Intesa Sanpaolo Spa Ord

Good afternoon ladies and gentlemen and welcome to the conference call of Intesa San Paolo for the presentation of the first half 25 results hosted today by Mr. Carlo Messina, Chief Executive Officer. My name is Sarah and I will be your coordinator for today's conference. At the end of the presentation there will be a Q&A session. To enter the queue for questions please press star 1 1 at any time. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. You are kindly invited to ask no more than two questions so as to leave room for other participants. In case of additional questions, the IR team will be at disposal after the conference call. I remind you that today's conference is being recorded. At this time, I would like to hand the call over to Mr. Carlo Messina, CEO.

Welcome to our first half 2025 results conference call. This is Carlo Messina, Chief Executive Officer, and I'm here with Luca Bocca, our CFO, and Marco De Frade and Andrea Tamagnini, Investor Relations Officers. We are navigating the current geopolitical uncertainty from a position of strength, thanks to our resilient and well-balanced business model. In fact, we just delivered our best-ever six-month net income at 5.2 billion euros. That means a return on equity of 20%, so a return on equity of 20%, 24% on tangible. Earnings per share grew 12% on a yearly basis. Net income in the second quarter was also the best-ever at 2.6 billion euros. These top-notch results are marked by record high commissions and insurance income. And net interest income grew strongly in the second quarter, even as rates declined. And we continue to manage revenues in an integrated manner. I want to stress that the Italian economy continues to show strong resilience. Italian SMEs are much stronger. and public and EU-driven investments are supporting growth that we are ready to finance. Looking ahead, we are upgrading our 2025 net income guidance to well above 9 billion euros, including Q4 managerial actions to strengthen future profitability. InterSan Paolo offers one of the highest shareholder returns in Europe. This year we will distribute no less than 8.2 billion, considering the over 3 billion final dividend pay in May, the 2 billion buyback launched in June, and the 3.2 billion euro interim dividend to be paid in November. An additional capital distribution will be quantified at the end of the year in line with our practice. Costs are down, asset quality remains top-notch. We confirmed our best-in-class capital generation capabilities, and customer financial assets grew $37 billion on an yearly basis, of which $12 billion in Q2. We are delivering strong internal synergies, adding risks related to acquisitions. I'm proud of these results and thank our people for their excellent contribution. Let me underline that our strong profitability allow us to continue holding a world-class position in social impact to fight poverty and reduce inequalities. Now let's turn to slide one for the key achievements of the first six months. Slide one. In the first half, we delivered. record high net income and revenues, lowest ever cost income ratio, MPL ratios and historical lows, strong growth in common equity ratio, and high increasing and sustainable value creation. Slide two. In this slide, you can see the strong and continuous increase in net income that has more than doubled in five years. Slide number three. In the south, we delivered a significant and sustainable increase in return on equity, earnings per share, dividends per share, and tangible book value per share. Slide four. Thanks to our excellent six-month performance, we are in an affordable position to upgrade the 2025 net income to well above $9 billion, including Q4 managerial action to strengthen future profitability. Moreover, we clearly have significant excess capital, giving us a lot of flexibility for future additional distributions. Slide number five. Our performance allow us to benefit all our stakeholders and strongly support the fight against poverty and inequalities. In the first half, families and businesses received 42 billion euro in new medium long-term lending. up 44% in Italy on a yearly basis. Let's now move to slide seven for more details on our first half results. Slide seven, in a nutshell, net income was up 9% in the first six months and we accrued 3.7 billion in cash dividends. Slide eight, this slide shows the building box blocks of the first half P&L with improved results across nearly all items. Please turn to the next slide for a look at our second quarter results. Slide 9. Very briefly, in the second quarter, net interest income grew 5% quarterly. Revenues reached the record high with non-motor P&C revenues up 15% on a yearly basis. Net income was the best Q2 result ever, up 6% versus the same quarter last year. Slide number 10. In the first half, revenues were up despite the strong decline in market interest rates, thanks to our well-diversified and resilient business model. Slide 11. Net interest income was very resilient in the first half. And we raised our guidance for this year to a level well above 2023, with further growth expected next year, also thanks to the contribution from core deposits hedging. Slide number 12. In this slide, you can also see the quarter-on-quarter increase in net interest income, despite the further reduction in your IBOC. The growth drivers are the spread component that includes the contribution from core deposit hedging, the financial component mainly driven by the higher contribution from the securities portfolio, and the volume component that also