Banca Generali Spa

Good afternoon. This is the Coral School Conference Operator. Welcome and thank you for joining the Banca Generali first quarter 2023 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.

Good afternoon and thank you for participating to our first quarter result conference call. Before starting, I would like just to inform you that we have changed some slides just to better represent the business model of the bank. So the first quarter was pretty impressive on different aspects. First of all, the total assets of our client achieved the highest level ever and basically thanks to an increasing productivity of our existing sales force. On the financial numbers, pretty impressive the new highs of the recurring fees and the recurring net profit. Thanks of course to very strong net interest income but also steady recurring revenues thanks to diversification and cost control. The capital ratios and the liquidity ratio strengthened in the last three months and even more important we are very confident to achieve and to deliver all the targets of our three year business plan. net profit closed at 83 million euro, of which 77 of recurring net profit, while variable net profit closed at 6 million, so a positive contribution in terms of performance fee. Let's now go through line by line our P&L, starting from page 5, net financial income. Net financial income closed to 75 million euro, of which 71 comes from net interest income with a margin of 1.82%, while the trading result then stood at 4 million euro in line with the same period of the last year. Page 6, total gross fees, slightly down. We closed at 243. of which 238 coming from gross recurring fees. And as I mentioned, we start to receive some performance fee, 5 million. This is thanks to our flagship fund. It's an in-house flexible fund that is at the high water market level. And the total assets are above 1 billion euros. If we go through the total gross fees, we see management fees down 5%, and it is all driven by a reduction of average managed assets, while margins are keeping pretty well at 1.43%. Pretty impressive at page 8, the result of other fees. Other fees closed at 38.3%, or 10%. higher than the same period of last year, thanks to the contribution of all the major components. Entry fees, 10.7, thanks to higher volumes in primary market, structural product certificate. Brokerage, impressive acceleration of retail brokerage, and a contribution at 11.6. Advisor fees, We achieved a new ice and we will deep dive later, 9.4 million and also other banking fees were supported by expanding volumes. Focusing on margins, you see that both measure, so the overall margins and the margins including the more cyclical components have been steadily in the last quarters. Moving on on cost side, page 9, you remember that we decided to show explicitly the cost of the payout on net interest income. It accounts for 2.5 million euro, while the total expenses for revenues incentive scheme and the third party payments stood at 122.4 or down 2 million euro on year-on-year basis. In terms of payout ratio to the network, no news good news, everything is in line with our guidance. Ordinary payout 35.6%, incentive payout 10%, and also the payout to third parties is stable in line with our guidance. Moving on to the operating cost, you see in the graph on the top of the page, some one-off, which is basically related to some M&A activities, some analysis we run, some potential targets. that we didn't go through, and then Main Street Partners. Sales personnel costs are in line with some seasonality, but it's no news also from this side. Core operating costs close at plus 6%, in line with guidance, including all the inflation impacts and all the projects that we are developing, and including also, of course, the BG Swiss projects. Overall, the ratios continue to stay at best practice level with the cost income ratio close to 33%. Summing up the first part, we can say that the operating result excluding performance view was very, very strong thanks to the increase in net interest income, sticky recurring revenues, but also cost discipline. If we move below the operating line, the total non-operating charges amount to 50 million euro or 2.4 million higher than a year ago. To work on the tax rate, tax rate closed higher than our guidance, closed at 27.4. This is basically due to major effects, the increasing contribution of net interest income and lower performance fees. but also in this case we do expect a normalization in the next quarters thanks to a normalization of the markets and so forth for the performance fee. On the balance sheet you will see new slides to show in more details our solidity and the strength of our balance sheet. Page 14 we start from total assets and you see the trend in the last year and you see also They did dive on interest-bearing assets. Overall interest-bearing assets closed at 15.5 billion euro or minus 2. And in terms of margins, you see the overall margins stood at 2.3 with all major components, of course, increasing the contribution. So you have 2% for loans to banks and other liabilities, 3.5 the loans to clients and above 2% the financial assets. Next page, you see a deep dive of the financial assets. First of all, the trend and the breakdown. You see the percentage of Italian GOVI bonds, it is constant at 5.4 billion or 47%. 