Bper Banca Spa Unsp/Adr

Good morning, this is the Coruscall conference operator. Welcome and thank you for joining the third quarter 2025 BIPER consolidated results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Nicola Sponghi, Head of Investor Relations of BIPER. Please go ahead, sir.

Thank you, and good morning, everyone. I am pleased to welcome you to our third quarter and first time month 2025 earnings conference call. Before I give the floor to our CEO, Gianni Franco-Patta, please be reminded that our slide set and press release can be found on our corporate website. I would also advise you to take note of the disclaimer on slide two, of the presentation document. That said, after the presentation, our CEO, our CFO, Simone Marcucci, and our CRO, Emanuele Cristini, will take care of the Q&A session. I will reiterate that this is reserved for financial analysts whom we kindly request to ask a maximum of two questions each. So that everyone will have the opportunity to contribute to today's call. Thank you very much. I will now leave the stage to Mr. Papa, CEO of BIPER.

Thank you, Nicola. Good morning to everyone and welcome to our Q3 earnings presentation. Before giving you details on the financial performance of BIPER, I would highlight a number of key features of the third quarter 2025. First and foremost, the 23 work streams identified for the integration of BIPSO into BIPER are all up and running and will be completed by the end of the first half of 2026. Secondly, in the context of our new organizational model, we have decided to regroup 90 overlapping branches in the central and northern part of Italy. And given our market share by branches in Lombardy, where we can almost boast a share of the market of 18%, we decided to create a new regional headquarter called Lombardia Nord. As far as our human capital is concerned, we are aiming to further invest in young talents. In order to accomplish a generational change in the bank, we have initiated discussions with trade unions to implement additional voluntary exits, which should amount to about 800 employees. As you have seen in our press release dated October 21st, Deeper signed a derivative contract which can be summarized as a synthetic exposure to its own shares of up to 9.99% of the share capital. We decided to take this action as we strongly believe in the enormous potential to shareholder value generation of the new banking group combining BIPER and BIPSO. On the rating side, we have received important recognitions from the credit rating agencies with improved ratings post the successful outcome of the business combination with Bipso. And finally, as you can appreciate on the slide, in the last 24 months, Bipper shareholders have benefited from a total shareholder remuneration which is shy of 280%. This would increase to 315% at the end of October when the market cap reaches 20.2 billion euros. The trajectory is similar if we look at the main tangible banking asset drivers, which have increased by almost 50% in the same period. And let me add that compared to our peers, I'm convinced that we continue to trade at a discount. Let's now move to our Q3 financials on the next slide. I'm very pleased about Q3, because along with the ongoing business integration, both banks performed extremely well. These outstanding results have been possible because of the remarkable commercial performance, which led to continued and robust commission growth, resilient NII, and an increase in the number of net new customers. This particular slide highlights the financials of the new group. based on the consolidation of BIPSO Q3 results. As such, the impact of BIPSO on the consolidated financials counts for only three months, and in a similar way, Q4 will include only six months of BIPSO results. Please note that balance sheet items, on the other hand, include the full nine-month consolidation of BIPSO. In order to ease the reading, on the right side of the slide, we have included on the bottom part of each box BIPER like-for-like results. As you can see, total revenues now amount to €4.6 billion and net profit amount to €1.5 billion. On a like-for-like basis, these are the best-ever nine-month results by BIPER with a net profit of 1.3 billion euros, an increase of almost 20% nine months on nine months. The cost-income ratio stands at 46%. BIPER, on a like-for-like basis, decreased cost-income ratio by over 270 basis points to 46.8%, underlining the continued focus on cost efficiencies. The cost of risk stands at 24 basis points, while, like for like, the cost of risk landed at 35 basis points, lower by 5 basis points, 9 months on 9 months. The return on tangible equity stood at 19.8%. If we would operate with a CET1 ratio of 13%, our return on tangible equity would surge to 21.6%. The CET ratio continues to be very solid at 15.1% or 15.7% following the deconsolidation of Alba Leasing in Q4. Organic capital generation by BIPER, like for like, amounted to 1.7 billion euros, or 272 basis points, in the last nine months. In a similar way, the liquidity profile of the new group is sound, with short and long-term ratios well above regulatory thresholds. Before we start, please note that the figures reported on the left side of the table concern BIPER on a like-for-like basis. For ease of reading, we have included two columns with the consolidated financials, which embed only one quarter of BIPSO contribution. As already mentioned, BIPER is reporting a set of outstanding results nine months on nine months. As you can appreciate, total revenues were up by over 2% nine months on nine months, driven by resilient net interest income and a very robust result in net commissions. Please bear in mind that Q3 is normally a lackluster quarter in terms of commissions, given the summer holiday period. Moreover, the resilient performance of NII, as I will later explain, was supported particularly by commercial efforts of our network, which translated into an increase in new loan origination. Our continued focus on operational efficiency ensured costs to come down by 3.5%, nine months on nine months, and 2.4%, quarter on quarter. Loan