Banca Monte dei Paschi di Siena

Good morning. This is the Chorus Call Conference Operator. Welcome, and thank you for joining the MPS Group's first quarter 2026 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 Lovalio, chief executive officer, and general manager. Please go ahead, sir. Mr. Lovagio, perhaps you have your line in mute.

Yes, thank you.

Good morning and thank you for joining our first quarter of that presentation. This was a strong quarter with disciplined execution and clear strategic momentum. We enter the next phase with fully established governance and strong deliverance. Sorry, I understand some technical problem. I will start again. Good morning. Good morning. Thank you for joining our first quarter results presentation. This was a strong quarter with disciplined execution and clear strategic momentum. We entered the next phase with fully established governance, aligned priorities, and strong focus on delivery. The newly appointed board ensures continuity of leadership while strengthening our collective expertise and execution capabilities. It brings together high-qualified professionals with complementary skill sets, reinforcing our ability to navigate complexity and deliver on our strategic commitment. The message is simple. Uncertainty is behind us. Execution is now the focus. The Mediobank integration remains central, progressing in line with plan and supported by clear operating model designed to preserve brand strength while capturing the full value of our high-quality talent base. and unlocking synergies and scale. This is an execution-led transformation with clear milestones, accountability, and quarterly measurable outcomes across our five business lines. T1 results validate this strategy. High quality, wide diversified revenues mix, improving profitability, tight cost discipline, strong capital position, and leading shareholder returns. At the core remains our franchise strengths, a broad and resilient client base across families, entrepreneurs, SMEs, corporates, and local communities, supported by a consistent high-quality service model. We are building a more diversified, more resilient banking group while remaining firmly anchored to our identity and to the needs of over seven million clients. Let me now turn to the key highlights. This quarter demonstrates earnings momentum, with visibility and repeatability. We deliver 521 million euros net profit and 111 million profit before tax, up by 15.6 quarter-on-quarter and 6.7 year-on-year on a performer basis. Operating leverage is unmistakable. Gross operating profit exceeded 1.1 billion, up 8.4 quarter-on-quarter. Revenues increased 3%, cost declined 3.1, and the cost-income ratio improved to 44, down 3 percentage points versus last quarter. Commercially, Grow is broad-based. Loans reached 129 billion, up 1% quarter-on-quarter and 5.2% year-on-year, supported by 1.7 billion of new mortgages and 2.7 billion of consumer credit. Funding is resilient. Direct funding is stable at 106 billion and indirect funding stands at 185 billion. up 12 billion versus March 2025. Asset quality remains strong. Cost of risk is 42 bps. Gross NP stock is down to 3.7 billion with ratios at 2.5 gross and 1.3 net and coverage up to 15.6%. Capital is a differentiator. Quarter one is 15.9, even after 100% payout accrual and risk-weighted asset growth. And critically, integration execution is on track. The merger was approved on 10 March 2026, with eight war streams, 50-plus projects, and 300-plus colleagues mobilized, and synergies progressing as planned. Let me now go one level deeper, starting with profitability. The profit in the quarter was $521 million, but it reflects tax effects and PPA adjustments, which limit like-for-like compatibility with prior periods. The cleaner profitability indicator this quarter is profit before tax. 911 million up 15.6 versus Q4 and 6.7% year on year on performer basis. That uplift is driven by operating performance, core revenues, cost discipline, and the well-contained risk profile. we are strengthening the bank's run rate while executing the integration. Now, let's look at operating results that best captures the dynamic. Net operating profit was €947 million, up 9.5% quarter-on-quarter, reflecting strong operating momentum and improving earnings quality. Performance was driven by positive revenue mix dynamics and tight cost discipline with a stable risk profile. Year-on-year growth of 3.4% confirmed strength and consistency of our earnings trajectory. Let me now show how this translates into operating leverage. Just operating profit was about 1.1 billion, up 8.4% quarter-on-quarter. Revenues rose 3% while operating costs declined 3.1, which is the definition of positive jobs. As a result, the cost-income ratio improved to 44%, down 3 percentage points versus Q4. Year-on-year gross operating profit was up 4.3%, confirming the solidity and diversified business model even in a complex environment. This matters for integration because synergies are delivered by a culture of cost ownership and performance management. Now I will move to the two revenue pillars, net interest income first, then fees. Net interest income was $1,036,000,000, up 1.9% quarter on quarter. The increase came from improving commercial spread and higher lending volumes, fully aligned with our strategy. Year on year, the NII was stable, showing resilience. supported by volume growth and proactive management of funding costs. You can see that in commercial spread dynamics, this trend with disciplined pricing on both lending and funding. Beyond the current quarter dynamics, the combination with Mediobanca structurally reduces interest rate sensitivity. now at around $50 million for 100 basis points, strengthening earnings and the stability of our earnings across rate scenarios. Recent commissions were $600. 