Mediobanca Spa

Good morning to everybody and thank you for joining the call. The results of the last nine months give us a picture of the group which is changing quarter on quarter and which is coherent with our vision of the three-year industrial plan, the one that we have called One Brand, One Culture. In particular, we have had increase of 9% in revenue associated with a steep decrease in RWA, down 5%. This is led by an increase of results and trend in wealth management and insurance, which are capital lighter, a different management and attention in RWA in CIB, and very strong performance from consumer finance. This was coupled with a reduced risk within the group, and excellent core, which is in the region of 50 basis points. And these two elements led, so strong growth with less important capital allocation led to an important increase in profit, roughly 950, and an important EPS accretion of 20%, ROTE of 13%, and very robust capital ratio. These two elements led to a 5% yield by June, basically having our first interim dividend set at 0.51 euro per share to be paid in May, plus the already completed buybacks of 200 million euro, with 17 million shares acquired to be deleted by the end of June. If we stick to the industrial trend of the last three months, we can say that they clearly see an increasing in a stronger trend. In particular, we have reached 900 million euros, which is one of the highest, if not the highest level of revenue associated with the lower core led to a steep increase in profit compared to a year ago and to a quarter and to the last quarter. If we look at the single business, We have had a quarter where Medibanca Premier was very well received by clients and bankers with very important new intake of professional. TFA up 3 billion and with important and net new money in different mix with 1 billion inflow in AUM in the last three months and an increase in asset management offer. CIB a rebound in activity and fees with solid performance in domestic advisory, while consumer finance growing volume, new all-time high quarter in terms of new loans, with effective reprice, which led to a steep increase in NII, and this is on loan margin, on high loan margins, and very important profitability with stable core. We were also, you know, registering quite positive metrics in terms of per share of Mediobanca. So plus 20% of EPS is coupled with plus 16% in book value per shares and plus 15% in tangible book value per shares. Looking at the last queue, as I said, basically we have had Strong AUM, AUR inflow with the rebalancing mix in wealth management coupled with much stronger recruiting after the rebranding. So TFA up to 97 billion and basically record net profit 53 million and high revenues more than 230 million. So basically At the end, this quarter was seeing best profitability in wealth management, best profitability in consumer finance, as I said, with strong new loan and very good cost of risk, and a rebound in CIB fee with a positive pipeline head. So basically, this quarter showed 90 million euro fee up 7% quarter on quarter, but If you see the comparison of the similar period of last year, we have had plus 72%. So this means that we are bottoming out. The industry is bottoming out in terms of trend of new transaction. And hence, basically, we see already an improvement in fees. And I think more to come if this happens. scenario is confirmed as it is recently of much more activity in the sector so the growth came from tfa first page seven basically we have put emphasis on aum aua why we push down a bit in terms of new deposits because as we will say see after say after we have had a very positive funding activity in bonds. So basically we have pre-funded in bonds. So basically we put our attention on AUM, AUA, and I would say that the very positive message is that we have recorded 2.6 billion of AUM, AUA in this queue, and out of which 1 billion was coming from AUM. which is an important element of ability to grow, ability to grow much faster than the average of the market. If you see that Mediobanca has had 10% of net inflow in the quarter as opposed to 1.5 of average of the network in Italy. We have had quite positive new in terms of new loan in Compass, which was more than able to upset The other, the opposite trend that we see in the market and we see also for ourselves in corporate loan and mortgage. And we continue to manage RWA in order to have a more efficient bank. So this year, already in the last 12 months, we have had minus 5% year on year, but we have had also another minus 1% in the last year. So we like this kind of group where, as you see on page eight, we are harvesting growth well diversified from different sources. Wealth management, consumer finance, insurance, holding, and waiting for CIB, which is going to come. We have then recorded 9% in revenue. This 9% broken down in different business, you see on the right side of the slide, we have had a trend of revenue in the last few quarters is clearly higher than the average of the last year. So in consumer, the average revenue trend was closer to 200. Now we are closer to 230 or between 230 and 240. There is always some seasonality. then in consumer finance we have had 280 and we are now running at 300 in cib we are back to a level of 200 and in insurance we constantly have quarters that are closer or higher than 100 as opposed to 120 as opposed to 100 of the previous year this is driven If we see the sources by, of course, three main or four main sources of revenue, the