on our capital position. Post-integration, we stand at a very comfortable CET1 ratio of 15%. We maintain our path of generating, quarter by quarter, a substantial amount of internal capital, which allows us to be ready for potential headwinds, competitively strong, and financially prepared for any inorganic growth opportunities should they arise.

Speaker #3: This is an increase of approximately 500 million euros compared to 196 million euros paid in November 2026. Let's move to the next section. In the next section, we will illustrate our strengthened platform, the acceleration levers, and the improved projections for 28 and 2029.

Speaker #4: It also allows us to be very forthcoming in terms of shareholder distributions. In this context, yesterday the board agreed on a proposal to discuss at the next board meeting scheduled for Q3 results the distribution of an interim dividend of approximately 700 million euros.

Speaker #3: As you can see on slide 18, our position today is further improved. As already mentioned, this is also recognized by the achievement of Italy's best bank award in 2026 by Euromoney.

Speaker #3: We are now one of the leading domestic players in Italy, with approximately 6 million clients of which 5 million individuals and almost 1 million corporates.

Speaker #4: This is an increase of approximately 500 million euros compared to 196 million euros paid in November 2026. Let's move to the next section. In the next section, we will illustrate our strengthened platform, the acceleration levers and the improved projections for 28 and 2029.

Speaker #3: As one of the largest asset gatherers in Italy, we can now boast around 425 billion euros of total financial assets between life insurance, asset under management, asset under custody, and customer deposit.

Speaker #3: Thanks to the acquisition of BIPS, we have strengthened significantly our presence in rich northern Italy. We are now the leading bank in Lombardy, Liguria, and Sardinia, and we rank second in Emilia-Romagna by number of branches.

Speaker #4: As you can see on slide 18, our position today is further improved. As already mentioned, this is also recognized by the achievement of the Italy Best Bank Award in 2026 by Euromoney.

Speaker #3: By clients, customers, financial assets, and banking branches, we are clearly positioned as the third bank in Italy. Let's move to the next slide, where we illustrate our fully functioning operating platform.

Speaker #4: We are now one of the leading domestic players in Italy, with approximately 6 million clients, of which 5 million are individuals and almost 1 million are corporates.

Speaker #4: As one of the largest asset gatherers in Italy, we can now boast around €425 billion of total financial assets, including life insurance, assets under management, assets under custody, and customer deposits.

Speaker #3: As you can appreciate, the business combination has transformed the bank into a larger platform which is fully functioning and ready to scale thanks to four key features.

Speaker #3: First, we have a wider and pervasive network. If you recall back in February 25, I stated that the new bank would reinforce and broaden the proximity client coverage model.

Speaker #4: Thanks to the acquisition of BIPS, we have significantly strengthened our presence in the wealthy northern regions of Italy. We are now the leading bank in Lombardy, Liguria, and Sardinia, and we rank second in Emilia Romagna by number of branches.

Speaker #3: Becoming a go-to bank for families SMEs and corporates. Now, also thanks to the integration of BIPSO, we have transformed BIPER into a nationwide capillary platform that is mostly concentrated in the wealthiest Italian regions.

Speaker #4: By clients, customers, financial assets, and banking branches, we are clearly positioned as the third bank in Italy. Let's move to the next slide, where we illustrate our fully functioning operating platform.

Speaker #3: We have distinctive product capabilities. On top of consumer and corporate loan services, we focus on wealth management, bank assurance products, global transaction banking services, and advisory services through our CIB unit.

Speaker #4: As you can appreciate, the business combination has transformed the bank into a larger platform which is fully functioning and ready to scale thanks to four key features.

Speaker #4: First, we have a wider and more pervasive network. If you recall, back in February 2025, I stated that the new bank would reinforce and broaden the proximity client coverage model.

Speaker #3: We have specialized service models to serve all our clients. Over time, our business model has increasingly become omnichannel ensuring high-quality service and improved access to all clients.

Speaker #4: Becoming a go-to bank for families, SMEs, and corporates. Now, also thanks to the integration of BIPSO, we have transformed BIPER into a nationwide capillary platform that is mostly concentrated in the wealthiest Italian regions.

Speaker #3: We also have leading-edge digital and technology foundations. Our IT ecosystem is fully integrated and modernized. We are pioneering in AI-enabled software development. The substantial CAPEX deployed in technology and AI provides us with a strong foundation for the future, supporting the acceleration of business growth and enabling the bank to be more efficient and more effective.

Speaker #4: We have distinctive product capabilities. On top of consumer and corporate loan services, we focus on wealth management, bancassurance products, global transaction banking services, and advisory services throughout our CIB unit.

Speaker #3: This platform created through a series of integrations is now ready for further scale-up thanks to a proven playbook, a management team with strong execution capabilities, and a flexible and future-proof technical stack.

Speaker #4: We have specialized service models to serve all our clients. Over time, our business model has increasingly become omnichannel ensuring high quality service and improved access to all clients.

Speaker #4: We also have leading-edge digital and technology foundations. Our IT ecosystem is fully integrated and modernized. We are pioneering in AI-enabled software development.

Speaker #3: Let's turn to slide 20. BDynamic execution is continuing at a very strong pace throughout our retail, corporate, and wealth management divisions with continued attention to all strategic pillars of the plan.

Speaker #4: The substantial capex deployed in technology and AI provides us with a strong foundation for the future, supporting the acceleration of business growth and enabling the bank to be more efficient and more effective.

Speaker #3: Yet the potential goes beyond the targets we had set. For example, in Lombardy, we boast a market share by branches of 17%, while we hold approximately a 10% market share by loans.

Speaker #4: This platform, created through a series of integrations, is now ready for further scale-up thanks to a proven playbook, a management team with strong execution capabilities, and a flexible and future-proof technical stack.

Speaker #3: Today, we are in a better position to capture a wider portion of this potential. In particular, we see five areas where our new platform offers opportunities for further acceleration.

Speaker #4: Let's turn to slide 20. Dynamic execution is continuing at a very strong pace throughout our Retail, Corporate, and Wealth Management divisions, with continued attention to all strategic pillars of the plan.

Speaker #3: Let me walk you through them one by one. Be champion. The integration of BIPSO has made our corporate platform complete and competitive, and we are now ready to capture our fair share focusing on Italy's midsize champions.

Speaker #4: Yet the potential goes beyond the targets we had set. For example, in Lombardy, we boast a market share by branches of 17%, while we hold approximately a 10% market share by loans.

Speaker #3: In this context, we expect total lending to corporate clients between 2025 and 2028 to increase by 13%. Be wealth. Our focus on capital-like commission growth will be further accelerated by leveraging the hidden value of our wealth management clients.

Speaker #4: Today, we are in a better position to capture a wider portion of this potential. In particular, we see five areas where our new platform offers opportunities for further acceleration.

Speaker #3: We anticipate AUMs to increase by 18% reaching approximately 125 billion euros in 2028. Be insured. Along with our bank assurance partner Unipol, we will be offering a wider product range and we will be serving our clients in an efficient and effective manner.

Speaker #4: Let me walk you through them one by one. Be champion. The integration of BIPSO has made our corporate platform complete and competitive and we are now ready to capture our fair share focusing on Italy's midsize champions.

Speaker #3: We anticipate that net insurance commissions will increase by 55% reaching 230 million euros in 2028. Be digital. We will unleash our digital Gen AI and AI-powered platform in order to increase productivity.

Speaker #4: In this context, we expect total lending to corporate clients between 2025 and 2028 to increase by 13%. The focus on wealth will remain. Our focus on capital-light commission growth will be further accelerated by leveraging the hidden value of our wealth management clients.

Speaker #3: As part of this strategic lever, we will also achieve significant cost reductions. We anticipate the cost income ratio to reach approximately 40% in 2028.

Speaker #4: We anticipate AUMs to increase by 18%, reaching approximately €125 billion in 2028. Be insured. Along with our bancassurance partner Unipol, we will be offering a wider product range and will serve our clients in an efficient and effective manner.

