Bper Banca Spa Unsp/Adr

Good evening. This is the Porusco conference operator. Welcome and thank you for joining the conference call on the full year 2022 consolidated results of the PeopleBanker group. 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. Piero Luigi Montani, CEO of the Beeple Banker Group. Please go ahead, sir. Thank you. Thank you very much for joining. And I would like to give you a short overview of the results we achieved in 2022, which was a particularly significant year. for Bipa Banka marked by important accomplishments as we saw in the previous quarters that we illustrated. The last part of the year closed with extremely positive results with improving profitability, a very good improvement in credit quality, And as far as profitability is concerned, the year closed with a profit of $1,449,000,000, including $946.2 million worth of non-recurring items that are primarily accounted for by The bad were recognized following the acquisition of Karije, excluding these one-offs, net profit amounts to $500 million. In terms of volumes, of course, there was an uptrend in net interest income, and revenues are going up by 19%, with reference to volumes. Volumes are on a strong year to date. Uptrend on the back of... and many elements, both bunker carriers onboarding since the end of June 2022, and the positive and very effective commercial input that we announced in the previous quarters. Direct funding was up 13.3% year-on-year, and net loans to customers were up by 15.3%. Again, in lending, support to households and businesses continued as usual, with new loans in 2022 totaling 16.5 billion, 25.8% increase. Credit quality is improving further, and the additional de-risking has enabled us to further downsize our stock of non-performing loans. The gross NPU ratio is, in fact, down to 3.2%, And the net NPE ratio is now at 1.4% respectively compared to last year. They were 4.9% and 2.0% at the end of 2021. And the coverage levels have risen further at 57.1%. Bad loans, 77%. UTP, 49%. And performing loans are... I mean, their coverage is growing to 0.77%. It was 0.68% in the previous quarter. As far as capital is concerned, the bank's capital strength is confirmed with a pro forma fully-faced CET1 ratio that factors in the full benefit deriving from courageous DTAs, and it's now at 12.9% or 12.8%. And then on the basis of some other transactions that have already... being foreseen for next year, it will improve further. Our sound capital position is the basis for us to propose a dividend payout in the amount of 12 cents per share, which is twice the level of last year, so twice the level we resolved upon last year. The year that has just been closed was also marked by important accomplishments and one-offs that we have already mentioned. But first and foremost, I would like to emphasize the successful completion of the integration of Banca Carige that was closed successfully, I would say, at the end of November with the deed of murder of the two banks, and I'm referring to both Carige and Banca Montediluca, followed by the complete migration, full-scale migration of the information systems of the two networks, which in this further step in the process of banking consolidation has made it possible for us to increase lending and funding volumes and further strengthen our competitive position on a national scale. With regard to non-performing loans, I would like to mention the major sale of a bad loan portfolio, which we closed by the end of the year last year, which drove our growth NPE ratio to 3.2%. This transaction is part of the broader de-risking strategy that the PeopleBank Group has effectively pursued in recent years. And let me remind you that this indicator will decrease further during the next few months as a result of the disposal of two UTP portfolios and the MPE platform. And on the basis of these disposals, there will be an upside also in terms of CEQ1, such one that will get to 13.2%. Among the other transactions that were significant for us, I would mention the strategic partnership on payment cards, which we concluded and completed with Nexi in December, whereby Nexi was, in fact, transferred our merchant acquiring and management with POS management business, and this will enable us to leverage a degree of specialization they have. The branch network rationalization continues, combined with enhanced digitalization. and also our customer service model was improved in an omni-channel innovation logic. These one-off initiatives, and I'm sure you know because you've always followed us, but these one-off initiatives fit within the path that was charted in the 2022-25 business plan that we presented in June last year, whose implementation is already delivering significant upside in terms of streamlining the operational structure and increasing efficiency and profitability. Before I give the floor to Mr Gianluca Santi, I would like to remind you that we have 72 integration tracks in place that we are perfectly in line with the timing of, and I would like to say that in about a dozen of the key projects were even ahead of the time schedule and we have had the opportunity to start up and roll them off beforehand and this was done by the beginning of this year and of course this also brought about some expenses that we had to take before, but of course, taking them before, we will not pay them for them later. Having said this, I would give the floor to Gianluca Santi that will go into the details of the, of course, of our results. Good evening, everybody. So we're going to go into the details of the numbers. As an introduction, I would like to say that the numbers for Banco Carice will be consolidated in terms of balance sheet starting from 30th June, whereas in terms of income statement, they started to be consolidated from the 1st of July. So economically speaking, we're starting to see them in the last two quarters of the year. In terms of volumes and in particular direct and indirect deposits, you can see that there has been the consolidation of Parija that had an impact. And what is important is the resilience that we are observing in terms of funding from retail and corporate customers. So also in the fourth quarter, we have been able to grow our volumes. And this