Intesa Sanpaolo Stock

Good afternoon, ladies and gentlemen, and welcome to the conference call of Intesa Sanpaolo for the presentation of the first half 2026 results, hosted today by Mr. Carlo Messina, Chief Executive Officer.

My name is Nadia, and I will be your coordinator for today's conference. At the end of the presentation, there will be a question-and-answer session. [Operator Instructions] I remind you that today's conference is being recorded. At this time, I would like to hand the conference over to Mr. Carlo Messina, CEO. Sir, you may begin.

Thank you. Welcome to our first half 2026 results conference call. This is Carlo Messina, Chief Executive Officer; and I'm here with Luca Boca, our CFO; and Marco Delfrate and Andrea Tamagnini, Investor Relations Officers.

We have just delivered our best 6 months ever with net income of EUR 5.6 billion, including EUR 2.8 billion in the second quarter, making it the best quarter ever. Our annualized return on equity reached 20% with return on tangible equity of 25%, while earnings per share increased by 9% year-on-year. These excellent results allow us to upgrade with confidence our 2026 net income guidance to more than EUR 10 billion, reflecting the quality and sustainability of our earnings. The execution of our business plan continues at full speed with key initiatives well underway.

We are operating from a position of strength, thanks to our best-in-class asset it and our resilient and well balance sheet business model. The Monte Pascuidiciera transaction will further accelerate the execution of our business plan and create additional value. Italy's resilient economy and strong SMEs continue to provide a supportive environment for our business. In the first half, our high-quality revenues were supported by all-time high commissions and insurance income, while customer financial assets grew to more than EUR 15 trillion showing continued commercial momentum.

Net interest income accelerated in the second quarter, also thanks to loan and deposit growth. We further reduced costs while investing in technology, accelerating the generational change of our workforce and delivering significant efficiency gains. We maintain a rock-solid capital position with a current equity Tier 1 ratio of 13.1%. Our offer for Monte Paschi Dicerna is well tracked -- the transaction is fully consistent with our business plan and with our disciplined approach to growth and value creation.

I will further strengthen our leadership in Italy, while enforcing our position among Europe's leading bank group with 0 integration risk. Intesa Sanpaolo continues to offer 1 of the highest dividend yields in European banking. In 2026, we expect to return EUR 9.4 billion to shareholders through dividends and buybacks. I'm proud of our results and thank our people for their excellent contribution.

Now let's turn to Slide 1 for key achievements of the first half. In the first half, we delivered a record high 6 months and quarterly profitability with the lowest ever cost income ratio. Excellent asset quality and high sustainable increasing value creation and distribution. Slide 2. In this slide, you can see the invasive growth in net income that has more than doubled in 6 years. Slide #3. In the first 6 months, we delivered a significant increase in earnings per share, dividend per share and tangible book value per share. In November, we will pay a EUR 3.8 billion interim dividend.

Slide #4. As you can see in this slide, we are on a solid growth path with loans and deposits accelerating in Q2. Loans to customers have grown for 5 consecutive quarters and are up 5% yearly. Customer financial assets are growing strongly with deposits increasing by 7% and assets under management up EUR 49 billion. Slide #5. As said before, thanks to our excellent 6 months performance, we are in a comfortable position to upgrade the 2026 net income guidance to about EUR 10 billion leaving room for further improvements.

Slide #6. Our excellent profitability allow us to benefit all our stakeholders, sustain the real economy and strongly support the fight against poverty and policies something that I personally care about deeply. Slide #7. In this slide, we have a recap of the 3 pillars of our business plan presented in February. The plan is proceeding at full speed and we have already launched all the initiatives. In the appendix, you have an update on the most significant ones. The [indiscernible] transaction will trigger additional growth with no integration risk.

The industrial rational is strong as we have captured a unique strategic opportunity that can accelerate our business plan growth initiatives and create value for all stakeholders. In short, we will immediately exceed our business plan targets for Wealth Management, corporate investment banking and consumer finance. In addition, we will enlarge our customer base and will create and distribute significant value at no social cost with a strong accretion in a per share dividend per share in capital distribution per share while further strengthening our rock-solid capital base.

Now let's move to Slide 9 for a closer look at our first half results. In , in the first 6 months, net income was up 6% year-on-year. We delivered the best month ever for revenues, operating margin and gross income. Costs were down and asset quality remained top notch with high increased coverage and stable overlays. Slide #10. In this slide, you have the detailed P&L for the first half showing improved results across almost all the lines. The tax rate is 2 percentage points higher than last year, mainly due to Italy's budget law.

Slide 11. Looking at the second quarter, net interest income strongly accelerated, up 6% quarterly. Revenues reached a record high and net income is up 7% on a yearly basis. Slide 12, in the first half, revenues grew across all components, thanks to our well-diversified business model that drives growth. As usual, we managed revenues in an integrated manner. Slide 13. Net interest income in the first 6 months was up compared to last year despite lower rates, and we can raise our guidance for this year to well above EUR 15 billion.

Slide 14. This slide provides more details on net interest income, and you can see that the strong quarter-on-quarter increase is mainly driven by the commercial component. Slide 15. Our Wealth Management and protection machine continued to deliver strong results. This was the best 6 months in Q2 ever for commissions and the best result ever for insurance income. Assets under management gross inflows were up 7%. Slide 16. In the first half, commissions were up 5%, driven by Wealth Management and protection despite market volatility. Our top notch advisory services are a stabilizer for the impact of market volatility on fees and our fully owned product factories are a clear competitive advantage.

Slide 17 non-motor P&C was a driver of record high insurance income, and we still have significant upside potential. Slide 18 customer financial assets exceeded EUR 1.5 trillion with significant growth in assets under management and deposits. Slide #19. We can count on our unmatched client advisory network with over 19,000 people dedicated to fuel assets under management growth. In the first 6 months, we added 600 people. Slide 20. The contribution from commissions and insurance income to revenues is by far the highest in Europe after UBS. Slide 21. The cost income ratio was also thanks to our tech investments that are clearly paid off.

Please turn to Slide 22 for a look at costs. Operating costs were down 1% compared to last year. Slide 23. We have high flexibility to reduce cost further, thanks to our tech transformation that will enable significant generational change and no social cost and with no impact on revenues -- let me highlight that taking into account the 6,800 new hires envisaged in the Motor desk transaction we will hire more than 13,000 people with 1 of the most ambitious hiring programs ever seen in our country, focused on young people.

Slide 24. We have a best-in-class cost income ratio in Europe. Let's now move to Slide 25 for a look at our top-notch asset quality. Annualized cost of risk was 20 basis points with a strong increase in coverage and no over laser resist. We see no signs of asset quality deterioration. Slide 26. We have a very low NPL stock with bad loans received to near 0 NPL inflows were at historical lows, and we have a well-diversified loan portfolio.

Let's move to Slide 27 for an update on capital. The common equity ratio is more than 13.8%, including the benefit from DTA absorption. Slide 28. We have best-in-class rent ratios and the liquidity ratios are well above our business plan targets. Let's now move to Slide 30 to see how well equipped is to succeed in any scenario. Our profitability and capital position remains strong, even under adverse conditions. We have a very resilient and efficient business model with EUR 6 billion already invested in tech. Our asset quality is top notch in Europe.

And last but not least, the management team is cohesive and there is a strong track record in delivering results. Slide 31 Intesa Sanpaolo stands out across key metrics and is better positioned than our peers to face any future challenges. Slide 32. In this slide, you can appreciate our unique positioning, thanks to our efficient commission-driven business model supported by strong tech investments.

Slide #33. As previously said, our NPS stocks ratio are among the best in Europe, and we are absolutely a Nordic bank looking at this profile Slide 34. As you can see, we are also very well positioned in terms of Stage 2, the further decline in Q2. Slide 35. Our NPL coverage is also among the best in Europe. Slide 36, our Russia exposure is essentially 0. Please turn to the next slide for a few words on the macro picture. The Italian economy remains resilient and we expect Italian GDP to grow this year and next. Slide 38. Italian companies continue to be strong and are more resilient to external shocks than in the past.

Let's now move to the next slide for a brief update on the Monte de Paske transaction. When we announced the offer for Monte dei Paschi, we explained the solid rationale underlying lease combination, with clear benefits for all stakeholders who will enjoy the rewards of growth and increase in value creation and distribution. We have a strong potential on a stand-alone basis. but the transaction is also a big accelerator of the business plan, enabling us to achieve the target 3 years in advance, reaching EUR 2 trillion in customer financial assets by 2029.

We will enlarge our client base by 6 million clients while strengthening our franchise in consumer finance and corporate investment banking, also leveraging Mediobanca's international footprint. -- will deliver EUR 2.9 billion in synergies by deploying ISP best-in-class delivery machine and IoT platform. We can do all of this confident there is no integration risk thanks to our proven expertise in managing integration. As a result, we will generate more than EUR 16 billion net income in 2021 strong earnings per share, dividend per share, capital distribution per share accretion.

In the next slide, you have the details on the offer, but for the sake of the time, let's now move to Slide 43. In this slide, you can see that we have filed the offer document as planned, and we have already published the documents for the September AGM, sorry. We are fully on track to complete the offer by year-end. Let me conclude this section by saying that Monte dei Paschi shareholders can choose to join forces with the strongest player in Italy and 1 of the leading players in Europe, a group that always work works to benefit shareholders client people and the broader community and with significant transparency involve what we do.

We are determined to move forward and we remain absolutely convinced that this is the best option for Montepaschi Mediobanca and for Intesa Sanpaolo. Let's now move to Slide 45 for the final remarks. This slide offers a recap of our best ever 6 months and the reasons why we are fully equipped to succeed in the future. Slide 46. For 2026, we have upgraded our net income guidance to more than EUR 10 billion, leaving room for further improvements. We will continue to operate from a position of strength combining high-quality revenues, efficiency, strong internal capital generation and a low risk profile, making us 1 of the most resilient and profitable banks in Europe.

We are on a solid growth path and remain focused on delivering strong short-term results while continuing to invest for sustainable, long-term value creation. That is why we continue to offer 1 of the highest dividend deals in European banking while maintaining a rock-solid capital position and continue to lead on social impact. Let me finish by saying that the Monte Paschi transaction is fully in line with our strategy and will trigger additional growth while creating value for all Intesa Sanpaolo and Monte Repasky stakeholders and for the real economy with no integration risk. So thank you for your attention.

And now we are happy to take your questions.

[Operator Instructions]

And the question comes from line of Sophie Peterzens from Goldman Sachs.

This is [indiscernible] from Goldman Sachs. My first question would be around loan growth. Your loan growth was very strong this quarter, up 2% quarter-on-quarter and 4% year-on-year. How should we think about the loan growth outlook for the second half of 206 but also 27%. And related to that, you upgraded your NII guidance for 2026, how should we like the well above EUR 15 billion for 2026. Is it fair to assume that we will see like 2% quarter-on-quarter and growth maybe in the third quarter and the fourth quarter? So how should we think about the how that feeds in due 2027? So if you could also government on NII outlook for 2027.

So thank you very much. We think that loan growth will continue to stay very positive. So our expectation is that we will continue to grow more or less at this level. So this is the trend that we consider today the run rate for the loan growth perspective of Intesa Sanpaolo. If we look at the trend of net interest income, probably we will have, for sure, a strong increase in the second part of the year in comparison with the first part of the year, second half should be much higher than the first half and also in a significant way.

Our expectation is to have an increase in third quarter and in the fourth quarter, but with a further significant acceleration in the fourth quarter. So third quarter should be an increase, but not so significant. The fourth quarter, there should be a much higher acceleration and leading with a strong starting point for 2027. And also in 2027, we think that we will continue to grow in terms of loan growth, our expectation, we are obviously working on budget 2027. So we are still with some top-down figures but should be much higher than 2% within 2% and 5%.

So we will see at the end of presentation of in November, we'll be in a position to give to the market our expectation on a bottom-up basis. So that's more or less all relating to your question.

And the next question comes from the line of Marco Nicolai from Jeffries.

A couple of questions from my end. The first 1 is on commercial banking fees. So we saw a little bit of a pickup in terms of year-on-year growth trends in the first quarter. However, this quarter, the results was a bit different. So overall, the fees were very, very strong, but the commercial banking fee is not so strong. So can you give us your idea on what's going on there -- and how is this going to trend over the next quarter?

Second question on the costs. You upgraded the guidance, net income guidance driven by NII -- but you didn't change your wording around the costs. Costs are pretty solid in the first half, and they are declining compared to last year. So what are your thoughts there? And perhaps this is a further area of upside for your net income guidance for this year.

So thank you. Related to the fees, we had a seasonality impact during this quarter. So our expectation is that we will start again to grow also in the commercial banking activity with a peak in the fourth quarter of this year, but the trend should be in recovery also for the commercial banking activity with a lot of commission related to corporate investment banking and to deal related to the activity of the corporate investment banking visions.

On the cost side, you are right, we have a number of potential reserves. So also -- let me elaborate just on the outlook and the change of this outlook -- we maintain also with this new outlook, a number of contingency plans, and we can easily make results that can exceed in a significant way our outlook. What we have still to consider in the next quarter and at the end of the year, the potential need for further managerial actions.

So that's the reason why we decided not to push on this outlook also because being under an M&A deal, we don't want to create something that can be considered as manipulation of the market as it has happened in other counterparties that are working in the banking sector today in Italy. So we want to remain with a clear approach of transparency. We have the potential to exceed this because on revenues, but also on the cost side because you are right, we have an amount of synergies and economy that we are generating that is in excess of what we have considered in our forecast.

And so the potential on the cost base is really much higher. And as soon as we move from the mainframe into the cloud, the evidence is that we are in a position to gain significant efficiency on the cost base -- and the evidence is that we can accelerate also in the second part of the year.

We're going to take our next question and it comes to line of Britta Schmidt from Autonomous Research.

On the volume growth, maybe you can give us a little bit of color as to what has been driving that and perhaps break down the year-on-year growth when it comes to mortgages, consumer lending and corporates and also between Italy and the international businesses? And then on the capital position, maybe you can give us an idea as to where you see that now developing until year-end? And maybe you can also remind us as to what the -- what drawdown you expect with the Monte Paschi offer with and without the Danish compromise I know you said you want to remain well above 13% on day 1, but maybe you can be a bit more specific regarding that?

So looking at the dynamic of the volume, we had a very good growth in the International Banking divisions. We had a very good growth in the Corporate and Investment Banking divisions, both in international large corporate and Italian large corporate. In the Banca detector divisions, we had a good growth in the SME sector and a slowdown in the growth in mortgages with households because in our expectation, the potential further increase should be in the third and in the fourth quarter.

So that's more or less the kind of dynamic on the loan book. On capital position, we remain with our indication that we will stay absolutely above 13%, 13.1% in -- during 2026 on the period of the plan. And in the Montepaschi Sina transaction, our expectation is that we can stay in the range of 14%, not considering the DTAs of Monte Pasquin and above 14.5%. Looking at the compromise we have already done a promise in the insurance business divisions, and we will move the Generali stake into the insurance division.

So the Danish compromise should be starting from day 1 disease, our expectation, and we have checked with the Italian EVAS authorities that we can move the participation of Generali from the corporate investment banking sector. So from the Video bank area into the insurance business area. -- then we will see what can happen. And we will give clear figures in the market as soon as we have the real evidence of the transaction.

Now we're going to take our next question. And the next question comes from line of Andrea Lisi from Equita.

A couple of questions from my side. The first 1 is just a [indiscernible], it was reported that there are different views within Monterey Paske Board of Directors regarding the process adopted to assess alternatives to the offer presented by Intel, in particular with for minority board members that have submitted according to the article late to the Chairman. Just if you can share your views on the current situation, what you think about that, if any thoughts will be appreciated?

And the second 1 is on the NII indication that you have provided, in particular, on the guidance. You have talked about volume growth. Just wondering to understand which are the assumption on the rivers that you are using for the second part of the year and for the update on the 2027?

So starting from the first point, I have to tell you that the letter is a clear demonstration on what we said when we started with this transaction. So 1 of the reason why we decided that we can create value for Intesa Sanpaolo shareholders and that obvious to the synergies, but also for Multiparty dien shareholders, is that we can create a normal situation in the governance of the company. So the it is unbelievable that this company continue to be under this situation after what happened in the last months with the filing of the CEO because of the Procura involvement and all the judicial problematic, then the reappointment then the Board of Directors that was with different positions.

So this is the evidence of something that need to be assessed by a reputational counterparty that can create conditions for the multiparter shareholders to be in a safe [indiscernible] that's my opinion. Looking at the net interest income, what I can tell you is that -- we think that the dynamic on what we expect is that we can have a clear trend of growth in the loan volume also deposits can increase -- can continue to increase as you add the clear evidence also in this quarter.

You I has been considered in a conservative way, so just a little above 2%. And we have also some potential in the financial activity. Financial activity is the area in which we have the uncertainty in terms of dynamic because -- this will depend on the attitude of different divisions to move from net interest income into trading income. So that's the reason why -- for the third quarter, we expect an increase, but not such a significant increase. And it is likely that we will have a significant increase in the fourth quarter. We will see in the next months, but we think in any case, we have been conservative also looking at the dynamic on net interest income.

Now we're going to take your next question, and it comes the line of Pablo de la Torre Cuevas from RBC Capital Markets.

