Banca Mediolanum Unsp/Adr

Good day and thank you for standing by. Welcome to the Banca Mediolanum 9 month 2025 results conference call. At this time all participants are in listening only mode. After the speaker presentation there will be the question and answer session. To enter the queue for questions please press star 1 1 at any time. You will then hear an automated message advising that your hand is raised. To withdraw a question please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Alessandra Lanzone, Head of Investor Relations. Please go ahead, Madam.

Hello, everyone. It's a pleasure to meet with you again. As you've seen, with a strong third quarter behind us, our nine-month picture is in good shape. And today we are going to take a closer look to our results, what's powering them and how we see the road ahead. Just a quick note before we start. You're welcome to ask a question at the end of the presentation in the language of the line you're calling from. We will answer in Italian, as usual, with a real-time English translation. With that, I'm pleased to turn the floor to our CEO, Massimo Doris, who is joined by our CFO, Angelo Lietti. Massimo, over to you.

Thank you Alessandra, and good afternoon everyone, and thanks for joining us. Let's start with the context. Nine months in, inflation in Europe returned to around 2%. Interest rates remained restrictive, equity markets advanced unevenly, bond yields were volatile, currencies were choppy, and geopolitics remained a persistent headwind. In this kind of environment, discipline matters, and steady execution is rewarded. And that's where we stayed focused. We planned for this noise and kept on doing the fundamentals well, prioritizing our proven trademark levers over one-off moves or tactics. And this discipline came through in our nine-month numbers. From earnings to revenue, the trend is up. Net income up 8%, operating margin expanding 5%, and an 11% lift in the net commission income. We also reached two record milestones that we are proud of. Over 150 billion euro in assets and more than 2 million customers. Another strong year is shaping up. Our nine-month performance reflects preparation and a simple aim to provide our customers with the same dependable, hassle-free service we never fail to deliver. Two points stand out. First, we deliver strong overall net inflows underpinned by a 21% year-on-year surge in managed asset inflows. This supports healthier recurring fees and also strengthens customer relationships. Our family bankers continue to convert customer engagement into advised investment solutions, enhancing quality as much as quantity, increasing share of wallet and improving retention. Second, our revenue mix proved well balanced. As the interest rate tailwind softened as anticipated, recurring fee income increased markedly, thanks to higher average managed assets more than compensating for lower NII, while protection policies and credit volumes picked up year on year. Below the line, we stayed disciplined on costs while investing in growth levers that matter, namely technology, network quality, and the customer experience. Capital and liquidity remain robust, well above regulatory thresholds, giving us the flexibility to keep investing in our business in all market environments while delivering attractive and rising shareholder returns. Our business in Spain is progressing in line with plan and in breadth without distracting from our core Italian focus. As we enter the final quarter, our priorities are clear. Keep leading in flows with a biased asset bias. Protect profitability through revenue mix and discipline. Sustain high quality customer acquisition as well as network growth. And execute with the same level of rigor that has driven quarter by quarter improvement in operating margin this year. Let's walk through the nine-month details. First up, economic and financial highlights of slide number four. Let me start with the headline number. Net income came in at €726 million, 8% ahead of last year, mainly thanks, as we said, to a material recurring fee growth driven by strong inflows into managed assets. Our core business set a high bar. Contribution margin surpassed 1.56 billion euro and operating margin 891 million euro, both advancing by 5% year on year. We solidly outperformed the interest rates headwind. Maintenance income fell 5% to 582 million euro, yet our results came in stronger. Q3 added significant value year-on-year. We anticipated that net interest income would narrow the gap versus last year, and it is now moving toward our full-year guidance for 2025, which we have further revised to end up closer to the results of 2024. Our working view is that three-month Euribor averages 2.17% in 2025, Notably lower than the 3.64% average in 2024. The impact, however, is partially offset by a more favorable volume mix, supported by increasing liquidity from customer deposits. And looking ahead, 2026 points to a higher net interest income. Importantly, while our commercial initiatives put near-term pressure on NAI, they fueled growth in net commission income, which at the nine-month point climbed 11% to some €967 million. Every component of gross commission income posted strong gains, as expected recurring fees contributed the largest share. In fact, combined management and investment management fees rose to over €1.24 billion, marking a solid 10% rise over the same period last year. This expansion was underpinned by a record net inflows into managed assets. which lifted average assets by 13 billion euro year on year. This came despite market volatility and a weaker US dollar weighing on Q2. However, Q3 saw a supportive market backdrop. In fact, as you can see in slide