Banca Monte dei Paschi di Siena

Good morning, this is the Chorus Call Conference Operator. Welcome and thank you for joining the MPS group third quarter and nine month 2025 results presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Luigi Lovaglio, Chief Executive Officer and General Manager. Please go ahead, sir.

Good morning, everyone. Thank you for joining us today for the presentation of our third quarter and nine-month 2025 financial results. This is a landmark moment for Montepaschi. At the end of September, we successfully completed the acquisition of Mediobanca, a strategic move we have always believed in. And 86.3% of Mediobanca shareholders confirm that belief by tendering their shares That's a clear endorsement of the industrial strength and the long-term value of this combination from both co-shareholders and from Italian and international institutional investors. So first, let me thank all of our shareholders for their trust and confidence in our vision and in our ability to execute. I also want to thank our people. Our teams at Montepaschi have stayed laser-focused through intense months, and they continue to serve clients, deliver strong commercial momentum, and produce another solid quarter. They show what commitment to performance and integrity looks like. I also want to acknowledge our colleagues at Mediobanca as well, Their results this quarter demonstrate the resilience of their business model and the strength of their client relationship. That is exactly the kind of excellence we want to build with. Finally, thanks to our client. Your continued trust is the foundation of everything we do. Together, shareholders, employees, clients, we made this possible. With Mediobanca, we have created a new competitive force in Italian banking. This combination brings together strong brands with deep client loyalty, exceptional professionals across both organizations, complementary business strength across commercial banking, wealth management, corporate investment banking, consumer finance, and cut-edge and scalable technology. This is an accretive combination, financially, strategically, and commercially. It accelerates growth and value creation. Our combination process with MedioBanca, with more than 20 ongoing work streams, is structured on track and is going smoothly with discipline. And I am pleased to start working closely with Vittorio Grilli and Alessandro Melfi-Derillo, who will be key in ensuring that together we reach new heights as an integral part of this project. We will present our group business plan in the first quarter of next year that will be the moment to outline the full strategic and financial roadmap and potential power of the combined group. In the meantime, as you can see from the third quarter results, Montepaschi continues to perform very well, thanks to the strength of our franchise and disciplined cost management. I am especially pleased to note that our people were not distracted by the Mediobanca transaction. Across the organization, they were able to stay focused and deliver on their business target to achieve profitable growth. We reached net profit at about 1.4 billion euro, up by 17.5% excluding net taxes. Our balance sheet, as a consequence of the combination of Mediobanca, continues to be stronger and stronger. We maintain a very solid level of quarter 1 at 16.9, including the preliminary impact of Mediobanca. This is higher than we expected when we announced the transaction in January. For the 2025 full year, we are setting new guidance on pre-tax profit. We now expect to well exceed $1.6 billion. Let's move on to the nine-month results, which testify our capability to build sustainable value and deliver high returns to our shareholders. We close the first nine months with a net profit of €1,366,000,000, up by 17.5% in one year, excluding the positive net taxes in both periods, sustained by solid growth fees, thanks to the clear focus on commercial activity. Third quarter net profit was €474,000,000, up by 16.5% compared to the third quarter last year. confirming the solid progression while the quarterly comparison, quarter-on-quarter, was affected by the typical third-quarter seasonality on revenues, while confirming a high level of profitability. Net operating profit increased by 3.7 cents year-on-year, reaching about euros 1.4 billion in nine months. Thanks to resilient revenue sustained by fees, offsetting rate impact on net interest income almost totally, operating