Banco Bpm Societa Ord

Good evening, this is the Coruscall Conference Operator. Welcome and thank you for joining the Banco BPM Group H1 2025 results presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Arneris Cassi, IR Manager of Banco BPM. Please go ahead, sir.

Good afternoon, everybody, and thanks for joining the Banco BPM Alfea Results conference call. Giuseppe Castagna, our CEO, and Eduardo Gineva, Joint General Manager and CFO, will take you through the presentation, which will follow by Q&A session. Please, just let me remind you to limit to maximum two questions each. I will hand over to Mr. Castagna.

Good evening, everybody. Welcome to our H1 presentation. Very happy to give you this presentation, which is full of good results and state of art of our business plan target already reached in our H1. First of all, very good net income at an all-time high at $1.2 billion. 110 million. Well on track on our target of this year, 1 billion and 150 million. Very good news also from Capital. Remember that we had a guidance of 13%. We are already at 13.3% of chat one. Also, of course, this will be the first presentation which we have also consolidated from the second quarter ANIMA results. So I will try to give you both figure one like for like without anima contribution and of course the stated one which includes also anima contribution which mean Q2 contribution plus the one off on capital gain. Let's start from net income. 31% like for like increase. from 750 million H1 last year to almost 1 billion, 984 million this first half of the year, to which we have to add 230 million of global contribution of Anima. Let's say that these accounts for 54 million being the contribution of Q2, 200 million being the capital gain, and minus 25 million, which are the cost of both the successful OPA and the abandoned OPS. For a total, again, net income of more than 1.2 billion in six months, which represents 62% of our guidance of almost 2 billion, 1,150,000,000. for 2025. Again, the guidance has already been overcome by our common equity tier one. And all these results, I would say, are thanks to our confirmation, our model to be very close to our client, to our territory. and is well represented by the growth that we had bought in a new lending for 15.3 billion in the first six months of the year, which represents 50% more than the same period last year, and also the sales of investment products, which is 12% plus year on year. very good performance also on the management of our credit portfolio which declined 23% year on year and if we exclude considering net MPE the loans with state guarantee which we don't want to sell because they are very much well covered then we can cash all the difference we are below 1% 0.84% Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Page 7, let's consider what happened to our bank with Anima Consolidation. To confirm the successful strategy that we had in launching the public offer on Anima, we have our group now handling 155 billion of asset under management on top of the more than 200 billion of the bank. with a total consideration of 383 billion managed by the group. Also, the contribution to the fees and the net fees and net income is very considerable. We increase with Anima on a pro forma basis 23% net fees and 11% net income of the group. Another very important target that we have already reached, which was one of the main targets for 2027 of our business plan, was to even the contribution from non-NII to the one given by NII. I'm sure you remember that our target was to reach 50% of non-NII Let's say that after the first half of the second year of the plan, but the first year with Anima inside, we are already at 49% of non-NII on total revenues contribution. And also the contribution to net income from well management, asset management and protection is already at the target level of 35%. Very consistent is also the increase of both return on equity and return on tangible equity, respectively to 17% and 22.6%. And also the pre-tax and pre-one-off profit contribution is already at level of the final year of the business plan. So we are already at 1.6 billion vis-a-vis 1.577 million being an average year. of the results of 2027. The contribution comes from very solid growth in revenues. As you can see on the left, we grew, notwithstanding 124 reduction in NII year on year, we grew non-NII 213 million for a total consideration 2,883,000,000, which is 3.2% like-for-like growth, to which we have to add the contribution second quarter of ANIMA, which is 141 million, ending up to more than 3 billion in the first half of the year. Again, the non-NIA revenues grew from 38% in the first half of 2024 to 45% like-for-like, and if we have a pro forma consolidation of ANIMA for all the year, we are already, as I mentioned before, at 49% of contribution. This was coupled by very strong cost control. We reduced our cost from 2.6% like for like, and we are basically at the same level of cost of 24, even if we include the cost related to Anima for the second quarter. The same we can say for the declining of provision which went down 24% from 215 million to 163 million which comes from a reduction of LLPs from 194 to 164 million and basically to reduce it to zero the other provision mainly on real estate. On page 9, this was coupled again by a very strong capital position. We started, as you know, with 15% at the end of last year. We had to face two very strong reductions coming from the ANIM acquisition, of course, after the denial of the application of the Danish Compromise, which accounted for 242 basis points. and regular headwinds for 62 basis points, mainly related to Basel III. This ended up our capital to 12%, to which we were able to add both with organic capital generation and managerial action, mainly, I would say, regarding fair value on comprehensive income, DTA, and so on, the level of the capital above the 3%. to 13.3%. The same comes from MDA Buffer which grew from an average level that we mentioned Q1 of 350 basis points to almost 380 basis points. Let's see, generally speaking, you know that our business plan has been done with the strong thought of transforming our bank from a pure commercial bank into a more