Mediobanca Spa

Good morning to everybody, and thanks for joining the call. We are halfway of our plan, so one brand, one culture, and the first half of the second year has delivered €660 million of net profit with the return on tangible equity of 14%. We have had a strong commercial activity across the different business, and we have improved all our business positions. In wealth management, we have had roughly 5 billion of net new money. In CIB, we have not only confirmed our strong positioning in Southern Europe, but also thanks to ARMA, we have had an important leg in the fee generating business. In consumer finance, we have printed more than 4 billion of new loans, and this is clearly above sector growth. For this reason, revenue were up a single digit. So six months on six months, they were up 7%. Cost income ratio stood at 42%. And the main driver has been in the last six months, the important growth in fees, which is one of the theme of our plan. So producing more fees and using less capital. So fees were up 30% driven by CID and wealth management. The core was stable with some encouraging sign of a slight decrease in the quota. This led to, as I said, an important jump in profit and also in EPS, which went up 10% to 0.79 euro per share. High capital generation confirmed this is another important feature of our plan. So grow revenue without using too much capital and producing a lot of capital available for distribution. So our CHAT 1 stood at 15.2. If we include 10% of payout, also taking into consideration the possible next buyback, we're going to end up at 14.8. So interim dividend, the amount will be fixed in the next board meeting and will be paid on May 15. but clearly reflects the increase of earnings. Now looking at the second quarter, we have seen a clear acceleration of the business development across the different business sectors. So wealth management revenue up 10%, CIB 46%, consumer finance three, and insurance 11. So all four businesses, contributed positive to the dynamic of revenue, and we have reached nearly a billion of revenue, which is the all-time high in terms of revenue in this second quarter. So 14% increase Q on Q. Here, what we want to underline is the NII trend. NII, you remember in the last call, NII was a bit disappointing because it was a bit lower compared to our expectation. We have been working hard to basically fend off this trend, and now we are in a position to see that NII is going up, Q on Q, 2%, and the main driver are consumer finance and CIB growth or loan book. On this, of course, we will elaborate further in the conference. The second important element, as I said, was the number we printed in fees. we have had the highest ever quarterly results in fees with 316 million euro. This is up 36% Q on Q. And again, here is CIB and wealth management, the main driver. Core. The stated core, 175 in consumer finance, is three bps lower than the first Q. And the underlying core is down 10 bps in the second quarter. uh gop and net profit were at record levels so gop was 500 and eps of the quarter was 0.40 euro per share going through the different business our priority as we said many times is to develop a massive wealth management operation this is happening and this is happening faster than expected because If you see the increase in net due money, it's 30% year-on-year, not only in terms of amount of size, but also in terms of quality. So two-thirds AUM, just one-third is AUA and deposits. This is one of the best-in-class growth capabilities because if we compare these growth rates on TFA, we are nearly at 10%, and if you see the comparison with other more a fun player, we are showing a fastest growth. This is also driven by our model. Our model of PIB is clearly supportive of NII and Net-U-Money, sorry, because of liquidity events. Here we have roughly a billion of liquidity events and mainly generated by our network. So TFA reached 107 billion, so this is clearly 13 billion up year on year, and it's making our target of 115 in a year time more achievable. What is important to note is that after one year, Mediobanca Premier is clearly becoming a big driver of growth. Recruitment plus 22%, average portfolio is plus 80%, And new private clients, it's two times compared to the pre-repositioning of Medibank. But on this, we will elaborate further. So this reverted into important increase in revenue, 252, as opposed to 228. And also in net profit, also taking into consideration that we are investing a lot. And so we have naturally a dynamic of cost, which is linked to the growth of our network. CIB had a very positive trend in the second Q. This is on the back of rebounding activity, rebounding M&A, but I have to say more driven by our strategic initiatives, which are the initiatives that we have announced a year ago when we have outlined the plan. These are a mix of M&A and new initiatives. So basically, we have seen an