Speaker #3: Be excellence. We are simplifying our approach to clients. The bank is optimizing front and bank office function to increase client-facing time enable higher proximity to our clients and enhance productivity.

Speaker #4: We anticipate that net insurance commissions will increase by 55% reaching 230 million euros in 2028. Be digital. We will unleash our digital gen AI and AI power platform in order to increase productivity.

Speaker #3: Frontline time dedicated to commercial activities will increase by 30% by the end of 2028. Let's turn to lever number one, be champion. Let me remind you that we created our CIB division just over two years ago.

Speaker #4: As part of this strategic lever, we will also achieve significant cost reductions. We anticipate the cost/income ratio to reach approximately 40% in 2028.

Speaker #3: Thereafter, we acquired BIPSO that has strong corporate capabilities. Today, we have a corporate platform which is complete and competitive enabling us to scale our share of wallet.

Speaker #4: Be excellent. We are simplifying our approach to clients. The bank is optimizing front and back office functions to increase client-facing time, enable higher proximity to our clients, and enhance productivity.

Speaker #3: As you can see on this slide, we will be leveraging our strengthened network through a substantial amount of business centers trade finance centers and approximately 3,000 business specialists mostly situated in the most productive export-oriented Italian regions.

Speaker #4: Frontline time dedicated to commercial activities will increase by 30% by the end of 2028. Let's turn to lever number one. Be champion. Let me remind you that we created our CIB division just over two years ago.

Speaker #3: The goal is to capture a higher share of wallet from this important client segment characterized by Italian champions within corporates and SMEs. On top of lending objectives, we are increasing the penetration and so the share of wallet of several products and services.

Speaker #4: Thereafter, we acquired BIPSO, which has strong corporate capabilities. Today, we have a corporate platform that is complete and competitive, enabling us to scale our share of wallet.

Speaker #3: In this context, we will be aligning with Italian best practice and strengthening the offer of GTB services, cash management offerings, and factoring. In addition, through our CIB unit, we will be increasing client penetration in terms of structured finance, corporate finance, and other advisory added value services.

Speaker #4: As you can see on this slide, we will be leveraging our strengthened network through a substantial number of business centers, trade finance centers, and approximately 3,000 business specialists, mostly situated in the most productive, export-oriented Italian regions.

Speaker #3: BIPER will benefit from the combined effects of increasing the penetration of underserved and untapped clients of the former BIPSO network along with leveraging BIPSO consolidated expertise in selected areas such as factoring and non-domestic banking services to widen the client offer as a go-to bank for our customers.

Speaker #4: The goal is to capture a higher share of wallet from this important client segment, characterized by Italian champions within corporates and SMEs. On top of lending objectives, we are increasing the penetration—and so the share of wallet—of several products and services.

Speaker #3: Let's move on to the second lever. Be wealth focuses on increasing products and client penetration of our wealth management division. This division has delivered results above our expectations over time and it continues to grow.

Speaker #4: In this context, we will be aligning with Italian best practice and strengthening the offer of GTB services, cash management offerings, and factoring. In addition, through our CIB unit, we will be increasing client penetration in terms of structured finance, corporate finance, and other advisory added-value services.

Speaker #3: As mentioned in first half 2026, wealth management fees grew by 10.3% half on half. Today, we have consolidated a platform that enables us to capture the hidden potential of our clients including entrepreneurs.

Speaker #4: BIPER will benefit from the combined effects of increasing the penetration of underserved and untapped clients of the former BIPSO network, along with leveraging BIPSO's consolidated expertise in selected areas such as factoring and non-domestic banking services, to widen the client offer as a go-to bank for our customers.

Speaker #3: Our service model is centered around BIPER Banca Private Cesare Ponti which acts as a group wealth management hub. In this context, Arca SGR which already holds over 50 billion euros in assets under management and about 1 million clients will play a key role.

Speaker #4: Let's move on to the second lever. Be wealth focuses on increasing products and client penetration of our wealth management division. This division has delivered results above our expectations over time and it continues to grow.

Speaker #3: The group is making significant investments in strengthening the private banking network and has set ambitious goals in terms of productivity. We are strengthening the private banking network by increasing the number of private banking centers and dedicated bankers.

Speaker #4: As mentioned in first half 2026, wealth management fees grew by 10.3% half on half. Today we have consolidated a platform that enables us to capture the hidden potential of our clients including entrepreneurs.

Speaker #3: In this way, we will increase proximity and so frequency of contact with our existing and potential clients. We are focused on fully serving our hidden private clients with the potential of doubling the size of our current private customer base.

Speaker #4: Our service model is centered around BIPER Banca Private Cesare Ponti, which acts as a group wealth management hub. In this context, Arca SJAR, which already holds over €50 billion in assets under management and about 1 million clients, will play a key role.

Speaker #3: We will do this by attracting new clients and increasing the share of wallet of existing ones deepening our relationship with SMEs entrepreneurs. Finally, we will leverage our strategic presence in Luxembourg, Switzerland, and Monaco where we expect important and tangible results.

Speaker #4: The group is making significant investments in strengthening the private banking network and has set ambitious goals in terms of productivity. We are strengthening the private banking network by increasing the number of private banking centers and dedicated bankers.

Speaker #3: As you can appreciate on this slide, we are anticipating asset under management growth of 18% reaching 125 billion euros in 2028. In a similar way, we expect wealth management commissions to grow by 14% landing at 1.2 billion euros in 2028.

Speaker #4: In this way, we will increase proximity and so frequency of contact with our existing and potential clients. We are focused on fully serving our hidden private clients with the potential of doubling the size of our current private customer base.

Speaker #4: We will do this by attracting new clients and increasing the share of wallet of existing ones, deepening our relationship with SME entrepreneurs. Finally, we will leverage our strategic presence in Luxembourg, Switzerland, and Monaco, where we expect important and tangible results.

Speaker #3: Let's move to the next slide. Be insured is based on our strong tie with our insurance partner Unipol the largest Italian non-life insurer. Historically, Banca Assurance has been one of our distinctive strengths.

Speaker #3: The results we have delivered are exceptional. With net insurance commissions more than doubling since 2021. We believe we can do even more by delivering a few focused initiatives.

Speaker #4: As you can appreciate on this slide, we are anticipating assets under management growth of 18%, reaching €125 billion in 2028. In a similar way, we expect wealth management commissions to grow by 14%, landing at €1.2 billion in 2028.

Speaker #3: The product offer will be broadened with new modular product solutions aimed at increasing client insurance penetration. We will grow our insurance commissions from 148 to 230 million euros increasing by 55% by the end of 2028.

Speaker #4: Let's move to the next slide. Be Insured is based on our strong, time-well-tested insurance partner, Unipol, the largest Italian non-life insurer. Historically, bancassurance has been one of our distinctive strengths.

Speaker #3: Beyond the retail clients, the insurance offer will increasingly target private clients SMEs and corporates where we expect a significant potential to deliver tailor-made insurance solutions.

Speaker #4: The results we have delivered are exceptional. With net insurance commissions more than doubling since 2021. We believe we can do even more by delivering a few focused initiatives.

Speaker #3: In this way, we will be able to increase net commission income and in parallel improve the credit rating of our clients. We will succeed thanks to a wider omnichannel access combining 230 specialists a new dedicated remote support unit and a fully fledged digital offer for basic products.

Speaker #4: The product offer will be broadened with new modular product solutions aimed at increasing client insurance penetration. We will grow our insurance commissions from €148 million to €230 million, increasing by 55% by the end of 2028.

Speaker #3: Let's move to the next page to be digital one of the key levers underpinning our acceleration. Our digital foundations are solid thanks to the investments carried out in recent years.

Speaker #4: Beyond the retail clients, the insurance offer will increasingly target private clients, SMEs, and corporates, where we expect significant potential to deliver tailor-made insurance solutions.

Speaker #3: As such, a new dedicated digital business unit has been recently created and is now in place to act as a transformation catalyst for the bank.