15 million euro, up 2.8% quarter-on-quarter. The most important point is next. Oil management fees increased 7.6% quarter-on-quarter, reflecting targeted commercial focus on strategic areas. Commercial banking fees show some seasonality effects quarter-on-quarter, And the year-on-year reflects the normalization of the ALMA partners' contribution. So the design is our growth and genes are working, particularly in wealth and advisory. This connects directly to the Mediobanca logic. Integration expands product capability and distribution reach, accelerating fee capture through cross-selling. Let's now look at what sits behind this in terms of commercial momentum. This quarter confirms the strength of our franchise. Total financial assets were almost stable quarter-on-quarter despite market turmoil. And oil management gross inflows increased by close to 10% quarter-on-quarter. On lending, we originated 1.7 billion new retail mortgages and 2.7 billion on new consumer finance in the quarter. Now, let's translate momentum into the balance sheet, starting with customer loans. Customer loans were €129 billion, up 1% quarter-on-quarter. Growth is driven by the quarters production already discussed earlier. and is well supported across business lines. On year-on-year basis, loans increase 5.2% with contributions from all businesses. This is important. The growth is broad-based. not concentrated in a single segment. To reinforce our integration strategy, we are scaling a multi-business platform while maintaining consistent underwriting discipline. Now, moving to the liability side, direct saving and funding franchise strength. Commercial direct savings were 106 billion euros. showing resilient dynamics quarter on quarter. Since March 2025, we grew direct savings by 4.6 billion, a strong indicator of customer trust and franchise quality. In today's environment, funding stability is strategic. It protects margin, supports liquidity, and reduces sensitivity to market funding. It can give us additional optionality as we integrate it. We can optimize product mix, deepen primary relationship, especially in premium and private segments. Now let's look at high rate funding where fee momentum and client engagement are most visible. And the rate funding was stable at $185 billion quarter-on-quarter despite market volatility. Both asset under management and asset under custody held up. very well in a challenging macro and geopolitical environment. Since March 2025, indirect funding is up to a billion, mainly driven by asset under management, confirming strong commercial focus and asset gathering capacity. This delivers stronger revenues quality with greater fee capacity, deeper advisory, and enhanced client economics. Integration further strengthens this by expanding capabilities and brand reach in wealth and advisory. Let me now return to efficiency. Operating costs were 859 million euros, down 3.1 quarter on quarter. Both components contributed. HR costs declined 3.2 and non-HR costs declined 2.8 versus Q4. Year-on-year costs were up only 1.1% despite labor contract renewal impact. That is a disciplined cost control without disturbing the business of investment. From integration standpoint, cost discipline also. How we protect synergies delivery. Now, let's move to asset quality and risk. Asset quality remains a clear strength. Gross NP stock is 3.7 billion. The gross NP ratio is 2.5, and the net NP ratio is 1.3. Coverage increased to 50.6%. Quarter risk is 42 bps, stable versus last quarter. We are protecting balance sheet quality as we integrate. Now on to liquidity and funding resilience. Our liquidity profile is sound and conservative. Counterbalancing capacity is 49 billion. 72% of the stable funding is represented by customers' deposits. The LCR 157, despite the lower ECB funding, now only 6.5 billion, down 3.5 billion versus December 2025. Then NSFR is stable at 121. Now to capital. We ended the quarter with a core tier one ratio of 15.9%. That is after accruing net profit for dividend distribution and absorbing the risk with the trusted growth from IRB model updates in the new loan production. Moreover, there is a temporary impact connected with increase of value of generality for the profit of the period. This is what I would call a best-in-class capital buffer. It provides strategic flexibility. We can invest, integrate, and sustain attractive shareholder remuneration. Now let's move to Mediobanca's quarterly performance and to the integration update. Mediobanca delivered a net profit of $323 million with profit before tax at $447 million, up 19% quarter-on-quarter. Commercial trends were overall positive, and we are seeing first benefits from synergies. Values increased 5% quarter-on-quarter, with NRI up 3%. This is up 3%. 6%, and stock trading supporting other income. The cost-income ratio improved to 41%, down 5 percentage points quarter-on-quarter, and quarter-one stands at 15.7%. In wealth management, total financial assets are $113 billion, up 4% year-on-year, driven by assets under management, up 7% year-on-year. In CIB, activity has re-accelerated in recent months with growth returning across all major product lines, which advisory fees back to last year level, and sound pipeline with ECM and DCM providing positive contribution with high markets activity. Now, let me briefly return to private banking. Q1 reflects a temporary dislocation primarily driven by concentrated banker departures. Since mid-April, however, we have seen a rapid normalization in the business, with client confidence returning, the banker base stabilizing, and commercial activity rebounding. In the last three weeks alone, we have generated approximately one billion of potential net new money, largely linked to entrepreneurial liquidity events. At the same time, recruitment has restarted with a focus on high-quality senior profiles, with initial hires expected to join from the beginning of next quarter. As a result, exit