Bper Banca Spa Unsp/Adr

Good afternoon. This is the conference call conference operator. Welcome and thank you for joining the conference call of the PeopleBanker Group's consolidated nine-month results. 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 the telephone. At this time, I would like to turn the conference over to Mr. Pierluigi Montanici of the Beeper Banker Group. Please go ahead, sir. Thank you, thank you, and good evening, everybody. Thank you for joining. I'm here with my colleagues, in particular with Gianluca Santi, Deputy General Manager, the CFO, the manager responsible for the financial information, Fabio Pilatti, for investor-relators. We're very happy with the results of this third quarter. The nine-month results are extremely positive, and they confirmed the growth strengths observed year-to-date, combined with increasing core business profitability, further improvement in credit quality, and a solid capital and liquidity position. As far as profitability is concerned, the net profit for the nine-month period amounts to $1,466,000,000 and includes $1,041,000,000 worth of non-recurring items, primarily accounted for by the badwill recognized following the acquisition of Karijai. Net of this amount, net profit totals $425,000,000. Net recurring profit for the third quarter amounts to $108.6 million after payment of $123.3 million in Italian banking system contributions, reflective of robust profitability, which from this quarter also includes the contribution of Banca Carice. As far as Banca Carice is concerned, I'm pleased to say that the bank is a break-even. And as far as this quarter is concerned, in terms of volumes, volumes are on a strong year-to-date uptrend on the back of both Banca Carige's onboarding since the second quarter and the positive commercial input that we have already had an opportunity to observed in the previous quarters. Net of courageous contribution, direct funding was up 1% and net loans to customers were up 1.7%. Gaining lending support to households and businesses continued with new loans in the first nine months of 2022 totaling $12.6 billion. In the previous quarter, I remember we hinted at this figure, which was close to this level. As far as credit quality is concerned, we have recorded further improvements with growth NPE ratio down to 4.2%. Last time we communicated 4.3% in the previous quarter. And the net NPE ratio is now at 1.7%. It was 1.8% in the previous quarter. All of this It's combined with further improvements in the coverage ratios, so the non-performing loans are at 61.7% versus 61.3% and bad loans were at 75.6% and now they are up and UTPs were at 46% and they have improved and bonus, so the performing loans are at 0.68%. The banks capital strength is confirmed with the performer fully faced ct1 ratio that including the full benefit deriving from courageous dta settles at 13.2 percent so this is the over role overview of uh of the of the quota and i will give the floor to um john luca santi and the cfo so that will illustrate the details i would say that uh The CEO has already commented the overall situation. We will go into the specific details just for some qualitative comments. As you can see in slide 6, the path has already been developed for the acquisition of Banca Caridia in the third quarter of 2022. We completed the mandatory tender offer and there was a subsequent sell-out process with BIPA reaching 96.1%. stake in Banca Carice and in the fourth quarter just last weekend there was the approval of the acquisition of Banca Carice and Banca Montediluca in Zubipa and IT migration is scheduled for the 28th of November 2022. Just I'm recollecting all of the numbers and Carice really brought about 800,000 customers to the bank and 10.2 billion in AOM and life bank insurance and 10.3 billion in net loans, and 14.3 billion in direct deposits. Moving on to an analysis of the direct and indirect deposits of the group, growth was by 15.1% year-to-date, and if we look at the entire period, the growth was outstanding, and also in the last quarter it was because it happens through the retail customers. So there's a good positioning and a good growth, which is a very good indicator for banks in this very moment. In indirect deposits, a further comment I would like to make is that the market effect since the beginning of the year had an impact of 14%. So the impact of this market will reverberate and translate into $20 billion. It does reverberate and translate into $20 billion as of September 2022. But it's important to say that assets under management has been confirmed as a positive contributor for the three quarters. And in this quarter, having good assets under management is a good... So we've got five... to one, I think, as a ratio between direct and indirect. But with the Carige and the former Ubi customers, we've been able to contribute to this sector significantly. Looking at loans, net customer loans, the growth year-to-date is 14.8%, 1.7% change on a like-for-like basis. Out of the 90 billion net customer loans, we've got 8.3 billion that are state guaranteed. What is important is that new loans have reached 12.6 billion, and once again, this bears witness to the fact that the customer base we have achieved makes it possible for us to develop a strong commercial effort and the expectations for 2023 are that the situation may be reversed so that the short term will go up because inflation and the price increase will especially for businesses lead to an increasing need for liquidity and so the trend may be reversed in the future. As far as asset quality is concerned, strong asset quality is confirmed in Q3 2022 with declining NPE ratios and coverage further strengthened. So we're now at 4.2% in the NPE ratio. NPE coverage has been further strengthened. bad loans at 77.9% and UTPs at 47.3%. There's the consolidation of Carrija that has brought in about 150 million in net loans, which means that if we had to analyze one, we only had to analyze BIPER, we would be at 64% in terms of NPE coverage. 