22% of other GOVIs in Euro terms and then you see significant contribution on covered bonds with very very high rating. On the right of the slide you see first of all that we have a very high quality financial assets with almost 96% that is eligible for ECB. 96% equals to 10.9 billion euro and we have 8.2 billion euro of high quality liquid assets. That number is pretty impressive. The duration is very low and we have more than 50% of the portfolio with a maturity by the end of 2025. On the liability side, and I'm at page 16, here you see the overall liabilities and equity, and then zoom on total deposits. Total deposits amount to 15.2 or 2%, lower than the end of last year, of which 12 billion euros comes from client deposits. Cost of funding closed at 0.5 with a cost of 0.24 for clients and above 2% for deposits held by banks and institutions. Here on the right you can see also some more information on our current account. the average client deposit balance stood at €34,000, of which clients with more than €500,000, the average is slightly lower than €100,000. For affluent and upper affluent clients, the average is €17,000. And even more important, the ratio of H2LA on total client deposit stood at 68%. That is probably one of the highest ratios in Italy. In terms of total capital ratio, all good news, total capital ratio stood at 17.1. Also, once we have posted for this first quarter, 81% of net profit for the dividend policy. so we posted 67 million euro for the dividend of this year leverage ratio 4.5 and liquidity coverage ratio and net stable funding ratio definitely above the requirement of 100. so i think that the balance sheet represents probably one of one of the main strengths of our bank very flexible very liquid and say that we can manage the overall assets also to manage net interest income and you will see in the business update some new guidance. Page 19, there is a new representation. First of all, at the top left you see the total assets, highest level ever. It's about almost 86 billion euro. you see that the asset under measurement start resuming, so it's a little bit higher compared to the end of last year, and then you see the significant increase of assets under custody and the slight reduction in banking assets. At the bottom of the page, on the left, There is new information that it's about the asset under advisory with an explicit fee. You see that now advanced advisory account for 7.8 billion euro or 9% of the total asset. But even more important, if you focus on the breakdown, you see that the orange part is accounted for €3.9 billion of advanced advisory with the underlying invested in stock and bonds, so in asset under custody. And you see that this part increased by €1 billion in one year. On the right, you see new representation because this is about all the assets in the bank with a recurrent fee so we have the managed solutions we have the traditional life policies and we have the part of advanced advisory with the underlying invested in asset under custody and you see that the overall portfolio with an explicit recurrent fee amounted 70 percent of the total assets but in the Let's say that in the business update we will see some more information on that. Page 2020, we see on the left the asset measurement product, pretty impressive the result of the financial wrappers at the highest level ever, $9.6 billion. And then we see a slight reduction in the fund industry, in house and third party. On the right you see a lower contribution in terms of total assets of the insurance products, but also here I will comment during the last chapter of the presentation. Page 1 we have the inflows. We already said that inflows are slightly higher year on year. Let's focus on the quality of these inflows. Of course, the measure part comes from asset under custody, so it will be important to focus on margins on the asset under custody. The managed solution accounted for €400 million. On the right, you see that this €400 million comes from financial wrappers and funds, but you can also see at the bottom of the page the net inflows on asset under advisory. They closed at 300 million euro, of which 400 million euro is an explicit fee on asset under custody. So if you want to work out the total of the net inflows invested in risky assets with a recurring fee, you have just to add these two numbers, 0.4 and 0.4, for the total of 0.8. Page 22. Pretty impressive result. We have been increasing the productivity of our existing sales force, 1.3 billion euro, thanks to the implementation of some strategic projects. we start to see some results for the project on the data, but we are just at the beginning, so I'm very confident on the inflows, especially for the existing Salesforce, thanks to all the projects that we are executing. If we focus on the recruitment, the net recruitment, the contribution was very low, not for the part of out, so the phase that who decided to leave the company because the retention is probably the highest ever. So we have just 100 million euro outflows, probably the lowest level ever. But for the recruitment, for the in, because as I mentioned in the previous conference call, in this moment it's very difficult to transfer portfolios with performance in the range of minus 10, minus 12. But the interest is pretty impressive. In terms of ads, ad count, we have 29 new colleagues, of which 9 without recruitment package or talented junior FAs, 11 from banks, and 9 from secondary advisors. Page 