Unicredito Spa Ord New

Good morning, ladies and gentlemen. Before I hand over to Magda Placinska, Head of Investor Relations, a reminder that today's call is being recorded. Madam, you may begin.

Good morning and welcome to Unicredit's first quarter 2025 results conference call. Andrea Orchel, our CEO, will take you through the presentation. This will be followed by a Q&A session with Andrea and Stefano Porro, our CFO. Please limit yourself to two questions. With that, I'll hand over to Andrea.

Good morning. Before I take you through our results, strategy, and prospects, I would like to take this opportunity to thank, once again, our people, the true engine of Unicredit, whose passion, dedication, hard work, and excellence make this possible quarter after quarter. Q1 2025 marks the beginning of phase two of Unicredit Unlocked, unlocking acceleration. While we continue to optimize our operating model, we are now focused on fully leveraging our structural commercial strengths to drive top-line growth. This quarter's results, well ahead of our plan across all KPIs, confirm the resilience of our core business, the depths of our transformation, and the strengths of our future trajectory. Our performance is anchored on three pillars. First, financial strengths. Q1 marks the best quarter in our history, solidifying our record of quality delivering across all KPIs, building a significant buffer to improve our own projection for 2025, while increasing our lines of defense. This meaningfully differentiates us, our present and expected future performance versus that of our peers. Second, structural strengths. We operate a unique pan-European platform diversified across countries, client segments, and business lines. This gives us reach and resilience, allowing us to reallocate capital towards the highest return opportunities while absorbing local volatility and delivering both quality growths and distributions. Third, our ever-evolving transformation. Between 21 and 24, we focus on redesigning and streamlining our operating machine while rebuilding and reigniting our commercial one. We're now shifting to acceleration, optimizing our operating machine while accelerating our commercial machine by targeting the right geographies, the right client segments, the right channels, and the right products. While the macroeconomic environment remains challenging, our disciplined execution and solid foundation give us confidence. Our previous guidance included softer net operating profit through 2025 due to normalizing rates and cost of risk, with improvement weighted towards Q4, also due to lesser non-operating charges. This, along with returning excess capital, was expected to keep net income and return on tangible equity broadly in line with 2024 and ensure higher distributions than 2024. That trajectory for the next three quarters remains unchanged. However, Our high performance in Q1 across non-operating profit, net income, return on tangible equity, and organic capital generation allows us to upgrade our 2025 guidance. We now expect to exceed 24 net income and ROTE with distribution above last year by more than initially anticipated, benefited from higher net profit growth. Should this momentum continue into Q2 and early Q3, we will consider further upgrades to our guidance. Our ambitions for 26-27 and beyond are unchanged, but we approach them with even greater confidence. This is a story of organic quality profitable growth and distribution unmatched in Europe, strengthened by selective inorganic opportunities that will only be pursued if they enhance our already best-in-class standalone case. Q125 marked a historic milestone for Unicredit. We delivered record results across all KPIs, further improved their quality, and further strengthened our capital, asset quality, liquidity, and lines of defense. Net revenue increased 3.2% with excellent fee generation more than compensating net NII decline, all further boosted by trading. NII ROAC increased to 20%, best in class. Fees grew to 36% of total revenues, while on their way to 40%. We reduced costs by 1.3% at constant perimeter, almost compensating the impact from first-time consolidation. Reducing our stated cost-to-income ratio to 35.4%, beating peers by a significant margin. We grew net revenue over RWAs to 9.2% while absorbing the bulk impact, generating 3.1 billion of capital organically and 5.3 billion overall. Net profit increased 8.3% to 2.8 billion at an industry record, 22% return on tangible equity, unadjusted from our significant excess capital. Adjusted for that excess capital at 13% CT1, our return on tangible equity would have been 26%. Our profitable growth allowed us to offset the impact from BAL, accrue 100% of net income in distribution, while increasing our CT1 ratio to 16.1, 16.6 excluding the accrued SBB. Our per share growth is even more impressive. EPS up 18%, dividend per share up 46%, tangible book per share up 17%, including dividends. We achieved Q1 results while maintaining our 3 billion buffers intact, 1.3 billion non-operating items, and 1.7 billion of overlays, and increasing NPE coverage by one percentage point, and our excess capital to 8.5 to 10 billion, or circa 7.5 billion, excluding the more volatile elements. So we stand prepared for the future. This is the result of a deliberate strategic transformation which balances delivering in the short term with continued investment supporting long-term performance. This position Unicredit as a benchmark for banking. We grew our net revenues by 3.2% year-on-year and 14.6% quarter-on-quarter without compromising quality as proven by strong fee growth more than offsetting expected NII decline. Combined net NII and fee grew 1.6% year-on-year. Trading contribution continues to be positive as we offer essential hedging to our clients in effects, in rates and commodities, leveraging our unique pan-European network. Two-thirds of our trading was client-driven in that area, with the remainder resulting from strong performance of our treasury and investment portfolio. Cost of risk remained benign at eight basis points. NII showed resilient profitability driven by positive margins and benign cost of risk. Unicredit maintained discipline even as other banks, particularly M&A targets, pushed for higher volumes and drove pricing to value destructive levels. Our unwavering focus on EVA-positive volumes over volumes at any cost is delivering, as our net NII trajectory is better than the sector, while its profitability is significantly greater, reaching a best-in-class ROAC of 20%. We continue to have excellent pass-through management, with the average in the quarter down 1.3% to 32.6%.