So my first 1 is a bit of a follow-up on NII. Last quarter, I think you provided some useful comments on what your expected NII would be in 2029, if you were to use forward rates at that time. And I believe the figure you mentioned was around EUR 500 million higher than initially guided. I would just kind of invite you to update what your latest views were on that?

And also your expected -- the latest on the expected contribution from the hedge over the next few years. And then I had another question on the other charges and gains line. So obviously, asset quality trends remain very strong, but your bridge is on Slide 10 and Elepsia there has been a bit of a deterioration year-on-year on these other charges. So I just wanted -- I was wondering if we should take this first high level as a new normalized level going forward? Or if there's anything notable this half year that we should consider going forward?

So on net interest income, I will leave the floor to look at related to the other items, we think that we had a very good performance in fee and commissions and also in trading income, but we decided to put some kind of reserves in the provision. So we started also in this quarter to make to create condition for the managerial actions to be realized because we realized managerial actions in provisions -- and if you look at the increase in coverage of nonperforming loans is the clear evidence that as usual, we are creating conditions to make disposal of nonperforming loans at the end of the year.

At the same time, we decided to increase the coverage for provisions and other charges in order to have the real conservative approach on all the different items. For net interest income, I will leave the floor to Luca.

Yes. Thank you. Yes, we can confirm that at the moment, the rates are continuing to remain 50, 70 basis points above our importance is on the business plan, and this can give between EUR 500 million and EUR 600 million, the positive contribution in the NII of 2029. Also taking into consideration what you said that we will have positive contribution by the replicating portfolio that is continuing to repricing, and it gives a EUR 500 million positive contribution in 2027. A and other EUR 300 million in 2029. So the NII will continue to be a key driver of growth for our profitability.

Now we're going to take our next question. And the next question comes from the line of Andrea Filtri from Mediobanca.

Just a follow-up from Britta's question. On the Danish compromise, please. Can you explain how the process works in practice in case of an acquisition of an insurance asset. As a financial conglomerate with Danish Compromise already approved many years ago, do you have to ask for Danish compromise usage on a case-by-case basis to the European Central Bank? Or is it an automatic adoption of the Danish Compromise squared version after the recent EBA clarification?

Andre, I think that you are under restricted situation. So can you make a question during the presentation. In any case, obviously, I will answer. But looking at your report, you start unrestricted and then you elaborate on all the items. So it seems to be really difficult to understand, but a number of items are difficult to understand in all the Montepaschi Ciena Group. Looking at Danish compromise, the our -- what we think can happen is that if the major bank in the case of the acquisition of multipath Mediobanca used to have the Danish compromise and having the Danish compromise in our insurance business unit.

It is likely that the transportation, what we need to have is the approval to move the participation from the governance centers. So from what we will have in the acquisition as the governance center into the insurance divisions. And we have already agreed at this point with a unique art that is in charge of this that is IVAS. So having said that, our expectation is that it should be automatic.

Next question and the question comes of Huge Cruz from KBW.

I have 3 questions. One is the loan growth that I think you're guiding now that 2% to 5%, I think, is a bit better than what you assumed in the business plan. So should we assume that there is upside to the business plan targets also from volumes -- and if you could talk a bit about how this front book rates on the new lending compare basically, should we assume some margin compression or stable margins from the loan side? So that's the first question.

Trading has been very strong, again, 2Q. You've talked about would be some optionality between NII and trading on some business areas, but I was just wondering if you could give some guidance on trading at least for the second half. It would be very helpful. and if that's kind of a representative run rate for the business?

And then the third question, for ever reason, Monte Paschi manages to sell the Generali stake and distribute the cash to shareholders or spin-off the stake to shareholders. How would you adjust your offer for the stake for Monte...

So I will start from the third question. So I think that the distribution of extraordinary dividends from Monte Paschi Ciena is subject to the approval of the extraordinary shareholders' meeting. They are under the passivity rule. I know that it is difficult to understand for the Montepaschi CN, but they are under the passivity rule. And this means that they need to have an approval from the shareholders' meetings.

But first of all, from the ECB. So having in mind at this point, all these actions are to be considered. First of all, it is not easy to make disposal of the general stake. Let me say, because it is a significant amount of who could be the beer. So who could be, let me say, we are in a situation in which we are launching the offer. UniCredit can buy the Generali stake, we have a full spec friendship, we consider UniCredit, the other big player in the market. But I don't think that they are ready to buy the stake in Generali could be alliance. I don't know.

So in my opinion, if they make disposal in the market, this could be something like 20%, 30% reduction in the share price. So I think that it is better to stop to make what-if analysis that are not in the possibility to be realized. Then what they can consider is to make a distribution of a potential excess capital. So they need to have the approval of DCB and considering that the business model of multipass today is quite different from the starting point of the acquisition of Mediobanca which they met an acquisition of the real strong part of the banking sector in Italy in the last decades in the country because Monte Pacira made the acquisition of Mediobanca.

So we are all worried about the Montepaschi Bank was a target of Montepaschi Ciena. They transform the business model. So Motepaskiiena can stay at a lower level in terms of capital if they continue to be a retail franchise, but having a significant corporate investment banking activity in their risk profile, not easy to say that they can give a significant dividend. So having said that, if they can realize after an extraordinary meeting and after extraordinary shareholders' meeting. And after the approval of ECB, obviously, this will change the exchange rate and our transaction will be to be reconsidered. That's for sure.

Looking at the trading income, obviously, we will not continue this trend. We do not need to have further revenue from the trading activities. So that's a clear point for us. And the trend should be in reduction in comparison to this quarter. The real dynamics will depend on the attitude of our people. we will continue to have a positive contribution. But for sure, we will not have the trend of the first 2 quarters. Looking at the loan growth, we are not considering a reduction in terms of volumes, what -- in terms of margins, we are considering a number of volumes in terms of loans.

I'm talking about 2027 that would be more or less in the range of 2% because the real acceleration could be much higher that we have declared. So the net-net, what we see in the market today is that there is a clear approach on all the banking sector to be really in the [indiscernible] maintaining a good markup. So there is no pressure competition on pricing. And so markup is in good shape, I think, for all the bank sector. So I think that we remain with further potential increase in net interest income also coming from margin.

And now we're going to cover our last question for today. And it comes from the line of Giovanni Razzoli from Deutsche Bank.

Have 2 questions. One is on the volumes and the 1 and the other is on net interest income. So you already commented that you expect the volumes to remain strong, in particular, the CIB. I was wondering if you can comment about the competitive environment in Italy because we've seen 1 of your largest competitor that is unique, which has posted a very significant 8% year-on-year growth in the second quarter in the loan book in Italy, with gain of market shares on the year, almost 1 percentage point -- you seem to focus on a different trend.

It seems to me that you are more focusing on pricing rather than on acquiring volumes. So if you can share with us what are your thoughts about this the coupling trend between you and the rest of the market so far?

The second question is on net interest income. Again, just to understand that the moving parts there I've seen from your divisional database that the contribution from securities that amortize cost in the second quarter have increased significantly in the second quarter when compared with the Q1. I think this reflects the increase in the sovereign bonds -- so I was wondering whether this contribution can remain or further increase in the next couple of quarters?

So looking at the loans dynamic in comparison with other peers, I won't just refocused point on business model. Let me do this. because when we started with the outlook on 2026, we made a clear statement of a potential rebound in the loan book of Intesa Sanpaolo, so with a focus of growth, and we are realizing growth. But the loan growth is not the priority for Intesa Sanpaolo. So it's something that we do. We are in a position to move the demonstration is that we are increasing the loans, we will increase in the future, but we have a business model that is completely different.

So I think that in -- in Italy, we have 2 real champions, 1 is Intesa Sanpaolo. The other 1 is Unicredit. Ita Sanpaolo is focused on wealth management and protection. So what we want is to have an increase in loans by definition because we are a key player. And if you want to make a wealth management protection, we have to stay in a country which you can be also a player in the loan side. But what we want is to be sure to increase deposits, asset under management, the assets under administration. So increasing the loan book by 5% for a wealth management and protection company is, in my view, very good growth.

If you look at UniCredit, they are, for sure, a very good commercial bank with a strong focus on areas on a pan-European approach in the countries in which they operate like Italy, they want to increase market share in the loan side that is absolutely in line with this business model, but it is another story in comparison with the 1 of Intesa Sanpaolo. So we don't want to increase by 10% the loan book, and we do not need to do this. What we want, if it is possible, is to increase deposit, asset under management and asset administration by 10% per quarter, obviously, not easy to do.

So that's a completely different approach between us and the most important competitor that we have in the country. Looking at the net interest income, as I told in other previous answer. The real point is that we think that net interest income will increase and will increase in a significant way during the second part of the year, but the contribution from the security portfolio that has been really important, but it is something that we declared by the beginning of the year that we will have that we could be in a position to have a much higher contribution from loan book and from the financial activity through the initial dimension of the portfolio can be under some scrutiny for potential capital gain that we can realize during the third quarter.

So on the loan book, on the Euribor on deposits, we will have a clear driver for growth in the third quarter and especially in the fourth quarter. For security, this will depend from the dynamic of the trading income during the next quarter. I think that I answer to all the questions.

Okay. Thank you. Speakers have no further questions for today. I would now like to hand the conference over to your speaker Master Calamia for any closing more.

So thank you very much. We will continue to focus on execution of our results on a stand-alone basis because also this transaction with Monte de Pasi will not defocus the -- from the delivery of the business plan, we think that the execution will bring us with a significant net income generation during also the second part of the year and look in the Montepaschi transaction, there's 0 possibility that we will increase our price for the Montepaschi today is always in such evaluation to be comparable with price earning JPMorgan or gas and Goldman Sachs, and so I think that if Intel and UniCredit stay at 11 and Monte Paschi is 15, there's no room to further increase thank you very much, and hope to see you in our road show.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

Good afternoon, ladies and gentlemen, and welcome to the conference call of Intesa Sanpaolo for the presentation of the first quarter 2026 results hosted today by Mr. Carlo Messina, Chief Executive Officer. My name is Razia, and I will be your coordinator for today's conference.

[Operator Instructions] I remind you all that today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Carlo Messina, CEO. Sir, you may begin.

Welcome to our first quarter 2026 results conference call. This is Carlo Messina, Chief Executive Officer, and I'm here with Luca Bocca, our CFO, and Marco Delfrate and Andrea Tamagnini, Investor Relations Officers.

Before we begin, I would like to state that suddenly yesterday night, my mother passed away. And so today, I will open this call with a very brief introduction, and then Luca will go through the presentation of our results. So you will help me in making the presentation, while we will manage the question and answer together, and I will be at your disposal for all the strategic questions.

Let me underline in any case that we just delivered our best ever quarterly net income at EUR 2.8 billion with an annualized return on equity of 21% and earnings per share up 8% on a yearly basis. These are excellent results, confirming we are well on track to deliver EUR 10 billion net income this year. And in any case, we are not used to change our guidance in the first quarter of any kind of year. So in my opinion, to change guidance starting from the first quarter is not the right way to manage an organization.

Execution, then I will elaborate on what we have as a driver that can allow us to have a very good performance also in the next quarters. Execution of our new business plan is already proceeding at full speed, and we are navigating the current market volatility from a position of strength, thanks to our top-notch asset quality and our resilient and well-diversified business model.

In the first 3 months, we delivered high quality and increased revenues, supported by record Q1 commissions and best ever insurance income. Net interest income can be the real surprise for 2026. We reduced costs, and we will continue to reduce cost, and we confirm our strong capital generation capabilities. Intesa Sanpaolo offers one of the highest dividend yields in European banking. And this year, we will return around EUR 9.4 billion, taking into account the May dividend, the November interim dividend and the EUR 2.3 billion buyback to be launched in July. I'm proud of our results and thank our people for their excellent contribution.

So let me underline that our strong profitability allow us to maintain a world-class position in social impact. I will now hand over to Luca, and thank you for your understanding.

Thank you, Carlo. We are all very sorry for your loss. And now let's start with Slide 1 for the key achievements of the quarter. In the first 3 months, we delivered record high profitability with the lowest ever cost/income ratio, excellent asset quality, rock-solid capital position and sustainable and increasing value creation and distribution.

Please turn to Slide 2. In this slide, you can see the impressive and consistent growth in net income that has almost doubled in 5 years.

Slide #3. In the first 3 months, we delivered a strong increase in EPS, DPS and tangible book value per share. In 2 weeks, we will pay the final dividend for 2025, which is 11% higher than last year.

Please turn to Slide 4. As said before, thanks to this excellent start to the year, we are in a comfortable position to deliver EUR 10 billion net income in 2026 despite market volatility.

Slide #5. Our excellent profitability allows us to benefit all our stakeholders and strongly support the fight against poverty and inequalities.

Please turn to Slide 6. In February, we presented our new business plan based on 3 pillars: one, cost reduction, benefiting from tech investments already deployed; two, conservative revenue growth, thanks to group synergies and additional people to strengthen our wealth management protection and advisory leadership; and three, low cost of risk, driven by our 0 NPL bank status with bad loans already reset to near 0. The plan is proceeding at full speed. And in the appendix, you have an update of the most significant initiatives underway.

Now let's move to Slide 8 for a closer look at our first quarter results. In a nutshell, in Q1, net income was up 6% year-on-year. We delivered the best quarter ever for revenues, operating margin and gross income. Costs were down and asset quality remained top notch with increased coverage and stable overlays.

Please turn to Slide 9. In this slide, you have the detailed P&L for the quarter, showing improved results in almost all the lines on both quarterly and yearly basis. Let me underline that the tax rate is almost 3 percentage points higher than last year, mainly due to Italy's budget law.

Slide #10. In Q1, revenues were up both quarterly and yearly. As usual, we manage our revenues in an integrated manner with higher profits from financial assets that act as a natural hedge against the impact of market volatility.

Please turn to Slide 11. This slide provides more detail on net interest income that was up year-on-year despite the strong reduction in Euribor. Net interest income also increased on a quarterly basis when considering the fewer days in Q1. Let me highlight that loans to customer grew 3% yearly and 1% quarterly.

Please now turn to Slide 12. Our Wealth Management and Protection machine continued to deliver strong results. In fact, this was the best Q1 ever for commissions and the best quarter ever for insurance income. Asset under management gross inflows were up despite market volatility.

Please turn to Slide 13. In Q1, commissions were up 3% yearly with 4% growth in Wealth Management and Protection. The quarterly decline was due to performance fees and seasonality in commissions from commercial banking activities. Our top-notch advisory services are a stabilizer for the impact of market volatility on fees with 13% growth year-on-year in related additional commissions. Our fully owned product factories are a clear competitive advantage. Let me add that April was another good month for assets under management inflows.

Slide 14. Non-motor P&C was a driver of insurance income growth, and we still have significant upside potential.

Please turn to Slide 15 now. Customer financial assets were up EUR 64 billion on a yearly basis to more than EUR 1.4 trillion. The quarterly decline was due to negative market performance.

Please turn to Slide 16. We can count on our unmatched client advisory network with 19,000 people dedicating to fueling assets under management growth, reaching 22,500 people in 3 years. In Q1, we already added about 350 people. And in the past 12 months, we have increased our global adviser network by almost 900 people.

Slide 17. The contribution from commissions and insurance income to revenue is by far the highest in Europe after UBS.

Slide 18. The cost/income ratio was lower than 36% in Q1, also thanks to our tech investment that are clearly paying off.

Please turn to Slide 19. Operating costs were down 1% compared to last year. And in 12 months, we have a headcount reduction of over 1,900 people.

Now turn to Slide 20. We have high flexibility to reduce costs further, thanks to our tech transformation. A significant portion of our workforce is approaching retirement. And in Q1, we had 1,400 exits, and we hired 500 young people. By 2029, we will have more than 12,000 exits at no social cost while having more than 6,000 young people in Italy, mostly global adviser with skill aligned to evolving business needs. This will enable EUR 570 million in cost savings at run rate with no impact on revenues.

Slide 21. As you can see from this slide, we have a best-in-class cost/income ratio in Europe.

Let's move to Slide 22 for a look at our top-notch asset quality. Our annualized cost of risk was 16 basis points with a strong increase in coverage and no overlays release, and we see no signs of asset quality deterioration.

Turn to Slide 23. We have a very low NPL stock with only EUR 3.9 billion net NPL and bad loans reset to near 0. NPL inflows were at historical lows, and we have a well-diversified loan portfolio with no material exposure to private credit.

Let's move to Slide 24 for an update on capital. After having accrued EUR 2.6 billion for distribution in Q1, the common equity ratio was above 13%. In Q1, we had an impact of about 15 basis points from the valuation reserves due to market volatility. 10 basis points were already recovered in April. The common equity ratio was 13.9%, including the benefit from DTA absorption.

Please turn to Slide 25. We have best-in-class MREL ratio and the liquidity ratios are well above our business plan targets.

Let's now move to Slide 27 to see how well equipped ISP is to succeed in any scenario. Our profitability and capital position remains strong even under adverse conditions as shown in the EBA stress test. We have a very resilient and efficient business model with EUR 5.7 billion investments in tech already deployed. These are a key enabler for further efficiency gains and to win against fintechs. Our net NPL stock is very low. We can count on high-quality loan origination, and we have EUR 900 million in overlays. Last but not least, the management team has a strong track record in delivering results.

Please turn to Slide 28. Intesa Sanpaolo stands out across key metrics and is better positioned than our peers to face any future challenge.

