Banco Bpm Societa Ord

Good evening, this is the Corusco Conference Operator. Welcome and thank you for joining the Banco BPM Group 9 Months 2024 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Arne Riscassi, IR Manager of Banco BPM Group. Please go ahead, sir.

Good evening, everybody. I want to apologize for the delay. Let me remind you that today the conference call will be focused both on the nine-month group results of Banco BPM and of the just announced cash tender offer, public tender offer that we launched to Anima. Now, I leave the floor to Mr. Castagna. Thank you.

Good evening, everybody. Sorry, also on my behalf, I will try to keep as less time as possible to give you the presentation because you got the presentation early this afternoon, so I'm sure you have gone through but having such an outstanding figure to present, I will spend some of the time of this evening also to underline some of the more important aspects of our nine-month results, especially because some of them are very much linked to the second announce of the evening. Sorry again for being able to present only a few minutes ago the press release on our public offer on Anima, which is very much consistent with our business plan, with our industrial plan, which was clearly focusing the growth on the product factory and the opportunity to launch this offer on Anima will increase even more the results of the group over the plan horizon and balance even more the total revenues between NII reduction and growth in core commission and stakeholder participation. Let's start from page six, some outline on the main figure. The Q3 was very good both in terms of normal activity where we had a growth of 19% over the last quarter. On top of that, we also registered, as was very well known, almost 500 million of capital gain on the NUNIA transaction related to the payment service. This allowed us to be confident to overperform the 95 cents for full year 2024 APS previous guidance which we increased from 90 last quarter the board today approved also the interim dividend for 600 million 0.4 dividend per share on 0.75 dividend per shares already matured in 9 months 2014 The total payment of dividends paid out in 2024 grew to 1.450 billion, which is 150 million more than original plan guidance. also the outlook is very good thanks to the reduction of the sensitivity of NII of 50 million from 250 to 200 the progressive deployment which we start already to register in 24 and will continue in 25 on top of course of the transaction that we anticipated which will have full steam in 2026 and Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord This result has been obtained through core revenues increase of 6.7% vis-à-vis 9 months 23. Let's consider that the business plan had a forecast of 1% per year. So we are also in this respect ahead of the plan. Gross MP ratio reduction of 18% year-on-year. anticipating 620 of MPE disposed in the first nine months 24 respect to 700 million of total MPE to be disposed that we will complete by year end. Comonet with ETR1 increased 132 basis points in nine months 24, considering also a negative effect on the NUMIA transaction related to the increase of our stakeholder participation for a consideration of 300 million. The common equity tier one ratio stands now at 15.48%. two important transactions while on track the first one we already talked about Lumia which was closed in the 30th of September 24th we will discuss deeply about that in the next page but I take this occasion to eventually present a very good result also in the Life Insurance Business where we increased our performance from 15 million of H1-24 to 71 million of revenues coming from this activity with an acceleration in Q3 including reversally lost component for 18 million which was negative in H1 has now been reversed so the total increase was of another 56 million some figures on page 8 about the standing point vis-a-vis the last year and with respect to the target of the plan both total revenues are up 9% on the plan 8% on last year results with a contribution from the key product factories already in line with the big increase that we forecasted when we presented the business plan Let's remember that we forecasted an increase with this activity of 260 million over the planning horizon. 80 million of that are already reached in the first nine months of the year. Pre-provision income stands at 819 million, 12% above last year, nine months, and 19% above the average quarter of the business plan. we already talked about cost of risk 40 basis point out of the 45 basis point of the plan as well as cost income is below 47% with a target of below 50 from the strategic plan just two numbers about the NUMIA deal I would not consider the left side of the slides which is quite clear I would stress some that we started only in September this year, so only one month of activity in Q3. We were able to switch in September, October this year, 46,000 posts from the previous partnership to NUMIA out of the 140,000 posts, a total of 40,000 posts but these of course were the most interesting in terms of transaction and so that means that we have switched already to Nomia more than 65% of the total retail acquiring volumes which in turn represent the retail volumes 80% of the total transacted by the bank we are confident to complete by the first part of 2025 also all the migration of the remaining POS. Let's go to page 11. Some figures. I would underline only some of these numbers. A very good Q3 result in interest income higher than Q2 with 9 months higher 7% on last year. very sound also the commission only 2% in the quarter below the previous quarter but 4% above 9 months 23 strong results as I was mentioning before from insurance where we passed from 15 million in H1 to 71 million in 9 months 24 This was mainly through the possibility to start offering to our client the new product on Bank Insurance Life, Ramo Primo, released by Generali only in the beginning of September. We have already placed in these first two months almost 500 million of product, which bilanced the request of disinvestment on the old product, which together with the decrease of interest rate brought a revaluation on CSM of the company of 71 million in the first nine months, which will lead to reach the guidance for 95, which is between 95 and 100 million. very happy to confirm this number because in the first half of the year, of course, we had to cope with the difficulties of not having product to propose to our client. Core revenues up 7%. Total revenues with a good performance on MFR thanks to the coverage of the portfolio of the bank of the deposit of the bank and on the govis of the bank which grew to 226 million 100 million more the result of last year as well as also the figure of this quarter is almost 100 million higher than last year operating costs in line with last year, considering the effect of the cost of personnel, which, as you know, increased for 75 million during the first nine months of this year vis-à-vis last year, which brings to a pre-provision income of 18% quarter-on-quarter and 12% on the year-on-year comparison. loan loss provision in line with the previous quarter at slightly above 100 million and 300 million for the whole 24. Pre-tax profit grew to 21% year on year and 18% on the quarterly basis. After tax, we have a net profit which is 20% year on year and 15% higher quarter on quarter. Of course, we have also the one-off of 456 million, which is mainly due to the Numia transaction, which brings the final result to slightly below 1.7 billion stated, and without the Numia transaction, 1.245 million adjusted, Let me just remember that this figure is equivalent to the net profit of the whole 2023. Let me go to page 13 directly in terms of NII because these are the actions we implemented in order to get the good results we've shown on the profit and loss. We have increased to 21 billion the replicating portfolio. We have already started forward another 2 billion of current in order to try to reach the target of 25 billion which we had in the business plan. Also very successful in this respect was the switch that we did in the first six months of the year from non-indexed to indexed current account. This has allowed us to reduce massively the rates quarterly of more than 50 basis points as far as index rate, and having switched also the more priced non-indexed rate, also this rate came down from 26 basis points to 10 basis points, leaving, of course, to the results that we showed in the presentation. These are the drivers on the sensitivity. Then we have very strong drivers also in terms of effect on the forecast of the future NAI. As you may know, we have a big upgrade in terms of credit rating confirmed also by Standard Pulse with one notch upgrade during October and this is leading to a global savings of 100 million through the plan in 2026 in terms of lower interest paid in our wholesale issuing the same on the respect to the time deposit we are still at 1 billion time deposit issued with a target for this year of 4.5 billion and the total target of 9 billion. Let me remind that every billion of lower issuing of 10 deposits, we save, respect to the plan, 15 million in 2026. And this, of course, is to be added to the 100 million of the wholesale funding. Financial asset very strong, 8 billion of increase in Bpm Societa Ord Bpm Societa Ord Euribor Plus which are not anymore in the balance sheet since July and also a strange calendar effect which the day after the 30th of September brought back to us 1.4 billion due to the receivables let's say that end of October we were already back to 100 billion of core deposits In terms of loans, we are, as all the markets, registering a reduction in terms of loans to clients, especially with financial counterparties. Meanwhile, non-financial corporates are standing more or less at the same level of beginning of the year. Let me remind that these... slow pace on loans is allowing us to improve the quality of portfolio where we have 55% of non-financial corporates secured, 28 with state guarantee and 27 with mortgages. The recover with the interest rate reduction in September and October brought already in October some more activity especially in mortgages and we have a new lending for 1.8 billion in October. Fees and commission we already mentioned and maybe I can go through only remembering that as investment product fees we did the same result in Q3 of Q2 in which Q3 is very much affected by August, but nevertheless, we were able to obtain a very good result. The 10, 12 million that are missing from Q2 to Q3 are related to lower commission from the almost terminated impact of EcoBonus and SuperBonus. Cost income below 46.7%, still impacted by staff cost. As you know, we have from one side the impact of the new labor contract, which amount to 75 million and will account for almost 100 million end of the year, with 25 million each in 2025 and 2026. unfortunately we don't have yet reached an agreement with the union so I cannot bring you the counter measure that we have already determined in order to reduce thanks to the early retirement scheme and early the possibility to have early retirement also not authorized by the union but through individual agreement with our colleague, which should bring, in any case, to a reduction over the year of the announced 800 people. I think we already spoke about the risking. We are now at 3.2 billion, 1.9 billion of OTP, 1.3 of bad loans, more than 800 billion of these 3 billion are loans guaranteed by the state. Of course, these reduce the collateralization of the MPEs, of total MPEs, which without the state guarantee would be at 74% for bad loans, 44% as OTP, and 54% as total MPEs. The recent transaction of further disposal reduced a bit the coverage but reduced also the vintage of our MP portfolio which went down from 3.5 years to 2.7 and especially in bed loans from 5 years to 3.8 years. I would leave to Eduardo Ginevra some comment from the financial.