Speaker #4: In this way, we will be able to increase net commission income and, in parallel, improve the credit rating of our clients. We will succeed thanks to a wider omnichannel access, combining 230 specialists, a new dedicated remote support unit, and the fully fledged digital offer for basic products.

Speaker #3: Ensuring an efficient cross-functional collaboration across businesses and technology. Building on this foundations, we have defined a selected number of new high-impact initiatives to capture the next frontier of digital and AI-powered productivity.

Speaker #3: Firstly, we are leveraging AI to support our relationship managers in client origination improving the effectiveness of our commercial campaigns and enhancing an omnichannel yet personalized approach on the basis of our customer needs.

Speaker #4: Let's move to the next page. To be digital is one of the key levers underpinning our acceleration. Our digital foundations are solid, thanks to the investments carried out in recent years.

Speaker #4: As such, a new dedicated digital business unit has been put in place to act as a transformation catalyst for the bank, ensuring efficient cross-functional collaboration across businesses and technology.

Speaker #3: Secondly, we will deliver automated first-level controls accelerate end-to-end digitalization of key processes and automate central functions. This will enable a more efficient and more effective end-to-end product delivery.

Speaker #3: Lastly, we'll scale up the adoption of AI and agentic AI in our IT factory covering the full software development life cycle from requirements definition to coding and maintenance.

Speaker #4: Building on these foundations, we have defined a selected number of new high-impact initiatives to capture the next frontier of digital and AI-powered productivity.

Speaker #4: Firstly, we are leveraging AI to support our relationship managers in client origination improving the effectiveness of our commercial campaigns and enhancing an omnichannel yet personalized approach on the basis of our customer needs.

Speaker #3: In this way, we will be able to increase the overall productivity enabling lower IT capex for the same level of outputs. In this context, cybersecurity threats are a high priority for us and we plan to further strengthen our cybersecurity to protect our customers and operations.

Speaker #4: Secondly, we will deliver automated first-level controls to accelerate end-to-end digitalization of key processes and automate central functions. This will enable a more efficient and more effective end-to-end product delivery.

Speaker #3: The size and frequency of cyber attacks is ever growing in the banking industry and we need to be more than prepared. All in all, be digital will our relationship managers by 15%.

Speaker #4: Lastly, we'll scale up the adoption of AI and agentic AI in our IT factory, covering the full software development life cycle, from requirements definition to coding and maintenance.

Speaker #3: To secure 300 million euros of savings and to enable a 20% increase in capex productivity. Overall, this will allow us to reach a 40% cost income ratio by the end of 2028.

Speaker #4: In this way, we will be able to increase overall productivity, enabling lower IT capex for the same level of outputs. In this context, cybersecurity threats are a high priority for us, and we plan to further strengthen our cybersecurity to protect our customers and operations.

Speaker #3: Let's move to the fifth and last strategic levers. Be excellence our fifth lever will enable us to create additional value enhancing our client approach increasing customer-facing time and strengthening advisory value-added product and services.

Speaker #4: The size and frequency of cyber attacks is ever-growing in the banking industry, and we need to be more than prepared. All in all, Be Digital will contribute to increasing the productivity of our relationship managers by 15%.

Speaker #3: Our focus on customer excellence already deliver clear results with be dynamic. During 2025 on a be per standalone perimeter we have increased productivity by 10%.

Speaker #4: To secure €300 million of savings and to enable a 20% increase in capex productivity. Overall, this will allow us to reach a 40% cost-income ratio by the end of the last strategic levers.

Speaker #3: We have upskilled over 4,000 employees. And we kicked off a new talent program. Yet we can do more. Thanks to new technologies today like never before we have an unprecedented opportunity to bring the client even more at the center of what we do.

Speaker #4: Be excellence our fifth lever will enable us to create additional value enhancing our client approach increasing customer facing time and strengthening advisory value added product and services.

Speaker #3: We are reviewing roles and positions to make the network more efficient. Streamlining support functions around our client service model. Our specialized workforce will be empowered with more available time enhancing proactive client interactions and accountability.

Speaker #4: Our focus on customer excellence already delivers clear results with Be Dynamic. During 2025, on a deeper standalone perimeter, we have increased productivity by 10%.

Speaker #3: Upskilling our talent base will be key. Our colleagues will be supported by new digital tools. As such, it is important for us to enable our colleagues to maximize the utilization of AI tools to increase efficiency and productivity and to support them in the process.

Speaker #4: We have upskilled over 4,000 employees, and we kicked off a new talent program. Yet, we can do more. Thanks to new technologies today, like never before, we have an unprecedented opportunity to bring the client even more at the center of what we do.

Speaker #3: As a result, our clients will benefit from a higher proximity of our advisors. Let's move on to the next slide in which we will lay out our macroeconomic assumptions.

Speaker #4: We are reviewing roles and positions to make the network more efficient, streamlining support functions around our client service model. Our specialized workforce will be empowered with more available time, enhancing proactive client interactions and accountability.

Speaker #3: Given the ongoing geopolitical turmoil, and given that macroeconomic context is somewhat uncertain, we have based our 2028 projections on assumptions which we deem conservative albeit realistic.

Speaker #4: Upskilling our talent base will be key. Our colleagues will be supported by new digital tools. As such, it is important for us to enable our colleagues to maximize the utilization of AI tools to increase efficiency and productivity, and to support them in the process.

Speaker #3: Italian GDP growth is expected to remain basically flat in 2026 and 2027 with a pickup in 2028 at 0.7%. On the other hand, EU inflation is expected to decrease from 3.3 to 1.9% in 2028.

Speaker #4: As a result, our clients will benefit from a higher proximity to our advisors. Let's move on to the next slide, in which we will lay out our macroeconomic assumptions.

Speaker #3: Finally, we have taken a conservative approach with interest rates assuming EURIBOR three months flat at 225% for the full three-year period. That said, we look to the next couple of years with some caution given the potential headwinds deriving from the current global situation.

Speaker #4: Given the ongoing geopolitical turmoil, and given that the macroeconomic context is somewhat uncertain, we have based our 2028 projections on assumptions which we deem conservative, albeit realistic.

Speaker #4: Italian GDP growth is expected to remain basically flat in 2026 and 2027, with a pickup in 2028 at 0.7%. On the other hand, EU inflation is expected to decrease from 3.3% to 1.9% in 2028.

Speaker #3: As you can see on this slide, we expect total revenues to reach approximately 8 billion euros by the end of 2028. On top of the positive effects of volumes and rates on NII, we expect continued progress on net commissions.

Speaker #3: As such, revenues will increase by approximately 600 million euros the main contributor being net commission income underlining our strong focus on high quality capital light revenues.

Speaker #4: Finally, we have taken a conservative approach with interest rates assuming EURIBOR three months flat at 225% for the full three-year period. That said, we look to the next couple of years with some caution given the potential headwinds deriving from the current global situation.

Speaker #3: In this context, it is important to note that the ratio of net commissions to total revenues will grow from 35% to 38% by 2028.

Speaker #3: NII is expected to increase by 300 million euros thanks to the combination of higher volumes and higher rates. We expect customer loans to increase by some 9% by 2028 thanks to pervasive commercial actions focused on consumer finance and mortgages in retail and loans incorporate.

Speaker #4: As you can see on this slide, we expect total revenues to reach approximately €8 billion by the end of 2028. On top of the positive effects of volumes and rates on NII, we expect continued progress on net commissions.

Speaker #4: As such, revenues will increase by approximately €600 million, the main contributor being net commission income, underlining our strong focus on high-quality, capital-light revenues.

Speaker #3: Where we plan to materially increase the share of wallet on best on the best counterparts. Please note that the phasing out effect of eco bonus between 2025 and 2028 is expected to have a negative impact on NII of some 300 million euros.

Speaker #4: In this context, it is important to note that the ratio of net commissions to total revenues will grow from 35% to 38% by 2028.

Speaker #3: Let me repeat, is expected to have a negative impact on NII of some 300 million euros. So that you can appreciate better the increase in the revenues that we are projecting.