benefited from the growth in loan volume in the quarter. Slide number 13, customer financial assets were up strongly on a yearly and quarterly basis. In the quarter, we had more than $6 billion growth in assets under management, despite the market volatility due to tariffs. And we can count on our unmatched client advisory network to drive future growth. Over $900 billion in private deposits and assets under administration are already fueling our wealth management, protection, and advisory businesses. Let's now move to slide 14. In the first six months, commissions were up 5% yearly with a 9% growth in wealth management. Our fully owned product factories are a clear competitive advantage and our top notch advisory services are stabilizers for the end of market volatility on fees. with over 30% in related additional commissions. Please turn to the next slide for a closer look at insurance income. Slide 15. Non-motor P&C contribution was the main driver for insurance income growth, and we still have significant upside potential with both individuals and corporate clients. Slide 16, the contribution from commissions and insurance income to revenues is by far the highest in Europe after UBS. Please turn to slide 17. The cost income ratio was the best ever at 38%. So please turn to slide 18 for a closer look at the breakdown of costs. Operating costs were down despite the impact of the national labor contract renewal and depreciation linked to tech investments. Personal costs decreased 1% and administrative costs 0.7%. We achieved an almost 3,400 in the first half of the year. Slide 19, we have high flexibility to further reduce costs thanks to our tech transformation. By 2027, we will have 9,000 exits with savings of 500 million euros. 9,000 exits are equal to the ones deriving from the UBI merger. Slide 20, the best in class cost income ratio in Europe. And now let's move to slide 21 for a look at our asset quality. Slide 21. Asset quality remained excellent. Inflows are at historical lows and MPL stocks further declined in the quarter. Slide 22. Our MPL stock and ratios are clearly among the best in Europe. Slide 23. As you can see, we are also very well positioned in terms of stage two. Slide 24. Our analyzed cost of risk is just 24 basis points with no overlays released and MPL coverage ratio at 50%. We see no signs of asset quality deterioration. Slide 25. After quarter by quarter, we keep reducing our Russia exposure down to less than 0.1% of the group's total loans with local loans close to zero. Slide 26 for an update on capital, 26. In the first half, the common equity ratio increased by 65 basis points to 13.5% and will increase further in the coming quarters. In the next three slides, you have the usual update on our sound liquidity position and ESG actions with additional slides on our leading ESG position in the appendix. But let's move to slide 31 to see how ISP is fully equipped to succeed in any scenario. Slide 31. Our profitability and capital position remains strong, even in adverse conditions. We have a very resilient and efficient business model, and we have already deployed 4.6 billion in tech investments including artificial intelligence, key enables for future and further efficiency gains. Our net MPL stock is just 4.9 billion, and we can count on 900 million in overlays. Last but not least, the management team has a strong track record in delivering results. Slide 32, Intel Sao Paolo stands out in Europe across key metrics and is better positioned than peers to face any future challenge. Slide 33. In this slide that we share every quarter, you can appreciate our unique positioning thanks to our commissions-driven and efficient business model supported by strong tech investments. Let's move to slide 34 for a few words on the strength of the Italian economy. The Italian economy remains resilient, supported by export-oriented and highly diversified companies, a strong banking system, high household wealth and low private debt. Employment and activity rates at their highest levels and continued EU public investments. So we expect Italian GDP to grow this year and next year. Slide 35, Italian companies are in a stronger position and more resilient to external shocks today compared to the past, even considering tariffs. Their debt equity ratio has decreased over time and their liquidity buffers are at all time highs. Please turn to slide 37. This slide offers a recap of our best ever six months and the reasons why we are fully equipped to succeed in the future. To finish, please turn to slide 38 for the outlook. Slide 38. Thanks to our excellent six-month performance, we are in a comfortable position to upgrade the full year net income guidance to well above 9 billion euros, including Q4 managerial actions to strengthen future profitability. This is a level we consider fully sustainable in the years ahead. As always, we will continue to manage revenues in an integrated manner, maintaining a strong focus on cost efficiency, asset quality, and the sustainability of results. We are delivering one of the highest capital returns and dividend yields in European banking while maintaining rock-solid capital and continuing to lead on social impact. We clearly have strong internal capital generation and excess capital. An additional distribution will be determined at year end. So thank you for your attention. And now we are happy to take your question. So thank you.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. Thank you. We will now start with our first question. This is from Delphine Lee from J.P. Morgan. Please go ahead.