consolidated bank with all the product factory contributing to the final results. And of course, in order to do that, it takes time, but we were very quick to reach some of the target already already in the first half of the year. Notwithstanding that, there is still a long way to complete, and we want just to say that for the different product factories that we consolidated, let's say, in the last three years, 23, 24, and 25, we are still halfway, I would say, to the final full steam that we think can happen starting from 2026. for the different product factory. Let's say that the life insurance that we integrated in 2023, but we had the opportunity only to switch in terms of IT system during the second quarter of 25. We have completed the migration very successfully. Meanwhile, our joint venture PNC is still under migration, which is to be completed in second part of 2025. This is just to say that these are very long consuming time transaction which are already giving very good result to our bank but still have to perform in the terms that we forecast in the business plan because still has to bring more value to our bank. The same we can say for the payment system found on Numia joint venture with ICREA and FSI. The transaction was completed in 24. We worked a lot last quarter 24, the first quarter 25 to complete the POS migration, which is completely successfully completed. But we are now starting with the issuing migration. So the issuing of credit cards to our clients. And this will take for the whole 25. So again, the full steam will be in 26. Last but not least, Anima, which was announced, the cash offer was announced on the 6th of November 24th, as you know, has been completed April 25th. This is the first quarter in which we consolidate Anima, and the numbers are already very loudly speaking, but still we think that with all the synergy, we can have full steam again in 2016. So I would say very good result up to now, but it's a long work and we have to wait maybe another year to see better and stronger results that we expect. Let's have a look to the roadmap to the plan target. As you know, we plan to terminate 2027 with 2 billion, 150 million of net profit. we have on the right side of the slide 11, split in two, of course, the F1 and F2, compared with H125 pro forma, which means consolidating ANIMA for both quarters, not only for the one that is stated, not considering, of course, the one-off, and comparing this figure with our final plan target. As you can see, total revenues are almost there. We have a performance 3 billion, 150 million as total revenues compared to 3 billion, 180 million of the target of the plan, which is we are slightly above in terms of NII, 30 million above, slightly below 70 million below in terms of fees and commission. This is why I explain to you that the roadmap for the increasing of volumes of the product factory are still to come with core revenues which are 3 billion 100 million vis-a-vis 3 billion 160 million with non-interesting income contribution of 49% compared with 50% of the plan and operating costs which are already at the level of the 2027 plan target. Cost income is already there, 44%, we are below in terms of cost of risk, with the net income excluding one-off and by far minorities, which is almost 1 billion 60 million, compared to 1 billion 75 million of the business plan. So still some room, but very close to the final target. Let's have a look on page 13 to the main figure of our H1. Of course, we are comparing like for like in the first two columns, and we just put also the stated number on the fourth column of the slide. I will comment, of course, only the like for like. We are 7% below in terms of net interest income. If you consider the NII at full funding costs, which means including the cost of the reduction that we experienced, the cost of certificates, the total NII cost has been 4.2% below last year results. And this 4.2% has been completely replaced by increase of 4.4% in terms of net fees and commission, which grew 4.4%. Let's say that we had also a very strong increase in terms of income from insurance from 25 to 80 million. We had a good net financial result from minus 76 to plus 46. And this brought total revenues 3.2% vis-a-vis H1 24. We already spoke about the reduction of 2.6% in terms of operating costs. which brings the pre-provision income to a plus 8.5%. We experienced some reduction in total provision, so we grow the contribution on profit from continuing operation pre-tax to 14% and post-tax to almost 18% more than the first six months of 2014. Of course, 24% was impacted from the last tranche of systemic charge. So we end up with a 31% of increase like for like accounting the net income to 984 million. Meanwhile, including Anima, we reach a net profit stated of 1.2 billion. On the right side, you're going to see the main trends, 23, 24, 25, both, of course, compared with the first H1 of each year. And you see that the growth and improvement was good in all the main line of the profit and loss. Revenues grew almost 12% because the income went down four percentage points. LLP were down 36% and net profit from continuing operation was up 42%. Let's go through some items. NII, 1.6 billion, the results of the year, minus 7% year on year. Meanwhile, we have the Q2 compared to Q1 at only 3.9% below. If we exclude a one-off over Q1 related to interest on a previous litigation, we have, like for like, an increase of 1% also Q2 on Q1 on net interest income. Let's consider how these six months results come from a reduction of an Euribor, which in first half of 24 was 3.87% and was down to 2.33% in H125, the sensitivity would have brought down more than 200 million our results, but we were able to recover 91 million through managerial action. Through managerial action, excluding one-off, we have already recovered 65 million out of the 100 million we said in our presentation of the strategic plan we would end up the 2027 so almost two-thirds of the recovery has already been done in the first six months let's pass to the trend of commercial spreads spreads are doing much better than the reduction of Euribor as you can see both year on year compared with Q2 24 we have had an