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Good morning, ladies and gentlemen. Before I hand over to Ms. Magda Palczynska, 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 2026 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. As always, please limit yourself to two questions. With that, I'll hand over to Andrea.

Thank you, Magda, and good morning. and thank you all for joining. I would like to begin today with a shout out for our people. Our performance and progress are driven by their execution every day. Unicredit has consistently demonstrated the ability to adapt throughout its transformation, initially primarily focused on efficiency and profitability through Unlocked. The results speak for themselves. 20 consecutive quarters of outperformance, with net profit growing from 1.5 billion to 10.6 billion throughout the rate cycle, while dedicating on average 1 billion per year in transformation investments. With Unlimited, we entered a new phase, more ambitious, more demanding, requiring us to push the boundaries of both efficiency and growth, sustainably gaining market share in our core market, in the right segment, and on the right terms. Unlimited is raising the bar further. It builds on our strengths while demanding from all of us a step change in mindset, execution, and ambitions. We are off to a strong start with another record quarter, with net profit 16% ahead of last year, fueled by strong core revenues, complemented by equity investments and continued cost reduction. Our focus is clear, quality and consistency in our core business while transforming to be future ready. Inorganic opportunities will remain add-ons, never a substitute for or destruction from our base performance. Any view that external noise will disrupt our delivery, underestimate our discipline, our focus, and above all, our people. Turning to slide one. Today, I am proud to present our first quarter result, the first quarter of Unicredit Unlimited, the 21st sequential record quarter and best quarter in Unicredit's history. Unlimited is off to a flying start. We are executing at speed across both dimensions of our strategy, acceleration and transformation. We continue to drive quality growth across our business while further improving efficiency and investing in our people, technology and AI as key enablers of future change. This is what makes our trajectory distinctive. We are not choosing between short-term results and transformation to become future ready. We deliver both. Strong core revenues propelled by robust commercial dynamics and complemented by equity investment more than offset the decline in rates, proactive Russia compression, and a more even quarterly distribution of loan loss provisions. Continued transformation supported yet another sequential quarter of cost reduction. Combined, they translated into record gross operating profit, record net operating profit, record net profit, and record return on tangible equity. This is not momentum by chance. It is momentum by execution. Because of this strong start, the strengths of our business, our lines of defense, and the ability of our people to perform across different macro scenarios, today we're not only confirming our ambition, we're upgrading it. We expect net profit to reach at least 11 billion in 2026, and we recommit to our 28-2030 net profit ambition. we have taken into consideration the currently expected impact of a more challenging geopolitical and macro environment. Our story remains unlimited. Anything inorganic will be managed with the same discipline we have always applied and only in a way that can further improve our standalone baseline. Slide two. From the outset, we said that Unlimited would build on the momentum of Unlocked by pushing further, moving faster, and raising our ambition again. To go beyond the boundaries of legacy banking, to be able to compete and win against fintechs, hyperscalers, and any new entrant. Unlimited is about rewriting the rules of the game. It is about reimagining what a bank must look like, challenging our data models and artificial limits, and recognizing that the greatest risk is not change, but standing still. That is why Unlimited is a new blueprint for the future, combining the strengths of a traditional bank, the agility of a fintech, and the dynamism of a technology company. And this is exactly what we're doing now. Slide three. Unlimited acceleration. Our franchise is accelerating decisively. We deliver 7% revenue growth, excluding Russia, which we are compressing, absorbing rate decline, and 5% including Russia. We continue to invest in our people, the true engine of our success, hiring around 1,400 colleagues, around 90% of them in the business. We are growing the balance sheet in a disciplined way, with customer loans up 6%. We are acquiring targeted clients with SME, private and wealth up 2%, while total financial asset excluding deposits are up 3%. And we are improving the quality of our revenues, maintaining the profitability of our capital deployed, while further strengthening our fee base, with one market's funds increasing 9% in the quarter. Slide four. Unlimited transformation. We continue to further reset the efficiency frontier, starting from a position of strengths. Best-in-class capital and operational efficiency. Unlimited is allowing us to shift gears again. Our operational efficiency is further improving from an already unmatched position. Costs are down 2%, excluding new perimeters, 1% including them. Our capital efficiency remains top tier despite headwinds. The result is a bank that is leaner, faster, closer to clients, and more efficient. Unicredit Unlimited is not about incremental improvement. It is about rethinking the operating model at its core, with new technologies and AI as key enablers of that shift. We're deploying AI at speed. with multiple AI-driven solutions already in place across all our regions, each one of them leading change in an area, together underpinning tangible improvement in client experience and productivity. Our Group AI platform already ensures approximately 35% lower time to delivery and 30% lower IT cost. This platform is the key enabler of our bottom-up approach. Countries lead innovation close to clients, and once value is proven, the most successful use cases are scaled across the group. We're decisively progressing across AI-powered survey channels, next-generation virtual assistants, predictive analytics for tailored solutions, smart recommendations for advisors, upgraded tools, further empowering our people. Somewhat similarly to AI, digital asset and the required transformation that goes with them will dramatically change the way we do business. With the creation of our digital asset hub, the objective is clear. Move beyond pilots and make digital assets scalable. That is why we invested in Blockinvest and continue to explore on-chain settlement solutions, including Kivalis, which is continuing to get more traction in the industry. Slide six, first quarter performance mark, yet another record in Unicredit history. Our strong core revenue performance, complemented by equity stakes, more than offsets Russia and LLP's headwinds. On a comparable basis, excluding these effects, gross and net revenue grew by 7%, core net revenues by two. Costs continued their gradual decline, further improving our already best-in-class operating leverage. As a result, gross operating profits and net operating profit both increased 12%. Net profit increased 16% to 3.2 billion, 22% excluding Russia compression, at a best-in-class return on tangible equity of circa 26%, two percentage points better, despite our significant excess capital. Our EPS grew 20%, EPS 12, tangible book value per share 17. This confirmed the strengths of our underlying business, our