23, we have also an update on the inflows in April. We closed the first four months with 2 billion euro of inflows, net inflows. Focusing on the right, you see that the managed solution closed at half billion. If you look at the bottom, we have 600 million euros under advanced advisory with the underlying invested in assets under custody. So it means that more than 1 billion provide recurring fees with an underlying that is invested in risky assets. In terms of banking assets and in terms of traditional life insurance, you see in both cases that the outflows are slowing, but I will focus more on this in a few minutes. New recruitment, April was a pretty positive month with 12 new colleagues, so the total new recruits for the year stood at 41. So I think that from a commercial perspective, three major considerations. First, we achieved the highest level of assets and this is really important because I think that as usual, there is some seasonality in how you invest in these assets, but in the long term, higher the assets, higher the profitability for the bank. Second, the acceleration in inflows comes from existing sales force, so we are achieving higher productivity. And third, that recruitment is not contributing to the numbers as it happened in the past, but there is a very important, great interest from different players. So once we're going to see a normalization of the market, I'm confident to see a restart also of the contribution from recruitment. So now let's enter the last chapter of the presentation that is about business update. Here you have two focuses. The first one is on net interest income and the second is on client assets, the major trends and the major consideration on what we have to expect for the last part of the year. Page 25, net interest income. If you remember during the previous conference call, we gave a guidance or higher, the net interest income at 200 million euro and there were some assumptions. The first assumption was about the cost of funding and we set the cost of funding, the average cost of funding for the year at 130 basis points. And the second assumption was about the deposits, client deposits, and we set the guidance to an unchanged level. So we said basically we don't see the case of increasing deposits and we want to be very conservative in defining an expected cost of funding. Of course, we can either work on the level of deposit paying less cost of funding or we can reduce the deposit uh optimizing the net interesting so in the in the case that we discussed during the last conference call 130 basis point and stable assets now we have just updated this projection trying to maintain the same assumption that we discussed at the beginning of the year so just maintaining As a cost of funding, 130 basis points for the remaining eight months of the year, just because April was again a very positive month for our net interest income with the cost of funding almost in line with the first three months. So maintaining a cost of funding from May to December at 130 basis points, This would imply an average cost of funding of 100 basis points. This is the first assumption. Second assumption, very conservative. If we project linearly what happened in the current accounts in the first quarter to the remaining three quarters, and this should set a range between 10 and 11 billion euro of client deposit, at this condition, you will achieve a net interest income of 230 million. This 230 million is a floor. How can I work out a potential number for the full year? We can give you the sensitivity to the cost of funding. Any 10 basis points saved in the cost of funding would impact on a period of eight months eight million, so one million per month. If you want to have, let's say, this is the floor, 230, and the average cost of funding 100. If you want, let's say, an optimistic scenario, you can set the cost of funding at almost 50% of 100, so around 50 basis points. So this could be a range between 50 and 100 basis points of cost of funding. The same can be said for the client deposit. If I look at the numbers in May, I should be very optimistic. But since we don't want to pass through net interest income to the client deposit, we maintain this very cautious assumption to a slight reduction, ongoing reduction in deposit. And I repeat, In May, I'm not seeing this kind of trend. So April was pretty positive with a strong deceleration. May, we see a stabilization, but we continue to maintain a very low cost of funding for client deposits. Now, let's move on the second part of the business update that is about the client assets. First of all, we are all convinced that our business is to sell and to provide advisory on managed solutions. Having said that, and having said that, I do expect a normalization of the overall contribution of assets under custody in the medium terms on overall assets. So I see tremendous upside there. We have to understand in depth what we have been doing in the last three years to increase margin on assets under custody. Because we are a unique example in Italy that succeeded in increasing systematically the profitability of assets under custody. Page 2.6, you see, first of all, retail brokerage. 