Euribor down 170 basis point with the commercial spread down only 118 basis point meanwhile Q2 and Q1 25 the reduction of sorry of Q2 25 to Q4 24 so in the last six months the reduction of the Euribor was 91 basis point meanwhile we managed to reduce commercial spread only 66 basis points. On the bottom side of the right part of the slide you will find the update on the managerial action that you will know we have increased our replicating portfolio to 26.5 billion up from 22 billion end of the year with an average receiving yield of 2.1% and a duration of 2.7 years. the share of index current account stayed at 36% compared with 34% full year and you can see also some indication about the low cost of wholesale funding that we are experiencing thanks to the better perception of our risk profile confirmed by the rating agency also after the abandon of our OPS very recently. We will tell afterwards some detail. But the reduction of the spread, as you can see, is really massive, contributing to the bettering of our results vis-à-vis the final target of the industrial plan. We have been reaching these results, continuing to do the work that we do better, supporting our client, our territory, putting all our effort in serving our corporates and retail clients, which led us to increase 50% the new lending granted. Specifically, we increased the lending to households, so the mortgage side to private individuals, 68% year on year, and almost 40% the new lending to small businesses. And the new lending to small business has been 59% guaranteed by state guarantee, vis-a-vis 52%, which was the average in 2024. The stock of performing loans basically is the same level of end of the year, but this is just because we reduced 1.6 billion our exposure to some institutional big ticket. Meanwhile, both in the household we grew 1% in the stock and in non-financial corporates we grew 1.8% toward the end of the year. All in all, 52% of non-financial corporates portfolio is secured, 27% with state guarantee and 25% with collateral. In terms of direct customer funding, this is driven by deposit which grew from 100 million to 101.9 billion. Meanwhile, the certificates reduction was 400 million, bringing the total direct customer funding to 107.3 billion. On page 16, let's have a look to the growth of the commission. Like for like, we grew 4.4%. But normalizing for the reduction in the eco bonus and the instant payments, we have a growth more than 7% year on year. And of course, the stated results is much higher because we consider also the integration of Anima to 1.2 billion. If we would consider a pro forma with the full consolidation of Anima for the first six months, the contribution on net fees would go up to 1.340 million. Our growth was mainly in the investment product fees, which grew 12%, which is exactly the growth that we experienced in the investment product placement, going from 10.6 billion in six months, 24, to almost 12 billion in six months, 25. Let me reassure that also in July, we had investment product sales for 2 billion, which is exactly the average of the first six months. Going to the details, upfront fees grew 27%, running fees 3%, to which we have to add the 114 million coming from the second queue of Anima Consolidation. Very strong results also on other fees, even though it appears to be flat, but just consider that we have almost 30 million less in the first half 25 coming from the reduction of the fiscal credit fees, the famous ECO bonus, and the impact of the instant payment. This reduction was completely offset by the other fees, mainly fees from specialised activities, meaning corporate investment banks, structured trade finance, which grew from $140 million to $176 million. Let's have a look to the number with the consolidation of Anima of the indirect customer funding, which grew 3 billion like for like without Anima from 160 billion to 119 billion. And of course, as I mentioned before, end up to 275 billion consolidating Anima, which 222 of asset under management and 54 billion of asset under custody. It is worth to notice that there is 1 billion growth higher than last year of net flows of asset under management, growing from 300 million of last year to 1.3 billion of this year. The cost income, again, a good reduction, 2.6%. bringing the cost income down from 48% to 45.2 like for like 44.6, including Anima, basically with the flat contribution from the staff cost. Let's have in mind that the main impact of the early retirement scheme will appear in the second half of this year, which will amount in a saving of 40 million. of course, more than offsetting both the new labor contract and also the new hiring that we continue to make. Very good results also in other administrative expense and DNA with a total reduction of 7.8%. Cost of risk down to 33 basis point, driven by old credit management over the life cycle, meaning very strong credit policy in granting new loans mostly granted by the state very effective management throughout the life of the loan with all the attention to the deterioration possible deterioration of credit and early intervention in order to minimize the potential effect of cost of credit This brought us to a reduction of 23% total MPE year-on-year and excluding the MPEs with state guarantee, we have a reduction of almost 30% year-on-year. Let's consider on the bottom side, on the left of the page, 19, that the net bed loan excluding state guarantees represent only 0.2% of total new loans. is basically to make evident that we basically don't have any other net bed loads other than the one who are guaranteed by the state. On the right side, some figure about ratio, cost of risk again down to 33 basis point, default rate battery to below 1% to 0.9, good increase in cure rate to 7.5, and also the coverage which appear to grow also on the total MPs. Again, on the right side, if you exclude the state guarantee, the MP guaranteed by the state, we increase the coverage of the other bad loans from 73% to 75% of UTP from 41.4% to 41.9% and globally to grow to 53% the full coverage of the other loan not guaranteed by the state. Let's give the floor to Edoardo Ginevra which will drive you through the financial and capital issue.