loss provision stood at 230 million euros, nine months on nine months, In the quarter, reported LLPs stood at 88 million euros, increasing by almost 22% quarter-on-quarter on the back of our continued conservative approach. As a result, BIPER stated net profit exceeded 1.3 billion euros, up by almost 20% nine months on nine months. As you can see, given these outstanding results, we maintain our guidance unchanged. Please take note that the left part of the slide is related to BIPER on a like-for-like basis, while the table on the right side is related to the consolidated financials, which includes the six-month contribution to the 2025 group accounts. This is the first time we provide 2025 guidance on consolidated figures including BIPSO. There is an exogenous factor which needs to be taken into account that is related to the new banking levels in Italy. The topic is being discussed at banking system level with the auditors to understand whether the impact will start from 2026 or 2025. On a conservative basis, we have taken into account the impact of the so-called extraordinary tax on the increase in interest margin, which relates to the redemption of the non-distributable reserve created in 2023, and which amounts to approximately 116 million euros or 14 basis points on the CET1 ratio. It is yet unknown if the impact will pass through the P&L. One last note is related to the combined cost-income ratio for the end of the year. which will land at below 48%. Guidance is adjusted for approximately 300 million euros of integration costs related to the merger. Let's move to the core part of the presentation. After some 12 months since the launch of B-Dynamic Full Value 2027, a quick glance at the progress of our plan is a must. The plan which I remind you remains to date stand-alone, must be read in the context of the additional 23 work streams launched for the integration. As I mentioned several times, the merger with BIPSO is an accelerator of B-Dynamic Full Value 2027. Some highlights. On Pillar 1. The strong commercial push enabled new lending to increase by 20% nine months on nine months to almost 15 billion euros, close to 20 billion euros, including DIPSO. Commission income growth continues to be very robust, particularly in wealth management, and our customer base continues to grow significantly. On pillar two, Currently, 26% of new customers become Beeper's clients via digital channels. And similarly, Beeper has been awarded a leading position among the digital leaders in Italian banking. As far as Pillar 3 is concerned, our conservative risk approach enables Beeper to boast the most conservative asset quality ratios in Italy. And finally, on Pillar 4, On technology, security, and AI, the group data center rationalization process is fully completed with the adoption of AWS cloud services, ensuring data protection and business continuity while improving the digital customer experience. In this context, CapEx is running according to plan. Our commitment to ESG-related lending continues to be strong with some 2.7 billion euros of new ESG lending in the nine months and, finally, over 3,700 colleagues have already been involved in BIPR's academy and training paths. Let's now turn to our financial performance. Despite the overall scenario, characterized by an acceleration of the reduction of interest rates and the summer months, BIPER produced very positive results on a like-for-like basis. As such, total revenues increased by 2% 9 months on 9 months, and these are extremely satisfying results. Core revenues 9 months on 9 months were stable at 4 billion euros, driven by continued strength in commission growth thanks to AUM, life insurance, and bank assurance products. In this context, the ratio of net commission income to total revenues rose from 36.4% in the nine months 2024 to 37.8% in the nine months 2025, proving the high quality of our revenues. As we will see later, I wish to align the commercial drive on NII, where the negative impact of decreasing interest rates was compensated to some extent by the commercial push of the bank in terms of loan origination. In the quarter, lower NII was compensated by a strong performance in commissions, whereas dividends and other income were particularly affected by dividend seasonality and lower trading activities, which is customary in Q3. As you can appreciate, our productivity index measure as net revenues on risk-weighted assets has improved year-on-year to 9.8%. Let's move on to the next slide, which focuses on net interest income. Although net interest income came down by some 3.6% nine months on nine months, the reduction in NII, principally driven by lowering interest rates, was better than expected. As you can appreciate on the slide, commercial spreads came down from 3.7% to 3.4% in the last 12 months, negatively impacting the NII line item. In the quarter, NII was basically stable, down by less than 1%, and was driven by the interest rates environment, which clearly had a negative impact on NII. Lower interest rates had an important effect on commercial spreads. And in an opposite direction, but to a lesser extent, the important commercial effort of the bank had a positive effect on new loan origination. In this particular context, commercial actions aimed at increasing the quality of loan volumes have been extremely effective. This had a positive effect on credit risk-weighted assets, which we will illustrate later. As I mentioned in the slide on progress of our business plan, new lending in nine months increased by 20% to almost 15 billion euros. Finally, I would like to highlight that our NII sensitivity to 100 basis points movements equal to €184 million in the quarter versus €150 million in the previous quarter. The increase in sensitivity is related to seasonal repricing of floating rate assets. The increase of approximately €30 million in the quarter is in line with the increase between Q2 and Q3 Now, let's move on to the development of net commission income. Commission income continued its strong progress up by 6% nine months on nine months and 8.4% year on year. It is noteworthy to underline that net