costs under control, and improved cost of risk. Three-quarter net operating profit at euros 453 million, up by 2.4% year-on-year, and decreasing by 7.3% quarter-on-quarter due to decisionality. After nine months, gross operating profit reached euro 1,643,000,000, Almost stable year-on-year thanks to the resilient revenues. In a decline, interest ratio sustained by fee, income, and cost well under control. Third quarter gross operating profit at €532 million. Nine-month cost-income ratio at 46, stable year-on-year. Strong progression on banks' commercial performance in nine months, driven by the clear focus of Montepaschi's franchise on key strategic areas. Well-management with gross inflow close to 30 billion euros, up by 18% year-on-year. We granted mortgages to families worth euros for 8 billion, more than doubling last year's volumes. New consumer loan showed a 17% increase compared to the same period of last year. These are tangible signs of banks deeply connected to its clients and to the real economy. Our cost of REITs dropped to 42 basis points in nine months from 53 basis points last year. Cross-MP ratio 3.7 and net MP ratio and MPE coverage at 48.7%. The combination with Mediobanca will lead to a further reinforcement of the balance sheet structure of the new group, with a sound liquidity position with counterbalancing capacity of about $53 billion. Quarter one fully loaded at the solid level of 16.9 included the preliminary impact of Mediobanca transaction, confirming best-in-class capital buffer and providing strategic flexibility. With a successful completion of Mediobanca tender offer, we are opening a new chapter in 553 years history of Montepaschi. The 86.3 acceptance give us clear governance from day one and the strategic flexibility to move quickly in implementing the combined industrial project. The new Mediobanca board appointed on October 28th marks the start of the new phase of development for the combined group. But before we move forward, A warm welcome to our Mediobanca colleagues as we begin this new journey together. We are now one team building the future. Now, on third quarter and nine-month results. As I mentioned, the profit for the first nine months reached 1,366,000,000 euros, up by 70% year-on-year, excluding the positive net tax in both periods. We reported as well a solid quarter contribution for Euro 474 million, up by 16.5% year-on-year. Net operating profit after a month amounted to Euros 1 billion, 389 million, showing a positive trend, growing 3.7% year-on-year, with resilient revenues, sustained by seeing The net operating profit in the third quarter amounted to Euro 453 million, showing a 2.4% increase versus a year ago. Now let's move on to gross operating profit. We reached Euro 532 million in this quarter, showing a resilience year on year. and cost-income ratio at 47% basically stable year-on-year. Gross operating profit after nine months reached 1,642,000,000 euros, almost stable year-on-year, thanks to resilient revenues, again driven by net fee income. Will this confirm our disciplined approach to both costs and readiness generation, ensuring steady performance. For the first nine months of 2025, we maintained the cost income of 46%. Now, I think it's important to underline the strong commercial performance, as you can see after nine months in this slide. Total commercial savings crossed €174 billion and were higher by almost €10 billion since September 2024. And wealth management gross inflows amounted to almost €13 billion in nine months, up by 18% year-on-year. New retail mortgage granted in nine months reached €4.8 billion, 2.2 times compared to nine months of 2024. As well, new consumer finance flows amounted to almost $1 billion, with a 70% year-on-year increase. I believe these are the confirmation of capability and effectiveness of our commercial network, and I would like once again to thank you, my colleagues, for the excellent results achieved. Now let's move on to the net interest income evolution. In the third quarter, it amounted to Euro 544 million, down by 1.3% quarter on quarter, confirming a certain resilience, also in times of overall spread. In the first month of 2025, net interest income reached Euro 1 billion, 638 million, with an early trend in line with the guidance given to the market at the beginning of the year. Net loans dynamic in 2025 has been strong, with a growth in retail and small business components by almost 4 billion euros. with the