Thank you Giuseppe and good evening everyone. So in page 20 we see the contribution of the financial part of our balance sheet both to capital and to financial activities to P&L. So in terms of contribution to capital, our negative reserves are down now to 335 million on a net basis, thanks to the reduced from the initial level in the beginning of the year of 500 million, thanks to the active management of our bond portfolio. Similarly, we had a positive trend in unrealized losses on debt securities at amortized cost, which is now almost at zero, minus 27 million at the end of June. And we worked actively to improve the resilience of the contribution of our bond portfolio to net interest income, increasing its BPV, now at 2 million, 2.1 million, of which only 0.8 million come from Italian government bonds. net financial result is now at 72.7 million in the quarter stated thanks to various factors among which it's important to notice the dividend we receive from Montepaschi the 97 million the active management of our bond portfolio the reduction in the cost of certificates which one year ago was 75 million per quarter now it's near to half that amount at only 41.9 million thanks to both the reduction rates and the improvement in our credit spread. Page 21, quite flat, the evolution of the portfolio versus the previous quarter. You may observe that all data are very stable, 46.7% the total, 8.5% corporate and non-government bonds, 38.2% of government bonds, 69% the amortized cost component, finally Italian government bonds remaining below 40%, exactly at 38.9%. Liquidity in this environment grew significantly. Now we have cash plus unencumbered assets at almost 54 million. This is owing to the evolution of eligible assets especially. Total direct funding is at 135 million with 4 million increase in bonds that we issued, that we have in our balance sheet. whose success was facilitated also by the improvement in our standing with the great rating agencies so DBRS updated our rating to BBB high in April recently S&P Moody's and Fitch all the three of them upgraded our outlook to positive and this very important to notice was after the conclusion after the withdrawal of the offer of the tender offer on our shares so with no external support so to speak LCR is now up at 160% NSFR at 127% net ECB position is slightly below 9 billion MRL buffer almost at 8% 792 basis points bearing in mind that we have absorbed also from an MRL perspective the impact of the acquisition of Anima with no delish comp And talking about this impact, let's recap the evolution of capital to that very strong 13.3% that we are printing in June. So we started in March at 14.76. Then performance in this quarter, and I'm talking about organic, sorry, recurring performance, not accounting for the 200 million of revaluation in the stake of ANIMA, allowed to bring 85 basis points positive contribution. 72 basis points are the part that is dedicated to the payment to the dividend that is maturing during this quarter. 41 basis points is the contribution of DTAs and Ferberia Comprehensive Income Reserves apart from other minor points, other minor contributors. Our support to the economy thanks also to the high quality mix of the new lending and to the contribution of state guarantees is costing only 9 basis points in terms of reduction in capital acquisition of anime gives 189 basis points on top of the 53 already booked in Q1 leading to the total 242 that is shown in the previous slide so coming at the end resulting in the end to 13.32% which is more than 30 basis points above the planned target. MDA and CET1 buffer on the right part of this slide have been reduced following not only the decrease in CET1 ratio but also the systemic risk buffer increase, the phasing of this systemic risk buffer that was introduced one year ago by Bank of Italy and was planned to be adopted in two separate installments. So now the buffer is at 379 basis points, well above the planned target. One final point on this slide is that this contribution that I mentioned from Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Now, final remarks. Page 25 is an updated presentation of our guidance in terms of profitability and the confirmation of the interim dividend. Guidance is confirmed of net profit as far as net profit is concerned at one point. 95 billion, despite further declining rates. Now we're modeling a full year arrival, which is very close to the 2% that is the end state of our strategic plan. 62% of this 1.95 billion have been already achieved in the first half of this year. And to get the remaining 38%, we're expecting a single digit, mid single digit decline in NII at full funding costs, so including the certificates. double-digit increase in net fees and commissions, which will, of course, enjoy the benefit of the contribution for Anima for the total part of the second half of this year, instead of just one quarter as in the first half, a continuation in the reduction in the trend in cost income and a significant reduction in provisions, again, in comparison with last year. As already mentioned in the beginning of the presentation, The guidance of the dividend is 700 million compared to the 600 million previous year, 46 cents per share as expected dividend per share. This will be confirmed or finally defined by the board in November when also the payment date is expected. an increase of 17% versus the previous year. We are in total at 2.2 dividends, including these 700 million, which means that we are proceeding at the right pace towards our target of 6 billion until 2027. The dividend yield is a strong 8%, following also the Very good performance of our share price in the last weeks. The accrued dividend is 800 million to be compared with the 700 million that we were guiding the market towards. Finally, common equity award ratio is confirmed also end of the year to stay above the 13%, which is the minimum target of our plan. Now leaving the floor to Giuseppe.