commission income contribution on total revenues increased to 36% 37.8% in the nine months 2025 versus 37.3% in first half 2025 and 36.4% in the nine months 2024. This is a clear indication of the increasing high quality of our revenues. The bank relentlessly focuses on capital light, high quality wealth management products. This counts for over 43% of total commissions from 41.5% 12 months ago. All this was achieved despite the summer season, which is a remarkable result. In fact, contrary to 2024, net commission in Q3 were higher than in Q2. That said, the most important contributor, which represents more than 50% of commissions, remain banking services fees, which reached 820 million euros. This increased by 6% nine months on nine months. The fact that Deeper is gradually being perceived as a go-to bank by its customer from a purely relationship bank allows the bank to capture a higher share of wallet and increasing net. As already mentioned, normally Q3 is a weaker quarter in terms of commission generation, so we do expect a pickup of fees in Q4 versus Q3. Let's move to the next slide. Total financial assets, the most important driver of commission income, grew by 5.3% since the launch of our plan, reaching 320 billion euros. On top of the market-driven effect, TFA's are growing significantly because BIPER is being increasingly perceived as a relevant player in Italian asset gathering. In this context, The contribution of BIPs increased TFA's by almost 100 billion euros to almost 415 billion euros. This will allow us to further strengthen our focus on asset gathering activities and will ensure the exploitation of further commission-related potential. Key drivers in the quarter have been AUCs and AUMs. Although deposits have been flat, there has been an important asset rotation from deposits to AUCs, mainly due to the issuance of certificates. This is important, as we are now increasing penetration of liquidity management for both corporate, SMEs, and private clients. In fact, in Q3 2025, the loan-to-deposit ratio stood at 76%, stable quarter-on-quarter, one of the lowest amongst Italian peers, which will enable us to continue to grow the loan book and to transform client liquidity into AUCs and AUMs. Let's move on to our performance on the cost side. Total costs were down by 3.5% nine months on nine months, underlying our relentless focus on operational efficiency. Our plan actions continue to reduce the cost-income ratio, which decreased to 46.8% from 49.5% one year ago. Non-HR costs were slightly lower, below €250 million, in line with the previous quarter. As you can appreciate, the waterfall chart reports the key drivers of HR costs in the quarter. The reduction was mainly driven by organic turnover, which more than compensated the increase related to the National Collective Labor Agreement. At the end of September, headcount stood at 19,144, a reduction of some 1,100 compared to September 2024 related to actions which are already in place. In terms of the combined group, the integration of BIPSO will increase the account to approximately 22,900. This will decrease by some 260 in Q4 once Alba Leasing will have been deconsolidated. Before we move to cost of risk, let me anticipate that costs in Q4 will incorporate approximately 300 million euros of integration costs, as we previously indicated when we illustrated the BIPER-BIPSO business combination. Let's move to the next slide. In a similar way to costs, the trajectory on the cost of risk nine months on nine months is decreasing from 39 basis points to 34 basis points, including BIPSO. The cost of risk would stand at 24 basis points. The increase in Q3 to 38 basis points is related to our continued conservative approach, totally devoted to increasing coverage and translated into an improved NPE coverage ratio, which increased to 56.3%. This remains one of the highest among Italian peers and will act as a further buffer against any potential deterioration in asset quality. Our conservative approach is further confirmed as we report a Q3 2025 coverage ratio on performing loans stable at 0.63% among the highest in Italy. In this particular context, total cumulative overlays in the nine months amounted to 146.6 million after a reallocation of $67.2 million between provisioning categories, keeping stable the performing coverage ratio at 0.63%. When including BPSO, coverage ratios are somewhat lower due to a technical factor. BPSO non-performing loans are reported only on a net basis. As a result, The total NPE coverage ratio, which decreases from 56.3% to 50% in Q3, is driven partly by this reporting difference. On a comparable basis, the consolidated NPE coverage ratio would stand at 58% instead of 50%. Moving forward, once full integration, will have been accomplished, coverage ratio and NP ratios will be calculated in a homogeneous way. Let's move on to asset quality on the next slide. On asset quality, let me state that Q3 was characterized by lower loan disposals. This is important as there was literally no positive effect on stocks from such divestiture activities. As in previous years, we expect MPE disposals will pick up in Q4. As a result, the gross MPE stock was minimally higher than in Q2, but flat year on year, and the gross MPE ratio was slightly higher at 2.7%, although improved year on year. In any case, as in previous quarters, The quality of our loan book continues to show a very healthy state with net MPE ratios almost flat at 1.2%, one of the lowest in the Italian banking system. As far as the combined banks are concerned, attention should focus on the net MPE ratio which stands at 1.2% in Q3 and not on the gross MPE ratio. The reason? is exactly the same as previously explained, which is that DIPSO only reports on a net basis. Having finished with asset quality, let's move on to the development of the bank's risk-weighted assets. As you can see, In Q3 2025, total risk-weighted assets decreased from 55.6 to 54.6 billion euros, partly because of almost flat loan volumes and thanks to higher quality lending. As such, credit risk-weighted assets came down by 0.9 billion euros. While in Q1 2025 