trends are improving and commercial momentum is clearly returning. Structurally, our model remains anchored in the PIB framework, which is unique in Italy. Combining private banking and investment banking capabilities to serve entrepreneurs holistically across wealth, corporate transaction, and private market. This integrated model supports deeper client relationships, higher quality flows, and stronger retention, particularly around liquidity events. While Q1 was transitional, we are now seeing stabilization, pipeline rebuilding, and strengthening of our differentiated model positioning the business for renewed growth. The same strategic consideration applied to our corporate investment banking franchise in particular to our Mediobanca bankers. The integration creates a fully integrated CIB platform combining Mediobanca's advisory excellence with Montepaschi lending capacity and commercial reach into a single unified offering. We are not simply combining two platforms. We are upgrading the way we win businesses. And let me speak directly to our Mediobanca bankers. This platform is designed to strengthen your competitive position, combining top tire advisory with execution capacity at scale. This is especially relevant in mid-corporate segment where the combination of advisory and lending is most powerful. And where the teams of bankers are already demonstrating the strength of this model. In today's market, advisory wins when it is backed by balance sheet. With this combination, every mandate is supported by both enabling higher conversion, larger transaction, and greater client value capture. This is a clear professional step change. More mandates won, deeper client franchises, and stronger long-term economics. And let me be clear, you are the core of this franchise. client trust, mandate generation, and long-term relationships sit with you, and this group is fully aligned to amplify your ability to deliver. Now I will show how this translates into the combined revenue mix. This slide makes the evaluation logic of the group more explicit. The combined business mix is increasingly weighted toward higher multiple activities. Notably, asset gathering and wealth management alongside CIB and consumer finance while retaining the strength and the scale of our retail franchise. This evolution supports a step up in earnings quality and over time, a re-rating of the group's valuation profile. At this stage, the representation is intentionally focused on revenues as integration is ongoing. As we progress in the alignment of system metrics and performance framework, we will progressively enhance the level of economic and financial detail by business line, providing a more comprehensive view of profitability and capital allocation. This will enable the market to better assess the underlining value of each franchise and appropriately reflect the contribution of higher multiple business within the group. Let me now walk you through the timeline and execution status. We are on track for effectiveness by 4Q2026. following a clear timeline of corporate and regulatory steps. Boards approved the merger project and exchange ratio on 10 of March, 2026. Next are the merger resolution in May, June, and schedule the regulatory approvals in Q3, and then execution and effectiveness in Q4. The structure is designed to protect value and identity. Mediobanca merged into Banca Montepaschi, while CID and private banking are merged into a wholly owned company named Mediobanca SPR. Mediobanca Premier's advisor network will be integrated into WIDIBA, which will adopt a corporate name including the Mediobanca brand, and the general stake will sit under the new Mediobanca entity. Execution is fully mobilized. It will stream 50-plus projects, 300-plus colleagues, and strong PMO oversight. And importantly, over 300% of target synergies are already secured in 2026, supported by granular monitoring and discipline execution. Retention of client-facing projects talent remains our clear priority. With targeted actions already in place to protect franchise value and sustain revenues momentum. Now, let me detail synergies and what we have already activated. We are confirming synergies targets and facing reaching 0.7 billion by 2028, with a clear ramp from 2026 to 2028. The key point is that initiatives activated in Q1 are expected to contribute visibly during the year. On revenues, we are accelerating structured product distribution from Mediobank CID into Montepaschi channels and launching selected advisory cross-selling. On cost, we are renegotiating the shared supplier agreements, launching joint tenders, and removing duplications like info provider, consultancy, and at group level. On funding, we are realizing benefits from issuances executed at tiered and optimizing the funding mix through 2026 issuance planning. This is what integration execution means in practice. Specific action tracked centrally and converted into measurable outcomes. With that, I will move now to our closing messages and outlook. This was a strong start to the business plan. We delivered $911 million profit before tax, up 13.6% quarter-on-quarter and 6.7% year-on-year, and $521 million net profit, fully in line with guidance. Commercially, the franchise is resilient. Just operating profit was up 8.4% quarter-on-quarter. Loans were up 1% quarter-on-quarter, by 1.7 billion mortgages, 2.7 billion consumer credit. And wealth inflow were up 10% quarter on quarter, despite market volatility. On integration, we are delivering early. Mediabank is progressing on track, and 30% plus of target synergies are already secured in 2026 with execution fully mobilized. We confirm guidance with confidence with 2026 profit before tax expected to exceed 3.5 billion, supported by strong momentum, disciplined execution, and sustained delivery of shareholder value. Thank you. We are now ready to take your questions.