Yes, just some very brief, but I think very new final consideration about what happened in the last nine months that we lived together. Let me try to drive you through what happened on the market to our stock and our shareholders after ANIMA announcement, which I think was a pillar stone in all the M&A fuss that has been going on creating in Italy after our announcement on the public offer of Anima, which has been concluded successfully. As you may remember, I mentioned in the presentation on the business plan that, of course, the consensus needed always some months to acknowledge the result that we were presenting year by year. The same happened, but more quickly this time. As you can see, the first figure was the one related to our consensus of net profit immediately after ANIMA announcement. This was the figure 1.3 billion of net profit for 2027. This was, let's call it, the undisturbed figure which was considered. But immediately after, after the presentation of our business plan, first part of 2024, February 2024, the consensus grew to 1.6 billion. After Q1 results, again, it grew to 1.8 billion and currently is already 1.9 billion. So, of course, this helped a lot the performance, the share price of our stock. which grew 70% during the same period, more than the FTSE Italian banks which grew 40%. But more important, this gave a material impact to our return, total shareholder return for our shareholders, which in the last nine months was 91% compared to the lower return of our peers. This for us is very important because of course, we still have some room, we still have 10% between the consensus and our target which is 2.150 billion and we really believe that this can still add some move to our stock price and to remuneration for our shareholders. Let me conclude with a final page which is more qualitative but is very important because in only six months, basically, we have already put the base for having the bank that we presented in our business plan. We say that we would have wanted to have a bank well-balanced between NII and non-NII, a bank which would have overcome 16% in terms of ROE. We are already at 17%. 21% of ROT target, and we're already at 22.6%. Net income, six months net income of 1.75 million. We are 1.60 million. But the qualitative part is very important for us, which brings our bank to transform, to be transformed from a pure commercial bank to a more capitalized bank. model of bank. You can see that the wealth and asset management plus protection grew from 24% of last year to 35% of this first half year, which is completely already in line with the results that we presented for 2027. Specialty banking solution, 9% vis-a-vis 10 to 15% of the plan target, commercial banking activity is reducing from 65% to 56% of this first part of the year compared with 50-55% of our target plan. This means that we are already really on the right pattern for transforming our bank in less capital intensive, in a less risky kind of bank We think that this should bring to some consideration also in terms of multiple to be considered for the net result of our bank. And we are really very proud that only in six months we're already able to give you this very strong pattern for the future of our bank. Of course, again, we still have a lot to do in terms of completion of the productivity of our product factory but all these things has been done very recently in the last couple of years and we could start only in the final part of 24 to really manage some of the new joint venture we did and we are really sure that this number can only improve once all the product factory will be at full stream so thank you very much for your attention we will give you some Time for the Q&A section and of course very happy to answer.