operational risk-weighted assets were impacting by 1.5 billion euros due to Basel IV, we do not expect any material impact related to operational risk due to the annual update in Q4. On a final note, the combination with DIPSO would lead to a total risk-weighted asset of just over 82 billion euros. I will now turn to organic capital generation on the next slide. In the last quarter, we mentioned that we approached the merger with BIPSO in a very robust position as our CET1 ratio stood at over 16%. The combined CET1 ratio at the end of September stands at a very comfortable 15.1%, or 15.7% following Alba Leasing deconsolidation. BIPER, on a life-for-life basis, continues to generate a very high level of organic capital with approximately 272 basis points or 1.7 billion euros in the last nine months. This result reaffirms BIPER position as a highly resilient institution. Moving on to liquidity, let me point out that at the end of September 2025, the bank's liquidity ratios remain high. The LCR is equal to 165% at the end of September 2025, in line with the 163% reported at the end of June. With the deconsolidation of Arbalese, the group LCR would stand at 173%. The NSFR is equal to 132% stable compared to the end of June 25, or 135% including the deconsolidation of Albalisi. As in Q2, in Q3-25, the loan-to-deposit ratio stood at 76%, stable quarter-on-quarter, one of the lowest amongst Italian peers, which will enable us to continue to grow the loan book through increased loan origination, and to transform client liquidity into AUCs and AUMs, thanks to our ability to attract customer liquidity. Turning now to the bond portfolio, Italian government bonds were flat at 14.8 billion euros and accounted for around 49.8% of total bond. In Q3 2025, the duration decreased, majority due to the position of CCTs equal to 4.4 billion euros that were repriced in mid-October. Now a brief look at our latest bond issuance. In the first nine months of 2025, as far as main wholesale issuance is concerned, BIPR successfully placed 500 million senior non-preferred bonds with VIPSO while BIPSO placed €500 million of cover bonds. On top of all the previous upgrades, in October, DBRS upgraded BIPER long-term deposits from BBB high to A low. Moreover, all credit rating agencies have positively viewed the BIPSO business combination and, as a result, have also increased the credit rating of BIPSO itself. Following the successful completion of the volunteer exchange offer for BIPSO in July, we have launched a joint project between BIPSO and BIPSO aimed at IT and organizational integration, as well as the corporate merger, to be completed by approximately mid-April 2026. Specifically, the project involves 23 cross-bank work streams, which are all up and running. To ensure the IT and organizational migration in line with the timeline, we launched discovery sessions in August to identify relevant functional and IT gaps between the two banks, which will be addressed and implemented through the integration. Additionally, we have defined an IT migration plan, which foresees technical migration tests and simulations in Q1 2026. In parallel, we have initiated the step leading to the merger between BIPER and BIPSO. On November 5th, the merger plan was presented to the board of directors of both banks, including target organizational model, share exchange ratio, and IT integration plan. Thereafter, the request to DCB for the merger authorization will be submitted. Finally, We believe that the merger between BIPER and BIPSO will be carried out effectively, enhancing the strength and resources of BIPSO and resulting in a bank that will be even better positioned to achieve the strategic and business objectives of both entities. As previously stated, we confirm that we will fully achieve €290 million in synergies in 2027. We also confirm that integration costs amount to €400 million. Of these, 75% will be booked in Q4 2025, the remaining in 2026. Now, let's turn the timing and next steps. As of today, the next key regulatory step will be the extraordinary shareholders' meeting of BIPER and BIPSO in order to approve the merger plan in March 2026. From an operational and business point of view, we expect the IT migration and the launch of the revised organizational and distribution model to be finalized by approximately mid-April 2026. On slide 28, we report the divisional financials for BIPER on a like-for-like basis. I would like to draw your attention to the important results achieved on total wealth commission income across our divisions, which amounted to €689 million in the first nine months, compared to €840 million achieved during the entire 12 months of 2024. These results underline the important focus of the group on asset gathering activities. Let's move to the final remarks. In conclusion, in this important quarter, the group has been focusing on business growth, execution of B-Dynamic Full Value 2027, and the regulatory, IT, and business integration of BIPSO. As we previously stated, the acquisition of Bipso must be seen as an acceleration of our plan. The commercial strength of the bank has been remarkable despite the summer holidays. Net commissions continue to grow at an important pace, with wealth management playing an ever-increasing role. Reported NII was better than expected despite declining interest rates. In this context of geopolitical headwinds, asset quality remains one of the best in the Italian banking sector. Let me underline that the bank has been able to generate an important profitability coupled with an outstanding organic capital generation amounting to 272 basis points in the last nine months. As such, we are confident in the potential for further superior value creation. The recent derivative transaction of 9.99% of share capital needs to be viewed as a proof of management's confidence in the enormous potential for shareholder value generation of the new banking group, combining BIPER and BIPSO. And finally, we are fully on track to ensure a smooth, efficient, and effective integration of the two banks by approximately mid-April 2026. We are now ready to take your questions.