continued transformation, and the quality of our execution. Slide seven. Revenues are up 5%, driven by an acceleration of our core business, up three, excluding Russia, and the returns from our equity investments. NII remains resilient, down 2% year over year, and flat sequentially, adjusting for the day count. Our core lending and deposit business absorbed around 100 million of rate headwinds and 30 million from Russia compression. This is the result of strong commercial dynamic with loans up 6%, deposits up 5%, 6% excluding Russia, and path through further improving. NII ROAC remains above 20%, underscoring our ability to grow while maintaining our discipline. Fees and net insurance continue to benefit from our highly diversified product factories and grew 8%, 9% excluding Russia, increasing their shares of net revenue by 2% to 38%. Our equity investment complemented well our strong core business dynamic. Overall, our revenue base is higher quality, more diversified, and better balanced. Slide 8. Net revenues grew 3%, 6% excluding Russia, absorbing what we expect to be a more evenly distributed cost of risk in the year. Costs of risk remain low and in line with our ambition. Our overlays are unchanged at 1.7 billion, preserving a significant buffer to mitigate future pressure on cost of risk or further support profitability. Asset quality is strong and improved in the quarter. Net NPE at 1.4% is down 0.1%. Coverage ratio at circa 46% is up 2%. Default rate at 0.7% is down 0.6%. The consistent quality across portfolio demonstrate prudent origination, robust underwriting discipline, and tight monitoring. Slide down. Efficiency continues to be a defining strength, and Unlimited intends to push it further. Costs were down 2%, excluding new perimeters, 1% stated despite inflation, and continued investment in people, technology, and AI. Our cost-income ratio improved to 33%, remaining best-in-class. Our gross operating profit reached a record, combining the highest revenues with the lowest cost in our history. This is exactly what resetting the efficiency frontier looks like. Slide 10. Capital efficiency remains top tier despite headwinds. Organic capital generation in the quarter amounted to 2.9 billion, 98 basis points, more than covering distribution accruals and regulatory and other impacts. The higher-than-expected consumption from equity investment is due to a temporary impact from the increase of Alpha and Commerce Bank equity value, triggered by their 2025 net profit, which will be reversed once the 2025 share-by-back and dividends are executed in 2026. Once the accrued distributions are executed, we expect a 19 basis point CT1 benefit, leading to a 10 basis point CT1 beat versus expectations. Pro forma for Danish compromise, our CT1 would stand at around 14.8% and at circa 15% considering the 19 basis points equity investment capital absorption reversal. Slide 11. Italy confirmed its role as a quality earnings powerhouse, delivering 44% of gross net profit while executing Unicredit Unlimited at speed. Italy showed clear signs of acceleration with loans up 5% and deposits 6%, reflecting continued acquisition of quality clients and strong transactional activity in the right places and at the right time. These commercial strengths supported a resilient and increasingly high-quality top line. Core revenue increased 1% while trading decreased 1% largely to balances affecting one-off. Net interest income declined 4% year over year due to rates, but grew 1% sequentially. NII ROAC stood at 23%, confirming disciplined pricing and capital-efficient balance sheet usage, notwithstanding strong growth. Cost of risk remained stable and structurally low at 25 basis points. Fees and net insurance grew 9%, reaching 48% of net revenue, up 4 percentage points. Investment and insurance were up 5%, financing 6%, payments 3%, and client hedging in this environment 36%, highlighting deepening client relationship in this challenging environment. Italy is gaining market share in most targeted segments with 2,500 new SME clients. Costs were down 1%, driven by non-HR down 2%, while continuing to invest in growth and transformation. Cost to income remains record at 33%. ROAC was circa 31%, best in the country. AI impact is becoming visible. Beyond efficiency gains, two initiatives are worth mentioning. GenAI use cases in BUDDY support advisors, improving speed, consistency, and quality of service. Virtual corporate branch launched, expanding digital capability while reducing operational workload for our people. Slide 12. Germany confirmed its role as a resilient anchor for the group, delivering 23% of the group net profit while executing Unicredit Unlimited at speed. It is delivering today, focusing on its core business, while at the same time transforming to be future ready and win tomorrow. Germany showed clear sign of acceleration with loans up 3% and deposit five, supported by targeted client acquisition and growing penetration in priority segments. Commercial momentum supported a resilient top line despite rates decline. Revenue grew 2% driven by core revenue up 10. Net interest income increased 8% with NII ROAC up one percentage point at 19%, confirming a structurally sound and capital efficient lending model. Cost of risk at 23 basis points reflect an expected more uniform provisioning throughout the year and a prudent approach with all asset quality metrics improving. Fees and net insurance grew 13% and now represent 37% of net revenue, up 4 percentage points. Financing was up 24%, investment 12%, payment 9%, and client hedging 2% of a very strong base, highlighting strong client activity and franchise momentum in more challenging times, with Mittelstand benefiting from close client proximity to deliver tailored financing and hedging precisely when market conditions demanded. Cost decreased 5%, driven by non-HR costs down 11%, while continuing to invest decisively in transformation. Cost income declined 3 percentage points to below 35%, confirming best-in-class operational efficiency. ROAC above 24% remains the best in the country. Germany aims to sustain this trajectory with continued transformation, leveraging significant past and future investment and 100 plus AI use cases. Slide 13. Austria confirmed its role as a resilient anchor, delivering 14% of group net profit while executing Unicredit Unlimited at pace. It showed renewed commercial momentum with loans up 5% and deposits up 2%, driven by profitable market share gains, particularly in corporate lending. Revenues decreased 2%, mainly driven by decline in equity investment contribution, while core revenue increased 4%. Net interest income increased 1%, supported by volume growth and disciplined pricing. NII ROAC increased 1 percentage point to 16%, confirming sound focus on quality. Cost of risk remained negative at 16 basis points, thanks to continued write-backs. Fees and net insurance grew 7%, reaching 32% of net revenue, up 3 percentage points. Investment were up 12, client hedging 17, and payments 3. Cost decreased 4%, driven by non-HR down 6, while continuing to invest in AI and people training. Cost income declined 0.5% to below 38%, confirming best-in-class operational efficiency in the country. ROAC reached circa 27%, reaffirming Austria's position among the most profitable bank in the market. Austria remains at the forefront of Group's innovation. As an example, this quarter, it developed several AI agents in credit analysis, generating a 50% productivity uplift, and rolled out AI-enabled sales training for relationship managers, supporting scalable capability building. Slide 14, CE confirmed its role as a group's gross engine, delivering 18% of group net profit while executing Unicredit Unlimited at speed. CE showed a strong acceleration with loans up 