Thank you. This is the Coruscall conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star N1 on their touchtone telephone. To remove yourself from the question queue please press star N2. We kindly ask to use your handset when asking questions. Anyone who has a question may press star N1 at this time. First question is from Giovanni Rozzoli, Deutsche Bank.

Good afternoon to everybody. And two questions on my side. The first one is on them on the city one ratio. You mentioned that over the by 2027, you expected to release a 140 basis points of city one via DTA and fair value on other comprehensive income. I was wondering whether there are other managerial actions that you can activate in order to improve further your CT1 ratio from the already in my view strong level of 13.3% and then a clarification again on the CT1 ratio you reported in the second quarter because you said that you have accrued 0.8 billion euros of dividends but you plan to distributed 0.7 billion social interpret these as a kind of 100 million euros of capital buffer so that your city one ratio would be around 15 basis points higher in the second quarter when compared to the 13.3% that you have reported. And the final to conclude on the city one ratio, if I put all these into the context, I would assume that your city one ratio would be closer to 14% rather than above 13%. So what are the other moving parts that may instead bring it just above 13% and not 14%? And the last question, the NII, you're replicating portfolio as a duration that is more or less half the amount of your competitors. Two of them report a duration that is above four years. Yours is flat at 2.7 years. I was wondering whether you can increase or your target to increase the duration of your replicating portfolio to improve the contribution to NII as other peers are doing, or you don't want to stretch your balance sheet in this respect and you don't plan any changes. Thank you.

Okay, so thanks a lot Giovanni for the two questions plus two questions. Let me start with capital. We continue to be very active on various fronts for improving our capital position. So Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Composition of our group, especially as far as assets that are currently generating goodwill in Anima, who could be transferred from Anima to Banco Bpm Vita, originating treatment directly at Danish Compromise. This is an option we are leaving for the future, but not something that we are currently actively pushing in the current context. The accrued dividend as opposed to the 700 million we are using only simply the criteria that we are smoothening the overall payment of the dividend between the first and the second part so the interim and the final balance so this means correctly that we are prudent in capital calculation in this quarter and we will release the same capital when we pay the second installment at the end of the year. Moving paths of capital, you know, we're happy to be above 13%, but we have to bear in mind that there could be risks from interest rate environment that may generate So to say that will require us to be well equipped whenever any evolution in interest rates may materialize. So for the time being, we are confident that we are very good at the current level of 13.3%. Let's see what will happen in the future. On the duration of the replicating portfolio, on one hand, we are happy that this is limited. We are not blocked, locked with this replicating portfolio for a very long period of time. Still, we are generating a very satisfactory return on it. And now in area of a positive carry after the reduction, the recent reduction in arrival. Increased duration may have some price because, of course, there is some yield pickup given the current shape of the curve. at the same time may create some unnecessary rigidities in the overall assets and liability management. So we will continue to replace the maturities that we have in the replicating portfolio on the increase in the duration unless there are material changes in the shape of the curve. I don't believe this is a choice we will adopt.

If may I add just a note on the what you envisage the potential 14%. We were said that after ANIMA we would have been down to below 12%. We showed with the Q1 that we're already on track for 13%. We were obliged to change our guidance of the original plan before the non-approval of ANIMA Danish compromise from 14% target or ending part to 13%. As you see, in a couple of quarters, we are already above 13%. 13.3% is a very good result, and with all the moving parts which are going to increase, as we have already done since seven, eight years, we were very able to manage our capital structure to improve our capital base, also in the old time of the MPE disposal, and we never were short of capital. We are a bank which can produce capital and we very soon will be ready maybe to change our guidance also on the business plan.

Thank you.

Next question is from Antonio Reale, Bank of America.

Hi, good afternoon. It's Antonio from Bank of America. I have two questions, please. One on strategy and one on the effects of golden power, please. So starting with strategy, I think you've made your standalone case clear, and I think you're well on track, if not ahead, when I look at your plan targets, which is why I'd like to ask you, well, what's next for the bank? I mean, you're out of passivity rules now. You've been open to explore opportunities. I think you're on a stake in Montepaschi, and you've been open to explore further commercial partnerships. At the same time, your main shareholder, Credit Agricole, is rounded up its stake in the bank. So my question is, where do you see Banco Bpm going from here and what role do you want to play in this Italian M&A wave? And the second question is on Golden Power, which is partly interlinked with my previous question. I mean, the conditions imposed by the Italian government on Uniquative meant that there was a cap to the value your shareholders could extract from a potential improvement of the offer. Now, I'm conscious we are talking about a purely theoretical exercise Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord which I mean is a serious matter it creates a precedent and I'm sure your board and you as a management team have considered that so how should we think about this in the future is it going to prevent or limit future M&A opportunities for the bank and more importantly any value creation for for your shareholders I'd like to hear your thoughts thank you let's start from the first part I think I was quite open in saying that we have we will wait to see under after the