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 and 1 on their touchtone telephone. To remove yourself from the question queue, please press star N2. Please pick up the receiver when asking questions. Anyone who has a question may press star N1 at this time. We will pause for a moment as participants are joining the queue. First question is from Marco Nicolai Jeffries.

Good morning. First question on capital. Can you explain all the moving parts in your above 14.5% common equity target for December? During the call, you mentioned 14 bps negative from the extraordinary profit tax. Is this all for this item or do you expect to have more say in the coming years if you pay dividends out of that reserve? Then another question on this 300 million integration cost is it pre or post tax? Do you include also the 60 bps positive from Alba Lease in the consolidation? So do you have also the 60 basis in your December targets? And what is the impact of the total return swap transaction? so this is the is there anything else i've missed here in the capital in the moving parts between september and december and then a second question on the total return swap transaction when do you expect to deliver this roughly 2 billion buybacks shall we consider something like one third per year or so and Are you confirming that you're going to cancel the shares you buy back? Thank you. And sorry, just let's follow up on this point. So where does it leave your common equity tier one, say long-term common equity tier one targets for BIPR? Like where is the right level to run this bank? You mentioned in the past, in the previous plan, 14%. Is the target still there or now closer to 13? Thank you.

Thank you very much, Marco, for your question. I'll answer first your question related to the buyback. As we already mentioned, at present, no decision has been taken in this respect. So we made the transaction to provide a strong sign of confidence in the bank strategy. However, if we were to proceed with said buyback, obviously subject to all the necessary corporate and regulatory approvals, this transaction would provide us with macro-edging with respect to the plan cost, to the benefit of shareholders. But let me repeat that no decision has been taken in this respect. And now I'll put through Simone Marcucci, our CFO, for the other questions.

Okay. Thank you very much for your question. Starting from 15.1 CT1 ratio at September, these are more or less the building blocks. We will have, as you highlighted, 55-60 bps from ALBA positive deconsolidation. We will have 70-75 bps conservative effect one-off from the derivatives depending on how the position will be built between now and the first month of 2026. We will have the positive effect from the PPA with respect to two middle digits but still under analysis. We will have minus 10 BIPs around of update operational risk. This is like every year, but this year is much, much less. Then we will have a business dynamic with respect to middle digit, negative clearly. As the CEO has mentioned, we will have 116 million minus 14 BIPs. New Italian law, as you requested, this is the first of the four fingers. The other three fingers will happen in 2026 or will not be significant for us. Then we will have 190 million around net integration cost, that is the 270% of the 400. This counts for around minus 25 bps, and the rest will be positive net profit, net of dividend, and other minor effects. I think that on this I have covered both questions. The last item, if there are profit and loss effects of the derivatives, it will be negligible, let me say, or slightly positive among the years.

Okay, and when do we expect to take a decision on the buybacks? So when do we get clarity on this front?

As I said, it's too early. When we take the decision, we let you know. But for the time being, no decision has been made. Okay, thank you.

Next question is from Andrea Lisi, Equita.

Good morning. Thank you for taking my question. So the first one is on the revenue dynamic, in particular on the NII and fees. Related to NII, there are several peers hinting to third quarter NII having reached bottom and 2026 to be at least in line with 2025. Is it this indication that other banks have provided something that is also suitable for you or do you think that the movements of the NII can be slightly different and in case which are the main drivers. The second related to fees is rates to fees and in particular on the season height, you indicated in the fourth quarter last year, looking at B percent alone it was more than 50 million if I remember well. do you think that a similar seasonality should be expected this year as well? And the last point really on the distribution, we have indicated that the instrument, the derivatives gives you flexibility on potentially launching a buyback. If you can provide us at the current moment, given also the conditions, which is the trade-off between potentially a higher dividend or a loan in a payback. So which are the pros and the cons that you see of both situations? And so what makes you feel that some solutions could be better than the other? Thank you.

So thank you very much for the question. So, yes, I can confirm that in as much as we are concerned on the NII side, We can give a guidance that 26 would be, say, broadly in line with 2025. Obviously, we believe that we are working on interest rates at 175%. Today, we are at around 2%, so we believe that there might be and a further decrease of a quarter of a point by the ECB next year. On the other hand, we will keep on growing and keep the trajectory that we have had in the last few quarters in terms of growth on the loan side, both on the corporate side as well as on the retail side. In as much as the fees are concerned, yes, also for last year we had The top up, let's say, for the premium that we receive on the bank assurance activity, that was around 30 million, 31 million euros. We will have this, the famous rappel also this year. We are yet not in the position to indicate what is going to be in terms of overall amount, but this will be also this year. But as you've seen from our presentation from this quarter, we are taking away the indication of this because this has become a, let's say, a deferred payment that we receive at the end of the year in December. But it's part of the overall activity that we have across the year. So we will not be indicating anymore what is this top up at the end of the quarter. But I confirm that we will have this rappel also this year. In terms of distribution, what is the trade-off? As you know, we promise in our strategic plan to pay a portion of the dividend up to 75%. I also mentioned several times that as we have a very strong organic capital generation and the capital piles up, we might be in the position also, but this is a decision that will be taken at a later stage, to pay maybe slightly more than 75%. On the other hand, let's say that there has been quite a strong request, quarter after quarter, and you have been present to all the quarters, the presentation of these quarters, a very strong request coming from the market for launch of a buyback plan, given the fact that we are growing our capital. Now, we are going through the process of integrating BIPSO. So by subscribing the derivative, we have basically taken the chance to have a macro edge in case we decide to do it. This might be something that in the future can, you know, come to the market. But, you know, there's no very different tradeoff between the two. So we will keep on paying a dividend up to 75% as a payout ratio. And then on top of that, there might be a share buyback in case, you know, we have a very strong capital generation as in the past.

Very clear. Thank you.

Next question is from Matteo Panchetti, Mediobanca.

Hi. Thank you for taking my question. I have two on derivatives and one on cost savings. The first one, you have decreased your CT1 target by 50 basis points, of which 40 basis points come in from the banking tax. Is it correct to say that the maximum loss amount from the derivatives, including the hedges, will be worth 35 basis points? And can you tell us the sensitivity on capital for each 10% share price increase decrease in deeper share? The second one is on, still on the derivatives. You have announced the merger plan, which now consider the acquisition on Sondra minorities. If you were expected to deliver the share from your toss-as-a-turn swap, can those be used as a part of transactions instead of doing a share buyback? Is this something that you have considered? And finally, on cost savings, Can you quantify the impact from the 800 exits, and can you confirm this is only a deeper perimeter?