important increase in fees, and this is driven by advisory. Advisory was pretty robust in Italy, large and mid, but also in non-Italian advisory. So basically, Spain, France, and notably, if we want to say UK, Arma. But Arma is not a UK player. It's a player, a European player. You see how we are reshaping this business. From being a purely Italian player some years ago, mainly using capital to generate revenues, now we are having 60% of revenue which are not domestic, and we are more differentiated between large cap and mid cap. And as I said, this is coming without massive use of balance sheet. the other hand we have had a recovery in corporate lending a already noticeable uh recovery which will continue in the next few quarter is not a big jump but is important to support the nii so profit where i close to the highest level consumer finance another very very positive and strong quarter Based on the strength of Compass in generating new loans, so we are up 6% Q2, 2.2 billion. Above sector average, you see that we are growing at 8% while the market is growing at 7.5. This is reverted in a solid loan book growth. So we have had 300 million euro of loan to the loan book. And we have had also a slight decrease in core. So you see that the growing, we are seeing a growing risk adjusted profitability. So NII on average loan was up 10 basis point and it's staying at a very high level, 7.3. but also the NII minus core on loans is going up to 555. So we are having really a very good trend in terms of both growth and profitability. So which were the goals that we had when we have published our latest plan? is to work at a bank which should have high and sustainable growth through a stronger industrial footprint. So our play was and is mainly industrial, so becoming stronger, deeper in each of our verticals. This growth, as said, is not linked to massive use of balance sheet and RWA inflation. On the contrary, our plan said, and we confirmed, RWA neutral from year one to year three. This is leading to high distribution with the low execution risk. So after this second quarter, we are able to, on one hand, confirm the guidance of 2025. So NII resilient, fee low double digit growth, net new money between nine and 10 billion, and EPS between six and eight. And the distribution is 70% cash out, cash payout plus buyback. On the contrary, given the trend in revenue and the outlook for NII and fees, we have revised slightly up the revenues from 3.8 to 4. We have revised slightly up also net profit to 1.4. And we think that we're going to stick to this 10% payout. with an element of, I would say, additional distribution on 2026, which will trigger our distribution, will bring our distribution from 3.7 to 4 billion. This is going to be mainly a cash component, and it will be in the region between 300 and 400, more 400 and 300, and it will be, according to actual plan, split into, I would say, interim dividend in 2026. So, as I said, going on page 11, you see that our revenue trajectory was pretty interesting. Seven percent increase in revenue is, I think, an important sign of the development of the bank in a moment where normally banks in particularly if they rely on nii they have a declining revenue rather or stalling revenue rather than increasing revenue so seven percent it's important but is it more important to see that the so-called capital light were up more than double so 18 percent year-on-year they roughly are now half of the total revenue of our group And we said that this is the highest quarter in terms of fee. You see on page 12 that this is driven by an important increase in two businesses, CIB, thanks to ARMA and to advisory in Italy. And also, you know, there has been also a pickup in lending fees. but also in wealth management where we had roughly reached 150 million euro of net fees in a single quarter. And I back to growth in Q2. This is basically effect of two trends. The first is a more important is consumer finance. The loan book and the marginality of Compass and the fact that Compass is starting to harvest the lower cost of funding, which will, I think, play more effect in the quarters to come, is a great supporting factor. The second one is CIB loans, we're up 8% Q on Q, reflecting a gradual recovery in corporate. We still have a subdued activity mortgage, which we think will still last for some quarters. The two positives are mainly Compass consumer and CIB. We have had a positive spread effect in consumer finance and in banking book, and we are starting to see a lower cost of funding. You see this on page 14. So funding stock was stable or slightly up at 64 billion. and we are starting to see wealth management deposit costs going down. Here we have to manage, we had to manage the growth in terms of net new money and also deposits with the need also to decrease this cost. So it's always an equation that we have to solve every single quarter depending on our