5.1 billion euro compared to 1.8 billion euro first quarter 2019. It's almost three times. Primary plus structured product, 5.5 billion in just one quarter compared to 100 million euro in the first quarter 2019. advanced advisory services fee-based business with the underlying of assets under custody from 1.6 to 3.9. At the end of the day, the margin of these initiatives stood at 0.44. This is about retail clients and it accounted for almost 19 million euros in just one quarter. So it's true that we're going to see a normalization of assets under custody in the next quarters and the next year, but it's also true that we found a way to get profitability also on this part of the portfolio. Second, we have a terrific competitive advantage in the high value investment services. What do I mean? I value investment services are of two kinds. Financial wrappers and advanced advisory services. And if you look at the graph, the acceleration, so the growth has been pretty impressive. From 9.3 to 17 billion euro. This is all driven by in-house capabilities. and is best practice in the market. This is, of course, all about also any doubt on ban on inducement because the answer to the inducement is to be very strong on this kind of services, and we are definitely best in class. And if you look at the margins and the revenues coming from these two services, again, the numbers are pretty impressive. Financial wrappers... to that 1.38. Advanced advisory, considering the underline, the profitability of the underline, at 1.45. On average, 1.41. So this is, again, another way to see the quality of our financial advisors and how to provide two complementary services to high-end clients. then of course it's not just about investment solutions but it's also about you say bread and butter products so if you move on to page 2a you see fund results and here you see a different representation you see three colors the first consideration is about the red ones in house funds you know we reviewed our offering in october and since that every month we got positive results. Not very significant, not impressive, but steadily growing and also with a different trend compared to the third-party plain vanilla products. Plain vanilla flower products are the great ones. So you know asset management is suffering and third party is in a proxy. You see that in the last three months the contribution is negative and you know this is due to the fact that there is a disaffection on this kind of products. The orange part is about specific target initiatives organized for Banca Generali. An example, a target found launched with JP Morgan in February. And you see that the orange contribution is positive. So the changing strategy at the end of last year in focusing more on in-house products and developing partnerships with target funds is providing results. Last part of the presentation is about page 29 of insurance. And again, here we have to invest some time to understand the trend. Let's start from the red, purple numbers. This is about traditional life insurance. We shared several times the opportunity to reduce traditional life insurance, also to reduce the risk of diluting the yield for our existing clients. And if you look at the monthly trend of 2022, also in that case, the outflows were pretty impressive. Then we saw an acceleration of outflows driven by two factors. increasing interest rate and some bad news on other insurance companies. We decided to reopen the offering of this product and you see the sharp deceleration of outflows in April and I can assure you that in the second half the numbers will be different. If you focus on insurance wrappers, same story. Insurance wrappers invest also in traditional life insurance. So at the beginning of the year, we had negative inflows. We reviewed the offer. We focused more and more on efficiency and the results are pretty clear. Again, positive inflows. So we represent the Lion. Generally, it's the strongest brand in Italy and is a competitive advantage. This combined with the investment services will be a competitive advantage also to strengthen the inflows in managed solutions for the remaining part of the year. Page 3.0 is about the financial target. I already said we confirm all the targets. Consistent growth is about net inflows. As already mentioned several times, we are increasing the focus on product mix. I see some seasonality in the peak of asset under custody. It's good to continue to get inflows, to have inflows, and then we will convert these assets under custody also in asset and manager products. The project on data-driven approach is the solution to accelerating productivity where existence is false. We are back to in-person activity meetings, and this is very strong in terms of utilization, and this explains why The churn rate is so low. Profitable growth. We gave very important numbers at the beginning of our three-year business plan. We have a growth in the range of 10-15. We raised the target at 15 and 20% and we confirmed that. We increase the guidance with net interest income and we already gave you some flexibility on the guidance of net interest income. In our solution are working pretty well and we know how to extract value also from assets under custody. Last but not least, remunerative growth. We already discussed several times that we are one of the fastest growing companies, but we care about the remuneration of our shareholders. In May the 22nd, we will pay 1 euro for the dividend payout of last year, and we already paid 0.85. We are perfectly in line to achieve also these results. And now I will end over for any questions. Thank you.