Please turn to Slide 29. In this slide, you can appreciate our unique positioning, thanks to our efficient commission-driven business model supported by strong tech investment.

Slide 30. As previously said, our NPL stock and ratios are among the best in Europe.

Slide 31. As you can see, we are also very well positioned in terms of Stage 2 that further declined in Q1.

Please turn to Slide 32. Our NPL coverage is also among the best in Europe.

Slide 33. Our Russia exposure is also close to 0.

Please turn now to the next slide for a few words on the macro picture. The Italian economy remains resilient, and we expect Italian GDP to grow this year and next.

Please turn now to Slide 35. In this slide that you already know, but is very important, you can see that Italian companies are now in a stronger position and more resilient to external shocks than in the past. Their debt-to-equity ratio has increased over time and their liquidity buffer are at all-time highs.

Turn now to Slide 37. This slide offers a recap of our best ever quarter and the reason why we are fully equipped to succeed in the future.

To finish, please turn to Slide 38 for the outlook. For 2026, we are in a comfortable position to deliver a net income of EUR 10 billion. This performance reflects the strength of our business model with strong potential for growth. As always, we will continue to manage our revenues in an integrated manner, maintaining a strong focus on cost, asset quality and the sustainability of our results. We combine high-quality revenues, cost control, strong investment for growth, high capital generation and a very low risk profile, making us one of the most resilient banks in Europe.

We remain focused on delivering strong short-term results while continuing to invest for sustainable long-term value creation. That is why we are delivering one of the highest dividend yields in European banking while maintaining a solid capital and continue to lead on value creation and distribution and social impact.

Thank you for your attention. We can now open the Q&A session.

[Operator Instructions] We are now going to proceed with our first question, and the questions come from the line of Antonio Reale from Bank of America.

It's Antonio from Bank of America. My sincere condolences to Carlo and your entire family. I'm very sorry to hear about the loss. I had a question on strategy, but I'll stick to questions for Luca perhaps. So one on NII and one on costs. The first one is on your hedge portfolio. This quarter, you've added another EUR 10 billion or so to your hedging book. And every year, you have about EUR 30 billion of this maturing and these are broadly reinvested at sort of an interest rate on the front side of about 2.8%, 2.9%, which is a big tailwind to NII. You have a relatively low duration lower than your peers of 4 years. So my question is, why are we not seeing a little bit more support to your NII? Maybe you can share how much the hedge contributed this quarter? And more importantly, why you're not increasing your guidance? Are there any other bits of the swap that is eroding some of this benefit? So that will be my first question.

My second question is you're guiding for stable costs. And by all means, that comes with a lot of discipline when we account for inflation, IT investments. But you've built quite a lot of buffers going into the business plan in the last quarter. So I wonder to what extent you'd be able to do sort of better than stable costs? So if you can elaborate a little bit more on this point.

Thank you, Antonio. We'll go to the 2 questions. On NII, if you look the trajectory year-on-year of the Q1 result compared to last year, we have more than 60 basis point decline in Euribor. So the contribution is really positive and the fact that we decreased only by EUR 100 million, the spread component is totally related to the hedge contribution that as we have said at the beginning of the year, and we can confirm we will give year-on-year EUR 500 million of positive contribution in the 2026 due to the increase of the last part of the curve, a positive contribution of EUR 500 million also in 2027 and then continue to give EUR 200 million, EUR 300 million contribution positive '28, '29.

So it's clear that we are in a comfortable position to increase NII this year compared to 2025. And remember that our estimates are done with stable Euribor. So at the moment, we are looking at forward rates that are above this level. So we have upside potential.

On cost, we said that we want to be very prudent in estimate as usual, saying that the cost can remain stable this year. Of course, the starting point of the year is better than expectation. So probably we can do better also on cost. It's clear that, as Carlo said, we are at the beginning of the year. The scenario is very fluid. So we prefer to not change all the different line of the guidance, but the result of first quarter on operative point of view are better.

We are now going to proceed with our next question. And the questions come from the line of Delphine Lee from JPMorgan.

So -- and my sincere condolences as well to Carlo and his family and sorry to hear about the loss. So the first question is just to understand a little bit sort of the trend so far? Are you still seeing some impact of the current environment, the macro uncertainties, situation in the Middle East in terms of like loan demand? And has that impacted your inflows into Wealth Management? I mean fees and commissions have grown at a decent pace in Q1, but just wondering how that pace is changing because of that?

And my second question is on Generali. Sorry to ask about this, but the press keeps talking about mentioning Intesa, and I know you've looked at it obviously in the past. But maybe could you just remind the market a little bit sort of what your thoughts were at the time and right now and sort of your approach to this topic?

So I will answer to these questions because I think that my presence here today is just to talk about Generali. So I was sure that you were interested in making this question and so that the reason why I'm here today. So the point on Generali is always the same. We have a business model that is based on Wealth Management and Protection, but we have also market share in Italy that can prevent us to make any kind of transaction in the banking sector and insurance sector because we have significant problems from an antitrust situation. So I think that today, Generali has in the last 2 years, a number of shareholders that are always the same, just with some change in the percentage that voted in the same way in the shareholder meetings because, Delphine, UniCredit and Caltagirone had the same approach on the organization that was against the current management team.

So I think that this point on Generali is a matter that has to be considered by different counterparties by -- different from Intesa Sanpaolo. So again, I can just point out that antitrust is a clear point for us that can prevent for make any kind of acquisition.

On the point on impact on macro uncertainty and other trend, one of the point that suggests me that to change the outlook in the first quarter is something that is not conservative also if you have very good results is because when you have uncertainty, it's much better to stay at your original forecast than to change just for the sake of increasing your currency because you have to make some extraordinary transaction. So my perception is that today, the situation in Italy is totally under control. So also with the kind of implication that we see from the conflict that can reduce the growth of the Italian GDP, but we do not see any kind of significant threats on the asset quality of our group, and we made a good job in reducing nonperforming loans just last year. So we are more than prepared to any kind of negative scenario. But today, this is not what we are considering.

At the same time, also on fee and commissions, the starting point of the year has been very positive. So also in April, we continue to have a very positive trend and also the attitude of the clients to be more in favor of maintaining a good attitude towards Wealth Management is very positive.

I have to add also in any case that we will consider with attention also the trend of the current accounts in the next quarters because -- and that's the reason why I think that the underlying trend of the organization are much, much better than what we have considered in making the forecast for the outlook in net interest income. As Luca said in the previous answer, the forecast is based on Euribor that is below 2%. So all -- what I'm pretty sure that will happen that ECB will have to increase the interest rate will bring positive to our figures. But within the framework of an increase of 50 basis points, we will continue to have a very positive trend in fee and commissions, but accelerating conversion of assets under administration and maintaining the current accounts because this will bring us a significant markdown contribution that is what we are considering in the new target that we are giving to the people within the organization.

We are now going to proceed with our next question. And the questions come from the line of Ignacio Ulargui Lopez from BNP Paribas.

My sincere condolences to Carlo to you and your family. I have 2 questions. The first one is on loan growth, which we have seen a bit of an acceleration in the quarter. There was a very strong growth in the Corporate and Investment Banking business, but also there was an improvement in Banca dei Territori. So I just wanted to get a bit of your thoughts on how should we see the acceleration with sectors you are prioritizing? And what should we expect going forward in terms of loan growth?

And the second one is on insurance revenues. It has been a record quarter. How should we expect the non-motor part, the kind of the non-life and the life business performing into the year?

Thank you, Ignacio. I will go through the answer. On loan growth, yes, you are right. We are satisfied of the loan growth, especially because derives from the corporate sector that is the one that lagged behind in the previous quarters. The strongest performance is made by the companies that are linked to foreign environment in the Corporate Investment Banking division, in infrastructure, in energy transition, all related to a GDP that is growing above the level of Italy. So this is the main contributor. And we expect also for the future that this trend can continue and we can reach the target that we set in the business plan of a loan growth between 3%, 4% for the year. So this is our estimate at the moment.

For what concerns insurance, you are right, again, the performance is leaded by the Property and Casualty, even if the performance in life insurance is very solid and is still recovering from the previous quarters. So the contribution of insurance can be very solid in mid-single digit for the year and the target for Property and Casualty, you know that we have more or less EUR 800 million starting from 2025 as contribution. For sure, we can increase this target with the pace that we have forecasted during the business plan. So this is more or less the ambitions that we have.

We are now going to proceed with our next question. And the questions come from the line of Marco Nicolai from Jefferies.

First of all, I will join the colleagues in extending my condolences to Carlo Messina and his family. I had a couple of questions on today's results. First of all, it's a follow-up on the commission income. So this quarter, you grew by 3% year-on-year. I think you were guiding for a CAGR of 4% in the business plan. So shall we expect that the pace is going to pick up again in the following quarters, perhaps after the volatility that we saw in the market in the first quarter is digested.

So -- and then also I have another question on fees. If I look at the commercial banking fees, so last year, this pool of commission actually contributed negatively on the year-on-year growth. But in 4Q '25 and the first quarter '26, we saw a little bit of a pickup in this. So do you expect this commission pool to actually bring a positive contribution to the growth this year?

And perhaps also a follow-up on NII. Can you just remember us your rate sensitivity? If I'm not wrong, that's usually based on a 12-month horizon. But can you also give us a sensitivity or at least an idea on a 24, 36 months sensitivity to rates -- to higher rates?

So on sensitivity, Luca will give you the answer. On the first point on commissions, I want to elaborate because this point is very important for us. We think that we can continue at this trend with an acceleration in terms of fee related to Wealth Management and Protection. But at the same time, the real driver that in our expectation will recover in the next quarters will be the area of commercial banking and commissions related with corporate lending because still after the growth and the starting point of the growth of the lending book, we are not seeing for the time being evidence of this increase in commissions that will start from the second quarter of this year.

But let me add that on fee and commission, just to give you point on the strategy and the strong correlation with the current account. As I told you, we will monitor also the dynamic of the Euribor because we think that in our trend of increase of customer financial assets, we will give also particular attention on the growth of the current account because we think that on net interest income, we will have a very positive dynamic and also much higher than the analytical sensitivity that Luca will explain now to you.

Okay. I will start with the sensitivity at 12 months that I remember is a sensitivity made on a static balance sheet according to an increase of the rates versus the rates that are implied in the forward curve that is EUR 200 million for 50 basis points. But if we consider the sensitivity, the managerial sensitivity, so considering the evolution of the balance sheet on a real projection, I can say, the sensitivity is EUR 300 million for 50 basis points. And this is the sensitivity, of course, that means that if you have a movement on the Euribor moving from 2 to 2.5, you will count in the net interest income for the quarter.

Looking at a more longer sensitivity is something that can generate more higher level of benefit. At the moment, I can say that if we use forward rates for the NII at 2029, we can have EUR 500 million more contribution, but it is, of course, something that is theoretical. The important aspect is that in 12 months, based on managerial number, if we have 50 basis point increase, we can have EUR 300 million more contribution in NII.

Luca, sorry, a follow-up. The EUR 500 million you mentioned, is it still -- does it still relate to 50 bps or...

Yes, 50 bps on a long-term perspective, so between '28 and '29.

We are now going to proceed with our next question. And the questions come from the line of Noemi Peruch from Morgan Stanley.

My sincere condolences as well. I have 2 questions. So one is on your market share evolution in Italy. If I look back in the past 2 years, this has been going down slightly between 1 and 2 percentage points. And I was wondering what is behind that? Do you see the market growing perhaps in segments that you don't like the margin or the asset quality over? And do you see this trend stabilizing or inverting perhaps?

And the second question is on fees. At the moment in Q1, the growth pace is 3%. Do you expect a more optimistic outlook for the remaining of the year? And on this, we have seen asset gross AUM inflows are flat Q-on-Q and up year-on-year. And I was wondering what do you see in terms of margins and on upfront fees?

Okay, Noemi. Our market share evolution, the situation is stabilizing. I want to start from this point. Of course, we have already spoken about this in previous meetings. The competition during the last 2 years, was very important, especially in the loan book arena. So in this respect, we prefer to maintain the right price on the loan and not enter in a battle for volume. And now the situation is stabilizing also because we think that our competitors are involved in integration and in external operation that permit us to maintain market share stable on deposit, as Carlo said, it's become a strategic asset for us in the environment. And so we continue to maintain a very stable market share in the deposit and current account that is the most important part for us. So we do not follow competition for having a corporate deposit with a margin of 0.01%. So this is the point.

Instead, on fee. Fee, we have not registered the impact of the decline in the yield that we put in the business plan on medium, long term for having prudence on this. In the first quarter, the return on the asset is stable. Don't forget that during March, we have had a very important impact in the valuation of assets under management and assets under administration that has been totally recovered at the moment already in April and is continuing in May. So I can assume that we can recover the trajectory and in line with our business plan for the last part of the year.

We are now going to proceed with our next question. And the questions come from Sofie Peterzens from Goldman Sachs.

Here is Sofie from Goldman Sachs. My condolences as well, very sorry to hear. My first question would be on your provisions. You guide for a significant decrease in provisions you have EUR 900 million overlays. How should we think about this provision or provision decrease over 2026 and 2027. And do you consider releasing some of the overlays? And then the second question would be on capital. How should we think about potential SRTs? And do you see any capital headwinds or tailwinds on the horizon?

No. On provisions, we are not expecting of release any kind of overlays not in 2026 and not in 2027. In the guidance, this is an important point. We put a cost of risk in line with the business plan, so between 25 and 30 basis points. We have currently run the bank at 16 basis points. So we have room to absorb eventual spike in the next quarter. And of course, overlays will be utilized only in case of a massive deterioration of the scenario, but at the moment, also in April, the inflows -- net inflows of NPL are very, very limited. So we are continuing to do very well in the new credit disbursement.

In SRT, now SRT at the moment, we have a benefit in the common equity Tier 1 ratio that is 60 basis points stable compared to the last part of 2025. We are working to continue to increase the size of SRT. At the moment, the costs are in line with our expectation and with the previous years. I want only to remind you that we have the cost of SRT in commission that is an accounting treatment, but it's important to you to remember that we have this kind of operation -- the cost of this kind of operation in commissions. Not any kind of headwinds in the future, remembering that we have tailwinds of DTAs because with such profitability high, we can absorb the 80 bps quite easily that we still have as a deduction of common equity Tier 1 ratio.

We are now going to proceed with our next question. And the questions come from the line of Pablo de la Torre Cuevas from RBC Capital Markets. .

I'm deeply sorry to hear about your loss, Carlo. I just had a couple of follow-ups. The first one being on the hedge. I just wanted to check if you can disclose what are your current expectations for the growth in the size of the hedge going forward to 2029. The second one was just a quick follow-up on cost of risk. It seems like you've reconfirmed that you see the normalized level there at 25 to 30 basis points. I just wanted to check if that includes the usual managerial actions at the end of each year. And also, it would be useful just to get some sort of sensitivity around what would that level be in a significantly more challenging macro environment, including a recession in Italy?

No. At the hedge, we are not planning to increase the size of hedging because we maintain in our projection, EUR 170 billion, then it's clear that increasing the level of deposit, this is a very prudent assumptions. So as we have done this year, increasing by EUR 10 billion, the total volume under the hedge program can be that in the future, we can increase. But the estimate that we are providing are done with a stable EUR 170 billion of deposit hedged. And the contribution, just to be very, very clear, is EUR 500 million in '26 and '27, so more contribution of EUR 1 billion in 2 years and then EUR 300 million in '28 and EUR 250 million in '29. So these are the number of hedge.

And of course, as I said before, the target for the year is 25 or 30 basis points in cost of risk and include possible managerial action because, as I said before, we are running the bank between 16, 20 basis points. So we maintain some room of prudence.

According to sensitivity, it's clear that a deeper recession can change the number. But taking into consideration that we have basically 0 stock. So compared to the past, it's difficult to imagine a big increase in cost of risk the important aspect that is, at the moment, we are looking at GDP growth for Italy between 0.3%, 0.4%. And even if the situation can deteriorate, we do not expect a recession during 2026. So on cost of risk, we are very, very comfortable.

We are now going to proceed with our next question. And the questions come from the line of Andrea Lisi from Equita.

First of all, condolences to Carlo for your loss. Well, my question was on trading that provided the strong contribution in the first quarter. If you can update us on your strategy in the management of the portfolio, now it relates how with the evolution of NII. So can we assume that the bulk of trading income in the current clearly depending on market condition, but assuming conditions stabilizing, has been realized in this quarter.

The other questions were related to capital dynamics. So if there is something that should be -- if you can update us on the capital evolution. So what should we expect for this year? And lastly, if you can give us an indication of the final tax rate should we expect for 2026?

So Andrea, trading, we manage the revenue in an integrated manner. So it's difficult to give a specific guidance of trading. For sure, we are looking at a normalization of trading compared to the year 2022, 2023. We can increase the level of trading compared to 2025. How much it will depend also on NII and on the contribution that we can have by an increase in rate that, as Carlo said, is the more probable scenario now that is not included in our numbers. So I think that we have started very well the year. So we are in a comfortable position. We have a government bond portfolio that is higher than last year, so it's giving contribution to NII, and we have some recovery in the fair value of the position in April and in May.

So very solid performance in trading also for the next quarter. But again, it's important to look at our revenue in an integrated way. Capital dynamic, we have a target above 13% for the business plan and we can confirm that we will remain above this level and above the level of today because -- of today of the presentation because we have had this impact of 15 basis points that has been a recovery in April and is continuing also in day -- in this week. So the level of capital will be above 13% in line with our estimate that we provided with the business plan.