positive trend also quarter-on-quarter despite seasonality. The same performance we are observing in total savings, with total commercial savings in September crossing the level of €174 billion, and are up by more than €3 billion quarter-on-quarter, supporting an increase year on year, exceeding 10 billion euros. With 7 billion from the beginning of the year. Now on Portofolio Govis, as usual this is stable, almost stable. with a small decrease of and with credit spread and sensitivity confirm a very low level and slightly longer duration reflecting reinvestment of maturities. Now, let's move on to fees and commission income. If you look at the quarter, we reported an amount of €382 million, with a solid 7.4% increase versus the quarter 2024. with an excellent performance on the wealth management component, up by 10.6% year-on-year, and the positive dynamics on the commercial banking component, up by 4.5% year-on-year. The quarter evolution is affected, as was already mentioned, by the typical third quarter seasonality on both wealth management and commercial banking fees. If you look at the performance after nine months, you can see that thanks to the excellent work of our commercial network, the total fees reached the level of 1,185,000,000 euros, up by 8.5% year-on-year, with wealth management and advisory fee up by almost 13% year-on-year, and the positive dynamic also in commercial banking fees increased by 4.4%. In the third quarter, operating costs amounted to Euros 468 million and were marginally lower quarter-on-quarter driven by non-HR component decrease. Costs were flat year-on-year with the increase in HR costs related to labor contract renewal and increase in variable remuneration pool completely offset by the effective management of non-HR costs. After nine months, total operating costs amounted to euros 1,411,000,000 and were higher by 1.4% year-on-year. As I mentioned again, the growth was driven by the HR component due to the labor control renewal and the variable partner remuneration. And part of this increase was offset by effective cost management of non-HR costs. Now let's move to asset quality. The stock non-performing decreased to 3.1 billion euros, reflecting a reduction of 400 million in the quarter, mainly due to the sale of MPE portfolio completed in August. The gross MPE ratio is 3.7 billion, and the net MP ratio at 2%, in line with the business plan targets. Cost of risk for nine months was 42 bps, down versus 53 bps of full year 2024, confirming the good status of our asset quality. The breakdown on MPE stock shows a low incidence of bad loans on total MPE, It's about 30% and that's why this portion, this proportion should be considered in analyzing the coverage. That anyway is a very good level of 48.7%. You can see from the slide the solid, the liquidity position of Montepaschi. leading to a more diversified funding structure and a lower ECB funding weight on total liabilities. Moving on capital, I believe that this is a very interesting set of figures. The strong capital position of the bank is confirmed also in this quarter. we had common equity tier 1 ratio fully loaded at 16.9%, already reflecting the preliminary impact of the Mediobanca transaction. This ratio incorporates the net profit of the period and this calculated net of dividend assuming 100% payout ratio on net profit. As you can see, the Mediobanca transaction is impacting around two percent, two percentage points, in line with our preliminary estimates. It is worth mentioning that we are not fully incorporating the purchase price allocation. As for example, we have not yet factored the valuation of financial assets and the ability for value. The capital ratio is therefore very strong, with a large capital buffer compared to regulatory requirements and also our management targets that we were indicating the level of 15%. And that gives us strategic flexibility going forward. Now I would like to spend just a few words on the results that were already published of Mediobanca. I think it is important to underline the positive trend and the potential that is deriving from the combination. The commercial momentum remains solid with Euro 2.5 billion of net new money, robust major acquisition activity in corporate investment bank division, and 2.3 billion of new consumer finance volumes. Very remarkable results. The diversification of the business has supported resilient revenues, even in a challenging macroeconomic environment.