I would go very fast on the main items which did not show significant change versus the previous quarter. So especially in page 18, you will see that most of the indicators and aggregates that are shown in this page are very similar to the level they had in June. One noteworthy point is that in terms of ESG bonds share in the corporate proprietary portfolio, they are already at 35.4%. It was 29.1% at the beginning of the year. So going directly to page 19, some points here worth mentioning. First, Bpm Societa Ord Bpm Societa Ord The main driver of this positive evolution is the contribution to P&L of hedging strategies we have deployed since the first month of the year to counterbalance the impact of reducing rates. Bpm Societa Ord to forecast a neutral evolution of this overall basis of this component of the PNL, whereby the cost of certificates is expected to be, rightly speaking, offset by the positive components also going forward. On liquidity and funding position, which is page 20, we want to highlight the improvement in ratings already mentioned in the first part of this presentation, with S&P very recently upgrading to triple B, one notch, and Latest from Morningstar this week improved to positive outlook or positive trend as it is called by that agency. Liquidity level is at 49 billion, LCR 153% and SFR stable. MRL buffer important to note is above 11 percentage point. Page 21, let me spend a few words on the evolution of capital. We started the year at 14.16. We are now at a very important level, an outstanding level, I would say, of 15.48. This was the result of 300 basis points, 300 basis points of organic capital generation from P&L. Two-thirds of these is P&L, Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord The evolution of reserves, I commented a couple of slides before, here contributes positively for 12 basis points. Synthetic securitization, which we have been using since 2021 to regularly to improve our capital position, gave a contribution of 28 basis points. Then there is the impact of the other components, including those regulatory impacts, which we have communicated in the previous quarter, for a positive amount of 52 basis points. NDA Buffer is at 641 basis points. 17.7, tier total 20.7. Important to note that on top of the current very abundant level of capital we have also additional tailwinds created by those items that are currently deducted and that in the future are expected to be progressively to be used for creating additional capital. I'm referring to DTAs and to for variable comprehensive income reserves. The order of magnitude is above 300 basis points. Half of these 300 basis points will materialize into capital by 2026. For the final remarks, I'll give the floor to Giuseppe.