And tax rate, the level we have been very clear at the end of the 2025 giving the update, the level that we have registered 2.5% more or less increase in tax rate can be something that can arrive also at the year-end. Of course, we have EUR 1 trillion of assets. So we can try also to find some lever to optimize. But at the moment, in the guidance, there is the increase of 2.5% in tax rate.

We are now going to proceed with our next question. And the questions come from the line of Andrea Filtri from Mediobanca.

First of all, Carlo, deep condolences for your loss. I have questions. I'll start with the first on loan growth. Mainly comes from the CIB, the loan growth you have shown in Q1. If you could provide us more granularity on the composition of the loan growth you are seeing, what sectors are accelerating your expectations going forward, given Carlo's comment on an expected pickup from Q2 in corporate lending fees.

The second is on the Danish Compromise squared. In case of acquisition of a significant stake in an insurance company, could you confirm you would be able to adopt the Danish Compromise squared regulatory treatment to the stake specifically? And finally, on regulation, there is much talk about Europe on the front foot to review and potentially improve the regulatory framework. Are you seeing any potential improvements? Is anything moving from your viewpoint?

No. On loan growth, Andrea, you are right. As I said before, the corporate investment banking will be the key driver, not only in first quarter, but also continuing positively in the second quarter. As I said, more or less 50% of the new disbursements are made by international clients. So these are the one that can benefit for a more higher growth in terms of GDP in the world compared to Italy. So we can continue to have benefit on this side.

There is also another important aspect that you do not see increase of stock or big increase of stock in Banca dei Territori as in Corporate Investment Banking, but this is related also a substitution of the previous COVID loans that now are expiring, substituting by normal, I can say, normal loans. And so the stock is remaining stable, but the markup is increasing. So in terms of new disbursement of medium, long-term loans, also Banca dei Territori and the SMEs sector specifically is doing a very good job.

On commission, of course, it's clear that we have had March that has been impacted by the very difficult situation. So some pipeline has been moved in April and in general in the second quarter. So we can expect a pickup in the second quarter structured fee related to loans. I leave it to Carlo for consideration on Danish Compromise.

So first of all, on regulatory framework, we do not see any kind of improvement. So I don't think that we can have some visible improvement in the next quarters and for my understanding, also in the next years because there is a clear difference in attitude from politicians and supervisors. So my expectation is that it is difficult that can be -- that we can have some improvement like system.

Talking about Danish Compromise squared and talking about the insurance business, obviously, if you remain in the insurance business environment, my expectation is that in case of an acquisition of an insurance company, the Danish Compromise can be considered as something not difficult to be confirmed by the supervisor. So just make it in clear word, if Intesa Sanpaolo should make something in the insurance business, my expectation is that we can have the confirmation of our Danish Compromise. This is based on the fact that we have a significant dimension in our insurance business. And at the same time, it is really unbelievable that if you make a significant acquisition in something that can diversify your business model, you can be treated like nonperforming loans because if you consider the complete deduction of a participation, insurance business is equivalent to have nonperforming loans in your asset book.

So this is crazy. And it is obvious that the most important part of the story is that you should have the governance and the risk control that is able to function as a complete group and not obviously maintaining as a separate entity. But in my perception, also your analysis that I read in different paper on the benefit that can derive from the Danish Compromise squared are absolutely likely and there are also something that it is reasonable because when you make a diversification, it is crazy to consider that you are making an acquisition of nonperforming loans or also with the Danish Compromise, you will remain with a risk weighting that is much higher than a credit.

So also in this case, the Danish Compromise, if you make a good acquisition in insurance business can create significant capital. The real point is that an acquisition from a bank in comparison with an insurance has a significant earnings per share problem. So if you consider this, you can have benefit in terms of capital, but you can lose in terms of earnings per share. Having said that, this is theoretical, I can confirm that we have antitrust problem to make the acquisition of Generali.

We are now going to proceed with our next question. And the questions come from the line of Britta Schmidt from Autonomous Research.

Yes. First, let me also offer my condolences to Carlo. Just 2 quick follow-ups. On the valuation movements this quarter, can you give us a little bit of an insight into what was -- what caused the movements there? And maybe also update us on some of the sensitivities to credit spreads or valuations? And then secondly, what sort of cost for certificates do you expect to book this year in the trading income? And how should we expect that to move or reprice potentially with changes in rates?

I want to start with the second one. The cost of certificates is in line with the level of 2025 because we are assuming that the Euribor remains stable. As I said before, in the NII, we have said -- we have set this prudent approach, and this is the reason why also on cost of certificates remain stable. Of course, if we will have an increase in Euribor, we can have a small impact in trading, but definitely higher impact positive in NII. So net-net is positive.

On sensitivity of the impact of valuation reserve, first of all, again, we have an impact of 15 basis points because basically all the government bonds, not only the Italian one, have had an impact on the different -- on the credit spread. So you can use the actual number to have a sensitivity looking what happened in the month of March and the impact has been 15 basis points. So it's the best way to have a sensitivity on our number. Just to remember that we have recovered 10 basis points in April and looking the number of today, we have the other 5 basis points recovered. So all in all, at the moment, we have reabsorbed all the impact of the valuation reserve.

We are now going to proceed with our next question. And the questions come from the line of Giovanni Razzoli from Deutsche Bank.

My condolences also to Mr. Messina and his family for his loss. On the questions, 2 very quick ones, please. The first one is on the deposits because it seems to me that Intesa so far is the best performing bank in terms of deposit growth or one of the best one in Italy with growth 4%. We have seen that most of it was in the corporate segment, but you said that your strategy does not envisage clearly to enter into competition for hot money or temporary deposits. I was wondering so if going forward for the rest of the year, we shall assume that this deposit base will be maintained and progressively increase as you also plan to expand your reach into the Banca dei Territori as per the business plan. So that's my first question.

And the second question, if you can remind us what is the time line for the 80 basis points of DTA absorption? I would say 20, 30 basis points per year over the next 3, 4 years is a reasonable assumption?

Yes. The assumption on DTA is correct. This year, we can have 25, 30 basis points. It depends, of course, on the net profitability. But for sure, we will absorb the 80 bps during the next 3 years. So this is on capital.

And on deposit, I can say that the start of the year is very positive on all the different part. Of course, the lion part is made by our household current account where the cost is 0. And so this is the target that we want to achieve. On the other sector, we will follow the trend of the market, remembering that the Italian -- the quality of the Italian corporate SMEs is increasing and they are very liquid as we've shown in the presentation. So basically, we can have some benefit also in the trend of deposit for corporate sector without paying too much money for maintaining them. So this is the answer.

We are now going to take the last question. And the last questions come from Ignacio Cerezo from UBS.

Obviously, extending my condolences to Carlo and his family as well. On the questions, first one is on NII. I mean, it looks like the kind of messaging from you is reasonably optimistic on things like hedge volumes, but you haven't really changed your NII guidance for the year being higher basically than 2025. So just basically asking if you can be slightly more precise around how much higher basically than last year consensus is at plus 2 -- so just having -- getting some color beyond actually, if you can, in terms of how much higher you can have? And related to this, if there is any negative we need to think about actually in terms of the net interest income progression through the year?

And then the second question is on the EUR 421 million of dealing and placement of securities fees, the upfront component. If you can at least give some color of how that number is split between the different products and how sustainable that number is into coming quarters?

On NII, I think that we have given details, but I want to be more clear again. It's clear that we have assumed to have increase in the region that we have said during the business plan, so 2%, 3% with stable rates. It's clear that 50 basis points can give us EUR 300 million more. So this is the best situation to calculate our NII can be. Of course, during Q2 after 6 months, we can give update on the guidance also for NII for the end of the year, we can say that we can do better than 2025 in a discrete way, so in a very important way, not more at the moment, but will be higher than our expectation. This is for sure. And can you repeat the second question because it's on commission, but I didn't catch the specific question.

Yes. The question was around the upfront component basically of the market fees, EUR 421 million. I think you call it dealing and placement of securities. If you can split that number between different products, and if you can let us know how sustainable you think that number is -- has grown actually versus Q4 and it has grown as well versus Q1 last year. I think it's the highest number in this series [indiscernible].

I think that we can provide detail with our Investor Relations team in a follow-up. Of course, the placement -- I can say that the placement of securities is very positive because, as Carlo said, we have been able to maintain our ability to have gross inflows during this quarter. Remember that 1 month has been highly impacted by the situation in Middle East.

So I think that the placement -- the commission deriving from the placement of securities is totally sustainable and represents only a portion of our commission base that part has been impacted instead in the recurring fee during the month of March. So I think that the largest part of our commission base can be higher during second quarter due to the recovery in asset under management and asset administration stock. Generally, in placement of securities, we have certificates, third-party bonds and mutual funds. And so it's a typical activity that our Banca dei Territori and Wealth Management division will continue to do so are completely sustainable for the future.

This is the end of the question-and-answer session. I will now hand back to the management team for closing remarks.

So first of all, thank you very much for your condolences. I much appreciated your condolences. What I want just to focus at the end of the presentation is just an executive summary of our expectation for 2026, so that you can have the clear lever that we are using within the organization. So on net interest income, our expectation is that the macro environment will give us a significant further contribution. And in this -- for this reason, we are accelerating the work on the current account just in order to be in a position to have growth in terms of markdown.

In terms of commissions, we are continuing to have significant gross inflow accelerating in all the different areas of Wealth Management and Protection, but also in terms of lending commissions. If we look at trading, we will continue to have a good performance. Insurance income will continue to have a good contribution.

Looking at Property and Casualty that is increasing in terms of penetration. Cost will be the real surprise for 2026 because we would be in a position to exceed in a significant way our expectation. Also, if you look at loan loss provisions, the significant reduction in terms of nonperforming loans will allow us to have a very good performance and if needed, to make other and further managerial actions. So net-net, our expectation is to continue to have a good trend for 2026.

Also, the condition in Italy is a condition that obviously is affected by the crisis, that's a geopolitical condition that for sure. But I think that the government is making a good job in managing the situation. Both Giorgia Meloni and Giancarlo Giorgetti, in my opinion, have the right approach on managing the situation. And if needed, I think that Italy should be in a position to increase also the public expenditure, especially if this will be in connection with a potential further reduction of the public debt through disposal of the real estate assets that are in the end of the government and the public. So net-net, my view is also positive on the country, obviously, provided that geopolitical conditions will reduce the growth within the country.

So thank you very much, and we will leave occasion to see in roadshow or in other occasions. Thank you.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

Good morning, ladies and gentlemen, and welcome to the conference call of Intesa Sanpaolo for the presentation of the 2025 Results and Business Plan, hosted today by Mr. Carlo Messina, Chief Executive Officer. My name is Sandra, and I will be your coordinator for today's conference. [Operator Instructions]

I remind you that today's conference is being recorded. At this time, I would like to hand the call over to Mr. Carlo Messina, CEO. Sir, you may begin.

Good morning, ladies and gentlemen, and welcome to today's conference call on our full year results and our new business plan. This is Carlo Messina, Chief Executive Officer; and I'm here with Luca Bocca, CFO; Marco Delfrate and Andrea Tamagnini, Investor Relations Officers.

Before starting our presentation, let me recap the main elements of our strategy. Over the last two business plan, we have delivered on our commitments, exceeding our targets. We have created a unique business model strongly focused on commissions with high efficiency and a low risk profile. This strategy was enabled by strong investments in technology and in our people.

Our investments in technology are a key enabler of growth, risk management and of the scalability and resilience of our operating model. They continue to translate into benefits over time, both in cost control and in the way we run the group. The new business plan will build on what already works, scaling our strengths. It is an ambitious plan, but with zero execution risk.

I will now briefly review our full year results, which are a key enabling factor for the new plan before presenting our 4-year strategy and targets.

Please turn to Slide 2. In 2025, we delivered record net income at EUR 9.3 billion. best-in-class cost income ratio, lowest ever NPL inflows, stock and ratios with bad loans reset to near 0, strong growth in capital and high increasing and sustainable value creation.

Slide 3, we delivered on our commitment while paving the way for the new business plan. Revenue grew despite a significant drop in Euribor, costs were down, cost of risk was low and net income was the highest ever despite significant Q4 managerial actions to favor derisking and strengthen the balance sheet.

Slide 4, we over delivered on all our targets set in the previous business plan, while investing more than planned. Shareholder distribution was 50% more than the business plan target.

Slide 5. We leveraged Q4 profitability to allocate EUR 1 billion of gross income to strengthen future profitability. We are the most resilient bank in Europe, fully equipped to succeed in any scenario.

Slide #6. In this slide, you have a brief summary of our excellent performance. In a nutshell, we had the best year ever for revenues and operating margin with record high commissions and insurance income. We reduced costs and net income was up 8%.

Slide 7. We delivered a strong growth in return on equity, earnings per share, dividend per share and tangible book value per share. For 2025, we will pay a cash dividend up 10% on a yearly basis, and we will launch a EUR 2.3 billion buyback in July.

Slide 8 for a look at capital. The common equity Tier 1 ratio grew to 13.9%, 13.2% after the buyback to be launched in July. We were able to increase the common equity Tier 1 ratio while distributing EUR 8.8 billion to shareholders.

Please turn to the next slide to see the further strengthening of our 0 NPL bank status. We strongly reduced the NPL stock in Q4. We now have just EUR 0.8 billion in bad loans. This is a key element for maintaining a low cost of risk in the coming years.

Slide 10, our NPL stock ratios are among the best in Europe, like in Nordic Bank.

Slide #11, revenues were up year-on-year despite a strong decline in market interest rates. Thanks to our well-diversified business model.

Slide 12. Net interest income was resilient despite a strong drop in Euribor. In Q4, we decided not to push strongly our loan growth and we are accelerating in the first quarter to compensate the EUR 570 million impact on common equity Tier 1 ratio from the Italian Budget Law. Still, loans in any case were up EUR 4 billion in the quarter.

Slide 13. We had a record year for commissions and insurance income, and Q4 was the best quarter ever for commissions.

Slide 14. Costs are down year-on-year. In Q4, in light of our strong profitability, we accelerated investments, training in preparation for the new business plan and advertising campaigns for the Winter Olympics. Our digital transformation is enabling significant efficiency gains, and we have high flexibility to further reduce costs in the coming years.

Slide 15. Our cost of risk was 26 basis points when adjusting for additional provisions to favor derisking and strengthen the balance sheet. The Italian economy is very resilient, and we see no signs of asset quality deterioration.

Slide 16. Our excellent and sustainable performance allow us to benefit all our stakeholders and strongly support the fight against poverty and inequalities.

Slide 17, our resilient profitability, well-diversified business model, low cost income ratio, cutting-edge technology and best-in-class risk profile place us in a unique position to keep succeeding in the coming years in any scenario.

Slide 18, Intesa Sanpaolo is also far better equipped than its European peers, and we are the most resilient European bank.

Slide 19. In this slide, you can appreciate the unique business model of Intesa Sanpaolo.

Now we can turn to Slide 20, '26 outlook -- to see the 2026 outlook. So Slide 20. For 2026, we expect a net income of about EUR 10 billion, driven by increased revenues, mainly thanks to commissions and insurance income growth, stable costs, low cost of risk driven by our 0 NPL bank status and the tax rate increase due to the Italian Budget Law, coupled with an increase in costs concerning the banking and insurance industry. We are also raising our cash payout ratio to 75% with an additional 20% buyback for a total payout of 95%.

Now let me briefly summarize our key messages for the full year results. The level of profitability we have delivered is driven by structural factors, not by temporary effects. In Q4, we took significant managerial actions to further strengthen the sustainability of our results, fully consistent with our approach that balances short term and long term. The combination of profitability, capital strength and low risk we have is not common in the banking sector. From this position of strength, we are entering the next phase of our strategy with strong confidence.

In the following slides, you have the full details of our full year and Q4 results, but now let me turn to our new business plan. Over the years, we have significantly strengthened the group. So this plan is about taking the strength further with zero execution risk. The plan is based on businesses we already run, investments we have already made, an execution model that is already proven. We are unique in Europe, resilient and ready to succeed in any scenario.

Our Wealth Management, Protection & Advisory model is fully integrated and operates efficiently with product factories and distribution networks working together under full strategic control. It has delivered results over many years, and we will take this model to the next level.

The plan includes a very detailed road map to grow our advisory network in Italy and abroad. We will scale up the Global Advisers network in the Banca dei Territori division, and this network will become the third largest in Italy, with Fideuram remaining #1.

On top of that, we will set up a Fideuram-style network in the International Banks Divisions. The plan unlock synergies across divisions, not only in Italy but also abroad. We will export all the elements of our successful business model to our international banks. We will leverage isytech, our product experience and fully owned product factories to fully unlock the bank's growth potential. The International Banks will contribute a lot more to net income growth than in the past. The synergies included in the plan have been developed together with the other group divisions through a dedicated steering committee zero-ing execution risk.

Another perfect example of our ability to extract synergy outside of Italy is the launch of Isywealth Europe. We see the opportunity to be a challenger in France, Germany and Spain, where we are already present with international branches. We will extend our successful business model, leveraging our strong tech investments, the extension of isytech, our Wealth Management leadership and our existing international branches presence.