number 9, there was a solid uplift in Q3, 7% higher than Q2, benefiting from constructive markets as well as strong flows. Some volumes boosted the recurring fee income. At the same time, a somewhat different mix favoring fixed income funds, together with increasing equity-oriented influence via Intelligent Investment Strategy, which begins in lower fee money market funds, compressed the average recurring fee from 212 to 202 basis points year on year, in line with our expectations. Let's now focus on the key ratios across the first 9 months. The cost-income ratio came in at 37.2%, edging lower versus H1, as could be expected given the cost seasonality. There is also a cost-efficiency component that should support year-end, and we can now confirm we'll finish out 2025 below 40% as per our cost-income guidance. Acquisition costs measured against gross commission income held steady quarter after quarter, ending the nine-month period at 34.3%. Finally, the cost of risk, annualized on a 12-month rolling basis, stood at 15 basis points, and we expected it to normalize toward around 20 basis points by year-end, consistent with our guidance. Slide 8 provides more detail on the other income statement lines, and let me flag a few. Banking service fees climbed 29% to nearly €182 million on the back of strong certificate sales, especially in Q2, with some follow-through in Q3. As you know, certificate fees are booked upfront in the P&L. Net income on other investments was €23.5 million, up 29% year-on-year, reflecting a larger Q2 Mediobanca dividend and higher valuations on our Treasury portfolio after Italy's rating upgrade. The 50% increase in provisions for risk and charges reflects the same dynamics we saw in H1. On risk provisions, last year's favorable legal resolutions led to one-off partial releases that were not present this year. For natural indemnities, the increase remains volume-driven. Higher commissions naturally require higher provisions. Fair value showed a significant improvement to €23.4 million from €10.3 million last year. The stake in Nexi was fully disposed of in Q2, leading to a substantial uplift from the negative mark recorded in the same period last year. We also saw a positive contribution from Treasury trading activity. Let's turn to slide 5 for a brief look at the business results in the first 9 months. Commercial activity was strong, lifting total net inflows by 14% to €8.16 billion, supported in large part by the success of our time deposit campaigns. Notably, inflows came from both new and existing customers, underscoring the effectiveness of our marketing and acquisitions engines. The clear standout, however, was managed assets, which flows at which flows of €6.58 billion, up 31% year-on-year. And with October now in, the year-to-date figure stands at €7.3 billion. We are firmly on track to reach our €8 to €8.5 billion guidance in minus asset inflows, topping the €7.6 billion record from 2024. As shown on slide 34, for the first nine months of 2025, we again topped Assorety in managed asset net inflows, extending a four-year leadership streak. And even with the updated classification, which also includes the lower margin segment of administered assets with fee-over or fee-only pricing models, we came in second place, only a touch behind Fideurum. Let's now refer back to slide number 5. As we said at the beginning, we crossed the 150 billion milestone in total assets, ending September at 150.4 billion euro, 9% above year-end. The credit book also posted growth, reaching €18.44 billion, with asset quality remaining solid, as shown by an MPL ratio of 0.78%. And this was thanks to loans granted, which increased 37% year on year, totalling €2.79 billion. Gains were also solid in general insurance growth premiums, up 23% to 114 million euro, driven by stand-alone policies, but even more so by a renewed uptake in loan protection policies in line with mortgage expansion. Turning to slide 6, we crossed the 2 million customer milestone. adding 147,700 new customers and lifting the base up 4% at the end of September. Our family banking network at the group level expanded in step, also up 4% to 6,682. As we noted earlier, Intelligent Investment Strategy gained clear momentum. About €4.4 billion is currently parked in money market funds, set to transition into equities over an average of 3.5 years. Since the beginning of the year, €1.5 billion has been added, raising the material 43%. Another 2.9 billion euro is slated to move into mutual funds over the next 12 months, as shown on the last two lines of slide 6, including some 800 million from double chance deposits and over 2 billion from installment plans flows, which continue to build steadily. Our trademark model keeps proving its value. It pairs customer convenience with long-term consistency for the bank, supporting recurring fees and strengthening the durability of our revenue base. Let's move on to another key pillar of our model, balance sheet ratios shown on slide 7. Nothing dramatic here and by design. Capital strength is one of our defining advantages and a cornerstone of your long-term confidence in Banca Mediolanum. For the first nine months, the full set of capital ratios reinforced an already robust balance sheet, comfortably exceeding regulatory thresholds and sector averages. Our C to M ratio moved up to 23.2%. The exit from the stake in Mediobanca is now fully incorporated, contributing slightly above one percentage point. In light of this, the Board of Directors has resolved to pay a more generous interim dividend this year, namely 60 cents per share, which indeed factors in this one-off benefit from the Mediobanca sale we executed in July. The interim dividend will be paid