Banca Generali Spa

Good morning. This is the Chorus Call Conference Operator. Welcome and thank you for joining the Banca Generali First Quarter 2021 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Gian Maria Mossa, CEO and General Manager of Banca Generali. Please go ahead, sir.

Thank you and good morning. Thank you for attending our first quarter result conference call. Let's start by saying that the first quarter was probably the best quarter ever for the bank. of course, for the numbers, but even more for the quality of the underlying. We achieved more than 77 billion euros of total assets, and what impressed me more, apart from the impressive acceleration, 19%, the increase year-on-year, is about the quality, because the greatest part of this acceleration comes from asset management products. This increase is the consequence of, of course, positive markets, but also very sound and of great quality activity of our financial advisors with net inflows up to 1.7 billion in the first quarter. You've already seen April very strong and also May started very well. Of course, the quality of the underlying activity It had a positive impact also on the financials, so net profit jumped at 135, of course driven by an acceleration of the markets and so on the most valuable components of RP&L, but also very sound and solid recording net profit. Recording net profit closed the first quarter above 37 million euro. In terms of capital ratios, Also, once allocated all the net profit over the first quarter for the dividend policies of 2021, the capital ratio are well above the SREP requirement and almost in line with the numbers of last year, with CT1 at 16.2% and TCR 17.5. Of course, these numbers include also the distribution of 3.3 euros as approved by the AGM in April. Moving on to page 4, there is as usual our short representation of our P&L. As you can see, net financial income was pretty stable year on year. The net recurring fees increased by 13.3%. And as we will see great results of the gross fees and the payout ratio under control, the overall total banking income jumped to 239 million euro. And the total operating costs are in line with our guidance with an increase of 3.6%. If we consider the items below operating profits, you can see an acceleration in the contribution to banking funds from 3.1 to 4.6, and a spike in the provision primarily linked to the great result of our financial advisors, so we increased the provision for the loyalty program that's really important, as you know, also in terms of retention. And as already we said, the net profit at 135.4%. also thanks to a temporary reduction in tax rate for the higher contribution of our Luxembourg platform results. Page 5, you can see the breakdown of net profit in the two major components, the variable net profit and the recurring net profit. The build-up on the right shows you the great job in terms of net fees. with an increase of 30 million euro and on the negative side you see an increase of 6.6 million of net adjustment and provisions. So the recurring net profit increased in absolute numbers but also in terms of quality. Now from page number 7 as usual we go through line by line starting from net financial income As already said, net financial income closed at 24.7%, with the net interest margin at 21.7%, almost in line with the fourth quarter, and slightly above the first quarter of last year. Basically, here you have to affect a slight reduction of the total net interest income yield at 0.71%, and an asset expansion from 12.5 billion euro to 14. The results of the total net interest income yield comes from two different trends. On one side, we have the reduction of the yield on interest-bearing assets at 0.66. On the other side, a reduction of the cost of funding, also thanks to the LTRO contribution. So the overall cost of funding declined at minus 0.05. I can confirm, as already said in the previous conference call, our guidance for the full year of the contribution of net interest income in the range minus 2, minus 3 on year-on-year basis. And I can say that We continue to maintain a very conservative approach. The overall duration of the portfolio is around 1.4, maturity around 3.4, and this is because we are ready to take advantage of any normalization of the rates. Page 8, gross fees. Here, the results are pretty impressive. gross recurring fees exceeded 221 million with both management fees and other recurring fees with a significant increase on year-on-year basis. The result is an increase also of the profitability with margins at 1.17. On the right you can see also the contribution of the variable fees and at 111 million euro, a very strong quarter due to the fact that almost all the products are close or at the highest level ever. Page 9, a deep dive on management fees, again a strong acceleration, 187.4 million, here you can see two different representations of margins. The black bar is about the like-for-like numbers, so excluding next-term end-values, and you can see the steadily growth in the last four quarters, and the orange bar instead is once included the two legal entities, And so from this quarter, we're going to include all the perimeter in this analysis. We are at 1.38, and we are confident to confirm our guidance of margins in the range of 1.38, 1.42, also ones included in EXTEM and Valeur. So very, very solid growth with an underlying of higher quality than in the past. Page 10. Other significant positive news comes from the banking and entry fees. You can see on the left the representation in the two blocks, banking fees and entry fees. Banking fees jumped to 24.5, while entry fees were in line with the last quarter of last year. In terms of margins, You can see also in this case an increased contribution of total margin with the profitability at 0.18. On the graph on the right, you can see the representation of the two major contributors of other recurring fees, the new revenue streams and the transactional banking and front fees. On the side of the new revenue streams, the contribution is pretty significant, 18.1 million, and is definitely above, if you project this number for the full year, to the