Bper Banca Spa Unsp/Adr

Good morning. This is the course call conference operator. Welcome and thank you for joining the fourth quarter 2025 BEPER 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. Nicolas Pungi, Head of Investor Relations of Beeper. Please go ahead.

Thank you. Good morning, everyone. I'm pleased to welcome you to our full year 2025 earnings conference call. Before I give the floor to our CEO, Gianni Franco Papa, please be reminded that our slide set and press release can be found on our corporate website. That said, after the presentation, our CEO and our CFO, Simone Marcucci, will take care of the Q&A session. I will reiterate that this is reserved for financial analysts, whom I will 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 end of year results presentation. Before giving you details of the financial performance of BIPER, I would highlight a number of key features of this last year. 2025 has been an intense year for both BIPER and BIPSO. Since August, the two banks have been extremely busy with integration. Please note that the update of B-Dynamic Full Value 2027 will be presented in the second half of this year. The combined group has been able to register outstanding results thanks to a strong focus on commercial activities both at revenue level and on the cost side. As you can see on the slide, despite a complicated macroeconomic contest and ongoing geopolitical headwinds, we've been able to increase customer loans and TFAs to 551 billion euros. And as you will appreciate later in the presentation, our capital position remains strong despite the BIFS acquisition, our business growth, and the total return swap we implemented in Q4-25. Financial year 2025 has proven to be a record year in terms of the bottom line thanks to all the group companies and to all our employees. Despite the ongoing integration of BIPSO, our colleagues have been able to focus relentlessly on commercial activities. NII has been resilient in spite of an acceleration of the reduction in interest rates and the progression on net commission income has been extraordinary, thanks to the effort of all our colleagues. We have transformed ourselves as a key domestic player with an 11% market share from 8% in 2023. In addition, we have achieved a very thorough presence in rich Northern Italy, where we are present with more than 58% of our branches compared to 47% in 2023. And finally, as you can appreciate on the slide, Since April 2024, when the new Board of Directors took over, BIPER shareholders have benefited from a total shareholder remuneration which is close to 220% versus 127% for the FUZI Italian Banks Index. Moreover, our market capitalization stands at more than 24 billion euros, an important leap from a market capitalization of just 6 billion euros in April 2024. As such, BIPER has been included incrementally in more than 130 market indices, which have benefited the stock in terms of liquidity and purchasing momentum. Let's now move to our Q4 financials on the next slide. I would like to draw your attention to the continued progression of our dividends generation. As a result of net profit growth between 2021 and 2024, from approximately €480 million to over €1.4 billion, cumulative dividend payments in the same period amounted to over €1.5 billion. and the payout ratio has increased in the same period from 17.8% to 60.6%. As you can see on the right side of the slide, for financial year 2025, the Board proposed a dividend distribution of almost €1,370,000,000, of which €196,000,000 have been paid in terms of interim dividend in November 2025, amounting to a payout ratio of approximately 75%. This follows our target dividend payout ratio following B-Dynamic Full Value 2027. Let's turn the slide to BIPER's key financial results. I'm extremely pleased about financial year 2025. In the first part of the year, both banks have focused significantly on business growth and their respective strategic plans. In a similar way, in the second half, despite the ongoing business integration, both banks performed extremely well. These outstanding results have been possible because of their remarkable commercial performance, which led to continued and robust commission growth and resilient NII's, despite the acceleration of decreasing interest rates. This slide highlights the financials of the new group based on the consolidation of BIPSO second half results. As such, the impact of BIPSO on the consolidated financials counts for only six months. Please note that balance sheet items, on the other hand, include the full 12 months consolidation of BIPSO. Also, please note that, as we mentioned in Q3, Alba Leasing has now been excluded from the consolidation. In order to ease the reading, on the right side of this slide, we have included on the bottom part of each box, beepers like for like results. As you can see, total revenues now amount to 6.6 billion euros and net profit adjusted amounts to 2.1 billion euros. The cost-income ratio stands at 45.7%, underlining the continued focus on cost efficiencies. Please bear in mind that on a like-for-like basis, the cost-income ratio stands at 47.2% and has improved by 314 basis points in the last 12 months. So, a tremendous effort in operational efficiency has been carried out. Furthermore, the cost of risk stands at 24 basis points, while like for like, the cost of risk landed at 34 basis points, basically flat in the last 12 months. The return on tangible equity stood at 20%, while the CET1 ratio continues to be very solid at 14.8%. Despite the acquisition of BIPSO, business growth, and the implementation of the total return swap in 2025, organic capital generation by BIPER amounted to 2.3 billion euros or 