We will combine our digital capabilities with the development of a sizable network of Wealth Management advisers. This is an opportunity for the group in the midterm, and this is why we assumed 0 revenues in the business plan despite including investments.

We will be able to structurally reduce cost and technology remains a major enabler, supporting efficiency, risk management and scalability. We are the first leading bank fully adopting a cloud-based core banking system. As you will see, our business plan includes substantial growth in terms of new clients, new customer financial assets and new lending.

On this point, let me highlight that our total new lending in Italy will be by far bigger than Italy's recovery plan and, as usual, will follow high-quality origination standards. We are the most resilient bank in Europe as confirmed by the EBA stress test and the 0 NPL bank status that we will maintain.

Against this backdrop, the new business plan is built around three clear pillars: cost reduction, conservative revenue growth and low cost of risk.

Let's now turn to Slide 3. This is very important for me. So let me start with our people, our most important assets. And I want to thank them for their hard work and full commitment to the success of Intesa Sanpaolo. Our people will always be our main asset and the key enabler of future success, and we will continue to invest in their talents. On top of that, we have a strong long-standing and cohesive management team.

Slide #4. Intesa Sanpaolo is a proven delivery machine, and this slide shows the excellent results of the past business plan. Net income and return on equity more than doubled. Cost income improved strongly. Customer financial assets grew significantly. NPL stock and ratios reached historical lows, and we returned almost EUR 50 billion to shareholders, mainly cash.

Slide #5. As you can see in this slide, net income has grown 20 years -- 12 years in a row.

Slide #6. The three pillars of our strategy are: one, cost reduction, benefiting from tech investments already deployed; two, conservative revenues growth, thanks to group synergies and additional people to strengthen our Wealth Management protection and advisory leadership; three, low cost of risk driven by our 0 NPL bank status with bad loans already reset to near 0. Our people are now fully committed to delivering the new business plan, a plan they were essential in developing.

Slide #7. Let's now go through the business plan numbers. By the end of the plan, we will deliver a net income above EUR 11.5 billion, a sustainable return on equity above 20% and the cost-income ratio at 37%. We will maintain our rock-solid capital position and our leading role in social impact with a new EUR 1 billion contribution.

Slide #8. Our priority remains high in sustainable value creation and distribution with strong growth in earnings per share and dividend per share and a total capital return of EUR 50 billion, close to 50% of our market cap. We will distribute in each year of the business plan a cash dividend equal to 75% of our net income, and we will add a 20% buyback. Any additional distribution will be evaluated year-by-year starting from 2027.

Slide #9. As usual, our business plan is built on a solid set of industrial initiatives that I will outline later.

Slide #10. This plan leverages our strengths with no execution risk. We can leverage a proven track record in cost reduction and our cloud-based digital platform is now being extended to the whole group, while generational change is already underway. We can boost our revenues through the unique combination of fully owned product factories, growing advisory networks and a cohesive management team to extract the group growth potential. We can count on a very low NPL stock, high-quality loan origination and a strong track record in managing emerging risks.

Slide 11. To sum up, we are committed to a strong increase in profitability and efficiency with a return on equity above 20%, a result that very few banks in Europe can deliver.

Slide 12. We have significant client and loan growth potential. We will expand our customer base by 2.5 million clients, mainly leveraging Isybank and the international banks. We will provide more than EUR 370 billion in medium/long-term lending to households and businesses. In Italy, the amount of new lending is higher than the European Union financial support to fund the national recovery and resilience plan for the country.

Slide 13. We will also increase customer financial assets by EUR 200 billion, of which EUR 100 billion in assets under management, also thanks to 3,700 additional people to further strengthen our Wealth Management Advisory Network.

Slide 14, our common equity Tier 1 ratio will remain comfortably above the target level of 12.5%, even after EUR 50 billion of capital return, thanks to strong internal capital generation.

Slide 15, we will also maintain an excellent liquidity profile despite a light funding plan confirming once again the zero execution risk of the business plan.

Slide 16, I want to highlight that the business plan targets are based on conservative rate assumption. Italian GDP growth will be supported by Italy's strong fundamental and our international markets will show an even higher increase.

Slide 17. The Italian economy remains resilient and recent upgrades of Italy's rating confirm the country's strength.

Slide 18. In this slide, you can see the main P&L figures we are targeting for 2029. And in the next two slides, you will find the main balance sheet figures with a positive contribution from all business units.

Now we can go to Slide 21. Thanks to the new plan, we will further strengthen our unique business model.

Slide 22, our new business plan will generate benefits for all stakeholders, and we will contribute EUR 500 billion to the real economy over the next 4 years. We can now move to the next section for the industrial initiatives of the business plan.

Slide 25. Let's now go through the first pillar of the business plan, cost reduction, which includes five main initiatives, such as the extension of isytech and the acceleration of generational change.

Slide 26. As a result of these initiatives, cost will decrease by EUR 200 million in absolute terms, thanks to EUR 1.6 billion in cost savings while keeping investing in technology and growth. To my knowledge, we are the only large bank in Europe with a business plan delivering cost reduction, and we are further stead to have further cost reduction.

Then we can go to Slide 27 to see more in details, the first initiative, the extension of isytech. Isytech is our cloud-native digital platform, and it has already been deployed with success to the Italian Retail segment, and this is a key enabler for expansion into a new international markets.

Slide 28. This is very important. Isytech will be rolled out across the entire group over the course of the business plan. And by 2029, 100% of application will be in the cloud. But what I want to point out is the '26, '27 in which we will extend to all the Wealth Management activity of the group, so affluent, exclusive, private, and this is -- will be very important also for the international expansion of Wealth Management of the group that we will see in Isywealth Europe.

Slide 29, we will deliver a significant increase in productivity through artificial intelligence. This evolution will transform our service model, enhanced operational efficiency and strengthen oversight of risk and control.

Slide 30, we will expand also our digital branch capabilities to increase productivity and commercial activation, leveraging artificial intelligence.

Slide 31. Our bank is undergoing a generational transition and a significant portion of our workforce is approaching retirement. And by 2029, we will have more than 12,000 exits at no social cost, while hiring more than 6,000 young people in Italy, largely global advisers with skills aligned to evolving business needs. This will enable EUR 570 million in cost savings at run rate.

Slide 32, we will also leverage our in-sourcing machine, enabling EUR 200 million savings in external costs.

Slide 33. In this slide, you can see our continuous focus on proactive cost management, driving structural administrative cost reduction.

Slide 34, we enter into revenues. We have a strong internal growth potential, also leveraging group synergies. The business plan envisages a wide set of revenue growth initiatives across all business lines in Italy and abroad.

Slide 35. Our ambition for the top line mainly comes from growth in Wealth Management, Protection & Advisory without relying on interest rate increases. Commissions will be the main source of revenue growth, thanks to initiatives that strengthened both our product factories and distribution networks.

But do not forget the growth in net interest income, because in 2026, we will have the first round -- the final round of Euribor reduction. And then in 2027, '28 and '29, we will have a significant acceleration also in the growth of net interest income coming from growth in loan book in deposits and in hedging facilities. So also net interest income will be a key driver of increase of our revenue base with an acceleration starting from 2027, significant acceleration.

We can go to Slide 36, starting from the first initiative. This will strengthen our distinctive advisory network, focusing on the Exclusive Client segment. We started serving these clients with a dedicated service model in the last business plan. In this business plan, we will unlock the full potential by serving them with over 2,300 new global advisers, bringing more than EUR 300 million in additional revenues. And you can see also that this acceleration in growth will leave us with further significant space of growth, just looking at the quartile in which we have not generated significant revenues. So the potential is really enormous in the Exclusive Client segment.

Slide 37. The Banca dei Territori Global Advisers Network will become the market's third financial advisory network with our Fideuram network remaining in the first place. In addition, we will set up a new Fideuram style advisory network in our International Bank divisions.

Slide 38, Private Banking. We will continue to strengthen our Private Banking leadership by enhancing our commercial proposition, reinforcing our life cycle and longevity offering and scaling up our international prices increasing by 500 units the number of financial advisers. And remember, just in 2025, we increased by 500 person the network of Fideuram. So it is really something conservative in my view.

Slide -- we can move to Slide #42 to look at the leadership that we have in product factories. We will continue to strengthen our fully owned product factories in Asset Management through the enhancement of our service model and product offering coupled with international expansion. In Life Insurance by developing dedicated solution to address specific customer needs. And in Property & Casualty insurance by extending our proposition to our private banking, SMEs and corporate clients.

Now let's turn to Slide 45. Very important for our Property & Casualty Insurance business. As you can see in this slide, we have huge potential to grow Property & Casualty revenues, increasing penetration of our products across our client base, including private banking, in which today we have zero penetration. So, we think to have further significant potential of growth in this business unit.

Slide 46. Moving into Corporate and Institutional clients. In the new plan, we target a 5.4% increase per year in IMI Corporate Investment Banking net income. We will grow across various dimensions, scaling up our international business while strengthening our propositions in high-growth value chains, global markets, transaction banking and private markets.

We can go to Slide 47, and we will look that we will also scale up IMI Corporate Investment Banking, International Business, launching a new dedicated service model to support Italian Corporates and SMEs in core and emerging markets while strengthening institutional client coverage in core geographies.

We can go to Slide 51. Moving into transactional banking, which is very important. And in 51, you can see the SMEs initiatives. In this slide, you can see that we will introduce two different service models to best serve SMEs, thanks to our distinctive product offering and top-notch digital platform. This is another example of synergies across divisions.

Slide 53, consumer finance. We are also planning to grow in the consumer finance space where we can improve our market share with a particular focus on personal loans and salary-backed loan solution.

Slide 54, Isybank. With more than 1 million clients already on board, a complete product offering, Isybank is beating the FX.

In Slide 55, you can see that in the new business plan, Isybank will further consolidate its leading position among Italian digital banks, acquiring 1 million additional new clients.

Slide 56, international banks. Looking outside of Italy, we will grow across our international banks, leveraging our successful business model in Italy and unlocking full synergies with other group divisions, a lot more than in the past, also thanks to the extension of isytech. We created a dedicated steering committee with the division sets, the CFO and Chief Transformation and Organization Officer and the Chief Technology Officer to accelerate synergies. This will lead to a 50% significant increase in profitability.

Slide 57. Our international banks are expected to deliver strong net income growth driven by the evolution of the business model with enhanced advisory capabilities. The setup of the Fideuram style network to accelerate growth in Wealth Management and Protection, a strong focus on digital, including the isytech adoption and the launch of a new digital payment and lending solution.

Slide 59. By 2029, we will have a Fideuram style advisory network in the International Banks division with 1,200 people to fuel growth.

Slide 61. This is a very important project for the future of Intesa Sanpaolo. So last but not least, we see the opportunity to extend our successful business model to the main European countries where we are already present such as France, Germany and Spain in which we have branches. We can leverage our leadership in Wealth Management, the EUR 10 billion tech investments already deployed, the extension of isytech in 2027 to Wealth Management areas and the existing presence in these countries.

We can combine our digital capabilities with the development of a sizable network of Wealth Management advisers, and we will build on our product factories to develop solution tailored to the new markets while at the same time, leveraging partnership with global champions as we are already doing with BlackRock in Belgium and Luxembourg. This is an opportunity for the group in the midterm, and this is why we assumed zero revenues in this business plan. Despite this, we included EUR 200 million of investments.

Slide 62. We have a two-phase road map for Isywealth Europe. In the first phase that I will directly overseas, we will launch the project, extending our international branch, license to serve retail and private client and setting up the new business model. So we will transform our branches that today only corporate devoted into branches that can operate on retail and private.

In the second phase, following the extension of isytech to Affluent and Private Client segment. So at the end, we will have Isybank in our branches, just to make it easy. We will have a state-of-the-art IT system, cloud-based that will allow us to make Wealth Management also in this country. We will scale up the business by extending the footprint into other major cities, launching a new digital and holistic product offering and expanding the network of financial advisory and private bankers through hiring or acquisition. At the same time, our product sector in the insurance company has created product in health and house that will be available starting from 2027 also abroad of Italy and especially in Germany, France and Spain.

Slide #63. We can enter into the pillar of cost of risk.

Slide 64. We are a zero NPL bank. And during the plan, we will keep NPL inflows low, thanks to high quality origination and optimized credit portfolio management. This will drive a structurally low cost of risk without using overlays.

Slide 65. As mentioned earlier, in Q4, we reset bad loans to near zero. In the next two slides, you can see more details about our active credit portfolio optimization and forward-looking credit decisions.

Slide #68. In addition to our credit risk strategy, we will continue to maintain a strong focus on all other risks, strengthening the internal control framework, risk management and anti-financial crime. We will also improve the management of emerging risks in the new economic and geopolitical environment.

Slide 69, we are the most resilient bank in Europe, also demonstrated by the EBA stress test.

Slide 71. We will invest heavily in the development of our people. We will scale up capability building and we will push connecting with -- connectivity within the group.

As you can see in Slide 72, we will also further promote our group culture and enhance welfare at group level.

Slide 73. We will continue to be the #1 bank in the world for social impact with an additional EUR 1 billion contribution to support people in need, fight poverty and reduce inequalities. We will also support clients in the sustainable transition by allocating 30% of total medium-long term new lending to sustainable financing. We confirm our commitments to decarbonization and will continue our commitment to preserving and promoting our cultural heritage, while fostering innovation.

In the next slides, you can see more details about our initiatives.

We can go to Slide 79 for final remarks before we take your questions. 79. To sum up, our strategy for the next 4 years is based on three key pillars, all enabled by our people, structural cost reduction, conservative revenue growth and low cost of risk.

Slide 80, this plan, free from execution risk, translates into a net income above EUR 11.5 billion, giving us a sustainable return on equity above 20% and strong growth in earnings per share and dividend per share, all of this while leveraging our strong growth potential, distributing EUR 50 billion of capital to shareholders and maintaining a rock solid capital base and a very low risk profile.

Slide 81, as mentioned earlier, our new business plan will generate benefits with an almost EUR 500 billion contribution to our stakeholders.

So today, we covered a lot of ground this morning, and it was important to go into details so that you can see exactly why we are unique and how we will execute this strategy. So this is a plan based on a bottom-up approach, and I think that we will overdeliver the plan. At the core of this strategy is value creation and distribution, guided by a strong sense of purpose. Year-after-year, we have demonstrated our ability to deliver our targets even in a challenging environment.

So thank you for your patience. And now let's move to your questions.

[Operator Instructions] We will now take the first question from the line of Antonio Reale from Bank of America.

It's Antonio from Bank of America. I have two questions, please. The first one, if I may. It's on the vision you have for Intesa Sanpaolo. I think, I mean, you and the country are at a strategic turn, at least in my view. And if I look at your business on one hand, you're clearly -- Italy is a national champion and that's I think an undisputed statement, you generate a steady stream of income, and you have a return that is well in excess of the market growth rate. You can continue to defend that market position within Italy and continue to distribute almost all of your earnings in the form of cash, which is what you've been doing. Or you can have the ambition to add scale and export some of your products internationally, thinking about insurance, asset management. And I'm hearing you talk a little bit about both, some international expansion as well as at the same time, increasing dividends slightly.

Interested to hear, sort of, your views here, especially in the context of the changes that are taking place in Italy. There were more headlines also over the weekend. So your views will be very, very helpful here.

And my second question is on the NII bridge between '25 and '29. If you could just walk us through the moving parts? And maybe give us a sense of what your NII could look like also this year and next? And particularly related to that, when you think loan growth will be resuming in Italy?

Thank you, Antonio. So, starting from the second question, then I will elaborate more on the first that was more strategic.

On the first -- on the second question, our expectation on net interest income is that we will increase in 2026 in comparison to 2025. We still have roughly 20 basis points of reduction in terms of Euribor. So we will have a reduction in terms of contribution of markdown. But at the same time, the acceleration in the loan book, as I mentioned, we decided to decrease the strong acceleration that we are seeing in the loan book in the last quarter, because we want to be sure to be in a position to face the EUR 60 million of taxation coming from the new budget law. But at the same time, we have a lot of origination that is already in place for 2026. At the same time, the hedging facility will give us a strong contribution during 2026. So, we expect a growth in terms of net interest income in 2026 in comparison to 2025.

Having said that, starting from 2027, we will have a flat Euribor in our assumption. Then in the forward, there could be also an increase in terms of Euribor, but we had a conservative approach, not considering a further benefit coming from increase in Euribor. And at the timing, we will have all the game that will be based on items relating on hedging facilities that will continue to bring positive on the net interest income, but also we will have the full impact of the growth in terms of loan and also deposits. Because at the timing, both these two areas will have a positive.

That's the reason why in the growth of our total financial assets, you will not see only growth in terms of assets under management, that is, for sure, a priority, but also the increase in deposits will bring us strong contribution to revenues through increase in net interest income. So, my expectation is that we can have really a clear trend of strong acceleration, probably much higher that we have considered in our plan.

So, I'm pretty positive on the evolution of net interest income and also of our ability to increase the loan book, both in Italy, in which in the assumption that we have in the plan, we have been, in my opinion, conservative. And in the international expansion in International Bank division and also in all the trend of growth that we have in the IMI Corporate Investment Banking divisions, they are operating in a very good way outside of Italy. And in my expectation, we can have further growth in terms of loan book.

Then you see that we decided to change our attitude toward the consumer finance, so allowing increase not only in mortgages with individuals, but also in consumer finance. So my expectation is that also, net interest income will give positive surprise during the next business plan.