12% and deposit eight, driven by robust client acquisition and SME growth. Revenues increased 4%, driven by core revenue up six, Net interest income grew 3%, supported by strong volume and pricing discipline, with NII ROAC at 23%. Cost of risk increased to 16 basis points, as writebacks are normalizing, with asset quality remaining resilient. Fees and net insurance grew 12%, reaching 31% of net revenue, up 3 percentage points. Investments are up 25%, financing 17%, payments 9%, confirming strong client engagement across the region. Cost decreased 1%, driven by non-HR down 4%, while absorbing inflation and investments. Cost to income reached 33%, down 2 percentage point, confirming operational excellence. ROC over 23% confirmed CE structural superior, profitable gross profile. CEE continues to invest to transcend transformation boundaries through scaling AI-driven digital sales journey and further simplification of processes end-to-end across payments, lending, account services, and KYC automation. Slide 15. Client solution continued to be a core pillar of Group's capital-light growth, powering the quality and resilience of our top line. Client solution generated 3.3 billion of revenue, up 3%, and 2.4 billion of fees and net insurance, up 11%. Performance was broad-based across all product factories. Corporate solution delivered resilient revenues with strong momentum in advisory and financing, confirming our leadership in corporate bonds and financing activity across core European markets. We maintain top-tier position in trade and correspondent banking in every country we operate. We continued innovating client risk management with visible results. Individual solution delivered strong growth. Investment increased 6% supported by continued expansion of our offering led by one market. Insurance revenue grew 18% as we further internalized the value chain and deepened client engagement. Payment solution remained solid while driving innovation with enhanced transaction service across geographies. Revenues were up 2% and related fees 5. Slide 16. When you step back and look at these results on a relative basis, the message is clear. Our leadership is confirmed with our relative gap further widening across most key dimensions. And we are aiming to go further, transcending boundaries. Slide 17. Our equity story is compelling. We're showing visible progress on both revenue acceleration and transformation, offering a superior combination of growth at high return on tangible equity and distributions. Because of this strong start, the strengths of our business, our lines of defense stand touched, and the ability of our people to perform across different macro scenarios, today we're not only confirming our ambition, we're upgrading it. We expect net profit to reach at least 11 billion in 26, and we recommit to our net profit 2830 ambitions. Putting noise aside, Commerce Bank offer outcomes can only further improve the story. Slide it in. After 20 consecutive quarters of quality profitable growth under Unlocked, we entered Unlimited at pace with another record quarter. We have strengthened our leadership across the metrics that matter the most, and we continue to offer the best combination of growth at high ROTE and distribution in the sector. Our 2528 EPS CAGR is 16%, dividend per share 15%, and our 2026 cash yield almost 6%. All achieved despite strong investment in transformation and protected by the highest lines of defense in the sector. And yet, we continue to offer an attractive entry point. We are operating in an increasingly volatile environment with emerging macro concerns around growth, inflation and the credit cycle. We are well prepared to deliver unlimited and continue to outperform thanks to our continued transformation, idiosyncratic strengths and well-established lines of defence. Our top line is resilient. NII will benefit from any rates increase, which together with a keen focus on margin will help mitigate any slowdown in loan growth. For Unicredit specifically, our loan focus is on gaining share in targeted areas, and that also helps mitigate possible headwinds. Our diversified fee engines are more resilient in a volatile environment. Our cost dynamic will benefit from our starting best-in-class position, and transformation levels already expand, which will help us even in a more inflationary environment. Asset quality remains robust, coverage solid and increased, and our leading overlays remain untouched at 1.7 billion. We are closely monitoring our portfolio exposed to spillover risk in prolonged war scenarios and do not observe signs of deterioration while our exposure to private credit is very limited and largely within the European Union. Both profitability and distributions are protected, supported by all levers above, as well as our excess capital. We believe AI gives us additional upside, at least in the short to medium term, with potential to improve both revenues and costs, widening the gap versus laggards. Slide 20. Let me close with a clarification on the potential outcome of Commerzbank. That is an offer that is officially starting today and will remain open for six weeks. As a regulatory matter, the offer is for 100%. It is a sensible and pragmatic mechanism to overcome the provision on the German takeover law, but would require us to make a mandatory offer where we to go above a 30% shareholding. This is particularly important in an environment in which commerce bank share by back scheme is creating instability and uncertainty. Our approach remains disciplined and fully focused on value creation, above and beyond unlimited, which is a high bar. If we do not acquire control as a result of the offer, the expected scenario to date, the status quo works well from our point of view. We expect return to remain well above 20%. We think Commerce Bank is encouraged to improve its performance initially with momentum and now with momentum 2.0 that we will witness on Friday. We feel well protected on the downside given our put option and we preserve full strategic flexibility. If we were to acquire control, our intention is to implement this only, and I underline that, only if returns are superior to our cost of equity and hence add to unlimited trajectory. We consider both scenarios a clear win for Unicredit shareholders as they can only improve our best-in-class equity story. Before opening to question, let me leave you with five key messages from today's presentation. First, Unicredit Unlimited is already delivering at pace, both on acceleration and transformation. Second, Q1 is the 21st record quarter sequentially and a strong beat across the board, driven by our core business, complemented by equity stakes. Third, our transformation to future ready is accelerating. is accelerated by AI. Fourth, we are upgrading 2026 net profit ambition and recommitting to 2830 net profit ambitions. And finally, we offer the best in class combination of gross at high return on tangible equity and distribution with Commerce Bank, a positive add-on across all outcome. Before I open to questions, as I may not have the opportunity to do that later, I would like to announce that Magda, the person who has kept us on track, on time, and occasionally slightly nervous about both, is going to be stepping down from her role. Over the past five years, her hard work and dedication to explaining and championing Unicred Unlocked have been incredible. And now, having settled us into our first quota of unlimited, so comfortably, she's heading back to her roots in Canada. We wish you the best with your new coffee venture, bringing Canadians to the world. She lives IR. to eat good heads, and Jacopo Dalu, whom all of you know will be stepping up to be an interim head of IR. Magda, thank you for everything, and Jacopo, good luck.

