Banca Monte dei Paschi di Siena Stock

Good morning. Thank you for joining us. Today, we are presenting not only two transactions, we are presenting a vision. Over the last years, Monte Paschi has completed one of the most remarkable transformations in European banking. We restored profitability, we rebuilt capital strength, we regained strategic freedom. Through Mediobanca, we added capabilities in corporate and investment banking, wealth management, consumer finance, and advisory.

The question before us is, therefore, not how to become larger. The question is how to become more relevant. And today, we have the opportunity to take the next strategic step. That's why we are here to present two voluntary public exchange offers for Banco BPM and Banca Generali. They are legally separate transactions, but they form one coherent industrial project: the creation of an elevated national champion across banking, advisory, and wealth management.

The project will bring to a strong and comprehensive Italian financial platform, bringing together a unique combination of complementary strengths: commercial banking, corporate investment banking, wealth management, and also insurance capabilities.

All of them integrated within a single industrial platform. The uniqueness of this transaction does not stem from scale alone; it stems from bringing together capabilities that today coexist within few institutions in Italy.

The combination of Monte Paschi, Mediobanca, Banco BPM, and Banca Generali will create a true alternative financial powerhouse, an integrated national champion, a group that preserves competitive plurality within the Italian financial system. We intend to create a leading Italian banking and wealth management group with over EUR 800 billion of total financial assets on an integrated platform. The combined group will rank number two in Italy by customer loans and branch network.

But the ranking is not the objective.

Scale matters because it allow us to serve more clients, invest more effectively in technology and innovation, and deploy market-leading capabilities across commercial banking, private banking, asset gathering, asset management, bancassurance, corporate investment bank and capital markets.

The business mix would shift structurally towards fee-based and capital-light revenues, improving the quality and the resilience of earnings.

The financial proposition is compelling.

Approximately EUR 1.8 billion annual run-rate synergies on top of EUR 800 million associated with the Monte Paschi and Mediobanca combination. The pro forma 2028 return on tangible equity of approximately 19%, a core Tier 1 ratio consistently above 13% throughout the plan horizon.

For Monte Paschi shareholders, the project implies approximately 11% EPS accretion in 2028 and more than EUR 19 billion of cumulative distribution over 2026 to 2030, including EUR 4 billion upfront, of which EUR 1 billion cash and about EUR 3 billion in Assicurazioni Generali shares.

A project of this significance must create value for every constituency. For Banco BPM and Banca Generali shareholders, the offers provide meaningful EPS and DPS accretion and the opportunity to participate in the upside of a larger, more diversified, and higher-quality financial group.

For customers, the benefit is a broader proposition and greater access to credit, to advice services, and to wealth management solution. For employees, it is a stronger platform for professional development and talent attraction while preserving the distinctive expertise of each franchise.

The Banco BPM offer is consistent with the strategic rationale already outlined by its Board of Directors to Monte Paschi. Our voluntary exchange offer represents an alternative technical route to achieve the same objectives through a clear, orderly, and execution-certain process.

It also allows Banco BPM's key shareholders to participate in the creation of a stronger institution while developing cooperation in areas of mutual interest. The Banca Generali combination has strategic significance in the industrial project and represent the first step towards a broader program of industrial collaboration with the Generali Group in strategically important business areas.

Let me now turn to the strategic rationale and the sources of value creation. So I think -- there are four questions we must answer clearly: why Monte Paschi is ready, why Banco BPM and Banca Generali are the right partners, why the franchises are worth more together, and why we are confident in our ability to execute.

The answer starts with the transformation already delivered by Monte Paschi, and what has been achieved up to now, and our track record in delivering what we promised. This project is built for the way banking is changing.

Customers increasingly expect tailored solutions throughout their financial lifecycle. They use digital channels for daily banking, but continue to value physical or hybrid interactions for more complex products.

At the same time, the industry must strengthen a fee-based business as the rate environment evolves. Technology, compliance, and regulatory costs are largely fixed. Persistent inflation, sustained cost pressure, advanced analytics, and generative AI require continuous investment.

To win in this environment, institutions need greater scale, more recurring fees, own product factories, and the capacity to keep investing without compromise shareholder distribution.

The combination of Monte Paschi, Banco BPM, and Banca Generali addresses each of these requirement within one integrated platform. Monte Paschi today is fundamentally different from the bank it was only few years ago. We have confirmed sustainable profitability, exemplary capital and asset quality metrics, and proven execution and integration capability.

In 2025, adjusted return on tangible equity was approximately 13%. In June 2026, the core Tier 1 ratio was 16.3%. The Mediobanca integration is on track. It brings a powerful product engine, leading position in wealth management, consumer finance, corporate investment banking, and a more fee-oriented business model. The market opportunity is equally clear. Banking consolidation is accelerating, scale is increasingly critical to investment in technology and AI, and revenue diversification matters more as the rate cycle normalize.

We have demonstrated that we can transform. We are demonstrating that we can integrate, and we are now ready to scale. This brings to the -- brings us to the central question: Why is Monte Paschi the natural partner for a friendly aggregation?

First, because our model creates value through integration, not breakup. Second, Monte Paschi offers a unique blend of product and distribution capability. This allows specialist expertise to reach a wider client base and translate into sustainable growth. Third, we combine national scale with regional roots, supporting effective integration without losing proximity to customer and communities.

Fourth, our financial flexibility allow us to pursue strategic growth while maintaining capital discipline and shareholder remuneration. Finally, Monte Paschi could represent for Banco BPM and Banca Generali a secure platform for sustainable long-term growth. Banco BPM brings a scale distribution platform of approximately 1,360 branches, including more than 1,000 in Northern Italy.

It adds a strong retail and a leading small-business and corporate banking franchise. It also brings proprietary capabilities across asset management, insurance, and payments, complemented by consumer finance and corporate investment banking. Its financial profile is strong, with almost 20% return on tangible equity and a 14% core Tier 1 ratio in June 2026.

Let me just recall that the offer is the technical instrument to give execution in a certainty way to an industrial project that had already been proposed by Banco BPM to Monte Paschi. So if Banco BPM makes the group stronger, Banca Generali makes the group different. And this is perhaps the most important aspect of the entire project.

Without Banca Generali, we would create a larger bank. With Banca Generali, we create a fundamentally different business model. Banca Generali had more than EUR 110 billion of total financial assets, more than EUR 90 billion of private banking assets, and a nationwide network of approximately 2,500 financial advisers. Its productivity of almost EUR 50 million of asset per adviser reflects deep relationship with private, high-net-worth, and entrepreneurial clients.

So, we are speaking about a capital-light recurring fee revenues, a nationwide advisory model that complements the branch network, and a credible rerating narrative based on earning quality. Together with Monte Paschi, Banco BPM and Banca Generali will cover the full value chain across banking and wealth management. The combined group will become Italy's second-largest banking group by loans and distribution network, one of the country's leading wealth management platform, a major European banking institution, a group with more than EUR 800 billion of financial assets, a platform capable of generating more than EUR 1.8 billion of annual industrial synergies on top of the EUR 800 million associated with the Monte Paschi-Mediobanca combination.

More than EUR 19 billion of cumulative distributions for Monte Paschi shareholder over the period 2026 to 2030 based on a 100% payout ratio. It would become a unique institution designed to strengthen the sector competitive framework, supporting credit to the real economy, value long-term savings, and contribute to the growth of the Sistema Italia.

On the presentation assumptions, the combined group will have a pro forma market capitalization of around EUR 80 billion, placing it among the top 10 European banks and #2 in Italy by customer loans and branch network. We are creating a stronger Italian group with European relevance, rooted in the domestic economy and equipped to compete as the industry continues to change.

The combined group would hold almost EUR 150 billion of customer loans, almost EUR 240 billion of total assets, EUR 166 billion of direct funding, and over EUR 800 billion of total financial asset based on 2025 reference date used in the presentation.

So, a successful banking model combine scale with proximity. And for us, proximity is very important. This project is designed to deliver both. Monte Paschi provides a privileged footprint in Central and Southern Italy. Banco BPM provides complementary access to the most productive and wealthiest regions in Northern Italy.

The combined network would include approximately 2,900 branches in Italy, comprising more or less 1,500 from Monte Paschi, including Mediobanca, and approximately 1,365 from Banco BPM. The result will be the #2 branch network in Italy with limited overlap and extensive access to local household entrepreneurs, and businesses. This geographical complementarity supports commercial growth and integration of the activities of both banks in terms of commercial, while offering a strong base for all financial adviser of the other companies, particularly Banca Generali.

This slide shows how distribution scale translates into growth. The combined client base would increase from 7 million to 11 million, adding around 4 million clients. The platform will add almost 1,400 branches and almost 2,800 financial advisers and private bankers. Across this enlarged reach, the group could scale a broad set of product factories and specialist capabilities in commercial banking, consumer finance, wealth and asset management, private banking, insurance, payments, corporate and investment banking, and advisory.

The opportunity is straightforward: bring more products to more clients, strengthen product penetration, and improve the economics of each relationship. Capabilities create value when they reach clients, and this project materially expands that reach. The enlarged group would combine 5 complementary earnings engines. Retail and Commercial Banking provides scale, client access, and origination, supporting cross-selling across wealth management, insurance, and payment.

Consumer Finance contributes specialist underwriting and risk-adjusted growth across a larger client base. Asset Gathering and Wealth Management generate recurring fees through net inflows and deeper wealth penetration. Private Banking connects high-value advice with entrepreneurial relationship, and corporate investment bank integrates lending, advisory, and capital market capabilities to deepen client economics.

Together, these businesses would bring the fee and commission contribution to more than 40% of group revenues, including the run-rate synergies. This means a better-balanced model with less volatility and higher-quality earnings. This slide quantifies the step-change in Wealth Management scale and earnings quality. Combined total financial asset would cross EUR 800 billion. The fee and commission contribution to total revenues would increase from 32% to approximately 41% for the combined group, including synergies, an uplift of around 10 percentage points.

This is strategically important. A structurally higher share of fee-based revenues improves earnings visibility, and lowers dependence on balance sheet growth, and strengthens resilience through the cycle. Let me now turn from the industrial architecture to the principal value creation levers: synergies, capital, profitability, and stakeholders' returns.

The project identifies almost EUR 1.8 billion of annual run-rate synergies. Approximately EUR 1.2 billion will come from cost synergies, including the rationalization of operational processes, optimization of administrative expenses, and the accelerated adoption of digital and AI to improve customer experience and efficiency. Almost EUR 600 million will come from revenues and funding synergies, including coordination optimization of product factories and cross-selling across the enlarged client base.

These synergies are expected to be fully realized by 2029 and are additional to the almost EUR 800 million associated with the Monte Paschi-Mediobanca combination. Pretax integration costs are estimated at almost EUR 1.9 billion over the period 2027 to 2029. These are in addition to the almost EUR 600 million for the Monte Paschi-Mediobanca combination.

The project preserves a strong and sustainable capital profile. The core Tier 1 ratio is projected to remain above 13% throughout 2026-2030. By 2028, it is expected to be above 15%, assuming application of the Danish compromise. At the same time, the dividend payout ratio is assumed at 100% of reported net income. For the Monte Paschi shareholders, expected distributions over the period 2026 to 2030 amount to approximately EUR 19 billion.

The amount includes the EUR 4 billion of the extraordinary distribution. Across all shareholders of the combined group, cumulative distribution over the same period are expected to amount to almost EUR 30 billion. The key message is clear. Monte Paschi can invest, integrate, and remunerate shareholder while maintaining capital discipline.

On the 2025 reference base and including run-rate synergies, revenues increase from EUR 8 billion to EUR 15 billion. Adjusted net profit increases from almost EUR 2.4 billion to almost EUR 6 billion, while the cost/income ratio improves from 46% to 36%. The combined group will deliver a return on tangible equity above 19% in 2029, maintain a core Tier 1 ratio above 13% across the plan horizon, and generate approximately 11% EPS accretion for Monte Paschi shareholder, including the run-rate synergies.

The project is larger in scale, delivering more value generated more efficiently, and distributed sustainability. The benefits are for all stakeholders: in particular, for customer, for integrated offering across banking, advisory, and wealth management, end-to-end coverage for entrepreneurs, and complementarity in physical, digital, and advisory networks; for the employees, from a broader career opportunities, professional skill development, and a stronger platform to attract, retain, and develop talent; shareholders, from a material EPS accretion and attractive cumulative distribution; and also Italian financial system, will benefit from this transaction because, from the creation of the country's second banking group, competition will be reinforced, and resilient, and long-term European competitiveness will increase while preserving complementary franchises.

So, now let me describe the structure of the 2 offers and the extraordinary distribution. For Banco BPM, the voluntary exchange offer covers up to 1,515,182,126 ordinary shares, representing 100% of its share capital. Each Banco BPM share tendered will receive 1.567 newly issued Monte Paschi ordinary shares. The exchange ratio factors in the proposed Monte Paschi extraordinary distribution, and the offer is subject to a 50% plus 1 share threshold.

In parallel, the voluntary exchange offer for Banca Generali covers up to 116,851,637 ordinary shares, also representing 100% of its capital share. Each Banca Generali share tendered will receive 6.958 newly issued Monte Paschi ordinary shares, again, factoring in the proposed distribution with the same 50% plus 1 share threshold.

Prior to the settlement of the offers, Monte Paschi intends to execute an extraordinary distribution of almost EUR 4 billion to its shareholders: EUR 1 billion in cash and EUR 3 billion in Assicurazioni Generali shares. So, the structure, therefore, combines disciplined strategic investment with a significant upfront return of capital to existing Monte Paschi shareholders.

Today, 21st August marks the deal announcement and publication of the notice pursuant to the Article 102. Then, we're going to file the offer document in September -- within September. An Extraordinary General Meeting is scheduled for 29th October to approve the capital increases, the offers, the extraordinary distribution in line with Article 104, and the Mediobanca merger. Supervisory approvals are expected in November. The offer periods are expected to begin in December, and then in February, when the extraordinary distribution and settlement of the offers are also expected to take place.

Of course, this is an indicative timetable. What is firm is our commitment to transparency, sound governance, and execution discipline throughout the process. Let me now conclude my presentation. So, this project represents a step change in scale, creating a leading Italian banking and wealth management group with European relevance. It combines 3 complementary business models: commercial banking, high-end wealth management, and specialist capabilities across advisory, and then consumer finance, corporate and investment banking, asset management, insurance, and payments.

Monte Paschi provides financial strength and an integrated platform. Banco BPM provides banking scale, distribution reach, and deep access to Italy's entrepreneurial economy. Banca Generali provides high-end wealth expertise, a distinctive advisory network, and capital-light growth.

The shareholder proposition is equally clear: significant synergies, higher-quality earnings, material EPS and DPS accretion, strong capital, and substantial distributions. Again, this is growth through integration. It's not a breakup. A few weeks ago, I said that some routes close and others open. I also said experienced navigators know that winds can change. Looking at the projects we have presented today, I believe those words are even more relevant.

What matters is the destination. Our destination is clear: to create a stronger, more diversified, more resilient institution. Long journeys require discipline and the courage to seize opportunity when they appear. That is exactly the approach we have taken. I said also that winds can change. Today, we are not talking about the wind anymore. We are talking about the destination.

And thank you, and I'm now happy to take your questions.

[Operator Instructions] The first question is from Sofie Peterzens with Goldman Sachs.

This is Sofie from Goldman Sachs. My first question would be on the cost synergies or synergies in general. So, you guide for EUR 2.6 billion of synergies, out of which around EUR 1.8 billion come from these 2 transactions. Can you maybe just talk about how should we think about the split between Banco BPM and Banca Generali in terms of the revenue and cost synergies?

And also, given that Banco BPM guided for EUR 1.1 billion of total synergies, I assume you see more synergies from BAMI compared to what they guided for. So, maybe if you could, kind of, just discuss how to think about that? And then the second question would be on the Generali stake and the passivity rules. Given that the Generali stake is owned by Mediobanca, do the passivity rules also apply to the stake? And also, if you could -- in regards to the Generali stake, talk about the Danish compromise. Do you expect a bigger capital benefit than the 50 basis points that you previously have guided for?

Andrea speaking. As regards your question about the synergies out of EUR 1.8 billion overall, we currently estimate approximately EUR 1.4 billion related to the deal with Banco and EUR 0.4 billion related to the deal with Banca Generali. That's on the first question. Then on your third question, before leaving the floor to Luigi, about the passivity rule -- about the Danish compromise -- actually, we have been very conservative because in our estimates, let's say, [indiscernible] zero following -- immediately following the settlement of the offers, we have not assumed any Danish compromise at all, just to be very conservative. Having said that, we are confident that we can get the Danish compromise in, let's say, at maximum two years' time, so let's say, by '28. And this would account for approximately 1.6 percentage points of Common Equity Tier 1 ratio to be added on top to, let's say, our base guidance of being above 13% throughout the period. Then, I leave the floor to Luigi for the second question.

Yes, we have analyzed, of course, also this aspect regarding the Generali stake. It's clear that we are going to present also this decision to the General Meeting of shareholders that we are going to hold at the end of October.

Okay. And just to clarify, do the passivity rules apply to the Generali stake or not, given that it's owned by Mediobanca?

Yes, I said yes.

The next question is from Andrea Lisi, Equita.

The first one -- the first two, honestly, are connected. You during the call indicated that the deals are friendly aggregation. So, should we interpret that those are already agreed in some way with the counterparties? And connected to that, you have indicated that minimum threshold for both deals is reaching 50% plus 1 of the share capital. Have you already undertaken talks with the reference shareholders of Banca Generali and Banco BPM -- so, Credit Agricole? And the last one is on antitrust: if you have already an indication of potential overlaps that could emerge after these deals have been completed.

So, as I mentioned during the presentation, we have, by definition, an approach, and I try to represent it like a friendly platform. Monte Paschi is a friendly platform. So, that's why we are confident that the strength of the project will be understood. And I remain highly confident that the merits of the project will help in making this transaction in a friendly way because there is a lot of value on that. Clearly, we didn't have any contact with the shareholders. And we leverage only on the fact that we believe that this is one of the most interesting projects in recent years in the Italian banking sector. As far as the overlapping on branches, I think there are limited situations, and I believe that will be easily managed.

The next question is from Hugo Cruz with KBW.