priority. The priority has been in the last few quarters to grow our net new money. We still have a wealth management cost which is supposed to go further down in the next few quarters. Bond stock spread is basically flattish or slightly diminishing, and we have still a very small amount of maturity bond expiring to be refinanced this year. Group core is at 50, so basis point is lower than our guidance. So our guidance was in the regional 55. We have had positive trend across the different business and notably you see here in this slide 15 in the core of consumer where we have had a decrease both in underlying stated in Q2. So this led to 50 basis points of core for the six months. A very low use of overlay because you see that we have used only 14 million euro overlays in this three months. So asset quality remains very good, excellent, with 2.5% gross NPL ratio, less than 1% net NPLs, and especially the coverage is pretty good. And we can say something more on Compass asset quality, which is even improved. So one important theme of our plan, as I said before, is growth, growing the business, growing the bottom line, using better the capital. This is a very important topic to which we stick every single quarter and not only a single quarter, but every day. So how we use the capital to grow. You see that We have been reshaping the allocation of capital in the last two years with a 3% decrease in RWA trend, and this is on the back of managerial effort, priorities, and this, of course, associated with higher profitability led to what we were fishing for, a strong increase in divisional return on risk-weighted assets. At group level, we are now at 2.8, but you see that every single business is going up in terms of profitability, and this is the effect of both better operating performance, but also more careful and follow-up in terms of RWA savings. Capital generation is being, as expected, strong, so earnings 140 basis points less the deduction of generality and the payout so basically we are in the region of 15.2 then if we take into consideration according also to the latest indication of our supervisor the fact that we may distribute or we plan to distribute further part in terms of buyback at the end of the plan, this is going to be 40 basis points lower to 14.8. I have already given a lot of details of nuance on the trend of the different businesses, but let's go and say something more on wealth management. In wealth management, it is important to note that the new net new money is mainly on managed assets. And this is coming from Premier primarily, but also from private. And also we have had quite a good quarters from asset management, thanks to our product factory. We still have ongoing deposit inflow. And we, as I said before, we are always contemplating and promoting campaign to attract liquidity through events or through interest rates offer. That after we are converting to AUM, AUR. This is leading to a very strong franchise performance. On page 26, you see the management fee trend is going up 14% year on year. But you see also that this number in terms of franchise TFA was 28.5 billion a year ago and now is 33.4. So we are growing franchise management, franchise fee in a steady way. And this is what we like. So having a wealth management that is more steady in terms of the growth of its fee and less volatile. The second element which is coherent with our plan is that the franchise net new money is coming or is invested, if you want, more and more in our product. You see on slide 26 that 60% of the franchise net new money is converted into in-house product. This is something that we wanted to have not only to retain more profitability and to internalize more margin, but because we have developed a very good capability in our in-house product offer. The private banking is going up in terms of net new money and in terms of expansion through liquidity events. This is something that it's growing because we are becoming more and more important in mid corporate in Italy and not only in Italy. And the second element is private market initiative, which reached roughly 5 billion of committed capital. You know that this is going to be invested in some quarters and we will see this in fees, which are normally higher than on the liquid in the coming quarters. To note Mediobanca Premier, page 28. This is really important to see the potential of our group in this sector. So you see that the capability to attract the bankers has been steadily up with 132 professionals in one year. So we have had a very important bump in this kind of ability to attract and recruit bankers. The portfolio that we are taking with new bankers is 80% higher than pre-repositioning of Mediobanca Premier. And as well as it is going up a lot, the number of clients, the target client is two times compared to a year ago. In the end, this is also converting to increase asset gathering capacity. Given a