target, the new target that we gave of 70 million euro. And you can see also an acceleration in transactional banking from fees. This is basically driven by two effects. a sound primary market activity, and increasing activity also in brokerage under the Wrappers Solutions and Funds. Page 11, the deep dive on the three new revenue streams, Advanced Advisory, Retail Brokerage, so Saxo Platform, and Structural Products. Starting from advanced advisory, here it's pretty impressive the steady growth of the assets under advisory. We achieved 6.5 billion euro in March and you can see the revenue contribution at 7.4 in line with the new target of achieving at least 30 million euro. Retail brokerage. Total volumes almost in line with the spike of the first quarter of last year, but with an higher profitability. Total contribution of revenues of BG Saxos amount to 7.1 million. This is basically driven by the diversification of the asset traded and the contribution of currency and derivatives. While structured products, Of course, on a year-on-year basis, the comparison is negative, but just because, as you remember, the first quarter last year was the best ever. But in absolute terms, €175 million is well above our forecast and projection for this year. Also, April and May are very solid. And just considering the revenues of the first quarter, 3.6%, Multiplying by four, you can see that we should exceed the target of 13 million euro. So overall, on the revenue side, I do see only positive news with a solid contribution from all the different lines of the P&L. On the cost side, also from here you can see positive trends. First of all, total fee expenses. The total payout ratio is at 52.9%, so below our projection, thanks to a slight reduction of the payout to the network. In particular, if you look at the ordinary payout, it's below our target of 37%. Now it's around 36.6%. And also the cost of growth is lower than our target, is at 10.3. And this is basically due to the fact that in the last three years, the recruitment activity decelerated. Payout to third parties instead is almost stable. On page 13, you can see the operating costs. As we already said, total operating cost increased by 3.6%. And also in this case, you see the two different representations. The first one, the like for like, so excluding next time and valuer. And the second one, instead restating it with the inclusion of the two legal entities. So let's focus on the restated one. As you can see, the perimeter inclusion one-off are slightly lower, the cost of sales personnel cost is flat, and there is an increase of the core operating cost by 4.6%. Due to the positive scenario, we have been accelerating the investment for new project and IT transformation. And going through the breakdown of the core operating costs, you see that the increase is well spread among all the different components, with in particular G&A up 1 million. Again, also in this case, we are confident to confirm our guidance, 3-5% of the core components. 1.414, you can see how is working the operating leverage. Very proud to see the operating cost on total assets below 0.3. It was considered a sort of floor. And cost-income ratio declined over time with the adjusted cost-income at 36.6%. On the capital ratio side, page 15, as we already said, really important. We destinate all the net profit of the first quarter to pay dividend also in 2021. Consider that this allocation implies already a dividend payout around 3.6%, a yield of 3.6%. on the current pricing of the title. And it includes already, as we already mentioned, the distribution of 3.3 euro for 2019 and 2020. And in terms of liquidity ratio and leverage, we are well above our requirements. So also on this side, I do see positive confirmation of the of the sound capital ratios. The slight reduction of these indicators is due to an increasing diversification in the banking book and a higher lending activity. So just to sum up the financial results. uh i'm uh let's say more bullish than ever in terms of the sustainability of our margins and on the revenue diversification and contribution at the current market condition i do see v strength continuing also in the second quarter. And I do see a strong contribution from all the financial advisors. So the quality matters. And as you can see at page 17, in this case, probably this quarter, we achieved the best results. First of all, in terms of total assets, total assets, as we said, jumped to 77.5%. But what impressed me more is the greatest part of the increase comes from managed solutions. 9 billion of growth on a year-on-year basis. You can see how we are managing very well the stabilization and slight reduction of the traditional life policies in favor of an acceleration of insurance wrappers and the total banking product increased by 3.5 billion euro basically driven by advanced advisory services focusing on the right you can see the confirmation of these trends starting from managed solutions all the components of our managed solutions so in-house funds third-party funds financial wrappers and insurance wrappers increased significantly in particular if you focus on insurance wrappers you can see an acceleration of 2 billion euro. And this explains the goal to rebalance in the medium term the overall allocation in insurance products. If you look at the banking products, you see that the growth of the current accounts is just 0.5 billion euro. So 0.5 out of 12 billion. It means less than 5% of the acceleration of assets is invested in cash. And this, again, is about quality. So we are advising our clients to invest in asset management products. We are increasing the role of the wrapper solutions, and the mix is well diversified. Page 18. There is a deep dive of net inflows. Just focus on the red bar, you see the great results in the last two quarters. And again, the greatest contribution of funds and insurance wrappers. Page 19, important to emphasize, the normalization of recruitment activity. As already announced, in the first quarter, we achieved the same results of the first quarter of 2018, so we resumed the activity of recruitment. It's more balanced because 50% comes