I have a few questions. So, first on DTA. If these offers succeed, what are the DTA implications for Monte Paschi? I would assume the DTA usage would be accelerated. So, if you could give any guidance there. A second question on the Danish compromise. So, if you pay in kind with the EUR 3 billion, you go, I think, below the 10% of Generali. So, I'm not sure why you need Danish compromise and what you would apply to after the deals happen. Is it because BAMI already has Danish compromise for the JVs? So, where is the Danish compromise applying if all these proposals get done? And then a final question around if you have had any feedback from your top shareholders about your proposals and whether you expect them to be approved in the shareholders' meeting.

Thank you, Hugo. So, on the first two questions, DTA, there will be, for sure, acceleration in the usage simply because our taxable base is expected, by means of this project, material increase. This is, I think, clearly visible in Slide 21, where we show the pro forma net profit. Then, let's say, in the bigger scheme of the project, this is one of the levers, but there are many others that, let's say, assign value to this project.

As regards the Danish compromise, yes, of course, by reducing the size of the stake in Generali, the impact of the Danish compromise on the Generali stake per se decreases. But the new group will have not only the participation in Assicurazioni Generali, but it will have participation in insurance factories, the one of Banco, for example, and the stake in the current JVs of MPS. So, altogether, this perimeter of insurance operations, let's say, would add significant capital if the Danish compromise is assigned.

Okay. So, as I was mentioning, we are really confident that this project has a compelling industrial rationale, and shareholder will receive a significant amount of remuneration during the period. That's why we believe that they will recognize the merits of the project and the strength of the project. So, this is a project, as I said, that is very much attractive for all stakeholders. I'm thinking also how the strong skills, capability of our private bankers, our personal financial advisors can exploit all their potential and the quality of what they are already demonstrating to do in the market.

So, a strong opportunity for the wealth management sector, strong opportunity for corporate investment banking, strong opportunities for our branches. So, we have all stakeholders that will benefit. And I believe also this element is important for our shareholder. And we will have the opportunity during roadshow to speak with all of our shareholder, getting their feedback, and we are very confident that this project will be appreciated by the market.

The next question is from [indiscernible] Kepler Cheuvreux.

On this deal announcement, exciting days ahead for you guys. I have two questions. Maybe you can confirm whether the Banca Generali and Banco BPM deals are conditional on both of them closing, or can you close one without necessarily closing off the other? And my second question is whether you expect the Mediobanca merger to be completed before Monte Paschi pays the exceptional dividend?

So, no, the two deals are not conditionally linked. So, we can achieve the results for one or the other. I'm confident that because of the strong value that is connected with the combination of the three strong group, I believe that all the two deals will be successful. The Mediobanca merger will be, hopefully completed for the end of the year. As we were mentioning, distribution of dividend will happen around February. So, this is the timetable of what is going to happen.

The next question is from Marco Nicolai, Jefferies.

I have a question on the Banca Generali side of the deal. Banca Generali it's a wealth management business. As you know very well, this type of business can be prone to revenue dis-synergies. The revenues rely a lot on the external financial advisors who are not even properly employed by Banca Generali, but are more like external consultants. And so, what are your plans and your tools to avoid any revenue dis-synergies on that part of the deal? Yes, if you can give us a little bit more color on that front. And then, just a clarification: if this plan has to be approved -- to pass, it has to be approved by a two-thirds majority at the shareholders' meeting of Monte dei Paschi.

So, second question, yes. Extraordinary General Meeting, so two-thirds. It's clear that, as you mentioned, personal financial advisors and private banker are a special group of important and qualified actors for the success of a company. I want to say that I personally believe that we are in a very positive situation. First, and especially, because Banca Generali is managed by a manager that is very well-known and very respected on the market.

And I know that the manager has a strong connection with the company and with the people that they manage. So, I'm sure that recognizing the merit of the project, the importance of the project, is much easier for a manager that aim at the value creation covering shareholders, but especially the people that manage. That's why this is a very concrete, clear, I want to say, exciting project. And I'm confident whoever will be part of the team that has to assess the importance for the Italian banking sector for the company itself, of this project will come to a positive attitude towards this combination.

Do you think Mr. Mossa could decide to remain in this enlarged project?

I think I wouldn't comment on private decisions, and I'm not the person that can answer now.

The next question is from Lorenzo Giacometti, Intermonte.

I have just a few follow-ups on the synergies. So, you basically guided for EUR 1.2 billion of cost synergies and EUR 0.6 billion of revenue synergies. I was wondering how much of these numbers are related to Banco BPM and how much to Banca Generali? And the second follow-up is, I assume these kind of synergies are based on an assumption of 100% -- I mean, final stake in both companies. What will be the -- I mean, the new numbers if the final stake will be lower?

So, on the first question -- so cost synergies, how much for either one? Out of the EUR 1.2 billion that we present at Page 19 of the presentation, approximately, let's say, up to EUR 1 billion is related to Banco and EUR 0.2 billion related to the transaction with Banca Generali. Then, with regard to assumptions in terms of how much synergies we could achieve in case we do not reach 100% of acceptance, we are confident that even in lower scenarios, we can get the bulk -- we can achieve the bulk of the synergies. And let's say, in the worst-case scenario, it might be a timing issue at most.

The next question is a follow-up from Hugo Cruz with KBW.

Just a quick follow-up. So, just to clarify, in the EGM, all these proposals will all be separate votes that the shareholders will vote on, or will they all go together?

Yes. So, on your last question, there will be one vote under Article 104 of the Consolidated Financial Act, and that following that, assuming approval, there will be a resolution on each point of the agenda. So, separately: the two offers, the dividend, and the dividend distribution.

Mr. Lovaglio, gentlemen, there are no more questions registered at this time.

So, thank you very much. I believe we are going to see in November for the presentation of the quarter results. Thank you.

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the MPS Group Second Quarter and First Half 2026 Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Luigi Lovaglio, Chief Executive Officer. Please go ahead, sir.

Thank you very much. Good morning, and thank you for joining us. The first half of 2026 confirms the quality of our transformational journey of growth. We are presenting today the evidence of the industrial scale that Monte Paschi has achieved together with Mediobanca. And let me be clear, this is only the beginning of what that combination can do.

In the first 6 months of the year, we generated more than EUR 1.1 billion in net profit. We expanded lending, we increased customer financial assets, and we strengthened capital. We continue to deliver strong, sustainable and increasingly diversified performance, thanks to a stronger franchise, a more diversified business model and a greater ability to create value over time. Monte Paschi today is a strategic asset of the Italian economy. It is an important economic infrastructure of this country. It has systemic value.

That systemic value depends on the integrity of the bank itself. Let me put it simple. If you split the power station in 2, each part may still stand, but you risk losing power. You reduce the capacity to deliver energy where it is needed. Banking works the same way. Monte Paschi is not just a collection of branches. It is a network of relationship, knowledge and trust. Branches are not walls. They are antennas. Every day, they collect signal from the real economy and they turn local savings into credit, credit into investments, investments into economic growth.

If the system loses power, business receives less energy. That is less credit, slower and more expensive decision, less support for the real economy. So the question is not only what Monte Paschi is worth today, it is what value our bank can generate for this country tomorrow. But now let's focus on the results achieved.

What stands out in the second quarter is quality. Growth in earnings, growing commercial activity, growing client assets and further strengthening of the capital. Net profit exceeded EUR 600 million in the quarter and EUR 1.1 billion in the first half. Revenues increased, costs remain under control, capital strengthening to 16.3%. Customer assets at EUR 300 billion and continue to grow across all major business lines. The most important message is that performance is becoming broader and more diversified, driven by strength of the franchise as a whole.

Profitability continues to improve quarter after quarter, year after year. Second quarter net profit exceeded EUR 600 million, more than 20% versus the first quarter. First half net profit exceeded EUR 1.1 billion. This level of profitability is creating value today, but is also creating strategic optionality for tomorrow.

Moving to the next, operating profit. Net operating profit exceeded EUR 1 billion in the quarter and EUR 2 billion in the first half. Growth reached 11.8% quarter-on-quarter and 8.2% year-on-year. This is one of the cleanest indicator of the quality of the business. It shows that growth is being generated by the core franchise. So stronger revenue, a better business mix, disciplined cost and controlled risks.

Now let me show how this translates into operating leverage. Second quarter gross operating profit reached almost EUR 1.2 billion, up 8.7% quarter-on-quarter and 11.4% year-on-year. This reflects a strong combination of revenues acceleration and cost discipline. Revenues increased during the quarter, supported by excellent fee performance. At the same time, operating costs remain under control. As a result, the cost/income ratio improved further to 42%.

This is a positive jaws. And positive jaws are one of the key indicators of execution quality. Let me now take you to the first half view of the gross operating profit. The first half picture confirms the same trend. Revenues increased 4.1% year-on-year. Operating costs declined 0.7%. Gross operating profit increased 8% to EUR 2.3 billion, and the cost/income ratio improved by 2 percentage points to 43%. The message is straightforward. We are delivering profitable growth while maintaining cost discipline. Our capability in execution is the key driver of value creation.

Let me now move to the 2 main revenue pillars, starting with the net interest income and then fees. Net interest income remains remarkably resilient at approximately EUR 2.1 billion in the first half and increased to EUR 1.06 billion in the second quarter. Growth in volume, effective management of commercial spreads. These factors confirm that the bank is able to protect margins while supporting lending growth. At the same time, we enjoy an increasing contribution from fees and capital-light businesses, and it is visible on the next slide.

If there is one area that best illustrates the evolution of our business model, it is fees. Fee income is becoming an increasingly powerful growth engine. Quarterly fees reached EUR 670 million, an increase of 8.4% quarter-on-quarter and 9% year-on-year. Growth was driven by wealth management advisory activity and commercial banking fees. This is exactly the trajectory we outlined when presenting our strategic plan and execution continues to validate that strategy.

Looking at the first half as a whole, fees increased to almost EUR 1.3 billion, growth reached 3.6% year-on-year. The direction is clear, more diversification, more recurring revenues, more resilience. It is the result of client relationship and advisory expertise and demonstrates the value of our group distribution platform, combining synergically Mediobanca and Monte Paschi capabilities.

Let's now look at what sits behind the terms of commercial -- in terms of commercial momentum. Commercial performance remained exceptionally strong. Customer financial assets reached EUR 300 billion. Wealth Management gross inflow exceeds EUR 6 billion. Mortgage production increased strongly. Consumer finance continued to expand. What these numbers really represent is trust, trust from households, from business, from communities and trust remain one of the most valuable assets a bank can have. Monte Paschi is not a simply collection of assets. It is a network of relationship, knowledge and trust built over generations.

Customer loans continue to expand, reaching EUR 131 billion, up 1.8% quarter-on-quarter and up 5.6% year-on-year. Growth was broad-based, retail banking, consumer finance, corporate and investment banking. We continue gaining market share in businesses where relationship matter most. This is important because loan growth remains one of the clearest indicators of relevance within the real economy. Commercial direct savings reached EUR 107 billion, up year-on-year and up sequentially. The important point is that customer balances remain stable despite a highly competitive environment.

The stability provides funding strength. Funding strength support lending growth and lending growth supports economy and consequently, earning generation. This is how our franchise value is created over time. Now let's move to indirect funding. Indirect funding reached EUR 193 billion. Growth exceeded 9% year-on-year. Assets under management increased more than 10%. Assets under custody also continued to expand.

This is one of the strongest indicator of our strategic evolution. The group is becoming increasingly diversified, increasing wealth management oriented and increasingly focused on recurring customer revenues. This trend improves earning quality, improves resilience and strengthens valuation fundamentals because high-quality assets generate long-term value creation.

Let me now turn to costs. Second quarter operating costs were EUR 867 million, down by 2.2% compared with the same quarter last year. The dynamic quarter-on-quarter is 1.1% up, almost absorbing inflation, double contract renewal impact and higher variable remuneration accruals linked to performance. Let me look now at the first half cost evolution. In the whole first half operating cost declined by 0.7% year-on-year to EUR 1.7 billion. This may appear straightforward. In reality, it is a significant achievement. We absorbed inflation. We absorbed labor contract renewals. We continue to invest in strategic initiatives and yet total operating costs still declined.

The key takeaway is execution. Revenue growth is important, but sustainable shareholder value is created when revenues growth is accompanied by cost discipline. That combination is visible throughout our results. Turning to asset quality. As you can see, asset quality remains very solid. Cost of risk remained fully under control and fully aligned with our business plan trajectory. NPE ratio, both gross and net remain at the best levels, and this reflects quality of our underwriting and quality of our risk management framework.

Liquidity remains exceptionally strong. Counterbalancing capacity stands at almost EUR 50 billion. The LCR increased to 169% and NSFR remains at the level of 122%. During the quarter, we successfully completed additional wholesale funding transaction, including senior recovered bond issuances. The group continues to retain significant flexibility. Now capital. Capital remains one of the strongest differentiators of the group. Our fully loaded core Tier 1 ratio increased to 16.3%, an increase of 40 basis points during the quarter. Our capital buffer remains among the strongest in the sector, close to 680 basis points above regulatory requirements.

Capital strength gives us 3 advantages: flexibility to support growth, flexibility to reward shareholders and flexibility to evaluate strategic opportunities. In the current strategic context, our capital position is one of the reasons why Monte Paschi can assess every strategic development from a position of strength. Now purchase price allocation. This slide provides an update on the purchase price allocation process related to Mediobanca. The process was substantially completed during the second quarter.

The final allocation identified intangible assets, including brand value, customer relationship and core deposits. Following the completion of the process, goodwill stands at approximately EUR 2.2 billion. This milestone provides greater visibility and represents another important step in the integration journey, a journey that continues to progress according to plan.

Let me briefly comment on Mediobanca's first half performance. Mediobanca delivered a strong set of results, confirming that the quality and the resilience of the franchise. Revenues increased to almost EUR 2 billion. Net profit exceeded EUR 710 million and return on tangible equity reached approximately 15%, supported by record performances in Corporate Investment Banking and Consumer Finance. The second quarter was particularly strong with revenues above EUR 1 billion and net profit of almost EUR 390 million.

Growth was supported by multiple business engines, including corporate investment banking, consumer finance and insurance, while maintaining strong capital, excellent asset quality and cost/income ratio below 40%. The Wealth Management franchise continued to stabilize during the quarter. Assets under management increased, net outflows reduced significantly compared with the first quarter. I strongly believe that this is a strong signal how important and strong and powerful is the combination between Mediobanca and Monte Paschi.

And I strongly believe that the trend that Mediobanca is presenting will further improve, providing even higher contribution to the total profitability of the group. Let me now show why the combined business mix is strategically important. This slide makes the valuation logic of the group more explicit. Today, our revenue base is supported by multiple high-quality business line with significant weight of asset gathering and wealth management businesses. This diversification is increasingly valuable and strengthens earnings sustainability.

We are building a business model that is more balanced, more scalable and better positioned for long-term value creation. This continued growth evolution supports a step-up in earnings quality and over time, a rerating of the group's valuation profile. This is precisely the direction outlined in our strategic plan. Let me spend a moment on integration. Execution remains exactly where it should be, on track and on time. Over the last few months, we have moved from planning to implementation across all major work streams.

We have completed the key corporate steps, submitted the core regulatory filings and continue to work closely with the competent authorities as we target regulatory approvals during the third quarter and the effectiveness of the reorganization in the fourth quarter. At the same time, business transformation initiatives are already being implemented. Client coverage models have been defined. Commercial cooperation between networks and product factory is progressing and the future operating model is taking shape.

The integration of platform data and security infrastructure is progressing according to plan and remains fully aligned with our day 1 objectives. Equally important, we have secured all the legal, regulatory and compliance foundation required for a successful integration. The integration is really becoming an operational reality and brings us closer to unlocking the full value of the combination.

Let me conclude this section with what ultimately matters most, value creation. Synergies progressing ahead of schedule, giving comfort to deliver results even above the target of 2026. On the revenue side, we are already seeing tangible results mainly from increasing collaboration between corporate and investment banking by executing together with Monte Paschi joint leading lending and advisory transaction. Distribution of Mediobanca certificates and asset management products, launch of lending products factories distribution.

On the cost side, the group is capturing benefits from optimizing procurement and shared supplier agreements, launching joint tenders and removing duplication like in provider or facility contracts. On the funding side, we continue to benefit from issuance executed at higher spreads, leveraging the scale and the strength of the combined group.

Let me now address the offer announced by Intesa Sanpaolo. As already communicated by the Board, the preliminary observations published on 16th July remain fully valid. The Board's preliminary view is that Intesa Sanpaolo does not currently appear to fully compensate Monte Paschi shareholders for control, synergies and franchise value, while exposing them to execution and regulatory risks. While conversely, Monte Paschi plus Mediobanca strategy has a strong industrial rationale and a clear execution profile, which, among other things, envisages significant value creation and cumulative shareholder distribution of EUR 16 billion over the planned period.

I have consistently supported banking consolidation. Scale matters, investment capacity matters, technology matters. But scale should strengthen players, not reduce diversity. Consolidation should ultimately be evaluated through industrial logic and value creation, not fragmentation. Competition remains a fundamental source of innovation, customer service resilient, and competition survives because there is a variety of players. A national champion should strengthen the country's competitive fabric, not reduce it. Otherwise, the crown may become larger, but the kingdom becomes smaller.

That's why the Board, with the support of its adviser will continue to conduct this assessment independently and rigorously. The objective is clear: to identify the optimal path that maximize value for Monte Paschi stakeholder while preserving the integrity of the franchise. Let me conclude with 3 final observations. The first half confirms the strength of our operating performance. Net profit exceeded EUR 1.1 billion. Profit before tax approached EUR 2 billion, double-digit growth dynamic year-on-year. Commercial momentum remained strong. Capital continued to grow and asset quality remained excellent.

The integration with Mediobanca continues to validate its industrial rationale. Execution is progressing according to the plan. Synergies are materialized, making us comfortable to exceed our original target. Our confidence in the future continues to increase and the visibility provided by current performance allows us to raise our guidance for 2026 profit before tax to EUR 3.6 billion. Finally, I would like to say that like in the Odyssey poem, which now has become a must-see movie, some routes close and others open. From our safe harbor, we will continue our own journey, fully committed to exploring every strategic option that can create long-term value for our stakeholders.

Thank you. I'm now happy to take your questions.

[Operator Instructions] The first question comes from Sofie Peterzens of Goldman Sachs.

So my first question would be on the strategic options that you're evaluating. Could you maybe elaborate a little bit more here also what the timetable is, how long it would take to get the EGM approval or to call sorry, an AGM. So if you could kind of discuss the strategic options, would you also consider selling the Generali stake? And yes, what are you kind of thinking about?