is important in terms of the upside that is reflected in the net interest income we're observing. In terms of indirect funding, we are growing. We grew also in the last quarter, in a year that was marked by an important market effect. You know that the impact of the underperformance of the market was about $17 billion in the year, so the capacity of our branch network is coming out. significantly in terms of stock but also in terms of net funding. As you can see we've been able, we've been resilient so we've been able to gather positive net funding in all quarters of the year which bears witness to the resilience of our branch network, of our branch network that can in fact work and operate even in adverse market conditions. Moving on to loans, we can see that there's good resilience there and even a slight increase in the last quarter, which is the result once again of efficient work conducted in May during 2022 for us to achieve a growth in terms of stock. to that extent, we had to grant $16.5 billion worth of new loans. So this is an excellent result in terms of loans, in terms of consumer loans, and also in terms of corporate lending, because you can see that CBI, that we have just introduced, Corporate Investment Banking Unit, that has just been introduced, is starting to work very well and performing very well even in a customer segment that did not belong to people that much in the past. And as the CEO was saying before, asset quality has improved significantly. Obviously, the one-off transactions enabled us to go down to 13.2% – I'm sorry, 3.2% in terms of gross MPE ratio and 1.4% in net MPE ratios. among the best in class in Italy. Net non-performing coverage remains high, and you will see there's a little bit of a slowdown because we have disposed of a significant bad loan portfolio in December. So there's a couple of numbers that I would like to give you in addition to what you can see there. There's a cure rate of about 16%, which bears witness to a good performance of our non-performing loans going back to being performing, and a default rate of about 10% to 11%, which is in line, and also the danger rate. They are both in line with the system, so the good quality loans is confirmed. As far as the securities portfolio is concerned, what I would like to mention there is that you can see that following the consolidation after EJ, we have now got, we have some sort of imported, onboarded a large share of Italian government bonds, but our idea for the future is that of reducing that stock to about 32%, which we think is the share that we should have as an ideal share of our portfolio. The duration is quite short because you can see that we're reporting there 1.9 years to 2.1 years for the overall portfolio. We're going up to 2.1, in fact, for the Italian government bonds. Moving on to the income statement, for sure this year was, or 2022, was not an easy year for comparing ourselves with the previous year, including Corrigia and including what we had in terms of one-off transactions. So we had to work a lot also to make the results and data comparable somehow for you to make your estimation. So the 2022 recurring data, we reconciled it with 2021, even though 2021 recurring results do not include Karije, so that's not a one, you know, a like-for-like comparison that we can make. But still, in the following slide, you can see that there's a focus on the one-offs that we carried out during the year. That's important for you to have an overview of how you can get to 503 million from the other data that you had. $18.4 million is accounted for by the capital gain on the bad loans disposal that we call breach transaction. Then $300 million primarily comes from the disposal of the merchant acquiring business to Nexi. $200 million, you can see there, is mainly traceable to the $177. 6.6 million booked in Q4 for the workforce optimization costs or the redundancy fund that obviously will not start I mean it will start in 2023 with 560 people net being involved in this maneuver and then we have the costs for the career acquisition process 55 million then there's 7 million in software impairment costs so of course some procedures, IT procedures that are no longer used and that came from Corrigia have been discontinued and then $60 million comes from the Corrigia's collective LLPs so by onboarding their net loans we had to take $60 million in collective loan loss provisions then there's $833 million in badwill $1.5 was the original badwill then the net of the items is $833 million. And in the annexes, you've got a breakdown of all of these items so that you can, in fact, understand better what the breakdown is about. But I would move on to the income statement and the net interest income. So as you can see, we have a very good performance in terms of net interest income in the last quarter, 19%. Plus 19% reflects both the improvement in the commercial spread and the yield on the securities portfolio and then we also issued institutional bonds, I would remind you of the $400 million in Tier 2 at 8%, and then there's a senior at 6% for $800 million in the last quarter, which of course brings the cost for institutional net interest income that is higher. But then as far as TROs are concerned, We did not recognize in the fourth quarter all of the interest income that comes from the TLTROs because we preferred to go for a different option that is following the deadlines that we will have in 2023. And so by doing that, we have a penalization in the last quarter, but we will have a benefit or an upside in 2023. Other things that are important to follow in the following slides, and if we go to – actually, it's in the same slide. We've got the commercial spread in the fourth quarter benefited from the spike we had – we have observed in the interest rates. And, of course, this was reflected in the interest income, and we have reached 2.90 there. We are starting to see in interest expense there's an increase from four basis points to 23%. And I would like to say that as far as our models are concerned, we have a beta of 30% that is embedded in the models. As far as retail customers are concerned, we are at about 3%. And we do not get to 20% for corporate customers. So we do not expect we will reach