November 26 and corresponds to a total of 443.5 million euro. Let's take a moment to focus on our family banking network in Italy, which crossed the 5,000 mark, reaching 5,046 financial advisors in the first nine months. Since January, 245 new colleagues have joined us, many with prior experience as branch managers or customer relationship managers in other sectors. We also welcome a strong pool of young talent through the project NEXT, our key growth lever to shape the network of the future, ensuring generational continuity as well as enhancing the productivity and profitability of our senior bankers. Our banking consultants are top graduates who begin with a six-month executive master at our corporate university. Finishing with the FA certification, then go straight to hands-on work alongside a senior private banker or wealth advisor, with their remuneration covered by the senior. The numbers in slide 37 reflect the success of the project. As of today, 556 banker consultants are already active in the network. with an additional 207 currently in training. We expect to overcome 800 by the end of 2026. This strategic project is already paying off. For the almost 700 senior bankers supported by a banker consultant for at least 12 months, productivity has stepped up materially. These were already ahead of their peer group, and now the gap has widened sharply. The advantage in minused asset inflows has increased six times, from plus 7% to plus 43%, about one and a half times in loans, from plus 28% to plus 42%. and almost doubling in protection policies from 29% to plus 54% and again almost doubling in terms of customer acquisition from plus 41% to plus 80%. We are more or less satisfied with the progress so far and confident about what comes next. Our network is set to keep growing faster, and we see clear upside in productivity. With that in mind, let's turn to slide number 30, which tracks the last five years of productivity in terms of average assets per banker for the 1,000 private bankers and wealth advisors who make up the top tier of our network. As you can see, at €64.2 million average assets per banker, we are already almost double the industry average , which is €34 million. This gap has expanded in recent years, underscoring our strong commitment to the network quality, as well as higher recurring revenues per banker. A productivity edge that thanks to our dedicated efforts we expect will keep trending higher. Now let's turn our attention to Spain by commenting on slide number 32. Given Spain's impressive step up in volumes, we chose to double down on acceleration to achieve a real step change in scale. This resulted in higher level of costs mainly linked to a scaling up of our platform, increased activity all over the country and incremental marketing spending. Therefore, the effect on the P&L reflects a cautious investment choice and aimed at supporting growth and building long-term value. It's also worth noting that net interest income dropped by 24% compared to the same period last year, and given the significantly smaller scale of our operation in Spain, the increase in net commission income there was not sufficient to offset the gap. Operating margin reached 44.5 million euro, reflecting a 32% decrease compared to 9 months last year, mainly due to the factors we just mentioned. Net income stood at 38.9 million euro, 28% lower year on year. Total assets grew by 14% since the start of the year, reaching 14.8 billion euro. with managed assets rising 15% to nearly €11.2 billion over the same period. Net inflows stood out once again, totalling €1.54 billion, 68% higher than last year. Managed asset inflows contributed €1.37 billion, an impressive 45% increase. On the lending side, the credit book expanded further, reaching €1.67 billion, an 11% increase versus year-end. Meanwhile, the number of family bankers increased up by 1%, to a total of 1,629. But what matters here is the material increase in productivity in the past five years. Just like the domestic market, average assets in their portfolio went from €5.5 million in 2020 to over €9 million today. Finally, our customer base in Spain has grown to 270,750, marking a strong 6% increase since the beginning of the year. In closing, let me first recap our guidance for 2025. Net inflows into managed assets at around €8.5 billion. For 2026, volumes are expected to remain similarly strong, assuming normal market conditions. Net interest income down some 1% compared to 2024, and based on current yield curves, we project an increase in 2026. Cost income ratio below 40% and cost of risk around 20 basis points. Dividend per share to increase compared to the previous year. Of course, subject to shareholders meeting approval. This dividend talking about 2025, of course. Looking ahead, analysts broadly point to a strong net inflows into managed assets, resilient recurring fees, and solid operating and commercial momentum into Q4. and I couldn't agree more. As we wrap up, I'd like to confirm that our recurring business engine is tracking last year's peak run rate, which reinforces our positive outlook for the year ahead. Our priorities continue to be growing the network and enhancing the productivity of our family bankers, delivering sustained net inflows into managed assets, expanding the customer base, building durability in any context through consistent execution, sharing the value we create with our shareholders through dependable dividends. 43 years on, we continue to create value in the same way, a consistent model, a clear strategy and real delivery, built on a long-term vision, our ownership-oriented people and daily customer trust. Thank you for your attention and Alessandra is over to you.