Excuse me. This is the course call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press 4 and 1 on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Our first question comes from Antonio Reale of Bank of America.

Morning, all. It's Antonio from Bank of America. A couple of questions from my side and one clarification. The first question is on the outlook for the year. You provided guidance on pre-tax profit to be above $3.5 billion this year. Can you give us a little bit more color around the moving parts, particularly on fees? I've heard your remarks on the commercial activity picking up since mid-April, your comment on sort of departures at the private banking side being behind us. So does that mean we can draw a line here and call this the trough point for fees when it comes to an operational standpoint, conscious that consensus for fees is at $2.6 billion this year? If you can provide a little bit more color around your thoughts for the outlook, that would be superfluous. That's my first question. My second question is, really a follow-up on distribution now that you may be in a position to have a little bit more visibility. You're expected to complete the Medievanka minority buyout in October, if I'm not mistaken, which I think is consistent with your guidance. I wonder when shall we expect ShareBedX to start, if they can also start before October, and ultimately what does that mean for your dividend per share from here. You're set to pay 86 cents dividends in about a week or so, so your expectation for DTS this year. And lastly, if I may, just a quick clarification. You've given us a clear view of the phase-in of your synergies for this year. What is the related integration cost that you're looking to book in 2026? Thank you.

Thank you. Thank you. Thank you for the question. So, as I was mentioning, the trends in terms of fees are quite positive. Sorry, we have, again, a problem with the microphone. I apologize. So, as I was mentioning, the trend from a commercial point of view is quite positive because the strength of our franchise is day-by-day confirmed. And so we are, again, quite positive regarding the trend of fees and commission. And we expect to have a trend that overall will be in line with the pace that we are reporting in the quarter. As usual, if we take in consideration the third quarter, the August month, we can have probably the usual seasonality. But overall, this trend will continue, and we are going to have a path that, together with the franchise, both franchise Medivanka and Montepaschi, will support the growing trend that we are already reporting in the quarter. As far as interim dividend, it's clear that we want first to complete the merger. Then we will consider it potentially, of course. And as far as dividend, I think we were already mentioning that we want the dividend level broader in line with the one of this year that as you mentioned we are going to pay 10 days from now and clearly as we were mentioning we will provide the additional contribution to the total remuneration in addition to the profit with the buyback that we were mentioning already in the time of presenting the plan So dividend remuneration, total remuneration shall order we feel comfortable to confirm and then clearly we are going to have an attractive trend from the next year according to what has been already set in the plan. Integration costs, we plan originally to have around 300 million of costs, and we believe we can stick to this expectation.

Thank you.

The next question is from Elena Perini of Intesa San Paolo.

Yes, thank you for taking my questions, and good morning, everyone. I've got three questions. The first one is on your sensitivity to interest rates, if you can update us on numbers. The second question is about your wealth management. We saw that you started to sell Mediobanca, SGR products to your network. You also have a strategic partnership with Anima. If possible, would you elaborate on Which kinds of client segments are you going to serve through the two SGRs? And about Anima, Banco BPM mentioned the possibility to open the capital of its control company to other partners. Would you be willing to to consider this possibility. My final question is about your general estate and next year expiry of the JV with AXA. What kind of thoughts are you making about your insurance business, considering the staking in general and the deadline that you have next year? Thank you.