And then my second question would be on dividends. How should we think about a potential interim dividend paid in -- or announced with the third quarter? Do you still consider interim dividends? Or is this kind of off the table?

Okay. So I just take the question regarding the strategic option. So I believe the real question is which strategic path best unlocks the value. And I believe the best outcome is the one that delivers full value and carries forward what we have built rather than fragmented it. So as you know, building the best strategic option is much like assembling mosaic. For a long time, the pieces kept moving, then one by one, the picture comes into focus. So we are fully committed to explore any opportunity with a clear direction to optimize the value for our shareholders.

On the timetable, it takes 30 days to call an EGM. So we are -- we will be on time anyway. As regards the question on interim dividend, the assessment will be done in the context of the analysis of the strategic options that, as the CEO said, we will carry out following a rigorous approach and aim at maximizing long-term value for all stakeholders.

Okay. And EGM, just on calling the EGM, you haven't done it yet, right?

We haven't called an EGM yet. As said, there will be anyway an EGM that will be called for the integration, so for the merger with Mediobanca that is expected based on the current time table to be convened in the first half of September. So the notice will be issued in the first half of September.

The next question is from Luis Pratas of Autonomous.

My first one is on the Generali stake. There has been plenty of speculation about a sale of this stake. I wanted to ask you how strategic is the Generali stake for you? How much capital do you think you could release if there was a sale? And instead of a sale, could you consider distributing the stake in kind to your own shareholders?

And then my second question is again on defensive actions in this case, related with Banco BPM. So the last Friday, we had Banco BPM Board of Directors terminating the merger discussions with Monte Paschi. I wanted to ask you whether you could provide extra color on what went wrong for no agreement to be reached and whether investors should now close this chapter with Banco BPM? Or could you become a bit more aggressive and still pursue Banco BPM in a takeover offer as speculated in the press?

Okay. Thank you for raising this topic about Generali. So I described the stake in Generali as a nice to have because it represents an important source of value and strategic optionality for Monte Paschi and Mediobanca Group. I have to say that it also seems to be regarded as a particularly relevant nice to have by a number of other market participants.

Any future decision will be assessed in the interest of Monte Paschi shareholder, taking into account the value of the stake, the capital and the regulatory implication, market condition and the group's industrial strategy. As far as BAMI, so I would separate the 2 points. The decision to discontinue the consultation was taken and communicated by Banco BPM Board of Directors. It is not for Monte Paschi to comment on the counterparty's internal decision-making process.

What I can say is that we didn't approach this opportunity as the tactors. We analyzed with conviction because we saw the potential to create a leading Italian banking and financial group capable to delivering significant value for the shareholders of both banks as Banco BPM itself acknowledged the industrial rationale was significant. However, the discussion didn't progress to a stage where structure valuation terms could be fully discussed and assessed.

Banco BPM chose to discontinue the consultation before that point. So we respect the decision, and we move forward accordingly. On the second question, I don't honestly think investors should think in terms of chapter being closed or open. Today, there is no transaction under discussion with Banco. If strategic opportunities arise because our focus is not on pursuing transaction, our focus in creating value for Monte Paschi shareholders. So as I said, the strategic opportunities arise, we will assess them with the same discipline we always have.

Industrial rationale, value creation, capital efficiency, execution certainty, regulatory feasibility. And perhaps there is where -- this is practically where a maritime analogy is useful. Now as I mentioned before, like the Odyssey poem, some routes close and others open. And I have to say that very experienced navigators know that winds can change. Sometimes they carry you towards new destination. Sometimes they bring you back to ports from which you had previously sailed away. So our responsibility is not to predict the wind because it's quite difficult, but to be ready to capture it whenever it serves the interest of our shareholders.

On the capital treatment of Generali currently in our regulatory capital, around EUR 4 billion is goodwill, which is currently deducted pro rata, that then following the merger with Mediobanca will be fully deducted. Around EUR 2.5 billion is deducted, so on top and the rest to get to our carrying value, which is currently EUR 6.9 billion is risk-weighted assets at 250%.

The next question is from Lorenzo Giacometti.

I have 3. So the first one is on fees. Basically, the fees rose 8.4% quarter-on-quarter with the release that was flagging a few larger CIB transactions. So I was wondering how much of this quarter's fee level is one-off deal driven versus a sustainable run rate? And what's the underlying recurring fee trajectory for the remaining part of the year?

And the second one is on trading, which was, I mean, pretty strong for the first half. I was wondering if you can give us some color about the -- again, the trajectory of the second half of 2026.

And the third one is again on the strategic options. So can you be a little bit more specific on what these options actually are on the perimeter you're looking at and on the potential time frame of the potential decisions? And if a credible combination, I mean, were to present itself, what are the 2 or 3 nonnegotiable conditions the Board would require before engaging?

Okay. So I will take the question regarding fees and then the other 2 strategic questions, right, on option and what is not negotiable, as you said, right? Okay. Let's start from the fees. I think as I mentioned during our -- my presentation, this is a key pillar of our strategic plan. We strongly believe that we have a huge potential in terms of network franchise of both institutions.

In this quarter, there was a particular high performance from Mediobanca from some transaction connected with -- performed by corporate investment banking. I really believe that despite this was an important transaction, so we can consider as exceptional one. My view on the potential of Mediobanca is that there we can really aim at getting significant higher contribution going forward. So what we can consider as exceptional one according to me can be considered like recurrent in a very short period of time.

The combination of Mediobanca with Monte Paschi is a very successful, strong industrial powerful combination. So having said that, in terms of guidelines, as we already mentioned in the previous presentation, we believe the fees and commission will keep having a positive trend. As usual, in the third quarter, we are going to have our old period, but I believe that also quarter year-on-year, we will show a positive dynamic. And we are fully focused on getting this trend in a growing mode considering that the synergies that we plan to realize with Mediobanca are really reaching a level that make us thinking that can be even above the target we set in our business plan.

So positive trend, thanks to the strength of the 2 franchises. Now I think on strategic option, I already mentioned, it's quite difficult now to go deeper in what was the key message we passed during the presentation. As we were discussing during the Board in July and also recently, and I think it's quite well described what is considered by the Board important in our press release, I want just additionally to mention that we are looking for strategic option that will generate significant value for our shareholders, for all stakeholders, aiming at preserving the integrity of our institution.

And I think this is one of the most important aspect in the direction that the Board has pressed with the communication on the 16th of July, but not because we believe and there is a sense of tradition on that, just because I strongly and personally believe that breaking up a network, we are not increasing value, not only for stakeholders, but also for the economy of the country. And that's why we are fully committed in looking for solution that will generate additional value for all stakeholders. And the integrity of the network for us is an important driver of this target.

On trading, yes, on trading, it is slightly more difficult to forecast compared to NII and fees. First and second quarter were particularly good. Having said that, we still expect a relevant contribution also for the next quarters thanks to our activity, which is mainly client-driven and also to the expertise of our markets people, both at Mediobanca and Monte Paschi in structuring solutions for our clients.

Okay. Maybe on synergies. As you said, I mean, synergies may prove even higher than your EUR 700 million target. But do you have like any color about how much higher were -- yes, may improve or not?

This is a moving target, I have to say, because every day, we are enjoying a strong cooperation between the teams. And so I can say just based on what we are observing in terms of trend, at least we can have a growth compared to the original target of other EUR 100 million. But that, as I said, is something that we are going to explore, and I believe it can be a target that will make us thinking more and more about how powerful is our combination.

[Operator Instructions] The next question is a follow-up from Luis Pratas of Autonomous.

I have another question in case you decide to make an extraordinary distribution. I wanted to ask you what's the time line there? And for instance, can it be approved quite swiftly by the ECB? And if I'm not mistaken, your management target in the business plan is 13%, but you never actually issued like any AT1s, for instance. So what level can you go down if you wanted to make an excess capital distribution tomorrow?

So I'll start from the last question. Our common equity Tier 1 ratio appetite is 13%. So I think in general terms, we always said that this is a reasonable level to a comfortable level to run the business. Then on your question to AT1, we might fill in the bucket quite easily. I think we have a queue of investors that would love to subscribe our potential AT1s. On the time line, as mentioned, we need to call for a general shareholders' meeting, which takes 30 days. And so we think we are fully on time to potentially distribute if the assessment of strategic options will lead us there an extraordinary dividend.

I'm sorry, just another follow-up. But in terms of ECB, how much time does it take for them to analyze that possibility?

We think that the timetable would be in line with, let's say, the time of the offer, which is outstanding.

The next question comes from Hugo Cruz of KBW.

I have a few questions. So first of all, Danish Compromise, I think it was 50 basis points, not included in your targets. Do you still expect to get that benefit? And what do you think you can do with the capital released by the implementation of Danish Compromise? Could it be distributable?

Second, the DT absorption, I'm not sure -- so the guidance was EUR 0.5 billion a year. I think you've probably done EUR 300 million roughly in the first half. So can you update us on the timing of this? Do you think you can actually absorb them faster? And if you could give some guidance there?

And then the third question on -- you gave the PBT guidance, which is very helpful, which is after restructuring costs. Is that still -- you're still assuming EUR 300 million of restructuring costs? Or is it different for this year? And could you give us guidance for the OpEx before restructuring costs for the full year? That would be very helpful.

So on the Danish compromise, we have an outstanding question to the EBA. So waiting for the answer. As you know, let's say, the Danish compromise per se should not lead to a regulatory arbitrage. Having said that, we think that in case it is extended to the consolidated group, we think that will be distributable.

Then second question on the absorption. Yes, in the first half, the absorption was around -- the utilization was around EUR 300 million. Actually, the underlying business is doing particularly well. So compared to the guidance of around EUR 500 million per year, we cannot exclude that there might be an acceleration in the utilization. Third point on restructuring cost, we are following, let's say, our business plan. So the guidance is confirmed on operating cost. We've gone with our optimization activities and the synergies with Mediobanca to offset as much as possible all the inflationary effects such as, for example, the renewal of the national labor contract.

The next question is from Juan Pablo Lopez of Santander.

Sorry if any of them has been already answered, I joined a bit later. My first question is regarding the strategic options. And how do you see the passivity rule, if you see any limitation there? My second question is regarding a potential disposal of the stake to the government and if you have any comment on this one.

And lastly, the third question is on commercial activity. If you have seen any increase in competition from the 2 large banks on corporates, mainly in SMEs and in deposits, customer deposits, how do you see the evolution and competition there as well?

Okay. Let's start with strategic option because I'm going again to repeat what I said before, the optimal outcome is whichever path creates the greatest long-term value for our shareholders while preserving the integrity of our franchise. Now clearly, we cannot comment on the stake of the government. And the third question was regarding competition. I think I was mentioning before, we are gaining market share. It's a trend that is continuing quarter-on-quarter by quarter.

And I strongly believe that it is a trend that as is based on sustainable achievement, I think it's a trend that we can preserve. Competition is strong, as I mentioned, also in terms of deposit. On that, as usual, we have a double approach on retail for us, it's strategic. And so we are using an approach that can also use and leverage on prices. While on corporate, it's much more tactical. So we like to have deposits when customer is working with us, and providing additional business that can generate additional fees for us.

So strong competition, but we are strong as well. So we will keep our pace and try to even overperform compared to the market. Sorry, regarding the passivity, I think it's quite clear, the general principle. We have an obligation to look for the best solution that can improve and maximize the value for our shareholders. There are rules, and we are fully respecting this rule, and we will keep paying a lot of attention to that. But it's clear that we have a duty and the duty is to look for the best solution for all our stakeholders.

The final question is a follow-up from Luis Pratas of Autonomous.

On the EUR 3.6 billion pretax profit guidance, could you please provide a bit more detail on this guidance, especially on the core lines, so NII, fees, revenues, costs, cost of risk?

So we are already, I think, in the mid of the third quarter. And looking at the results of the second quarter and the 6 months, I think it's quite easy to understand if we give this guideline, how much will be the performance in the second part of the year. So what really we can say that -- we plan to have a growing trend in terms of operating income. Then it's clear that, as Andrea was mentioning before, also, we want to pay attention to cost. And so to be almost in line, even if from the fourth quarter, we can have a sort of seasonality.

So some costs will appear. But anyway, overall, the trend of cost year-on-year will be almost in line, but slightly higher, but even better what we plan. So the cost of risk, as we said, will be in line with our guidelines. So it's easy to understand line by line, what is the expected trend for the second half of the year.

Mr. Lovaglio, that was the final question. Sir, back to you for any closing remarks.

Okay. So thank you very much. I'm thinking if I have to say see you in November or eventually earlier. Let's see. Thank you very much.

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

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the MPS Group First Quarter 2026 Presentation. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Luigi Lovaglio, Chief Executive Officer and General Manager. Please go ahead, sir.

Good morning, and thank you for joining our first quarter results presentation. This was a strong quarter with disciplined execution and clear strategic momentum. We enter the next phase with full established governance and strong delivery.

[Technical Difficulty]

Sorry, I understand, some technical problem. I will start again. Good morning, and thank you for joining our first quarter results presentation. This was a strong quarter with disciplined execution and clear strategic momentum. We entered the next phase with fully established governance, aligned priorities and strong focus on delivery. The newly appointed Board ensures continuity of leadership while strengthening our collective expertise and execution capabilities. It brings together high qualified professionals with complementary skill sets, reinforcing our ability to navigate complexity and deliver on our strategic commitment.

The message is simple. Uncertainty is behind us. Execution is now the focus. The Mediobanca integration remains central, progressing in line with plan and supported by a clear operating model designed to preserve brand strength while capturing the full value of our high-quality talent base and unlocking synergies and scale. This is an execution-led transformation with clear milestones, accountability and quarterly measurable outcomes across our 5 business lines.

Q1 results validate this strategy: high quality, well-diversified revenues mix, improving profitability, tight cost discipline, strong capital position and leading shareholder returns. At the core remains our franchise strengths, a broad and resilient client base across families, entrepreneurs, SMEs, corporates and local communities, supported by a consistent high-quality service model. We are building a more diversified, more resilient banking group, while remaining firmly anchored to our identity and to the needs of over 7 million clients.

Let me now turn to the key highlights. This quarter demonstrates earnings momentum with visibility and repeatability. We delivered EUR 521 million net profit and EUR 911 million profit before tax, up by 15.6% quarter-on-quarter, and 6.7% year-on-year on a pro forma basis. Operating leverage is unmistakable. Gross operating profit exceeded EUR 1.1 billion, up 8.4% quarter-on-quarter. Revenues increased 3%. Costs declined 3.1%, and the cost income ratio improved to 44%, down 3 percentage points versus last quarter.

Commercially, growth is broad-based. Loans reached EUR 129 billion, up 1% quarter-on-quarter and 5.2% year-on-year, supported by EUR 1.7 billion of new mortgages and EUR 2.7 billion of consumer credit. Funding is resilient. Direct funding is stable at EUR 106 billion and indirect funding stands at EUR 185 billion, up EUR 12 billion versus March 2025. Asset quality remains strong. Cost of risk is 42 bps. Gross NPE stock is down to EUR 3.7 billion, with ratios at 2.5% gross and 1.3% net and coverage up to 15.6%. Capital is a differentiator. Core Tier 1 is 15.9%, even after 100% payout accrual and risk-weighted asset growth. And critically, integration execution is on track. The merger was approved on 10 March 2026 with 8 work streams, 50-plus projects and 300-plus colleagues mobilized and synergies progressing as planned.

Let me now go one level deeper, starting with profitability. Net profit in the quarter was EUR 521 million, but it reflects tax effects and PPA adjustments, which limit like-for-like comparability with prior periods. The cleaner profitability indicator this quarter is profit before tax, EUR 911 million, up 15.6% versus Q4 and 6.7% year-on-year on a pro forma basis. That uplift is driven by operating performance, core revenues, cost discipline and a well-contained risk profile. We are strengthening the bank's run rate, while executing the integration.

Now let's look at operating results that best captures the dynamic. Net operating profit was EUR 947 million, up 9.5% quarter-on-quarter, reflecting strong operating momentum and improving earnings quality. Performance was driven by positive revenues mix dynamics and tight cost discipline with a stable risk profile. Year-on-year growth of 3.4% confirm strength and consistency of our earnings trajectory.

Let me now show how this translates into operating leverage.

Gross operating profit was about EUR 1.1 billion, up 8.4% quarter-on-quarter. Revenues rose 3%, while operating cost declined 3.1%, which is the definition of positive jaws. As a result, the cost income ratio improved to 44%, down 3 percentage points versus Q4. Year-on-year, gross operating profit was up 4.3%, confirming the solidity and diversified business model even in a complex environment. This matters for integration because synergies are delivered by a culture of cost ownership and performance management.

Now I will move to the two revenue pillars, net interest income first, then fees. Net interest income was EUR 1.036 billion, up 1.9% quarter-on-quarter. The increase came from improving commercial spread and higher lending volumes, fully aligned with our strategy. Year-on-year, NII was stable, showing resilience, supported by volume growth and proactive management of funding costs. You can see that in commercial spread dynamics, this trend with disciplined pricing on both lending and funding. Beyond the current quarter dynamics, the combination with Mediobanca structurally reduces interest rate sensitivity, now at around EUR 50 million for 100 basis points, strengthening earnings and the stability of our earnings across rate scenarios.

Fees and commissions were EUR 618 million, up 2.8% quarter-on-quarter. The most important point is mix. Wealth management fees increased 7.6% quarter-on-quarter, reflecting targeted commercial focus on strategic areas. Commercial Banking fee shows some seasonality effects quarter-on-quarter, and the year-on-year reflects the normalization of the Arma Partners contribution. So the headline is our growth engines are working, particularly in wealth and advisory. This connects directly to the Mediobanca logic. Integration expands product capability and distribution reach, accelerating fee capture through cross-selling.

Let's now look at what sits behind this in terms of commercial momentum. This quarter confirms the strength of our franchise. Total financial assets were almost stable quarter-on-quarter despite market turmoil and wealth management gross inflows increased by close to 10% quarter-on-quarter. On lending, we originated EUR 1.7 billion new retail mortgages and EUR 2.7 billion on new consumer finance in the quarter.