Speaker #4: NII is expected to increase by 300 million euros thanks to the combination of higher volumes and higher rates. We expect customer loans to increase by some 9% by 2028 thanks to pervasive commercial actions focused on consumer finance and mortgages in retail and loans incorporate.

Speaker #3: Finally, net commissions are expected to increase by approximately 400 million euros driven by a 55% growth in bank assurance and a 14% growth in wealth management by 2028.

Speaker #4: We plan to materially increase the share of wallet on the best counterparts. Please note that the phasing out effect of the eco bonus between 2025 and 2028 is expected to have a negative impact on NII of approximately €300 million.

Speaker #3: On the next page, we will focus on the key drivers of costs. Our obsession for a best-in-class operational efficiency will continue beyond be dynamic.

Speaker #3: Despite 200 million euros of inflation-related and DNA increase, we will reduce absolute costs by some 100 million euros while supporting the strong top line growth.

Speaker #4: Let me repeat, it is expected to have a negative impact on NII of approximately €300 million, so that you can better appreciate the increase in the revenues that we are projecting.

Speaker #3: As a result, our cost income ratio is expected to improve from 45% in 2025 to approximately 40% by end of 2028. We anticipate 300 million euros in cost savings which are related to the full achievement of synergies from the BIPS integration as well as to other initiatives such as end-to-end digitalization of key product journey the automation of meat back office activities and the containment of other non-HR costs.

Speaker #4: Finally, net commissions are expected to increase by approximately €400 million, driven by a 55% growth in bancassurance and a 14% growth in wealth management by 2028.

Speaker #4: On the next page, we will focus on the key drivers of costs. Our obsession with best-in-class operational efficiency will continue beyond being dynamic.

Speaker #4: Despite 200 million euros of inflation related and DNA increase, we will reduce absolute costs by some 100 million euros while supporting the strong top line growth.

Speaker #3: FTE will decrease as a result of previous agreements and natural turnover. In this context, we are expecting over 220 exit in 2026. Furthermore, we expect mainly in the same year 800 additional exits as agreed in December 2025 with the unions.

Speaker #4: As a result, our cost income ratio is expected to improve from 45% in 2025 to approximately 40% by end of 2028. We anticipate 300 million euros in cost savings which are related to the full achievement of synergies from the BIPS integration as well as to other initiatives such as end-to-end digitalization of key product journey the automation of meet back office activities and the containment of other non-HR costs.

Speaker #3: Let's move to the next page where we will outline our technology modernization effort. The size of our capex investments aimed at modernizing the bank's technology ecosystem between 2022 and 2025 amounted to approximately 1 billion euros.

Speaker #3: We invested in key areas among others we modernized the bank technology ecosystem we created distinctive digital channels we digitalized transactions evolving towards cashless branches and we deployed a full range of AI use cases with particular impact achieved in the IT factory.

Speaker #4: FTE will decrease as a result of previous agreements and natural turnover. In this context, we are expecting over 220 exits in 2026. Furthermore, we expect, mainly in the same year, 800 additional exits as agreed in December 2025 with the unions.

Speaker #3: Going forward, we will focus our investments on the remaining areas that require to be modernized further. For example, automation of key processes to make entire end-to-end process swifter, more efficient and enhance more effective.

Speaker #4: Let's move to the next page, where we will outline our technology modernization effort. The size of our capex investments aimed at modernizing the bank's technology ecosystem between 2022 and 2025 amounted to approximately €1 billion.

Speaker #3: Strengthening our corporate platform with the aim of improving customer targeting anticipating customer needs and delivering time-to-market solutions. And finally, elevating cyber security and IT resilience to the next level as the protection to the increasing number of cyber attacks in the banking industry.

Speaker #4: We invested in key areas among others we modernized the bank technology ecosystem we created distinctive digital channels we digitalized transactions evolving towards cashless branches and we deployed a full range of AI use cases with particular impact achieved in the IT factory.

Speaker #3: Overall, thanks to the investments made and the scale reached we are now in the position to continue to invest significantly 600 million euros over the next three years while at the same time increasing our capex productivity by over 20% compared to 2025.

Speaker #4: Going forward, we will focus our investments on the remaining areas that require further modernization. For example, automation of key processes to make the entire end-to-end process swifter, more efficient, and more effective.

Speaker #3: We will now turn over to the main projections for 2028 and some for 2029. I would like to draw your attention to our 2028 projections.

Speaker #4: Strengthening our corporate platform with the aim of improving customer targeting, anticipating customer needs, and delivering time-to-market solutions. And finally, elevating cybersecurity and IT resilience to the next level as protection against the increasing number of cyber attacks in the banking industry.

Speaker #3: Total revenues will reach 8 billion euros. This will be positively impacted by the effect of higher NII by about 300 million euros and higher commissions for a total of 400 million euros.

Speaker #4: Overall, thanks to the investments made and the scale reached, we are now in the position to continue to invest significantly—€600 million over the next three years—while at the same time increasing our capex productivity by over 20% compared to 2025.

Speaker #3: As a result, commissions on total revenues already today align to the best practices will further increase from 35% to 38%. Operating costs excluding depreciation amortization our operating cost will materially decrease by almost 4% bringing the cost income ratio down to approximately 40% to 45%.

Speaker #4: We will now turn to the main projections for 2028, as well as some for 2029. I would like to draw your attention to our 2028 projections.

Speaker #3: We expect to improve our projection on cost of risk. We have however kept a conservative approach with an expected cost of risk below 35 basis points in light of the current geopolitical turmoil and the potential impact on the Italian economy.

Speaker #4: Total revenues will reach €8 billion. This will be positively impacted by the effect of higher NII, by about €300 million, and higher commissions for a total of €400 million.

Speaker #3: All in all, net income will increase from approximately 2.4 billion euros to about 2.7 billion euros. CTO ratio will stand at above 14.5% despite a higher shareholder remuneration.

Speaker #4: As a result, commissions on total revenues already today, aligned to the best practices, will further increase from 35% to 38%. Operating costs, excluding depreciation and amortization, will materially decrease by almost 4%, bringing the cost-income ratio down to approximately 40% to 45%.

Speaker #3: This will enable us to have a strong capital buffer should macroeconomic conditions deteriorate. Be prepared for potential business combination should they arise. Or evaluate higher shareholder remuneration if the conditions allow it.

Speaker #4: We expect to improve our projection on cost of risk. We have however kept a conservative approach with an expected cost of risk below 35 basis point in light of the current geopolitical turmoil and the potential impact on the Italian economy.

Speaker #3: On the far right of the slide, the number of projections for 2028 2029 have been included. These are limited to total revenues where we expect an increase to over 8.3 billion euros.

Speaker #4: All in all, net income will increase from approximately 2.4 billion euros to about 2.7 billion euros. CT1 ratio will stand at above 14.5% despite a higher shareholder remuneration.

Speaker #3: Our ratio of net commissions to total revenues is expected to improve to approximately 40%. We expect our cost income ratio to fall below 40% and our CT1 ratio will stand at.

Speaker #4: This will enable us to have a strong capital buffer should macroeconomic conditions deteriorate. Be prepared for potential business combinations should they arise, or evaluate higher shareholder remuneration if the conditions allow it.

Speaker #3: Robust level of above 14.5%. Let's move on to the next page where we show how our volumes will grow. On this slide, you have a snapshot of our key volume drivers both on and off balance sheet.

Speaker #4: On the far right of the slide, the number of projections for 2028 2029 have been included. These are limited to total revenues where we expect an increase to over 8.3 billion euros.

Speaker #3: Together with our asset quality projections for 2028. Net customer loans will increase to over 140 billion euros with CAGR of 3% between 25 and 2028.

Speaker #4: Our ratio of net commissions to total revenues is expected to improve to approximately 40%. We expect our cost/income ratio to fall below 40%, and our CET1 ratio will stand at a robust level of above 14.5%.