Hi, good morning. On NII sensitivity, let me reiterate what the CEO has already mentioned when giving the presentation. The current sensitivity of NII to a parallel shift of 100 bps of the curve is around 50 million euros at group level with slightly above half of this amount related to Montepaschi and the rest related to Mediobank.

Okay, so I was mentioning and I think this is a positive element of the integration Clearly, let's start by saying that Anima is a strategic partner for us. And we are keeping growing in the cooperation, enriching the product wallet that Anima is providing. And we have to say that this is a trend that we believe will continue, having this kind of long-term partnership with them. And for the time being, we stick to the partnership, commercial partnership, and we are focused to implement our plan that counts a lot on the contribution coming from the partnership with ANIMA. Having said that, I think that the SGR Mediobank is providing specific kind of products that we were distributing to our network to specific kind of customers. So, something that is not strictly comparable with the products that we have with Anima. And I think this kind of offer that we are providing to the product SGR is not competing with the products that we have with Anima. As far as generality, I'm just sticking to what I used to say that is nice to have, is an important uncorrelated part of revenues on which we count. generally giving also additional optionality in terms of operational partnership so it's clear that We are considering all the opportunities that we can have on the market in terms of product offer, in terms of partnership, as for us what is really important is the value creation and to provide to our customer the best offer in terms of product combination. and to ensure sustainability to our results so as i was to say nice to have a general mistake the next question sir is from giovanni razzoli of deutsche bank good morning to everybody and thank you for taking my question well done with the

The Q1 results, two very quick questions. The first one is on the volumes, lending volumes in the CID and consumer of MedioBanca. They were very, very strong, both of them. We've seen the first impacts of the synergies. I was wondering whether you can give us a little bit of outlook for the next couple of months. On those trends, in particular, what is the pipeline also for the investment banking going forward? And what's your view also on the volumes on corporate and consumer? The second question relates to the dividend for Generali. It is 20 basis points of reversal to the CT1 once Generali will pay dividends, so your pro forma CT1 ratio will be above 16%, and I was wondering whether, what is the state of the art of the application for the Danish compromise? Have you already submitted the request, and what is the reasonable timeframe to see whether we can roll Mediobank setup to the parent company? Thank you.

Okay, so thank you, Giovanni. As I was mentioning, really, what is an important element as a result of this integration is the strong cooperation that we have between the CIB, I mean advisory services in Mediobanca and our uh mid corporate and even large corporate in montepaschi customers right because um and uh i have to say that this is one in some way also surprising for the speed we are getting this kind of cooperation. It's something that is tangible and every day I'm hearing about meetings that the two teams are having with customers and I think the trend can only improve despite we already are reporting important results. So Mediobanca by tradition is present in all important deals and will keep going and being present because we have exceptionally high quality level of professional there. But now they can also enjoy the fact that we can go to customer and support customer with our balance sheet of Montepaschi. And this is a win-win solution that is making the bankers from Mediobanca and our relationship managers very close day by day in trying to explore all the opportunities and the one of the key elements of this positive Integration is coming especially in the mid-corporate sector where Montepaschi is quite strong, Mediabanca is quite strong because also there we have top talent bankers and I believe this is a unique opportunity for growing and we will see the volumes growing as well the fees, I mean the advisory fees coming from this activity. So quite positive trend I believe from now on.

Ciao Giovanni. On the impact of generali, yes, the... Generally participation brings some seasonality to our capital transfer because you have deductions as you accrue net profit and then you have capital release as you are paid dividends. By the way, this is valid not only for Generali but also for our insurance JVs with AXA even if, of course, on a smaller amount. Then on your precise question, the expected impact, the net expected impact from Generali in the second quarter is around plus 30 basis points. Then on the Danish compromise, on the Danish compromise, we are submitting a question to the EDA.

Sorry, Andrea, can you remind us the benefit of the Danish compromise, please?

On the range compromise, we are submitting a question to the EDA to, let's say, validate the potential approach.

The next question is from Sophie Pettersens of Goldman Sachs.