Now let's translate momentum in terms of the balance sheet, starting with customer loans. Customer loans were EUR 129 billion, up 1% quarter-on-quarter. Growth is driven by the quarter's production already discussed and is well supported across business lines. On a year-on-year basis, loans increased 5.2% with contribution from all businesses. This is important. The growth is broad based, not concentrated in a single segment. It reinforced our integration strategy. We are scaling a multi-business platform while maintaining consistent underwriting discipline.

Now moving to the liability side, Direct saving and funding franchise strength. Commercial direct savings were EUR 106 billion, showing resilient dynamics quarter-on-quarter. Since March 2025, we grew direct savings by EUR 4.6 billion, a strong indicator of customer trust and franchise quality. In today's environment, funding stability is strategic. It protects margin, supports liquidity and reduced sensitivity to market funding. It indeed give us additional optionality as we integrated. We can optimize product mix, deepen primary relationship, especially in premium and private segments.

Now let's look at indirect funding where fee momentum and client engagement are most visible. Indirect funding was stable at EUR 185 billion quarter-on-quarter despite market volatility. Both assets under management and assets under custody held up very well in a challenging macro and geopolitical environment. Since March 2025, indirect funding is up EUR 12 billion, mainly driven by assets under management, confirming strong commercial focus and asset gathering capacity. This delivers stronger revenues quality with greater fee capacity, deeper advisory and enhanced client economics. Integration further strengthens this by the expanding capabilities and brand reach in wealth and advisory.

Let me now return to efficiency. Operating costs were EUR 859 million, down 3.1% quarter-on-quarter. Both components contributed, HR costs declined 3.2% and non-HR costs declined 2.8% versus Q4. Year-on-year, costs were up only 1.1% despite labor contract renewal impact. That is a disciplined cost control without disturbing the business or investment. From an integration standpoint, cost discipline also, how we protect synergies delivery.

Now let's move to asset quality and risk. Asset quality remains a clear strength. Gross NPE stock is EUR 3.7 billion. The gross NPE ratio is 2.5%, and the net NPE ratio is 1.3%. Coverage increased to 15.6%. Cost of risk is 42 bps, stable versus last quarter. We are protecting balance sheet quality as we integrate.

Now on to liquidity and funding resilience. Our liquidity profile is sound and conservative. Counterbalance sheet capacity is EUR 49 billion. 72% of the stable funding is represented by customer deposits. The LCR, 157% despite lower ECB funding, now only EUR 6.5 billion, down EUR 3.5 billion versus December 2025. Then NSFR is stable at 121%.

Now to capital. We ended the quarter with a core Tier 1 ratio of 15.9%. That is after accruing net profit for dividend distribution and absorbing risk-weighted asset growth from IRB model, updates and the new loan production. Moreover, there is a temporary impact connected with the increase of value of Generali for the profit of the period. This is what I would call a best-in-class capital buffer. It provides strategic flexibility. We can invest, integrate and sustain attractive shareholder remuneration.

Now let's move to Mediobanca's quarterly performance and to the integration update. Mediobanca delivered a net profit of EUR 323 million with profit before tax at EUR 447 million, up 19% quarter-on-quarter. Commercial trends were overall positive, and we are seeing first benefits from synergies. Revenues increased 5% quarter-on-quarter with NII up 3%, fees up 6% and strong trading supporting other income. The cost income ratio improved to 41%, down 5 percentage points quarter-on-quarter. And core Tier 1 stands at 15.7%.

In Wealth Management, total financial assets are EUR 113 billion, up 4% year-on-year, driven by assets under management, up 7% year-on-year. In CIB, activity has reaccelerated in recent months with growth returning across all major product lines, with advisory fees back to last year level and sound pipeline with ECM and DCM providing positive contribution with high markets activity.

Now let me briefly return to Private Banking. Q1 reflects a temporary dislocation, primarily driven by concentrated banker departures. Since mid-April, however, we have seen a rapid normalization in the business with client confidence returning, the banker base stabilizing and commercial activity rebounding. In the last 3 weeks alone, we have generated approximately EUR 1 billion of potential net new money, largely linked to entrepreneurial liquidity events. At the same time, recruitment has restarted with a focus on high-quality senior profiles with initial hires expected to join from the beginning of next quarter.

As a result, exit trends are improving and commercial momentum is clearly returning. Structurally, our model remains anchored in the PIB framework, which is unique in Italy, combining private banking and investment banking capabilities to serve entrepreneurs holistically across wealth, corporate transaction and private market. This integrated model supports deeper client relationships, higher quality flows and stronger retention, particularly around liquidity events. While Q1 was transitional, we are now seeing a stabilization, pipeline rebuilding and strengthening of our differentiated model, positioning the business for renewed growth.

The same strategic consideration apply to our corporate and investment banking franchise and, in particular, to our Mediobanca bankers. The integration creates a fully integrated CIB platform, combining Mediobanca's advisory excellence with Monte Paschi lending capacity and commercial reach into a single unified offering. We are not simply combined 2 platforms. We are upgrading the way we win businesses. And let me speak directly to our Mediobanca bankers. This platform is designed to strengthen your competitive position, combining top tier advisory with execution capacity at scale. This is especially relevant in mid-corporate segment, where the combination of advisory and lending is most powerful and where the teams of bankers are already demonstrating the strength of this model.

In today's market, advisory wins when it is backed by balance sheet. With this combination, every mandate is supported by both enabling higher conversion, larger transaction, and greater client value capture. This is a clear professional step change. More mandates won, deeper client franchises and stronger long-term economics.

Now let me be clear. You are the core of this franchise. Client trust, mandate generation and long-term relationships sit with you, and this group is fully aligned to amplify your ability to deliver. Now I will show how this translate into the combined revenues mix.

This slide makes the evaluation logic of the group more explicit. The combined business mix is increasingly weighted toward higher multiple activities, notably asset gathering and wealth management alongside CIB and consumer finance, while retaining the strength and the scale of our retail franchise. This evolution supports a step-up in earnings quality and over time, a rerating of the group's valuation profile.

At this stage, the representation is intentionally focused on revenues as integration is ongoing. As we progress with the alignment of system, metrics and performance framework, we will progressively enhance the level of economic and financial detail by business line, providing a more comprehensive view of profitability and capital allocation. This will enable the market to better assess the underlying value of each franchise and appropriately reflect the contribution of higher multiple business within the group.

Let me now walk through you through the time line and execution status. We are on track for effectiveness by 4Q 2026 following a clear time line of corporate and regulatory steps, The Board has approved the merger project and exchange ratio on 10th of March 2026. Next are demerger resolution in May, June and shareholder regulatory approvals in Q3 and then execution and effectivenesses in Q4. The structure is designed to protect value and identity, Mediobanca merged into Banca Monte Paschi, while CIB and Private Banking are demerged into a wholly owned company named Mediobanca S.p.A. Mediobanca Premier's adviser network will be integrated into Widiba, which will adopt a corporate name, including the Mediobanca brand and the Generali stake will sit under the new Mediobanca entity.

Execution is fully mobilized. 8 work stream, 50-plus projects, 300-plus colleagues and strong CMO oversight. And importantly, over 300% of target synergies are already secured in 2026, supported by granular monitoring and disciplined execution. Retention of client-facing talent remains our clear priority, with targeted actions already in place to protect franchise value and sustain revenues momentum.

Now let me detail synergies and what we have already activated. We are confirming synergies targets and phasing, reaching EUR 0.7 billion by 2028 with a clear ramp from 2026 to 2028. The key point is that initiatives activated in Q1 are expected to contribute visibly during the year. On revenues, we are accelerating structured product distribution from Mediobanca CIB into Monte Paschi channels and launching selected advisory cross-selling. On cost, we are renegotiating shared supplier agreements, launching joint tenders, and removing duplications like info provider, consultancy at group level. On funding, we are realizing benefits from issuances executed at tighter spreads and optimizing the funding mix through 2026 issuance planning. This is what the integration execution means in practice. Specific actions tracked centrally and converted into measurable outcomes.

With that, I will move now to our closing message messages and outlook. This was a strong start to the business plan. We delivered EUR 911 million profit before tax, up 15.6% quarter-on-quarter and 6.7% year-on-year and EUR 521 million net profit, fully in line with guidance. Commercially, the franchise is resilient. Gross operating profit was up 8.4% quarter-on-quarter. Loans were up 1% quarter-on-quarter, driven by EUR 1.7 billion mortgages, EUR 2.7 billion consumer credit and wealth inflow were up 10% quarter-on-quarter despite market volatility.

On integration, we are delivering early. Mediobanca is progressing on track and 30% plus of target synergies are already secured in 2026 with execution fully mobilized. We confirm guidance with confidence with 2026 profit before tax expected to exceed EUR 3.5 billion, supported by strong momentum, disciplined execution and sustained delivery of shareholder value.

Thank you. We are now ready to take your questions.

[Operator Instructions] Our first question comes from Antonio Reale of Bank of America.

It's Antonio from Bank of America. A couple of questions from my side and one clarification. The first question is on the outlook for the year. You've provided guidance on pretax profit to be above EUR 3.5 billion this year. Can you give us a little bit more color around the moving parts, particularly on fees? I've heard your remarks on the commercial activity picking up since mid-April. Your comment on sort of departures at the private banking side being behind us. So does that mean we can draw a line here and call this the trough point for fees when it comes to an operational standpoint? Conscious that consensus for fees is at EUR 2.6 billion this year. If you can provide a little bit more color around your thoughts for the outlook, that would be super helpful. That is my first question.

My second question is really a follow-up on distribution. Now that you may be in a position to have a little bit more visibility. You're expected to complete the Mediobanca minority buyout in October, if I'm not mistaken, which I think is consistent with your guidance. I wonder when shall we expect share buybacks to start, if they can also start before October? And ultimately, what does that mean for your dividend per share from here? You're set to pay EUR 0.86 dividends in about a week or so. So your expectation for DPS this year?

And lastly, if I may, just a quick clarification. You've given us a clear view of the phase-in of your synergies for this year. What is the related integration cost that you're looking to book in 2026?

Thank you for the question. So as I was mentioning, the trend in terms of fees are quite positive. Sorry, we have again, a program with the microphone, I apologize.

So as I was mentioning, the trend from commercial point of view is quite positive because the strength of our franchise is, day by day, confirmed. And so we are, again, quite positive regarding the trend of fees and commission. And we expect to have a trend that overall, will be in line with the pace that we are reporting in the quarter. As usual, if we take in consideration the third quarter, the August month, we can have probably the usual seasonality. But overall, this trend will continue, and we are going to have a path that together with the franchise -- both franchise, Mediobanca and Monte Paschi will support the growing trend that we are already reporting in the quarter.

As far as interim dividend, it's clear that we want first to complete the merger, then we will consider it potentially, of course, and as far as dividend, I think we were already mentioning that we want to have a dividend level broader in line with the one of this year that, as you mentioned, we are going to pay 10 days from now. And clearly, as we were mentioning, we will provide the additional contribution to the total remuneration in addition to the profit with the buyback that we were mentioning already in the time of presenting the plan. So dividend remuneration, the total remuneration of shareholder, we feel comfortable to confirm. And then clearly, we are going to have an accretive trend from the next year according to what has been already said in the plan.

Integration costs, we plan originally to have around EUR 300 million of cost, and we believe we can stick to this expectation.

The next question is from Elena Perini of Intesa Sanpaolo.

I've got three questions. The first one is on your sensitivity to interest rates, if you can update us on numbers.

The second question is about your wealth management. We saw that you started to sell Mediobanca SGR products to your network. You also have a strategic partnership with Anima. If possible, would you elaborate on which kinds of client segments are you going to serve through the 2 SGRs?

And about Anima, Banco BPM mentioned the possibility to open the capital of its control company to other partners. Would you willing to consider this possibility?

My final question is about your Generali stake and next year, expiry of the JV with AXA. What kind of thoughts are you making about your insurance business considering the stake in Generali and the deadline that you have next year?

On NII sensitivity, let me reiterate what the CEO has already mentioned when giving the presentation. The current sensitivity to -- of NII to a parallel shift of 100 bps of the curve is around EUR 50 million at group level with slightly above half of this amount related to Monte Paschi and the rest related to Mediobanca.

Okay. So I was mentioning, and I think this is a positive element of the integration. Clearly, let's start by saying that Anima is strategic partner for us. And we are keeping -- growing in the cooperation and reaching the product's wallet that Anima is providing. And we have to say that this is a trend that we believe will continue, having this kind of long-term partnership with them. And for the time being, we stick to the partnership, commercial partnership, and we are focused to implement our plan that count a lot on the contribution coming from the partnership with Anima.

Having said that, I think that the SGR Mediobanca is providing specific kind of products that we were distributing to our network to specific kind of customers. So something that is not strictly comparable with the product -- that products that we have with Anima. And I think this kind of offer that we are providing to the product SGR is not competing with the products that we have with Anima.

As far as Generali, I'm just sticking to what I used to say that it's nice to have. It's an important uncorrelated part of revenues on which we count. Generali is giving also additional optionality in terms of operational partnership. So it's clear that we are considering all the opportunities that we can have on the market in terms of product offer, in terms of partnership. As for us, what is really important is the value creation and to provide to our customer the best offer in terms of product combination and to ensure sustainability to our results. So as I was to say, nice to have, Generali stake.

The next question, sir, is from Giovanni Razzoli of Deutsche Bank.

Well done with the Q1 results. Two very quick questions. The first one is on the volumes, lending volumes in the CIB and consumer of Mediobanca. They were very, very strong, both of them. We've seen the first impacts of the synergies. I was wondering whether you can give us a little bit of outlook for the next couple of months on those trends, in particular, what is the bid pipeline also for the investment banking going forward? And what's your view also on the volumes on corporate and the consumer?

The second question relates to the dividend of Generali. It is 20 basis points of reversal to the CET1 once Generali will pay its dividends or your pro forma CET1 ratio will be above 16%. And I was wondering whether what is the state of the art of the application for the Danish compromise? Have you already submit the request? And what is the reasonable time frame to see whether we can roll Mediobanca set up to the parent company?

Okay. So -- thank you, Giovanni. And as I was mentioning, really, what is an important element of -- as a result of this integration is the strong operation that we have between the CIB, I mean, advisory services in Mediobanca and our mid-corporate and even large corporate Monte Paschi customers, right? Because -- and I have to say that this is one in some way also surprising for the speed we are getting this kind of cooperation is something that is tangible and every day, I'm hearing about meetings that the two teams are having with customers. And I think the trend can only improve, despite we already are reporting important results.

So Mediobanca,, by tradition, is present in all important deals, and we'll keep going and being present because we have exceptionally high quality level of professional there. But now they can also enjoy the fact that we can go to customers and support customer with our -- the balance sheet of Monte Paschi. And this is a win-win solution that is making the bankers from Mediobanca and our relationship managers very close day by day in trying to explore all the opportunities. And one of the key elements of this positive integration is coming, especially in the mid-corporate sector, where Monte Paschi is quite strong. Mediobanca is quite strong because also there, we have top talent bankers, and I believe this is a unique opportunity for growing. And we will see the volumes growing as well the fees, I mean, the advisory fees coming from this activity. So quite positive trend, I believe, from now on.

Giovanni, on the impact of Generali, yes, the Generali participation brings some seasonality to our capital trends because you have deductions as you accrue net profit, and then you have capital release as you are paid dividends. By the way, this is valid not only for Generali, but also for our insurance JVs with AXA even if, of course, on a smaller amount. Then on your precise question, the net expected impact from Generali in the second quarter is around plus 30 basis points. Then on the Danish compromise, we are submitting a question to the EBA.

Sorry, Andrea, can you remind us the benefit of the Danish compromise, please?

On the Danish compromise, we are submitting a question to the EBA to, let's say, validate the potential approach.

The next question is from Sofie Peterzens of Goldman Sachs.

Here is Sofie from Goldman Sachs. So my first question would be on M&A in Italy. I know you are in the middle of the process of integrating Mediobanca, but how do you think about M&A in Italy and kind of opportunities here in the next, I don't know, 12 to 24 months? And then my second question would be, I saw that the variable compensation was lower for Mediobanca this quarter, and that has drove some of the cost improvement this quarter. How should we think about the kind of variable compensation going forward and what you can do on the cost side? And then just finally, a very short question. How should we think about the tax rate going forward? What's the normalized tax rate for MPS?

Okay. So I was already mentioning since last year when we start the transaction on Mediobanca, that I believe size matter in banking. And this is a process that is unavoidable. So for sure, there will be a further phase of consolidation. Having said that, it's nice to be in a position where practically, we feel that we can be clearly a key actor also in this field, thanks to the position we reached in terms of capital, capability to generate value, capability to remunerate our shareholders and at the same time, having a significant buffer in terms of capital. I mean that we believe that we should be focused at the current stage in completing our integration process, ensuring that the synergies we had in mind will be concretely and clearly realized. Hopefully, even above the target we fix to ourselves. And that's why at the current stage, our focus is exclusively in deliver what we promised to the market.

On the other two questions. As regards the operating cost trend, actually, our guidance on PBT factors in a slight growth year-on-year of operating cost. And then, of course, on a quarterly basis, there might be a small volatility. On tax rate, at the moment, let's say, our best estimate is around 32%. And this might slightly vary depending on the contribution of the Generali net income to the bottom line, because the higher the contribution, the lower the weighted tax rate. But at the moment, our best estimate is around 32%.

The next question is from Luis Manuel Grillo Pratas of Autonomous.

My first one is on the 2026 NII, whether you could provide any guidance on NII. Then I have a few clarifications. On the tax rate, you just mentioned 32%. Could you also confirm what would be the tax rate before any income from associates, including Generali? And then I also noticed that the DTAs this quarter were only like EUR 1 million negative, much lower than the run rate book last year. I wanted to confirm whether this is a new run rate?

Okay. So net interest income I believe we can confirm the guidelines we provided at the beginning of the year. The trend is expected to be positive. And so we think that the contribution in the coming quarters will be above the contribution that came in the first quarter, mainly driven by volumes growth and also effective management of spread, particularly, we believe that we can have a tight control also on deposits.

So on the tax rate, actually calculating the taxable income, the tax rate of what is not related to Generali is around 36%. But then when you make calculations, you should take into consideration that some part of the taxable income of the group is abroad. And then the PPA impact is already net of taxes. So this makes the calculations slightly more complicated.

On fees, on convertible DTAs, for the time being, let's say, the guidance is confirmed. Here, this is a benefit deriving from the consolidated tax financial statements with Mediobanca. Then the 2026 amount will depend on the amount of taxes paid in the year while from '27 onwards, the number should be close to 0.