the... data that are embedded or implied in our assessment models because there's some sort of a viscosity, as he calls it, in our funding that is higher. As far as net fees and commissions are concerned, there's one thing that we are confident about for 2023 because in spite of the adverse market conditions, we have been able to grow In assets under management, again, we have grown also in bank assurance and in traditional banking services. So in the fourth quarter, all of the fee-based assets went up, which is an important message that I wanted to convey. As far as operating costs are concerned, well, 985 is the figure, including the one-offs that we have listed in details. So 166 million from the workforce optimization effort. Then we have 31.3 million from the Corrigi acquisition process in the last quarter of 2022. As a whole, the costs for that item amount to 55 million, but then there's a 10 million for a one-time allowance that we paid to the employees. Looking at the recurring costs, the figure is higher. So you can see that we're higher there, but as the CEO was saying, what we expect for 2023. In terms of guidance, we're giving you 2.6, 2.7 billion in operating costs. We're very close to Q3, to the Q3. Where's the delta? Well, on many projects, we are in line with the time schedule, but on some projects, we could be ahead of the time schedule and so of course we took the expenses before even though they were supposed to start in 2023 we um started those projects before this uh implied some costs were taken in 2022 but we would benefit from that in 2023. among some among the other relevant items i was saying 55 million in karija's acquisition process costs but there are some other costs that we could not allocate. For instance, some unused holiday leaves by some employees that had to support courageous workers. And so those costs were not allocated yet, but they amount to about 20 million euros. And then in the last quarter, there's also an inflation-related, energy-related cost that in 2023 will, of course, be capped because we've been able to renew the contracts with our providers and suppliers, and so the prices were stabilized and we will not see these spikes in costs in 2023. As far as loan loss provisions are concerned and the cost of risk, As you can see in the last quarter, we have $274 million in LLPs. But let's go into the details of that amount. So $60 million comes from the collective loan loss provisions from the region that was restored. Then in the last quarter, there were $50 million in overlays that amount to $150 million. million for the year and then 130 so that's for the overlays and then 130 is in fact attributable to the de-risking process because of course there will be NPE flows in 2023 but we want to be ready with our stock also to dispose of some additional NPE portfolios at a price that is compatible with the market trend so 59 basis points is the recurring cost of risk excluding the overlays. So excluding the overlays for the year, that would come to 43 basis points. If we also remove the coverage for future de-risking, then we go down to less than 40 basis points for 2022 in terms of cost of risk. I would conclude the part by talking about capital. The slide is quite self-evident, so we've got an illustration of the fully-fledged CEC1. Of course, the market generated some capital losses in the OCI reserves, the Carrije reserves, impact is in terms of deferred tax assets and you saw the benefits in terms of the 63 basis points and the bad wall is represented there but then there are also 45 basis points in deductions concerning first and foremost DTAs and shareholdings there are some thresholds as far as individual DTAs and shareholdings that you cannot overcome. Or actually, you have to deduct from capital that surplus, and so we've got some deductions there. And then there are some deferred tax assets that were generated in the fourth quarter. Then in terms of upside, as the CEO was saying before, we basically have already got some binding offers for the platform and the UTP portfolio, so the NPE recovery platform and UTPs, and so we have highlighted the pro forma of the effects of these transactions. And I will give the floor again to the CEO for the conclusions. After Luca was saying correctly, we have brought forward much of the work that was embedded in our business plan, and we are ahead of the time schedule with some projects. The year was very committing, challenging, and replete with actions. We have completed most of the actions. With the only one... that we wanted to complete by the end of the year, the UTP disposal. And I would like to say that the two transactions that were just mentioned account for more than $2 billion. And with the disposal of the UTPs between the first and the second quarter, we should get to 2.5% growth MPE ratio. So we think that this result... should not be taken for granted because of course until the closing is done that should not be taken for granted but it is in fact there within reach and we have had the opportunity to bring forward some of the activities in the business plan which will be an advantage to us for the next year both in terms of implementation and also in terms of cost that we have already incurred and paid for so we are ahead of the business plan both in terms of project delivery and economic financial targets. I think that we are in some cases ahead of the time schedule by one year, so we're ready to face the challenging macro scenario from a position of strength for the next year. As far as the guidelines or the guidance actually for next year, the net interest income that we foresee is of about $2.2 million. Then net fees and commissions as well and net operating income $4.3 billion. operating charges 2.6, 2.7 as Gianluca was saying before, and then the recurring net profit 770, 780 million is our guidance. Then in terms of LLPs, we expect a cost of credit of 40 to 50 basis points with no release of overlays in a scenario, in a basic scenario, baseline scenario. This is all. We're very satisfied with the achievements we have attained and also we are in line with the business plan and even ahead of the time schedule. We're very confident about the results that we will deliver next year. Thank you.