most important is still NII. NII is enjoying a very positive spread between loan yield and loan fund spread. So basically, this spread is stable, growing. And so the ability to reprice of Compass was so strong that we could counter the weakness of other sources that I think particularly in the next year can come back, while Compass will continue to have this kind of trend. And this was able to maintain a very high level of NII, notwithstanding the fact that As we said, in funding, given the very positive capital market trend, we prefer to pre-fund with the DCM part of our funding and hence incorporating a higher cost of funding in absolute, but lower than what we have budgeted and forecasted. In fact, you see on slide 10, that this quarter we have privilege taking the opportunity of very positive credit spread, DCM activity, pre-funding most of our budget in funding, also in terms of capital issuance plan. So 80% of the capital issuance of our plan are already completed. with the pre-funding maturities done at tighter than budgeted spread. You see the breakdown here on page 10. Fees, we had a positive, very positive quarter. I would say why, because basically net of some seasonality, you see in particular in wealth management, if you see the corresponding quarter of last year, it was 111, this year is 123. In the middle, there are some seasonality effects like in December you have always banking fees and performance fee. In the net of this, it's a very healthy trend where all the components are working in the right direction. CIB is going back to level of between 85 and 100, supported also by ARMA. and as well as the consumer finance and joining buy now, pay later fee contribution is getting closer to 14 million per quarter. Costs are a function of our development. So we have broken down the increasing cost in three main drivers. Business-related growth, so basically 55 million of additional cost It's are related to platform growth. Our headcount went up by 200. So we are hiring people in most of our business, but all three business are growing in terms of headcounts. And some also add on from acquisition net of disposal. Other part is more related to technology and projects, in particular digital. And then we have had what was partly forecasted is the inflation and labor costs related to the new contract. In our budget, we have anticipated a part of this. Another part, of course, had to be put to the P&L. But it's also true that this is coming in a context of a very positive trend in revenue. So it's well-deserved. Cost income in the region of 43% and in all division is broadly stable with an improvement in wealth management that the more growth and the more the operative leverage will work and will make that we're going to go closer to 60 rather than to 70. Positive news also on core. basically core in this quarter was 48, the group was 48, and basically this in the nine months is reverting to 50 basis points of cost of risk, where in consumer finance we are seeing this increase in cost of risk being stabilized, so compared to our initial budget we had something like 15 16 basis points on top of the increase we have had in mind but this is much more than upset by higher higher i would say loan and in particularly more more healthy loan in terms of personal loan which have a much better margin so net Net-net, it's something that we will see after is making Compass more profitable compared to the previous year. CIB, very good. CIB and wealth management, very good cost of risk. Hence, I would say now we are running better than anticipated in group core. And this is coming, another positive, with much lower usage of overlays. The more we go on, the more we see room to use less of this overlay thanks to a much better trend compared to our budget. Staging and NPS ratio are broadly unchanged, and this is also part of effect of the derisking, overall derisking that we have already started some quarter ago. In terms of capital optimization, our reallocation is underway. It is important to note in the last 12 months the improvements that are massive that we made. A year ago, 40% of our RWA were in CIB. Now, we are at 33%. In consumer, we went from 26 to 30. Wealth management and insurance are broadly unchanged. This, of course, is also leading to an overall important increase in return on risk-added assets that went from 3.2 to 3.6 in wealth management and as a group went from 2.3 to 2.6, so ahead of also our plan. Capital generation has been strong. Basically, we are broadly at the level of December, so 15.2. This was basically as a result of earning generation, payout, business growth, and other 20 basis points, including Generali, which in part will be reversed, as you know, with after the payment of the dividend. So we have a temporary absorption of RWA and capital, but then this is going to be reversed in the coming quarter. So we have made also progression our ESG plan and target both on governance with the outcome of the general meeting we have already commented. in our social target where we are at the second year of our program in today, Diversity Inclusion Initiative, and we have renewed our commitment in some partnerships which are important and I would say delicate program to support female refugees with the United Nations. and we have been more precise in environment setting our second interim emission reduction target in particular we have identified aviation and cement sector and we have had also some acknowledgement of our effort where in