Speaker #3: Our total financial asset will be growing at around 2.9% per annum. Out of this, asset under management will increase from 106 billion euros to approximately 125 billion euros equivalent to a growth rate of 5.7% per annum.

Speaker #4: Let's move on to the next page, where we show how our volumes will grow. On this slide, you have a snapshot of our key volume drivers, both on and off balance sheet.

Speaker #3: Risk weighted assets will increase in line with our loan book at 3.4% per annum. Thanks to our conservative risk approach, asset quality measured as net MP ratio will remain among the lowest in the Italian banking sector with an MP ratio of 1.2% while the coverage ratio is planned at above 53% among the best levels in Italy.

Speaker #4: Together with our asset quality projections for 2028, net customer loans will increase to over €140 billion, with a CAGR of 3% between 2025 and 2028.

Speaker #4: Our total financial assets will be growing at around 2.9% per annum. Out of this, assets under management will increase from €106 billion to approximately €125 billion, equivalent to a growth rate of 5.7% per annum.

Speaker #3: And finally, let's move to the next slide where we focus on our shareholder remuneration which will be higher and sustainable. Thanks to the further acceleration we are foreseeing, not only we confirm but we also improve our expectations on the overall shareholders remuneration for the three-year period.

Speaker #4: Risk-weighted assets will increase in line with our loan book at 3.4% per annum. Thanks to our conservative risk approach, asset quality, measured as net NPL ratio, will remain among the lowest in the Italian banking sector, with an NPL ratio of 1.2%, while the coverage ratio is planned at above 53%, among the best levels in Italy.

Speaker #3: Thanks to the solidity of our balance sheet, we expect to deliver sustainable yearly distributions including buybacks of 85% between 2025 and 2028 distributing approximately 7.5 billion euros.

Speaker #3: Of this amount, dividend totaling 1.4 billion euros have been distributed for financial year 2025 translating into a payout ratio of 75%. Including the authorized buyback and accrued dividend for first half 2026, distribution to shareholders amounts to 3.1 billion euros.

Speaker #4: And finally, let's move to the next slide, where we focus on our shareholder remuneration, which will be higher and sustainable. Thanks to the further acceleration we are foreseeing, not only do we confirm, but we also improve our expectations on the overall shareholders' remuneration for the three-year period.

Speaker #3: Further shareholder remuneration may arise should the bank generate excess capital. Let me reiterate the yesterday the board agreed on the proposal to discuss at the next board meeting scheduled for Q3 results the distribution of an interim dividend of approximately 700 million euros.

Speaker #4: Thanks to the solidity of our balance sheet, we expect to deliver sustainable yearly distributions, including buybacks of 85%, between 2025 and 2028, distributing approximately €7.5 billion.

Speaker #4: Of this amount, dividends totaling €1.4 billion have been distributed for financial year 2025, translating into a payout ratio of 75%. Including the authorized buyback and accrued dividend for the first half of 2026, distribution to shareholders amounts to €3.1 billion.

Speaker #3: Let's move to my closing remarks. In conclusion, let me remark the five key messages I would like you to bring home today. Be dynamic is over delivering on promises with commission growth and efficiency gains well ahead of schedule already at the end of the first year.

Speaker #4: Further shareholder remuneration may arise should the bank generate excess capital. Let me reiterate that yesterday the board agreed on the proposal to discuss, at the next board meeting scheduled for the Q3 results, the distribution of an interim dividend of approximately €700 million.

Speaker #3: While preserving our capital strength and progressing steadily on our modernization. We have achieved a record semester with over 1.3 billion euros adjusted net profit.

Speaker #3: Equivalent to a 15% year-on-year growth. Thanks to the integration of the VIPSO we have now built a stronger platform ready to scale further. Deliver enhanced growth and capture organic and inorganic opportunities.

Speaker #4: Let's move to my closing remarks. In conclusion, let me highlight the five key messages I would like you to take home today. Be Dynamic is over-delivering on promises, with commission growth and efficiency gains well ahead of schedule already at the end of the first year.

Speaker #3: We see potential for an acceleration beyond be dynamic with five strategic areas driving stronger results in 2028. This will allow us to accelerate performance sustain our value creation and deliver attractive shareholder remuneration with 7.5 billion euros throughout 2025-2028 through a combination of cash dividends and share buyback.

Speaker #4: While preserving our capital strength and progressing steadily on our modernization, we have achieved a record semester with over €1.3 billion adjusted net profit.

Speaker #3: Our strong capital position will enable us to evaluate higher shareholders remuneration if the conditions allow it. We believe that this projections are a substantial acceleration that we consider in our style ambitious but realistic.

Speaker #3: I wish to thank you for your attention and we are now ready to take your questions.

Speaker #1: Thank you sir. We will now begin the question and answer session. I remind you that it is reserved for analysts only. If you wish to ask a question please press star and one on your touchstone telephone to remove your question press star and two.

Speaker #1: The first question comes from Ignacio Urlargüe of BNP Paribas.

Speaker #2: Thanks very much. Good morning everyone. Thanks for the presentation and for taking my questions. I have to if I may the first one is on the revenue targets for the business plan particularly focused on fee income and other non-interest income revenues.

Speaker #2: I mean the targets that you have provided look to me a bit like a floor given the track record that you have delivered so far do you see them in general as such or do you think that there is a aggressive stance in terms of the outlook?

Speaker #2: The second one is on capital you have announced today that you are unwinding the TRS for 7.95% of your own sales could you help us to understand how this will interplay with the buyback announced and whether we should expect some new announcement in terms of buybacks in 2027 and whether these sales will be canceled potentially?

Speaker #2: Thank you.

Speaker #3: Thank you Ignacio for the question. So revenues you know our style is to be conservative I think that the projections we are showing are important we have you know both on the NII and on the commission income a clear path ahead of us.

Speaker #3: The projection on NII for instance the projection assumes NECB deposit rate at 225 and obviously we have also the possibility in case interest rates go up to have a better situations.

Speaker #3: And in as much as commission are concerned I would not consider this as a floor but again we prefer to be conservative but the growth we projected in the first 18 months of the plan show you already the path that we are following.

Speaker #3: We are already very advanced compared to what we promised with be dynamic which means that you know we will be pushing even more on that.

Speaker #3: In as much as the TRS we have not announced any unwinding on the TRS we have announced that we are stopping the TRS and therefore you know whatever information related to the TRS whatever actions we will be taking on the TRS will be obviously inform at the later stage when if and when we will take a further step in terms of that.

Speaker #3: In as much as the share buyback is concerned we have announced also that we have been authorized by the board to start the share buyback.

Speaker #3: The share buyback will start immediately after the summer. This is because usually in summer the market is less receptive to transactions of. This kind.

Speaker #3: In any event the launch of the share buyback will be preceded by an official announcement in accordance with the applicable legal requirements obviously including all necessary information and disclosures.

Speaker #1: The next question comes from Noemi Peruk of Morgan Stanley.

Speaker #2: Thank you good morning and thank you for taking my question. And I would like to ask if you could share your thoughts on the recently announced evolution in the MNEC in Italy and the potential opportunity for VIPER.

Speaker #2: And I was I would like to ask whether you could consider using the shares underlying the share buyback and the TRS to fund MNE potentially and you mentioned that you stopped the share the TRS but you have not but without unwinding it.

Speaker #2: What's the difference between the two? Thank you.

Speaker #3: Thank you Noemi for the question. So if I understand correctly your first question relates to the MPS possible deal. So what the development of the MNE in Italy.

Speaker #3: Did I got correct because I was not hearing fine your question. Am I right?

Speaker #2: Yeah. In general. In general the evolution of MNE and if this could present an opportunity for you.

Speaker #3: Yeah. Well it's a matter of. That the evolution is you know. We have a lot of moving parts still now on the MNE activity in Italy.

Speaker #3: There are a lot of ongoing developments is some are I will say clearer as we go ahead. Some others are not really clear in what will be the final realization of this transaction.