Yes, very quickly. Basically, these performances, also in a situation where interest rates are going down much quicker than we expected, allow us to be very positive on confirming the 6 billion target of the plan, also with an average EUR at 2% in 2026. So, meanwhile, the plan was more or less 3% of Euribor in 26. We are able to confirm that we will be able to reach the same result with a faster reduction, quicker reduction at 2% in 2026. This comes, of course, from the experience, good experience of these first nine months. As you can see on the left side, we were expecting 90 cents of APS as a guidance in the business plan for 2024, with an Euribor environment at 4%, we have been able to improve to higher than 99 cents with an Euribor that we expect end of the year, an average of 3.5%, 3.6%. This gives us, together with our reduced sensitivity, and with the work progressing on the product factory to be really consistent in confirming our overall results. On the right side, again, this strong increase in capital, of course, gives us room for the distribution of dividends. We already anticipated over the delivery of $150 million over the plan, and with a total dividend yield for 2024 overall of 15%, and if we now annualize the interim dividend distributed with the approval of today, we will have a 12% dividend yield annualized. So we are confident to be still ahead of the trajectory towards the 4 billion cumulative remuneration target for our shareholders. This, of course, is on a standalone situation. Let me spend, of course, another 10 minutes about the announcement we have just brought forward, the voluntary public offer on Anima Steak. This, for us, is a transformational deal which will strengthen our business model and delivering value for our shareholders. We are creating through Banco Bpm Vita an integrated life insurance and asset management champion in Italy, which will rank at the second place amongst the bank with a total asset under management of $217 billion. combining our first class distribution, especially in the north of Italy, where we have a market share of almost 10%, with more than 100 agreements that are in place with distribution partners. And with a very attractive value proposition for our shareholders, for which we will increase our ROTE performance in 2026, from 13% to 17% with an offer to anime shareholders which is 25% higher of the average of the last six months. Why there is a very solid industrial rationale for this transaction? First of all, we will strengthen BPM Vita as a life insurance and asset manager product factory of the group coordinating the offer of life insurance and asset management product, which we know are so close and so complementary each other in the offer to our client, will increase the efficiency in managing also Banco BPM Vita and Vera Vita reserves and assets and exploit the potential economy of scale and scope to integrate a product development and a more efficient risk and investment strategy. let's only consider that the asset under management insurance activity in Banco BPM Evita will grow from the current 60 billion from 16 to 90 billion after the ANIMA transaction. This is, of course, as I mentioned before, in full continuity with our strategic plan. The business model allows to have an integrated and complete product offering addressing client financial needs throughout the overall life cycle, allowing also BPM to benefit from an increase in profit and loss contribution thanks to the additional commission and full consolidation of ANIMA earnings. We will grow the revenues coming from the key product factories of the group from the 800 million dollars of 2023 through the 1.2 billion forecast in 26 up to 1.6 billion thanks to the potential success of this offer. This will also reinforce our business model because we'll give more resilience and more visible delivering in terms of revenue growth thanks to the report of a more consistent activity in life insurance and asset management with a more diversified revenue source which will compare more the contribute from fees on the total core revenues growing from the 37% of 23 to more than 45% by 2026. Who is Anima? You know very well. It's the largest independent asset manager in Italy. Almost 200 billion of asset under management is of 30 of June, I think, with the results of today is well above 200 billion. More than 100 partners distributing product and 1 million clients distributing Anima product, of which half of them are already our clients. 300 investment professional balance and retail and institutional asset management mix with the recent acquisition also of alternative products through Castello SGR and wealth management with the acquisition of Kairos strong contribution of life insurance activity which accounts 84% of institutional asset under management and 45% of the total asset under management. Stable long-term commercial agreement with primary Italian financial institution. Let me remember that the major holders of Anima, apart from us, with 22.4%, are Poste Italiane with almost 12%, FSC with almost 10%, and Carta Geroni Group, 3.5%. On the right of the slide, you will see the asset under management mix, basically 50-50 retail and institutional, all which, again, the insurance contribution is almost 50%. Let me just give you the reason why we think this is... We can consider the perfect... for having such a combination we have been together with ANIMA since 2007 when firstly Banca Popolare Milano acquires a stake in ANIMA and the following year BPM launched a public tender offer on ANIMA subsequently delisted in 2009 then in 2009 ANIMA merged with BPM and gestione SGR and which was the asset manager of Bpm in 2010 and 2011 we completed a merger with Prima Sgr which was the asset manager on Montepaschi and Anima Sgr was put under the control of Anima Holding which had as shareholders Flessidra with 38% Bpm 36% and Montepaschi 23% Anima Holding since 2014 has been listed in Milan Stock Exchange and after the merger between Banco and Bpm acquired also Aletti Gestielle Attiviti which was the previous asset manager of Banco resulting with a stake below 15% which over this year we grew up to 22.4%. The relation with Anima is a relation with a contract between us and Anima which stands for a strategic partnership of 20 years. This was due to expire in 2037. Anima is already managing 75% of Bpm total asset under management. and which contributed Bpm contributed 35% of Anima's retail under asset management and 40% of retail net fees of Anima Anima and Banco has already many activities in common we have a preferential access on an exclusive basis to the Bpm network for the distribution of Anima products we have an exclusive partnership for the delegated management of asset underlying insurance product and let me remind that we have a commercial agreement which is subject to the change of control of ANIMA. That's why we feel that we can be considered natural partner for ANIMA ensuring full continuity to ANIMA trajectory while offering a strategic benefit of financial conglomerates and also we think that this reason could make consider this offer friendly from ANIMA board let's also give you what will be what will became the activity in financial asset of the group with the ANIMA transaction we will pass from 235 billion to 387 million of financial assets of which 217 will be asset under management giving to our group the second place in the ranking of Italian banks in terms of asset under management. Some few words about the positive impact that this transaction can bring for all the stakeholders. Let's say that shareholders would have an attractive consideration fully in cash. Of course, this is related to anima shareholders with a significant premium equal to 25% higher than the average of the last six months. for the distribution partner they will leverage on a strong and stable partner with a complete range of products including life insurance and part of a large diversified group with strong presence in all segments for our customer because they will benefit from the improvement and expansion of the product offering to a more integrated coordination between life insurance product and asset under management leveraging on the expertise in the creation of Ramo Trimo and Ramo Terzo products for the employees of course which will have much more opportunity of professional growth and from the community being Anima very much engaged as well as we are in strengthening the ESG investment and the approach to the financial education under ESG engagement. I will leave the floor to Eduardo for some financial about the transaction.