particular cdp has increased the scoring of our group going to divisional results i would start from our priority wealth management This is a very important quarter, I have to say, because this is a quarter where acknowledgement, I shouldn't say final acknowledgement, but full acknowledgement of our potential is clearly there. And I have to summarize this with three main events. One is the rebranding. We were already very confident about the outcome of this rebranding. The reality is better than what we have imagined. Why? Because it was so welcome that we think that in terms of recruitment, not merely in terms of number, but quality of people that can join Mediobanca in the next few months is going to be much better. So you see here numbers of 42 new professionals. The reality goes beyond the number in terms of quality, no? So this is the first element. The second element is what we have done in private markets. Private markets, you know, now collecting capital for private equity initiative overall is very difficult because of what happened in the world, higher interest rates, low allocation from institutions. So Mediobanca was able to raise 1.2 billion and having 650 investors out of which 30 are new customers into Tech2 program, which is a club deal type of investment into minority of very interesting growing mid cap in Italy. This gives you the sense that Mediobanca when is there to promote products that are tailor-made in asset management, also within its wealth management network, it's marking the difference. It's something that you see, you feel it, you feel it into the market. So this is something that together with the net new money gives the sense of the potential we have still embedded in our franchise, which is a great, I shouldn't say, confirmation that the strategic path is the right one and more growth is coming in the next foreseeable future. Then if we stick to numbers, TFA up to $8 billion since June to $97 billion and basically $7 billion of AUM, AUR in nine months. This turned into 12% increase in revenue, and net profit up of 18% to more than 150 billion. This is coming, this is coming, I have to say, notwithstanding growth, because the more you grow, the more it costs you. So we have recorded these numbers notwithstanding two elements. Basically, cost of growth in terms of legal costs, So as we have recruited better and more people, we are paying more cost. Second, the renewal of a label contract. So net of this extraordinary cost, the recurring profitability is even higher than the one we have recorded. So another element of seeing Mediobanca performance, Mediobanca Group performance is on slide 24. Here, we are growing at least two times the system speed, where Mediobank has had an increase of 4% of net money in percentage of AUM, AUF stock, while the market has had 1.7. But if we focus more on AUM purely, this is even more important because it's 2.4% as opposed to 0.4%. um as i said we have privilege in this quarter uh funding in bonds rather in deposits and we are moving more the campaign for deposits in this quarter so in this quarter we'll see more inflow in deposits as well key initiative been already mentioned so basically a very positive quarter, which I said is giving even more confidence about what we have to do in this segment. In CIB, you go on page 28. Again, it's coherent with what we have planned to do. So we want to have a CIB operator which is more skewed on fees, so M&A, capital market, and less in... I would say, balance-driven activity. So the first nine months saw a steep increase in announcement in transactions, plus 57%. It's more international, thanks to Arma and our friends outside Italy. So 53% of transactions are non-Italian. 30% are involved in mid-corporates, and 50% have as a counterparty a provider of private capital, so basically a private equity. So we think that advisory is going to go better in the first few quarters because it takes time to build the pipeline and then to sign deal and do the closing of deals. So we have done some announcements, so we think that in the next few quarters we can enjoy this trend. And we will continue to work in three main initiatives. One is having a stronger tech digital presence with ARMA. ARMA is already growing very nicely, has already done some nice hire, more to come. As well, this we can see in energy transition, which started very, very strongly. And as well as private capital coverage, Private capital and private equity is making 40% of the people in the industry. So having put the attention and the special coverage on this is proven to be a right choice. On top, we have started other country mid-corporate activities. So basically, Mid-market activity is already very robust in Italy, but in the future we'll enjoy at least a couple of more countries to support this trend. Lastly, the new initiative in market, we are on track. As a BTP specialty, we should start to harvest revenue in the next financial year. So basically, we are creating... different pool of revenue to support the rebound of CIB in the next few quarters. The revenue trend, you see it on page 30. It's a revenue trend that is going in the direction we like, so basically in the 200-ish level. So then this quarter, like previous quarter, as I said, we had some positive, which are basically advisory. I would say also DCM, also markets activity in particular certificates and activity with clients was very robust. Still missing part of which the industry has to have a rebound are ECM IPO where the market