Yes, good afternoon. Thank you for taking my questions. My first one is on net interest income, please. I just wanted to understand a little bit what's driving the interest I mean, clearly you had a very good quarter with more resilient trends, but just wanted to have a bit more color on the improvement in the guidance that you've given of well above 23 levels. And then secondly, on fees and commission, so is your target for this year to still grow mid-single digits? If you just wouldn't mind commenting on the underlying moving parts of that as well. Thank you very much.

So thank you, Delphine. Starting from net interest income, that is the most important part of the upgrading of our outlook, but not only for 2025, especially for 2026. So we are now working on the new business plan. And the preparation of the plan is part of the story that we are starting to create from this quarter in terms of a final result for 2025 in order to prepare the new business plan. So net interest income is the area in which we continue to have very good performance in terms of core hedging plans. So the contribution of core edging is very positive, to be very positive. And our expectation is that we remain positive also during 2026. At the same time, we worked in order to optimize the medium-term cost of funding because we some during the first quarter and we didn't replace and our expectation is not to replace this medium term funding. This has created condition to have a positive impact on net income and this will remain also for the next years. Our expectation is also that looking at the commercial activities We are starting to have recoveries in terms of loan growth, so there is a clear reduction of the competitive pressures coming from this crazy M&A attitude that we had in Italy in the last month. We started again to have growth, especially in terms of new medium-term lending. Then we have some portion of portfolio expiring, but we will replace. So we are starting to have a momentum of growth in terms of loan book portfolio, especially related with the area that are more involved into the next generation EU funds. So it's something that is based on companies in very, very positive and good shape, so with a limited impact coming from potential future non-performing loans. This trend, in our expectation, will continue also in the next quarters, and this can prepare for a further growth in 2026 of the level of net interest income. At the same time, As I now said in the first quarter in which we increased the size of the security portfolio, we are now having in this quarter the first impact of the improved conditions of the security portfolio. You remember that in the last years we reduced in a significant way the portfolio, so we replaced a portion of the portfolio in this first semester. And so we are also maintaining a good contribution in terms of net income coming from the security portfolio. Our expectation is that if interest rate will remain in the range of average 2% Euribor and then with a slight reduction during 2026, we can continue to have a very good performance net interest income can continue to be a good contributor to our results just a focus on a managerial way of managing the the wealth management of the company today deposits are continue to give a two percent a very good contribution in terms of markdown so that with the reduction but we get very good contribution so we are also looking the right attention to the conversion of the portion of deposits into wealth management products. We have a selective portion of these deposits, especially term deposits that can be converted, but for the time being, we are also working in terms of maximization of the relation between the net interest income and fee and commissions. So moving into fee and commissions, we continue to have very good performance in terms of wealth management and protection. In April, there has been some turbulence deriving from some announcement from the USA, but starting from May and June, we had a very good recovery. And in terms of gross inflows, that is fundamental for our economy. wealth management and protection activity, we are running above 33 billion euros per quarter, so our expectation is to go in the range of 35 billion euros, so to continue to have a very good contribution in terms of fee and commission coming from wealth management and protection. In this quarter, we had a reduction in terms of contribution from the activity in corporate investment banking that made a very good job in trading income, but some deals were postponed in the third and fourth quarter. So also in the area of corporate investment banking, we think to have the potential to increase also in the second part of the year. So our expectation is to continue to have a very good trend maintaining a double-digit growth in terms of fee and commission coming from wealth management, protection, and advisory, and all the other commission can stay in a low single-digit. So on average, we can stay in mid-single-digit. That's our expectation for this year. We will see during the next months, but the trend is there. Obviously, during the third quarter, you will have on August 1st, a pit stop in terms of revenues generation due to the fact that clients will be on holidays. But our trend is clear and our expectation is to have a strong contribution both on net interest income and .

Great. Thank you very much for the column. Thank you.

We will now take our next question. This is from Marco Nicolai from Jefferies. Please go ahead.