from FA networks and 50% from traditional retail and private banks. And in terms of acquisition channels, in absolute terms, the contribution of the existing sales force is in line with the last year. In percentage, you see a slight reduction for the acceleration also of the recruitment activity. Page 20, you can see the focus on April numbers. And again, the confirmation of the positive trends in the first quarter. And as I said, also May is confirming this positive trend with almost all the managed solutions contributing positively to the net inflows. So the commercial activity is very sound and the acceleration of managed solution is pretty impressive. Now the last section is about numbers of our three year business plan. We want to share numbers achieved but also consideration on the priorities over the last three years and what we are planning for the future. So page 22, first of all, you can see a broader picture of the asset expansion during the current three-year business plan and also considering the previous three years, so starting from the end of 2015, where the acceleration of the total assets was very, very impressive, from 41 to 77. And 77 is already in the range of the target we announced for our three-year business plan. And just to remind you, it was in the range of 76, 80 billion euro. So considering the current condition of the markets at the current level, we have the opportunity also to exceed the upper range of the target. This growth of total assets has been driven by an increasing number of clients where the percentage of the increase is lower than the percentage of a total asset because the focus was on quality. And the way to see the quality of our clients is at page 23 where, as you can remember, The main driver of the business plan, of the three-year business plan, has been to accelerate our competitive positioning in the private banking sector. And the acceleration of clients with more than €500,000 with the bank has been really impressive, with an increase of 86%. and a total contribution on total assets of almost two-thirds, 67%. While at the same time, you can see that the acceleration in the clients, in the affluent segment of our clients, has been definitely lower. So for the next three-year business plan, we're going to confirm the strong positioning on the private clients But at the same time, thanks to the great investment in our digital platform, you will see we're going to launch several initiatives also to expand in the affluent segment. Page 2.4, it's not just about, as we said, asset expansion, so absolute numbers, but it's also about quality. And if you focus on the managed solution on total assets, bottom left of the page, you can see that managed solutions now exceeded 51%. At the end of 2015, it was around 45%. And what impressed me more is that it's well diversified among in-house funds, third-party funds, financial wrappers, and insurance wrappers. And another important target achieved is the overall equity exposure, now above 25%, at 26.4%. And all the initiatives of automatic switch and saving plans will increase even further this percentage. I do estimate at least 1.5% of an increase. And again, considering the current market level. So the overall equity exposure on total managed solution is still below 50% and below the average of the market. I don't want to close the gap with other players, but I do see some room to optimization. Page 2.5 is just to focus also on our BG Fund Management Platform because, as we already said, managed solutions increased and with the managed solutions also our in-house platform expanded and expanded in a very sustainable way with a growing contribution of BG, SICAM and LAXIM. and now it accounts for 14.1 billion euro out of 19.4 and there is also a representation of the performance of our in-house products as you can see with a low volatility we delivered on promises so in overall performance above 17% in the last, let's say, four years and one quarter. So also in this case, we can say that quality matters and in the context of a controlled volatility portfolio, the performance was relevant. Why we have been experiencing such an acceleration in asset management products? I do see a positive contribution to the introduction also of a new methodology, a new commercial approach for our clients. In this case, sustainability matters. And in this case, I do see a significant competitive advantage compared to other players in the market because we were first mover introducing a proprietary digital platform in which we can bring our clients closer to the SDGs concept to give also a different reason to invest in the long run. We targeted 10% of total assets in ESG products by the end of this year and we have already exceeded our optimistic approach and targets because now total assets in ESG products account for more than 13%. A great part of this comes from new net inflows. with the LACSIM accounting for more than 50% of the overall net influx. So just to sum up, the next six months will be focused on delivering and completing the journey of the initiative launched in the last three years. And as we already seen together, all the initiatives are going in the right direction and there is still room to improve. And we started thinking also to the next three year business plan, where on one side we will continue the great job on private clients and on the diversification of assets. On the other side, we will expand and accelerate our business also on new targets of clients. So very confident, very confident to exceed the expectation of the target announced during our investor day in 2018. Very confident of the quality of our financial advisors and of the results we have been delivering over time. And I do see also the opportunity to expand our client base in the next three years thanks to several initiatives we have been working in the last few months and in which we can leverage our partnership with Saxo, our partnership with Kono, our expansion in Switzerland. and the opportunity to develop dedicated products and digital platforms and tools for our foreign clients. Thank you and I'm more than glad to take any questions.