Speaker #3: So it's a matter of fact that yes we are looking at a further consolidation of the Italian market but if you recall is a couple of years that I'm saying that in Italy banks need scale to support the Italian economy being Italy the second manufacturer of Europe and the scale and the size of the banks so far were not really helping the Italian economy in developing.

Speaker #3: So let's see what you know the development of these actions will give us in the near future I believe. In as much as your second question is concerned no I mean we have started the buyback because we got the approval and so on and so forth.

Speaker #3: We are not considering to use this shares for any kind of transaction so far we don't have we are we might be part of the consolidation we were discussing before everybody read about the possible the agreement between you know Intesa and Unipol but we will analyze the situation if and when I would say this will be presented to us.

Speaker #3: And in as much as the TRS is concerned we have stopped the TRS which doesn't necessarily means the unwinding of the TRS. Stopping means that we are blocking basically our exposure to the TRS at the current level.

Speaker #3: Which at the end of July last was at 795 7.95%. So we could keep this position going forward. You know that our TRS has a maturity of three years.

Speaker #3: So it would be expiring in 2028 basically. Or if the decision and the board will decide we will do something and we start unwinding.

Speaker #3: But for the time being no decision taken.

Speaker #2: Thank you. And the underlying shares of the TRS could that grant you some optionality?

Speaker #3: Oh the buyback you mean right?

Speaker #2: The TRS. The TRS.

Speaker #3: No TRS no optionality for the simple reason that is a cash transaction and being a cash transaction the only situation that will develop is that when we'll unwind the TRS depending on the valuation of the stock we will be receiving cash or we'll be paying cash.

Speaker #3: But no optionality attached to that. No share delivery.

Speaker #2: Thank you.

Speaker #1: The next question comes from Sophie Petersons of Goldman Sachs.

Speaker #4: Yeah hi. Here is Sophie from Goldman Sachs. Thanks a lot for taking my question. So you very helpfully guide for around 3% cake or loan growth going forward.

Speaker #4: Could you maybe just discuss what dynamics you're seeing both on the lending and deposit side? How much competition is there? Is there any pricing pressure either on the lending side or the deposit side?

Speaker #4: And yeah how you kind of see growth opportunities here? And then my second question would be on Unipol and VIPER. You have helpfully the slide on Unipol but could you maybe just discuss how the potential transaction is going to work if Unipol acquires the branches from MPS and kind of how potentially you could further strengthen your relationship with Unipol.

Speaker #4: And yeah. If you could discuss that. Thank you.

Speaker #3: Yes. Thank you for your question. So in as much as the development of lending and deposit is concerned you have seen in the numbers that were presented today that our growth in lending keeps on track on the end on the promise that we made and what we have indicated back in October 2024 3% growth CAGR and we are projecting this growth also up to 2028.

Speaker #3: We have you know 6 million customers. We are one of the largest if not the largest player in terms of mortgages for instance on the retail side.

Speaker #3: We are expanding our business on the consumer finance and on the salary back to pension back financing. For this particular so for the consumer financing as you know we are operating exclusively with our existing customers in order to be also very safe in terms of risk associated to this kind of business.

Speaker #3: In terms of corporate it's a matter of fact that since the inception of our B-Dynamic 2027 we have strengthened our positioning on the market in terms of corporate on all the different areas of corporate including also CIB where we are now very active in arranging deals transaction structuring financing for our customers and this is also witnessed by the strong increase in commission driven by the sort of activity.

Speaker #3: So we will be growing and we will keep on capturing and increasing our market share in this particular both on as I mentioned retail and corporate on the corporate side.

Speaker #3: Obviously there is a lot of competition. So as such you know every basically every day there is a bank that is trying to you know get deals and offer better prices both on the deposit side and on the loan side.

Speaker #3: Nevertheless if you see also in as much as the TFAs is concerned total financial assets you see that we are constantly grow. You see flat deposits but the deposits are flat because we are converting deposits into you see a and increasing also the loans to our customers.

Speaker #3: So we keep on growing and we will keep on growing in that direction. In terms of the possible deal which is becoming more probable than possible.

Speaker #3: So looking at what the newspaper are today indicate in these days are indicating I would say that the plan that we're presented and the levers of acceleration that we're presented remain focused on our current perimeter.

Speaker #3: We have created a very strong platform ready to capture growth opportunities both organic as I mentioned before and inorganic through opportunities that might arise in the market.

Speaker #3: In as much as Unipol is concerned Unipol for us is a very good long-term strategic shareholder is a key partner in Bank Assurance that for us is a core growth business.

Speaker #3: We have existing agreements on commercial partnership and this independently from any hypothetical consolidation scenario. Obviously we will be assessing future opportunities with the usual discipline approach and as usual with in the best interest of all stakeholders so we will analyze this once we have a clear indication of the perimeter that will be offered to VIPER and only at that time we will have you know clearer picture of numbers and so on and so forth.

Speaker #3: That to say that so far we are not discussing with Unipol because obviously the main transaction is Intesa on Monte dei Paschi and from there everything will derive.

Speaker #4: Thank you. The next question is from Marco Nicolai of Jefferies.

Speaker #5: Good morning. I've got a couple of questions. The first one is if you could help me reconcile the 7.5 billion distributions with the more than 85% payout ratio.

Speaker #5: Because I'm struggling a bit to get there. So based on my numbers I don't even reach your previous 75% dividend payout ratio for the next few years.

Speaker #5: Given what you have already announced for 25 the dividend and also including the 750 million buyback. So can you give us please some color on this how's the 85% payout divided in the various years and shall we assume that the dividend payout remains at 75% plus the 750 million you deliver you are going to deliver in terms of buyback.

Speaker #5: Perhaps the answer could be in the profits. So in the net profit evolution. So if you can give us some color also on the net profit evolution between 25 and 28.

Speaker #5: So this is the first question. And the second question is on this potential transaction offered by Unipol. So I understand that after all that's not certain yet.

Speaker #5: However you already have an idea of what could be the perimeter and what would be the expense broadly related to that perimeter. So my question is how do you intend to pay and would be a good idea to ramp up buybacks in order to pay for that.

Speaker #5: Given that the time frame it's pretty clear now and in order to approve to get the buybacks approved by the ECB and your shareholders it takes some time.

Speaker #5: Why you're not being beforehand more aggressive on the buyback plan preparing for that transaction. Or do you plan to pay for that perimeter issuing new shares because there is a big difference in terms of EPS accretion.

Speaker #5: Thank you.

Speaker #3: So thank you for the question. I take the second one and the first one will be answered by Simone Mercucci our CFO. So let's put it in this way.

Speaker #3: The information we have so far and the information that everybody read on the newspaper we do know yes that 635 branches will be you know transferred to us in case the deal goes through and in case the board of directors and the extraordinary shareholders meeting of VIPER will approve it.

Speaker #3: And attached to the 635 branches there will be part of the head office of Monte dei Paschi but we don't know and that's why I cannot give any indication on this particular case where these branches are rightly located.

Speaker #3: So we have a rough idea and this is what has been announced by the CEO of Intesa that was given some indications but we don't have a specific indication of where do they stand.

Speaker #3: We don't know exactly how many people will be transferred to us. We don't know where these people are working whether in the branches who are commercial very busy and commercial activities or are part of a office and therefore you know it is very difficult to assess the numbers beyond the numbers that have been given to the press.

Speaker #3: So it is if it goes through and when it will go through is a good transaction for us because this will enable us to further strengthen our position in Italy we could be even bigger we will be even bigger than what will be.

Speaker #3: We understand that there will be a kind of a couple of million more customers coming to us which you know is a further acceleration of our activity but you know it will be it's very difficult today to dwell into numbers and specific you know indications of the transaction and we will be able to do that only when we will have a clear understanding of the situation.

Speaker #3: In as much as how the transaction will be performed reading you know the news basically is these branches will be sold to Unipol Unipol will then approach VIPER offering these branches to us and to basically paid in the branches as a capital increase a contribution for capital increase of VIPER.