Thank you.

Thank you, Matteo. I take the last two questions, and then I'll let Simone Marcucci to answer the first two. So in terms of M&A plans, so the possibility of using the shares coming from the derivative to be distributed to the minority, no, this is not possible because this is a cash transaction with no physical delivery of shares. So this is not possible to have. There will be not shares to be distributed to minorities because of the typical structure of these transactions. The last question you put was about the impact of the 800 exits. You know that in terms of cost, we have synergies up to 190 million euros. Of this 190 million euros, around 70 to 75 million euros will come from the FTE reduction driven by the agreement that has to be reached with the unions.

Regarding the building blocks I've already mentioned before, I understand that you would like to have a clarification about the building block of the derivative. The derivative for, as I mentioned before, for 2025 we do expect 70-75 bps, another little part in 2026 negligible. This is the effect that we will have in 2025. Clearly, it's conservative. Less impact in 2025, higher impact in 2026. The sensitivities of 10% of the derivatives on the $2 billion clearly will be a profit and loss, $200 million up or down, but no impact at the CT1 ratio because all the impacts have already impacted now. as a one-off. I hope I clarified. Otherwise, please let me know.

No, that's clear. Thank you.

Next question is from Lorenzo Giacometti in Termonte.

Yes, thank you for taking my question. I have actually two. So the first one is on synergies, and given that the integration seems to go as planned or even faster than planned, Are you confirming the estimated synergies or do you see those numbers as actually a floor? And the second one is on the merger. And assuming, as you said, it will take place in April 2026, will it have a retroactive effect? And if so, does that mean that you won't have to pay minorities in the Q1 of 2026 or And actually, I have a third one on the business plan update. And so when are you publishing an update of the business plan targets? Thank you.

Thank you for the question. So in as much as synergies are concerned, I can confirm synergies up to 190 million euros. F 2027, so not in 2026. And believe me, 290 million euro synergies, both on cost side and revenue side, by 2027 is going to be a very difficult exercise. Having said so, when we merged Carriage, we had indicated some synergies. and at that time the bank was able to achieve better results, but we confirm only the $290 million, and obviously we'll see whether we're able to extract more synergies out of that. In terms of retroactivity of the merger, yes, the merger will be retroactive as at 1st of January, 2026, and will have a retroactive effect, which means that the the minority shareholders that will become shareholders of BIPER will receive the dividends once the dividend is paid by BIPER. Yes, of course. And then in terms of business plan updated, we mentioned already that we are going to present the market with a business plan updated by June. let's say by the end of June or in July. We see we haven't decided yet when what I can assure, what I can tell you is that for the time being, the two banks are proceeding in terms of the strategic plan that has been presented. So for us, in October last year, for BIP, so I think in March this year, obviously within the activity of the group, so we keep on going to deliver what has been promised to the market by the two strategic plans. Okay, thank you.

Next question is from Giovanni Razzoli, Deutsche Bank.

Good afternoon. Two questions on my side. One on the share buyback. When you say that there is no decision taken on the share buyback, you mean that you have not decided yet whether to leverage on the derivative to proceed with the share buyback, so that's the first clarification. Simone, you mentioned that there are 75 basis points of impact of the share buyback in the 15.1% CT1 ratio at the end. So shall I read this guidance as the fact that if you were ever to proceed with the decision of the share buyback, you would consider an impact of 600 million euros given or taken, given the 75 basis point impact that you are guiding. That is one third of the 2 billion in total. That's my first question. And the second one is on the interim dividend. You decided to pay 0.1 euros in interim, which I guess there will be a quite significant catch-up dividend in May. There are a lot of moving parts clearing the Q4. You guided for a 75% payout ratio. And the net profit in the nine months for the combined entity was 1.5 billion. And the run rate of the quarter is 500 million. So, I was wondering whether we should look at something like 2 billion euros as a reference point for the final catch-up dividend at the end, because this 0.1 has crowded out a lot of investors. Thank you.

So I take a couple of questions, and then for the more technical one, I let Simone answer. So first, no decision has been taken means nor if Neither when. So I think I'm clear now. So no decision has been taken for a buyback. So neither nor on whether we're doing it, neither if and when we do it. So no decision taken. Close discussion, I hope. Secondly, we paid 10 cents as interim dividend exclusively on the profit accumulated by BIPER, not by the group. The dividend is equal to almost 18% of the accrued dividend of BIPER, which is whatever it is, equal to 1.099 euros. This is the accumulated amount. The 17.8 equals to 196 million euros is the first year, as you know, that we're paying an interim dividend. And you have to consider the fact also that we have been working on the exchange ratio for the exchange for the minority shareholders of Bipso. So we could not pay more. Otherwise, this would have moved the exchange ratio. for the minority shareholders. Simone?

Yes, regarding the effect of the derivatives in the fourth quarter, I mentioned 775 bps, but I never mentioned share buyback. This is the effect of the derivatives regarding share buyback. Nothing has been decided. I cannot comment.