And now on to questions. Thank you, sir. We will now begin the question and answer the questions. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove your question from the question queue, please press star and two. In the interest of time, a reminder to please limit your questions to two per person. We will pause a moment as callers join the queue. The first question is from Noemi Peruk of Morgan Stanley.

Good morning, and thank you for taking my questions. I have two. One, the first one is on Generali. What rational or scenario will lead you to increase the stake above 10%. And my second question is on capital. So in the context of the 12-month period you mentioned before reconsidering, perhaps pursuing the control of Commerce Bank, should the tender offer not granted, what capital relief should we expect from SRTs? And what other capital efficiency measures could you implement to replenish capital as you execute the share buyback? Thank you.

So let me answer in general, and then Stefano will take the second question. At the moment, we don't see scenarios that would bring us above 10. Generally, the financial investments, we have stepped up the dialogue on cooperation that adds value to both sides in asset management, in insurance, and in a number of other areas where we can create value for both. We like status quo. We're happy with status quo, and the stake we have helps us stabilize the situation indirectly. But our exposure is well below 2%, and we intended to keep it that way as of now.

So, Noemi, in relation to trend of the capital, so let's start from active portfolio management action. So we're expecting to generate around 10 billion of risk-weighted assets in 2026, deriving from active portfolio management action. Part of this already executed in Q1. Around two-thirds of this is via securitization. fundamentally synthetic, so SRT, and one third of these is via getting collateral focus on EVA negative transaction. We're expecting to be able to have even an higher generation of risk-weighted asset from active portfolio management action in 27 and in 28. One important element for the capital trajectory in 2026 is, on one end, the Danish compromise. So we have allotted the expected benefit of the Danish compromise. On one end, we will have a benefit on the capital. On the other end, we will have an increase of risk-weighted assets of around 6 billion. And then in the second part of this year, we will also have model changes for an amount between six and eight billion, primarily in Germany and in Italy, that is something to be factored in.

Thank you.

The next question is from Britta Schmidt of Autonomous Research.

Good morning. Thank you for taking my questions. On the outlook and the guidance, which you've tweaked upwards despite a very strong Q1, how do you think about this conceptually? Are you making any changes to the constituents of that outlook, or can you confirm them? Or shall we interpret this as basically leaving a buffer in terms of any of the other constituents change a little bit? You talked about weaker volumes, for example. And the second question would be, On the net interest income, I mean, what we're seeing is not a parallel shift in the curve, but more an increase in the shorter end while the ECB has not yet raised rates. What sort of impact would that have on your NR trajectory for this year and maybe also 2027? Thank you.