The next question is from Noemi Peruch of Morgan Stanley.

I have a few. The first one is on Generali. So in which scenarios would it make sense for you to sell the stake? Then the second one is on capital. You mentioned the question to the EBA. So I was wondering how long you think this process could last. And what's the sense on the -- of the ECB on this from your dialogue? And then finally, a few questions on the private banking still. So in your press release, you mentioned that the exits were mainly on the first part of the quarter. And I was wondering if this is the same for deposit and outflows, and maybe money outflows. And if you can give us an update in terms of deposit volumes in the Private Banking in Mediobanca in May. And finally, if you could give us your estimate of the outstanding outflow risk related to the bankers that have already left from Mediobanca.

Okay. Honestly, I think I'm so focused in accelerating the integration process that I wouldn't -- I didn't even think in which scenario can be logical or profitable to sell the stake of Generali, so honestly I believe it's better if I postpone this kind of consideration because now what is important for us is to be focused on commercial activity and integration. As I said, it's nice to have a contribution as this quarter, EUR 130 million coming from this stake, and potentially to think also, on some business cooperation with them.

Taking the point regarding -- relating to private banking is really important to consider that in economic terms, the impact of bankers that left are quite marginal, being a significant portion of savings in some way parked in current account or in a very low margin products. So I believe that we can expect some additional, probably, decrease of -- or, how to say, decrease of volumes, but I believe is what we consider a normal trend in each situation together on some flow that we are going to lose. As I mentioned before, we have significant new money that is coming.

And I strongly believe that the actions that were put in place and the people that we have in private banking will already adopted measures in order to have the trend of the stock growing from now on. And I think this unique model of private investment bank that Mediobanca enjoys something that can provide further benefit for the stock of savings on private banking. And this is what I mentioned before already. I was informed that we have important that money coming just for few liquidity events connected with some entrepreneurial deals where Mediobanca is playing the role of advisory in terms of entrepreneur.

At the same time, the role of getting the benefit of the money that is coming from the sale. So I believe the situation is normalized. And as I mentioned before, from now on, I see that we can just observe some natural situation that each bank that has a private banking division is in some way noticed, right? It's important to underline that the first quarter was a particular quarter. And now from mid-April, situation definitely is under control and will keep improving in terms of assets.

And on the EBA?

On the Danish compromise, Noemi, on the Danish compromise, I mean, based on past experiences, it might take some months to get an answer. We're submitting a question in the next few hours. And the ECB will provide their stance to EBA and that we will -- as soon as we get a feedback, a formal feedback, we will give disclosure to the market.

The next question is from Manuela Meroni of Intesa Sanpaolo.

The first one is on the NII. The NII trend was positive in this quarter because it was up quarter-on-quarter despite the issuer days. You mentioned in the press release a contribution from hedging derivatives, so I'm wondering what was such a contribution? And if you expect this contribution to accelerate in the next quarters?

The second question is on the cost of risk, 42 basis points in this quarter. I'm wondering if you have seen some deterioration of the asset quality after the end of the quarter. And if we can take this 42 basis points as a guidance for the full year?

And finally, a clarification on Danish compromise on the previous question. If I remember correctly, the expected benefit from the Danish compromise was 50 basis points. I'm wondering if you can broadly confirm this figure.

Okay. I will start with the asset quality. We didn't observe any signal of deterioration. Situation is, how to say, from the beginning of the year are almost the same. So we feel comfortable to confirm the guidelines we gave with the cost of risk that we said, at the level not higher than what we are observing in the first quarter.

And on the other two questions. On hedging, this is part, let's say, of our overall hedging strategy that led to a reduction of the NII sensitivity. So we expect I would say, stable contribution over the next quarters from this hedging strategy. While on the Danish compromise, yes, I confirm, we've always given a guidance of around 50 bps positive impact.

The next question is from Luigi Tramontana of Kepler Cheuvreux.

Just one question left on the PPA, approximately EUR 60 million this quarter. If I remember well, you gave guidance for the full year of EUR 100 million. Are there any one-off in this quarter? Or do we have to expect a higher impact for the full year?

Yes, on the PPA, let's say, we said that on average, over, let's say, the PPA amortization period, we expected EUR 100 million per year, again, on average. And then the time distribution would depend on the amortization of the relevant assets and liabilities. Actually, the amount is expected to be slightly higher at the beginning of the period, so in the first and second year compared to this average. And this is the first point, of course, the accumulated amount is the same.

The second point is that in this quarter, yes, there was also a bit of seasonality because a good chunk of the PPA reversal was driven by prepayment on consumer loans, even if, let's say, the overall stock amounted despite the very good commercial performance.

The next question is from Andrea Lisi of Equita.

Some clarifications. The first one is if you can provide us a guidance and an evolution of the integration charges. So should we expect it mostly in second quarter, third quarter? And if you confirm the EUR 300 million of these integration charges for the year?

The second question was on the capital dynamics. If on top of what you have already highlighted during the call, so related to the reversal of Generali effect, should -- and the movement of the OCI reserves should we expect also other elements not still highlighted in the quarter dynamic, particularly considering obviously normal risk-weighted asset increase related to volume growth and so on?

And the other question is on volumes. I saw that they increased quite well also on the Monte Paschi perimeter standalone. So if you can provide us an indication on what you expect going on and as well on deposits, which are your expectations?

On the first two questions, integration charges, we would expect them in the second half of this year because, let's say, their booking, of course, is strictly related to the implementation of the relevant actions. And as regards to capital dynamics, in terms of moving parts, of course, there is the DTA utilization. And then the other main driver is related to the RWA growth. In particular, I can anticipate that in the second quarter of this year, we expect a small increase of EUR 400 million RWAs related to the implementation of a model change in Mediobanca.

So volumes is clear that integration and synergies that are coming, integration counts a lot of the contribution of consumer loans. That's why we believe that we will observe a growing trend up to the end of the year as a result of effective commercial activity that Compass traditionally has in the coming quarters and also some synergies that will come according to our plan, because a significant portion of synergies are coming from -- in the area of retail banking where we allocate also from a logical point of view, the consumer lending activity.

So combined with consumer lending, we expect to have a growing line at least with what we reported in the first quarter for mid-corporate, also with some deals. But clearly, our focus is what we believe is sustainable. So retail mid-segment, and then corporate connected with additional business can come by getting turnover from the customers. So in a nutshell, a growing trend as a result also of gradual implementation of the synergies we expect, particularly in consumer lending.

Sorry, a follow-up on deposits, what are your expectations?

Sorry. I was -- I forgot about that. It's clear that for us, we consider deposits like a raw material for an industry. For us, are key. Clearly, we have to manage a trade off so while on retail and small business is crucial to our deposit, we have a tactical approach as far as concerned large corporate, where the trade off between price and volumes are always taken in consideration. As you see, we don't have an issue in terms of liquidity. That's why I have to say retail and small companies, the trend should be growing as this is not affecting particularly the spread, while on large corporate, we will see time to time. But anyway, in general terms, we expect deposits to grow.

The next question is from Hugo Cruz of KBW.

I have quite a few questions. So first, on the NII, your sensitivity seems quite low. And given that everyone expects rates to go up this year, I was wondering how we could see that playing out in your NII line. So when could we see a positive impact from the higher rates this year, assuming they happen in June? And then if you could increase your sensitivity over time to take advantage of these rate increases? So that's the first question.

Second, on OpEx. I was wondering retainers, is there anything booked already. I think your guidance for the full year was clear but I was wondering if that includes some sort of one-off costs with retainers either already in Q1 or later in the year, if you could quantify that.

Then a question on the PBT guidance above EUR 3.5 billion, is that before or after the restructuring costs? And then finally, the interim dividend, I understood that you said you could pay an interim after the delisting of Mediobanca. I'm not sure if that means there could be an interim already this year or not? So if you could clarify that because I think the market is already pricing in an interim for this year. So that's it.

So I'll try to answer and maybe not in the same order. So the first question -- sorry, not the first question. One of the questions was on the guidance on PBT, whether it was after restructuring charges. Yes. it is after restructuring charges. Then on costs, there was a question on whether the -- in this quarter, we were factoring one-off costs. There are some -- there are a few millions related to retention charges, but they are booked in integration cost, so in the integration cost line. Then interim dividend after delisting. We -- let's say, we are, as mentioned by the CEO during the presentation, we are, let's say, delivering on our time table.

As regards to interim dividend, when we present the first half results, we will take a view whether when to start paying interim dividends, so whether this year or not.

On NII sensitivity, yes, I mean, we are managing proactively, let's say, our hedging strategy, considering particularly the amount of new business that we grant every quarter. So we actually are in a position to benefit of the increasing interest rates.

The next question is from Lorenzo Giacometti of Intermonte.

I have actually one question and one follow-up on capital. So the first question is on synergies. Can you remind us what are the business area in which you basically -- which the majority of synergies will be extracted? And given the working groups already in place, are you seeing some upside potential or downside risk on the overall number? And the follow-up on capital is that -- I mean, can you confirm that the Danish compromise positive impact on capital is not included in your capital projections for the next year? That's all.

Okay. So synergies. Most of synergies are expected to come from retail and commercial banking. And I believe they account approximately for 50% of the total. Then we have an important contribution coming from corporate investment banking, as I was mentioning, even above what we were originally expected. Originally, we plan close to 20%, and I think the contribution can be even higher. And clearly, asset gathering and wealth management, additionally, we will have a contribution can be even around 15%, and then the remaining is connected also with private banking, especially if we consider the activity of private investment banking.

So overall, this distribution can slightly change, especially if we are observing this positive trend on corporate investment banking, but this can be also on the top of the EUR 700 million, if we are capable to accelerate even more than what we are doing now, this kind of cooperation full fledged service that we can provide to our -- especially mid-corporate customers.

And I will take the question, Andrea. So positive impact on Danish compromise is not considered in any of our projections as we were clearly mentioning the time of presentation our business plan.

[Operator Instructions] Mr. Lovaglio, there are no more questions registered at this time, sir.

So thank you very much to all of you and looking forward to meeting you again in August. Thank you very much.

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

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the MPS Group Fourth Quarter and Full Year 2025 Preliminary Results Presentation.

[Operator Instructions] At this time, I would like to turn the conference over to Mr. Luigi Lovaglio, Chief Executive Officer and General Manager. Please go ahead, sir.

Thank you. Good morning. Thank you for joining us for the presentation of our fourth quarter and full year 2025 financial results. Today is more than a quarterly presentation, it marks a milestone in our history.

We are at the gateway to what Monte Paschi Group will become, decisive turning point that sets the direction of the group for the years to come. It is the first time we stand here as Monte Paschi plus Mediobanca, with consolidated results that speaks clearly and proudly about what we are accomplishing together.

What truly matters today is that we now have a tangible evidence, not forecasts, not expectation, that Monte Paschi plus Mediobanca combination is grounded in a strong industrial rationale, strategic coherence and the strength to create lasting value for our clients, our people, our shareholder and for the entire economy as a whole.

As Monte Paschi, we're presenting another quarter and full year of strong stand-alone results. Our business continues to perform solidly across all dimensions, particularly in fees and commission income, supported by robust commercial dynamics.

We are offering one of the highest dividend yields in European banking currently standing at 10%. All these provides a solid foundation on which to build the future of the Monte Paschi Group, a leading competitive force in the banking landscape, thanks to the complementarity of the two platforms, Monte Paschi and Mediobanca, with a diversified, resilient and customer-driven business mix.

We are accelerating the integration process with the bank moving towards a specialized [Technical Difficulty] business model that enhances the brand value, capabilities and talents of both organizations with Mediobanca's legal entity focused on corporate investment banking, high-end private banking activities, embracing a very ambitious and deserved path for growth and development.

We confirm that our target group structure will be fully aligned with our industrial projects to maximize the value creation at the integration level. We will present our business plan for the combination with Mediobanca on February 27 as we are finalizing the guideline for the group's reorganization. This will allow us to build a powerful, profitable and sustainable business model.

Our clients will experience a group that blends proximity with capability, heritage with innovation. As the integration progresses, these benefits will become increasingly visible.

Together with Mediobanca, we have the earning power, capital strength and the balance sheet quality to invest in talent retention and development with dedicated program being designed and funded; client service excellence, leveraging combined capabilities as a broader product and service platform; growth initiatives, systematically pursuing customer coverage opportunities; technology investing to support all our businesses; sustained high shareholders' returns supported by strong earnings and capital generation.

Turning now to the full year results, which underscore our ability to create sustainable value and deliver strong shareholders' return. Full year 2025 net profit of the new combined group amounted to EUR 3 billion before PPA's net income impact equal to around EUR 300 million. Full year 2025 Monte Paschi stand-alone profit at EUR 2.750 billion, up by 17.7%, higher than last year, excluding the positive net tax in both periods [Technical Difficulty].

Ladies and gentlemen, please hold the line. The conference will resume shortly. Thank you. Mr. Lovaglio, you can go ahead.

Okay. Thank you. I'm just recalling the full year 2025 net profit of the new combined group at EUR 3 billion before PPA's net economic impact equal to EUR 300 million. Full year 2025 Monte Paschi stand-alone net profit at EUR 2.750 billion, up by 17.7% year-on-year, excluding the positive net tax in both periods.

Results were driven by solid operating performance with resilient revenues sustained by growing fees and the effective management of both operating costs and cost of risk. Net profit in the last quarter reached EUR 1.384 billion, higher by 18.5% compared with the fourth quarter of 2024, excluding positive net tax.

Focusing on our stand-alone results, our strong performance is reflected in the net operating profit, which amounted to EUR 1.860 billion in the 12 months, growing by 6.4% year-on-year with resilient revenue sustained by strong plus 8.2% increase in fee income, costs well under control, improved cost of risk.

Significant contribution to the results came from the fourth quarter net operating profit that reached EUR 472 million. It was higher by 15.3% [Technical Difficulty] and plus 4.2% quarter on the quarter. Commercial performance remained very strong. Savings, inflows, mortgages and consumer finance all confirm the resilience and the power of our franchise.

Regarding asset quality, cost of risk has been reduced to 40 bps from 53 bps in 2024. Gross NPE ratio at 3.5%, lower by 1 percentage point compared to last year. Net NPE ratio at 1.8%. NPE coverage reached 49.3% with an increase of 80 basis points year-on-year.

Solid capital position at group level with core Tier 1 ratio at 16.2%, including the impact of Mediobanca transaction, net of dividend to be proposed to the coming Annual General Meeting. The dividend is equal to EUR 0.86 per share for a total amount above EUR 2.6 billion for a dividend yield of 10% at the top of the banking system.

And now I would like to give a short update on the combination process with Mediobanca. The combination creates a new strong, powerful player in the banking sector, thanks to the complementarity of the two platforms, leveraging the strength of both Monte Paschi and Mediobanca.

The target group structure is confirmed, fully aligned with the industrial rationale of the offer, aiming at maximize the value creation and achieve maximum integration in line with the regulatory requirements related to ECB authorization, with legal entity Mediobanca focused on corporate investment banking and private banking high level.

The combination program is progressing at full speed with full involvement and alignment of both teams. Bottom-up analysis confirmed that outside-in estimate of EUR 700 million synergies are there, and I allow myself to say also with a potential upside. As anticipated, we will detail the corporate reorganization business plan and the updated targets at our Capital Market Day on February 27.

We now move to the stand-alone results section. For comparability, this P&L and balance sheet figures do not include Mediobanca. Now just an explanation from the stand-alone to the combined group full year '25 net profit. We are describing the main components.

The waterfall explain the, as I said, components for the full year '25 group profit reported at the level of EUR 2.7 billion. Monte Paschi's stand-alone pre-tax profit is EUR 1.7 billion, well above guidance. Fourth quarter Mediobanca pre-tax profit at EUR 376 million. With Mediobanca P&L consolidation, we completed the full write-up of off-balance sheet DTAs with the net positive contribution of taxes amounted to EUR 461 million (sic) [ EUR 961 million ] in the full year.

With these three elements, we have reached EUR 3 billion net profit of the group. The slide also highlights PPA's economic impacts, including an ECL booking of Mediobanca's performing loans as customary under IFRS. Including these net effects, we have reported group net profit of EUR 2.716 billion.

Now let's move on the usually discussed details of Monte Paschi's stand-alone results. As I have already mentioned, full year 2025 net profit of Monte Paschi stand-alone reached EUR 2.750 billion, up by 17.7% year-on-year, net of positive tax effects in both periods. These results were driven by a solid operating performance, thanks to resilient revenue, sustained by strong growth in fees, coupled with effective management of both operating cost and cost of risk.

Fourth quarter contribution of EUR 1.384 billion, including positive net tax from DTA write-up following tax consolidation with Mediobanca. Net of that tax effect, Q4 '25 profit is up by 18.5% versus fourth quarter '24, with quarterly dynamics affected by nonoperating costs related to the transaction.

Now moving on the next slide. The net operating profit confirms the strength of our underlining engine. Full year 2025 amounted to EUR 1.860 billion, up by 6.4% year-on-year. The net operating profit in the fourth quarter amounted to EUR 472 million, showing an increase of 15.3% compared to last year and 4.2% dynamics quarter-on-quarter, driven by strong fee income, solid base this quarter for a new strategic plan.

Now let's move on to gross operating profit. We reached EUR 546 million in this quarter, up by 5.2% year-on-year and 2.8% quarter-on-quarter. Revenues increased by 2.4%, despite the impact of the decreasing interest rate environment, thanks again to strong fees, while costs remain well under control.

Full year gross operating profit was EUR 2.189 billion, up by 1%, with the revenues supported by fees and net interest income stabilization. Operating costs are up only by 0.8% despite labor contract renewal. Full year cost/income remained stable at 46%.

Commercial momentum remains a clear highlight and lays the foundation for the new business plan. Total commercial savings are EUR 178 billion, up by 6.5% year-on-year. Wealth Management gross inflow are EUR 17 billion, up by 17%. New retail mortgages are EUR 6 billion, up by 81% (sic) [ 83% ] and the new consumer finance are at the level of EUR 1.3 billion, up by 14%.

Let's see now net interest income evolution. In the fourth quarter '25, net interest income is EUR 544 million, flat quarter-on-quarter, seeing a stabilization according to the guideline we gave in the last quarter. Full year '25 net interest income was at the level of EUR 2.182 billion, down by 7.4% year-on-year, in line with expectations.