is reopening but is more selective and acquisition finance. Going to consumer, consumer is having a very, very positive trend. I would say that this environment, you can see from competitors' numbers, it's not the ideal for consumer finance. Why? Because consumer finance normally has like a compass, a fixed rate asset side, and more variable rate and faster repricing in terms of liability. So basically, in a moment where interest rates are going up, normally you see consumer finance company incorporating lower results. And this is coupled with an overall slightly higher cost of risk would have brought to much lower results for a consumer finance company. In Compass, we are seeing the opposite. Why? Because the ability of Compass to invest in its leadership in distribution, in its leadership in digital, in its leadership in new products, like Buy Now, Pay Later, led to the fact that the repricing, the amount of new loans were so good that they can more than balance the increase in cost of funding, cost of risk, and in cost of development. So basically what I have to say is that we were touched by the high level of productivity of new loan. If you see page in particular 37, we have had recorded the new all-time high quarter in terms of new loan. 2.2 billion with 1 billion in particular in personal loan. Most of them are done through our network. So this is giving much more marginality to the group. And so this and the ability to guide the price was such, as you see on the right part of the slide, we keep on growing in terms of basically NII on average loans. So third quarter was 7.2. And we have still some improvement to be done because it takes time to reprice. So now you see in the slide that part of this has been repriced and part is still to come because it depends on maturity. On top, having invested in digital in a new product is leading to new avenue of growth. The new important avenue of growth is the way Compass is doing buy now, pay later, which is not the typical of the market, because we don't operate as a fintech, we operate buy now, pay later as a proper consumer finance product. So basically, the activity done in physical and online with a very important level of merchants, which are part of our, in partnership with us, led to a steep increase in new loans. So basically you see the last quarter loan book went up to 230 and basically new loan at 150. So the more we roll out our agreement and the new digital outfit with merchants, the more we will grow. And this is bringing both fee income and NII if I can summarize 50-50. And what we can say is that the profitability, net of risk, now it's more than three years we are operating in this segment, is very good and is comparable to finalized loans, so basically the purpose loan that we have been doing for many years. Here, the beauty is the number of customers we are acquiring every single day, and the redemption in terms of repeat business. Both are above our expectation and are clearly laying out the path or an avenue of growth that only a few years ago was not there and was not deemed to be so big. Cost of risk has been stabilizing On the level we have told in the last few quarters, so basically this higher cost of risk but contained compared to the start of the year is driven by two elements. I would say the vast majority is the mix. So doing more personal loan, we have higher gross yield and higher core. Net-net, as we have seen from the numbers, it's highly positive. And the second is back to normality, back to pre-COVID kind of level of core. Insurance, generally, trend continues to be very positive and above also our internal guidance, which is the guidance of the consensus of the market. So basically, we are enjoying a higher component of insurance that now, as you know, is treated in such an efficient capital way that makes this investment and this business quite interesting. Holding function improves results thanks to the fact that as we have central ALM management, part of the benefit of NII is going to the holding function. So as a closing remark, we are very happy with the industrial trend. I mean, results, quarters are important, but what is more important is the trajectory of the group. The trajectory of the group tells us that we are now planning a future of the bank more on wealth management, and this is having every day positive feedback and confirmation from our initiative that a capital lighter activity in CIB is possible and it's going to be what we are fishing for in the next few quarters. and that we continue to have improving results in two business that are having excellent metrics like consumer finance and insurance. Of course, these three level, three element is then pushing to have a very interesting capital distribution or capital return, which is more acts on, in our case, dividends, cash dividends. So at 70% and, but we always put a piece of, uh buyback and this is basically giving an overall very interesting uh remuneration so in terms of number if we see our our revenue should be in the regional 3.5 billion meet material growth both in nia and fees the dividend we have already you know mentioned and this will likely bring double-digit growth in EPS and DPS compared to last year. We see this trend also going well in next year. Qualitatively, we can say that we see increase in NII and EFI also in 2025 and 2026. And hence, I think we have a good industrial trend in the next few quarters. Thank you very much for your attention, and it's now time for your questions.