Now,

Let's again go through some key important messages regarding our combination. So we have really transformed into a new leader in Italian banking with the scale and credibility to compete at the European level. This transaction was driven by a clear conviction that Italy deserves a stronger, more innovative, more diversified financial institution, one capable of supporting families, small and large corporates across the country. On this slide, you see some of the key financial metrics of the combined group, $8 billion in pro forma revenues and around $3 billion in adjusted net profit. I would like again to underline the strong industrial rationale for our project. From the get-go, the industrial rationale has been clear and consistent. Montepasque and Mediobanca are different and therefore complementary. Together we combine leading capabilities in retail and commercial banking, consumer finance, asset gathering and world management, private banking, corporate investment banking. The result is a more resilient, diversified, and innovative group with a balanced source of profitability and multiple engines to invest, to grow, and to better serve clients. On this slide, you can see an overview of our combined operating model and the strong industrial merits of the transaction in each business line. In retail and consumer finance, we bring together a Montepaschi nationwide network and compass best-in-class product and risk expertise. In wealth and private banking, we now operate with greater scale and higher advisory capability. Spending Montepaschi Premium, Banker with EVA, Mediobanca Premier, Mediobanca Private Bank, banking, Company Monegas de Banque, Montepassi Family Office. This will allow the group to deliver more sophisticated solutions and attract high-value clients. And in corporate investment banking, our clients benefit from a stronger balance sheet a deep advisor expertise in Italy and abroad through Messier Marie and Alma Partners. Insurance and asset management and stability, add stability and optionality, diversifying our revenue space and supporting long-term value creation. The combination creates a more resilient, diversified and innovative group. Then on the slide, The figures that you see represent a preliminary illustration of the performance business line on the basis of historical numbers and not including synergies. From a revenue mix composition, asset gathering and wealth management represent almost 30% of the total revenues. Retail and commercial banking stands around 31%, consumer finance, 70%, and corporate investment banking, including the lending business for Mediobank and Montepaschi, large corporates represent almost 50%. While generally, the insurance contribution represent 7%. This is the first snapshot of what the combined entity will look once that we have completed our project. And we are working with our colleagues at Mediobanca to further optimize the target business model. Clearly, we will provide additional information and all details in the new business plan. We began the combination process immediately with structured work streams and joined teams across both organizations, coordinated through regular cross-functional governance. The plan covers all key business and support functions, with clear accountability, senior leadership oversight, and the focus on maintaining business continuity and exceptional client service throughout. As a part of our integration strategy, a dedicated HR wall stream has been established, focused on retaining key managerial talent. This initiative reflects our deep commitment to preserving and enhancing brand value during this transformative phase. We want to ensure continuity, safeguard institutional knowledge, and support long-term leadership stability. Our objective is to build a solid, efficient operating model, step by step, with disciplined project management and transparent communication. A detailed analysis, for example, is already completed on IT architectures, operating models, and development priority, aiming at enhancing the best solution for each area and plan IT investment for digitalization to ensure resilience and efficiency. This is just an example of how the work is progressing at full speed. The 700 million industrial synergies target we communicated is now in this preliminary assessment reconfirmed on the basis of this work we are performing. MediBanca remains a distinctive and highly valuable franchise within the group with its brand, client relationship and professional capability preserved and strengthened. The ambition is to unlock new opportunities for growth across both organizations. The group will increase productivity, expand its product and service offering, invest in technology and digitalization, and continue to attract and retain top talent. So Mediobanca is an attractive combination from all perspectives. Autonomous tangible is expected around 14%. We expected to confirm our payout ratio 100%, and the capital position remained best in class in Europe, providing strategic flexibility. Now, Short update about the process and indicative timeline. I have to say that our approach is quite methodical, step-by-step, and transparent. Our key milestones have been met, demonstrating discipline, execution, and strong project management. In the first quarter of next year, we will present a combined business plan that reflects the full potential of our group. We will hold a capital market day to present it to the market. Now, going back to Montepaschi standalone, again, we reported another solid quarter with almost 1.4 billion euros after nine months. Strong commercial performance, strong capital position with quarter one and 16.9. We are further improving our 2025 full year guidance with the per tax profit expected to be well above 1.6 billion. The capital position is expected to be about 16 at the end of the year, a very sound level which provides confidence in ensuring the 100% payout for the coming years. Montepaschi plus Mediobanca create the third competitive force in the Italian bank industry with potential to increase its European scale. We have organized teams with people from Montepaschi and Mediobanca working together with a common strategic vision and spirit of collaboration, each bringing their skills, know-how, and sense of responsibility to bear. The values are aligned around integrity, respect, customer focus and accountability. Now it is clear that together we are capable of making things happen. Our goal is clear and within reach to play a leading role in Italian and European banking with vision and the desire to create sustainable value for all our stakeholders. Thank you very much and we are Ready to answer to your question.

Thank you, sir. Excuse me. This is the 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 touchtone telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking questions. The first question comes from Antonio Reale of Bank of America.

Good morning, all. It's Antonio from Bank of America. Just a couple of questions from my side, please. The first one on distribution. Your capital ratio at 16.9%, as you said, incorporates the new dividend policy of up to 100% on net profit, which is a big change, I think, for you, as you were not previously paying the tax year assessments out. Now, does this mean that you're now looking to pay out on a reported net profit basis, so including potential DTA write-ups and similar? just trying to get a sense and better understand what this means for your dividend per share going forward. I remember during the tender offer, I think you mentioned that you wanted to try not to deviate too much from the DPS of last year. And related to that, if I may, pretty much, if I look at all your peers, they pay dividends on an interim basis. I think it was the case also for Mediabank. Do you think it's something you would look to consider for 2026 fiscal year? That's my first question. And then my second one, is really try to get a sense of how you're thinking about the reorganization of the new businesses that you plan to sort of reorganize following the deal with Mediabanca, both from a divisional and a legal entity standpoint, if I may. Your slides, 27 and 28, I think show very clearly how, while in one go, you bought back all the proto factories that Montepaschi had lost over the years and more. So the question is, how do you plan to integrate all these businesses and at the same time monetize Mediabanca's strong brand, and achieve the synergies that you targeted. Thank you.