Thanks very much Giuseppe. So let me start with the description of the transaction. So we will, technically the offer is being launched by Banco Bpm Vita, our Insurance Controlled Entity owned by Banco BPM at 100%. Banco BPM Vita is launching the offer which is on all the ordinary shares of Anima including treasury shares and including also the shares that might be issued in the future by Anima between now and the end of the offer period to service the long-term incentive program that has been approved in the previous months by the General Assembly. The price of the offer is €6.2 per share, which represents for us a very interesting premium on the six-month average. which in our view considering the overall evolution of the market and relative performance of the share price is the most qualified indicator to assess the attractiveness of the offer. Let me also mention that the premium is 5.8% above 12 months average. At the end of the offer we will also make sure that BPM sells 22.4% stake that currently tons on Anima so that all the shares in our, of course, ideal scenario, 100% of the capital, 100% of capital of Anima Holding will be held through Banco BPM Vita. On our side, Banco BPM will make sure that Banco BPM Vita is provided with the middle level of cash with an equity injection. so that cash will be available to pay for the shares included in the offer. Financial impacts. The deal offers very attractive terms also for our shareholders, given that it will not only originate an EPS accretion of 10%, but more importantly, as mentioned in the initial page of this document, this presentation, will lead to an increase in return on tangible equity of around 4 percentage points, from the landing point in 2026 of 13.5% to a level which will be significantly above 17%. At the same time, this will happen with very limited capital consumption because the overall impact of the deal is as limited as 30 basis points calculated at the expected closing date of 30th of June of next year. Main indicators at P&L level provide the... also the quality of revenue composition, offering indications that this deal will improve and make more solid the overall business model of the group. Net fees are expected to be raised around 20% versus the standalone level embedded in our plan, and net income around 10%. And finally, the composition indicator net fees on the total of NII plus net fees, which in the plan was supposed to be raised to 41% from original 37%, will grow for an additional 4% down to a level which will exceed 45%. These numbers are not including synergies, are not including any additional contribution from the combination of the two entities. There are on top of these numbers to be considered some very interesting, several very interesting optionalities. First of all, ANIMA internal market share. 15 billion of the total assets under management of our clients are not going to be attracted by ANIMA, So this could be an opportunity to expand the volumes of business of the asset manager. Similarly, we have now 49 billion of assets under custody, assets under administration, that may be used to be converted into ANIMA assets under management. The second point of synergy is the partnership. Distribution capacity, we will be able to develop and offer Banco Bpm Vita products to Anima's distribution partners and we will use the combined force of Anima and Banco Bpm Vita for promoting additional commercial agreements or attracting potentially financial advisors networks or financial advisor groups or financial advisors. synergies may be created also in the affluent and private banking segment where we are active with Aletti and Animo of course with Kairos and also in the area of alternative where we have recently established Banco Bpm Invest that can be synergetic with Animo alternative finally product development capabilities to serve our own network we expect them to be enhanced and enforced by the combination within the financial conglomerate. Worth noticing in this context that Anima is already currently outperforming our business plan, especially thinking that the consensus in terms of net profit is 180 million, and by the way, this year is going much higher than yesterday, Bpm Societa Ord In terms of the offer, as I said, the entire share capital is a target. Number of shares is the total number of shares, including those, treasury shares, including those that might be issued by Anima in the context of the offer for the long-term incentive plan. Offer price already commented 6.2 per share, dividend, to be considered dividend. Financing all in cash, as already mentioned. Important to highlight that there are some conditions in the offer. A minimum acceptance level of two-thirds, 66.67%. Conditions that are customarily related to MAC and to regulatory approvals. And the fact that we need to obtain all preliminary authorizations, including those concerning the Danish compromise. Timeline of the deal. Today we have sent the notice according to the law, Article 102. By end of this month, in 20 days, we need to file the tender offer documents. we expect to receive the regulatory authorizations in February or March, between February and March, and then to receive the authorization by CONSOB in March as well, so that we'll be able to complete the overall transaction by half of this year, by mid-2025, ending the tender period and settlement of the offer. So this concludes our presentations.