Thank you, Britta. So let's be clear. If we look at Q1 and if you look at April, there is no real change, i.e., the acceleration of the franchise is kept up, and what you have seen in the first quarter on NII trajectory, on fees trajectory, on cost is holding up. Obviously, every quarter is different. Not every quarter is like the first one, but there is no material change to date. That does not mean we're not prepared for one. It means when we look at it, we don't see it. Now, if there is a situation that maybe is more similar to the one we had when Russia invaded Ukraine, so a further decrease in growth, inflation, potential increase in rates, as the ECB has signaled that they will do so, the composition of our core revenues will shift. This is one of the reasons why we indicated we didn't want to guide separately on all NII fees, net insurance separately, but as an aggregate, because they're all core revenue, and depending on the macro and on the environment, they evolve differently. and the team can drive one more versus the other, depending on what is in the best interest of Unicredit. So we think that the core revenue dynamics, so NII plus fees per net insurance, for the time being, we don't see it affected materially, but that may change. But for the time being, as of today, we don't see it affected. The composition could change because of what I just said. Below the revenue line, Obviously, the equity contribution, you can drive that from your expectation on Commerce Bank and Alpha. And obviously, we had more than 100 million benefit from positive on trading in hedges. That is not recurrent. Cost, I think we're committed to a trajectory of continuous, gradual, not disruptive improvement. So you should continue to expect that we will grind down. And by having taken disproportionate integration costs last year, we can afford to grind down and to accelerate the grinding down to deliver what we want to deliver. And therefore, all of that, together with the fact that our NPs are down, our coverage is up, and our overlays are untouched, allows us to be relatively comfortable on what we can achieve this year, and therefore on the bottom line. Some of the composition will change, but I think less than people expect. If we then transition into 27 and 28, I do believe that if this current environment continues, the composition will change. Probably less volume, more margin on NAI, different factories in fees performing better than other factories. Costs continue to decline, but we don't think that that is going to be overly disruptive. Now I think for, and obviously if cost of risk increase, which at the moment we see no indication of, we have our overlays and our coverage ready to absorb that, and that has been the reason why we kept them where they are.

I'll pass to Stefan on NII. So, at Lunette Interest Income, which are the assumptions for rates, we're assuming the deposit facility rate at 2.5 by year-end A 50 base point more than the current one. This and then flat during the course of 27 and 28. This is fundamentally then translating with an arrival average for the year of around 2.3 and something between 2.5 and 2.6 for 27 and 28. This is going to have a positive impact on net interest income. Our net interest income sensitivity is confirmed. So plus 50 base point is around 300 million euro of net interest income. So if you like to keep, let's say, rate flat at 2%, is 50 base point less, that is equal to 300 million. Top line, but for the bottom line is around 200 million euros. So all in all, it's something, but it's not very meaningful for the overall trajectory of the group in 26 and 28.

The next question is from Andrea Filtri of Mediobanca.

Thank you for taking my question. And first of all, good A Spanish competitor last week said that they expect Danish compromise approval from DCB in Q2. When do you expect your application to be approved? And could you treat the generalist stake under the Danish compromise squared treatment? And, sorry, just a follow-up on that. Can you clarify where your generalist stake is at? I heard you saying 2% before, but the line wasn't great. And I was reading headlines from the General AGM and quoting Unicredit close to 9%. Second question is on Commerce Bank. What is your assessment of the shareholders' overlap in Unicredit and Commerce Bank, meaning investors that hold both shares? If these shareholders... all tendered the Commerce Bank shares during your offer, would you reach control of Commerce Bank?

Thank you. Always interesting, Andrea. So on Danish compromise, we do not speculate, but we are conservatively assuming that the Danish compromise approval would arrive between the end of the second and the third. but it depends on the ECB, and we don't speculate, but that is the case. What about the Danish compromise squared for the generalistic? We do not think that that is applicable. We believe that the Danish Compromise applies only and will be applied only upon reaching control and therefore stakes do not fall into it, not even the inverted comma squared. So yeah, our stake is around 9% and yes, I confirm that. It will climb as shares bought in the share by back gets cancelled. CBK, shareholder overlap is significant, but we have also witnessed a reduction of certain shareholders that are overlapping with ours in Commerce Bank, not in us. And therefore, it's very difficult to answer your question. I would love to be able to do so. But I would say that if all the shareholders that overlap, which is an assumption, were to convert, we would get significantly above 30, very significantly above 30, given that the fewer overlap is significant. Thank you.

The next question is from Antonio Reale of Bank of America.

Good morning. It's Antonio, Bank of America. Two questions for me, please. The first one is on your structural hedge portfolio. This quarter, you've added another $8 billion or so to your portfolio. You're guided to about $400 million in the contribution this year, which looks increasingly conservative now when you have $211 billion at a back book yield of around 1.5%. If I understand it right, your exit maturities are likely to be still near zero or in any case well below the book yield. And if I look at the current euro swap curve, why wouldn't that NAI contribution be much higher than 400 million? So that would be my first question. My second question is on the use of capital. You're generating something like 400 basis points of organic capital a year, which is I mean, a big number. Your CT1 ratio this quarter, I think you're saying it's 14.8% pro forma for the Danish compromise, but it's actually 16.4% if I also add the buyback that you've deducted, which considerably could be also used towards M&A. I don't know, to put it, it's a bit like going around sort of shopping with a lot of cash in the wallet. The more you have, the more the market will expect you to spend it. Now, I've heard your remarks on cost of equity, but can you remind us sort of your priorities on on the use of this capital, please. Also conscious that, I mean, low growth seem to have really turned the corner for this quarter. Thank you.

So I'll start with a second question, Antonio, and then I'll pass the first to Stefano. So on the second question, we have been steadfast in telling everybody since this management team took over in 2021 that Our priority, and I would say 110% focus, is our own strategy and implementation. Unlocked before, unlimited now. So this is where we spend most of the time. I know that M&A is seductive, but we spend all of our time in trying to deliver quotas like this one, again and again and again. And we believe that that sustainability, and if we can now convert it into organic market share gains at the right pricing, in the right segment, that is the greatest value we can generate for shareholders. So if I go back to your question on capital, priority one is supporting that growth. That does not mean derailing any capital return because actually we are demonstrating that we can do it without reducing our distribution. Second priority, is it depends. Either we have inorganic opportunity that beats the cost of equity. And I keep on saying it and people tell me, oh, but the shareholder of the target, one more. Yeah, but the duty of this management team is to our shareholders, not the shareholders of the target, which incidentally, as Andrea just mentioned, are in large part our shareholders as well. So we will be steadfast in our discipline that if we do not have something that exceeds the cost of equity by enough margin to justify the risk, we will distribute in dividends and in share by back. And obviously, if your scenario were to be correct and we accelerate the capital generation, therefore there is more than we're expecting at the moment, and we do not find inorganic opportunities that beat that, we will increase our distributions, as we have always done. I think if you go back on five years, a lot of speculation, we've never let anyone down on one, performance, and two, capital distributions. So if there will be more organic capital generation and the business can grow organically, healthily, without restriction,