340 basis points in the last 12 months. In a similar way, the liquidity profile of the new group is sound with short and long-term ratios well above regulatory thresholds. Slide 7. As we mentioned in Q3, please note that the figures reported on the left side of the table concern BIPR on a like-for-like basis. We have included two columns with the consolidated financials, which embed only two quarters of BIP's contribution. It seems to me pretty clear that BIPR is reporting a set of record results. As you can appreciate, in the last 12 months, Total revenues were up by over 2.5%, driven by resilient net interest income and a very strong result in net commissions. The growth path on net commissions has been remarkable and better than planned. Moreover, the resilient performance of NII, as I will later explain, was supported particularly by commercial efforts of our network. Our continued focus on operational efficiency ensured costs to come down by 5.1%, both in terms of HR and non-HR costs. Loan loss provisions stood at €316 million, on the back of our continued conservative approach. As a result, Vipers adjusted net profit almost reached 1.8 billion euros, up by almost 27% in the last 12 months. Let's move on to slide number 8. As you can see, these outstanding results allowed us to perform better than our guidance for 2025, both on a like-for-like and on a combined basis. In this respect, I can say that we are well ahead of B-Dynamic Full Value 2027. As far as 2026 is concerned, we expect BIPER to continue this trajectory on a like-for-like basis. Further information on guidance, including BIPSO, will be given at the business plan update scheduled for the second half, once the full integration will be completed. Let's move to the core part of the presentation. After some 15 months since the launch of Bidynamic Full Value 2027, a quick glance at the progress of our plan is a must. The plan I remind you remains to date standalone, and the merger with BIPSO is an accelerator of Bidynamic Full Value 2027. Here are some highlights. On Pillar 1, The strong commercial push enabled new lending to increase by 13% in the last 12 months to almost €20 billion. Net commission income growth continues to be very robust, particularly in wealth management and bank assurance. And our customer base continued to grow significantly, with over 50,000 net new customers acquired in 2025. On Pillar 2, the following highlights are important. Digital channels now process 93.8% of the bank transactions with approximately 28% of new customer acquisition and best-in-class completion rates. Digital sales continue to increase thanks to higher cross-selling and product penetration. we consolidated the digital human model and completed the end-to-end digital operating platform for business and corporate, launching digital corporate banking and smart banking business with fully digital SME credit solutions. As far as Pillar 3 is concerned, our conservative risk approach enables BIPER to boast the most conservative asset quality ratios in Italy, while at the same time we are increasing automated credit approvals for selected retail, small business and SMEs. And finally, on Pillar 4, on technology, security and AI, the group data center rationalization process and cloud implementation of all multi-channel retail applications are fully completed. In this context, CAPEX is running according to plan. Our commitment to ESG-related lending continues to be strong, with some 3.9 billion euros of new ESG lending in the last 12 months. And finally, over 4,000 colleagues have already been involved in Deeper'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 continued geopolitical turmoil, BIPO produced a set of remarkable results. Noteworthy are total revenues, which increased by 2.5% on a like-for-like basis to over 5.7 billion euros and almost to 6.6 billion euros, including BIPSO. Core revenues were stable at 5.4 billion euros, driven by continued strength in net commissions and resilient NII. In this context, the ratio of net commission income to total revenues rose from 37% to 38% in 2025, proving the high quality of our revenues. As we will see later, I wish to highlight the commercial drive of NII which increased between Q4 and Q3. Finally, it is important to underline how our productivity index measured as net revenues on risk-weighted assets has continued to improve relentlessly every quarter from 9.5% at the beginning of 24 to 10.1%. This It's a remarkable result and it is among the highest productivity ratios in the industry. Let's move on to the next slide, which focuses on net interest income. Although net interest income came down by some 3.2% in 2025, I'm extremely pleased about the outcome, given the context of lowering interest rates. As you can see on the slide, commercial spreads came down from 3.7% to 3.5% in the last 12 months, negatively impacting the NII line item. In the quarter, however, NII was slightly higher by 3.5%, driven by marginally higher commercial spreads from 3.4% to 3.5%, in an opposite direction but to a lesser extent lower impact of average loan volume, and an important contribution of non-commercial drivers related to asset liability management exercise. Please note that loan volumes in the quarter actually increased by 2.1%, driven primarily by retail and factoring. 