Yeah, so if you like, we are ready for a Q&A session. Thank you.

Thank you. This is the Coruscant Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use handsets when asking questions. In the interest of time, please limit yourself to two questions only. Anyone who has a question may press star and one at this time. The first question is from Noemi Peruc of Mediobanca. Please go ahead.

Good evening. Thank you for taking my questions. I have some on the application of the Danish compromise squared on the ANIMA deal. First of all, I would like to ask you, what is the final size of the equity book of BPM Vita post capital increase? that you assumed in the 30 bits impact. And if you could please comment on the treatment that you assumed for the goodwill currently on the balance sheet of Anima. And also, if I may, a third on cost synergies and potential synergies and whether operationally you're planning to merge some of your businesses into Anima. Thank you.

Thank you very much, Noemi.

So, for the equity book of Banco BPMV, if I understood correctly the question, let me check. So, the capital increase... In Banco Bpm Vita we will find of course the overall both the increase in the participation for the 77% and 78% that we don't own and the amount that is currently held by Banco Bpm. The total amount of capital increase is is expected to be slightly higher than 2 billion. The current level of Tier 1, to give you an idea, of BPM Vita is around 800 million. So, the increase in capital in Banco BPM Vita will be on top of these own funds, but of course we will deduct from the capital over Banco BPM Vita the amount of the goodwill that will be created by the deal for an amount of 1.9 billion. This amount of the goodwill is deducted only for Solvency II treatment, not for the Common Equity Tier 1 treatment, which will remain attracted by the Danish compromise regime. So this means that all of the additional participation in Banco BPM Vita, be it represented by goodwill or by fair value of the assets of Anima after PPA is conducted following the acquisition, will be treated as RWA and risk-weighted at the Basel III plus risk-weight of 250% following the completion of the deal on a fully phased basis, whilst on a phase-in and first deal will be treated at 100%. So I think I replied also on the goodwill on balance sheet of Anima because at the end of the day we will simply sell the participation to the insurance company and we will mark this participation to the fair value originated by the new share price that is the share price implied in the offer. of co-synergies we expect them to be limited and given that we want to be as effective as possible in integration of the skills and capabilities of ANIMA we are not here to extract enormous value from this deal on co-synergies of course there could be a reasonable amount but we prefer not to include them These synergies, maybe you want to be more specific in saying what you have in mind so that we can elaborate.

Noemi?

Thank you. My question was more about the assumption of the current perimeter of Anima, if you assume that it will remain intact or not.

Noemi, I didn't hear you.

I was wondering if you assumed that the perimeter of ANIMA will remain the same as it is now. Thank you.

The perimeter?

The perimeter of ANIMA, of distribution.

Oh, yes. So you refer to potential distribution, sorry, the synergies in the commercial agreements of ANIMA with the distributors?

Yes.

Okay, no, sorry. Sorry, I understood. I don't know why, but the audio is a bit disturbed. So, we expect to start working as soon as possible with the current distributors of Anima. We believe that there are all the right preconditions to continue and even expand the current relationships that have been so productively maintained over time by the company as we ourselves experienced so we are definitely very confident to preserve the P&L and to even improve over time.

Let me add only that as far as we know there are no change of control apart hours and the contract are all long-time contract, I would say, from 2030 ahead. So we'll have all the time to try to negotiate new opportunity of expanding the duration of the contract.

Thank you.

The next question is from Pamela Zuluaga of Morgan Stanley. Please go ahead.

Hi, good afternoon. Thank you very much for taking my questions. I have one on results and the other one on the ANIMA transaction. The first one, we've seen insurance relatively muted until Q2. You were flagging last quarter that you expected a delay in the contribution until the full generalization of the joint venture. So I was wondering if you could give us some color on the drivers behind the steep jump that we saw in Q3 and how we're expecting this line to evolve into Q4 and and into 2025. And the second question, on ANIMA, I imagine that you have already discussed with the regulator the application of the Danish Compromise, of course, for this specific transaction. But I was wondering if there is any limit on how much ANIMA could potentially continue growing. Could it jeopardize, then, the application of the Danish Compromise? Thank you.