Thank you. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. We will now take our first question. Please stand by. And the first question comes from the line of Britta Schmidt from Autonomous Research. Please go ahead. Your line is now open.

Yeah, hi there. Good morning. Thank you for taking my questions. The first one will be on the outlook for the year. It looks like a really good quarter. The revenue trends are very solid. Cost of risk is also looking a little bit better. But the full year has been largely reiterated. Maybe you can comment a little bit on the outlook for next quarter for costs, for example, and also for the cost of risk, and whether we should expect visibly higher costs based on the better revenue performance so far. And then secondly, on the capital ratio, which came in a little bit lower than expected, do you still guide to a capital ratio by year-end to around 15.5%, please? Thank you.

Thank you, Britta. So, in cost... we can say that, I mean, this trend is going to be confirmed. You know that the last Q is normally bonus season. So normally we have the last Q of the year a bit higher compared to Q3. As revenue are going well, I don't see a different trend this year compared to previous year. While in cost of risk, we have to say we are seeing better trend. So we gave a range of 50, 55. Today, clearly, we are on the lower part of this range. Let's see, but I mean, as far as we see, cost of risk looks better. Capital ratio, to explain the trend of the quarter, What you saw is relative to an initiative in asset management with some seed capital for new interesting initiative. Well, we can say that capital ratio will look very nicely at the end of the year.

Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Luigi Debellis from Equita SIM. Please go ahead. Your line is now open.

Yes, good morning. I have some questions. The first one is on the NII. So we have seen a resilient trend in Q3. So can you elaborate also on the trend for the next year? So what are the tailwinds that can offset a lower interest rate curve? elaborating also on the loan yield and funding cost expected going forward, in particular in consumer, considering the lag effect of repricing. When do we expect the peak of loan yield considering the current interest rate curve? The second question is on the wealth management. So deposits have been softer sequentially. So can you give us more color on this, also on the trend expect in the coming months, And the recruitment, you mentioned it, the stronger quality recruitment after the rebranding. So how do you expect this trend to evolve? And can you elaborate also on competition to acquire new bankers? And in terms of inflows, if you can give us an update on the net inflows trend also in April and the first days of May. Thank you.