Thank you Massimo. We can now open the question and answer session. Please try to limit a couple of questions each at the beginning and then if we have time we can continue that is for sure. Thank you very much.

We're ready to open the Q&A session. If you want to ask a question, please press star 1 1 on your keypad and wait for your name to be called. If you want to cancel your question, please star 1 1 again. Wait for your name to be called before asking the question. Question from Luigi de Bellis, Equitasim. Please go ahead. Good afternoon. I have two questions. The first one is net inflows. It is really impressive, between 8 and 8.5 billion, and you expect a solid trend in 2026 as well. What are the main reasons why you think inflows will be robust in the year to come as well? Do you see any special opportunities due to the inflows mix in terms of, you know, transition from administered assets into managed assets and so on and so forth? Network, you have increased the total sales network by over 100 professional. What's the expected trend? Can you provide some update, some colors as far as the wealth managers and private bankers' network is concerned, also in terms of the assets they manage? Thank you. So, net inflows into managed assets. Well, why do we expect 8.5 billion inflows next year as well? Well, provided the markets are normal, This is what we expect. Should a bear market materialize, should market collapse by 20% or 30%, it will not be possible to report 8.5 billion net inflows into managed assets, because when the market crashes, Mediolanum Unsp Mediolanum Unsp in terms of net inflows into managed assets plus the network is growing so I think that inflows should be growing as well because you know points of sale quote in quotes are increasing the demand for a device is increasing so I really think that we have laid all the necessary groundwork to keep growing Also, we are in November and we are providing a range of 8 to 8.5% billion in terms of inflows into managed assets. You have to consider that this net inflows include certificates. These certificates do have an auto-callable option. Certificates normally track S&P or FTSE MEB indexes. A year later, the two indices are above the initial strike price, the certificate would pay out a significant coupon and repay principal. If either one is below the threshold, no coupon is distributed and the following year you go in, check again and see whether you are above or below Mediolanum Unsp which we sold between November and December last year which actually are part of Net Managed Assets and they are above they have reached maturity both indices are above the initial strike price so potentially they may return a principal to customers so the money may be transferred from the certificate which is managed assets into you know deposits which is administered inflows Mediolanum Unsp Mediolanum Unsp-Adr Mediolanum Unsp-Adr Mediolanum Unsp-Adr As far as the network is concerned, well, the sales network recruitment policy will continue recruiting new bankers. 20% of them, they have A significant portfolio already, a significant amount of assets under their management. Another 20% of them are more junior professionals so they are not bringing a lot of assets with them and then we have people whose background is in insurance and others that come from different areas and then we have banking consultants. I really have to say that clients do appreciate and they continue to express their appreciation for advisory in general. There is a recent market Research by Promethea, according to which sales network used to manage just 9% of Italy's assets and they are up now to 20%. Traditional banks used to manage over 70% of Italians' wealth and they went down to 60%. So you see, The advisory model is really meeting a specific need on the part of clients. As far as both private bankers and wealth advisors are concerned, we have about 1000, putting them together. There is a significant trend that is steadily going up. I believe that the average advisor's portfolio will keep increasing. The number of people probably will slow down in terms of growth not because we will hire less but because every couple of years we will kind of raise the bar and it will be increasingly difficult to pass to the upper tiers and become either a private banker or a wealth advisor. As you can see, in 2029, 2020, we saw a decline in the number of private bankers and wealth advisors. Mediolanum Unsp simply because, you know, the bar was set to a higher level at that point. So those people who could not comply with a new requirement fell off that category. Then they came back in in 2021 where you can see that significant jump forward. private bankers have an average of 51 million assets in their portfolio in five years we'll have fewer private bankers but with a bigger average portfolio so the total will be higher in terms of assets about lower in terms of number of professionals we are staking it all on quality We want them to be qualified, highly professional bankers managing increasingly larger portfolios. Thank you.