This is the course called Operator.

We'll now start the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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. This first question is from Noemi Peruk from Mediobanca. Please go ahead. Thank you for the opportunity you have given me to make questions. I'm seeing the breakdown of the badwill allocation after EJ with respect to June. And I was wondering, what has changed compared to June? What has changed to such an extent that you had to post $300 million in losses, in additional losses? And then my second question is about the cost of risk. I would like you to give me some color about the cost of risk for the Q4. I've seen that your coverage level has been increased in the performing loans, particularly for Karije. And I would like to understand whether your models have been updated for the IFRS 9 and what assumptions you have included in that. And my last question is about costs. Your guidance ranges between 2.6 and 2.7 billion, which is a 4% difference. What's the difference that can account for the delta between 2.6 and 2.7? Well, let's start from the easier part. The badwill of Karije, apart from the interest rates curve, well, the difference there is accounted for by the resolution of the distribution agreements that were very much of an unknown factor, so to say. or at least the source of concern when we're dealing with that, not in terms of resolution but in terms of timing. well-performing because we concluded them, but still we terminated them. But of course, this has an impact on the bad will. However, we now have the opportunity to go on without having this open issue, let's say. Then in terms of the cost of the costs, so I've given guidance about it. That's where we think we will land, but there's no reason why it should be 2.6 or 2.7. This is a very high level guidance that I'm providing you with. And then there's inflation, of course. that may have an impact, and the range is quite justifiable. We're making some forecasts. The forecasts and the guidance we gave you, of course, are quite clear, but there's caution involved, and so that's why... there's a range in the guidance I provided. Then I do not remember your next question was about the cost of risk. So you have increased the cost of risk for the performing loans. So my question was whether you have changed the IFRS 9 model or the assumptions for the GDP or inflation. The CFO, Mr. Ferrari, is answering. So the I4S9 models, Noemi, are quite, you know, progressively updated. We have a total overlays of 100 I'm sorry, 180 million of overlays were done and taken in 2022. So we also took account of an adverse macroeconomic scenario and possible effects coming from the, you know, viability of our borrowers. And also we took account of some effects associated with an increase in energy costs.

Thank you.