Thank you, Luigi, for your question. So NII trend. Let's break it down in different components. Start from funding cost. Funding cost, we see after June, a progressive decrease in funding cost. Why? Because we have put our effort on, as I said, pre-funding in the capital market, so more bonds than deposits. bonds are more expensive than deposits. And starting from June, we should see a decrease in interest rates. So this element should bring a more competitive, we always say should, because basically we know that interest rates forecast always difficult, but our main scenario leads to an overall 2.7 average uribor in the in in 2024 2025 so uh we see more more interesting cost of funding on one end and on the other we have two elements that are having different trend uh compass which is going to print and is printing even in april we have had another very positive month so As long as Compass continue to print this level of, I would say, new loan and price the way they're able, we have two strong supporting factors. So lower cost of funding and higher loan stock in Compass price at the right level. Where is the weak part of the story? As we know, is the volume on corporate and mortgage. Why? Because corporates on one hand, they tend to basically refinance on capital market and they are not willing to pay spreads on top of higher interest rates. And this is a bit similar in mortgage. So we expect that the two main positive will be bigger than the two main negative. And this will bring an increase in NII also in 24, 25. Of course, it's going to be lower. We are talking about low single digit, but the trend is that we haven't seen a peak in NII today. Deposits in wealth management and equipment. For the reason I told just a few seconds ago, a few minutes ago, we are sticking more to deposits in the coming quarters because we have pre-funded our bond issuance. So we're gonna put a bit more emphasis on deposits. Now, deposits, it's a matter of also pricing. we have to find the right balance between promo price and the amount of deposits we need. Normally, even if we don't have a huge increase in loans, it's better to do more deposits because then you convert into AUM and AUR rather than bonds because commercially they are much less effective in wealth management. recruitment. Recruitment is going very well. We have to look at quality and quantity. We can do a bigger number with lower amount of intake because of average size of portfolio. We see that I mean professionals that have in their customer base entrepreneurs, they are more and more taken by our proposition because of course we can serve them with a number of products and expertise that in some cases they don't have where they are. So this pitch is working. It's not only positive because I said that this recruitment is not coming without costs. There are some legal costs, there are the higher labor contract, but I think overall it's something that is bringing more AUM, generate a bigger leverage, operative leverage on wealth management. So what we'll see is basically a trend of continuing growth in revenue in wealth management associated with lower-cost income. Competition is there, like always. Many banks are putting focus on wealth management, so we knew this and this is happening, but I think we have...

some features and some skill set that are not easy to be replicated thank you thank you we will now take our next question please stand by the next question comes from the line of azura guelphi from city please go ahead your line is now open

Hi, good morning. Two questions for me. Listening to the presentation, you have said many times the word growth and progress, but all of those seem just to relate to your initiative, so not rate-related. If anything, your business is more counter-cyclical versus rates, so with rates coming down, this growth will not slow. When I think of the major initiative that you mentioned, it's ARMA, it's the financial advisor growth. Do you think that those are going better than what you were initially expecting? And if anything, are they positively surprising, like the ability to attract FAAs higher than what you thought? Are you integrating better and easier with your CID? So if you can give us some color of what do you think could be a conservative or original assumption on these growth initiatives? And the second question is a quick one on the CAV. The environment seems to be more supportive than in previous quarter. Can you give us a little bit of expectation of the pipeline going forward? Thank you.

Thank you, Azura. So I would say that ARMA is going according to expectation and basically is having opportunity to grow in terms of new partners. And this is already happening. Now, from the idea of new partners to see, you know, impact in numbers, it takes some quarters. But, you know, we are going according to our plan. That was a plan where ARMA within Mediobanca can grow because we can provide capital to grow in terms of new partners and also some selected acquisition. So we are now in execution phase. Of course, as I said, execution to be seen in terms of number normally requires some quarter. So I think what we are doing now, we'll see more the benefit in 2025. Financial advisor, you know, we knew We knew that the trend we knew when we did interview in the past, people said we want to go and come and work for Mediobanca brand. We want to be close to Mediobanca. We want to be close to the expertise of Mediobanca, to the soft skill in CIB. So this is why we have rebranded KeBanka into Mediobanca Premier and why we have put the new Mediobanca Premier closer to the ecosystem of Mediobanca because this is a strong selling point, I would say, a bit abused, unique selling point. Now, we are seeing this now happening to the point that while we were starting a financial advisory chain six, seven years ago, ten years ago, and the possibility to hire was more limited to some cluster in some cluster of financial advisor now we are more is more media bank that is in the in the position to choose who is going to come who is better not to come no so again our mindset is going according to plan i would say financial advisor intake quality in particular is better than than forecasters no now of course it's a it's a long trajectory no it's not something that We should see only this quarter, but it's going in the right direction. CIB. CIB, as I said, we are seeing a greater number of transactions announced. These transactions are coming from, I would say, private capital, so a lot of private equity, business-related activity, and also some I would say M&A between, you know, corporates. The second positive is DCM. And the second element, third element, which has been very robust and will stay is certificates. Again, here we see a very positive situation with Mediobanca because Mediobanca is harvesting, I would say, to benefit in certificates. We are manufacturing certificates, so in CIB we retain margins and we sell certificates to our wealth management customer base. So again, having CIB and wealth management combined is reaping the benefit of the two. There are also some weaknesses in CIB markets. Still, as I said, ECM is for the time being not as robust as we have anticipated and acquisition finance and loans to corporate done at decent spread within M&A are still behind what should be in the normal market.