then and we don't have inorganic that beats our cost of equity we will distribute and distribute and distribute and that is the equity story i'll pass it to stefano yeah so for the edging on on the deposit so let's start from the size the size the average of q1 was 211 billion and we have reached around 216 at the end of the quarter. There is a few billion more that we can do, but not meaningfully, unless the deposits are going to increase meaningfully. Fundamentally, the contribution is depending from the overall level of the rates. Currently, we are expecting to do the rolling in the area of 2.8%, 2.9%. What is important to consider, you're right, so our average duration is around five, but we have, let's say, some position rolling that are more short-term whose yield was Good. So the topic is currently average is 1.5% of the overall IG. The contribution that we are expecting in terms of improvement on the interest income for this year is something more than 400. We don't believe it's going to be meaningfully more than 400, but it's going to accelerate in 27 and 28. So around 450 million in each of these two years. And one important point, this is not the end. So this will keep on going also during the course of 2029 and 2030 with a similar contribution and increase of the net interest income in 2029 and 2030 as well.

Thank you. The next question is from Delphine Lee of JP Morgan.

Yes, thank you for taking my questions. My first one is on... Just on NII, I mean, we've seen really good, I mean, long volume growth, but the NII seems to be lagging a little bit. So maybe can you just elaborate a little bit if we are seeing a bit of, you know, sort of margin pressure, or is this volume growth being achieved a little bit at the expense of margins, because you can, because of the cost of risk overlays? And my second question is just... Going back to the question of M&A, I know at the moment you're very focused on Comet Bank, but there's more and more noise around M&A in Italy. Just wanted to know if you have any kind of updates on the situation on the golden power requirements and your thoughts about are you feeling like you're missing out on Italy or not? Thank you.

So I'll start with M&A and then I'll pass to Stefano. So on M&A, I think we think the following. Number one, we believe that the situation around the golden power is resolved. Number two, Italy as a banking market is not as fragmented as Germany, but is fragmented. We're the second bank. We have a market share below 10%. and therefore it is a market that will consolidate over time. So while we have no pressure to intervene because we reach scale and create synergies through the entire group, and Italy's only 45% of the total, as a player in Italy, we obviously observe the environment and are attentive to opportunities of consolidation. As we have done already twice, actually more than twice, but twice public, we will not move or we will not go to the end unless we exceed our cost of equity by a margin. But we're probably in one of the better position to look at what is happening and intervene if and when necessary. there is an opportunity to do so. So I would just feel that the missing out on Italy would be a voluntary missing out if returns do not match our cost of equity or if it would destroy value for shareholder. In other opportunities, we will be attentive to them. With respect to NII, I think that, but that's a more generic answer and Stefano will go in detail. We don't see any margin pressure. Actually, our margin is improving, not the opposite. The issue that is, in inverted commas, polluting the NII trend is the extent of rates normalization impact on NII, which, as you know, in Italy, our biggest market is quite significant. So we are absorbing that. And secondly, the compression of Russia, where, as you know, it's a big NII contributor, as we deposited the excess liquidity at the central bank, and now we're compressing that aggressively, and that is a loss of NII as well. So, actually, the market share we're gaining is, A, done without, reducing margins or aggressively pricing, and B, very importantly, because it is focused on the segments we talked to you about, i.e. consumer, small corporate, micro-businesses, where margins are higher, the net-net on our book is an increase in margin, for example, in Italy, not a decrease in margin. In average jurisdiction, that is less so, but the similar dynamic applies.

So some data points for you. When you look at the trend of net interest income, Q1 versus Q4, there is a reduction of 40 million, 4-0. However, the Russia, part of that is 30 million. So 30 out of 40. And then there are day differences for around 40 million. So if you are just for The day differences of the two quarters in Russia, the net interest income is higher in Q1 than Q4. So net interest income trend of Q1 is good for the group. In relation to the client spread, so the client spread of the portfolio went up for a couple of basis points. So from 138 to 140. Where this is coming from? It's coming from Italy and Austria. Four basis points each for the mix. Composition and improvement that Andrea was highlighting before. In the case of Germany and C, the spread is flat. So there is not a reduction, but the spread is flat. While on the deposit pass-through, so if you look on the liability side, the deposit pass-through went down for one percentage point. So if you look at the asset and liability side, there is an improvement on both sides.

Great. Great. Thank you so much. The next question is from Sophie Pedersens of Goldman Sachs.

Yeah. Hi. Here is Sophie from Goldman Sachs. Thanks a lot for taking my question. So I was wondering if you could talk a little bit about the volume growth outlook. It was very solid across regions and especially in Italy where we saw 2% quarter-and-quarter and 5% year-on-year growth in volumes. How should we think about the volume growth outlook from current levels? And then the second question would just be a follow-up on the Generali stake. You mentioned that you currently have close to 9% stake in Generali. Could you just remind us how the capital accounting for that stake is and how much capital it absorbs? Thank you.