Next question is from Deutsche Bank, Giovanni Razzoli. Good evening, everybody. I have a first question on net interest income because if I have understood correctly, I think you have adopted a different option in terms of accounting treatment of the TLTRO in net interest income by penalizing, so to say, the fourth quarter so that you can gradually take an advantage and benefit in the next quarter. I would like to understand whether this assumption I am making is correct. and what benefit you will get in the future in terms of net interest income for 2023. Another clarification I would like to get from you based on what you said during the conference call, I think you hinted at a beta at 2%, 20% for corporate, but I think that the guidance in net interest income for 2023, you estimated at 20%. you are prudentially above the level you're seeing now. Could you explain better what your sensitivity is for net interest income in different scenarios of deposit details? Then another question is about the redetermination of the distribution agreements with Karija. I would like to understand whether the cost was reduced fully incurred I think you were referring to 100 million and I wanted to understand whether this is the cost of the badwill that you have already expensed because you hinted at that during the business plan as a maximum cost basically but then I'm sorry for the many questions I'm making but I have another about the fact that I think you are well ahead In terms of time schedule with many projects of your business plan, the scenario is more positive. But if I remember correctly, the business plan envisaged more than $600 million in profit for 2024. So do you think you will basically adjust your guidance how should we consider the payout for the shareholders because there should also be a step up in the payout considering these premises. Mr. Montani is answering. As far as the TLCO is concerned, what you said is correct. It's true that we were penalized in the last part of the year, but for the next year, We've got $80 million of a benefit, of an upside that we'll get from this bringing forward of the project. In terms of sensitivity, I think that Roberto, the CFO, Roberto Ferrari, will take the floor. In terms of the commercial distribution agreements, $100 million. is more or less the right amount but there's another agreement that we are going to terminate shortly but all of the costs were incurred and as far as the business plan for 2024 or actually the guidance for 2024 is concerned where you're looking too much ahead of time probably we've given guidance for 2023 and we wish that everything will go well but as far as the remuneration or actually the payout for the shareholders What we can say is that if the numbers are positive, and I think they will, there will be no difficulty for us to get closer to the target of the 50% that we had foreseen by the end of the planned period. But I would not venture into 2024 before we get to the end of 2023, because I need to see what happens first before making predictions. The CFO is answering some questions. 10% less beta compared to the 30% that was embedded in our models. Well, that means that we gain about 4% in sensitivity. So by lowering the sensitivity by about 10%, then 5% net interest income increases by 5%. Yes, correct. Next question is from Andrea Lisi from Equita. Yes, good evening. My first question is, again, about net interest income. In particular, I would like to have your guidance. You provided the guidance of 2.2. What levels of URIBOR are assumed in that case? Because we have seen different targets. of a new report at 2.5, but the forward curve points to higher levels. So if you could give us guidance for a potential further increase in rates by 50 or 100 basis points. But then my next question is about the evolution of your loan portfolio in terms of net interest income? What are you expecting for the next year and then for this year actually? And then another question is about capital. So in particular, like other peers, must be subject to inspections by the ECB, and so is there any headroom for you in terms of risk-weighted assets? My last question is more strategic. Now that Caricia has been integrated, would you be open to further consolidation facing the industry? Mr. Montani is replying. The Euroboard 2.5 is correct. Then... The inspections by the ECB was another question. The impact would be about 40 basis points. And then as far as whether we are ready for another consolidation step, this is a question that you made, basically. I would like to say that we need to be conservative and prudent. In a little more than one year, let's say 15 months, we have... absorbed 620 UB branches, 1.1 million customers have been onboarded, 5,500 employees were onboarded, and then 20 billion with Carige of assets, and then 50 million volumes, and then again 3,000 employees and branches from Carige. In a little more than one year, between Ubi and Karija, 8,400 extra headcount has been acquired. And even though we're very happy, even though everything was successful and very well performed, in all perspectives, we must be realistic that 8,400 people cannot be, you know... integrated in a short time so it needs time for us to settle and for all of the business plan projects to be accomplished it's true that we are ahead of time with some projects and we're happy with that we're confident that everything will be completed successfully but we're also realistic because we need some time to settle down then of course the future I mean, it's the future, so there's nothing on the table that is in addition to what we have declared and what we have stated. Our objective is that of completing the business plan and possibly bringing forward some projects, but that's it. I would give the floor to Gianluca for some other parts of your questions. Yes, the last question was about the evolution of our loan portfolio. We've got about 14 billion loans coming to maturity. at 1.9% interest rates and we think there's going to be an uplift to 2.4%. This is what will happen in terms of evolution of lows coming to maturity and interest rates relating there too. Next question is from Francesco Colamartino from CityWire Italy. Good evening. I would also make a couple of questions that are more of a strategic nature, one on private equity, I think, and one is more about financial counseling, so to say. Cesare Ponti and the role of Cesare Ponti will be enhanced in the future, and so I would like to know if there are more details that you can provide in terms of what contribution Banca Cesare Ponti will provide. in the future and then the second question is about the strategic central role of the financial advisors that will come I guess from Banca Cesare Ponti and the role they will play. Well Cesare Ponti was a theme that we included in the business plan The revenue generation that comes from that was one point, but in fact the real point was that of redefining, so to say, the profile of the bank and the plan is there, we're working on it. We had said that the finalization and the achievement of this objective would... have come this year and I think that this project will in fact be completed in the second part of the year or around the second part of the year but for sure Banca Città del Ponte plays a significant role and the central role of the financial advisors is there as an objective we have and we will work on that because we think we would be more attractive, more appealing we would be able to you know, manage the portfolio and the asset management and assets under custody portfolios of the bank better. So once all of this role of Banca Cesare Ponti is better defined, we will communicate it. But it's true that we will, in fact, enhance the role of Banca Cesare Ponti, both in terms of its brand and