Thank you. As a reminder, to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced. We will now take our next question. Please stand by. And the next question comes from the line of Marco Nicolai from Jefferies. Please go ahead. Your line is now open.

Hi. Thanks for taking my question. In the consumer unit, if I look on a year-on-year basis, loan growth is improving. I mean, it was always well into positive territory also in the past quarter. However, I can see a little bit of an acceleration. Can you tell us a little bit more on this trend and how do you expect it to develop going forward? Also, still in the consumer unit this quarter, including the release of overlays, you booked less than the last quarter in terms of total provisions, let's say. Are you still expecting a normalization of the cost of risk or is that it? I mean, since you already had an improvement compared to the previous quarter, how shall we still expect kind of a normalization or I guess the normalization is it over? And last question, can you tell us a little bit more on the move from Chebanca to Mediobanca. Obviously, you rebranded. However, can you tell us a little bit more about what you did beyond the rebranding? You said that you moved the structure of Chebanca, the former structure of Chebanca, closer to Mediobanca. But can you be a little bit more specific and tell us a little bit more around this? Thank you.

Thank you, Marco. Very nice question. So consumer. Yes, we saw an acceleration. And this is very much confirm also in April. Why I would say that the general mood is positive, so and this is in particular also related to core. So you have seen that we have an all time high employment data. So there is a quite good consumer confidence. So we're working in a positive environment, but I would say this is 30% of the answer. 70% is the ability of Compass because Compass has worked a lot on its distribution platform. Massive work in the last seven, nine years where basically we have invested in many kinds of distribution, fixed variable costs, the linkers, door to door to the by now, pay later. So this is creating two elements, more activity done through our network, which is then, you know, giving much better margins because we don't pay fee to third party distributor. So this coupled with the by now, pay later, which is becoming a trend of paying staff in the world, and given the position of clear leadership of Compass, which is doing this, as I said, I will repeat, because the business will be regulated by a EU directive in 2025, 2026. So if you operate already like a proper consumer finance product, you have done all what, most of what the new law will require. This is also important for our partners because we are there to stay as a stable institutional partner rather than a fintech. This is the reason why we see this acceleration and this acceleration is for the time being there to stay and is a great supporting factor to our NII. A bit related to this is the core. Now, part of this improvement is also and will be related to the fact that our ECL model is based on better, I would say, scenario where interest rates are a bit lower and the unemployment rate is lower as well. So basically, in the ECL, you project a better scenario. to the point that basically as this increase of beeps related to the mix is there to stay but is not growing, we see for the time being, Marco, little use of overlays, even for the quarters to come, the next word. So what we have done in Mediobanca Premier, we said basically we made a similar approach. We had a similar approach towards Mediobanca Private Banking. I give you, by analysis, not exactly the same because the segments are different. When we bought Mediobanca, when we bought Hesperia seven years ago and we ran into Mediobanca Premier, we said, okay, Mediobanca Private has to be something close to us, very close to us, operating with the same approach, having the same quality of people, And using our product, making Mediobanca asset management, Mediobanca investment banking product for them, Mediobanca, Tech One, Tech Two, all the other projects on private market. So the same is going to happen in Mediobanca Premier. Of course, it's a different segment, so not all the initiatives we do for private are good for Premier. For instance, our research, our M&A, our certificates, all our products are embedded now in Mediobanca Premier. The cooperation with advisory is coming because basically the quality of the bankers and advisors are such that they need and they get response and and feedback from the center so the so it's not a rebranding a repositioning in the higher level and in proximity in our ecosystem product philosophy um initiative for we do a lot of initiative on the territory using our institutional research. This is very important. You know that Marco, we issue, apart from our Mediobanca research, we have also a lot of sector research, a lot of industry research, which are very interesting when you present. So we do a lot of events now branded Mediobanca, branded Mediobanca with Mediobanca Premier to the customer of Mediobanca Premier. This is something that is creating a difference compared to others that they don't have. So this is a set of elements I wanted to give you to give the sense of this activity.