Good afternoon. Two questions from me. The first one is on the operational levers. So with the end of the current business plan approaching fast, I wanted to know if you had some early thoughts on the main areas you will focus on in view of the next plan. So you're a bank that is delivering a roti in the 20% area, very well diversified business. Your value is recognized by the market. So In a nutshell, what's next for Intesa? And then I had the second question on the managerial actions expected in the last quarter of this year. I just wanted to know if you can give us more color on what you have in mind, both in terms of size of these actions and in terms of, let's say, expected return. Thank you.

So thank you for your question. I will start from the managerial action and then I will enter into the operational levers because there are a clear linkage between the managerial actions and the entering in the new business plan. So we are focused and all the investors know that if they want a bank in which they can invest for sustainable return forever in San Paolo is the best option. If you are looking for the short-term investment yield or maximization of net income in San Paolo is not the right choice for you. So we want the result to stay for the next 20 years. And if we have possibility to have, as in this case, much net income coming from net interest income, from cost and from asset quality, we will devote these extra net income, not to improve the outlook and the net income that we can distribute in the short term, but to create conditions for the next 20 years through business plan. So the level of managerial actions will be defined in the next quarters. It is too early to say a real figures but could be significant. That's our expectation. The area in which we can enter into a creation of sustainability, further sustainability for the future are the ones in which we will have to focus in the new business plan. What's next for Intel Sao Paolo? Next is Intel Sao Paolo. Sorry to tell you this, but our business model is the right business model also for the next years. We obviously, we work into the possibility, and we have significant internal synergies, areas in which we can improve our profitability, but the business model will remain substantially the same, so wealth management, protection, advisory, asset gatherer, so this is the job of Intel Sao Paulo, this is the area in which We will continue to have a very good performance with the right mix between net interest income, commissions, and insurance income. Then we will continue to have a very good corporate and investment banking team. That is the best way to have the perfect edging for the revenue strand for the future, and technology and digital will remain the main driver in order to improve the the service for the clients, but also the efficiency for the organization. That is fundamental. We will complete at the end of this year the 5 billion euro investments in upgrading of technology, in easy tech, in creation of a platform that can be best in class for the future, but it is not enough, so we will continue to invest In this area, our target is to improve the condition to increase efficiency for the organization. And we started in this presentation to talk about sustainable 20% ROE bank. This is in San Paolo. This will remain for the future. So we are clear. utility, cash cow, I don't know how do you want to call it, but for the future, we want to improve the conditions of our efficiency through the work that we can do in terms of work with the right balancing between short-term results and the long-term results, because the majority of our investors are all investors that want to rely on a significant net income and dividends distribution, but forever, not only for the next six months. So my job and the job of Intel Sao Paolo is to create conditions in order to improve our already very high profitability, but working on a significant portion of reserves that we already have in terms of efficiencies. And the managerial actions will be used in order to improve this and to create condition in terms of integration charges in order to be in the best position also to exceed the 20% ROE for the future.

Thank you very much.

Thank you. We will now take our next question. This is from Ignacio Olargui-Lopez from BNP Paribas Exxon. Please go ahead.

Thanks very much for the presentation and for taking my questions. I have two questions. One on long growth. Just touch upon a bit on the potential improvement of long growth in the second half. Is there any chance that you can quantify a bit how the competition has been tracking long-growth potential and what should we expect in terms of lending growth into the coming quarters? And the second question on the deposit growth, there was a decline in the quarter, part of it explained by wholesale funding being maturing. Could you just elaborate a bit on how customer retail, customer deposits have evolved and how should we expect that in the context of health economic growth in Italy? Thank you.

So thank you. Just starting from long growth and then elaborating on the net interest income and the customer's deposit conditions. So on long growth, we are in a phase in which today especially starting from this month, there has been a reduction of pressure in terms of demonstrating just for the sake of marketing that you can have the best position in terms of the loan book growth for the fighting in the M&A world. Today the conditions are coming to normality and we are accelerating did the loan book work, especially because we want to defend and to improve the markup situation of the organization. Our expectation is to be in a position to grow between 2% and 5% in the second part of the year, so we can maintain a good trend in terms of loan growth. We will see also what could be the implication from a real economy point of view of the transaction on tariffs, but my expectation is that at the end there will be a good driver in terms of growth in Italy coming from the next generation new funds, and then do not forget that this quarter in Italy is particularly strong usually because the tourism is absolutely accelerating. So there is a very good momentum for our country. So our expectation is to be in a position to work in a very good way also on the loan book. Coming on net interest income, the wholesale funding is something that we, for the time being, we have no intention to replace. we have a portion of third deposits that is expiring and our attitude is to convert this term deposit into asset under management and asset under administration products. So reducing the cost of funding and increasing the commissions area. So my expectation is that looking at customer deposit, we should be in a position to have a good trend both in terms of volume and in terms of final contribution to the economic figures of the group.