Yeah, hi. Here is Sophie from Goldman Sachs. Thanks a lot for taking my question. So my first question would be on M&A in Italy. I know you are in the middle of the process of integrating Mediabank, but how do you think about M&A in Italy and kind of opportunities here in the next, I don't know, 12 to 24 months? And then my second question would be, I saw that the variable compensation was lower for Mediabank this quarter, and that drove some of the cost improvement this quarter. How should we think about the kind of variable compensation going forward and what you can do on that? on the cost side. And then just finally, a very short question. How should we think about the DAX rate going forward? What's a normalised DAX rate for NPS? Thank you.

Okay, so I was already mentioning since last year when we start the transaction of MediBanca that I believe a safe method in banking and this is a process that is unavoidable. So... for sure there will be a further phase of consolidation. Having said that, it's nice to be in a position where practically we feel that we can be clearly a key actor also in this field thanks to the position we reach in terms of capital, capability to generate value, capability to remunerate our shareholders, and at the same time having a significant buffer in terms of capital. I mean that we believe that we should be focused at the current stage in completing our integration process, ensuring that the synergies we had in mind will be concretely and clearly realized, hopefully even above the target we fixed to ourselves, and that's why at the current stage our focus is exclusively in delivering what we promised to the market.

Hello. On the other two questions, as regards the operating cost trend, actually our guidance on PBT factors in a slight growth year on year of operating cost. And then, of course, on a quarterly basis, there might be small volatility. On tax rate, at the moment, let's say our best estimate is is around 32%, and this might slightly vary depending on the contribution of the general net income to the bottom line, because the higher the contribution, the lower the weighted tax rate. But at the moment, our best estimate is around 32%.

Thank you.

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

Hi, good morning. Thank you very much for taking my questions. My first one is on the 2026 NII, whether you could provide any guidance on NII. Then I have a few clarifications. On the tax rates, you just mentioned 32%. Could you also confirm what would be the tax rate before any income from associates, including Genali? And then I also noticed that the GHGs this quarter were only like 1 million negatives, much lower than the run rate last year. I wanted to confirm whether this is a new run rate. And thank you.

Okay, so net interest income. I believe we can confirm the guidelines we provided at the beginning of the year. The trend is expected to be positive. And so we think that the contribution in the coming quarters will be above the contribution that came in the first quarter, mainly driven by volumes grow and also effective management of spread, particularly we believe that we can have a tight control also on deposit.

So on the tax rate, actually calculating the taxable income, the tax rate of what is not related to generale is around 36%. But then when you make calculations, you should take into consideration that some part of the taxable income of the group is abroad and then the PPA impact is already net of taxes. So this makes the calculations slightly more complicated. On fees, on convertible DTAs, For the time being, let's say the guidance is confirmed, this is a benefit deriving from the consolidated tax financial statements with Mediobanca. Then the 2026 amount will depend on the amount of taxes paid in the year, while from 27 onwards, the number should be close to zero.

The next question is from of Morgan Stanley.

Good morning and thank you for taking my question. I have a few. The first one is on generale. So in which scenarios would it make sense for you to sell the steak? Then the second one is on capital. You mentioned the question to the EVA. So I was wondering how long you think this process could last, and what's the sense of the ECB on this from your dialogue? And then finally, a few questions on the private banking still. So in your question, you mentioned that the exits were mainly on the first part of the quarter, and I was wondering if this is the same for deposits and outflows, and negative money outflows, and if you can give us an update in terms of deposit volume on the private banking and medibank in May. And finally, if you could give us your estimate of the outstanding outflow risk related to the bankers that have already left from Medibank. Thank you.

Okay, honestly, I think I'm so focused in accelerating the integration process that I didn't even think in which scenario can be logical or profitable to sell the Stecco Generali, so on. I believe it's better if I postpone this kind of consideration, because now what is important for us is is to be focused on commercial activity and integration. As I said, it's nice to have a contribution as this quarter, $130 million coming from this stake and potentially to think also on some business cooperation with them. Taking the point regarding relating to prior banking is really important to consider that in economic terms the impact of bankers that left are quite marginal, being a significant portion of savings in some way parked in current account or in a very low margin products so I believe that we can expect some additional probably decrease of, how to say, decrease of volumes, but I believe is what we consider a normal trend in each situation. Together with some flow that we are going to lose, as I mentioned before, where significant new money that is coming and I strongly believe that the actions that were put in place and the people that we have in private banking will already adopt the measures in order to have the trend of the stock. growing from now on and I think this unique model of private investment bank that Mediobanca enjoys something that can provide further benefit for the stock of savings of private banking and this is what I mentioned before already I was informed that we have important net money coming just for few liquidity events connected with some entrepreneurial deals where Mediobanca is playing the role of advisory in terms of entrepreneur at the same time the role of getting the benefit of the money that is coming from the sale so i believe the situation is normalized and as i mentioned before from now on i i see that we can just observe some natural situation that each bank that has a private banking division is in some way noticed, right? It's important to underline that the first quarter was a particular quarter and now from mid-April situation definitely is under control and will keep improving in terms of

That's it.