Speaker #3: So there's nothing we are going to pay with the shares that are coming from the buyback. So this is something that Unipol will be offering and if approved by the shareholder the extraordinary shareholders meeting is a basically a contribution in kind for a capital increase of Unipol.

Speaker #3: In this way Unipol will avoid if everything is approved the whitewashing and the need for an offering for the total shares of VIPER. These are any information I have and for the time being I'm not in the position to give any other details.

Speaker #5: So you exclude basically using the shares that you've already bought and you will keep on and one cancel you won't use basically these shares.

Speaker #5: To pay for that perimeter at all.

Speaker #3: No. I this is an option that has never been discussed and so I frankly speaking I cannot give you an answer whether I'm excluded or not.

Speaker #3: Bearing in mind that if everything progressed the way it is this is something that will happen in one and a half to two years from now because you know everybody has to go through different authorization.

Speaker #3: So we'll have a first Intesa that has to go through the authorization from the regulators. All the regulators involved. I read somewhere over 40 regulators.

Speaker #3: Then we'll be Unipol that has to go through regulators. And then it's VIPER that has to go through regulators to get the approval. Therefore you know we're not talking about a transaction that will happen in the next three to six months.

Speaker #3: But something that will take time and I believe a quite a long time to get through. I put through Simone for the other question.

Speaker #5: Thank you very much for the question. So the assumption that we have in our plan is a dividend I go for accrual for competence not for cash.

Speaker #5: We have a dividend 2025 you're seeing 75 in 26 77 in 27 79 in 28 81 percentage plus the 750 million already approved or buyback we arrive more than 85 percentage.

Speaker #5: Clearly everything is calculated on the stated net profit. The only difference therefore that there are between these figures and your hypothesis calculation could be in the let me say not aggressive plan as mentioned before by the CEO and this could be only the delta that could be between us and you.

Speaker #5: Sorry. Okay. So okay. Understood. Thank you.

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

Speaker #2: Yes. Hi. Thank you. Thank you for taking my question. Thank you for the presentation. I just got one question on one follow up basically on the payout policy.

Speaker #2: I mean you also cited in the presentation about potential excess capital return. I mean in this potential scenario shall we expect the excess capital to be returned via additional share buybacks or through potentially higher cash dividends?

Speaker #2: And then I have basically another one which is more of a strategical one. How much I mean of the earnings growth embedded in your plan or in your 2028 targets is still driven by the BIPSO integration and by that I mean potential additional synergies you may try to extract or are more related to the five year to the five initiative you just presented?

Speaker #2: Thank you.

Speaker #3: So thank you. So you know we mentioned that given our strong capital position if as we believe we'll be able to keep on generating such a strong organic capital generation we'll be in a position to evaluate how higher shareholders remuneration if the conditions allow it because obviously we are talking today about something happening in the future.

Speaker #3: We We need to analyze what the macroeconomic situation the geopolitical situation and so on and so forth will be when this will happen. I cannot tell you today whether this will be more on cash or share buyback because this is a decision that is taken by the board on yearly basis.

Speaker #3: Differently from the past where we were paying only there was only a cash out we already mentioned that we are going to increase the total return the say the distribution to our shareholders reaching 85 percent a might be also being increased on at a different level and higher level if the conditions allow it.

Speaker #3: And this will be cash out and buys back. The proportion between the two will be decided at a later stage. In as much as your second question is concerned we have always said that the 290 million synergies 190 million cost synergies and 100 million revenue synergies will be delivered by 2027.

Speaker #3: These are the synergies on BIPSO integration and we believe that this is a very large amount given the short period of time through which we'll be delivering this 25 percent of the synergies more than 25 percent will be delivered in 26 and the remaining part in 2027.

Speaker #3: Then you have seen that we are mentioning in the for the year 28 that we will have a reduction in cost reduction of 300 million euros.

Speaker #3: This 300 million euros include the 190 million euros of synergies plus some additional synergies coming from BIPSO integration that you know will be delivered in 2028 together with other initiatives in cost reduction that we're going to have in that in that year.

Speaker #3: The same works for revenues. Revenues we indicated 100 million euro by 2027. We have a strong increase in revenues in the in 2028. Obviously part of this increase in revenues come from additional synergies that will be able to deliver from the integration of Sondrio.

Speaker #3: Let me give you an example about that. You know that BIPER on standalone basis had a much stronger commercial activity than BIPSO in terms of cross selling activities.

Speaker #3: To the point that if you were looking at the commission on total revenue the percentage on commission total revenues in the first quarter of this year BIPER standalone had reached 39.8 percent.

Speaker #3: The number we are figuring now we are indicating today is 35 point something percent. Why? Because incorporating BIPSO obviously we have incorporated a lower percentage of commission on on total revenues.

Speaker #3: We see already a quite a good activity commercial activity coming from the integrated branches of former BIPSO. But obviously it will take longer time than December 27 to be able to bring the branches of former BIPSO onto up to the same level of commission creation of the BIPER's branches.

Speaker #3: That's why also the growth in revenues that we'll see in 28 include additional revenue synergies coming from the integration of BIPSO plus we will have some other initiatives that will create further further growth.

Speaker #2: Okay. Thank you very clear.

Speaker #1: The next question comes from Giovanni Razzoli of Deutsche Bank.

Speaker #4: Monitor Daddy. I have three questions. The first one is a clarification. Is the share buyback of 750 million finalized to cancellation of the shares if you can please clarify this point.

Speaker #4: The second question is on your CT1 ratio in 2029 at the 14.5 percent. Shall I read this and analogy ambition that is this is the level of CT1 you you plan to to run BIPER in the next couple of years or is the simply the CT1 ratio that will result after the return earnings and the organic capital generation and so in that case what would be the level of CT1 ratio that you see as optimal for a group like BIPER and another question is on something that has not been touched yet but has surprised me in this call that is the manifestation of interest for part of the businesses of BFF I struggle to understand the rationale of such a manifestation of interest for two businesses like payments a custodian which requires scale so I would like you to elaborate a bit on these what is reported on the press release.

Speaker #4: Thank you.

Speaker #3: Okay. So 750 million euros buyback we have not yet finalized the cancellation. We are starting in September as I mentioned after summer I would say the buyback.

Speaker #3: It will take some time to do it and then we will see what to do. We will follow the the the the market practice.

Speaker #3: In any case as I mentioned several times also in previous call this is a decision that has to be taken by the board and we will when the interest of the shareholders of the bank will be for that we will decide what to do with this with the shares coming from the buyback.

Speaker #3: In terms of CT1 ratio the numbers that we said more than 15.5 percent CT1 ratio this is coming from the simple translation of the numbers of the growth of the bank.

Speaker #3: You know I think that we could work with a CT1 ratio of at 13 percent which I think is would be a light right level considering also the asset quality we have considering the large amount of provisioning we have and therefore you know I think that we could go with that but you know that we have a conservative approach.

Speaker #3: You know that in the past having such a strong capital allowed us to be quick in reacting to market movement and you know being able to go to the market as in the case of Sondrio acquire a bank.

Speaker #3: So you know we keep always an optionality in having a higher capital and higher CT1 ratio. Having said so I also mentioned that if we see that optionalities are no more there and we keep on generating such a strong organic capital generation in the condition allows us will increase the the distribution to our shareholders.

Speaker #3: In terms of BFF first and foremost we have just issue a non-binding expression of interest so is non-binding an expression of interest I see an industrial I would say reason to do this transaction they are we are interested only in the an acquisition of the part related to payments and depositary bank businesses you know that we have a a an asset management company this could be we have within our BIPER this we acquired through BIPSO already a custodian activity because BIPSO had a custodian activity which could be integrated.

Speaker #3: So it's just a an expression of interest that will be analyzing but industrially for us it makes sense to have such a I think would be we will be bringing into the group an additional product factory but only related to these two activities no interest at all for whatever is related to factoring lending and so on and so forth.

Speaker #4: Thank you.

Speaker #1: The next question is from Andrea Lisi of Equita.