This is the Coruscant Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Elena Perini of Intesa San Paolo. Please go ahead.

Yes, good afternoon and thank you for taking my questions. I've got some questions. Actually, the first one is on your net interest income guidance because just to check out if I have understood correctly. So if we assume a cost of funding of 50 bits instead of 100 bits, we will recover 8... multiplied by 5, so approximately 40 million of an AI, just to check. And then the second question is about your performance fees, which were quite good for this period, so I was wondering if you can give us some data about some other potential funds that are well positioned to recover performance fees in the second quarter. And then looking at your tax rate, so should you come out with a net interest income of... in line with your guidance, should we assume a normalization of the tax rate towards 25% or for the current year you still see a higher tax rate? And finally, on your net inflow guidance, I don't know if you can provide us with some assumptions or some scenarios about the managed assets component, also considering that it seems that the situation regarding life insurance is improving. Thank you very much.

Thank you, Elena. So let's start from net interest income. You are right. If we estimate or project a cost of funding of 0.5, the overall result of net interest income for the full year would be 270. We gave the floor of 2030 just because, you know, we love to be conservative and then a bit... But now I must be a little bit more optimistic because April worked very well and May is working very well. So I gave you a range so that you can set your own expectation. On performance fee, the performance fee of our Flexible Fund was basically amazing and it accounts for more than $1 billion. So this fund now is at a high water market level and it can provide other performance fees. In general terms, we have almost 20% of assets that could achieve performance fees this year. I'm very optimistic for next year. This year, let's say, depends mostly from the market, but we have some flexible strategies that are performing very well. That is the reason also why the financial wrappers are working well because we are performing better than the market. In terms of tax rate, let's say the guidance, I mean, I have in mind the guidance for next year. This year, depending on performance fee, basically, we should stay above our guidance in case of recovery of performance fee, of course. the guidance would be targeted. But let's say that I'm not so sure to have significant performance in this year. We set the target, internal target between 20 and 30 million euro of performance in this year. With an assumption of from today to the end of the year of performance of one percentage point, two percentage point as overall. The last is about the inflows guidance. I love to be conservative but in this case it's difficult because I think that in this case the quality of our professional will drive an excellent result in terms of life insurance product I would be surprised to see numbers below zero as a net result for the second half but you could have some positive surprise the high value investment services that both provide a recurring fee. So I'm talking about financial wrappers as well as advanced advisory services are doing very well. So I'm confident to continue to deliver on these two services. And in terms of funds, I think that the average that we are achieving in the first four months is again a floor and we could again post this surprise also on this side. Of course, these considerations are in a situation in which the market stays at these levels. So in case of positive surprise of the market, I would be even more confident. In case of negative performance, we should review these kind of targets.

Okay, thank you very much.

The next question is from Giovanni Razzoli of Deutsche Bank. Please go ahead.

Good afternoon to everybody. Thank you for taking my questions. The first one is on your strategy in terms of product mix. You have showed an increase in the percentage of assets under advisory. I was wondering what percentage of total assets do you plan to move under that model in three years' time? from 9% today. And how can this impact the overall remuneration of your managed asset? I've seen that more or less, if I'm not mistaken, on these products, you do have slightly higher than 40 basis points of remuneration, which compared with slightly above 1% on recurring fees on total assets. So I was wondering whether we should consider take into consideration those two data points for making our assumptions going forward. And related to this, I was wondering whether you do plan to increase your exposure to this product as a kind of defensive strategy vis-a-vis possible regulatory changes, which doesn't seem to me to be taking place, at least in the short term. The second question, thanks for the disclosure that you've given. You mentioned that you have some cost in terms of M&A scouting without clearly mentioning what you had in mind. But is this something for the domestic market or for the market? And I think you are referring to something like bolt-on acquisitions. And the very last question, as I have you on the line, allow me the opportunity to ask you this. We have seen that so far the asset gatherers are, you know, a little bit – of the traditional banks in terms of remuneration of their deposits and in general the clients. I was wondering whether going forward you do expect as a defensive strategy from the banks also a similar move because so far we've seen divergent trends between you and the commercial banks. Thank you.