Coming on the point of Italy and outside of Italy. So the possibility of defending our positioning and changing our view for the international. So in Italy, we are a clear leader, and any kind of combination that can happen also reading on the newspaper will not change our leadership. We have a strong leadership based on strong relation with our client base with our 100% product factories. So we will remain, by definition, the leader, and we will attack all the other players through the acquisition of private bankers and financial advisers in the market, and the hiring of global advisers will allow us to increase also the penetration in the exclusive segments in our country.

So I'm not worried at all for the dynamics in the competitive landscape in the country. They will take a number of years to have some potential competitors for Intesa Sanpaolo, also, if we have the combination within other players not realized until today. But my view is that now it's a timing in which we have to accelerate also outside of Italy.

Our International Bank divisions today, I want to consider them as Intesa Sanpaolo. Because until the previous plan, there was something like not part of the Intesa Sanpaolo Group, but like an entity separated by the group. Now there is the full integration. They will work with the same approach in terms of Digital Wealth Management & Protection approach. And if you see the dynamic of commissions in 2025, you have the clear evidence that also these divisions will bring us a very positive trend in terms of fee and commissions, and the acceleration will be based on our Wealth Management & Protection models, so reinforcing the advisory, but also recruiting a Fideuram equivalent financial advisers team. And so this -- for a significant number, you see that we are talking about more than 1,000 people.

So, we are now changing the approach, and this portion of the group is part of clearly Intesa Sanpaolo. So we're not -- we will not have more Italy and outside of Italy. We will have Intesa Sanpaolo in all the countries in which we operate.

Understanding this approach, we are now considering that in the Eurozone, you do not need to make acquisition of banks, especially if you enter into fighting in the country in which you make the acquisition, but it is much better to leverage on branches that you have, especially if you are able to create, moving from corporate into private banking and retail activity, if you created a specific technological system upgrading and cloud-based like isytech.

In 2027, we will have isytech and Isybank, because isytech is a system of Isybank, but also the system of Intesa Sanpaolo.

And if you have a branch outside of Italy, like in Germany, in France and Spain, you have, by definition, Isybank Wealth Management in the country through the branch. And this will allow us to have a clear state-of-the-art company that can operate in Wealth Management. What we need is to increase, obviously, the financial advisory team. So, we will recruit a significant number of people in this sector. This is a clear project like we made in the past in our delivery machine. So, we started in saying, we will be a leader in Wealth Management. We will reduce to zero the non-performing loans. We will have the system based on cloud through investments like no other in Europe.

Now we want to create a new way of entering into market like a challenger bank, but with the strong ability and the strength of an incumbent in a country in which Wealth Management is, by definition, a point of strength, and we have product factories. We are working with our insurance company in order to be ready to have products for health and house like in Italy, in which in some years, we are today with Unipol, the leader into -- in this market.

And at the same time, through this isytech evolution for 2027, we will have ready for the branches outside of Italy, a best-in-class technological unit that could be considered a branch or an Isybank Wealth Management in the country. And with agreement with best-in-class players, and we hope to have further agreement with players like BlackRock and the other big player in the market. We can create something that could be very important for the medium-term value of the organization.

So, we are moving into a strategic usage of technology in the Eurozone. And our target is today to work to create a project that can allow us to have strong presence in Germany, France and Spain in Wealth Management, Protection & Advisory activity. And I think that this will be a clear priority for the new business plan. So, technology and the ability to have a Wealth Management & Protection, in my opinion, will lead us in a clear diversification approach, not paying goodwill to other players through acquisition in the markets outside of Italy.

We will now take the next question from the line of Ignacio Ulargui from BNP Paribas.

I have two questions, if I may. The first one is coming back a bit to the target growth of deposits that you were mentioning before, Carlo, on the Italian side. I mean, how do you see the growth of deposits and the speed of conversion of the deposits into asset under management that we have discussed in previous calls?

And the second one, looking to the cost. If I just look to the inflation that you are targeting. You're targeting like around 2.5% inflation. Should that be the level of savings that we are getting, not -- I mean, shouldn't be inflation a bit higher in the context that we are telling in Europe and with the expansion that you are targeting in terms of growth in financial advisers?

So in terms of cost, the inflation of 2% is what we have considered, looking at the most important forecast, but all the dynamics of cost is based on actions. So, we considered the inflection as the trigger point in order to have the inertial trend of cost base, but we don't have any kind of impact coming from this in all directions, especially all actions related to acquisition of people within the business plan.

Just the cost, on the cost side, what I can tell you is that we have been really conservative. We have a lot of contingency plan, because all the migration to the cloud and the possibility to close the mainframe will allow us to have a further cost reduction and a portion of this, so EUR 200 million, we decided to devote to the Isywealth Europe project. But we still remain with the potential of further reduction. We will check during the plan, because we will have the clear evidence only when we'll have the migration of the most important part of the segment that is the one related with the Wealth Management in 2027.

But my expectation is that we can exceed our expectation in terms of cost reduction and also when we will have the second phase on the corporate activity in 2028 to 2029, we will create further room for reduction in these 2 years and also in the medium term.

Looking at deposits, what I can tell you is that the majority of the growth in assets under management was derived by conversion of assets under administration. So we consider in this -- with this plan, deposit strategic like assets under management, just to make it easy. Then obviously, asset under management has a clear priority for us in terms of business model. But when we talk about Wealth Management Protection & Advisory for us, in Wealth Management, we consider also the deposit base, because at this level of Euribor, deposit can have a profitability equivalent to the asset under management product.

So for us, what it is very important is to have clients with us to maintain the strong relations that we have with our client base and also the acquisition of new volumes coming from existing clients that have deposits or assets under management with other players or the acquisition of private bankers or financial advisers that can bring us further volumes, but not only in terms of asset under management, but also in terms of deposits.

So deposits remain a clear strategic priority in the plan that we have considered a growth that is more in line with the GDP growth, with a nominal GDP growth. But in my expectation, probably we can also have an acceleration in terms of deposit growth.

We will now take the next question from the line of Delphine Lee from JPMorgan.

Thanks for the comprehensive business plan presentation. I just have two questions. So first of all, just wanted to come back on net interest income following up on previous questions. So if you look at your assumption of, sort of, NII growth, it looks pretty much in line with the loan growth assumption. So it seems to imply the replicating income contribution have some benefit in '26, but quite limited post -- well, from '27 onwards? Just checking if this is correct.

Second question is on distribution. So you mentioned you are going to reevaluate additional payout on top of the 95% from '27. So, I assume this is from fiscal year '27. I'm just wondering why you could not do that maybe already for fiscal year '26 or a little bit earlier?

So, let me start from net interest income, and then I will elaborate on distribution. Because on distribution, I have to make a clear reference in 2027 to our projects of expansion in terms of Isywealth Europe.

So in terms of net interest income, in 2026, we will have a clear strong contribution by the [ XME ] facilities, that we will have a strong contribution also from financial securities portfolio. So if you want to make a clear indication of the drivers for 2026, and we will have a strong contribution coming from the loan growth. So in terms of volumes.

Deposits, will remain point, the full amount of deposits. So the combination of volume and markdown will be the negative driver of the net interest income coming in 2026 in comparison with 2025, because the first 6 months of 2025 were very positive. And so in comparison, in this area, we will have a negative. But the combination of these effects will bring us to have a growth in terms of net interest income.

And then we will have a clear acceleration, because we remain with strong contribution from hedging facility from security portfolio and the timing, loan book will accelerate and will bring a positive trend, but also the growth in terms of deposits will not have more -- the negative coming from the markdown trend, and this will allow us in terms of comparative dynamics in 2027, in comparison with 2026 will allow us to have a strong acceleration.

I have to tell you that in the plan, we decided to put a number that is conservative in comparison with what we have in our final figures for the plan, because we want to remain with what we have called, no execution risk in the plan. But the reality is that the net interest income implied in what we have as a potential looking at the growth of the loan book deposits and the hedging facility is much higher than we have considered in the plan.

Understood. And on the distribution?

Sorry, on the distribution, so the additional payout will be considered year-by-year starting from 2027 because in 2027, we will have completed the migration on the Wealth Management portion of the isytech system. At the timing, we will have the possibility. In the meantime, we will start during 2026 in selecting financial advisers networks in the different countries in the Central Eastern Europe for the project of international banks and in Germany, France and Spain, but I want to start with Germany as a country, which we can make this analysis. And the timing, we will have a clear view on possibility of making acquisition of network of financial adviser or insurance agents, and we will see what will be the real trend in terms of potential acquisition of this player.

For the timing, we will have also a clear understanding of what today is a project because, as I told, we have no revenues embedded in this project. And in my view, it is the clear most important strategic project of the business plan. But if we have a clear potential of increasing significantly revenues for the group, creating ROE that could be much higher than the capital that we can distribute, we will use this for the growth in this sector.

So this is the real point of 2027. We will see, we have a lot of room in capital, because also in capital position, we have been conservative in the trend of estimates of our common equity Tier 1 ratio, we will see what can happen. But please do not forget that 2027 linked with technology. So with the technology improvement of isytech will be a very important year for the group, because we will have the possibility to set all the optionality in terms of Wealth Management growth through hiring or acquisition of financial adviser networks that will bring us at the scale of the European level in terms of Wealth Management.

Today, we are already in terms of dimension. In the first slide -- in the second slide of the plan in which we demonstrate in the final figures related to what we realized in the plan starting from EUR 900 billion of Wealth Management, financial customer, financial assets, and now we are at EUR 1.5 trillion. We made an incredible job in this, being today one of the leader in Wealth Management in Europe, but we are mainly concentrated in Italy.

What we want is to move into a different approach based mainly on organic growth, so leveraging on technology as a strategic tool and on our ability to be a leader in Wealth Management. But we cannot exclude also to make acquisition of network of financial advisers during the period of the business plan. So 2027 will allow us to better understand this point.

We will now take the next question from the line of Sofie Peterzens from Goldman Sachs.

Here is Sofie from Goldman Sachs. Just my first question would be on the fee income guidance that you give a 3.8% CAGR. In 2025, you had 6% fee growth and kind of, if you look at the volumes that you're looking to grow AUM, it's over 4%. So, why not be more ambitious on the fee income guidance, especially your push for P&C and also Wealth Management. So maybe if you could just talk about the upside risk, the fee guidance?

And then my second question would be around kind of the having a zero NPL strategy. What's the rationale for this? Wouldn't it make sense to take a little bit more risk, do a little bit more higher risk lending? Where do you want to kind of aim for zero NPLs? Isn't it better to kind of increase the risk appetite a little bit more, especially given that we have had a lot of deleveraging in Italy over the past decade?

So, I will start from the second question. Because I used to be the CFO of this organization, and then the CEO during a very difficult period in which you had in Italy and in Europe, different phases of negative cycle, the COVID period. So the approach on the most important risk that the bank can have because you are today, all the analysts and investors are bullish on economy, on the trend of loan book, asking for increasing loan because this increased loans, this increased net interest income. And believe me, I'm used to manage crisis and difficult situation. And I can tell you that you never know what can happen in the future. And it is much better to be really on the safe side if you want to be a clear sustainable and medium-term value proposition for your shareholders.

So that's the reason why I think that it is always much better to stay in a very conservative risk approach that's moving into a bullish approach that can be transformed in 1- or 2-year time is something that could be really dangerous.

Having said that, the strategy of zero NPL is also made by the fact that apart from other players that are continuing to reduce the coverage of the non-performing loans, in reality, non-performing loans need to be covered. So you cannot avoid to make provisions during the different periods of the year. And so having a zero level of non-performing loans can allow you to have only provisions coming from the new inflows. So that's fundamental if you want to maintain a sustainable cost of risk apart from marketing activities. So if you want to be a real medium, long-term sustainable bank, not -- they can stay here for the next 12 months or 24 months, but you want to stay here forever, it is very important to be in the very safe side of the market. And this is the reason why we decided to move into a significant derisking, being today the best bank in Europe also looking at this level.

Then obviously, we will accelerate in our loan book activity, but marginally, this will allow in case of negative to maintain a level of non-performing loans that was the level of the pre-derisking. So, I think that -- we had enough room to continue this strategy. Also, our risk appetite is moving into a more significant appetite also for something that we decided in the past not to do, so consumer finance, more lending at international level. So, we are moving into a different approach, but starting with an hedging that is the zero level of the non-performing loans. And remember that we decided not to use overlays and to maintain during the period of the plan, the amount of the overlay.

So, we remain very conservative in terms of hedging in case of negative, but open to accelerate in terms of attitude of risk appetite, especially reinforcing the original to share activity that we are doing today in the Corporate Investment division and will be extended also in the Banca dei Territori divisions.

So, looking at the second question, so on fee guidance, we decided to be also very conservative in terms of fee and commissions. So if you look also the amount of growth in terms of assets under management, it's equivalent to the EUR 100 billion of what we have already selected in the past as area of amount that can be converted. In reality, the amount is much higher in comparison to the first point, because we have a significant portion of the asset under administration that today is capital positive, capital gain positive. And this will allow us, if it is the case, to make a further conversion into asset under management product.

For the time being, looking at our business plan, we do not need to make further acceleration. And we have also considered a very conservative approach also in terms of pricing. So, we decided to reduce also the unit pricing for the asset under management product, and this will allow us to be in a very conservative side of the plan. And it is also related with the fact that we have considered also in the title, with no execution risk.

We will now take the next question from the line of Andrea Filtri from Mediobanca.

The first is on capital. Why has the minimum CET1 ratio increased by 50 basis points to 12.5%?

And the second, 2029 should see the launch of the digital euro. What assumptions have you made on the impact of digital euro revenues and costs?

On digital euro, we do not see a significant amount of contingency to be placed in the plan. So we think that at the end, this will be something that will have an important role in terms of strategic geopolitical position, but ECB will move in order not to create any kind of stress for the banking sector.

Looking at capital, just because we decided to move into a dividend policy that has changed because from a substantial point of view, we have used in the past the ability to consider each year with the Board of Directors, the possibility to pay a share buyback. And now having a dividend policy in which it is clear that we will pay cash dividend and share buyback, we decided to move into a different approach also in terms of common equity to be sure also in relation with the Board of Directors and the supervisor that the minimum level can be increased, but the dividend policy at the same time could be really significant. And with a strong correlation, with our very low risk profile and also our very sustainable cash flow generation because today, we are probably the bank that has the clear sustainability of cash flow for the future. So that's the reason why.

We will now take the next question from the line of Britta Schmidt from Autonomous Research.

I have a question on costs. Maybe you can give us a little bit more of a breakdown of the EUR 1.6 billion savings, the EUR 570 million in personnel, how much of that is incremental to the existing program? I think you also talked about some external savings but maybe you can give us a bit more of a breakdown.

And then coming back to capital, there is a comment that also the 20% share buyback could be dependent on M&A. Am I interpreting this correctly? And maybe you can just give us a clarification as to what tax rate and increase in levies you've assumed both for 2026 and 2029?

So on cost, we consider to have a reduction in the IT cost, in the real estate cost and in the administrative expenses, in marketing for the current activity in the country but an increase in marketing outside of Italy. And consultancy expenses will be reduced during the period of the plan due to the fact that a majority of the mainframe cost will be reduced during the plan. So the concentration is based on this area.

At the same time, the reduction of people already realized, so something that we have already embedded in figures for 2026. And further, people that can leave the organization. These people are people that have already asked to leave the organization, the timing of the previous exit, we were not in a position to allow them to exit the bank. Now we are ready to consider also their will to be part of a story of retiring. And so that's something that we consider absolutely achievable. So personnel cost and administrative expenses mainly concentrated in IT, real estate and consultancy, these are the area in which you can have the most important reduction.

Looking at capital, so distribution of capital. From a substantial point each year, when we decided to make the share buyback, we made a clear process that is the normal process in any organization in which you consider before proposing to your Board of Directors to make a share buyback that you have not better allocation for your capital. So that is the rule of the game in each Board of Directors.

In all these years in which we presented the plan of share buyback, for each year for the authorization of the Board of Director, we presented also the potential optionality that we can have because we -- it is true that we do not M&A, but we are not in a position not to look and make analysis, and making analysis of M&A, there was no possibility, and this was something part of the decision that have a better allocation of capital.

So moving from a substantial dividend policy into a formal dividend policy in which we have not only the cash dividend, but also the share buyback, having a formal process, you need to make the formal statement that you make all the analysis and in the end, you will decide that there will be no better allocation of capital to shareholders. So it's a normal phrase that you have in all the process related to the share buyback in all the organization. And especially when you have a price to book that is significant like all the other European banks today, but there is nothing strange in this approach. It is the usual one in a well-managed organization.

The other part of levies, there is an increase related to Banca Progetto in comparison with 2025 that is in the range of EUR 30 million net income, and this will create conditions to have a spike in 2026.

We will now take the next question from the line of Andrea Lisi from Equita.

The first one is trying to figure out the room of conservative divestment you adopted during the plan. In particular on capital, if do you assume any new SRT over the plan period or room from further optimizing the risk-weighted assets and capital?

And related to P&L, I saw that you have indicated pretax profit of EUR 18 billion. You already indicated that you took some margins of prudence on NII fee and cost, but also below the pay tax line to arrive to EUR 11.5 billion. Can you tell us what you have assumed in order of other provision charges, levies and the tax rate as well, so to figure out if you were prudent there as well?