Okay, I will try to be very clear. So, yes, we confirmed that we expect to distribute for this year, a dividend per share broadly in line with the one of previous year, ensuring to our shareholders a yield among the highest in Europe. And afterwards, we are committed to deliver a growing DPS while preserving our strong capital position, from which we want to leverage for industrial projects and additional remuneration for our shareholders. As far as interim dividend, it's clear that is one of the options we will consider and we will be very precise once that we are going to present the business plan in the first quarter next year. Now, as I was mentioning regarding the integration, yes, in our project we were quite clear saying that we would like MediBanker to be focused on corporate investment banking and high-level private banking, let's simplify, as we believe there is a strong competence there, excellent capability in dealing with customer, and a huge potential on which we can leverage in order to enrich our total level of profitability. And I have to say that from these few days where we are already working together, I feel even more comfortable that this is the right direction because we can create and build up a really unique potential additional powerful institution that will support the Italian economy with the competences in terms of advisory capability to which we are going to add the balance sheet to Montepaschi. On private banking, Mediobanca is a top player. Strong and excellent professional team is over there. And I strongly believe we have room for significantly increase our total asset and our penetration in overall Italian landscape. Now it's clear that the approach we want to use in order to be very effective is already from the day one, sort of divisional approach. And we already, we are setting our overall way in managing this opportunity in this way. Then we are going to consider, again, once that we have a clear view about the business plan, how we can optimize in terms of also legal structure, this exercise. Clearing Mediobanca will be a legal entity with this brand because it's too important to preserve the value and the peculiarities that Mediobanca has that are in some way different necessarily from commercial banking. And we want to leverage on this diversity in order to increase the value and to be a player that is unique in the Italian landscape for the balanced approach we can have on the market compared to other big players.

Thank you very much. Just maybe on the interim dividend, if I may, just follow up on that as part of the question. I don't know if you have any early thoughts on that. Thank you.

Excuse me. Antonio, Andrea speaking. Can you say again the follow-up question? Because we missed it.

It was just if you had any early thoughts on your interim decision and consideration.

Sorry, Mr. Reale, we cannot hear you. Can you please take it closer to the phone?

I think I mentioned, right, that this is an optionality we are going to consider with the business plan. When we are going to present, we will be clear on that. But clearly... we have a positive attitude towards the opportunity to have an interim dividend.

The next question is from Marco Nicolai of Jefferies.

Good morning. First question, again, on the DPS. I got your comments about this year DPS brought in line with last year. and growing DPS from this level, I'm just trying to understand the moving parts for the 2026 DPS, because clearly this year with the big positive one-off you will have at the end of the year in terms of DTA write-up, you can pay pretty much, if I look at the amount of net income that will bring, you will be able to pay pretty much the DPS you want. But for 2026, I'm just trying to understand the moving parts there because the DPS you had in 2024 seems relatively high. So I was just trying to understand, in terms of synergies, what do you expect already coming through in 2026, if any, and also how you plan to split the restructuring costs between this year and next year, and in general, all the moving parts that can bring us to a DPS in 2026 above 2026. broadly above the one of 2024. So this is the first question. And the second question is, if you can update us on your asset management partnerships. So my interpretation of Banco BPM management comments yesterday is that they are relatively open to a merger or any way to do something with you. And obviously, So these comments were kind of at the crossroad with Anima, as well as with the stake that they have into BNPS. So I was just trying to understand what's your view on this topic, and if you can help us understand what are the future plans in terms of M&A. So these are my two questions. Thank you.

Okay, so thank you. We will provide clearly quite detailed information once we are going to present the business plan. Now, we wouldn't like to go too much too deep in providing early drivers now in order to get this growing dividend, right? What... we are confident that our level of synergies are even conservative, starting from the first outcome from these work streams that we are practically developing together with the Medibank team. And so, at least the level that we already plan our understanding ensured and then we will be as i said more precise one that we are going to finalize the business plan as well all as well as on the integration cost on which we are now analyzing how to split them but anyway we believe uh that what has been planned from the very beginning when we launched the deal is confirmed and even, as I said, we are even more confident that we can get our goal. And most of the time we were speaking about growing DPS for sure. Now, Anami is for us an important partner. We are keeping growing. offering this product and I believe this is also reinforcing our relationship with Banco for this common pattern that we work with and clear for us as an important value and also strategically is important to keep reinforcing this cooperation. now anyway we are completely focused in delivering this combination industrial combination i'm not using the word integration because this one is not an integration is a combination of two excellent institutions and we believe that the more we are focused on this implementation, and the sooner we will get the results that we committed by launching the tender offer. So full speed on making all what we plan implemented and effective.

Thank you.

The next question comes from Ignacio Urlagui of BNP Paribas Exane.