I will go ahead with the first question. The driver result in Q3, as we mentioned in the presentation, comes also from the reversal of the loss component, which out of 56 million accounted for 18 million, so we cannot count for the next quarter this amount, but I would say an average of 30-35 million is what we expect for sure for this year, bringing in the total consideration of of Insurance Life Contribution to almost 100 million. And I can say that we have a target for 2026 or 160 million.

The second question, if I understand correctly, Pamela, was on the growth of ANIMA and the risk to jeopardize the Danish compromise. Is it correct?

Yes, I was wondering if there is any limit in terms of the size of ANIMA for you to apply the Danish compromise.

I mean, the rules are very clear after also the Q&A from EBA that was issued in, I think, December last year. So, the rules say that you have a participation in insurance and this participation is subject to Danish compromise. of course we believe you need to prove the reason industrial rationale but after observing recent developments in the market we believe that this has been already the case for very similar deals and we are not probably the first one creating and extracting synergies from the integration of life insurance and asset management we obtained already the Danish compromise for our financial conglomerate this means that we've been verified in all the prerequisites and we are only in the only additional point that is related to this deal is that we want this to be confirmed by ECB before the end of the offer period so that

everything is clear and there are no uncertainties on the regulatory treatment The next question is from Antonio Reale of Bank of America Please go ahead

Hi, good afternoon. Thanks for taking my question. First of all, well done to everyone, to the management team. I think this is a great move, and I think especially at this point of the rate cycle, even more so using a regulatory framework, which is, of course, attractive. I have three questions, please. The first one is a large chunk of ANIMA's AUMs are mandated by Poste Italiane, and that constitutes the bulk of the insurance related assets under management which I guess are a key part of you being able to make an industrial case for this to be acquired by your life business bank of BPM Evita so my question is what gives you the confidence that those AUMs from Poste will continue to stick around the second question which I guess is related to my first one is have you reached an agreement with the main shareholders of Anima you've mentioned key shareholders such as Poste, FSI and Caltagirone And lastly, you're clearly aiming at creating a new national champion in Italy. That's, I think, what you put on the slides. And I think that comes with a clear industrial vision. Now, does this transaction prevent you in any way from participating in bank consolidation in Italy? Thank you.

In consolidation. Okay, about the first question. Of course, we have a very good relationship with all the other shareholders of Anima, but we didn't mention the transaction to anybody up to the six and some minutes past this evening. We will be in touch with everybody. The first thing for us is to Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord and afterwards I think we will have when this will succeed we will have all the opportunity not only to remain and to get the current contract but possibly due to the strengthness of the new entity also to increase the activity with our partner. this transaction may push consolidation this transaction is part of the consolidation because of course we already always claim that we are on a stand alone path but with a big commitment to increase our product factory activity component to the production of revenues in terms of commission so we think this is a first step very important we already announced that we will be looking for opportunity in bank assurance in asset management as we did in the last quarters and for sure we will continue this way once we will be a consolidated asset of Pearl Factory this in the future can bring also to a higher capability in distribution because of course now we are more distributor at least we were only a distributor until last year and now building up the different product factory we are more becoming an integrated bank and product factory and of course the distribution will be one of the potential activity we will exploit in the future. Eduard already mentioned financial advisor and opportunity with maybe banks who want to reach some more agreement on a complete range of product.

Thank you.

The next question is from Fabrizio Bernardi of Intermonte. Please go ahead.

Good evening to everybody. Most of my questions have been already answered. I just want to focus on the commercial bias of the deal because let's say I understood Anima is or was a technically independent asset manager, which was its, let's say, the DNA of the company. Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord if you add something like a commercial commitment by the other franchises that are using Anima in terms of asset management company in order to preserve the NAV of the company.

Of course,

Of course, again, I repeat what I answered before. We couldn't have contact on this transaction with other distributors. We know the main distributors of Anima. We know that the contracts are long-lasting contracts. We feel that we have the opportunity to increase and to improve the capability already shown by Anima to improve number and volume of such distributors. we never say that we want to be the only shareholders of Anima we will also be open to give opportunity to whoever want to join this activity enlarging the distribution of the new life insurance and asset management factory which in our view has to go together so we are adding a very important asset to the Anima current

Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord of Anima is, let's say, made by Banco Bpm. So there is, let's say, a trade-off between what you gain and what you are giving to Anima. So the deal is very clear. Even the Kairos deal probably goes in the same direction. My fear, if I can, is that the other franchises that are distributing products of Anima are doing this not on an exclusive basis so they technically can sell whatever they want. Anima is just a more, let's say, direct or specified access to their franchises. But this does not mean that they can sell, like, for example, Poste, other products. So this is my only fear, but the industrial rationale is pretty fairly clear.

No, thank you. Of course, we have to examine all the opportunities, all the risks, On the balance of these two things, we think there are more opportunities than risks. Anima franchise is very good in terms of relationship with distributors. It's the only one who has experienced years of activity in this respect. We don't feel it's so easy and... for any distributors to switch because there is no more an independent but is inside a very strong new franchise which of course add more product to Anima offer so in my opinion there are more up rather than down but of course is a risk that we have to face Luckily enough, as I said before, we have many years ahead of us in order to have the opportunity to bring on board the other activity, the other commercial partners. Thank you very much.