So let me start with Generali. We have close to 9% in terms of physical share ownership and therefore voting rights, but we have well below 2% in terms of economic interest. It doesn't absorb almost any capital because it's below the 10% threshold by a very large amount. So it is that stake contribute through the dividends that get paid, I think, in the second quarter. And that is about it. And we mark to market that stake. but it is hedged on the downside, and we mark to market, let's be very clear, the well below 2%, not the nine, because we don't have economic exposure beyond that. So this is all it is. With the volume growth outlook across region, and then I'll pass it to Stefano, we are quite constructive, meaning the main change that we see or the most visible change from a commercial standpoint as we tilted from unlocked to unlimited was our ambition to gain market share in targeted segments and products. That means targeted segments, means the right geographies, it means affluent, it means SMEs, it means micro businesses. We are gaining market share in those segments. And we are gaining market share in those segments because we have a very focused effort with all the backup from technology, AI, people hiring. As you know very well, we're hiring thousands of people on the front end, and we're absorbing it in our cost reduction. And we continue to have traction in there. Obviously, if the general volume increase reduces, we will reduce with it. So if a market does not grow at the rate that we are anticipating, we will grow less. But we think we will maintain a differential vis-a-vis others on that. And the more the instability, given how much we have prepared for this, the people we have hired, the excess capital we have, the overlays and the coverage we have, allows us to be more on the aggressive side rather than pulling back if people are concerned. but obviously depends on the general environment. We are confident on the relative, obviously on the absolute, we are environment driven. But I'll pass it on to Stefano.

Yes, when we have commented unlimited, we have commented that the growth of the lending would have been above the nominal trend of the GDP, especially in some area. So for 2026, we are confirming the approach, especially for Central and Eastern Europe, and for Italy as well. Now, do consider that there is a slight reduction of the GDP growth. So there is also in the slide of the presentation for 2026 and 2027. So as I said by Andrea, we are committed to growth, but then depending also the overall trend of GDP. In relative terms for 2026, Austria will grow less. So I would say that if I would rank, we have Central and Eastern Europe, then Italy, then Germany, and the last one is Austria for some specific also market situation. And in relation to Germany, so far so good. The demand is good. We need to look at the trend, especially in the second part of the year, especially in relation to the large corporate whose demand is also depending on the overall trend of the uncertainty from a geopolitical standpoint. But having said that, also April confirmed the trend that we have seen in Q1.

Thank you. The next question is from Ignacio Urlagui of BNP Paribas Exane.

Thanks very much for the presentation and all the best to Magda in her new venture. I just have two questions, one on deposit growth and the outlook that you see for deposits across the different geographies. And if you have observed any change in customer behavior in terms of deposit costs, as the new rates are starting to be clearly going up. If you think customers could behave differently than in the previous rate cycle. The second question is about fee income. So you have done a very strong victory over numbers. How should we think about that fee income sustainability going forward? Thank you.

So in relation to deposits, so let's start from what happened in Q1 in relation to the deposit pass-through. I commented before that for the group who moved down from 31 to around 30, so there is an improvement. Where this is coming from, Italy in reality is going slightly up, so move from 13 to 14, but that's very low. We're not seeing a change in the behavior and we're not seeing a meaningful impact from competition. Germany went down from 46 to 45. There it's slightly different because we start seeing some competition in some segments from deposit pricing standpoint. Austria went down the deposit pass-through from 40 to 36, also due to the component of third deposit that are rolling at better condition. C moved down from 42 to 41. Also here, in some geographies, we see competition. So even more than Germany, I have to say, we are looking in some countries where there is competition on some segment of deposits. So all in all, what we are expecting is a slight increase of the deposit pass-through. So if we are looking into a second part of this year, in 2027, but not a meaningful one, right? So it can be something like 1% for the group. So it's not going to represent an important impact for the net interest income trajectory. In relation to the fees and when we look to the future. So the topic is in the key segment, we're expecting absolutely to be in line with unlimited. The topic to be looked at are fundamentally, on one end, what can be connected to GDP trend, meaning advisor and financing fees were very good in Q1. When we look especially to the second part of this year, if there is a slight decrease of the lending growth due to the macro, we can have some effect on the advisor and financing fees. Investment fees were also very good in Q1. April is confirming such a trend that's, or a part of that is also depending on market volatility. So the trend of gross sales and sale is going well. Also the trend of internalization on fund is going well. I have to say even better than the plan. We need, let's say, to look the potential future volatility, but in a trend that, that is confirming the path that we have communicated for unlimited. And I will not say something specific for the time being in terms of expectation for the geography. So the expectation is aligned to unlimited for all the geographies.

Thank you very much.

The next question is from Giovanni Razzoli of Deutsche Bank.

Good morning to everybody. Two questions on my side. The first one is on Commerce Bank, where clearly your investment as it proves, very profitable with double-digit return on capital with the current setup. And line number 20, you are clearly defining your strategy for 20 and 2030. But I'm wondering whether if I move to the very long term or in the long term, the current setup remains valid. If you do not have the control of the company, you cannot extract synergies, you cannot continue to impact the strategy of Commerce Bank. So my question is, in a longer-term perspective, is it fair to assume that or you reach the full control of Commerce Bank or you exit your investment because that would be one of the two options? And related to this, is it fair to assume that the share buyback will start immediately after the completion of the offer on Commerce Bank? That is six months for now. That is my question on Commerce Bank. The second question, Russia, which has slightly reduced the contribution on your operating profit in this quarter vis-a-vis the Q4, but the absolute amount remains pretty solid. I was wondering if you can provide us with some outlook for the next few quarters and the following years in the context of the leveraging that you are doing in the region. Thank you.