Thank you, Luigi. Next question, please. Next question. Enrico Bolzoni, JP Morgan. Please, sir. Good afternoon. Thank you for taking my questions. First question, I would like clarification on management fee margins. Clearly this year markets have moved a lot and can you confirm that taking into consideration the daily average assets and that the margins have started to increase in the third quarter compared to the second quarter. At the beginning of the year they were higher, clearly, but do you think that should markets remain stable, we might continue to see an increase in management fee margins in the coming quarters? Second question. Can you give us an update on performance fees that haven't crystallized yet, but which might do so by the end of the year as compared to the high water mark? Let me start with the second question first. 150 million, roughly, are the performance fees we may potentially collect right now. Talking about management fee margins, recurring management fees and investment management fee margins, between the second and the third quarter they were unchanged. What is actually affecting this fully expected decline in margins? Mainly one thing, that is the behavior of the sales network. I already hinted at this at the call when we published the first half result and the reason remains the same in the last two years and this year is no exception 100% of net inflows into managed assets that flowed into funds flowed into bond funds so 100% in bond funds then equity funds raised slightly, grew slightly, but the worst was for flexible and balanced funds. But let's say that 100% of flows went into bond funds. Bond funds have a lower management fee compared to equity funds. And therefore, of course, you see this decline. In addition, there was a $1.5 billion increase in money market funds linked to the Intelligent Investment Strategy, where the management fee is 20 basis points, so $1.1 billion more means that average fees are strongly impacted. Should we worry? Of course not. equity markets are tight at a certain point that they will correct If we take a look at the past during zero net interest rates 100% of our flows were into equity funds and our clients had increased this portion a lot then bond funds are back to being interesting thanks to the increase in interest rates and finally they can be A good solution for mid-term needs for our clients. And then this is also an asset class that may certainly level off risk since equity markets are so tight. In the last two years, net inflows into managed assets were really skewed towards bond funds. which means that now clients have a better balanced mix. When markets will correct our clients will be much more at ease and they will then be able to flow once again and to invest once again in equity markets where prices will be much more interesting. So these 202 basis points could certainly decline, especially if our intelligent investment strategy is going to grow further. When markets are going to move down, we already experienced this back in 2023. Just as back then, there is going to be an acceleration in the transfers of flows from money market to equity funds. So we go from 20 basis points to 250 basis points in terms of recurring management fees. with an increase in average fees. In 2022 there was a strong decline and then there was a very sharp acceleration. You see the light blue bars above 2022 are the step-ins where the installment would be doubled or tripled and would flow into equity funds. So the average fee at that point would really report a sharp increase because, as I said, a couple of billion, if I remember well, were transferred from money market funds with a 20 basis points fee to equity funds featuring a 250 basis points fee. So we have to just get used to this sort of volatility of the average fee and the average fee margin. Having said this, I've repeated this quite often, I believe that margins will dip slightly, really a matter of a few percentage points, because of our clients' mix. Since we are acquiring wealthier and wealthier clients, of course, not only wealth clients, also young clients that are not so rich, but also wealthy clients would not invest 70% in equity markets. You know, 40-year-old and 70-year-old clients, the risk being the same, would in any case show different investment mixes, especially if the 70-year-old Mediolanum Unsp has millions in assets and the 40 year old has 100,000 euros in assets. So if the high or ultra high net worth individuals have a higher bond investment share, this will mean that the average fee margin is going to be slightly lower, but I believe that it's not going to go much below 200 basis points. I don't foresee our average fee margin to go below the 195 basis points. Right now they are at 202, but they could go up to 207, 208 basis points. because if the markets go down, there will be an increase in equity investments with all the consequences I've already described.