round one of consolidation, what will be the situation. Of course, as you were rightly saying, we have already two things that are quite, let's say, something that can show the way. One is our participation in Monte Basco on 9%. And of course, you cannot forget that as well as for Anima Offer, Also, our participation in Montebaschi was before all the OPS round, first round. So we will see what happened to Montebaschi after the conclusion of Mediobanca transaction. Second, in the meantime, thanks to the offer of from Unicredit Agricole had the opportunity to grow from 9.9 to 19.9 and we read yesterday that as they were announcing they are now 20 plus so we will see what as a shareholder they will ask what they will want to do and we will examine full independence the best for our shareholders And this comes to the second question. Frankly speaking, I never saw golden power as a limit for our shareholders. This was announced as a 10 billion M&A when it started. Now we have a bank that is already almost 17 billion worth. So no limit for our bank, no limit to stand alone, no limit for further consolidation. I cannot do anything if somebody was stopped by the fear of golden power. But it's not the question that you have to do to myself. I think that we have been able to bring the bank to the good work. As I mentioned before, we still have a couple of hundred million to recover in order to have the value of the bank until the next update of the plan. and also the capital generation is proving that maybe we can have some more for our shareholders. So I don't think really that the golden power can impact. And in any case, it's not something that we can decide. So what to say? In Germany, it's not golden power. In Spain, it's not golden power. In Portugal, it's not golden power, but it's something else with which the bank has to work with. So I think it's the new normal.

Thank you.

Next question is from Noemi Peruk, Mediobanca.

Good evening. Thank you for taking my questions. I have two. The first one is on your target. So you have reported 1.2 billion of net profit as of H1 and your target is at 1.95 billion. So this implies clearly a lower run rate going forward, even excluding one off. So I was wondering on which lines do you feel you have been particularly conservative? And my second question is on SRPs. You have been pretty active in this market, especially in Q1. this year after the denial of the Danish compromise squared. So I was wondering if you saw part of it as not recurring. So if you're not going to roll over part of it in the future, and if so, how much it is in terms of basis points. Thank you.

Okay, let me handle, Noemi, the first part of the first question, then I will give to Edoardo for the second question. No, it's not that we are I would say I think we are assuming the same pace of growth of the second half as well as the other bank who preceded us in the announcement of the results. Of course, first part of the year is always the best one. We had also many one-offs. We gave our guidance before. We don't think that just in one quarter we can change our guidance. Of course, as Eduardo was saying, there are some indication for the opportunity that we have. The most important, I would say, do not depend really on us. We have already considered another cut to 175 EUR. Let's say starting from the end of Q3. If this won't happen, we can have a better NAI for... Commission I think the growth that we experience is massive and we are replicating the same growth of Q2 over Q3 and Q4 which normally are much harder because of August and December. Cost of risk still have possibly some room but we cannot avoid to think to the geopolitical assumption that are now still present in Europe and So, of course, there is a degree of prudence, but there is a lot of commitment also in some other line like commission. So we are trying to make something quite comfortable for the market to believe in. Of course, if there will be some progress in Q3, we will communicate and our expectation is already to always to beat the guidance. It's not a target, it's a guidance.

I just wanted to stress a little bit more the concept of the seasonality so it's not that the pace in the second half of the year is then the best estimator for the pace of the following years until the end of the plan there are some areas of the P&L where in the first half of the year you produce a better result the commission is the most important example but for example in trading we account for the dividend of MPS which is 100 million almost net and this is something that happens once a year according to the plan of the bank this is confirmed for the years to come or even has some potential to improve on SRT sorry the question on SRT so as you said correctly we are very active I believe that in our roster of banks we are the most active in Italy in instrument and we are comparable also with the larger and international players so we have printed two deals in March we are planning a new one as I said answering to a previous question in the fourth quarter and the pace for us will be always to at least replace the amortizing deals with the new ones so that we preserve the capital optimization lever in the area where it is. Of course, assuming that the conditions in the market in terms of cost of equity do not worsen significantly from the current level. We are in a comparable single digit area in terms of cost of capital when we close these deals. We've been always in the area in the last two years or so and we observes that the market continues to be conducive for similar conditions to be replicated in the near future.

Thank you.

Next question is from Ignazio Ulargui, BNP Paribas Exxon.