Now looking at the volumes, let's start with loans. Net customer loans to retail and small business reached practically EUR 66 billion, increasing by EUR 4 billion or plus 6.2% year-on-year. Growth is driven by strong commercial activity in key strategic segments, with important contribution also in Q4.

Total commercial savings reached EUR 178 billion, up by more than EUR 10 billion since December 2024. The Q4 '25 contribution was around EUR 4 billion, again driven by all components.

Quickly now about govies. The banking book stands at EUR 9.1 billion. Credit spread sensitivity of the Fair Value to OCI portfolio remains very low. The fair value through P&L decreased slightly quarter-on-quarter, reflecting market-making dynamics.

Now let's move on to fees and commission income. Fees continue to be a key driver of our performance. Fourth quarter '25 fees are EUR 401 million, up by 7.4% year-on-year, driven by Wealth Management fees, up by 14.8%. Fee also increased by 4.9% quarter-on-quarter, with both Wealth Management and Commercial Banking contributing by 7% and 2%, respectively.

Full year fees are at the level of EUR 1.586 billion, up by 8.2% year-on-year. Wealth Management and Advisory fees are up by 13.3% and Commercial Banking fees are up by 3.5%. Again, this is a confirmation how our network is powerful.

Now let's move on to the operating costs, starting with the quarterly evolution. Q4 '25 operating costs are at the level of EUR 474 million, down by 0.6% year-on-year. Non-HR costs fell by 7.8% year-on-year, more than offsetting HR cost pressure from contract renewal and variable remuneration.

Quarterly dynamics reflect typical fourth quarter seasonality. Full year operating costs are at the level of EUR 1.885 billion, up only by 0.8% year-on-year. Again, non-HR costs are down by 5.7%, offsetting HR costs up by 4.3%.

Now let's move on asset quality. Asset quality continues to improve. Gross NPE stock down to EUR 2.9 billion, gross NPE ratio improved to 3.5% from 4.5% in December '24. Net NPE ratio is at 1.8% from 2.4%.

Cost of risk is 57 bps (sic) [ 37 bps ] in Q4 and 40 bps for the full year '25, down from 53 bps in full year '24. NPE coverage is 49.3%, improving by 80 bps year-on-year.

Now funding liquidity again is showing the strength of our balance sheet. We have a very solid liquidity position, confirmed also in this quarter with unencumbered counterbalancing capacity above EUR 30 billion, LCR at 168% and NSFR at the level of 133%.

Now a quick and simple representation of the Purchase Price Allocation. So we are presenting here the main components. Provisional effects of PPA amount to approximately EUR 3.6 billion, of which EUR 2.5 billion have already been included in the third quarter 2025 results. Goodwill is estimated at the level of EUR 3 billion. The Purchase Price Allocation process will be continued, and it is expected to be finalized by the end of September 2026.

Now capital. We have a very strong capital position, and this is confirmed also in this quarter with a common equity Tier 1 ratio fully loaded at the level of 16.2%, including net profit net of dividend proposed already reflecting the preliminary impact of the Mediobanca transaction.

The capital ratios are therefore strong, with a large capital buffer compared to regulatory requirements that give us strategic flexibility going forward. The slide shows the main drivers of the quarterly dynamic and the conservative treatment of partial preliminary PPA effects.

Now let me spend a few words on Mediobanca fourth quarter results. The fourth quarter, again, is a confirmation of the potential deriving from the combination. Net profit Mediobanca was at the level of EUR 301 million before one-offs and EUR 221 million reported for fair value adjustments and costs related to the OPS. Sound asset-driven business with total financial assets at the level of EUR 115 billion, stable quarter-on-quarter.

Revenues are up by 6% quarter-on-quarter with fees rebounding plus 6%, driven by Wealth Management. Cost/income at the level of 47%, including retention action costs, and cost of risk is 55 bps. Core Tier 1 at the level of 16.4%. A dividend per share of EUR 0.63 is proposed to be paid in April.

Now let's turn to the combined platform and the industrial rationale. This transaction has a very strong industrial rationale, a combined platform that are not overlapping but genuinely complementary. Monte Paschi brings unique retail and commercial banking franchise. Mediobanca contributes best-in-class capabilities in consumer finance, wealth, investment banking and asset management.

Together, we create a structurally profitable and sustainable business model. The operating model is simple and industrially driven. We leverage scale where it matters while preserving specialization and excellence in each business line.

In Retail & Consumer Finance, the logic is very clear. By combining Monte Paschi's nationwide reach with Compass' leadership in consumer finance, we built a market-leading platform with superior growth and returns. Wealth Management and Private Banking are a core value driver. Greater scale and stronger digital capabilities allow us to move up the value chain, attract high net worth clients and increased share of wallet.

Asset gathering platforms and private banking franchises work together in a fully integrated model. Corporate and Investment Banking is significantly strengthened. We offer clients a solid balance sheet and unique advisory expertise in Italy. And also international through Messier Maris and Arma Partners.

Insurance and asset management add stability and diversification. They reduce reliance on traditional banking revenues and improve the overall risk return profile. The result is a well-balanced, resilient growth, diversified across retail, corporate, wealth and insurance and well positioned to deliver sustainable value through the cycle.

On pro forma basis, the group has a well-balanced revenue mix. Retail and Commercial Banking around 30%; Consumer finance 19%; asset gathering and management, 21%; 9%, SIB; and 14%, insurance. This is supported by a revenues base around EUR 8 billion.

Now about the Combination Program. We are moving at full speed with the combination. Our objective is clear. We want to reach the target operating model by the end of this year, 2026. We have almost completed the design of a comprehensive and disciplined integration plan. It covers all key business functions with dedicated teams, strong leadership and clear accountability.

The focus is on efficient execution while ensuring business continuity and minimal disruption. Phase 1 is now completed. We have finalized the diagnostic and the design of the target business model and operating model. We are now entering Phase 2. This phase is fully dedicated to complete the definition of the business target model and the corporate structure.

The work done over the last few months give us strong confidence in the delivery of EUR 700 million of envisaged synergies. These synergies are concrete and actionable. We have identified more than 50 granular initiatives across business, cost and funding.

The integration plan is almost finalized, fully aligned with the ECB requirement, with clear milestones already set for the coming weeks. Execution so far has been solid. Teams are working constructively. And this is the key message I want to underline. Synergies are not a promise. They are a program with initiative, milestone and accountabilities already in motion.

Let me conclude with what really matters. The fundamentals of this group are already very strong. In full year '25, Monte Paschi on a stand-alone basis, delivered a pretax profit of EUR 1.7 billion, well above guidance. This is a result of outstanding commercial performance with strong volume growth, a high single-digit fee growth.

And this momentum does not stop here. We expect these trends to continue into 2026, with an acceleration of commercial dynamics and solid growth in fees and commissions. On a pro forma basis, this trend will support a year-on-year increase in group profit before tax.

At the same time, we have confirmed the target group structure, a structure fully aligned with industrial rationale of the offer designed to maximize integration and to maximize synergies. Mediobanca's legal entity will be focused on corporate and investment banking and high-end product banking, reinforcing clarity, specialization and value creation.

But this is not just about numbers. This is about a new way of doing banking, a group where Mediobanca's client relationship is strengthening Monte Paschi lending engine, where excellent is not the sum of the part, but the multiplier, where client experience the full breadth of our capabilities with simplicity, confidence and trust, where two strong historic brands and franchises stand together as one group, broader, more powerful and more ambitious than ever.

This is only the beginning of what Monte Paschi Group will become, a group we are shaping for the benefit of all our stakeholders, a group powered by almost EUR 3 billion in earnings, a robust balance sheet with 16.2% capital strength and by an integration, advancing with discipline, speed and purpose, guided by a clear organization blueprint. This will be fully unveiled on February 27, when we will present the business plan for Monte Paschi and Mediobanca combination.

To our employees, our clients and our shareholders, [Foreign Language]. Your commitment, your confidence and your belief in this journey are the forces that make this transformation real. Our fundamentals are strong, our strategy is client-focused, our commitment and our ambitions are very high.

Together, we are not simply combining two banks. We are shaping the leading competitive force for Italy, one that creates value, strengthen its talent and stands on solid foundation for our employees, for our clients and for the future.

Thank you, and we are ready to take your questions.

[Operator Instructions] The first question is from the conference call in English from Antonio Reale, Bank of America.

[Technical Difficulty]

Mr. Reale, we cannot hear you. Can you get closer to the receiver, please? Mr. Reale, we cannot hear you. Maybe your line is on mute. Please check your microphone, please.

[Technical Difficulty]

The next question is from Giovanni Razzoli, Deutsche Bank.

The first one is on the CET1 ratio. If I'm not mistaken, the 16.2% includes only EUR 40 million of restructuring cost out of a total of EUR 600 million. And so my question is, can you still confirm above 16% CET1 ratio in the coming years when all the restructuring costs will be booked?

And another question on the restructuring cost is relating to the phasing of those costs in the coming years. How does this phasing of restructuring cost aligns with the proposal of dividend per share of EUR 0.86, which I presume represent a starting point for the plan?

So in other words, how can you expect to confirm, if any, this EUR 0.86 of dividend in the coming years when you are likely recorded restructuring cost? I understand that this is a kind of anticipation to the business plan, but if you can help us understanding how this square with the overall picture of this CET1 and dividend.

On your questions, actually, the integration cost, based on the latest estimates, are expected to be for the next year is around still EUR 500 million gross. So the net amount is around EUR 350 million. So if you even factored them in the capital ratio, would still be around 16%. Then you have to take into consideration that the booking of the integration cost is strictly related to the announcement of the plan projections, so on the plan targets and initiatives. So this is why will happen for the bulk in 2026.

For your last question on capital projections, state what I said on the impact of integration costs per se, I would, let's say, postpone the answer to when we present the business plan, which is, I would say, let me anticipate that this is -- this statement is valid for most of the forward-looking questions that we will tackle when we present the business plan on the 27th of February.

The next question is from Luis Manuel Grillo Pratas, Autonomous.

You comment on the presentation that you want the full integration of the two banks. I wanted to ask you, what is the ideal corporate structure for you? Is it a scenario where you delist Mediobanca, owning 100%, but then you spinoff a specialized entity for CIB and private banking? I'm asking this because for weeks, there has been a lot of speculation on the press about alternative routes such as refloating Mediobanca, keeping it listed. So any color here would be very much appreciated.

And then I wanted to ask you about the NII in Q4 stand-alone. It came flat, whereas peers showed already some growth in Q4 '25. If I look at individual drivers, loan volumes came 1% higher Q-on-Q. The customer spread also expanded a few basis points to 2.8%. So I wanted to understand the flattish Q4 figure, if there were like any one-offs there and whether you could provide any guidance for NII in 2026 stand-alone, please?

Okay. Thank you. Thank you for the question. I think Andrea make preliminary statement that clearly, most of the information regarding key elements, P&L and projection will be provided in 15 days with the presentation of the business plan.

Having said that, I can just really confirm that we are focused regarding the structure and reorganization, we are focused on value creation. And in order to do it, we need to maximize the level of industrial synergies to be achieved. That's why we are confirming that the organization of the group should respond to this objective.

The guideline will be finalized together with Mediobanca in the coming weeks, with the aim of reaching the final approval of the integration industrial plan by February 26. So I believe as -- no decisions will be taken at the Board yet. I really ask to be patient and to wait for the presentation of the business plan in the next 15 days.

About net interest income, I will ask Andrea.

Yes, about net interest income. As mentioned also in our previous calls, starting from Q4, has actually happened, we expect a stabilization and then a pickup -- a slight pickup in the next few quarters in 2026. In the fourth quarter '25, yes, we have some benefits on wholesale cost of funding. And also on commercial NII, there are actually, yes, some accounting one-off impacts that led to the stable NII. But let's say, the trend is expected to be a stable/positive one in '26.

Can I just do a very quick follow-up? So in the scenario where you delist Mediobanca via major bank corporation, I would like to ask how the buyout price, the exchange ratio is defined? Do you need to pay the same exchange ratio that you paid during the offer, so 2.533? Or can it be a different price, for instance, considering where Mediobanca trades compared to the offer?

Whatever I'm saying will be price sensitive. So I think it's better if we postpone the right timing. Sorry for that.

The next question is from Noemi Peruch, Morgan Stanley.

The first one is on tax rate. Which tax rate would you expect for 2026 for the group? And then if you could please update us on the trends of private bankers year-to-date, whether the exits have stopped or not? My third question is on the payment of an interim dividend in 2026. If you can share your thoughts on this?

Okay. Take the answer, right. Okay. Tax rate will be around 30% -- 29%, 30%, I believe, clearly in line with what we planned originally in our projection for the OPS.

Then I think regarding Mediobanca private bankers, right? I believe that some necessary actions have already been taken to retain talented bankers, that I believe are crucial for the business origination and growth. I know the new effort will be put in place in order to be even more effective.

Honestly, we believe that the situation is something that we can consider absolutely under control. And I'm sure that the top management of Mediobanca will ensure prompt action in order even to invert this kind of trend.

So as far as dividend, I believe, as Andrea was mentioning, it's better if we disclose all the necessary information in the next presentation of the business plan 2 weeks from now.

The next question is from Hugo Cruz, KBW.

I have a few questions. So the PPA, the full process will be completed by September. Should we expect any further impact on capital from finalizing this process? Perhaps it's something you can answer without kind of going into the business plan. And then ideally, if you could give guidance on PPA charge for future years, the annual recurring charge? But so that's one question.

Second question, MREL. Can you confirm if the plan is still to keep the combined entity as a single point of entry? And the third question on ECB funding, you're still 7% of liabilities. Can you remind us of the cost of this funding and if you can replace it with cheaper funding?

So thank you for your questions. So on the first question, what actually remains to be done with regard to the PPA is mainly related to the valuation of intangibles like brands, customer relationships, et cetera. So we would not expect any material impact on capital. The relevant things to be assessed were done end of this year.

As regards the PPA charge going forward, then it depends on the amortization schedule of the different asset liabilities. But let's say, on average, you can assume around EUR 100 million per year for an average 10 years, then it will depend on the actual amortization of the different items.

As regards the question on MREL, yes, we definitely still plan, stated that formally the decision is not on us, is on the SRB, but anyway that the group will be managed via a single point of entry approach, and this is also relevant for funding synergies. So definitely, this is still an objective.

Finally, the ECB funding, yes, I mean, as we further accelerate on our commercial deposits, yes, we will be able to replace the remaining ECB funding potential with cheaper cost of fund.

Next question is from Andrea Lisi, Equita.

The first one is on fees, particularly on wealth management fees that made really well in the last quarter. Just to understand and for comparison of the contribution of performance fees in the fourth quarter '25 and in the fourth quarter '24.

Then I want to ask you if clearly, I mean, that this will be said clearly that in the plan but if the target of EUR 700 million synergies would be realized also without a delisting of Mediobanca? And in case of full integration of Mediobanca with Monte, that's just from a regulatory standpoint and time frame, can you identify or clarify which are clearly the steps and the time frame to arrive at the full integration?

Maybe let me before letting the CEO comment on the commercial performance in wealth management fees, maybe just make a quick preamble that I think is relevant for the interpretation of our performance that was particularly good on fees.

I would refer you to Slide 39. So it is in annex of our presentation where you see the recast of Mediobanca P&L on the basis of Monte Paschi reclassified P&L. This is relevant because if you compare the fee number, you can see that the number under our classification is lower than the one that you will find in the Mediobanca presentation because there are some reclassification to other items like cost, for example. So this is relevant for your future projections and also to compare with your previous target. So this is the first point.

Second point, you have to take into consideration is instead when you consolidate, then part of the banking fees of Monte Paschi, so which are the upfront fees that we get on Compass -- on the distribution of Compass products, which is, say, around EUR 10 million this quarter, slightly less, these are elated because these are accrued in the future years.

So you have to take into consideration these two items to better interpret the fee performance that is much better compared to whether you simply add the two -- the fees of the presentation of Monte Paschi stand-alone and Mediobanca stand-alone as it was shown yesterday. So you have to refer to our Slide 39 to interpret the future. So sorry for the long preamble, but I think it's relevant for your future projections, but also to interpret our quarterly results.

And then I'll let the CEO comment on the commercial performance.

Okay. Let's start from the key information that we are providing with these results. So as we said, 1/3 of total revenues are coming from asset gathering. That's why it's quite important for us to exploit the potential of full synergies that we can come from the combination of Mediobanca plus Monte Paschi.

Now having said that, clearly, on the side of private banking, high level, this kind of activity will be clearly concentrated the focused in Mediobanca legal entity with the strong brands that they have, with the strong professional people there and the long-lasting experience and the position that they have on in the market.

If I remember well, recently, they got also a special reward and the money as the best private banker activity in Italy, right? So this is, again, a plus that we believe can further be developed by sharing their know-how also to the bulk of customer -- of private banking customer we have in Monte Paschi.

Having said that, it's clearly that as we were seeing in the documents of our public offer, it's clear that you will extract maximum level of synergies by optimizing the full integration. But anyway, also without a full integration, we can get synergies.

It's clear that the goal is to generate the maximum level of synergies and value for our stakeholder. That's why we are in the process to finalize the best structure that can fit with this goal, and we provide to the market a complete set of information during the business plan presentation.

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

I'm going to try again. Sorry about earlier. It's Antonio from Bank of America. Two questions from my side. Some of them have been addressed already, but I'm going to ask you a market question. Ex dividend, Monte Paschi is trading now on EUR 8 on my screen. And I think you said not long ago on previous occasions that you think the shares are undervalued.

Now I think you still believe that, and that probably makes two of us. My question is how can you convince the market that it's wrong on Monte dei Paschi? What do you think the market is getting wrong? That's my first question.

My second one is, can you help us frame the moving parts from here on sort of what's affecting your capital going forward, both positively and negatively? I know you've talked about PPAs, but sort of DTAs restructuring charge. Trying to get a sense of the magnitude of your excess capital here. You might have already answered this, but sort of is staying above 16% a target also in the outer years?

I think what is important and normally is what we're trying to do is to convince the market with the results. We are keeping deliver sustainable, continuously growing results in what is the part that is showing the sustainability of these results is the fees and commission. We are one of the most powerful network in Italy. And this is proven by this capability to keeping growing high-quality streams of revenues that are presented by wealth management product and fees related to this kind of business.