The other question is on Isywealth, we've adopted one of the most interesting projects in the plan. So can -- just a clarification if the EUR 200 million you said that should be made as an addition of cost or that investment you made? And if your reality plan or have an idea of already starting to generate some revenues and contribution to NII before the end of the planned period?

So the EUR 200 million are already included in the cost base of the plan. So that's the reason why I think that we have a really significant room in our cost base. These are already embedded in the cost base, because it is a project that I want to realize, and I will do all my best to realize this project that I consider really the strategic move for a group like us that wants to be sustainable for the future and doesn't want to make -- to put the shareholders in the condition, not to understand what could be your attitude towards the future, making a different allocation of capital.

This is the clear trend of the bank. We want to allocate capital on this. We have already cost on this base. We will try to do our best as in the past to set a delivery machine to deliver on this point. We have technology, we have branches. It is the euro area, and there could be a clear interest. All the country in euros to have players like us that can invest in the country, hire people. I think that we can have also a positive welcome in these countries, especially because we will have a friendly approach and not a no-style approach. And so I think that this could be a very positive project for the future. We will work with clear key players in the country in order to be sure to have a friendly approach in all these countries.

At the same time, looking at the P&L we had, as I told, different area of conservative approach, both on revenue and on cost side. But also on tax rate, we have considered a tax rate close to 32%. So we remain, in my opinion, in a very conservative side. And then we can have also extraordinary items that can compensate positive, that can be allocated also for further future growth. So today, the plan is all on the ordinary activity with also some degree of conservative approach also in the tax rate area.

On risk-weighted assets, we will continue the optimization. We have further room. In the plan, it's already indicated that we have 30 basis points of benefit, but the benefit could be much higher in the next years.

We will now take the next question from the line of Andrew Coombs from Citi.

Firstly, on net interest income. You've used a similar set of assumptions to what you used back in 2022. And by that, I mean you're assuming flat 1 month Euribor. If I go back to the 2022 plan, you did include a line where you talked about EUR 1 billion of incremental NII for every 50 basis points of rate hikes. So perhaps you could just touch upon what you think your NII sensitivity today is if you end up actually seeing the forward curve play out as opposed to flat Euribor?

And then second question is coming back to M&A. I mean you've touched upon it specifically in the Wealth space. You've talked about plans to expand in Central and Eastern Europe and Spain and France and Germany. But when you're thinking about M&A, how do you weigh up the prospect of just hiring teams of relationship managers and hire agents that is actually acquiring a wealth business? What are the dynamics and the thought process that goes behind that?

So, in terms of sensitivity, today, we have that for a spike of 50 basis points. We can have a move of EUR 300 million of increase in terms of net interest income. That's more or less what we can consider in terms of dynamic of net interest income.

Looking at M&A, so we -- so our attitude, it is not that we are against M&A by definition. We are against the possibility of not creating value for shareholders. So for a bank like us, entering into -- and we do not like to make acquisition of minority stake just for the sake of increasing the total amount of net income through consolidation.

So I think that the industrial part of the story of a bank is based on industrial actions, not on the hedge fund activity and investments. So my point is that if I'm in a position to increase in a sustainable way through the leveraging of technological improvement and through our ability to make Wealth Management, our ability to have product factories, our ability to hire Wealth Management, Financial Advisers, and we are able to do in Italy, we are able to do in Central Eastern Europe. And I think due to the reputation of the bank, we will be able also to do in countries different from Italy in which we have branches that are operating. And do not forget that in Germany, in France and in Spain, our Corporate Investment Banking division is a player.

So the total amount of loans that we grant in the area is really significant. So, we are not a marginal player in the country. And we think that this can allow us to be considered a player like all the other if we are able, especially if there could be some people that can leave organization in Germany, in France and Spain, we can be ready to hire these people, creating a network of people.

Then if it is not possible through the hiring of people, we are ready also to consider acquisition of financial advisers network. But my attitude is that if I can avoid to pay goodwill to other shareholders. So if it is possible to do something without paying a premium to other shareholders is the best for my shareholders. So my priority is not to make happy the shareholders of other players, it's to make happy my shareholders. So if I have the strength within my organization and if I have the ability, the people, the team and the reputation, I will do all the best to do this without making acquisition.

Then if it is needed, because it is strategic for us to have this growth in terms of technological usage, strategic usage of technology, and because we made billions and billions of investments in order to create something that is state-of-the-art, we are ready to use also outside of Italy and using outside of Italy, if I'm ready to make acquisition of financial adviser would be the best solution. Otherwise, I will make acquisition of network of financial advisers. Today, we have nothing on the table because it is a project. So we have to make the screening to work in this country. That's the reason why we will take until the end of the migration on cloud, on the new technology of isytech, but we have enough time to be in a position to create a project that can work.

In terms of revenues, we decided to put zero. Because it is really part of the conservative story of the plan in which we have the cost, but we have not the revenues. So I know that all the market today is really concentrated on the short term. So the amount of share buyback, the amount of dividends, the implication of all these M&A bubble that especially we have in Italy. But we couldn't care less of this situation. We work for the medium, long term. And this is the job of a CEO like me, and the job of 100,000 people working in Intesa Sanpaolo. That's all.

We will now take the next question from the line of Noemi Peruch from Morgan Stanley.

I have two. One is a follow-up on fees. During the plan, most of the BTP Valore taken up post the rate hikes will expire. How do you consider this trend in your plan? Or could this allow for more upside risk to the plan targets?

And my second question is on the strategy of isytech and Isywealth. What would be the differentiated proposition of Intesa to clients, especially in developed Europe?

Sorry, I didn't understand your first question. Sorry, because the line was not very good, and I didn't understand your first question. So if you can repeat, please.

Sure. So during the plan, Most of the BTP Valore taken up post rate hikes will expire. How did you consider this trend in your plan? And could this allow for more upside risk to your targets?

Okay. So this is a very important question. So that's a good point because we have a really significant amount of these assets under administration that are in the hands of our clients. There is not only the expiring portion, but there is also a capital gain embedded position of these that are an amount that can exceed the EUR 50 billion in our assets under administration. So it is really a significant portion.

Our expectation in the plan, we have not considered the total conversion of these BTP Valore into products of assets under management. There is also a portion, let's say, 50% of this can be considered as a potential conversion, but it is not only in assets under management, but it is also a life insurance product, because it is more -- it is probably something similar to BTP for clients that can be risk adverse. And so that's the reason why we have also something that can increase in life insurance. But the point of the BTP Valore is a very important point in combination with a significant number, more than EUR 30 billion, EUR 40 billion of certificates that will expire during the period of the plan.

So that's the reason why our approach today is really conservative in this point, because we have billion and billion of assets under administration that we expire during the period of the plan, or it is already today capital gain positive.

On isytech, we are today, if you look at the comparison between Isybank and all the other digital players in the market, we are, by definition, best practice in all the different sectors of the mass market. We want to create the same approach in terms of usage of this platform like a digital bank but within a bank like Intesa Sanpaolo. And so we will facilitate the operation of all the Wealth Management clients with an acceleration of timing, the possibility to choose a product with an easy approach. And we have already within the group, a company that is Fideuram Direct that is doing this job in Belgium and Switzerland, with an agreement with BlackRock. So it's something that already is a very important player with us in this area.

But we think that isytech is a clear evolution also, what we can do in terms of proposal for clients in Fideuram Direct, isytech would be really the best-in-class system for the management of Wealth Management. Then we can add also the proposal of Aladdin in terms of proposal to our clients. So we think that we can set a number of proposals to international clients that could be best practice also outside of Italy.

We will now take the next question from the line of Hugo Cruz from KBW.

Just three questions. One, on the NII, the hedging facility contribution, if you could give a little bit more color, is it going to be a linear improvement year-on-year? What is the front book yield you're assuming in the plan for the rollover of the hedging facility?

Second question on operating costs. What will be the shape in the plan? Are the savings more backloaded or not?

And third, how do you avoid the risk of cannibalization between Banca dei Territori Advisory Network and Fideuram? You're getting -- you're becoming so big. How do you do prevent that risk?

So starting from the last question. So cannibalization of the segment are completely different because the two areas are with a specific indication of what would be the clients in each division. So I do not see any kind of cannibalization. There could be clear usage of best practice within the organization and the reinforcement of global advisers within the Banca dei Territori. So I think that at the end, we will have Banca dei Territori with global adviser and relationship managers. Private Banking division with financial advisers and private bankers, but with specific clients for each division. And all these will be used also as best practice in the international bank division. And hopefully, in my expectation, through Isywealth also outside of Italy in countries in which we have branches.

Looking at operating cost, we made, in managerial actions, we can call, in 2025 in the range of EUR 50 million that will be something that made an anticipation of cost in 2025 that we, in any case, could have been placed in 2026. So this is the amount of cost that being front-loaded in 2025. Then it is clear that looking at the evolution of isytech and the possibility to make write-offs of procedures related to mainframe, we will have the possibility to make further write-off, creating condition to have a reduction of costs during the next years.

In terms of aging facility, we have a contribution in 2026. That would be an increase of EUR 500 million, between EUR 450 million, EUR 500 million, then moving into EUR 300 million per year during the next years.

We will now take the next question from the line of Ignacio Cerezo from UBS.

I've got three short ones, hopefully. First one is on the fees. So the 4% blended fee breakdown, if you can give us a bit of color on the disaggregation of that number between commercial banking fees and market fees?

The second one is within the market fees, if you're allowing for a decline of the placement component? Or do you think that is a sustainable part of the fee number?

And the third one is, if you can share with us what kind of market performance are you assuming to back the 4% AUM growth per annum revenue?

The performance is really limited, so 1%. So we have been really conservative also in terms of market performance in terms of volumes. Then in terms of performance fee, there is an amount that is below EUR 100 million per year, so it's very limited.

In terms of component of fees, commercial fees, we move between 2% and 3% during the period of the plan. So again, in my expectation, this include also the corporate investment banking fees that will accelerate, in my opinion, in a significant way.

In terms of the other component related to Wealth Management, we will have a trend of gross inflows that would be in the range of EUR 150 billion per year. So that's more or less the amount of increase that we will have in commission deriving from volumes. And in terms of net inflows could be between EUR 50 billion and EUR 20 billion depending by the years.

What we will have through this significant action that we made in Banca dei Territori is a significant increase of 360 degrees Valore Insieme that could be an accelerator of commissions within the -- all the group. But again, then we decided to make a reduction in terms of pricing. So bringing to something that both in terms of volume and pricing, in my view, is conservative.

We will now take the next question from the line of Giovanni Razzoli from Deutsche Bank.

I have just one question, which is about the operating leverage that you have on your EUR 200 million investment to scale up your international presence. I was wondering how much of operating leverage you do have on these initiatives. So if the success of this initiative were to exceed your expectations, shall we expect progressive acceleration of those investments and costs going forward? Or can you leverage on your tech spin to exploit the acceleration of revenues with no major increase in the cost?

So, we will accelerate these figures. So that's for sure. But in any case, our expectation is to use the reserves that we have in the cost base, so maintaining the total amount of cost more or less in line. Then we will see depending on what could be the real acceleration. But theoretically, we have enough room to accelerate this process to increasing the amount of cost devoted without changing the total amount of costs that we have considered for 2029.

We will now take the next question from Fabrizio Bernardi from Intermonte.

[Foreign Language] I am Fabrizio with Intermonte. I heard you talking about Fideuram Wealth Management, asset management many times. So my question is not on the state cost-income ratio or tax ratio. My question is that if you believe that we should change our mind about how to value Intesa Sanpaolo. So from a commercial bank to a player that is well involved in asset management, so technically with higher multiples?

So I think that the first point is that we consider -- so then obviously, investors and analysts can make their own evaluation. But if you want my personal view on my organization is that today, we are a technological company. So that's my first point.

So, we are ready to be really a clear technological player in the market using technology, so using the strategy embedded, the potential strategy that technology can give you, we can do something that other players cannot do. So moving into different countries, to branches, euro area. So with, I think, a very positive approach from the local government and player to increase the presence, to make investments, to be a clear player in the market.

Then obviously, this will be made in sectors in which we are a leader in which we consider that we have the winning business model that is Wealth Management Protection & Advisory. So asset under management will be a strategic part of this job, but also Property & Casualties business, because we think that through a proposal in health and houses, we can also increase our penetration outside of Italy starting from 2027.

If I can follow up regarding something else, like the, let's say, the link between Monte di Paschi and Banca Generali. Is this a key point for you or no? I mean, is this a clear competitor that can create some problems or not?

So we do not see any kind of problem coming from the combination of Monte Paschi di Siena in their ability to have an approach with Banca Generali or the full group Generali. I think that our dimension in Italy is relevant for us. And also I think that there is today an overestimation of the potential of dimension of Generali in Italy, Generali is not only in Italy. In Italy, the dimension of Generali is comparable with the one of BPM in terms of presence. So, in terms of the -- as soon as we talk about Generali -- it enters into a rebound, okay?

So, I was telling that Generali is a clear best practice player in terms of insurance business. But in terms of asset under management in Italy, I think the dimension is not different from the one of BPM. And so the possibility with Monte Paschi di Siena, they can accelerate the placement of the insurance product.

But again, do not forget that the #1 player in Italy also in terms of life reserve, life insurance reserve is Intesa Sanpaolo, not Generali. And in terms of new premium Generali is the one, the first in terms of life premium, and Intesa Sanpaolo is a second one. So, I have to tell you that from this linkage between Monte Paschi and Generali, I don't see any kind of threats.

I hope that there could be a clear, more relaxed approach between the different players involved in the saga, in the past of these M&A sector for 2025. But then as I told in the other answer, we are pretty happy to be part of a completely different story. We are on a different planet and our expansion will be outside of Italy. Thank you.

I would now like to turn the conference back to Mr. Carlo Messina for closing remarks.

I want just to stress the point of the correlation between technology and Wealth Management. I think that probably, I will use the next month in order to explain better the combination that we see between the strong investments that we made in technology and the potential of growth that we have in terms of Wealth Management & Protection.

My strategic view for the market is that branches and acquisition of branches or acquisition of bank with branches will lose a lot of value for the future in the next 5 years' time. And what is really the winning business model is to work in terms of Wealth Management & Protection, using people within the organization, creating the sense of being proud of being part of an organization of success, but using technology in favor of people within the organization.

Having said that, technology will allow us to increase our presence also outside of Italy and the strong capital base that we have, the strong synergies that we will create in terms of cost base will allow us to have significant amount of money that we can invest in expansion in other countries in Europe leveraging on our strengths.

So that's what I see for the future of the bank, and I think that we are a unique case in Europe. And also the fact that we decided to reduce in a significant way the non-performing loans is based on the clear view that a bank that can be a leader in terms of Wealth Management and Technology cannot have a significant amount of non-performing loans. So zero non-performing loan is also a precondition to be a clear leader in a market in which we want to enter, starting from the point that we are a zero bad loan bank. And please compare us with all the players that you have in your country because all the players will have non-performing loans much higher than Intesa Sanpaolo.

And so starting point is, we have an approach that is less risky than the other player. And we are a Wealth Management leader, Technological leader, and we want to play a game also outside of Italy, but not paying goodwill to other shareholders. So thank you very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the conference call of Intesa Sanpaolo for the presentation of the third quarter 2025 results hosted today by Mr. Carlo Messina, Chief Executive Officer. My name is Nadia, and I will be your coordinator for today's conference.

[Operator Instructions]

I remind you that today's conference call is being recorded. At this time, I would like to hand the call over to Mr. Carlo Messina, CEO. Sir, you may begin.

Thank you. Welcome to our 9-months 2025 results conference call. This is Carlo Messina, Chief Executive Officer; and I'm here with Luca Bocca, our CFO; Marco Delfrate and Andrea Tamagnini, Investor Relations Officers.

We just delivered our best ever 9-month net income at EUR 7.6 billion, of which EUR 20.4 billion (sic) [ EUR 2.4 billion ] in Q3. Common equity Tier 1 ratio increased more than 100 basis points. Annualized return on equity is 20% and earnings per share grew 9%. These are excellent results, confirming we are well on track to deliver our full year net income target of well above EUR 9 billion. including Q4 managerial actions to strengthen future profitability. The 9 months and the third quarter both recorded all-time highs for commissions and insurance income. Costs are down, asset quality remains top notch and customer financial assets grew to more than EUR 1.4 trillion. We keep investing strongly in technology, enabling the acceleration of our workforce generational change.

This year, we are returning EUR 8.3 billion to our shareholders, including the EUR 3.2 billion interim dividend to be paid in November. On top of this, an additional capital distribution will be quantified at year-end. Our results once again confirm the resilience of our well-diversified business model, further validated by the EBA stress test where Intesa Sanpaolo was a clear winner. This outstanding outcome reinforces our leading position in Europe. This is also reflected in the 2-notch upgrade by Fitch moving ISP above Italy and the 1 notch upgrade by DBRS. Our strong profitability allow us to confirm a world-class position in social impact to fight poverty and reduce inequalities. I'm proud of these results and thank our people for their excellent contribution.

Now let's turn to Slide 1 for the key achievement of the first 9 months. In the first 9 months, we delivered record high profitability and efficiency, NPL stock and ratios at historical lows, strong capital growth and high increasing and sustainable value creation. Slide #2. In this slide, you can see the impressive continuous growth in net income. Slide #3. In the first 9 months, we delivered a significant increase in return on equity, earnings per share, dividend per share and tangible book value per share. In a few weeks, we will pay an interim dividend almost 10% higher than last year.