Excuse me, this is the Coruscall conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking questions. Anyone who has a question may press star and 1 at this time. The first question is from Luigi Debellis with Equitasim. Please go ahead.

Yes, good morning. I have four questions. The first one is on BG Saxo. Could you provide an update on the trading platform, potential impact, new products expected to be launched, the feeling of your clients on the platform, if you think you can gain market share and if this is the driver to expand business with the new target of clients, namely affluent? The second question is on the dividend. Could you provide an update on the dividend policy and if you have had any interaction with the regulator on the possibility to return to pay dividends after the end of the ban? The third question is on the recruiting. How do you see the market for recruitment now compared to the pandemic situation? Do you think the market is more or less competitive than before the COVID? I mean, is it easier or more difficult to recruit new financial advisors? And the last question on the alternative PIR. Do you have a target in terms of net inflows for alternative PIR? And generally speaking, can you share with us your point of view on this product? Thank you.

Thank you, Luigi. So starting from the first question, The platform is almost fully integrated for the full range of products. We have an important release at the end of the first half, so between June and July, of the derivatives, so future and option. And we're going to complete the journey with the extension also to... current accounts in different currencies. Already now you can trade, of course, in different markets, but there is also that function. And we open up the platform to the clients. So we are in the rollout phase. You have, let's say, some clients Very happy with this technology and it's impressive to see the acceleration in the turnover of the clients who decided to join the platform. So I say that the evidence is pretty strong. We do not want to accelerate and to push. I do see the opportunity to accelerate in the BG Saxo platform in the next three-year business plan. You are right. The technology is cutting edge and the feedback of clients are pretty positive. So I do expect a significant contribution to the new business plan from these initiatives. It's a cultural change, so we want to continue to maintain a great focus on asset management products. So it will take time to expand this business, but it's very solid on the right direction. Dividend policy, my feeling is that we're going to pay because I don't see any reason not to pay. Depending on your view on the pandemic, but let's say that in the interaction, there is the strong conviction to normalize the role of the regulators and to reduce any distortion in the market. So my strong feeling is that in October, we're going to pay the first tranche of the dividend. In January 2022, we're going to pay the second tranche. And I'm very, very optimistic focus also on paying a significant dividend for the last year of our three-year business plan. Recruitment. Recruitment. Let's say that I am pretty impressed by the interest. I do see room to consolidate the banking system, further consolidation. You read every day some potential nerds. And this is positive for the whole industry. So there is a greater interest coming from traditional banks and private banks. And in case of financial advisors, there is a greater interest in more diversification in products and services. So I do perceive the bank as the right place to be. So we haven't accelerated in terms of focus or incentive, but it's just back to normal activity. So we could accelerate. I confirmed the target of almost 100 new colleagues because the focus must be well balanced to provide all the support for the existing Salesforce and continue to increase the Salesforce network. We are also very focused on new and younger financial advisors. So there is a dedicated project also to recruit younger colleagues, and the number of the younger colleagues is not included in the target of 100. In terms of cost, we are slightly below the historical cost for recruitment. In terms of