Thanks very much for the presentation. I have two questions. The first one is looking to blending growth. I mean, how did you see the evolution of the low book into the second half? After a very strong first half, probably a bit overshadowed by financial institutions. How should we think about that? And what would be the impact of that in RWA growth, if there is any corner that you can share with us? and the second question is on the commercial spread. I mean, leaving aside the incremental cut that you are forecasting, I mean, should we take the current level as the kind of the right one to think about your commercial spread or do you still see incremental downside from here? Thank you.

Thank you. For the long road, we think we have done very good progress in the first part of the year, not only in the volume, but also in the quality. As I mentioned before, we have increased mortgages, we have increased guaranteed transactions, so we are very happy with this kind of model. This, of course, may bring someone to basis point less, lower than normal, but you know that having guaranteed transactions is much better in terms of ROT. We don't see, of course, what can I say? After the consolidation, I think there will be maybe a bit less competition. We are ready to take advantage from that. We are, luckily enough, master of our decisions, so we can still continue to serve very well our client, our clients. Our places, we know very well our client. I have to say that the successful conclusion of this potential M&A has been very much willing, wanted by our client. And so everybody is much closer to the bank. I think we can only make advantage out of that. In terms of commercial spread, no, I don't think there is any impact. We have already factorized the reduction in terms of cost of deposit in our forecast, but in terms of loans, of course, we don't have any further reduction expectation because when interest rates are cut, you can make the spread a bit more aggressive. so both because we grew at a good volume in H1 and because we think we have already a backlog of good transactions to be already granted starting from September we think we can have a good part of the year also in H2 Thank you very much

Next question is from Hugo Cruz, KBW.

Hi, thank you for the time. Two questions. One on NAI. Can you explain why the NAI grew Q1Q on an underlying basis? Was it volumes? Was it loan spreads? Just a bit more color would be helpful. And second, you mentioned a few times updating the business plan targets. Do you have any date in mind to do that? Thank you.

Sorry, the second is to review the targets.

Yeah, when? Yes, when?

I think no, no, we don't have currently a plan. We don't believe we don't have in our program to review the targets of the plan and the plan includes already Anima. So this is not in the radar currently. We are happy with our 2.15 billion and very much focused on pursuing it in the foreseeable future. As far as NII is concerned, yes, after the deducting one-off, we have a growth of around... 1% this is due to the fact that we have reduced quarter on quarter our cost of funding leveraging on decreasing trend in the market reflected especially in the indexed deposits volumes did not contribute significantly some repricing in Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord

If just I may add something on, maybe I was guilty for giving you the idea of revising the business plan when I was talking about the common equity. I say that, of course, we were obliged to cut the landing point 14% of common equity to 13%. Now we are already 13.3%. Let me say that we think that with our new business model, we can save capital, we can very soon come back and maybe giving some more guidance for the capital. For the net profit, I don't think we can move our target plan also because implicitly we have already increased our target because you have to consider that in February we were considering an Oribor at 2.25%. and now is 1.75 and again with more common negative one to be deployed rather than the 13% threshold that we indicate.

Very helpful, thank you.

Next question is from Andrea Livi, Equita.

Good evening, thank you for taking my question. The first one is if you can provide us an update on the remaining stake in Anima of 10%. What would you do with this remaining stake? The second question is on the net flows of AUM that were quite strong in the first half of the year. Obviously the market environment was supportive and this supported as well the growth in fees. Which actions do you mind to put in place to make this trend sustainable over time so to also sustain the growth of fees? Thank you.

Thank you Lizzie. Let's say that for the 10% let me let allow me to be a bit conservative in saying that of course this is at least a company will not announce anything other than say that we will consider all the option and we are we got free let's say of the standalone practice only a few days ago we have to consider the integration of anime we can be more vocal maybe the next time we will see each other I mean the q3 For the other, of course, market, this is the net flow. So the market doesn't account for the growth of 1.3 billion. If you were meaning the market condition, for sure, this helped. But also last year, we had a very good market condition because meanwhile, interest rate go down is a good opportunity to invest in asset under management. We have been very much focusing on this. We are one of the banks which has the lower contribution related to the total deposit base in asset under management. So this is something that we have to work very hard. We are starting to see some good results, but still I think the best is yet to come because we have a lot of deposits growing quarter by quarter. and of course a good part of it can be switched into market asset under management.

Thank you.

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

Okay, so thank you. It's time to have some holiday for everybody so tomorrow we will have some more One to one or too many. Very happy to answer to your further question. And if we don't see each other, have a good holidays and see you in September. Bye bye. Thank you.