in terms of its footprint. Milan and we're also working on the restyling of some branches not only in Milan but somewhere else so that we can reposition Cesare Ponti within with some corners so within the branches so Banca Cesare Ponti corners within the branches so it's something that we're discussing thank you next question is from Marco Nicolai from Jefferies Thank you for your presentation. If I take the NII for the Q4 and your guidance, I understand for Q2, I understand that the beta is very low now, but also Euribor is destined to, is set to increase and so I would like to understand the moving parts that you expect in this area also in terms of quarters so on a quarterly basis and the same applies to the net fees and commissions income even though I understand that in the last quarter there's more of a seasonal effect but I think you will get more to a 2.1 than 2.2 for this quarter. So in the fourth quarter, the operating costs that exclude the one-offs, there's still an import from non-recurring elements. Is that correct? That's it, I would say. These are my questions. Mrs. Santi is answering the question. Then your guidance for the net interest income times 4, 2.3, there are some fees and commissions including the performance fees. As you said, there's a seasonal effect in Q4, so it's true we are optimistic but Q4 by 4 is a little bit of a too much of an optimistic forecast and the same applies to net fees and commissions by 4 well we should consider that the first two quarters will for sure be excellent but that beta that will not get to 30% it would be a little bit less than that but still faced with side deposits that, as we were seeing before, was priced at 0.20, and with 4.60, any bond, and ING, of course, the customers are not, you know, are moving around, and so we will try to also come up with some products that will try to intercept the customer deposits and AUM needs that customers may have. But we cannot expect the same spreads that we will get in the first and second quarters in the second part of the year. So there's going to be an adjustment, and we tried to reflect that in our guidance. Probably there was a part missing. Yeah, there's a part missing. for your question about the fourth quarter. You're right. There are some non-recurring elements and we tried to describe that by talking about the projects that were brought forward and then there was a one-time allowance that was paid to the employees that arose from an adjustment to labor contracts that of employees coming from different banks, so there are some non-recurring components that we cleaned up a little bit in the slide we presented. And then my question about capital, you mentioned the negative impact from the ECB inspections, and could you repeat the amount that you expected? And in terms of Paris J., I was thinking of the benefit of courageous transitioning to BPERS models and if there's a benefit from there. Well, as far as the capital impact from the ECB inspections, we quantified that at 40 basis points. And as far as the models are concerned, we calculated and estimated that impact at 50. Next question is from Andrea Vercellone from Exane. Good evening. I have three questions. My first question is the same that was asked by my predecessor in terms of net interest income. But my question is different. My question is formulated differently. Now, my joke was you're trying to deroute us a little bit. No, my question is the same as my predecessor was saying because 2.2 net interest income is very prudent considering the basis you're starting from. And then annualizing the fourth quarter by removing 20, we're taking 20 million. So we get to 2.340 plus 80 TLTRO. one-off, we get to $2,420,000,000, then you re-borrow, you used an assumption of 2.50, but it was $175,000,000, $177,000,000 probably in the fourth quarter, so it's going up again. Then it's true that you start to decrease, but the moving parts that we are removing are, actually, it's a question of Are the parts that we should be removing associated to the B-cell or to other elements? And then going beyond the assumptions, are there other things that you should add? For instance, as far as the models are concerned, you gave a guidance coming from the inspections of 40 basis points negative from the ECB inspection. So does it have a positive impact on the Basel IV capital or is it different? So was it already embedded in your guidance for Basel IV? Can you give us an update on that number? And then my last question is about fees and commissions. Some banks said that they will eliminate the so-called liquidity commissions. Is that something that you also apply? If so, will you eliminate them? And if so, what amount should we expect? Mr. Montani is answering. We have already eliminated the illiquidity commissions and we actually never factored them in too much because we've always thought that funding is not something unfortunate. It's in fact something important. I'm not that young and I have seen that If there's a lack of liquidity, effects are negative. So I was never too much concerned about having too much liquidity. So we have already eliminated the liquidity commissions. But as far as the models are concerned, there's a positive impact. And as far as your question is concerned about net interest income, there's nothing else that will have an impact. I would say that... these were the questions, or probably Mr. Sant is saying visa and institutional funding will have a material impact. What issues is... are you planning to have in 2023 in terms of institutional issuances? Well, in 2023 we will issue a senior non-preferred bond because by 2024 we will be subject to the requirement, the subordination requirement. And I would also give you an answer to your question about Basel IV. Yes, you were correct. The burden, so to say, that we are having on the models will offset the Basel IV impact in 2025. So the Basel 25 impact will be reduced. Next question is from Adele Palama from UBS. Yes, good evening. I would like to ask you something about institutional agencies. Are you compliant with the ML rail fully loaded by 2024? And then in terms of the moving parts of capital, you have 40... basis points of regulatory that should be added to the EBA guidance or have the EBA guidance for 2022 already been embedded? And then what about the other moving parts for capital? Are there any further elements that we should consider or Or do you only take account of the rollout of the models on career basis points? And then I would like to have guidance on the tax rate for 2023. And then as far as cost of risk is concerned, your guidance was 40 to 50 basis points for 2023. You had 70 basis points in the business plan, if I'm not wrong. And I would like to understand... You know, is this 40 to 50 basis points a long-term guidance for cost of risk for 2024? What do you expect in terms of cost of risk? And then for the NII guidance, the assumption of the deposit beta is 30% if I understood correctly for... the guidance that you gave of $2.2 billion and what evolution do you expect for NII in 2024? Thank you. Well, there's a lot there in your questions. I would start by saying that the evolution for 2024 in terms of net interest income is not something that we are concerned about because we're looking at 2023. then your assumption for net interest income is correct. Then the cost of 40 to 50 basis points in terms of cost of risk, that's only for 2023. Then tax rate guidance is 25% on recurring profit. And then I remember you said something about moving parts. I'm sorry, about the institutional agencies that... I think we said we're done, and then 40 basis points are to be added, yes, and the others have already been absorbed. Thank you very much. Next question is from the English conference call by Hugo Cruz from KBW.