Thank you. Let's start with Giovanni. the impact of advanced advisory services on total assets. We set the target during the investor day in the range of 10-12, if I remember well. And I'm very confident to achieve this target. Consider that in terms of profitability, on average, assets under advisory provide higher margins than, let's say, financial wrappers, especially on private clients. We show in the presentation profitability in the range of revenues above 1.4. And of course, the advanced advisory services normally is about private clients. So it's a very good margin if you think of the kind of clients. And as I mentioned before, Even if you see an acceleration of the advanced advisory services with the underlying of assets under custody, these assets, the assets invested in stock and bonds, provide good profitability. And I show you the slide with the volumes implied in brokerage, structure, certificate, and so forth. And of course, under advanced advisory services, you use more and more of these kinds of services. So to cut a long story short, I think that especially if you have in mind that sooner or later we will go through higher transparency or an inducement ban, this is the way. Financial wrappers and advanced advisory services. I don't believe that we'll go in that direction soon. I am sure that we will accelerate in transparency and I consider Banca Generali best in class on this topic. In terms of... defensive strategy and the product and so forth. We say that I do expect some rethinking of the asset management industry where you give more transparency over the underlying, where you focus more on the expected yield to maturity and so something that should converge to financial wrappers one hand or to the traditional, let's say, bonds on the other one. And we are working in this direction. So I think that we are ahead of the market in terms of innovation in products. In terms of M&A, you're right. We are scouting different opportunities, always pretty small, always to accelerate integration of capabilities. But at the end of the day, in this moment, we do not see any other opportunities, excluding the ones that we close, that is Main Street, that in my opinion is a great advantage in terms of sustainability and business linked to sustainability. And we scouted basically small companies both in Switzerland and in Italy. But again, I confirm that... After we close the deal with Main Street, we don't have any potential deal in this moment on our desk.

Thank you.

The next question is from Alberto Villa with Intermonte. Please go ahead.

Good afternoon, and thanks for the detailed guidance, especially on the net interest income. The first one is on your conservative provisioning you made in the first quarter. Since we have been hearing other banks being quite positive on the cost of risk, I was wondering if there is any specific reason for this provisioning. provision or is it just a generic one you are booking and if you can provide us an indication of what are your expectations in terms of provisions for the entire year. The second question is on the brokerage activity. You have shown a significant increase in volumes but a steady increase revenue contribution so I was wondering if we can expect going forward a higher contribution from brokerage revenues thanks to higher volumes you are expecting or if there is any reason why instead it should be considered to be quite flattish going forward and And then I think I'm basically done. Just one other point is on the cost of funding, the 24 basis points you are seeing now. You have also some campaigns of repos. Is that something that you expect to accelerate in the remainder of the year and how this could eventually impact the cost of funding? Thank you.

Thank you Roberto. I will hand over to Maso for the provision just to say that the short answer is a generic one and for the target of a full year I answer to the second and the third one and then I will hand over to Maso. Brokerage. I see stable profitability despite higher volumes just because the mix is in favor of bonds in this moment. So the increasing volumes offset the lower margin of the single trade. But you know Sachs is working pretty well. All the activity also in the secondary market of structured products could start gaining momentum because we start also to trade on the secondary market, all the primary assets, the primary activity. And on the cost of funding, two considerations. The first one that we set apart 10 million euro for initiatives in the next eight months. I don't know whether we're going to use it or not, but we set apart 10 million euro. Second consideration, we have almost 2 billion euro. of current accounts with the remuneration with current accounts linked to the Euribor to the percentage of the Euribor is normally 60%. So the projection that I provided as a positive scenario takes already in account the increasing weight of the cost of these current accounts plus the money that I set apart for any potential initiatives on repos that at this time are very negligible, just 100 million in the last weeks, so we are talking about nothing. But I set apart some cash just in order to in case accelerating inflows and to manage any specific campaign. So the cost of funding that we communicate of 100, if you well understand, that would imply a significant acceleration of cost of funding for commercial banks, just to answer also Giovanni. I don't see an acceleration of cost of funding from the commercial banks, so we have decided and we are trying to reduce as much as possible the pass-through, and this is very positive also for NASA. As other players, we use some small campaigns and we have part of the book that is remunerated, so current accounts remunerated, especially for corporate, so for business, and normally are important entrepreneurs. This part is in common also for the commercial banks, but you cannot see that just because it's a small part on the total balance sheet of the commercial bank. On entrepreneurs, they say that there is some competition and almost all the players pay some part, some percentage of the arrival. And Tommaso, on the provision side?

The provision, I confirm that the provision that we did was a generic one. Basically, we don't have a particular issue to cover with provisions. Going forward, we expect to stay in the range between 30, I mean for the year, 30-35% This is what we could get today in terms of provision for the full year. So we have been very conservative in the first quarter. We don't expect to have the same number for all the quarters going forward.