PIR, we don't... give a specific target to the financial advisory network. They say that in the alternative space of PIR like funds, you are around 70 million euro and I don't think to see significant numbers for the full year. So I do expect something in the range of 150 to 200 million euro. It's a positive trend but it takes time and I think that it's so important to sell in the right way this kind of initiatives. Here the real risk is the mis-selling proposition so we price these products in line with traditional asset management products. We haven't launched a specific incentive for this product and we see this as another way to diversify more the portfolio of our clients and a new source of revenues. Just to be sure I was clear in the dividend policy, I was saying that I'm very confident to pay the 3.3 euros and I'm very focused to pay an important dividend for 2022. Thank you.

The next question is from Gianluca Ferrari with Mediobanca. Please go ahead.

Yes, good morning. The first question is on page 12, the cost of growth. I think in that specific line you are booking both the recruitment cost, but also the accrual of the bonuses, if I'm not mistaken. So I was wondering, how is it possible that cost of growth went down when you made one billion more inflows into asset management products and you doubled the number of a phase? So probably I'm missing something on the mechanic of how you account for that. The second question is, On page 24, I think you gave for the first time a striking number that you have 47% of your AUM in equities. And I think in the AUM, you're also including insurance wrappers. So my question is, are insurance wrappers also including multi-class insurance, i.e. also a component of Ramo Primo in there? So the 47 net of the Ramo Primo could be even higher than that or higher. Again, I am mistaken in reading this. The last question is on the repricing. What is the state of the art here? And I was curious to hear if you are also thinking about repricing something outside management fees. So any different pricing on current accounts or banking services or stuff like that? Thank you.

Thank you Gianluca. So starting from the cost of growth. Here you have two different effects and then I will hand over to Tommaso for specific details. The first one is that you know you amortize the cost of growth over the last five years. So you have a spike in recruitment activity 2015 and 2016. So you have a sort of positive effect because you are discarding the strongest years. The second, more important, is that, of course, the total commission increased significantly. So in the ratio, the base accelerated significantly. But for other details, I'm going to hand over to Tommaso.

Yes, I think that Gianmaria... gave us the the answer the main point is that in absolute terms if you compare the cost of growth they are comparable in march 21 is a bit a little bit higher although there is a smoothing effect by for the recruitment of 2015 and 16. but if you compare this amount to the to the growing commission of course in terms you have a lower weight. This is the mathematical explanation.

Can we also have the stock of cost be amortized relative to past recruitment?

I have to check the numbers.

While we check the numbers, I answer to the second question. The second question is about the net exposure, equity exposure excluding, let's say, traditional life insurance, you are right. In the insurance wrappers, you have almost 30% of traditional life insurance. So normalizing for this 30%, you would obtain a higher number. So you're right. It's about 3 billion out of 10. So you can work out the right percentage. once excluded the traditional components of the insurance wrappers. And in terms of repricing, we are in line with our projection. In July, we are confident to launch the new wave of LAXIM with the repricing. The authorization should arrive at the beginning of June for the institutional share classes and then you have 30 days for the retail authorization. In terms of price optimization, I don't see room to optimize further the managed solutions. we have already introduced some optimization in the current accounts and the effect will be visible in January 22.