Thanks very much for the presentation and for taking my questions. I have two questions. One is coming back a bit to Antonio's question on the integration and your comments, Luigi, about Medibank being a legal company. I want to just understand a bit better How do you think the listing is going to go? Do you plan to further integrate by taking over the minorities and integrating that? What would be the impact if you don't do that in synergies? Because I think it would be a bit more difficult to go ahead with all the planned cost savings. The second question is on the commercial activity of Motel Pasca in the quarter. It has been super strong in lending and deposits. I just wanted to get a bit of a sense of where you're gaining market selling and lending. And in terms of deposits, you mentioned in the Q results that you were focusing on transactional deposits. And I think that I just wanted to get a bit of color on how do you think about your NII implications after the good quarter into coming quarters. Thank you.

So let's start by saying that the success of the tender offer at the level of 86% acceptance rate is ensuring us effective governance from the very beginning. In the presentation, in some way, we already provided a first glance at how we see this combination. We are working, as I said, with our media bank colleagues and a deep dive on the Target business model will provide, as I said, in the context of capital market day in first quarter. Next slide. What is important to underline is that we will maintain and leverage the two strong brands of Montevaschi and Mediobanca with the respective entities focused on what we say the core business. On the current listing of Mediobank, let me say that with the 14% free float, we see reduced volumes and liquidity on the stock. However, it's too early to take any decision of a potential delisting. That is part of the assessment in the context of the new business plan, as I was mentioning. As far as net interest income is concerned, I think that we expect in the fourth quarter to keep almost the level of the third quarter and then to have again a level of 2026 almost in line with the one of this year. we can have some positive upside, if you will, capable, as we are now aiming at, to increase the level of our lending, thanks to the combination of, with Mediobank capability in advisory and the balance sheet of us. Clearly, the expectations are as well, to keep under control the cost of deposits that are growing, but as we were mentioning, we are intensifying our commercial efforts, leveraging on the very positive attitude that we are now observing in the network that are very well motivated. We reinforce our capability in managing. We are getting... continuous feedback very positive in new meetings with customers so this will enable us also to keep growing the deposit without compromising the spread so that's why we are very positive that we can continue clearly we have to think that part of this deposit are collected with the scope then to convert in asset management product so we can have some situation just depending on the capability to make this kind of conversion at the same time to replace what we are converting in asset management product or bank assurance product with regular deposit. But anyway, we are really at this point enjoying a very positive moment of all our network, our franchise. And so it's not only deposits that we see at good pace without compromising the spread, but also, as you saw in the presentation, inflow of asset management product, bank assurance product. Overall, it's a very positive momentum for Montepaschi.

Thank you very much.

The next question is from Giovanni Rassoli of Deutsche Bank.

Good morning to everybody. I have just one question. Sorry for asking you this detail, but in the broader context of your capital position and dividend policy is important in my view. So you have reported a 17.9% CT1 ratio, which includes a part of the PPA. I was wondering whether you can share with us what was the impact of the PPA. You mentioned that there could be more in the coming quarter due to the fair value of assets and liability of Mediobanca. So if you can help us understanding what was the impact of the PPA in this quarter and what could be the impact in the next quarter. I'm wondering, for example, whether the PPA this quarter includes or not the revaluation of Mediobanca real estate assets. Thank you very much.

Ciao, Giovanni. Andrea speaking. Good morning to everybody. So, as mentioned, the PPA as of 30 September 2025 was partial and preliminary, so not including, for example, as mentioned by the CEO before, the valuation for value of financial assets and liabilities. It includes mainly the revaluation of generali, that is anyway not impacting the capital position, and a few hundred millions regarding what you mentioned, the real estate, which is in line with the projections that have consistently been delivered throughout the public offer. Thank you.

The next question is from Hugo Cruz of KBW.

Thank you for the time. I have a few questions, if I may. So first on, can you be a bit more clear on the CT1 ratio impact, so the impact coming in Q4? Do you expect that to be positive or negative? So that's my first question. Second on, you know, related to this, so the DTIs, I thought all the DTIs would be fully brought on balance sheet on day one. You still have $1.1 billion off balance sheet. So, you know, why is this still off balance sheet? When do you expect that to come on balance sheet? It will be Q4 or not. Then a third question on, you know, clarification on your comments about the dividend for 1026, so out of 1026 earnings, you know, So you still have a lot of DTIs, very strong capital ratio. So is there any possibility that you can manage the DPS to show that growth versus 1025 DPS? Or will it be just mechanical DPS out of 100% of payout? And then a final question on the bank tax. Some of your peers, BIPER and BAMI, have given a bit of an indication of the potential impact. Can you comment what could be the impact for you? Thank you.