look to CIB, As I said, CIB is going through important reshaping and quite a positive one. So it's enjoying on one end the corporate activity, which is improved. So we have announced 52 deals in the last six months. So it's nearly 30% up year on year. And this is basically both our international presence and the Italian one. Then we have enjoyed a record year of Arma Partners. Arma Partners has delivered 58 billion of transactions last year. It's the best year since inception, since the start of the company. It's having a fantastic trend, and we are very lucky to have done a partnership with them in a moment where the digital economy is booming and is supposed to stay like this for the foreseeable future. Energy transition and private capital are the other two drivers, as well as a very good trend in market activity. Our market activity becoming VTP specialist is more material, is more complete in terms of product, and hence we do expect more revenue in the future from this kind of activity. No need to comment further on market position. You see the numbers on page 35. Here, revenue are going up steadily, but also it's important to see the different composition. It's mainly advisory and used to be mainly capital-heavy revenue. And this is converting in quite a nice trend in terms of PBT and net profitability. Consumer, we said about the exceptional performance of Compass. Every year we say exceptional, but then Compass surprised us better the year after. And this is driven by the three main elements here on page 37. a very strong distribution network, physical and digital, and a very strong capability to price the loan, preserving the value. This is on the back of credit history of a lot of Italian family, 70 years of experience, 70 years of sophistication in our model, which tend to continue to adjust the price on value. And of course, the new tools or the new product, buy now, pay later, has become a huge driver in terms of new customer acquisition and hence on repeat business. So you see that the trend on page 38, it's quite healthy, new loans by product. So plus 6%, it's an important number. So 2.2 billion in Q2, we never had in the past. So it's clearly led by the stronger franchise, stronger loan origination capability of Compass. And this is driven by huge investment we have been doing. We are still doing in digital and by now pay later and in light physical. The profitability on page 38 is as well very important. What I want to note with you is on page 39, the asset quality. So we have said already on core, we expected core to go up this year because it's a function of the different mix. So more personal loan, more profitability next, but a touch higher in terms of core. Well, in the last quarters, and this is something we see even this quarter, we have seen less quarter that we were expecting. We have to always to understand that given the new mix we're gonna have compared to the past higher core, but then the ability of Compass to collect and to price may lead to this quarter where we have a notch down in terms of core. If we see the underlying mix of our deteriorated assets, you see the big input. It was already very good, but you see, up to June 18, 19, we had a net MPLs composition, which were mainly done by net MPLs with overview more than 90 days. So 77% were more than 90, and the rest were less than 90. Now we have the opposite, 77%. is net NPS with overdue less than 90 days and only 23. It's above this. What does it mean? That the strength of Compass is also its balance sheet. So we are having a provision policy which sets aside immediately, well before the 90 days, so protect the future P&L with a big provisioning day one. So insurance has been quite good as expected. And here again is the positive effect of having an exposure to insurance in banks is something that we have maybe discovered ahead of others. But also now we see that thanks to the Danish compromise, everybody's looking to have an exposure to insurance because it's the correlated and has a great return on assets and on capital. So going to the last part of this presentation, we are on track to deliver our vision of MediBanca. The vision of MediBanca is a vision on a bank centered on wealth management. Wealth management is our priority, developing organically, mainly organically, the business is our priority. And this is happening because we see already that We have more than 30% of banking revenue coming from wealth management and more than 50% of group fees coming from. We have a visible net profit contribution, which is going up. So it's not only already material, but in terms of contribution, it's going to go up. And we will be more and more seen, as we are already in part, as a diversified financial and not a bank with balance sheet. This is also linked to the fact that, as we said, capital like CIB is happening through the managerial efforts and M&A we did, and the fact that