Thank you very much.

Thank you. We will now take the next question. This is from Andrea Feltre from Mediobanca. Please go ahead.

Hi. First question, if you could give us some visibility on the 96 million financial component contribution in the quarter in NAI. The second question would be on why did you stop giving guidance on your CET1? And allow me a third one. You have clarified you want to stay out of the current messy dynamic in M&A. What would make you change your mind? Thank you.

I will not change my mind, Andreas. The real point, and you are working in an organization that is under this crazy world, so you know better than me what it does, can mean to have this dynamic with the long time. And I have to tell you that our attitude today is to stay absolutely without any kind of involvement, and also because we have a significant antitrust problem in the country. So there is also, there is a condition of style. So I think that what's happening in Italy is absolutely something that I defined far west, but I don't like what is happening in the country. And at the same time, I think that the style of Inter-San Paolo is completely different compared to what is happening in our country. The common equity TR1 ratio, we decided to change the presentation at this point because you remember that in the last presentation we talked about 13.7%. In reality, our trend will give us a significantly much higher trend in terms of common equity. between 15 and 25 basis points per quarter, and it is likely that we can stay between 13.8 and 14% at the end of the year. The only point of attention in giving guidance is the amount of loan book growth that we can have in the second quarter. So that is why we decided not to give a clear position because there is uncertainty on the ability of increasing the loan book for the organization. But the trend is there and the increase in terms of common equity will be significant and so we will have further room to make a strategic decision in terms of capital redeployment. But the majority of the point is that As usual, we prefer not to give guidance in which we cannot be sure to be in a position to reach the target or to over-deliver. The real point is there. So my expectation is that we can stay between 13.8% and 14%. This will be depending on the long route during the second part of the year. In the financial component, we have a contribution that is coming from the increase in portfolio. So if you look at the figure of Intel St. Paul, and you compare the end of 2024 with the final data on the end of March, you have the increase in terms of nominal. Then on average, if you compare the end of March with the end of June, substantially you have more or less the same amount. This has created condition to have the contribution during the second quarter that we had not during the first quarter. And then there is also something between 10 million and 20 million euros of contribution coming from non-performing loans because we usually accrue the likely to pay the portion related to non-performing loans, not in the first quarter, but in the second quarter. But it is really a marginal amount. But this number are in line with what we declared to the market. We had possibility to create a good dynamics between the interest rate on the asset side and the interest rate on the liability side through this very good performance in terms of managing of medium-term cost of funding. But I have to tell you that this can remain a good contributor to the results, but we are relying on edging, medium-term cost of funding reduction, and then increase of loan book with conservative assumption that could be the positive surprise for the next six months.

Thank you. We will now take the next question. This is from Giovanni Razzoli from Deutsche Bank. Please go ahead.

Good afternoon to everybody. Two questions on my side. The first one is on the CT1 ratio. You mentioned that you are generating 15, 20 basis points of capital every quarter, but you still have another 100 basis points of potential benefit from DTI absorption. I was wondering if what is the timeframe for the release of this capital? And from here, what do you think is an optimal level of capital for a bank like ISP, which has demonstrated a very resilient generation? You are saying that the profitability will remain well above 20% in the next couple of years, regardless of any scenario. So I was wondering from your internal perspective, to what level is the optimal CT1 ratio? And the second question is on the impact on the tariffs on Italian corporates. Clearly, with 20% market share, more or less, on the loans in Italy are a proxy of corporate Italy. Can you share with us what is your view about the recently announced agreement with the U.S. state administration on the tariffs? What could be the impact on your asset quality? I'm sure you have done some analysis about the exposure to sectors which can be impacted by tariffs. if you have kind of sensitivity to share, that would be great. Thank you.