Okay. If I may, just a little follow-up on the fee expenses for the network on deposits. Should we expect there, starting from the fourth quarter of last year, should we expect this number to grow significantly in the coming quarters, trying to retain, I would say, liquidity?

No, the short answer is no. We paid 15%. of the spread and with a cap at €50,000 on each account.

The worst case is around between 7 and 10 million of payout for the full year because of course it depends also on the assumption that you make on the on the liability side, because if you have a higher cost of the liability, you reduce the spread on which you pay the banker, while if you have a broader spread, you have a higher payout. But our assumption is between 7 and 10 million.

So let's say 3 million per quarter is a very conservative assumption, so between 2 and 3, let's say.

Okay, thank you. Thank you very much.

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

Yes, hi, good afternoon, everyone. So I start again from the NII. First of all, I would like to understand how much is the so-called non-transactional liquidity. So I appreciate the breakdown of the deposit balance among the two segments, above 500K and below 500K. Could you tell us also how many clients you have in the two brackets, or eventually, what is the level of the non-transactional liquidity? And linked to this, Can you share also a bit more the managerial view or the strategic view that took last conference call, the 90 business points, cost of retail funding going up to 130 and now down again to 100. So what were your thoughts? So you were expecting the sector to fight a bit more on deposits? And then you realize that, uh, nobody else is moving and you can be a bit more, uh, soft in terms of regulation. Uh, is that the rational? So you prefer to lose some, uh, 1 billion in the first four months and two, 3 billion, if we take your, uh, for your two, three guidance instead of overpaying for deposits or, uh, what are your thoughts behind this change in the guidance? And also on the banking book, I was noticing that you keep remaining super cautious in terms of duration on the asset side on your banking book, much more cautious than some of your competitors. And you are still a super liquid bank. So why not taking a bit more risk on the banking book, passing through parts of the past part? of those extra earnings to your client and to, let's say, retain and to make more loyal your top-end clients. So a bit of thoughts on this. And the second one is on the Ramo Primo, on the last traditional. What are, in practice, the strategic moves you are planning together with Generali? So are you launching new ramo primo, new segregated funds to be offered only to existing clients? Is this a way to soften the level of outflows or there are other moves behind it? Thank you.

Thank you Gianluca. Transitional liquidity, I can answer like this. We see outflows when the stock on current account is about €250,000 as a general rule. I can see 30-40% of assets that could be part of this story. The assumption to project the result of the first quarter is a very conservative assumption because On average, on the affluent clients, not the gates, but also in the private clients, most of them, the overall exposure to current account is already pretty low. So I would say that I consider transitional 60-70% of the overall liquidity from a commercial perspective. The second question is the cost of funding. I try to explain a little bit better the exercise we run in the previous conference call we set a cost of funding of 130 and i confirm also in this projection 130 but 130 is applied only for the remaining eight months of the year so if you consider 0.25 for four months and 1.3 for the remaining 8, the result is 100. So the conservative assumption of 100, 130 is unchanged. Then, my impression is that thanks to the resistance of the commercial banks, the pressure is probably lower than previously expected. In terms of duration, I mean, from a From an actual perspective, we are leaving a context with an inverted yield curve. In this situation, I think that staying in the shorter part of the yield curve is the best place to be. Then, of course, any normalization of the curve could imply rethinking of our strategy in terms of duration. we set also a cap in terms of maturity to stay below 4. So you have some rounding effect, but we say that also in terms of maturity, we don't want to exceed 4 years. Again, you know, our portfolio is very conservative and we want to be perceived also from a commercial perspective as the most liquid bank in Italy. On the traditional life insurance, it's also important a way to attract new clients. So we will launch some specific initiatives where the cost of the product will be paid. And then we are thinking of also launching some new traditional life insurance policies where we start from zero to the underlying. So where you can leverage on higher rates. The combination of these two initiatives should more than compensate the outflows that we already see in reduction.

Will the existing clients be allowed to subscribe the new one or eventually only for additional payments and the switch from the old to the new, I guess it will be forbidden, right?

Exactly, only for new cash. Okay, thank you very much. Welcome.

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

Okay. Thank you, and hope to see you soon. Thank you all. Bye.