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.