Okay, so thank you for your questions. So on the first question, i.e., capital ratio, common equity ratio end of the year, this will depend on the final impact of the PPA that it is under assessment. What we can, let's say, confer now is that we expect that it will be higher than 60% anyway. So that's the answer. Then about the DPS in 26 is what was mentioned by the CEO. So it's too early to give a guidance on net profit. What we can already confirm is that we expect to achieve a good chunk of synergies already in 26. Then on the tax law, the impact is definitely manageable in 26. Fix 28, we expect, based on the current draft of the law, an impact on the combined perimeter, so let me reiterate, on the combined perimeter of around 100 million euro per year. And then, on top of this, this year there might be the impact of the taxation of the so-called extra profit reserve that we expect will be accounted anyway directly into equity. The fourth question I missed.

You was on the DTA.

Sorry, the DTA. No, actually we have still 1.1 billion euro of DTA of balance sheet. When we update the new business plan, so end of the year, we expect that this amount will be basically written up. We expect in full.

I'm sorry, if I make a clarification, the 100 million impact on the tax, that will be through P&L?

The yearly one in 26, in 27, in 28, yes. It's additional tax, so yes.

Okay, thank you very much.

The next question is from Luis Manuel Grillo-Pratas of Autonomous.

Hi there. Thank you for taking my questions. My first one, I have essentially a bunch of clarifications. The first one is on the, so you essentially mentioned that you didn't include any value adjustments on the media banker balance sheet. And if I'm not mistaken, the 2025 annual report of Mediabank included a large positive effect there. So I wanted to hear any comments whether we should expect a positive in Q4 coming from this. And then you just mentioned to Hugo that maybe in Q4 we shouldn't expect any meaningful DPI capitalizations. Can you confirm that? So essentially the large one, the $1.1 billion, will only happen when the business plan is released next year. And then I also wanted to ask you about your comments about On the combined entity, so it seems that you are not going to the approach of doing a merger by incorporation, if I read that correctly. I wanted to confirm if this has any impact on your synergies execution. I'm thinking, for instance, on the funding side, if there could be any MRLD synergies for maintaining both entities separate. And yeah, thank you.

Okay, so I think I'm just confirming that we were very much conservative in this preliminary assessment of PPA. As Andrea was mentioning, overall at the current stage, being very much conservative and wanting to go deeper in making the analysis, we are hopefully expected to complete this process for the main item within the end of the year, at the current stage, we are also confident that we can have a positive impact, but let's complete the work before being much more, giving much more detail on that, right? Then, regarding the reorganization and the combination, we want I want just to underline that we will implement actions in order to get all the synergies, and I was mentioning even at the level that we expect now to be even higher than what we plan. The fact that we are speaking about legal entity doesn't mean that we cannot exploit all the potential that we can have from the combination. But as I said, it is a work in progress and hopefully will be soon completed. And as I said in the first quarter, we'll be very precise about the option that we are going, the target model we are going to implement. What should be clear that in our preliminary estimation, we see only positive upside in whatever we are going to implement in terms of synergies.

And then there was a clarification requested on the DTA write-up, since I mentioned the approval of the new business plan. Anyway, we... We expect to be able to write up the DTA already in Q4. That was your question. Potentially also based on preliminary projections. So the expectation is that the write-up, to the best of our current knowledge, happens in Q4. As regards MREL, we do not expect these synergies. We expect instead synergies because the new entity will be a single point event.

Thank you.

The next question is from Lorenzo Giacometti of Intermonte.

Yes, good morning, and thank you for taking my question. So the first one is on your excess capital, which is seen growing year by year due to DTA's compensation and potentially even more with the merger or with the Danish compromise treatment. So do you intend to distribute it to your shareholders? And if yes... Do you see distribution via dividends or buybacks as more likely? And the second one is a more strategic one. Are you planning to expand abroad with some of your businesses? I was mainly thinking about consumer finance, but also wealth management and investment banking. Thank you.