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 the last 12 months increased by 13% to almost 20 billion euros. Finally, I would like to highlight that our NII sensitivity on a like-for-like basis to 100 basis points movements equal to 176 million euros in the quarter versus 184 million euros in the previous quarter. Now, let's move on to the development of net commission income. The trajectory of net commission income has been spectacular. As you can see on the slide, thanks to B-Dynamic Full Value 2027, the performance of net commission income in each single quarter of 2025 was higher than in each quarter of 2024. As such, net commission income continued its strong progress up by 5% in 2025. To date, this performance is well above the targets of our plan. The mere fact that net commission income contribution on total revenues increased to 38% in 2025 versus 37% in 2024 is a clear indication of the increasing high quality of our revenues. Our focus on capital-light, high-quality wealth management products is proven by an increasing proportion of these versus total commissions at almost 43% from 41% 12 months ago. The remarkable performance of wealth management fees is underlined by an increase of more than 10% in the last 12 months. Please note that bank assurance fees in the last quarter are always positively influenced by performance fees, hence the 122% increase quarter on quarter. That said, the most important contributor remains banking services fees, which almost reached 1.1 billion euros. Although the contribution of these fees is coming down as a percentage of total commissions, We expect this to pick up significantly once BIFER and BIPSO will be fully integrated. Let's move to the next slide. As you can appreciate, since the launch of Bidynamic Full Value 2027, TFA, the most important driver of commission income, has been growing from approximately €300 billion to almost €330 billion on a life-for-life basis. and to over 420 billion euros with a new group perimeter. This is primarily as a result of BIPER being increasingly perceived as a relevant player in Italian asset gathering. The integration of BIPSO 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. An important contributor, for example, is Arcafondi SGR, which reported over 50 billion euros in total AUMs at the end versus 45 billion euros at the end of 2024. Noteworthy to emphasize the fact that asset growth between AUMs and AUCs amounted to approximately 16.7 billion euros, of which 3.9 billion euros related to net inflows and 12.8 billion euros related to market effects. In Q4, there has been an important asset rotation from deposits to AUCs, mainly due to the issuance of certificates as well as bond and treasury placements. This is important as we are now increasing penetration of liquidity management for both corporate SMEs and private clients. Finally, it is important to know that at year-end, the loan-to-deposit ratio stood at 76.3%, stable quarter-on-quarter. This 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. Before I start commenting on costs, a topic of which I'm very proud of, let me anticipate that integration costs of approximately 300 million euros are not included in these figures in order to show cost progress on a normalized basis. I'm extremely satisfied about the cost performance. The enormous effort of the whole bank on operational efficiency is bearing its fruit. Total costs were down by above 5% in 2025, and this has been achieved for both HR and non-HR costs. Our plan actions continue to reduce the cost-income ratio, which decreased from 50.3% to 47.2% in the last 12 months. Including BIPSO, the cost-income ratio would further lower to 45.7%. On the HR side, at year-end, the total accounts came down to 19,000, 700 less than in 2024, In terms of the combined group, total accounts stood at 22,600 at year-end. In addition, as a result of previous agreements, we are expecting over 220 exits in 2026. And furthermore, we expect mainly in the same year 800 additional exits aimed at the implementation of a generational change program in the bank. As a final note, the strong improvements of non-HR costs is the result of our relentless focus on cost efficiencies. As per our plan, we have significantly reduced outsourcing and consultancy costs. Slide 17, as you can see, the trajectory of the cost of risk is very sound. LLPs came down by 2% in the last 12 months, while the cost of risk stands at 34 basis points, slightly lower versus 2024. Including BIPSO, the cost of risk would stand at 24 basis points. In the quarter, Our continued conservative approach translated into an improved NPE coverage ratio, which increased from 56.3% to 57.5%. This remains one of the highest among Italian peers and will act as a further buffer against any potential deterioration in asset quality. Moreover, our conservative approach is further confirmed as we report a Q4 2025 coverage ratio on performing loans at 60 basis points, mainly driven by an improvement of the rating classes of our credit counterparts. This ratio is among the highest in Italy. As we already mentioned in Q3, please note that when including BIPSO, coverage ratios are somewhat lower due to a technical factor. BIPSO non-performing loans are reported only on a net basis. As a result, the total MPE coverage ratio, which decreases from 57.5% to 52.8% in QA4, is driven by this reporting difference. Also, please note that the total MPE coverage ratio, including BIPSO, improved significantly by 280 basis points from 50 to 52.8%. Moving forward, once full integration will have been accomplished, coverage ratios and MPE 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 Q4 was characterized by some loan disposals of single names. As a result, the gross MPE stocks were lower versus the previous quarter at 2.3 billion euros and the gross MPE ratio came down to 2.4% from 2.7%. In any case, as in previous quarters, the quality of our loan book continues to show a very healthy state with net MPE ratios improving to 1.1%, 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%, and not on the gross