We are a bank that is providing -- the group will be capable to provide one of the highest dividend yield. We have a strong position of capital, thanks also, as we were mentioning, the write-up of DTAs, we can count on additional support to the core Tier 1 of around EUR 500 million per year for the next 6 years. So we have capital. We can give evidence of capability to provide high remuneration while keeping a strong position, and keeping a strong position of capital will give us the opportunity to exploit and capture all the opportunity that will come to the market to further enlarge our business scope and to further have possibility to reward our shareholders.

So I'm sure that the market will recognize the work that we are doing, the quality of our results, and we will see the appreciation of our evaluation, that I agree with you, is absolutely underestimated today.

On -- Antonio, on the capital moving parts, let's say, in qualitative terms, you have the business evolution. So the net income relevant RWAs growth or anyway, movements that are relevant to produce that P&L. We mentioned that the one-off integration costs that are around -- expected to be around EUR 500 million gross of tax.

We mentioned the PPA charge for the next 10 years. The CEO has just mentioned the EUR 500 million for the next 6 years on average, positive contribution from the DTA utilization and then you will have the dividend roughly. So these are the moving parts. Then, of course, it depends on the relevant projections on which we will comment on the 27th of February.

The next question is from Hugo Cruz, KBW.

Sorry, I just wanted to follow up because you mentioned the integration charges, but how -- what split should we assume between Mediobanca stand-alone and Monte Paschi stand-alone for those charges?

Actually, this is a second level details question. So let us answer on the 27 of February. So I should go too much into detail now to answer this question, so that would be ahead of our business plan presentation, sorry.

The next question is the follow-up from Luis Manuel Grillo Pratas, Autonomous.

Just a quick follow-up. You mentioned the retention policy at Mediobanca. Can you give us any color on the expected cost of this policy? And like any early evidence that is working, essentially stopping the exit of private bankers?

As I mentioned, Mediobanca was already put in place some actions of retention. I believe that at the current stage, there are not a significant level of expenses. That's why we count on a broader action in order to retain the talented people that currently is in Mediobanca.

That's why I think a component of this cost will be considering among the split that we are going to provide in the business plan. So it's better not to anticipate out of the context that we are going to explain in connection also with the expectation of growing and further potential private banker to join Mediobanca as well.

Mr. Lovaglio, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

So thank you very much. I think we fixed this important date that is this investor day that we are going to have on 26 (sic) [ 27 ]. So it will be a pleasure to answer all your question, I apologize, if today, we postponed some answer.

But I'm sure you will also appreciate what we are going to disclose because this project that we are going to represent a full business plan to the plan of integration is one of the most attractive projects for the banking sector and opportunity to reward our stakeholders, and you will see that what we are going to present will be fully answering -- responding to this high level of targets we fixed to ourselves. Thank you very much, and see you in 2 weeks from now.

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

Thank you very much. Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the MPS Group Third Quarter and 9 Months 2025 Results Presentation. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Luigi Lovaglio, Chief Executive Officer and General Manager. Please go ahead, sir.

Good morning, everyone. Thank you for joining us today for the presentation of our third quarter and 9 months 2025 financial results. This is a landmark moment for Monte Paschi. At the end of September, we successfully completed the acquisition of Mediobanca, a strategic move we have always believed in. And 86.3% of Mediobanca shareholders confirm that belief by tendering their shares. That's a clear endorsement of the industrial strength and the long-term value of this combination from both core shareholders and from Italian and international institutional investors.

So first, let me thank all of our shareholders for their trust and confidence in our vision and in our ability to execute. I also want to thank our people. Our teams at Monte Paschi have stayed laser-focused through intense months, and they continue to serve clients, deliver strong commercial momentum and produce another solid quarter. They showed what that commitment to performance and integrity looks like.

I also want to acknowledge our colleagues at Mediobanca as well. Their results this quarter demonstrate the resilience of their business model and the strength of their client relationship. That is exactly the kind of excellence we want to build with.

Finally, thanks to our clients. Your continued trust is the foundation of everything we do. Together, shareholders, employees, clients, we made this possible. With Mediobanca, we have created a new competitive force in Italian banking. This combination brings together strong brands with deep client loyalty, exceptional professionals across both organizations, complementary business strength across Commercial Banking, Wealth Management, Corporate & Investment Banking, Consumer Finance and cutting-edge and scalable technology. This is an accretive combination financially, strategically and commercially. It accelerates growth and value creation.

Our combination process with Mediobanca with more than 20 ongoing work streams is structured on track and is going smoothly with discipline. And I'm pleased to start working closely with Vittorio Grilli and Alessandro Melzi d'Eril, who will be key in ensuring that together, we reach new heights as an integral part of this project.

We will present our group business plan in the first quarter of next year, that will be the moment to outline the full strategic and financial road map and potential power of the combined group. In the meantime, as you can see from the third quarter results, Monte Paschi continues to perform very well, thanks to the strength of our franchise and disciplined cost management. I am especially pleased to note that our people were not distracted by the Mediobanca transaction. Across the organization, they were able to stay focused and deliver on their business target to achieve profitable growth.

We reached net profit at about EUR 1.4 billion, up by 17.5%, excluding net taxes. Our balance sheet as a consequence of the combination with Mediobanca continues to be stronger and stronger. We maintain a very solid level of core Tier 1 at 16.9%, including the preliminary impact of Mediobanca. This is higher than we expected when we announced the transaction in January. For the 2025 full year, we are setting new guidance on pretax profit. We now expect to well exceed EUR 1.6 billion.

Let's move on to the 9-month results, which testify our capability to build sustainable value and deliver high returns to our shareholders. We closed the first 9 months with a net profit of EUR 1.366 billion, up by 17.5% year-on-year, excluding the positive net taxes in both periods, sustained by the solid growth fees, thanks to the clear focus on commercial activity. Third quarter net profit was EUR 474 million, up by 16.5% compared to the third quarter last year, confirming the solid progression while the quarterly comparison quarter-on-quarter was affected by the typical third quarter seasonality on revenues, while confirming a high level of profitability.

Net operating profit increased by 3.7% year-on-year, reaching about EUR 1.4 billion in 9 months, thanks to resilient revenue sustained by fees, offsetting rate impact on net interest income almost totally, operating costs under control and improved cost of risk. Third quarter net operating profit at EUR 453 million, up by 2.4% year-on-year and decreasing by 7.3% quarter-on-quarter due to the seasonality.

After 9 months, gross operating profit reached EUR 1.643 billion, almost stable year-on-year, thanks to the resilient revenues in a declining interest rate scenario sustained by fee income and cost well under control. Third quarter gross operating profit at EUR 532 million. 9-month cost-income ratio at 46%, stable year-on-year.

Strong progression on bank's commercial performance in 9 months driven by the clear focus of Monte Paschi's franchise on key strategic areas. Wealth Management with gross inflow close to EUR 13 billion, up by 18% year-on-year. We granted mortgages to families worth EUR 4.8 billion, more than doubling last year volumes. New consumer loan showed a 17% increase compared to the same period of last year. These are tangible signs of bank deeply connected to its client and to the real economy.

Our cost of risk dropped to 42 basis points in 9 months from 53 basis points last year. Gross NPE ratio 3.7% and net NPE ratio at 2% and NPE coverage at 48.7%. The combination with Mediobanca will lead to a further enforcement of the balance sheet structure of the new group.

With a sound liquidity position with counterbalancing capacity above EUR 53 billion. Core Tier 1 fully loaded at a solid level of 16.9% including the preliminary impact of Mediobanca transaction, confirming best-in-class capital buffer and providing strategic flexibility.

With the successful completion of Mediobanca tender offer, we are opening a new chapter in 553 years history of Monte Paschi. The 86.3% acceptance gives us clear governance from day 1 and the strategic flexibility to move quickly in implementing the combined industrial project. The new Mediobanca Board appointed on October 28 marks the start of the new phase of development for the combined group. But before we move forward, a warm welcome to our Mediobanca colleagues as we begin this new journey together. We are now one team, building the future.

Now on third quarter and 9 months results. As I mentioned, net profit for the first 9 months reached EUR 1.366 billion, up by 17% year-on-year, excluding the positive net tax in both periods. We reported as well a solid quarter contribution for EUR 474 million, up by 16.5% year-on-year. Net operating profit after 9 months amounted to EUR 1.389 billion, showing a positive trend, growing 3.7% year-on-year, with resilient revenues, sustained by fee income. The net operating profit in the third quarter amounted to EUR 453 million, showing a 2.4% increase versus a year ago.

Now let's move on to gross operating profit. We reached EUR 532 million in this quarter, showing resilience year-on-year. And cost/income ratio at 47%, basically stable year-on-year. Gross operating profit after 9 months reached EUR 1.643 billion, almost stable year-on-year, thanks to resilient revenues, again, driven by net fee income. All this confirms our disciplined approach to both costs and revenue generation, ensuring steady performance. For the first 9 months of 2025, we maintained the cost/income at 46%.

Now I think it's important to underline the strong commercial performance, as you can see, after 9 months in this slide. Total commercial savings crossed EUR 174 billion and were higher by almost EUR 10 billion since September 2024. And Wealth Management gross inflows amounted to almost EUR 13 billion in 9 months, up by 18% year-on-year. new retail mortgages granted in 9 months reached EUR 4.8 billion, 2.2x compared to 9 months of 2024. As well, new Consumer Finance flows amounted to almost EUR 1 billion with a 17% year-on-year increase. I believe these are a confirmation of capability and effectiveness of our commercial network. And I would like once again to thank you, my colleagues, for the excellent results achieved.

Now let's move on to the net interest income evolution. In the third quarter, it amounted to EUR 544 million, down by 1.3% quarter-on-quarter, confirming a certain resilience also in terms of overall spread. In the first 9 month of 2025, net interest income reached EUR 1.638 billion with an early trend in line with the guidance given to the market at the beginning of the year.

Net loans dynamic in 2025 has been strong with the growth in retail and small business component by almost EUR 4 billion with a positive trend also quarter-on-quarter despite seasonality. The same performance we are observing in total savings with total commercial savings in September crossing the level of EUR 174 billion and are up by more than EUR 3 billion quarter-on-quarter, supporting an increase year-on-year, exceeding EUR 10 billion, with EUR 7 billion from the beginning of the year.

Now on portfolio govies. As usual, this is stable, almost stable with a small decrease in fair value through OCI and with credit spread and sensitivity confirmed a very low level and slightly longer duration, reflecting reinvestment of maturities.

Now let's move on to fees and commission income. If we look at the quarter, we reported an amount of EUR 382 million with a solid 7.4% increase versus third quarter 2024, with an excellent performance on the Wealth Management component, up by 10.6% year-on-year. And the positive dynamic also on the Commercial Banking component, up by 4.5% year-on-year. The quarterly evolution is affected, as I was already mentioning, by the typical third quarter seasonality on both Wealth Management and Commercial Banking Fees.

If you look at the performance after 9 months, you can see that thanks to the excellent work of our commercial network, the total fees reached the level of EUR 1.185 billion, up by 8.5% year-on-year, with Wealth Management and Advisory Fees up by almost 13% year-on-year. And the positive dynamic also in Commercial Banking Fees increased by 4.4%.

In the third quarter, operating costs amounted to EUR 468 million and were marginally lower quarter-on-quarter, driven by non-HR component decrease. Costs were flat year-on-year with the increase in HR costs related to labor contract renewal and increase in variable remuneration pool was completely offset by the effective management of non-HR costs. After 9 months, total operating costs amounted to EUR 1.411 billion and were higher by 1.4% year-on-year. As I mentioned, again, the growth was driven by the HR component due to the labor contract renewal and the variable part of the remuneration. And part of this increase was offset by effective cost management of non-HR costs.

Now let's move to asset quality. The stock of nonperforming decreased to EUR 3.1 billion, reflecting a reduction of EUR 400 million in the quarter, mainly due to the sale of NPE portfolio completed in August. The gross NPE ratio is 3.7%, and the net NPE ratio at 2%, in line with the business plan targets.

Cost of risk for 9 months was 42 bps, down versus 53 bps of full year 2024, confirming the good status of our asset quality. The breakdown on NPE stock shows a low incidence of bad loans on total NPE at about 30% (sic) [36%], and that's why this portion -- this proportion should be considered in analyzing the coverage that anyway is a very good level of 48.7%.

You can see from the slide the solid liquidity position of Monte Paschi, leading to a more diversified funding structure and a lower ECB funding weight on total liabilities.

Moving on capital. I believe that this is a very interesting set of figures. The strong capital position of the bank is confirmed also in this quarter. We have common equity Tier 1 ratio fully loaded at 16.9%, already reflecting the preliminary impact of the Mediobanca transaction. This ratio incorporates the net profit of the period and is calculated net of dividend, assuming 100% payout ratio on net profit. As you can see, the Mediobanca transaction is impacting around 2 percentage points, in line with our preliminary estimates.

It is worth mentioning that we are not fully incorporating the purchase price allocation. As for example, we have not yet factored the valuation of financial asset and liability fair value. The capital ratio are, therefore, very strong with a large capital buffer compared to regulatory requirements and also our management target that we were indicating at the level of 13%, and that gives us strategic flexibility going forward.

Now I would like to spend just a few words on the results that were already published of Mediobanca. I think it's important to underline the positive trend and the potential that is deriving from the combination. The commercial momentum remains solid with EUR 2.5 billion on net new money, robust merger acquisition activity in Corporate & Investment Bank division and EUR 2.3 billion of New Consumer Finance volumes, very remarkable results. The diversification of the business has supported resilient revenues even in a challenging macroeconomic environment.

Now let's again go through some key important message regarding our combination. So we have really transformed into a new leader in Italian banking with the scale and credibility to compete at the European level. This transaction was driven by a clear conviction that Italy deserves a stronger, more innovative, more diversified financial institution, one capable of supporting families, SMEs, and large corporates across the country.

On this slide, you see some of the key financial metrics of the combined group, EUR 8 billion in pro forma revenues and around EUR 3 billion in adjusted net profit.

I would like again to underline the strong industrial rationale of our project. From the get-go, the industrial rationale has been clear and consistent. Monte Paschi and Mediobanca are different and therefore, complementary. Together, we combine leading capabilities in Retail & Commercial Banking, Consumer Finance, Asset Gathering and Wealth Management, Private Banking, Corporate & Investment Banking. The result is a more resilient, diversified and innovative group with a balanced source of profitability and multiple engines to invest, to grow and to better serve clients.

On this slide, you can see an overview of our combined operating model and the strong industrial merits of the transaction in each business line. In Retail & Consumer Finance, we bring together Monte Paschi nationwide network encompass best-in-class product and risk expertise. In wealth and Private Banking, we now operate with greater scale and higher advisory capability, spanning Monte Paschi Premium, Banca Widiba, Mediobanca Premier, Mediobanca Private Banking Company, Compagnie Monégasque de Banque, Monte Paschi Family Office. This will allow the group to deliver more sophisticated solutions and attract high-value clients. And in Corporate and Investment Banking, our clients benefit from a stronger balance sheet, a deep adviser expertise in Italy and abroad through Messier Maris and Arma Partners. Insurance and Asset Management and stability -- add stability and optionality, diversifying our revenue base and supporting loan lifetime value creation. The combination creates a more resilient, diversified and innovative group.

Then on the slide, the figures that you see represent a preliminary illustration of the pro forma business line on the basis of historical numbers and not including synergies. From revenues mix composition, asset gathering and Wealth Management represent almost 30% of the total revenues. Retail & Commercial Banking stands around 31%. Consumer Finance, 17%. And Corporate, Investment Banking, including the lending business for Mediobanca and Monte Paschi, large corporates represent almost 15%. While the Generali insurance contribution represents 7%.

This is a first snapshot of what the combined entity will look once that we have complete our project. And we are working with our colleagues at Mediobanca to further optimize the target business model. Clearly, we will provide additional information and all details in the new business plan.

We began the combination process immediately. We structured work streams and join teams across both organizations coordinated through regular cross-functional governance. The plan covers all key business and support functions with clear accountability, senior leadership oversight and the focus on maintaining business continuity and exceptional client service throughout.

As a part of our integration strategy, a dedicated HR work stream has been established, focused on retaining key managerial talent. This initiative reflects our deep commitment to preserving and enhancing brand value during this transformative phase. We want to ensure continuity, safeguard institutional knowledge and support long-term leadership stability. Our objective is to build a solid, efficient operating model step-by-step, with disciplined project management and transparent communication. A detailed analysis, for example, is already completed on IT architectures, operating models and development priority, aiming at enhancing, the best solution for each area and planned IT investment for digitalization to ensure resilience and efficiency. And this is just an example of how the work is progressing at full speed.

The EUR 700 million industrial synergies target we communicated is now in this preliminary assessment, reconfirmed on the basis of this work we are performing. Mediobanca remains a distinctive and highly valuable franchise within the group with its brand, client relationship and professional capability preserved and strengthened. The ambition is to unlock new opportunities for our growth across both organizations. The group will increase productivity, expand its product and service offering, invest in technology and digitalization and continue to attract and retain top talent.

So Mediobanca is an accretive combination from all perspectives. Return on tangible is expected around 14%. We expected to confirm our payout ratio of 100%, and the capital position remain best-in-class in Europe, providing strategic flexibility.

Now a short update about the process and indicative timeline. I have to say that our approach is quite methodical, step-by-step and transparent. All key milestones have been met, demonstrating disciplined execution and strong project management. In the first quarter of next year, we will present a combined business plan that reflects the full potential of our group. We will hold the Capital Market Day to present it to the market.

Now going back to Monte Paschi stand-alone. Again, we reported another solid quarter with almost EUR 1.4 billion after 9 months, strong commercial performance, strong capital position with core Tier 1 at 16.9%. We are further improving our 2025 full year guidance with the pretax profit expected to be well above EUR 1.6 billion. The capital position is expected to be about 16% at the end of the year, a very sound level, which provides confidence in ensuring a 100% payout for the coming years.

Monte Paschi plus Mediobanca creates a third competitive force in the Italian bank industry with potential to increase its European scale. We have organized teams with people from Monte Paschi and Mediobanca working together with a common strategic vision and spirit of collaboration, each bringing their skills, know-how and sense of responsibility to bear. The values are aligned around integrity, respect, customer focus and accountability. Now it is clear that together, we are capable of making things happen.

Our goal is clear and within reach, to play a leading role in Italian and European banking with vision and the desire to create sustainable value for all our stakeholders.

Thank you very much, and we are ready to answer to your question.

[Operator Instructions] The first question comes from Antonio Reale of Bank of America.