Thank you.

On the Danish compromise, based on past experiences, it might take some months to get an answer. We're submitting a question in the next session. few hours and the ECB will provide their stance to the EVA and that we will, as soon as we get a feedback, a formal feedback, we will give disclosure to the market.

Thank you. The next question is from Manuela Maroni of Intesa San Paolo.

Good morning and thank you for taking my questions. The first one is on the NIEI. The NAIC trend was positive in this quarter because it was up quarter on quarter despite the fewer days. You mentioned in the press release a contribution from hedging derivatives, so I'm wondering what was such a contribution and if you expect this contribution to accelerate in the next quarters. The second question is on the cost of risk, 42 basis points in this quarter. I'm wondering if you have seen some deterioration of the asset quality after the end of the quarter, and if we can take these 42 basis points as a guidance for the full year. And finally, a clarification on the net compromise. On the previous question, if I remember correctly, the expected benefit from the Danish compromise was 50 basis points. I'm wondering if you can broadly confirm this figure. Thank you.

Okay, we start with asset quality. We didn't observe any signal of deterioration. Situation is, how to say, from the beginning of the year, almost the same. So we feel comfortable to confirm the guidelines we gave with the cost of risk that we said at the level not higher than what we are observing in the first quarter.

On the other two questions, on edging, this is part, let's say, of our overall edging strategy that led to a reduction of the NIH sensitivity. So we expect, I would say, stable contribution over the next quarters from this edging strategy. While on... The Danish compromise, yes, I confirm we've always given a guidance of around 50 bps positive impact.

Thank you. The next question is from Luigi Tramontana of Capri Chivre.

Yes, thank you. Just one question left on the PPA. Approximately 60 million this quarter. If I remember well, you gave guidance for the full year of 100 million. Are there any one-offs in this quarter, or do we have to expect a higher impact for the full year? Thank you.

So, yeah, on the PPA, let's say we said that on average over, let's say, the PPA amortization period, we expected 100 million euros per year, again, on average, and then the time distribution would depend on the amortization of the relevant assets and liabilities. Actually, the amount is expected to be slightly higher at the beginning of the period, so in the first and second year, compared to this period. to this average, and this is the first point. Of course, the accumulated amount is the same. The second point is that in this quarter, yes, there was also a bit of seasonality because a good chunk of the PPA reversal was driven by repayment on consumer loans, even if, let's say, the overall stock amounted, despite the very good commercial performance.

Thank you.

The next question is from Andrea Lisi of Equita.

Hi, thank you for taking my question. Some clarifications. The first one is if you can provide us a guidance and an evolution of the integration charges, so should be expected mostly in second quarter, third quarter, and if you confirm the 300 million of these integration charges for the year. The second question was on the capital dynamics. If on top of what you have already highlighted during the call, so related to the reversal of general effect, should and the movement of the OCR reserves should respect also other elements, not still highlighted in the quarter dynamic considering obviously normal risk with the asset increase direct to volume growth and so on and the other question is on volumes so that has increased quite well also on the multi-pass click perimeter So if you can provide us an indication on what you expect going on and as well on deposits which are your expectations. Thank you.

So on the first two questions, integration charges, we would expect them in the second half of this year because let's say the booking, of course, is strictly related to the implementation of the relevant actions. And as regards to capital dynamics, in terms of moving parts, of course, there is the DTA utilization. And then the other main driver is related to the RWA growth. In particular, I can anticipate that in the second quarter of this year, we expect a small increase of 400 million euros in RWAs related to the implementation of a model change in Medibank.