CIB is not working on its own, but is working more and more in a synergic way with wealth management, and this is generating a stronger net human inflow. We enjoy to business that are de-correlated to this trend, so consumer finance and insurance, and this give us important revenue growth outlook and a big capital generation available to be distributed. So I said about the Guidance 25, I said about the Guidance 26, we can elaborate further in the Q&A session. We think that Mediobank is very well positioned in the next couple of years, five years, at least the foreseeable future, where basically we should take much more market share in wealth management, in CIB and in consumer. In a moment where NII for the vast majority of banking, as you know, is going to have pressure, we're going to have basically this year a flattish trend And next year, we're going to have a positive dynamic, so basically a slight increase. In fees, we are having, as you see on page 46, this is consensus across European banks, we're going to have 10 plus increase in fees. And this is the reason why we are focused on our plan. And in the meantime, as you know, we have received a proposal from another bank. And here we have summarized the reason why we consider this proposal not in the interest of our shareholders. Basically, we don't see value or strategic rationale neither for us nor for the offer. Why? Because we are very different animal. doing a very different activity. So one is, as I said, a specialized bank, another is a commercial bank. If we put together these two animals, we don't have neither a big commercial bank nor a specialized entity which can grow faster not using capital and a big remuneration. We're gonna have something of an hybrid which is, at least according to our view, not positive neither for us nor for the offer. There are no overlaps in the business, so we don't have, we have very little room of cost cutting also because we have different business with different systems. So we can't cut and use a unique system, IT system or a digital platform because we have different business. We think that there are important synergies in revenue. So we saw that the offeror put out a number in terms of important revenue accretion, we see important revenue attrition. So we think that the combined entity will be having less revenue than the two banks before any combination. And this is linked to the fact that the new entity will not be a bank of choice for entrepreneur. And hence we see that there will be attrition of revenue driven by loss of client and loss of professional. There is an high execution risk because basically we think that nobody, as it is not an agreed deal with due diligence and understanding of each other, our shareholder, given the relative size, are asked to own 60% of the combined entity without Mediabank having any possibility to do a due diligence on balance sheet and on business confidentiality. So we are going to take contingent liability that are stemming from the offeror balance sheet. And we have been doing this for clients and we have seen a lot of cases in the past The track record of putting together a retail commercial bank with a wealth or investment banking activity is, on average, very poor. And to our knowledge, there is no one single case of success when this transaction happens in a style way or not agreed way. The poor cultural fit is linked to what I said before, so the fact that we have... different story, different business, different target segment. And basically also there are some elements that are more on, if you want, on the financial side rather than on the industrial side. So today Mediobank is positive gear on macro. So as we said, enjoy an earning revenue and earnings trajectory, which is different from commercial bank. we never had a history or problem of asset quality or litigation and so we think that our profile will be diluted should we do a transaction of this kind because of negative projected revenue and earnings growth from commercial bank in general and the offer in particular we think that there are elements of attention given the fact some important commercial holder that enjoy this position in a different way compared to the other shareholder of Mediobanca and the other shareholder of the offer. And last but not least, because when you discuss about the offer, the financial terms are even more important than the industrial, because of course you can like or not a transaction, but if you have a very good consideration and this is cash, you can also think that the industrial profile is less important. The transaction is all in shares and has no market premium compared to standard offer of this kind. This is why our board has issued a preliminary valuation, a preliminary judgment on this offer, which is not positive at all. Thank you very much. I've been a bit longer than usually, and it's now time for your Q&A. Thank you.

Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 11 again. We will now go to our first question. Please stand by. And the first question comes from Adzura Gwelfi from Citi. Please go ahead. Your line is now open.

Hi, good morning. A couple of questions for me. One is on your review and upgraded guidance for 2026. You have increased your revenue and now your net profit is also above consensus. Can you give us a little bit of color on what has changed to drive the revenue increase? And also, in light of the offer as well, How do you see the development of your core business like CID and wealth management if they've already been impacted? And if you can share a little bit of color on how do you plan to have sustainable revenue growth in this uncertain time for your franchise? The second one is on capital. You historically had a payout of around 70% plus excessively distributed buyback. Now in the slide, you indicate a 100% payout Is this going to be all cash, and would this basically imply a significantly higher dividend per share versus consensus, not just because you increased the amount, but because of a different situation? Thank you.

Thank you, Azura. Best wishes for you for the future quarters. And apart from this, coming to your revenue, What's behind the guidance upgrade? In terms of revenue, we are seeing a better trend. We are seeing a better trend in NII. And we think that this trend can be fostered by the two main drivers that are consumer, which will continue to print additional loan and hence increased loan book. And this is coming with a decreasing cough. So of course there may be some pressure on condition to client, but normally when this happened, there is always a time lag. And so Compass will continue to have a very strong NII trend. In corporate, we don't expect for this six months, but after the six months we see more acquisition finance coming. For the time being, we have been doing more, I'd say, normally corporate lending, and this is enough to counterbalance the decrease in interest rates. In 2026, we will have Compass plus CIB doing more. So this is for the NII. For the fees, we are seeing, Clearly an acceleration of the fee of wealth management provided that markets stay stable in terms of more management fees and less fees coming from other wealth management activity because of NAV trend and also conversion of liquidity events and deposits. Basically, these are the two main drivers. So we have seen also the new plan of Generali. So apart from trading, which is very difficult to predict, but the core revenues are supposed to grow a bit more than what we thought. So from 3.8 to 4. In terms of impact on our business today, we have seen a very important response of our people, of our bankers. to what happened. So there is a team spirit, which is very strong. The team spirit is to show this moment that we stick to our priority. We show to our certain to the client that we are a quote unquote best in class for a very, very strong bank in terms of culture and delivery. Going to distribution or let's I would say go in some more detail compared to what I said about 25 and 26. So this year, we're going to have 70% cash and roughly €400 million of share buyback. This is going to end the execution. This is the execution of the buyback we have approved in October 24. With this, we're going to end up in the region of 14.5% of quarter one. Next year, we will have the execution, if we approve it, of the buyback in October 25. Plus, we will have 100% of cash, which is 100% of net profit distributed and this will revert into roughly 400 million of additional dividend to be split into installment in interim and all this will lead our courtier one is suspected to land above 14 which is coherent exactly coherent azura with what we said one half year ago when we presented the plan we said The landing point of our courtier one at the end of the plan will be in the region of 14, 14.5, leaving also a small buffer in terms of M&A.

Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Pamela Zuluaga from Morgan Stanley. Please go ahead. Your line is now open.

Hello, good morning. Thank you very much. I have two questions. The first one is around net new money flows. If I understood correctly, you said you've been benefiting from growth in your network and the push for hiring financial advisors. Could we see maybe a deceleration in net new money trends that could reflect some normalization in this regard? And then the second question is specifically on margins. You've already flagged that there were more flows into assets under management versus assets under administration. Could we expect this to continue? And in relation to this, as a BTP specialist, are you worried about the BTP plus potentially being a headwind for this expectation in terms of maybe weighing on margins overall? Thank you very much.

Thank you, Pamela. Look, for the time being, we are having quite a good trend in the last few days and weeks in terms of net new money. um then we have also so we do expect to continue with this trend knowing that we have different layers to work on for instance in order to increase our net to money it's not only the fact that we rely on new uh entrance or new hiring but we are working also on existing financial advisor and bankers to increase their average portfolio so before i would say up a year ago until a year ago we were putting more emphasis only or mainly on new recruitment since nine months at least we are putting a lot of emphasis also growing existing banker portfolio and financial advice so this is an important layer to be exploited because we have an important part of the network which is having Target portfolio, for instance, in Premier of 30 million, but previous recruited bankers and financial advisors sometimes are below this, and we are doing a very strong effort to increase there. So we have different layers to maintain the run rate of 9 to 10 billion of net-to-money. Margins are supposed to be flat. So we prudently assume that then of course, there will be an impact on the BTP new issuance, but on the other hand, we are also placing more and more, I would say not only private markets, but also equity or I would say more rich product made by our product factory. we can counterbalance the BTP effect with other placement. And in general, our assumption on the guidance are based on flat margins.

Super clear. Thank you very much.

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

Hi, good morning. Two questions for me. The first one is on the fees trend, so highest quarter ever. Can you elaborate on the evolutions for the coming quarters for both the CIB and wealth management? How much is sustainable the trend on Q2 that is outstanding compared to the average rate of the last quarters that are more in a range of 250, 260 million? The second question is on the NII and the positive volume effect on the CIB. Can you provide more details on the sequential growth of the loan book in the quarter, along with some considerations on the credit spread and its evolution for the upcoming quarter? Thank you.