It's Antonio from Bank of America. Just a couple of questions from my side, please. The first one on distribution. Your capital ratio at 16.9%, as you said, incorporates the new dividend policy of up to 100% on net profit, which is a big change, I think, for you and as you were not previously paying the tax reassessment out. Now does this mean that you're now looking to pay out on a reported net profit basis, so including potential DTA write-ups and similar? Just trying to get a sense and better understand what this means for your dividend per share going forward. I remember during the tender offer, I think you mentioned that you wanted to try not to deviate too much from the DPS of last year.

And related to that, if I may, pretty much if I look at all your peers, they pay dividends on an interim basis. I think it was the case also for Mediobanca. Do you think it's something you would look to consider for 2026 fiscal year? That's my first question.

And then my second one is really trying to get a sense of how you're thinking about the reorganization of the new businesses that you plan to sort of reorganize following the deal with Mediobanca, both from a divisional and a legal entity standpoint, if I may. Your Slides 27 and 28, I think, show very clearly how -- well, in one go, you bought back all the product factories that Monte Paschi had lost over the years and more. So the question is, how do you plan to integrate all these businesses and at the same time, monetize Mediobanca's strong brand and achieve the synergies that you targeted?

Okay. I will try to be very clear. So yes, we confirmed that we expect to distribute for this year a dividend with the dividend per share, broadly in line with the one of previous year, ensuring to our shareholders yield among the highest in Europe. And afterwards, we are committed to deliver a growing DPS while preserving our strong capital position on which we want to leverage for industrial projects and additional remuneration for our shareholders.

As far as interim dividend, it's clear that is one of the options we are -- we will consider, and we will be very precise once that -- we are going to present the business plan in the first quarter next year. Now as I was mentioning regarding the integration, yes, in our project, we were quite clear saying that we would like Mediobanca to be focused on Corporate & Investment Banking and high-level Private Banking.

Let's simplify, as we believe there is a strong competency there, excellent capability in dealing with customer and a huge potential on which we can leverage in order to enrich our total level of profitability. And I have to say that from these few days where we are already working together, I feel even more comfortable that this is the right direction because we can create and build up a really unique potential additional powerful institution that will support the Italian economy with the competencies in terms of advisory capability to which we are going to add the balance sheet of Monte Paschi.

On Private Banking, Mediobanca is a top player. Strong and excellent professional team is over there. And I strongly believe we have room for significantly increasing our total asset and our penetration in the overall Italian landscape. Now it's clear that the approach we want to use in order to be very effective is already from the day 1, a sort of divisional approach. And already, we are setting our overall way in managing this opportunity in this way. Then we are going to consider, again, once that we have a clear view about the business plan, how we can optimize in terms of also legal structure, this exercise.

Clearly, Mediobanca will be a legal entity with its brand because it's too important to preserve the value and the peculiarities that Mediobanca has that are, in some way, different necessarily from Commercial Banking. And we want to leverage on this diversity in order to increase the value and to be a player that is unique in the Italian landscape for the balanced approach we can have on the market compared to other big players.

Very clear. Just maybe on the interim dividend, if I may, just follow up on that as part of the question. I don't know if you have any early thoughts on that.

Antonio, Andrea speaking. Can you share again the follow-up question because we missed it?

It was just, if you had any early thoughts on your interim dividend and observations..

Mr. Reale, we cannot hear you. Can you please speak closer to the phone?

I think I mentioned, right, that is an optionality we are going to consider with the business plan. When we are going to present, we will be clear on that. But clearly, we have a positive attitude towards the opportunity to have an interim dividend.

The next question is from Marco Nicolai of Jefferies.

First question on -- again, on the DPS. Your comments about this year DPS broadly in line with last year, and growing DPS from this level. I'm just trying to understand the moving parts for the 2026 DPS because clearly, this year with the big positive one-off you will have at the end of the year in terms of DTA write-up, you can pay pretty much -- if I look at the amount of net income that will bring, you will be able to pay pretty much the DPS you want.

But for 2026, I'm just trying to understand the moving parts there because the DPS you had in 2024 seems relatively high. So I was just trying to understand in terms of synergies, what do you expect, already coming through in '26, if any? And also how you plan to split the restructuring costs between this year and next year and in general, all the moving parts that can bring us to DPS in '26 above -- broadly above the one of 2024? So this is the first question.

And the second question is if you can update us on your Asset Management partnerships. So my interpretation of Banco BPM management comments yesterday is that they are relatively open to a merger and/or any way to do something with you. And obviously -- so these comments were kind of at the crossroad with the -- with Anima as well as with the stake that they have into BMPS. So I was just trying to understand what's your view on this topic? And if you can help us understand what are the future plans in terms of M&A. So these are my two questions.

Okay. So thank you. We will provide clearly quite detailed information once we are going to present the business plan. Now we wouldn't like to go too much too deep in providing early drivers now in order to get this growing dividend, right?

What -- we are confident that our level of synergies is even conservative starting from the first outcome from these work streams that we are practically developing together with the Mediobanca team. And so at least the level we already plan are, in our understanding, ensured, and then we will be, as I said, more precise one that we are going to finalize the business plan as well as on the integration costs on which we are now analyzing how to split them. But anyway, we believe that what has been planned from the very beginning when we launched the deal, is confirmed. And as I said, we are even more confident that we can get our goal. And also at the time, we will be speaking about growing DPS per share.

Now Anima is for us an important partner. We are keeping growing in offering this product. And I believe this is also reinforcing our relationship with Banco for this common pattern that we work with and, clear for us, has an important value and also strategically is important to keep reinforcing this cooperation.

Now anyway, we are completely focused in delivering this combination -- industrial combination. I'm not using the word integration because this is not an integration. It's a combination of two excellent institutions. And we believe that the more we are focused on this implementation, and the sooner we will get the results that we committed by launching the tender offer. So full speed on making all what we plan, implemented and effective.

The next question comes from Ignacio Ulargui of BNP Paribas Exane.

I have two questions. One is coming back a bit to Antonio's question on the integration and your comments, Luigi, about Mediobanca being a legal company. I wanted just understand a bit better how do you think the listing is going to go, whether you will plan to further integrate by taking over the minorities and integrating that? And what would be the impact if you don't do that in synergies? Because I think it will be a bit more difficult to go ahead with all the planned cost savings.

The second question is on the commercial activity of Monte Paschi in the quarter, has been super strong in lending and deposits. Just wanted to get a bit of a sense of where you're gaining market share in lending. And in terms of deposits, you mentioned in 2Q results that you were focusing on transactional deposits. And I think that -- I just wanted to get a bit of color on how do you think about your NII implications after the good quarter into coming quarters?

So let's start by saying that the success of the tender offer at the level of 86% acceptance rate is ensuring us effective governance from the very beginning. In the presentation, in some way, we already provided the first glance how we see this combination. We are working, as I said, with our Mediobanca colleagues, and the deep dive on the target business model we will provide, as I said, in the context of Capital Market Day in first quarter, next year.

What is important to underline is that we will maintain and leverage the two strong brands, Monte Paschi and Mediobanca, with the respective entities focused on what we say the core business. On the current listing of Mediobanca, let me say that with the 14% free float, we see reduced volumes and liquidity on the stock. However, it's too early to take any decision of a potential delisting. That is part of the assessment in the context of the new business plan, as I was mentioning.

As far as net interest income dynamic, I think that we expect in the fourth quarter to keep almost the level of the third quarter and then to have, again, a level of 2026, almost in line with the one of this year. We can have some positive upside, if you will, capable as we are now aiming to increase the level of our lending, thanks to the combination of -- with Mediobanca capability in advisory and the balance sheet of us.

Clearly, the expectations are as well to keep under control the cost of deposits that are growing. But as we were mentioning, we are really intensifying our commercial efforts, leveraging on the very positive attitude that we have now observing in the network, that are very well motivated, we reinforce our capability in managing. We are getting continuous feedback, very positive, in new meetings with customers. So this will enable us also to keep growing in deposits without compromising the spread.

So that's why we are very positive that we can continue. Clearly, we have to think that part of this deposit are collected with the scope then to convert in Asset Management product. So we can have some fluctuation just depending on the capability to make this kind of conversion, at the same time to replace what we are converting in Asset Management product or Bancassurance product with regular deposit.

But anyway, we are, really, at this point, enjoying a very positive moment of all our network, our franchise. And so it's not only deposit that we see a good pace without compromising the spread, but also, as you saw in the presentation, inflows of Asset Management product, Bancassurance product. Overall, it's a very positive momentum for Monte Paschi.

The next question is from Giovanni Razzoli of Deutsche Bank.

I have just one question. Sorry for asking you this detail, but in the broader context of your capital position and dividend policy is important in my view. So you have reported a 17.9% CET1 ratio, which includes a part of the PPA. I was wondering whether you can share with us what was the impact of the PPA. You've mentioned that there could be more in the coming quarter due to the fair value of assets and liability of Mediobanca. So if you can help us understanding what was the impact of the PPA in this quarter, and what could be the impact in the next quarter? I'm wondering, for example, whether the PPA this quarter includes or not the revaluation of Mediobanca real estate assets.

Giovanni, Andrea speaking. Good morning to everybody. So as mentioned, the PPA as of 30th September '25 was partial and preliminary. So not including, for example, as mentioned by the CEO before, the valuation fair value of financial assets and liabilities. It includes mainly the revaluation of Generali that is anyway not impacting the capital position and a few hundred million regarding what you mentioned, the real estate, which is in line with the projections that have consistently been delivered throughout the public offer.

The next question is from Hugo Cruz of KBW.

I have a few questions, if I may. So first on, can you be a bit more clear on the CET1 ratio impact? So the impact coming in Q4. Do you expect that to be positive or negative? So that's my first question. Second, on -- related to this, so the DTAs, I thought all the DTAs would be fully brought on balance sheet on day 1. You still have EUR 1.1 billion off balance sheet. So why is that still off balance sheet? When do you expect that to come on balance sheet? It will be Q4 or not?

Then a third question on clarification on your comments about the dividend for 2026, so out of 2026 earnings. So you still have a lot of DTAs, very strong capital ratio. So is there any possibility that you can manage the DPS to show that growth versus 2025 DPS? Or will it be just mechanical DPS out of 100% of payout? And then a final question on the bank tax. Some of your peers, BPER and BAMI have given a bit of an indication of the potential impact. Can you comment what could be the impact for you?

Okay. So thank you for your questions. So on the first question, i.e., capital ratio -- common equity Tier 1 ratio end of the year. This will depend on the final impact of the PPA, that it is under assessment. What we can, let's say, confirm now is that we expect that it would be higher than 60% anyway. So that's the answer.

Then about the DPS in '26, is what was mentioned by the CEO, so it's too early to give a guidance on net profit. What we can already confirm is that we expect to achieve a good chunk of synergies already in '26.

Then on the tax law, the impact is definitely manageable in '26. '28, we expect based on the current draft of the law, an impact on the combined perimeter. So let me reiterate, on the combined perimeter, of around EUR 100 million per year. And then on top of this, this year, there might be the impact of the taxation of the so-called profit reserve that we expect would be accounted anyway directly into equity.

The fourth question I missed.

It was on the DTA.

Sorry, the DTA. Sorry, the DTA. The DTA. No, actually, we have still EUR 1.1 billion of DTA of balance sheet when we update the new business plan. So end of the year, we expect that this amount will be basically written up. We expect in full.

And sorry, if I may, a clarification, the EUR 100 million impact on the tax, that would be through P&L?

The yearly one in '26, in '27 and '28, yes. It's additional tax, so yes.

The next question is from Luis Manuel Grillo Pratas of Autonomous.

My first one -- I have essentially a bunch of clarifications. The first one is on the -- so you essentially mentioned that you didn't include any fair value adjustments on the Mediobanca balance sheet. And if I'm not mistaken, the 2025 annual report of Mediobanca included a large positive effect there. So I wanted to hear any comments whether we should expect a positive in Q4 coming from this.

And then you just mentioned to Hugo that maybe in Q4, we shouldn't expect any meaningful DTA capitalizations. Can you confirm that? So essentially, the large one, the EUR 1.1 billion will only happen when the business plan is released next year?

And then I also wanted to ask you about the -- your comments on the combined entity. So it seems that you are not going to the approach of doing a merger buying corporation, if I read that correctly. I wanted to confirm if this has any impact on your synergies execution. I'm thinking, for instance, on the funding side, if there could be any MREL dis-synergies for maintaining both entities separate? And yes.

Okay. So I think I'm just confirming that we were very, very much conservative on this preliminary assessment of PPA. And as Andrea was mentioning, overall, at the current stage, being very much conservative and wanting to go deeper in making the analysis, we are hopefully expecting to complete this process for the main item within the end of the year. At the current stage, we are also confident that we can have a positive impact. But let's complete the work before being much more -- giving much more detail on that, right?

Then regarding the reorganization and the combination, I want just to underline that we will implement actions in order to get all the synergies, and I was mentioning, even at the level that we expect now to be even higher than what we plan. The fact that we are speaking about legal entity doesn't mean that we cannot exploit all the potential we can have from the combination. But as I said, it is a work in progress and hopefully, will be soon completed. And as I said, in the first quarter, we'll be very precise about the option that we are going -- the target model we are going to implement. What should be clear that in our preliminary estimation, we see only positive upside in whatever we are going to implement in terms of synergies.

And then there was a clarification requested on the DTA write-up since I mentioned the approval of the new business plan. Anyway, we expect to be able to write up the DTA already in Q4? That was your question, potentially also based on preliminary projections. So the expectation is that the write-up to the best of our current knowledge happens in Q4. As regards to MREL, we do not expect the synergies. We're expecting such synergies because the new entity will be a single point of entry.

The next question is from Lorenzo Giacometti at Intermonte.

So the first one is on your excess capital, which is seen growing year-by-year due to DTA's compensation and potentially even more with the merger or with the Danish compromise treatment. And so do you intend to distribute it to your shareholders? And if yes, do you see distribution via dividends or buybacks as more likely?

And the second one is a more strategic one. And are you planning to expand abroad with some of your businesses? I was mainly thinking about Consumer Finance, but also Wealth Management and Investment Banking.

Okay. So let's start from, what is for me even more exciting that is the expansion of the business? So we strongly believe that Compass with this merger has the full potential to expand the business outside Italy. They have expertise. They have a very good technology, and they have a proven track record in terms of scoring. So I believe that this is an option that we are going to explore very quickly.

And my personal view is also that for some part of the business as well Private Banking, investment bank already is there. We have a strong opportunity because once the Mediobanca will be completely focused on Corporate, Investment Banking and Private Banking, there will be additional opportunity to expand business not only in Italy, but also abroad. So that's why it's a nice project, because we are opening a new market and new potential revenue generation for the benefit of all the stakeholders.

Yes, we have a nice excess of capital. And as you were mentioning, starting from this year, we will have also the EUR 500 million of DTAs that we are going to contribute to the increase to the overall capital level. As I was already mentioning, for us to have an important buffer of capital is an opportunity, and we would like to use in the best way or getting opportunity to expand additionally, our business, or we can say, and eventually further reward our shareholders with even high level of remuneration. Then, if it's through buyback or if through extraordinary dividend, whatever, is something that we evaluate time to time.

What is important that this is a strong opportunity. And I believe, today, by showing the revenue stream with almost 1/3 of revenues coming from asset gathering and Wealth Management, it's clear that this part of business deserve a significant rerating as well the other component. And this is an additional evidence that our valuation deserve to be much more in line with our fundamentals and the potential of value that we can generate. And this kind of approach in exploring all the opportunity for better extract value from the combination will materialize. I believe, even earlier than what we plan. I think we have a strong expectation and again, confirmation that we are really representing an attractive case of investment.

The next question is from Andrea Lisi of Equita.

The first one is on, if you can provide us a bit more update on the integration charges. If -- from your preliminary analysis, clearly pending the business plan presentation, you are still confident with what you have initially indicated. And if you can provide us some preliminary indication at least of how many years these integration charges will be split? If it is reasonable to see already a big portion in the last quarter of this year and then the rest through 2026 and maybe some portion also in 2027?

And the other question is on capital. If you can confirm that your preliminary indication of kind of 50 bps additional contribution in case of obtainment -- in case of regulatory treatment of the insurance component like in Mediobanca? And last question is regarding, if you can provide us a further update on the management of the stake in Generali?

Okay. So integration charge is something that we are assessing, clearly, looking at what now -- we are considering. We are going to invest money clearly in retention package. And then it depends how we complete the assessment, particularly on IT. That is one of the main area where practically we are going to have some cost. But overall, we are confident first that we can -- the estimation we fixed when we launch a transaction is absolutely actual.

And the second is that given the work of the teams that are now analyzing the combined business, we believe that we are going to have even room for having even a positive outcome from the overall cost we plan.

The impact on core Tier 1 regarding the potential Danish compromise is 50 plus. And on Generali, we are focused on Mediobanca. And as I was mentioning, the Generali is for us, a nice, correlated bulk of revenues. And for the time being, we are, as I said, completely involved and committed to deliver what we were mentioning earlier regarding the combination of the two entities.

[Operator Instructions] Mr. Lovaglio this time, there are no questions registered, sir -- excuse me, we do have a follow-up question from Luis Manuel Grillo Pratas, the Autonomous.

Sorry, just a quick clarification on the Generali treatment. When do you expect to receive those more than 50 basis points impact?

No. As I was saying, we like to be very conservative. All the figures we were mentioning are without this benefit. So we are working in order to have this kind of benefit. Honestly, it's difficult to predict when this can be completed. But I believe we deserve it. So we will do our best in order to get as quick as possible, but it depends not exclusively on us. For the time being, we manage everything without considering this benefit. That should be obvious and should come to us.

Gentlemen, there is a final question from Ignacio Ulargui of BNP Paribas Exane.

I just was wondering whether you could consider entering a total return swap as BPER has done on their own shares given the confidence that you have about integration and the strength of the franchise and the combined franchise. Could that be a possibility or is something that you don't explore at this stage?

Sorry, Ignacio, I have not understood what do you suggest we can consider.

So whether you could consider doing equity derivative buying your own shares like BPER did on the 9.9% of the capital. If that could happen?

We are focused on what we know better, that is doing banking, honestly. So we -- for the time being, we are not considering any kind of transaction like that. And we want to be really focused in getting the best from the two entities.

Gentlemen, at this time, there are no questions registered. Back to you for any closing remarks.

No other questions, right? So thank you very much. And see you in next presentation.

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