Hi, thank you for the time. I have quite a few questions. Apologies if you already answered this, but with the translation, it's a bit hard to understand some things. So on NAI guidance, I understood your guidance is based on the arrival rate of 2.5%. Can you remind us of the sensitivity for it to go up by another 100 basis points? I have in my mind that it would be around 100 million of NAI, but please correct me if I'm wrong. Then can you please repeat your guidance for fee income and total revenues for 2023? I missed it on the call. Third question on OPEX, your guidance of 2.6 to 2.7 billion. What rates of underlying inflation are you assuming in this guidance? And then finally, with the CT1 ratio, you know, you guided for a benefit of 42 basis points from the Curriculum DTI and the NPL platform disposal. Can you split those 42 base points between the two effects? I remember the carry agility was supposed to be a plus 65 basis points, I think. So I was just wondering if that changed in Q3 or not. That's it.

Thank you.

As far as the guidance, NII guidance is concerned, so 5%, so with 100% increase, there's a 5% increase. And then 2.6, 2.7 was the operating costs. The breakdown of the transactions can be the follow. as follows. So we are gaining eight basis points in terms of DTAs, I think, and then the capital transactions that have already been signed give us 34 basis points of upside.

I'm sorry, can you tell... Inflation.

Inflation, 4.5%.

And the fee income and total revenue guidance?

4.3 billion total income. Fee income over 2 billion.

Thank you very much.

I remind you that anyone who wishes to ask a question may press star and 1 on their touch-tone telephones. Next question is from Noemi Peruk as a follow-up question. Thank you very much. I have a follow-up question on capital. I was wondering what the time frame is for the rollover of the RWA models of Karije. There's a question about securitizations as well. As far as the expected timeframes, it takes about one year, more or less, for the RWA rollover. But I could not understand the second part of your question. Mr. Ferrari answers, the 34 basis points of upside will come from the extraordinary transactions, so the UTPs, disposal, and the platform that we have already had the signing of, and we're just waiting for the closing in 2023, and that's going to be upside from transactions that have already been signed.

Mr. Montani, there are no further questions at the moment.

Mr. Montani, we're giving you the floor for the conclusions. I would like to thank you for joining the conference call. So I hope the answers were clear. But if you need some more information, please contact us. I thank you for your patience and for listening to us. We're confident about the results we have achieved and those we will achieve. So I wish you a good evening. Thank you very much for listening. Bye-bye.