Thanks a lot. Quick follow-up on the consumer. Here, NPL ratio moved up a little bit, Q on Q. How shall we rate this? And thanks a lot for your answers before.

Yes, the NPR ratio is going up slightly. Why? Because basically we have had a decrease in stock loan because we grew where we see margin in consumer and we don't want to grow in mortgage in corporate because it's a negative EVA. But the trend in NPR is very, very healthy and in the last queue we will sell some, so we have already sold, you know, that Compass does two kind of disposal or one big every year in order to have a warehouse of non-performing, which is basically nothing, no, because we sell all the consumer. So it's matter also of timing of this, this is going to happen this quarter. And in the meantime, we see also the long stock where it ends up, but This is going to be either 2.4, 2.5, so we don't see any major changes in this. Thank you.

Thank you. As a reminder, to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced. Please stand by. Please stand by while we compile the Q&A roster. We will now take our next question. Please stand by. And the next question comes from the line of Adele Palama from Mediobanca. Please go ahead. Your line is now open.

Hi. I have a question on the management fee margin. which seems to have declined year on year. So I was wondering if it's a question of asset mix and then if you can give a guidance on the evolution of the management fee margin for the next quarters. And then the same question for the fees expenses. So as a percentage of management fees has slightly increased in the last fourth quarter. So if you can tell us a guidance there as well. Thanks.

So as you may have seen in many other situations, there's been a slight decrease in the ROA of the division. Why? Because basically we have had nine months now is improving where, you know, the component of a way was bigger than AOM and ends. There's been a bit of dilution dilution in terms of marginality. The more we are able to revert this in the last quarter, we have had one billion of AOM and we think this trend can be somehow confirmed in the current quarter, we should catch up a bit of this marginality. But it's a function of basically higher interest rates and fixed income products. We see an improvement in the quarters to come. Sorry, because the line was a bit not so clear. Maybe you asked other questions that I didn't really... Yes, I asked a question for the fees expenses.

As well, fees expenses seem to have grown over net management fees a little bit. So I was wondering if you can give a guidance on that trend as well for the next quarters. And then if I can add another question, sorry. What's the percentage of IUM that are coming from the financial advisor that were hired as a percentage of total IUM flows?

So there's been also... I would say a seasonal temporary impact in the sense that the AUM of this quarter were concentrated in the last part of the quarter. So the marginality was affected by the fact that maybe it was in the last month or the last 20 days, and then on average during the quarter it went down. we should see a reverse in the current quarter.

Thank you. As there are no further questions, I would now like to hand back to Mr. Nagel for closing remarks.

Thank you very much for your attendance and I hope you have A nice continuation on the day. You can join us in the last quarter and find full results in July. Thank you very much. Bye-bye.