0.68% of performing loans coverage is very important. with 4.3% for Stage 2 loans. We are among the best in class, and I would say that with the disposals by the end of the year, we should be able to be positioning among the best in the Italian banking system. As far as the financial assets portfolio is concerned, we can say, as you can see in the slide, that our portfolio is made up of you know 36 percent is Italian government bonds out of the total we had braced for and we were ready in the past to actually also acquire courageous government bonds and so from 8.6 we are now at 10.6 but with people that had gone down to 8.3 precisely to prepare for this import from Karija and as you can see the duration is 2.1 years in total bonds and 2.2 years so a little bit higher for Italian government bonds we have tried to you know give you an overview of the quarters of both Beeple and Karija by obviously also calculating pro forma and taking away all of the one-off or non-recurring items. And I would say that by comparing Solo, Beeper on a standalone basis, and you may remember that last time we had not yet consolidated the data profit and loss, but now the variation is only in terms of personnel costs because of a two-fold effect, seasonality effect and holidays, basically, on the one hand, but also we're starting to perceive also the reduction in the headcount. So 533 people have gone away. Now in the nine-month period, we are at 600 people. exits and so we will start to benefit from these reductions in the headcount over the next quarters too. Then, as compared to the second quarter, there's a difference then also in contributions to the Italian banking system funds, 123 million just for BIPER, 102 million that I would say is one of the most important differences compared with the second quarter that you can see in slide 13. Then as far as cost of credit is concerned, we will see the details thereof, but annualized cost of credit is 48 basis points. As far as net interest income is concerned, once again, the dynamics here for the quarter, between the third quarter and the second quarter, there is a So in the first part, we only have BIPER, 33.8% growth in commercial, and it's one to be split between market effects and volume effects. So the institutional funding, we have issued subordinated loans, and so the cost of funding is a little bit higher. and 22 million reduction in the TLTRO. So from 39 in the second quarter, we are now at 19. So there's a benefit from the TLTRO still. And you can see Karije as a whole because some information, some detailed information are being structured here. over these weeks. And so from next quarter, we will give you more details. But the commercial spread, as you can see, goes from 193 to 205 quarter on quarter. As far as net commission income, slide 15 is concerned, Of course, there's been a drop in what comes from assets under management and in direct deposits, but there has been a growth in the traditional banking activities, and we have seen that particularly in transactional banking, POS and cards, and also there has been an increase. And there's been an increase also in corporate investment banking activities, And the loan dynamics also drags along some important fees and commissions components. So we're very much satisfied with the traditional banking activity in terms of net fees and commissions. As far as finance is concerned and trading income, the only difference between the two courses lies with Carige because There were some capital gains there on the disposals of some securities, and Carissa also benefited from some short positions on interest rates. As far as operating costs are concerned, I would say that for operating costs, you can see there – that over the nine months we're calculating about 47 million in one-off costs that are broken down equally between cost adjustments to the Solidarity Fund of 2021 and 24 million instead are one-off costs deriving from the acquisition of Karije. We're benefiting also in terms of personnel costs from a reduction of about 590 people with 530 people from the 1st of July. As far as the cost of credit is concerned, we can confirm at BPIS level that there are the same loan loss provisions as we had In the second quarter, the annualized cost of credit is 48 basis points, but we should consider that we also increased the coverage ratio for non-performing loans. So this effect is very important and probably represents also and accounts for 50% of the loan loss provisions that in terms of basis points we are in fact taking. As far as capital is concerned, the slide is self-evident. You can see that the deductions are OCI for value reserves, and then there are deductions on DTAs because after a certain capital threshold, they are taken back, and we will reabsorb them by the beginning of by the early months of 2023 then so you can see that the risk-weighted assets and then by pro forma if we pro forma calculate the DTAs of courage we will get to 13.2 percent in terms of pro forma phase D and C one that is broadly in line with our expectations so once again I would reassert the final conclusions are operating profitability is underpinned by the top line growth and traditional banking revenues with again a net fee and commission income that exceeds net interest income in this course and then the resilient asset quality should be highlighted with higher coverage and the solid capital that gives us a good position of solidity and financial strength. My presentation is over and I would open the questions and answer session. This is the course call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone to remove yourself from the question queue. Please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from the Italian conference by Peroc, Mr. Peroc from Mediobanca. Please go ahead, sir.

Thank you.

Please go ahead, ladies and madam. So I've got three questions. First, could you share with us the dividend per share that you have included in your common equity for the nine months of the year, for this nine-month period, and how much should we expect for the next quarter? And you had indicated $450 million in net interest interest. And now, can you update your guidance for the quarter? And my last question is about fees and commissions. Your strategy in terms of asset management and insurance was profitable so far, and Q3 exceeded the limits of your guidance. But looking at next year, do you expect commissions will continue to increase? Well, very quickly, as far as the dividends concerned for the nine-month period, 7.5 cents was set aside. And as far as the expectation for the end of the year is concerned, we will try to keep with what we had promised. And so we will see how things are developed towards the end of the year. But as far as net interest income is concerned and the guidance for the next quarter, for sure we did very well. and probably you know I'm saying something in advance but I think that in terms of we will go around 1 billion divided between net interest income and net commission income 50-50 on a 50-50 basis but you know that 2023 so next year is going to be a very special year no one has understood yet what we can expect but we have carried out our analysis and so what I'm giving as a guidance is what we're thinking now and then we will be more accurate in our guidance over the next weeks and months. Thank you. And can you give us guidance also about the net interest income for