The next question is from Hugo Cruz of KBW. Please go ahead.

Hi, another question about Anima. I mean the deal looks very attractive if you have a 30 basis sports capital hit for 10% EPS acquisition and so you know the premium is not that high and so he raised the question can you pay more if you know can you raise your offer if you don't get enough beads and also I would like to understand more your comment about to be happy to have other shareholders in Anima you know it sounds you know you I see the offer is conditional on getting 66.67% acceptance. Does this mean you're actually not necessarily looking to delist Anima if you take control? What are your thoughts on that? Thank you.

Let me answer to the first part of your question. Frankly speaking, I don't think it's low because as you maybe have seen during the last months, of course, there were Anima was considered a potential target, especially after the BMP transaction. This, of course, helped Anima to increase share price. We feel, as we mentioned before, to be the most probable potential buyer especially on a potential friendly transaction with Anima the volumes dealt by Anima on the market are very low every day so whoever wants to capitalize a good offer all in one with a strong opportunity I think has a very good opportunity to make a capital gain out of this transaction with different situation with a different behavior on the market. I think the price, the potential attraction of Anima could be not the same. So I think it's an opportunity for everybody. of course we try to get 100% of the company but again if institutional shareholders who is also linked to the commercial activity want to stay into the shareholder structure we will be very happy to accommodate Thank you very much

The next question is from Andrea Lisi of Equita. Please go ahead.

Thank you. Just another question on Anima related to the previous point, related to the possibility of other shareholders to be in Anima under Banco Bpm. Is the threshold of the 66.7% waivable or not? So is a condition necessary for the offer to go on? This is the first question. Another question is instead on the results of the quarter. that is on SG&A that were down quarter on quarter and I want to ask you if there is something different or something, some one-off and what should we expect on the evolution of SG&A going on and lastly if you can repeat regarding the net financial result is it correct that assumption overall should be broadly close to zero for the next years. Thank you.

Yes, I start to answer. So I described the evolution of net financial result and given the mitigation in the interest rates that is expected in next year with a level which is in between 200-250% for the euro, this will help reducing the cost of funding from certificates. In such scenario, we expect to compensate, lightly speaking, at large, so to speak, the negative contribution from certificates with the positive trend of the other NFR components. This, of course, without taking into account valuation effects from hedging strategies that will depend Bpm Societa Ord Bpm Societa Ord Now, this contribution is very close to zero. It's expected to be more or less neutral for the reasons I mentioned. On SG&A, on general cost, we had a very good quarter. I wouldn't say we had some one-offs. It was... the outcome of a number of cost mitigating actions that we have implemented. I expect these to be slightly different but not to a significant size in the final quarter. We may have a limited increase, single digits, something like 5 million or like that. On the deal, if I understood correctly, your question was what is exactly the condition in terms of a share of the capital of Anima. The condition is the following. We want to obtain two-thirds of the share capital, and this is the condition which, if not reached, allows us to withdraw from the offer. this is an option for us this means that we can also consider lower level of adherence but of course we are here to buy all the share capital of Anima the purpose of the offer if you read the document is the listing so this is the transaction is aimed to obtain full control of the company Conditions are a different story. The conditions say that we would accept the result even to a lower level. If the level is too low, we reserve the right to withdraw from the transaction. Thank you.

The next question is from Luis Pratas of Autonomous Research. Please go ahead.

This is Luis from Autonomous. Thank you for taking my question. The first one is on Anima. Could you please explain the ROTI improvement walk from the 13.5% to 17% from this deal? Basically, the moving parts on the numerator, but also on the denominator. And my second question is on capital. You indicated in the past that you could think about releasing excess capital only after you booked a large puzzle for impacts. Could you please confirm if this rationale still holds true at this stage, especially considering this life offer for Anima, and if you could also update on the current expected Basel for Edwin and any potential mitigation action? Thank you.

So on the moving parts, basically there is a numerator and denominator component. On the numerator, we took a consensus level of net profit from Anima. We deducted the contribution to our own standalone P&L, which is included in our business plan, so in the numbers of the business plan. After we added the number, this is the expectation of net profit before any types of synergy, and considering also, of course, the cost of funding, for the cash included in the transaction. On the denominator, we recalculated the tangible book value of the bank, rolling forward the numbers of the plan, which is what we did already one year ago when we presented the objective, the targets, and including the impact on goodwill of the acquisition of Anima, so deducting from the overall level of the tangible book value. On Basel IV impact mitigating actions, so before going to the other question on excess capital, we are deploying a plan, developing a plan that has multiple areas of intervention that range from the management of relationships which become too capital consuming that generate an excessive consumption of capital in the new environment so for example large corporates that transition to a foundation approach for LGDs and or those relationships where we are too exposed into off-balance sheet transactions that are penalized from Basel IV. On top, we're implementing a number of actions that exploit at maximum level the opportunity to receive Bpm Societa Ord security sessions that may help also reducing capital absorption. We may... We are planning to introduce some rationalization actions in the participation portfolio. Some of them are deducted from capital, other ones are deducted from... Sorry, are risk-weighted with higher risk-weight with higher risk-weight on... Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord how to say, the menu of the actions that we are continuing to plan and will be deployed starting from next year bearing in mind that this impact of Basel IV is a long story during its development from phased in to fully phased we will of course adopt an attitude linked to the fully phased impact but at the same time we know that over time the progressive transition from phase in to fully phase will give us the advantage also to exploit the unexpressed capital I mentioned while commenting on capital coming from both DTAs and fairly comprehensive income negative reserves.