Yes. So I can start from the common equity . Then I elaborate on the tariffs in which we made the work sector by sector on the basis of what we know publicly on the tariffs. And so I will share with you also this view. On the common equity tier one ratio, the generation of capital will be significant quarter by quarter, then we will have 100 basis points DTAs that for the majority will be included in the common equity during the period of the next business plan. So in reality, during the next business plan, we will have the equivalent of a capital increase of 100 basis points that could be available for all our strategic decision in terms of distribution of capital with shareholders. And so I will move on the level of capital because it is clear that we are creating excess capital through the net income generation, but also through DTA. So we will end the different years of the plan with an increasing excess capital position. The level of capital, I can confirm you, is a level that is in the range of 12%. So looking at all different figures, stressing all the different conditions, and I think that you will have evidence also in the next stress test results that should be, that could be out on Friday. I think so in the next days that our position is absolutely, in my opinion and for my expectation, should be confirmed very good. So the point of the capital position is linked with the business model of the organization and the stock of non-performing loans. And in all these items, we are best practice. We are a company that is devoted to wealth management, protection, advisory, with an amount maximum of non-performing loans net of 4.9 billion euros, so zero for a bank like us, with the coverage ratio that are absolutely very good, 50%, and with no sign of reduction. That is why we we do not use the reduction of non-performing loans coverage in order to increase the profitability of the organization. We think that having overlays that are there, Russia exposure very limited, so no portion of overlays devoted to cover the Russia exposure. So we have a substantial real condition that can allow us to stay in a very good position also with a 12% or just above 12% common equity TR1 ratio. In the next vision plan, we will make all the analysis, we will make the confirmation of all these points and we will remain with a point of attention that is the redeployment of the excess capital of the organization because it is clear that with a trend of profitability above 2% are in bank. With 100 basis points DTAs, we are a unique case in Europe in term and with the business model with very low risk attached with the significant contribution from fee and commission and with the right diversification, we are a unique case in Europe. Looking at the tariffs, our Analysis of the impact coming from tariffs was based already in our figures outlook and estimates for a GDP of the Italian economy moving between 0.5 and 0.7 is already made on an amount of average tariff of 14%, so it is 50%. So the analysis was made on this basis And the confirmation is that the impact is not significant on the figures of the bank. We will remain with the cost of risk at the end of the year that could be in the range of 30 basis points that could be moved 35 with a portion of the leveraging that we can accelerate if we decide to accelerate, but from a structural point of view, the impact in our view will be not so significant. So this is our perception significant in the sense of having a substantial impact on our figures. Then there are sectors that can be impacted, but we are talking about reduction of revenues for some counterparties. In my expectation, a number of companies will move using the pricing levels if they have high quality product, otherwise they will have to make a diversification of their sources of ability to make export outside of Italy. But apart from specific areas, we do not see significant threats coming from this sector due to the very high profitability, the very low level of indemnities of the company in Italy and the very high level of deposits placed with the banking sector by all the companies in Italy.

Thank you.

Thank you. We will now take the next question. This is from Britta Schmidt from Autonomous Research. Please go ahead.

Yeah, a couple of questions from me. Two follow-ups on the NII. How should we look at the progression in terms of the next couple of quarters? Would you expect net interest income to increase sequentially in Q3 and Q4 and then increase in 26, growing on an annualized Q4 level? The other question on net interest income and balance sheet trends is, with the expectation of some long rolls, would you expect deposit rolls to trend in lines? since if you are looking to convert some of the deposits into AUMs in the future, does it mean you will have to increase your wholesale issuance, or do you think you can compensate that with nominal deposit growth? And then just lastly, maybe you can share a little bit your thoughts in terms of what's going on in the market with all of the M&A that we're seeing in Italy. Can you provide any color on what is happening with regards to investment banking and financial advisor hirings? Have you witnessed any movements or have you been able to benefit from any movements, either in terms of staffing or also client moves? Thank you.