Okay, so let's start from what is for me even more exciting, that is the expansion of the business. So we strongly believe that Compass, with its manager, has the full potential to expand the business outside Italy. They have expertise, they have very good technology. and they have a proven track record in terms of scoring. So I believe that this is an option that we're going to explore very quickly. And my personal view is also that for some part of the business as well, private banking, investment bank already is there. We have a strong opportunity because once the Mediobanca will be completely focused on corporate investment bank and private banking. There will be additional opportunity to expand business not only in Italy but also abroad. So that's why it's a nice project because we are opening a new market, a new potential revenue generation for the benefit of all the stakeholders. Yes, we have a nice excess of capital. And as you were mentioning, starting from this year, we will have also the 500 million of details that we are going to contribute to the overall capital level. As I was already mentioning, for us to have an important buffer of capital is an opportunity. And we would like to use it in the best way possible. or getting opportunity to expand additionally our business, or we can say end, eventually, further reward our shareholder with even high level of remuneration. Then, if it's through buyback or is through extraordinary dividend, whatever, is something that we evaluate time to time. What is important is that this is a strong opportunity, and I believe today by showing the revenue stream with almost one-third of revenues coming for asset gathering and wealth management, it's clear that this part of business deserves a significant re-rating, as well as the other components. And this is additional evidence that our valuation deserves to be much more in line with our fundamentals and the potential of value that we can generate. And this kind of approach in exploring all the opportunity for better extract value from the combination will materialize. I believe even earlier that what we plan, I think, we have a strong expectation and, again, confirmation that we are really representing an attractive case of investment.

Okay, thank you.

The next question is from Andrea Lisi of Equita.

Hi, thank you for taking my question. The first one is on if you can provide us information With more update on the integration charges, if from your preliminary analysis clearly pending the business plan presentation, you are still confident with what you have initially indicated and if you can provide us some preliminary indication at least of into how many years these integration charges will be splitted if it is reasonable to see already a big portion in the last quarter of this year and then the rest through 2026 and maybe some portion also in 2027. And the other question is on capital. If you can confirm that your preliminary indication of kind of 50 BIPs additional contribution in case of regulatory treatment of the insurance component like in Mediobanca. And the last question is regarding if you can provide us a further update on the management of the stake in general. Thank you.

Okay, so integration charge is something that we are assessing, clearly looking at what now we are considering. We are going to invest the money clearly in retention package. And then it depends how we complete the assessment, particularly on IT. That is one of the main areas where practically we are going to have some cost. But overall, we are confident first that we can, that the estimation we fixed when we launched the transaction is absolutely actual. And the second is that given the work of the teams that are now analyzing the combined business, we believe that we are going to have even room for having even a positive outcome from the overall cost we planned. The impact on quarter one regarding the potential Danish compromise is 50 plus. And generally, we are focused on Mediobanca. And as I was mentioning, generally, it is for us a nice correlated bulk of revenues. For the time being, we are, as I said, completely... involved and committed to deliver what we were mentioning earlier regarding the combination of the two entities.

Thank you.

For any further questions, please press star and 1 on your telephone. Mr. Lavaglio, at this time there are no questions registered. Excuse me, we do have a follow-up question from Luis Manuel Grillo Pratas, the autonomous.

Sorry, it's just a quick clarification on the general treatment. When do you expect to receive those, you know, more than 50 basis points impact? Thank you.

No, as I was saying, we like to be very conservative. All the figures we were measuring are without this benefit. So, we are working in order to have a This kind of benefit, honestly, is difficult to predict when this can be completed. But I believe we deserve it. So we will do our best in order to get as quick as possible, but depends not exclusively on us. For the time being, we manage everything without considering this benefit that should be obvious and should come to us.

Thank you.

Gentlemen, there is a final question from Ignacio Urlargui of BNP Paribas Exxon.

Hi. Thanks for the opportunity to take another question. I just was wondering whether you could consider entering a total return swap, as Vita has done on their own sales, given the confidence that you have about integration and the strength of the franchise and the combined franchise. Could that be a possibility or something that you don't explore at this stage?

Thank you. Sorry, Nacho. I have not understood what do you suggest we can consider?

So whether you could consider doing an equity, an derivative, buying your own shares like BIP or BIP on the 9.9% of the capital, if that could happen.

We are focused on what we know better that is doing banking, honestly. So we, for the time being, we are not considering any kind of transaction like that. We want to be really focused in getting the best from the two entities.

Thank you very much.

Gentlemen, at this time there are no questions registered. Back to you for any questions.

No other question, right? So thank you very much. And see you next presentation.

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