And this brings me back to question number two. Of course, we are... Almost 60 basis points ahead of the plan in terms of capital. So if you consider the Anima transaction will impact 30 basis points, we think there is still a big rationale and a big opportunity to have more capital that we need, considering that the impact of Basel was already in our figure to the target point of 2026. So I think this transaction doesn't change our capability to distribute eventual excess of capital. Of course, as I mentioned before, the fact that we are strengthening our product factory activity could bring to further activity into the market in terms of distributors, in terms of financial advisors. So whatever is not fostered and dedicated to the growth of the bank, will be devoted to our shareholders.

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

Hi, good evening. Thanks for the presentation. A few questions. I need to agree with the colleagues. It's a great deal, and probably you are even underestimating what the EPSA creation from ANIMA First of all, I want to understand well the new sensitivity that you give for the NII, given that there are the two moving parts. So basically, probably NII will be a little bit lower and the trading will be higher because of the component that you explained before. Is it fair to say that the 100 million loss that you had in the plan in terms of trading profit will probably trend to a breakeven? Have I understood correctly? First, second, you are also selling, if I'm not wrong, real estate at a loss in order to reduce the P&L volatility. So this line of adjustments on real estate that was quite large in the past, I'm just wondering what kind of number will trend during 2025 and 2026, maybe closing to zero. And the curiosity on the 15 billion that you at the moment, you're distributing as a probably 30 part products. I'm just wondering what the percentage the lever that you are paying back to the whatever is the product company in this moment. Thank you very much.

Okay. So, Domenico, on the 15 billion, you're referring to the IOMs that are not within ANIMA, correct? Exactly, yes. No, it's similar. The management fees and distribution fees that we receive are comparable. So I wouldn't expect these synergies from, how to say, the marginal contribution of those volumes if converted into ANIMA, definitely.

On the opposite, you are going to save money because you move to Anima, I suppose.

Of course, of course.

So the question is exactly how much you pay back now to the whatever is the product company or the different basically providers.

So I would say you can apply a running fee and more or less across the board to the products by category. So what is the average level of management fee that we get? I will tell you in a second. And this is more or less the exact answer to your question. And at the end of the day, whatever we do in these synergies on the 15 billion, we will continue to receive exactly the same management fee. And on top, we will get at factory level the additional revenues that currently are not recognized to Banco Bpm, but are retained by the... It's something like 90 basis points, the average level. It varies by product. So category, for example, mutual funds as opposed to managed accounts. For the real estate... Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord to stay in the real estate market that sometimes has some volatilities, this part of our balance sheet has been significantly reduced with this 300 million loss. So now we have a very limited level of remaining Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord we don't expect this to become to be maintained at the negative levels of the past so the question is this line in your plan how much it was on average was 25 26 was trending up to zero yeah it was yes close to zero all right and about the trading profits is that trading profit yeah I mean the question was

Yeah, now that basically you change the sensitivity, right, of NII, but I guess, I mean, probably NII will be a little bit lower, trading profit a bit higher. So what could be the guidance for next year in 2026? I remember it was 100 million loss in the plan.

Yeah, exactly. So now the guidance is, the new guidance is still negative, but I would say in the area of single digit per quarter. So something like, let's say, 20 million could be a good indication, depending, of course, on the rates.

All right. Okay. Thank you. Well done again.

The next question is from Marco Nicolai of Jefferies. Please go ahead.

Sorry Marco I found the data for Domenico we have now what we have in terms of investment so non-instrumental assets are in area of around 400-450 million Okay thanks for taking my question so a very quick one at this point on EPS creation of the deal

you say 10% if I got it right, you don't, you don't embed any further synergies that you've listed on page nine. So my question is, what's kind of a bull case EPS accretion you can get from this deal, if you bake in some of these, you know, further optionality for value creation you have in slide nine, I don't know, for example, if you can assume some revenue synergies, or maybe cost synergies on this on this deal.

Now, very difficult to say that's the reason why we didn't put it in right, because it can be anything. We have also 50 billion of assets under custody that can be switched. Possibly, you know, we are very much focused on our product factory, as we have shown also in the payment service, only in the first results that are eventually coming in insurance life. so once we have the possibility to let's say multiply the revenues through not only commission but also the revenues of the product factory we can address our network in order to maximize possibility on top of that we can add to the ANIMA ammunition the life insurance which is a quite interesting opportunity in a scenario in which everybody forecasts a quick reduction of interest rate and strong reduction of interest rate. So I think it's the best countermeasure we can have. The combination of insurance life and the CSM valuation under IFRS 17 which bring us value meanwhile the interest rate go down and the opportunity to give us more strength to the asset under management deal which of course is very strong when interest rate go down. This is something that should counterbalance even more easily than before the potential NII reduction under of course interest rate contribution.

Thank you and congrats again for this transaction.

Thank you.

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

Okay, thank you very much everybody and sorry again for giving you the press release so close to the meeting. Thank you.