So I will start from the third question. And I made the clear statement at the beginning of this Aga or Far West M&A in Italy that we will not – At the time, I clearly said that we will not participate, but we are in a condition to increase our market share through the hiring of people from other companies. And this is what, in reality, has happened, especially in the sector of private banking, wealth management, and Fideuram. So we made a campaign of acquisition of Fideuram of people that will not like to stay with medium-sized bank and want to remain in AAA perceived company by the clients. So that's something that is an important portion of this is in our net inflows in this quarter and we will continue during the next quarters due to the fact that This unbelievable Far West saga will continue also in the next month. So that's on M&A. The second point is on loan growth, deposit growth. Loan growth will continue. That's our expectation, as I told clearly, with an amount that in terms of percentage is not so significant, but will continue between 2% and 5%. In terms of deposit growth, We will continue to have an increase in terms of deposits, so we have no need to go into the wholesale market from just to finance the loan book for the next six months. And in the future, obviously, we will continue to have a funding plan because the organization has, by definition, a funding plan. But there's no need to use wholesale funding to increase the loan book size in the organization. In the trend of net interest income, for sure, we will have a growth in 2026. That's for sure. In the next quarters, this will depend by the mix between the security portfolio and the net interest income, but our expectation is there could be a slight reduction during the third quarter and an increase during the fourth quarter, more or less this should be the trend. But believe me, it is not easy to make a forecast on a quarterly trend. In the next six months, the performance will be very good and will bring us to have a well above final point in comparison with the 2023 figures.

Thank you. Thank you. We will now take the next question. This is from Andrea Lisi from Equita. Please go ahead.

Hi, thank you for taking my question. The first one is on if you can quantify an idea of the amount of analyzed capital gain that you have in your portfolio and how do you plan to manage them also considering the trade-off between NII and trading. The second question is on the managerial action in the fourth quarter. Last year we have seen a significant kind, a significant one, that involved potentially lots of people, voluntary exits and people leaving the company just before the normal age of retirement. So just to have an idea if there is still a large room to make... actions like the ones that you have made last year. Thank you.

So we do not give figures on the capital gains, but there are room for further capital gain in our portfolio. But our expectation is that we will continue to maintain a contribution from net interest income and in trading income will not move a significant portion of net interest income deriving from security portfolio. In any case, we will continue to have a trend also in trading, but we will see the speed during the further two quarters. In terms of managerial actions, The areas are obviously mainly concentrated on the cost side. There will be a write-off of a portion of the IT system procedures. Do not forget that we are entering into the easy tech world, and in the easy tech world, we will have the possibility to have significant benefits cost reduction through the usage of the cloud and so a portion, a significant portion of the maintenance in cost, the areas in which we had a procedure related with mainframe can be analyzed in order to make write-off before maintaining all the system on the cloud. So there's a portion of of potential usage of managerial action. Then we have a number of people that we decided not to allow in terms of exit from the organization. So they have asked during the previous agreement with the trade unions to leave the organization, and we were not in a position to accept their permission. a willingness to go outside the organization. We will evaluate this. Obviously, we will involve also the trade unions in this process if this process will be something in which we will decide that could be the right way to move, but it could be voluntary and we have already people that asked to leave the organization in the previous agreement. So there are a number of areas in which we have possibility to create conditions to improve profitability for the future for the organization without any social impact, but maintaining our people happy to stay or to live there. At the same time, the easy tech platform is the real big potential cost reduction that we will have during the next business plan.

Thank you.

Thank you. And the last question today is from Ignacio Sereto from UBS. Please go ahead.

Yeah, hi, good afternoon. Thank you for taking my question. I only have one, actually. So it's around the upfront fee and the market fees. So the billing and placement of securities is another very strong quarter, 360 million, only a small decline from a very high base in Q1. So if you can give us a breakdown of that number, and if you can let us know actually how sustainable you think that number is into the future. Thank you.

Yes, these commissions are a mix between very good performance in terms of gross inflows coming from our clients. And remember, with a portion of the month of April that was affected by the conditions of the tariff crisis, coming from the USA and so the dynamics of volatility of the market. This is part of a job in which we have already and all the people in the field of the organization have the clear capital gain position of our clients in moving their portfolio. That is the real point of strength of InterSanPaolo. And this, in our expectation, will continue at this trend. We had some marginal reduction in terms of placement of bonds, third-party bonds, including the BTP bonds, because during this quarter, the number of bonds of issuance was lower than in the first quarter, but our expectation is also to have a rebound also in this line. So the gross inflows, net inflows in this area of placing are the main drivers of this component of our economic figures.

Thank you.

Thank you. There are no further questions at this time, so I would like to hand the call back to Mr. Messina for any closing comments.

So thank you very much for your continued support. I want just to finish with the title of our presentation. We are a sustainable 20% ROE bank with 1.4 trillion in customer financial assets. So thank you very much and buone vacanze a tutti. Thank you.

Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.