Thank you, Luigi. So when you look at our fees, you don't have to be neither depressed if you see the Q1, neither overexcited if you see Q2. because we can have this kind of volatility. We have a very good pipeline, very strong pipeline, but then it depends when we finish some deal in terms of signing, in terms of closing. So what I can say is that we do think that the trend we are seeing in the next three quarters, the first one, the second one, sorry, the third and the fourth one are going to be coherent with the guidance of low double digit growth of fees with some variability. So we can stay between the first and the second. We can stay closer to the second. It depends. It depends on some closing of these, in particular in CIB, in CIB. Wealth management and consumer are more steady and more predictable. For instance, we know that every single bank, even in wealth management, has in December and June some banking fees that are charged in the last quarter of the solar year or in June. So this is a seasonal element. In terms of NII, we haven't seen a great rebound in margins, but we've seen a bit more demand or availability of credit in CIB. So our overall, I'm not speaking now of CIB, but speaking in general, our budget which was supposed to be difficult to be achieved a quarter ago in terms of new loan, the additional net new loan of 2.5 billion. Today, it seems realistic. And in this, CIB will stay at least at the outstanding level. So if I remember well, more than 14 billion. which we have today, will stay like this even in the next couple of quarters and may go slightly up. So we don't see a decreasing trend in CIB.

Thank you very much.

Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Britta Schmidt from Autonomous Research. Please go ahead. Your line is now open.

Yeah, thanks for taking my questions. Just coming back to the CIB revenues, AMA had a very large contribution in this quarter. Is it mainly seasonal or are you also seeing an increase in the baseline for the revenues here? And then a second question related to governance. There were some comments on the press on the Generali board renewal pointing to Mediabanker wanting to retain a board member. Is this related to the continued approval of the Danish compromise? If you weren't able to appoint a board member, could we see the Danish compromise disappear and what will be the impact? Thank you.

Thank you, Britta. Well, it's not seasonal in the sense that we clearly have seen a stronger intake of mandate, starting from already six months ago in ARMA. ARMA is increasing its presence, hiring new partners, is developing some sectors that were not so developed in the past, thanks also to our push and investment. So part is linked to the fact that the market is more supportive and they are seen as a clear leader. So imagine that they have 80%, 90% of their business is sell side. So today with the decreasing interest rates and the private equity that has a lot of money in terms of dry power and also need to offload assets, we think that this trend will continue. Of course, then there can be quarter which are exceptional because we have closing of some deals and quarter which are less important. So variability in this business is a bit of the name of the game. But this is coming on a trend of consolidation of the presence of ARMA in the sector and supportive macro because the macro in terms of consolidation Cost of funding, cost of financing and deal activity is positive. Governance, yes, as I said yesterday, we have two main drivers in looking at the election of the next Board of Generali. The first one, given the importance of our investment, we want to be confident that the management team and the board which is elected is uh as good as as we can as is possible in terms of delivering the plan and continuing to have the performance operative performance and the distribution that we are used to that were very positive for our uh last few years of of media bank consolidation And the second, that as you said, according to existing rule, in order to have our risk weighting, which is not a Danish compromise, it's a bit of a mix, because we risk weight part and we deduct part, so it's not a pure risk weighting. We need to have one representative in the board. This is linked to not only the rules that are but also supervision expectations so for this reason uh we may we we will work at a list to be presented because last year or the land the last board was done by the board of generali the board list and a representative of medibanka was included in the board list This time, the board of generalists said clearly that they are not in a position to file for their own board list, so we need to somehow go back to what we used to do before this kind of practice was introduced three years ago.

Thank you. We will now go to our next question. Please stand by. And the next question comes from Giovanni Razzoli from Deutsche Bank. Please go ahead, your line is now open.