Thank you Enrico. Next question please. The next question is from Elena Perini, Intesa San Paolo. Good evening, good afternoon everyone. I too have two questions. The first one is on NII and the new, more optimistic guidance you provided. I'm not sure whether you have already covered this topic because I had to disconnect briefly, but I'd like to know what are the main drivers underpinning your new guidance. Then I have a more technical question in nature concerning taxation. Because you were the one that promoted an action Mediolanum Unsp Mediolanum Unsp At the start of the year our guidance was minus 5% and now we are saying minus 1%. What happened in between? Well, the main reason is that actual data point to about one billion more on current accounts that pay zero fees. So it generates no income. And of course one billion more that you collected no cost made us go from minus 5% to minus 1%. In 2026, the outlook for NII is an increase We expect NII to go up, but always assuming the yield curve is the same as today. Should the curve change, our outlook will change too. But considering today's forward curve, this is what we expect, because there are certain Fixed rate securities that are about to mature, say BTP bonds that would yield 0.2, 0.3, 0.4% that are reaching maturity and be replaced by other BTPs that have a much better payout. also you have to increase consider the increase in our flows so like I said we managed to gather deposits at very low cost we have increased our activities in terms of lending as well so the improvement is essentially due to those BTPs that were paying off very little Mediolanum Unsp-Adr Mediolanum Unsp-Adr Mediolanum Unsp Mediolanum Unsp It will have an impact on the regional production tax, it will help us free up reserves on the non-deductibility of payable interests, and so on and so forth. And also you mentioned the European Court of Justice judgment, which is final. Italy hasn't actually fully incorporated this judgment into its national laws, but apparently the government set up some kind of reserve here, marked some money to return the money to the banks that were unduly taxed because of the dividends they received from foreign-based subsidiaries. So, as far as the draft budget law is concerned, we think it's manageable. There are obviously positive and negative impacts on us and other banks as well. Before we continue on with the Italian line, I'll rather hand it over to the English line for a minute, and then we'll get back to Italian.

Let me hand it over to the operator on the English channel for the Q&A session.

Thank you. And now we're going to take the question from the English line. And it comes from the line of Hubert Lam from Bank of America. Your line is open. Please ask your question.

Hi, good afternoon. I've got a few questions. Firstly, you mentioned for NII, now you expect 2026 to be higher than 25. At this stage, how much higher do you expect it to be? The second question is just a clarification on performance fees. You mentioned that if the year ended today, you would have accrued $150 million. Just double check, does that $150 refer to the full year or just to come up that could happen in Q4 alone. And lastly, I just want to check also on the dividend of 60 cents. You mentioned that it also includes the Mediobanca proceeds within that 60 cents. How much of Mediobanca is within the Mediobanca proceeds is within that 60 cents? Thank you.

Talking about the NII increase, this could be a double-digit increase when compared to the 2025 level. However, it's a bit too soon to really talk about this considering the present yield curve. The 150 million performance fees have to be added to the ones that have been accounted for in the first nine months. So it's plus 150 million. And as to the 60 cent dividend, the Mediobanca portion accounts for some 20 cents. So it's one third. Thank you, Hubert. We will go back to the Italian line if there are no other questions on the English line. Yes, I hand it over for the next question. From Gianluca Ferrari, Mediobanca. Please, sir.