Grazie.

And then Tommaso is checking the numbers. We can keep going with the Q&A session. Then when we find the number, we'll give you the disclosure. Thank you.

The next question is from Elena Perini with Intesa San Paolo. Please go ahead.

Yes, good morning. I've got two questions. The first one is about your performance fees in the month of April. If you can update us about them. And then the second question is about your banking fees. You were very good in this quarter with approximately... 24, 25 million. Could we consider it as a quarterly rate for the year? Or do you see, I don't know, some potential slowdown in the coming quarters? Thank you.

Thank you, Elena. So performance fee in April were pretty solid. in the range of 15-20 million euro, while the projection for the current quarter is negligible. So we already have another, let's say, between 15 and 20. In terms of banking fees, you have two different components. One is about the primary market activity. And it depends also on the opportunity in the market. So it's a variable component. While the second one is about the trading, the brokerage activity of the wrappers and of the funds. And in this case, of course, the expansion, the asset expansion led to increasing volumes and so increasing revenues. So it's half and half, but I'm pretty confident that the overall contribution will be significantly positive. I don't know whether you can just multiply by four the first quarter. It probably would be a little bit too high.

Thank you.

Okay, thank you. The next question is from Angeliki Bairactari with Autonomous Research. Please go ahead.

Good morning. Thanks for taking my question. Just three questions on my side, please. First of all, could you give us some color on what drove the margin improvement quarter on quarter? You have now sort of repeated your target of 1.38% to 1.42%, but including Nexterm and Valeur, Can you give us some color on why you are more confident to achieve this target now, including the new businesses that you have acquired? And would it be feasible to expect you to reach the upper end of that guidance, i.e. around 142 basis points? Second question, we have seen significant inflows into managed assets across the industry year to date, including for Banca Generali. What is driving this in your view and is it sustainable? And third question, if I may, can you give us a little bit more color on your plans with regards to the affluent segment? Thank you.

Thank you. Let's start from margins. and margin improvements, I confirm the range 1.38, 1.42 once included, next time and valuer, basically for three main reasons. The first one is the asset allocation, the second is the product allocation, and the third one is about the repricing. Asset allocation and equity exposure depends also on the markets. Product allocation is a long-lasting trend, in particular in the insurance space. So this rebalancing process will last at least the next three, five years, and this is a positive contributor to the overall margins. The equity exposure is, of course, influenced by markets, and then there is a positive contribution coming from new initiatives, for example, saving plans or automatic switch. And in terms of repricing, as you already know, it should imply five basis points of an increase, an overall increase in the BG fund management platform. So let's say that if you think of stable markets for the next 12, 18 months, probably we could be closer to the upper band than to the lower band because several initiatives are working very well. I'm more conservative because I'm more conservative on the market trend for the next six, nine months. So the overall effect is that I'm confident to confirm the guidance. I cannot confirm 100% the upper band. And in terms of managed assets, let's say that you have several factors contributing to this great interest in managed solutions. The first one, of course, is poor yields. It's difficult to invest in the bond markets, so you invest in the asset management solutions, trying to increase the diversification and try to invest also in alternative asset class. So it's a sort of substitute effect from traditional bonds markets to asset management or cash. And I think that now the weight of asset under custody, in particular to bonds, is pretty low. So I don't see significant room to increase, to decrease, sorry, this percentage, while I do see still some optimization in the cash exposure. The second reason is is about, as we already said, the traditional life insurance solutions, because as Banca Generali already communicate, the focus is more and more on asset management and hybrid solution than traditional life insurance. And this is a positive trend. element to think of an acceleration of managed solutions as a whole. So my view is that we're going to see a deceleration, my view, more in the bond sector because you still see a significant concentration of asset management products in the bond market. less in alternative flexible solution and equity because it's a way to try to achieve performance to the clients in such a low yield environment.

Thank you.

The next question is from Domenico Santoro with HSBC. Please go ahead.