Good morning to everybody. One clarification on the numbers and the two more strategic questions. The first one, we've seen clearly a very strong advisory fee generation in the quarter with a very strong contribution from ARMA. Is it correct to assume that in this quarter around two-thirds or more than two-thirds of your advisory fee were generated by your foreign franchise and the second question on the on the numbers the compass origination remained very strong as two billion euros in the quarter or slightly above two billion euros i was wondering whether this can be seen as a kind of steady state level which is difficult to exceed the given also you know capital constraints or even if this level can accelerate as probably lower rates may stimulate more business by compass. The other two questions on the capital, you have focused on the dividend increase and the distribution increase. During the presentation, we have highlighted that Mediobank as a capitalized business is very profitable. I was wondering whether in a medium-term perspective, there is a further step that you can take of, you know, starting discussing the possibility to return the excess capital to shareholders as in the last, you know, couple of years, you mostly concentrated on bolt-on acquisition while retaining an evident excess capital. And the last question, if I may, as a part also of the transaction, which has been announced in the past, we've seen some of the shareholders focusing on the potential streamlining of the cost base of your holding function, it would be possible to have your view on whether it's possible or not possible to streamline the cost that you are booking there. Thank you.

Giovanni, thank you for your question. Yes, two-thirds of the advisory are coming this quarter from ARMA. you know, ARMA, we started to consolidate a year ago, a quarter less. So because last year we started to consolidate from Q2 this year, we have two quarters included. So there is in the quarter, this is the impact in the six months, there is a quarter more. So the difference is also the different perimeter. Then Compass, I would say, growth is always stable. The beauty of Compass is that it is a bit de-correlated from macro and tends to be a machine that prints depending mainly, I would say, from the strength of its distribution network. So the more we invest in digital, the more we invest in buy now, pay later, the more we invest in some physical life branches, the more we can print. And of course, we can have a moment where we are more prudent. This is, imagine that Compass adjusts its pricing every two weeks. So it's a very dynamic company. So Giovanni, what you're saying is already what we're doing in the sense that when we say, okay, 2026, we're going to distribute 400 million euro on top. This means, and we're going to end up at the end of the plan at 14 percent quarter one plus plus 10 14 we are already doing what you said we are always to take into consideration that some bolt-on acquisition acquisition like karma can happen so we need always to maintain a buffer but we we could elaborate further on on capital distribution towards the end of this fiscal year um always when we look at the holding function there is always uh uh the the the the tentative to to streamline them um on the other hand we need also to take into consideration that holding functions are going to have an inflation which is linked to a number of because all the functions are supporting the different business so Basically, we have also inflation there, which is coming from a big development of the group. If you have much bigger consumer finance, much bigger ID and wealth management, you need to invest in IT, you need to invest in platform, you need to invest in risk management, you need to invest in compliance. So you have DORA, you have ESG, so there are a number of elements that are against the cost cutting or are more on cost inflation. Now, in fact, seeing an holding function going down is difficult. You can see costs going down because you close branches, you do a merger with an entity which has a big overlap, which is not our case with the offeror. And so basically, also when we say, okay, there can be some cost synergies, if they are not branches, yes, there can be synergies in putting together the holding function, but our holding function costs are below 200. And so basically, how much can you cut? Basically, can you cut a third? Maybe. Yes. Okay. 50, 60 million euro of less cost in putting together the two-ordinary function. But this is not material in a transaction of this kind. And it would be impossible to be done on a standalone basis because we have, we as all the other banks have projects which are not basically ordinary. Dora, for instance, It's a big project. ESG is a big project. Risk management has always to be upgraded. So it's very difficult to say we can cut severely holding function costs. Going back to ARMA, I want to tell you that if we strip out, to give the sense of the underlying business, if we strip out ARMA from our numbers, Six months on six months, corporate finance is up 40% year-on-year without ARMA.

Thank you. That is very clear.

Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Domenico Santoro from HSBC. Please go ahead. Your line is now open.

I actually canceled the question, so everything is clear. Thank you very much for the time.

Grazie, Domenico. Thank you. I don't know if there are other questions. It seems that we are done. Thank you very much for your attention and patience and hope to see you soon in May when we'll have the third quarter results. Thank you very much. See you soon.