So volumes is clear that integration and synergies that are coming, integration counts a lot of the contribution of consumer loans. That's why we believe that we will observe a growing trend up to the end of the year as a result of effective commercial activity that Compass traditionally has in the coming quarters and also some synergies that will come according to our plan because significant portion of synergies are coming from in the area of retail banking where we allocate also from logical point of view, the consumer lending activity. So combined with consumer lending, we expect to have a growing line at least with what we reported in the first quarter for mid-corporate, also with some deals. But clearly our focus is what we believe is sustainable, so retail, mid-segment, and then corporate connected with additional business can come by getting turnover from the customers. So in a nutshell, a growing trend as a result also of gradual implementation of the synergies we expect, particularly in consumer lending.

Thank you. Sorry, a follow-up on deposits. What are your expectations? Thank you.

Sorry, sorry, sorry. I forgot about that. It's clear that for us, we consider deposits like raw material for an industry. For us, our key, clearly, we have to manage tradeoff. So while on retail and small business, is crucial to our deposit. We have a tactical approach as far as large corporate where the tradeoff between price and volumes are always taken in consideration as you see we don't have any issue in terms of liquidity. I have to say retail and small companies, the trend should be growing as this is not affecting particularly the spread. While on large corporate, we will see time to time. But anyway, in general terms, we expect the deposit to grow.

Thank you.

The next question is from Hugo Cruz of KBW.

Hi, thank you for the time. I have quite a few questions. So first on the NII, your sensitivity seems quite low. And given that everyone expects rates to go up this year, I was wondering how we could see that playing out in your NII line. So when could we see a positive impact from the higher rates this year, assuming they happen in June? And then if you could increase your sensitivity over time to take advantage of these rate increases. So that's the first question. Second, on OPEX, I was wondering, you know, retainers, is there anything booked already? I think your guidance for the full year was clear, but I was wondering if that includes some sort of one-off costs with retainers, either already in Q1 or later in the year, if you could quantify that. Then a question on the PBT guidance. above $3.5 billion. Is that before or after the restructuring costs? And then finally, the interim dividend. I understood that you said you could pay an interim after the delisting of Mediobanca. I'm not sure if that means there could be an interim already this year or not. So if you could clarify that, because I think the market is already pricing an interim for this year. So that's it. Thank you.

So I tried to answer and maybe not in the same order. So the first question, sorry, not the first question. One of the questions was on the guidance on PBT, whether it was after restructuring charges. Yes, it is after restructuring charges. Then on cost, there was a question on whether they... In this quarter, we were factoring one-off costs. There are a few millions related to retention charges, but they are booked in integration costs, so in the integration cost line. uh then internet after the listing um we um let's say we are uh as mentioned by the ceo during the presentation we are let's say delivering on our timetable as regards interim dividend when we present the first half results, we will take a view whether when to start paying interim dividends, so whether this year or not. On NII sensitivity, yes, I mean, we are managing proactively let's say, our aging strategy, considering particularly the amount of new business that we grant every quarter. So we actually are in a position to benefit of the increasing interest rates.

All right. Thank you very much.

The next question is from Lorenzo Giacometti of Intermonte.

Yes, good morning, and thank you for taking my questions. Actually, one question and one follow-up on capital. So the first question is on synergies. Can you remind us what are the biggest areas in which the majority of synergies will be extracted? And given the working groups already in place, are you seeing some upside potential or downside rates on the overall number? And the follow-up on capital is that can you confirm that the Danish compromise positive impact on capital is not included in your capital projections for the next year?

That's all. Thank you.

Okay. So synergies. Most of synergies are expected to come from retail and commercial banking, and I believe they account approximately for 50% of the total. Then we have an important contribution coming from corporate investment banking, as I was mentioning even about what we were originally expected, originally we planned close to 20%, and I think the contribution can be even higher. And clearly... asset gathering and management and wealth management additionally we will have a contribution can can be even around 15% and then the remaining is connected also with private banking especially if we consider the activity of private investment banking so overall This distribution can slightly change, especially if we are observing this positive trend on corporate investment banking, but this can be also on the top of the 700 if we are capable to accelerate even more than what we are doing now, this kind of cooperation, full-fledged service that we can provide to our especially mid-corporate customers. And I will take the question, Andrea. So positive impact on Danish compromise is not considered in any of our projections, as we were clearly mentioning at the time of presentation of our business plan.

Okay, thank you.

For any further questions, please press star and 1 on your touchtone telephone.

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

So thank you very much to all of you and looking forward to meeting you again in August. Thank you very much.

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