Actually, I was going to ask the same question as Huber. So, we are talking about an incremental line in terms of dividends for 2026-2028. You said that Mediobank's stake sale accounted for 20 cents. Mediolanum Unsp-Adr Mediolanum Unsp-Adr At your end, our ideas will be clear. The fact that the sale of Mediobanca's stake accounted for 20 euro cents out of a total of 60, but that had no impact on our account because the extra capital generated by the sale of Mediobanca was equal to 150 million, so we may say that 150 million are worth 20 cents in terms of a portion of dividend paid out. As far as the trajectory of future payouts are concerned, future distributions, well, those depend on a number of things that will be more visible at sheer end. Let me add two comments. Our business is rock solid. In the medium term, I don't expect a collapse in profitability. Assets are growing in 2008, in 2011, or in 2022. Mediolanum Unsp Mediolanum Unsp and as a consequence, dividends will be growing. Also, the CEO is a major shareholder in the bank and he and his family do love dividends. We've always been a generous bank when it came to distributions. We'll continue to be generous But at the same time, we always keep an eye on the long term. We have robust capital ratios and this kind of guarantees us the possibility the opportunity of paying attractive growing dividends even in years where the net income maybe is not that high but since our capital ratios are so robust We could pay out more and have maybe capital ratios decline a bit because they're so high. So I don't know whether we can think that the basic dividend is, you know, 80 cents or 85 cents, whether it will go up by 5 euro cents or 8 euro cents a year. At this point in time, I don't know. But I myself, as the CEO and as the shareholders, I am extremely interested in making shareholders happy, myself included, and that is why we want to continue to be generous with dividends. Thank you.

Thank you, Gianluca. Next question. Alberto Villa Inter Montes Sim. Please sir, go ahead. Thank you. Good afternoon. I need just a couple of clarifications. Again, NII guidance. Does the 2026 guidance include commercial activities and initiatives or the expected growth is actually tied to assumptions that do not take into consideration commercial campaigns that have a short-term impact on NII. Second question regards Spain, robust growth and keeps on growing strongly. However, the contribution to net income was not growing, it was actually declining. What is your view on future profitability, whether this After this growth and investment, do you believe that the profitability in Spain will start to be comparable to the one you have in Italy? So structural profitability. The operating margin declined even though all the business activity numbers were growing. Can we expect to see a growth that is in line with the operational performance and the growing number of clients and inflows. I'll start with the second question. This year we decided to really start investing a lot in terms of the platform so we had to revise the app and the website they were sort of getting older and also marketing costs we wanted to have a higher visibility on the territory and also commercial costs with aggressive rate initiatives so as to acquire and win over clients. And by the way, these same clients are seeing a good transition to managed assets. This as far as this year is concerned. And next year, of course, we're not going to repeat exactly the same things. So Spain's profitability is going to improve, no doubt. This was only a one-time step that we introduced to really get up to a new level and start growing again to create the stepping stone so that we could grow again. As to the 2026 NII guidance, It includes the commercial initiatives as we did in prior years. So these costs were based on the present yield curve. Looking forward, should things change and they would be higher and then it will be reflected on the same guidance and vice versa. So really, there is no major impact from commercial initiatives to next year's guidance, but they have been included in the guidance. Going back to Spain, we should highlight the fact that The Spain's balance sheet is different compared to Italy's structure, so it was more affected by the rate movement. And compared to the Italian market, it is much more competitive. In Spain, mortgages are less expensive than in Italy. Between 2005 and 2008 I was the CEO there and I can say that things are rather different compared to Italy. Thank you, Alberto. Any other questions?