MPE ratio, The reason is exactly the same as previously explained, which is that Bipso 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 Q4 2025, total risk-weighted assets of Bipper, including Bipso, decreased to $80.1 billion. Despite higher volumes, credit-risk-created assets were down by 3.1 billion euros thanks to high-quality lending and the deconsolidation of ALBA leasing. On the other hand, operational risk-created assets increased by 900 million euros due to the annual update of operational risks. I will now turn to organic capital generation on the next slide. Despite the acquisition of Bipso, the total return swap and the robust business growth, the combined CET1 ratio at year-end stands at a very comfortable 14.8%. In the last 12 months, Bipper continues to generate a very high level of organic capital. Organic capital generation amounted to 2.3 billion euros or approximately 340 basis points. This result reaffirms BIPER position as a highly resilient institution. Moving on to liquidity, let me point out that at the end of 2025, the bank's liquidity ratio remained high. As of the end of 2025, the LCR increased to 172% from 165% at the end of Q3. In the same period, the NSFR improved to 134% from 132%. And finally, the loan-to-deposit ratio stood at 76.3%, 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 generation 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 increased to 15.6 billion euros and accounted for around 52% of total bonds. On a combined basis, including BIPSO, Italian government bonds increased to 21.7 billion euros and accounts to 50.4% of total. In Q4 2025, the duration increased majorly due to the position of CCTs equal to 4.4 billion euros that were repriced in mid-October. Please note that the annualized average yield of the financial portfolio was 2.5% in Q4. And now a brief look at the latest bond issuance. Throughout 2025, as far as main wholesale issuance is concerned, BIPO successfully placed the €500 million senior non-preferred bond and BIPO placed €500 million of cover bonds. In addition, in November, Viper successfully placed an 81 perpetual bond for a total amount of 750 million euros. And finally, on top of all previous upgrades, in Q4 2025, Fitch and Moody's upgraded their long-term ratings on Viper. Let's move on to the business integration between Viper and Bipso. The integration plan, which involves 23 cross-bank work streams, is fully running and will be completed at the end of April of this year. The major event since our last update is the regulatory green light on the merger by the ECB. This result was achieved in advance of our expectations. For what concerns business and operations, we have finalized the product catalog analysis, and we are implementing the identified actions. And finally, the alignment of group policies is well in progress, as well as the implementation of the customer communication plan. As previously stated, we confirm that we will fully achieve €290 million in synergies by the end of 2027. We also confirm that integration costs amount to €400 million, Of these, 72% were already booked in Q4 2025, the remaining will be booked in 2026. Slide 26, as you can appreciate on the slide, not much has changed since our Q3 2025 result call. As of today, The next step will be the extraordinary shareholders' meeting of BIPER and BIPSO in order to approve the merger plan in March 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 well-commissioned income across our divisions, which amounted to 928 million euros compared to 840 million euros in 2024, an increase of above 10%. These results underline the important focus of the group on asset gathering activities. Let's move to the final remarks. Allow me to say the deeper results have been outstanding. Firstly, we achieved a record net profit on both on a like-for-like basis and on a combined basis. This set of results will translate in a proposed dividend payout ratio for financial year 2025 of 75%, amounting to approximately €1,370,000,000, of which €196,000,000 already paid in November 2025. Secondly, thanks to all our units, our colleagues, and customers, we have been able to continue to focus on business growth, execution of B-Dynamic Full Value 2027, and the regulatory IT and business integration of business. The commercial strength of the bank has been remarkable. Reported NII was better than expected despite declining interest rates. while loan volumes have grown with respect to 2024. The trajectory of net commission income has been outstanding, fueled by growth in wealth management as BIPER is gradually being increasingly recognized by our customer base as a leading Italian asset gatherer. Cost efficiency has been very thorough on both HR and non-HR HR costs are very much under control. We are supported by our colleagues and trade unions to enable the bank to enhance a generational change while rendering the bank leaner. On the non-HR front, we have taken decisive actions on outsourcing and consultancy costs, which led to significant savings. In this context of geopolitical headwinds and political turmoil, asset quality remains one of the best in the Italian banking sector, given that we are very selective with respect to whom we lend to. On the capital side, despite the acquisition of Bipso, business growth, and the implementation of the total return swap, we maintain a sound capital position with a CET1 ratio of 14.8%. In addition, we boast an outstanding organic capital generation amounting to 340 basis points in the last 12 months. And finally, we are fully on track to ensure a smooth, efficient, and effective integration of the two banks before and April 2026. We are now ready to take your questions. Thanks.