Speaker #2: Good morning. Thank you for for taking my questions. Sorry but I want to come back to the target of cumulative dividend 2025 28 of 7.5 because it's not clear to me also the the answer that you provided before if I try to reconcile I have 7.5 target we can subtract the 1.4 billion that have already been distributed 2025 we subtract 700 million of share buyback and we get 25.4 billion.

Speaker #2: If we apply the payout of 85 means that the cumulative net profit will be 7.4 billion that divided by three makes 2.1 billion per year that clearly way below your indication and and target.

Speaker #2: So if you I'm I'm struggling a bit on this and so if you can help us and indicating what does not come what is not correct in this in this cards.

Speaker #2: The second question is a clarification. So you have at the beginning you have indicated your ambitions regarding an AI and and fees considering that they're not a floor that you use you you use a prudent approach but anyway I want to focus on other income in 2025 there were 450 million in the plan you're targeting 300 million can you explain us the reason for this decline there is any any reason for that the and another sorry for for this is if you have also adopted some conservative approach on cost and so if you think you can retain some margins should the revenues not perform as targeted in in the plan.

Speaker #2: Thank you.

Speaker #4: So Andrea thank you very much for your questions. Now Simone will enter into the details of the buyback. Just one notion. The we paid this year 1.4 billion that is the 75 percent payout ratio on the 2025 results.

Speaker #4: The 750 million buyback is on top of this. It's not deducted because if I understood correctly you said you did that 750 million buyback.

Speaker #4: The 750 million this year is on top of the 1.4 billion that we paid already. And Simone we go ahead.

Speaker #3: Yes. Thank you very much. Mr. Pappa. So as I mentioned in 25 we have a 75 percent. I go by accrual so therefore we we have the 75 percentage dividend payout that it means around 1.364 of dividends in the following year we will have a 77 percentage for example in 26 plus the 750 million share buyback in 27 we have 79 percentage in 28 we will have 81 percentage and mathematically we arrive at the figures that is stated on the on the presentation.

Speaker #3: I don't know if there is some hypothesis maybe we can clarify in a separate call later later on but it's it's mathematical effect. In relation to the other revenues in the plan excluding the interest margin and the commission yes compared to 2025 we have clearly a decrease because we have to take in account that in 25 there was there were some one off for example the FTD effects and clearly these are not repeatable like other effect and therefore in the plan yes in in other revenues not commission not interest margin we have taken a conservative approach and you have a lower amount compared to the 2025.

Speaker #4: So in as much as last your question is concerned Andrea cost I think that we have indicated that by 2029 will be below 40 percent which I think is already an extremely good target for our bank because first we should understand and recall where we were coming for from in 22 if I recall correctly we were a 62 percent today we close the quarter at 38 point something for a total of 41.8 or 42.34.4 if we exclude the TRS and we are projecting to be at 40 percent by 28 and below 40 percent in 2029.

Speaker #4: Obviously as shown in the last few years if the situation the macroeconomic situation worsen and therefore there will be more difficult to reach the revenues that we have indicated we'll we'll have all the tools in our hands to stay at this 40ish percentage point of cost in order to have a 40 percent cost income ratio.

Speaker #4: So we are really monitoring constantly the costs there are costs that are you know could be really further reduced as we have shown that are the other cost in as much as HR cost is concerned obviously here there's much less that you can do because it goes with you know contract and so on and so forth.

Speaker #4: But you know the target for us anyway is to be below 40 percent by 2029 or at around 40 percent in 2028.

Speaker #2: Yeah thank you. Just to be completely clear so 2028 payout will not be 85 percent or 81 correct.

Speaker #3: Yes it will be 81 the 85 is the average of the whole four years.

Speaker #2: Okay thank you.

Speaker #1: The next question is from Luis Pratas of Autonomous Research.

Speaker #3: Good morning everyone. Thank you for taking my questions. I also have a few clarifications on the on the capital trajectory. Could you please confirm what's the threshold for any excess capital distribution?

Speaker #3: Is it 14.5 percent or is it higher than that? Then maybe could you also comment on any expected tailwinds headwinds on capital across the plan you know stuff outside of the organic capital generation so be it the DTAs SRTs or anything you know extraordinary let's say.

Speaker #3: Then also to the to to make sure I understand so you plan to include those amounts that you just mentioned so it's not 85 percent then.

Speaker #3: Like when do you actually get 85 percent distribution accrual? And then my second question is again returning on the on the BFF transaction maybe could you also comment on you know what's the expected level of CT1 impact that you are expecting that this stage do you think this can be a cash only transaction or maybe do you need to fund it with equity and more and a bit more in general like in terms of your M&A targets like do you have any minimum objectives for instance like a return on investment threshold or like any EPS equation goal?

Speaker #3: Thank you.

Speaker #4: So thank you for your questions. We don't have a threshold for of CT1 ratio capital for returning to shareholders as dividend part of this.

Speaker #4: As I said we will be analyzing the situation when it will happen and if we see that we have such a strong organic generation we are going to increase the you know the the payout to our to our shareholders.

Speaker #4: The distribution to our shareholders. As we have been doing so far what we're projecting now because it's through that you are not looking at you're saying you'll never reach the 85 percent but if you add to the 75 percent dividend payout for 2025 that we paid in April this year May this year so the 75 percent you add the 750 million euros of buyback you will see that the distribution for 2025 in 2026 goes up to 113 percent I think something like that.

Speaker #4: So if you take this into consideration you will see that with the increase increase in distribution that has been indicated by Simone so the 77 79 and 81 percent with the inclusion of the 750 million buyback it goes up to for the period 25 28 to 7 to 85 percent.

Speaker #4: So we don't see any tailwind for capital in the point that there's no DTAs and I don't know if you have to give.

Speaker #3: And then we have like in the previous plan clearly we have the securitization planned for 27 28 three billion risk weighted asset release.

Speaker #4: In as much as your question for BFF is too early to say we have as I said sent a non-binding expression of interest that has been submitted to BFF bank today this will allow us to go through the due diligence we will analyze the situation we'll see you know whether you know there is the possibility of buying only these two business of BFF BFF I understand came out with the information saying that they are not going to sell piece by piece but to have a you know somebody going for the overall business obviously we like to team up with somebody who is interested in buying the factoring business and whatever lending activity they have.

Speaker #4: But today we don't have further information it's something that we will look at and this binding non-binding expression allows us to start a due diligence and then to finalize in case and and offer and only at that time we'll see how is how much is going to cost and how we are going to pay for it.

Speaker #3: Thank you.

Speaker #1: The next question is from Hugo Cruz of KBW.

Speaker #5: Hi thank you. So two questions. So on the capital just if sorry costs opex if you could just clarify after 2028 would there still be more costs synergies to come from the BPCO side or or not or like you'll be done and then on capital so can you clarify if there are any you know model adjustments to come again on the BPCO side you know you mentioned securitizations you mentioned DTAs but model adjustments I guess is the other topic that I still need to be discussed and also could you consider using the Danish compromise to facilitate the deal with Unipol if you thought about it.

Speaker #5: Thank you.

Speaker #4: So after 28 I think that we'll not anymore synergies coming from Banca Popolare di Sondria as I mentioned one on the cost side 190 million by 2027 additional one by 2028 in fact the part of this 300 million that I've indicated.

Speaker #4: So after 28 we will have already in a way exhausted all the possible synergies with with BIPSO. The same for capital so there's no other additional capital that can be extracted from BIPSO whatever was possible to be done has been done.

Speaker #4: No no Danish compromise because you know when this probable deal of Intesa will grow through and then between Intesa and Unipol we're talking about bank branches so not insurance business and this does not require any Danish compromise.

Speaker #4: So what will happen is that as far as we understand Unipol will offer BIPSO BIPER sorry to acquire the 635 branches or so that they they have bought from.

Speaker #4: They will buy from Intesa and this is you know relates only to banking business and not insurance business.

Speaker #5: Thank you.

Speaker #1: Mr. Spongi gentlemen there are no questions registered at this

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