Giovanni Razzoli, Deutsche Bank, has the next question. good afternoon I have two quick question and a more philosophical one so the first question is about capital so Mediolanum has a business model that is generating income grows I mean the company grows but you are also growing your own capital currently you have A leverage ratio that continues growing. Do we have to interpret this capital ration which is twice as much as your competitors as a guarantee that dividends will continue growing considering that year after year you will have a number of one-off components, etc.? ? Did I get you right when I say that you are not going to make any extraordinary action, any managerial action or anything, but you will keep growing year after year and dividends will grow at the same pace. Then you talked about the guidance for 2026 NII which should be growing in terms of at the level of a double digit so that I'd like to understand what kind of amount total amount we're talking about the final more philosophical question is about AI you know that the whole industry is talking about artificial intelligence, how to engage customers via AI, ensuring at a convention you showed us your new app, etc. But you're still betting on the human touch, on your financial advisors. Don't you think that AI is generating kind of a hype, or is a hype? Okay, let me take your first question first. Having robust capital ratios allow us to pay out attractive dividends even when net income for whatever reason isn't as good as expected. You may also pay out 100% of net income because capital ratios are so solid that we can have them soften a little bit and still keep going perfectly well. The other thing is regulatory changes. In the past, rules were passed that forced us Mediolanum Unsp Guidance for 2026 NII 10% plus 11% plus 9% I don't know it's what we expect but once again we expect these numbers based on today's forward yield curve AI Just like back in 2000 with the onset, with the advent rather, of the Internet, I think that this technology is being a little bit overrated. I'm not saying it's not good. It will be absolutely fully pervasive. It will be used everywhere, just same as the Internet. It's being used everywhere. There are no companies that don't use the Internet, and the same will apply to artificial intelligence. But just like back in the early 2000s, They were saying that trading online will mark the death of financial advisors, and this did not happen. Well, I think that the same goes for artificial intelligence. you know if you are a do-it-yourself investor probably you will have at that point an even more highly performing platform more efficient comparing to the most developed and the most avant-garde trading online platforms of today But artificial intelligence will never be able to meet the following demand by customers. Customers want to earn a lot of money, but they want no risk. Combining the two things is impossible. So when the client is going to ask AI to put together An investment portfolio generating 5% returns in real terms at zero risk. I'm really curious to see what kind of answer the system is going to give to clients. I mean, no matter how intelligent that system is, I don't think that the two things can go together. So, like I said, Investors will be able to count on a faster, more efficient, more accurate, easier to use platform and so the market will expand but it's also true that that technology in the hands of a financial advisor will be a tool that will help the advisor work better more efficiently and faster and when the customer is going to ask generated portfolio that would return 5% in real term but assuming zero risk the financial advisor will take a seat and you know or sit the client rather and start explaining to the client that that is not doable but there are a number of options to try and meet their needs as best as possible and also I don't think that the advice given by artificial intelligence when customers say are panicking because markets are crashing well I don't think Artificial Intelligence can provide the same degree of peace of mind, the ability to calm down clients when things are going down the drain. AI cannot pat you on the shoulder and tell you, you know, to relax. So, AI will be a tool that will make the business more efficient, more, I mean, faster, and it will be also an additional, very efficient tool for financial advisors. Those companies that decide not to invest in AI right now, in 10 years time, will be in, I think, deep distress. It's as if in the year, the early 2000s, you had not invested in the internet. By 2010, you would not have had a website, you would not have been able to contact customers online. This technology, AI I mean, Mediolanum Unsp will continue to be a success factor and will be absolutely in demand. I am 100% persuaded of this and this does not apply to Banca Mediolanum only, it will apply to all sales networks and it will apply to traditional banks as well because more and more clients want to talk to somebody so of course they're gonna cut down on the number of branches but physical branches will never disappear entirely because the need for a human relationship is important.

Let me go back to the NII guidance because I see that it's a matter of interest. Today we are just giving a guidance it's a forecast and as with any other guidance I confirm that based on what we know today and the information we had today as the CEO was saying the current curves and the possible forecast we are providing with possible commercial campaigns I confirm once again that we will brush the double digit but then I would like to really think about this with all of you because Say it would not come out to be 10%, but 5%. Considering that we are dealing with Mediolanum figures, the net income impact would be 2-3%. 14-15 month guidance having volatility of 2-3% on the net income figure is not really material. So we are now discussing whether it's going to be 7, 8 and 10, you know, that Mediolanum is really very, very careful when providing guidance. Based on what we know today, this is the guidance we can provide. Then, if along the year things will change and rates curve will change, the guidance will change accordingly. But once again, considering the amount of net income Mediolanum generates, you know, this is really trivial. It's negligible. Thank you, Giovanni. Are there any other questions? We have no further questions, so I hand it over to you, Mrs. Lanzone, to conclude the call. We end the conference call here. We are going to meet again at the beginning of February for the financial year 2025 results.

Thank you.

This is the end of the conference call. Thank you for participating and you can now disconnect.