So, on Commerce Bank, I think that you can assume that the current setup remains valid in the long term, even if you cannot extract the synergies. Why? Because for the time being, we will be having a 100 basis points capital absorption, which may go higher if we incorporate more shares. But for the time being, let's leave that on the side. And that 100 basis points of capital is yielding us more than 20%. And the more Commerce Bank does well, the more it will yield. As you see also this quarter, this is a good bedrock to complement the other earnings and gives us good support and exposure to markets we believe in over time. If they do not make their plan, then we have a put option and we are protected. So for our shareholders, it is an asymmetric with full upside and limited downside. The situation on not being able to influence, I would argue that we have influenced and we continue to influence. There was no momentum plan when we bought the first stake. There was no momentum 2.0 plan before we launched the offer. Now we have both and everybody's expecting an upgrade. So by our very presence, we are promoting an improvement of Commerce Bank, which I think we believe in, and that is positive. So I would say we are there. We intend to remain there. As I said, somewhere in the U.S., it would probably have taken three months to make an acquisition. And in Europe, it takes much, much longer. But in the meantime, if we deliver for our shareholders, a fully distributed return on investment of more than 20% climbing, it is really a high-class problem. So we're determined to stay. Share by back. Share by back, as we said, we pulled our request for authorization when we launched the offer because that was the right thing to do. the ECB could not approve a share buyback in the middle of the offer without knowing the outcome of the offer. If the offer, as we expect at the moment, does not reach control, we will resubmit and are quite optimistic with the timing that it will take the ECB to go back to the papers and provide us with their support. So I would not say immediate, but I would say close. Then we have Russia. So, yes, I would look at it this way. Russia contributed, and this is why we continue to highlight that we encourage everybody to look at the underlying, I know that underlying people don't like, but I think in this case it particularly is apparent given that we are actively compressing part of our business. So Russia contributed in terms of net profit, let's keep it simple, about 800 million last year in the 10.6 billion. This year, we're anticipating it will half or more than half below 400 million. By 28, we believe we're going to be in the 100 million area. So when you look at our growth, consider But we are delivering that growth, absorbing 700 million of net profit in the next three years by compression of Russia. So the underlying growth and the strengths of our core business underlying is, in my opinion, quite significant. And in terms of where we are in Russia and what is happening, very simple. It is since the invasion that we have not provided any lending onshore. It is since the invasion that we take the minimum deposit necessary to do payments, and that remains like that. In Russia, we cannot not take a deposit. It's an obligation. We are down, so the lending is depleting as the loans get paid back. There is a slightly longer tail on some of the mortgage portfolio, but the loans are paying back regularly. On the deposit, they are what they are. I think they are going to continue to decline because payments continue to decline as, through sanction, the bona fide payment between the West and Russia gets compressed, therefore less payment, therefore less deposits, and therefore that compresses. We had, at the beginning of the conflict, more than four billion of cross-border exposure to Russia. Today we have zero, and we have recovered more than 90% of that amount over the five years. So I would say that if you go beyond from a P&L standpoint, we have something that is going from 800 to 100 over three years, and that we are absorbing in full. And in terms of activity, when we are at 100, we are practically going to be focused on Euro and U.S. dollar payment corporates, West and non-section Russian, and the related deposit we have with that, very little, if nothing else. So this is the trend line.

Thank you.

The final question is from Andrew Coombs of Citi.

Good morning. One follow-up and one fresh question. Firstly, just coming back to the point about M&A, the need to generate a return above the cost of equity. Can I just clarify that point? Is it the incremental return versus the status quo that needs to be above the cost of equity? Or is it the return on the whole position that needs to be above the cost of equity, because it does make a difference because of how high you're already yielding on the existing 30%. And then the second question on the hedging cost, you've had the incremental 100 million recognised this quarter. I assume there's also a slightly higher hedging cost related to the general estate now as well. So does the 500 million guidance for the full year still hold true?

So, first of all, M&A, yes, you're correct. One of the reasons why the, there are two reasons that, or three, that compress our return in a controlled scenario. Reason number one, we would be converting 30% that now yields well above 20%. into 30% that will yield much less once it's fully consolidated. And therefore we have a headwinds because of that. Second, because of European regulation, and it is not fully clear to which extent, the excess capital on the minimum capital for minority interest is not counted, so the lower the participation, the more the capital spillover, the more the capital spillover, the lower the yield, which is why we're very attentive to where we land in terms of control, either high or not at all. Thirdly, that again, depending on where we land, more than half, actually 60% of the value being created is in the combination, not in the control. So those three variables are considered very attentively by us and we need to assess, or we will need to assess because we don't do it now, how they all interact. So if you're looking at high participation with a high expectation of combination, et cetera, et cetera, numbers work well with all of this because everything goes in one direction. When you look at low levels of control, they work much less well. And we are committed not to put our shareholders into that scenario. One of the reasons why we encouraged Commerce Bank to engage and to have a joint plan was to reach an agreement that would back a positive outcome for all in terms of levels of controls. And that would have also allowed us to review the term of the offer. But that was not to be. So at the moment, while the offer is directed to 100%, our focus or our expectation is to land below control because of what we see at the moment. And as we are below control, the returns are very high. And we, as they say in the movie, we live to... leave another day. And we will see what happens in the future. But we will remain at high returns on the participation.

For the edging cost, the average cost for 26, 27, 28 is confirmed at around 500 million euro. Slightly lower in 2026, while higher in 2027 and 2028. So that's confirmed.

No, no, this time there are no more questions.

Okay, thank you very much for your time, and we'll see you all on the roadshow. Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.