Thank you for the clarifications.

Next question is from Manuela Meroni, Intesa San Paolo.

Good morning. Thank you for taking my questions. The first one is on the total return swap. I'm wondering if there are some costs associated to this total return swap that will be accounted for in the P&L. or on a recurring basis, or the impact on the P&L will be just related to the sensitivity that you mentioned before of 200 million euros without any additional impact on the capital. The second question regards the banking tax. You provided some guidance concerning the reserve. I'm wondering if you can share with us your thoughts about the potential impact of of the remaining part of the banking tax in 2026 and going forward, both in terms of impact on the earnings and impact on the capital. And then I have just a clarification on the moving parts that you mentioned on the capital in the fourth quarter of this year. You mentioned the PPA. Could you please repeat what is the assumption that you are taking for the PPA?

Thank you.

I start with the cost of the total return swap. At the profit and loss level, the costs are negligible because there will be some costs, but there will be also some revenues that we will get from the remuneration of the dividends. Both effects will go in the line 80, therefore trading will see the effect there. So negligible unless the sensitivity that I mentioned before, plus 10, minus 10. But not other effect as CT1 ratio, as I mentioned. So regarding the other questions. So for the banking tax, as we mentioned, we had $116 million in the four quarters. That is a one-off. We're not clear if it will go to profit and loss or not. Then we will have – this was the first finger of the four fingers. The other two fingers, the year-up rate will happen in 2026. For us, it will be around seven bips. And instead, for the partial, not the deductibility of passive interest, this is the third finger, should be in 2026. For us, four BIPs decreasing in the following years. For the fourth finger, we shouldn't have any effect. Sorry, PPI, I forgot to mention the PPI. The PPI, we are still, as I mentioned, discussing. We don't have absolutely no final numbers. You can assume a middle two-digit number, but still absolutely under discussion at the moment.

Thank you.

Next question is from Hugo Cruz.

I'm sorry. No, sorry, just to specify the previous answer. The first finger that equals to 14 basis points or 160 million euros, we conservatively deducted from CT1 ratio of this year. Obviously, if the decision would be not to charge, and this, as I said, is a decision taken at system level, not by us. So if this will not be charged in 2025, we will have 14 basis points higher in terms of the T1 ratio in 2025 and the deduction in 2026.

Next question is from Hugo Cruz, KBW.

Hi, thank you for the time. I have two questions. First is on the dividend for 2025. If you could clarify what are your intentions for the final dividend? You know, my colleague, you know, has already just asked if you could pay $2 billion. Yeah, like if you could clarify that, I think it would be very helpful. And then a second question on the synergy potential, you know, especially in light of the business plan that you announced middle next year, Do you see the potential for higher synergies after 2027 than what you currently target or not? Thank you.

Thank you, Ugo, for the question. So dividend, as I said, we are paying 10 basis points on beepers' accumulated profit, and these 10 basis points are equal to 17.8% of the accumulated profit of BIPER, which equals to 1.099 euro so far. Obviously, as we promised and we mentioned in our presentation strategy plan last year, we will pay 75% of the combined profit of the two banks when it will be decided by the board and the assembly and then we'll pay. So we confirm the 75% on the combined but we need to have the merger hopefully as I said depends also on the authorizations coming from regulators and so on with a retroactive effect from the 1st of January, so automatically this is going to be the situation. In terms of synergies, as I mentioned, we confirmed the €290 million at the end of 2027. Obviously, the bank doesn't cease to operate in 2027. It will keep on going in 2028. So hopefully we'll be able to extract even more synergies, but it's too early to say because we have to proceed first with integration and then we will see what we'll be able to deliver. The only note that I can say is that if I look at the past when BIPER acquired Carige, At the time, the bank had indicated some synergies both on the cost and on the revenue side and was able to beat the indication. On the other hand, which means that the bank is always struggling to get better results than what indicates. On the other hand, we have to consider that these are completely two different situations. Carreger was a bank that was suffering because of the problems that had for many, many years. Bipso is a good bank with a good track record. So it would be, for instance, in terms of revenue synergies, there will be some synergies, for instance. as we indicated, from the liquidity, because we'll be able to address liquidity at a lesser cost, but will not be as much as Carigio, because Carigio obviously was paying much more in terms of liquidity from the market. So it is a much different situation, but hopefully we'll be able also from 2028 to deliver more.

Thank you very much.

Next question is from Ignacio Ulargui, BNP Paribas exam.

Thanks for the presentation and taking my questions. I just have to, one is on alba leasing. So do we expect any impact in the P&L from the deconsolidation of alba leasing in the fourth quarter? And the second one is on credit quality. If I just look to your guidance of below 35 basis points cost of risk, and I compare that with the nine months, there is a a very big gap, potential increase in the fourth quarter. Given the comments that you've made during the presentation about the solid credit quality, we shouldn't see any meaningful impact, but just wanted to get a bit of a heads up on how do you see credit quality evolving from here and what should we expect on the cost of risk in the fourth quarter. Thank you.

Thank you, Ignacio. In as much as the impact from Alda leaves in deconsolidation will be negligible, really 10 million euros, so really negligible, nothing compared to the overall activity of the bank. In as much as credit equality concern, I will ask Mr. Cristini, our CRO, to answer your question.