Hi, good morning. Hi, thanks for the presentation. I don't have specific specific questions on the numbers. You guys, you're doing pretty well. I mean, there is so much liquidity in the market. Rates are low, and this is, of course, a pretty much favorable context for you. I'd just like you to expand a little bit more on what you were just saying. That was my question. I mean, the market is clearly worried about inflation risk because of the steepening of the curve. You mentioned before that you've changed a little bit the maturity, probably reducing of the bond portfolio because you're preparing for higher rates. So that's my question. How this new context in my, you already touched base a bit on this, it might change the activity. Some investors are getting more worried that clients, they might be hurt on their bond positions. Is there any sensitivity of the in terms of long-term rates that you can give us that might affect more significantly your business. I mean, any comment, qualitative, quantitative, it's very useful at this point. And also, coming back on the matter of the flows, again, I mean, really amazing in the sector, but I just wonder how much there is also a little bit of a you know, tailwind, given that there is usually a sort of correlation between the pick of the markets and inflows in equity, and whether we should look at the second part of the year, when you actually specifically said that you're a bit more worried about the market performance. It's a bit of a question, you know, forward-looking rather than your business, which is great.

Thank you, thank you, Domenico, and I understand the question. You are right, there is an excess of liquidity, there is some risk linked to inflation, to normalization of rates, and I think that all these factors are really positive for our industry, because at the end of the day, as you know very well, the let's say the quality of the professionals matters. And in this case, we have the products and the competence to expand alternative investments, where alternative is a broad concept in which you have to sell also dynamic strategies with hedging strategies and so forth. So I think that this market condition, the inflation risk, the excessive liquidity with the risk of any significant correction implies a better diversified portfolio. And in this case, I do see a competitive advantage. The second even stronger competitive advantage, and this is just more about Banca Generale than others, is that if you work out the net inflows and the relative net inflows of Banca Generale compared to the market, we perform better when you have higher volatility first of all because we are less exposed overall to equity second because we are definitely less exposed to a duration risk and third because this is probably the most important we have on average the the best professionals so i'm not worried of significant deceleration of inflows i don't think we can not grow every quarter 10% because it would be a little bit too much. But I do see a structural rebalancing between the traditional distribution channels and the financial advisory business. I think MIFID now, so the introduction and the recognition of the financial advisors is important and was important for the acceleration of this rebalancing. It's a sort of virtual circle in which the detractor to the financial advisors is getting lower and lower and the word of mouth is working even better. So the momentum counts and counts a lot and the financial advisors are working very well. And I think that in this case, it's important to be sure to check no mis-selling approach. So this is why I'm so conservative on alternative asset class. I'm so conservative in any acceleration in the risk profile of clients and so forth. In terms of bond exposure, we built our banking book to be ready to catch any opportunities coming from a steepening of the curve and a normalization of the yield. So in the banking book, I do not see significant risk. On the client's portfolio, the risk is even lower because, as you know, we have more or less 18, 12, 20 billion euro invested in traditional life insurance policies. it's no volatility. And so we cover the bond duration portfolio through this sort of stabilizer, the traditional life insurance. So we are less exposed to any volatility or increase of the bonds and we normally deliver better results during turmoil compared to the market. So I'm pretty positively optimistic for these reasons. The last reason is with such a bullish view is that I do see an acceleration and consolidation process in the banking system. It is necessary. Now the banking system is being frozen. You know what I mean. And sooner or later we must normalize the situation and normalization implies consolidation. And during consolidation financial advisors accelerate. So there are several positive factors for the industry and less downside for Banca Generali because, in my opinion, we are a little bit more conservative than others and the quality of professionals is a little bit higher than others. All right. Very useful. Thank you. And now, sorry, I will hand over to Tommaso for the previous question of Gianluca.

Yes. So the... The amount that we have to amortize is in the range of 150 million, which is including both recruitment and ordinary incentive schemes. I remind that we amortize the incentive scheme through five years in the P&L.

Mr. Massa, there are no more questions registered at this time.

Okay, thank you. Thank you all for the participation and see you soon. Thanks. Bye.