Thank you, first of all, for your question. In general, it's worth noticing that, as I lighted in the presentation, the credit risk profile of the bank remains very positive, with very low both gross and P.A. ratios, stable annual default rate around 1%, stable P.D. priority of default, and very high coverage ratios both for performing and non-performing exposures. Having said that, of course, there are still some uncertainties related to the macroeconomic scenario and the potential related to the U.S. trade tariffs, and so we prefer to be conservative, as usually we do, regarding credit risk, so our guidance is the cost of risk on an hour basis lower than 35%. We continuously monitor the evolution of the credit risk profile Of the bank, but as I have already highlighted, we haven't detected currently any particular signals of deterioration of the credit risk profile of the bank. Thank you.

We shouldn't expect any meaningful top-up of provisions in 4Q at this stage. I mean, it's just that you are very conservative in the guidance.

Not top up. You have seen that we keep a high level of LAS. We consider our current coverage ratio both for performance and non-performance exposure high. Anyway, we will continue to monitor the evolution of the macroeconomic scenario.

Thank you.

Next question is from Juan Pablo Lopez Cobo Santander.

Yes, good morning. Thank you. I'm sorry for a new follow-up question on the total return swap. I'm not sure if you're able to answer, but can we understand the counterpart we need to cover by physical shares in the market? This is my first question. And then one regarding OPEX. I don't know if you could comment. In the last business plan presented both by BIPER and BIPSO, there was a hiring of more than 1,000 new employees. In the case of BIPER, more than 200 new employees coming from BIPSO. Is that something that is still in place? And the last question, and probably this is for the business plan for June, July, but that's almost six, seven months from here. Your latest guidance for the combined entity was more than 2 billion euros for 2027. The consensus is above that figure.

I don't know if you could provide any update on that one. Thank you.

So for, I don't know if you, because we couldn't hear properly your voice, but for the TRS, there's no delivery of shares. This was the question. This is a cash transaction. So it is a derivative which does not provide for the delivery of any physical stock. So there is no way that we receive stocks. In case of winding down all this, we will be receiving or paying the financials or whatever is going to be if the stock has increased in value or decreased. but no delivery of physical stock. And so this is what it is. In terms of the OPEX, when we presented our plan last year, we indicated a reduction in employees, And we reached an agreement with the unions, which provided for one new hiring for two exits, basically. And this is what has been happening so far. In fact, as I mentioned during the presentation, we had a reduction in one year of 1,100 employees year on year. In terms of Sondrio, they were providing for hiring. I don't remember the exact number because it was their plan. Nevertheless, as we are putting together the two banks now, we came up with a new plan which is under discussion with the unions. for the reduction of 800 employees always on voluntary basis, which means retirement or pre-retirement schemes, basically. This is the number that I can indicate. From the number we put there, which is 22,900, less the, you know, the 260 thing that is the Alba Leasing employees and once we have reached an agreement with the unions will be minus 800 plus the one that we will have to hire following the agreement with the unions. Hopefully, the scheme will be the same as in the past, so one new hiring every two exits, but this is under discussion with the unions, as I said. The last, the third question was this. I don't know if I answered all your questions because we couldn't hear well, so please let me know.

Thank you. The last one was regarding the combined target that was net income above 2 billion euros for 2027.

I don't know if you could provide some updates on that one. Yes, we confirm because if we add the two coming from the plan, we'll be above 2 billion.

Okay, thank you.

Next question is from Luis Manuel Grillo Pratas, Autonomous.

Thank you very much. My first question is again on the derivative structure. So we completely understand this gives you extra flexibility in executing a share buyback in the future. However, when Bipper was trading well below the book, the bank always refused to do a share buyback. So my first question is essentially what led to this big change? And sometimes the press also speculates on this being a proactive M&A defensive action. Can you comment on this? And then it's just a clarification on the 70 to 75, the one impact from the derivative. Could you split the impact on the numerator and also the denominator? Is there any market RWA inflation from the derivative, or is it just a deduction? Thank you.

Okay. So, Alain, I take the first question. no definitely is not a defensive move then the market reads this as the market wants to read it but i can confirm that is not a defensive move we decided to do it now and we were not doing it in the past because in the past we were deeper on a standalone basis and the transaction on Sondrio, so the OPS on Sondrio, you know, was positive, but we knew only at the end of July. And so, you know, until we knew what would be the outcome of our offer, we could not decide whether to do this or not. As we were able to reach the over 80% shares of Sondrio, and therefore it was very clear to us that the merger of the two banks would have happened, then considering, as I mentioned before, that we believe in the growth prospect of the bank, considering the integration of Sondrio into BIPER and the full development of the related synergies, then we decided to do this transaction in order to show the strong confidence that the management has in the bank strategy following the completion of the public exchange offer on Banca Popolare di Sondrio and again in view of the integration of the two banks. So this is the reason why we decided to do that. In as much as the exact impact of the derivative is concerned, Simone will answer.

So the 70-75 BIPs impact estimated for 2025 are almost totally due to the deduction, while instead the effect on risk-weighted assets is negligible a couple of BIPs.

Thank you. There are no more questions registered at this time.

Okay, thank you very much to everybody and see you soon. Thank you.