Slide #4. In Q3, we confirmed our excellent organic capital generation capability with a 40 basis point increase in common equity Tier 1 ratio. Slide #6 (sic) [ Slide # 5 ]. Net interest income has increased over EUR 400 million compared with 2 years ago despite a 90 basis points drop in Euribor. Euribor is now stabilizing at a level consistent with the normalized interest rate scenario, and our hedging strategy will continue to sustain net interest income in the coming quarters.

Slide #6. In the first 9 months, commissions and insurance income grew 5%. Q3 performance was excellent with 7% yearly growth and stable Q-on-Q despite the usual summer business slowdown. Slide #7. We also managed to reduce costs despite tech investments reaching EUR 5 billion. Slide #8. As said, we are in a comfortable position to confirm our 2025 net income guidance of well above EUR 9 billion. Moreover, we clearly have significant excess capital, giving us a lot of flexibility for growth and additional distributions.

Slide #9. Our performance allow us to benefit all our stakeholders. The new medium, long-term lending to families and businesses grew 40% on a yearly basis. And let me just focus on the contribution to the public sector because in taxes in the first 9 months, we gave contribution for EUR 4.6 billion that is equivalent to the amount of the new taxation that the government is looking from the banking sector. In 9 months, we paid the same amount. So contributing hopefully to social inequalities in the public sector.

Slide #9 -- Slide #11, sorry. In a nutshell, in the first 9 months, net income was up 6%. We accrued EUR 5.3 billion in cash dividends, and we delivered a best-in-class common equity Tier 1 ratio growth. Please turn to the next slide for a closer look at our P&L. Slide 12. This slide shows the building block of our 9-month P&L with improved results across nearly all items. Please turn to the next slide for the third quarter results. Very briefly, in the third quarter, revenues were supported by the highest ever Q3 commissions and insurance income. We decided not to push on trading, keeping flexibility for the coming quarters. Costs were down on a yearly basis, and we increased NPL coverage.

Please turn to Slide 14 for a look at net interest income. We are firmly on track to deliver net interest income well above the 2023 level. Further growth is expected in 2026. Slide #15. This slide provides more details on the net interest income evolution. The Q3 decline was mainly due to the further reduction in Euribor and the impact from the 6-month and 1-year repricing of loans. Slide #16. Customer financial assets were up strongly on a yearly and quarterly basis. In Q3, we had EUR 3 billion growth in retail current accounts and EUR 10 billion growth in assets under management.

Let's now move to Slide 17. Slide 17. commission growth was driven by wealth management fees. We can count on our unmatched advisory [indiscernible] and our fully owned product factories are a clear competitive advantage. Slide 18. The contribution from Wealth Management and protection activities is 43% of gross income and assets under management inflows are growing.

Please turn to the next slide for a closer look at insurance income. Non-motor P&C contribution was the main driver for insurance income growth, and we still have significant upside potential. Slide 20. The contribution from commissions and insurance income to revenues is by far the highest in Europe after UBS. Please turn to Slide 21 for a look at costs. Operating costs are down with personnel costs decreasing 1% and administrative cost 1.5%. Slide 22. We have high flexibility to further reduce costs, thanks to our tech transformation. By 2027, we will have 9,000 exits with savings of EUR 500 million. Slide 23. We have a best-in-class cost-income ratio in Europe. Let's move to Slide 24 for a look at our asset quality. Asset quality remained excellent, and we registered the lowest ever NPL inflows.

Slide 25. Our NPL stock [ is ] clearly among the best in Europe. Slide 26. As you can see, we remain very well positioned in terms of Stage 2. Slide 27. Our annualized cost of risk is stable at 25 basis points with NPL coverage up to more than 51% and stable overlays. We see no signs of asset quality deterioration. Slide 28. Our NPL coverage is clearly among the best in Europe. Slide 29, our Russia exposure is now less than 0.1% of the group's total loan with local loans close to 0. Slide 30. We have a rock solid and increasing capital position. Common equity Tier 1 ratio increased to 13.9%.

Let's move to Slide 31. ISP [indiscernible] of the EBA stress test, we had a very low adverse scenario impact on our common equity Tier 1 ratio. The next best performing peer showed an impact 3x higher. In the next 3 slides, you have the usual update on our sound liquidity position and ESG actions. But let's move to Slide 36 to see how ISP is fully equipped to succeed in any scenario.

Slide 36. Our profitability and capital position remains strong even in adverse conditions. We have a very resilient business model. Our asset quality is top notch, and we have already deployed EUR 5 billion in tech investments, including artificial intelligence, we are key enablers for future efficient gains. Slide 37. Intesa Sanpaolo stands out in Europe across key metrics and is better positioned than peers to face any future challenge. Slide 38. In this slide, you can appreciate our unique positioning, thanks to our commissions-driven and efficient business model.

Let's move to Slide 39 for a few words on the strength of the Italian economy. The Italian economy remains resilient and the recent upgrade of Italy's rating confirms the country's strength. We expect Italian GDP to grow this year and next. Slide 40. The Italian companies are in a stronger position today compared to the past. Their debt-to-equity ratio has decreased over time and their liquidity buffers are at all-time highs. Slide 32 -- 42, sorry. This slide offers a recap of our best ever 9 months and the reason why we are fully equipped to succeed in the future.

To finish, please turn to Slide 43. Slide 43. We are in a comfortable position to confirm our full year net income guidance. 9-month performance once again demonstrates the quality of our business model. We are a sustainable 20% return on equity bank, one of the few in Europe able to combine high profitability with long-term strength. In Q3, we started putting away in the and continue in the fourth quarter to reinforce future profitability. We are delivering one of the highest capital returns and dividend yields in European banking while maintaining a rock solid capital position and continue to lead on social impact. At the same time, we are accelerating the generational change of our workforce, investing in skills and new talent to ensure the group continues to grow and innovate in the coming years.

Thank you for your attention, and we are now happy to take your questions.

[Operator Instructions]

And now we're going to take the first question. And it comes from the line of Antonio Reale from Bank of America.

It's Antonio from Bank of America. Just a couple of questions for me, please. One on growth and the other one on capital distribution.

So my first question is, well, what do you think it will take for a bank like yours to be able to show some loan growth going forward and at the same time, not dilute your 20% ROTE. So basically supporting growth while keeping the same level of profitability sustainable through time.

The second question is to do with your capital. I think this quarter was a positive surprise. And I think yet it's not being rewarded by the market today. I think part of the issue might be that this excess capital has been trapped there in the bank as you've been basically remunerating shareholders only from your earnings, almost 100% total payout, but you've not paid out the excess capital. So the question is, could you consider paying shareholders also out of your excess capital?

And related to that, I mean, you're no longer the highest paying cash dividend bank in terms of payout for what it's worth really. Do you think it will make sense to pay more than 70% dividend payout, so tilting the mix even further towards cash dividends?

So thank you, Antonio. The point on growth is something that we analyzed in comparison the real potential of value creation. We are shifting a significant portion of our [indiscernible] into very low default rate loans. So we reduced in a significant way the default rate of our portfolio, so moving to close to 1% in the range of 0.7%, 0.8%. So the reduction was massive in the last year, and this will continue because we think that for a bank like us in mainly concentrated in wealth management and protection business model with a significant sustainability in the earning power, what is important is to concentrate on the ability to not generate nonperforming loans in the future.

So that means that the growth in loan book will be, for sure, accelerating mainly in the sector export related in the sector that are linked with the new generation and new funds. But in our perception, this will bring the growth in the range of 2%, 3% in 2026, but not more than this. So the main driver could be for sure, for the recovery and growth in terms of net interest income 2026 will be the loan growth, but the acceleration will be part of a story that will balance also the cost of risk for the future.

So that for us is fundamental having -- you know that Italian banks in the past had significant negative surprise from the loan book. We want to avoid to be in case of future crisis to be again in the same position. That's the reason why we are so concentrated in maintaining a net nonperforming loans ratio very low and [indiscernible] not diluting the coverage of the nonperforming loans that for us is fundamental also to proceeds in further reduction of the stock because 0 nonperforming loans is the ideal way of working for a bank that is really focused on wealth management and protection like Intesa Sanpaolo.

In terms of capital distribution, obviously, capital distribution and the excess capital is related with the business model because from one side, we have a very limited need of capital. So our capital related to unexpected losses today is very low because as you had the occasion to see in the EBA stress test, our resilience is really strong. So our real excess capital is really significant in comparison to the past and in comparison to all the other peers. At the same time, the capital distribution is something that we will reassess in the new business plan. We have a clear evidence of other players that are working on a payout ratio that is much higher cash dividend payout ratio that is much higher than the one that we have in Intesa Sanpaolo. So this is something that we are evaluating.

And at the same time, also what we can do with the excess capital, not only the current excess capital, but also the excess capital that we will generate in the next years because the run rate of 20% ROE bank will, by definition, create significant excess capital for the future. And this is part of what we are starting for the new business plan, but we have to discuss with the Board of Directors and then to propose and submit also to the supervisor. And then as soon as we have completed this process at the beginning of February, we will announce a new dividend policy. But obviously, the capital -- the excess capital, the real substantial excess capital significant and we do not see any kind of M&A opportunities. So by definition, the capital is -- the excess capital is of our shareholders.

And now we take our next question. And the question comes from the line of Sofie Peterzens from Goldman Sachs.

This is Sofie from Goldman Sachs. My first question would be around net interest income. How should we think about the net interest income trough? Do you think it's fair to assume that net interest income will trough in the next 1 or 2 quarters? Or when do you expect net interest income to trough on a quarter-on-quarter basis? And also, if you could just remind us of your rate sensitivity and how do you think about the replicating portfolio tailwinds that we should expect for net interest income?

And then my second question would be around the banking tax in Italy. How should we think about the potential banking tax or levy for Intesa?

So on net interest income evolution, I want just to make a clear point on net interest income because I read some point on net interest income that I think in this quarter, I need to have some clarification. So when we gave the outlook on our net interest income, we gave a clear indication that the third quarter could have been a third quarter in which we can have a reduction in terms of net interest income in comparison to the second quarter. And the reason is mainly related to the fact that we have, in the third quarter, a concentration and we had a concentration of repricing on the loan book. So we had the majority of our loan book that had made repricing during this quarter. We still remain only with EUR 8 billion of loans that we repriced in the fourth quarter.

So this is the real bottom that we reached in this quarter because we had an impact of roughly between the repricing on a 6 months and 12 months Euribor of 100 basis points on an amount of 50 billion in this quarter. So this means that we had the peak of the negative contribution in this quarter, but was expected by us. So that was not a surprise. That the reason why we confirm our guidance and also because refinancing on the loan book will be only EUR 8 billion, concentrated in a volume of loans of EUR 8 billion. So very limited amount in comparison to our portfolio.

So we think that in this quarter, we can have a rebound in terms of net interest income and then maintain the speed that will allow us to have in 2026 net interest income that can increase. So that's our expectation on net interest income. On the other side, banking tax. On the banking tax, we -- obviously, for the real figure, we will have to wait until the final process in parliament, so in which we will have the law approved. What I can tell you is that the impact that we can have both on net interest -- net income and on net equity from our side is totally manageable. And our commitment today are also including a potential impact coming from taxation. So absolutely not worried about this kind of impact.

And the question comes from the line of Marco Nicolai from Jefferies.

So the first question is on insurance income. I see that it's picking up. So if I look at the year-on-year growth in the third quarter, it's actually improving quite a bit compared to the previous quarters. So can you tell us what's happening here? And if we should expect for the future, the same level of year-on-year growth in this line in insurance income?

And then another question on isytech. Just wanted to know where you stand in terms of the group transition to this new tech platform beyond the isybank customers? And so what do you expect in terms of efficiencies from this platform, both in terms of cost efficiencies and also in terms of revenues upside, let's say, from this platform?

So thank you. On insurance, we are working in order to have further [ acceleration ] business. The momentum is very positive and the penetration is in such a position that can allow us also to have significant further increase because we increased penetration, but we remain with a penetration between 13% and 14%. And we think that there is room to have significant further penetration in the next years. So insurance is and will remain and especially property and casualty insurance is and will remain an engine for growth that for the group is really strategic. Also, if you look the growth in terms of market share in the areas in which we are investing is really impressive. So we are increasing the value of this company and the value of the acceleration of the product between the different networks of the group and especially in the Banca de Territori network.

Isytech is, for sure, important for Isbank, and this will allow to have further potential increase in terms of clients, in terms of revenue. But let me focus on what is in reality for us, isytech because isytech will be the pillar of the new business plan. isytech will be the key driver of the new plan, especially for the cost reduction. We think that the massive investments of the cloud and the possibility to write off the mainframe could be -- the investments in mainframe could be the most important part of the story of a plan that will be a plan based on cost reduction and efficiency. So this will be the clear lever that we will use in order to gain competitive advantage, not only in terms of client revenues, but in terms of efficiency.

So this will remain a strategic lever, and we will elaborate more in the presentation of the business plan.

When do you plan the presentation of the business plan again?

Should be in occasion of the results of the year-end, so the beginning of February.

And now we take our next question. And the question comes from the line of Ignacio Ulargui from BNP Paribas Exane.

I have 2 questions, if I may. The first one is on fees. Looking to wealth management fees and looking to the asset inflows in the quarter, seen a very strong performance despite the summer seasonality. Just wanted to get a bit of a sense of how you think fees will go through in coming quarters and the progression of shift from AUC to AUM, how you see your clients on that step?

The second one is on the capital movement in the quarter. If you could elaborate a bit more on the RWA improvement, the 10 basis points. Was there anything related to moves? Linked to that, should we expect any hit from operational RWAs in the fourth quarter?

Okay. So starting from fees, we expect to have a very good performance also in the next quarter by definition. So fourth quarter will be a quarter in which our expectation is to have a growth -- significant growth in terms of fee and commissions, but also an acceleration during the year of the business plan. In the plan, we are planning to reinforce the ability to make conversion in terms of asset under administration and also the portion of time deposits that will expire during the period of the plan. We are increasing and we will elaborate on the presentation of the business plan, but I can anticipate that the amount that is workable is really massive and increased in comparison with the EUR 100 billion that originally we gave as the workable -- real workable part that we gave to our network, we are increasing this amount and they will start in 2026 to work with target that will be selective client by client.

But this is and will remain an area in which we can deliver organically a significant growth in terms of fee and commissions. In terms of capital movements, we had in this quarter benefits in terms of risk-weighted assets is also related to this reinforcement of the quality of our loan book. So the reduction in terms of default rate has allowed us to improve the condition of the risk-weighted assets. And this is part of the story that I was mentioned before. This will continue to be part of our story. And we think that this can give satisfaction also during 2026.

In terms of the trend for the last quarter, we will have a further positive evolution in terms of capital ratio that our expectation. And we will compensate an increase in operational risk that can come from the revenues average of the last 5 years because you know that 3 years because you know that the rule in which you can calculate the risk on a standard basis is based on 3 years revenues. And so we had like all the other banks in Europe, an increase in revenues. So this will bring an increase but will be more than compensated by the other reduction in risk-weighted assets.

And the question comes from the line of Britta Schmidt from Autonomous Research.

Just coming back on net interest income. You mentioned that hedging means that you can sustain this net interest income for the coming quarters. So should we read into this that this is the level we should expect unless we see loan growth pick up? And then just a clarification, what is in the other net interest income that declined in 3Q in the quarter? Is that related to NPLs? Or is there anything else in there?

And then on capital, just 2 clarifications, please. I think there was a pillar increase of around 15 basis points. Maybe you can give us some color as to why that increased? And whether you could just confirm that any insurance dividends are yet to be recorded in your capital? And maybe if you have an impact on that, that will be helpful as well.

Luca bocca will answer to your questions.

Okay. I can start with NII. NII, we will have some decrease in the quarter in the financial component, but it is related to the classical situation in that line that are NPLs and the difference between loan and deposit. So the capital that is noninterest bearing asset liabilities. So it is something that is normal that decrease during a negative trend in the Euribor, but it will remain stable in the next quarters. And according to the question to insurance income, you are right, we are in Danish compromise. So RWA of insurance income is included in the credit risk. And during the quarter, we can have the payment of a dividend to decrease the level of RWA related to that kind of line. And this is one of the measure of optimization that we can have during the fourth quarter to compensate the increase in operational risk.

And the question comes from the line of Andrea Filtri from Mediobanca.

The first question is if you could give us a sort of sensitivity of your fees to the market performance?

And the second is an unbiased view on Italian M&A. There are articles every day on the combinations, potential combinations in Italy. How do you see the end game looking like in terms of market structure for the Italian market?

So looking at the sensitivity to the market performance, our expectation is that in case of a reduction of interest rate, we can increase our fee commission income in a significant way because this calculation is made moving through the capital gain embedded in our assets under administration that we can switch -- that we can ask our clients to switch into asset under management.

So we think that in case of a reduction of 50 basis points of Euribor, the increase could be in the range of some EUR 100 million of commissions. This will depend on the kind of portfolio. A significant portion of our -- of the portfolio of our clients with a reduction of 50 basis points could become significantly capital gain positive. So in case of potential switch, we can accelerate the growth of our fee and commissions income. In terms -- that's very important for the gross income -- the gross inflows, not only for the net inflows. So in case of a reduction, we are really positive. In case of an increase in interest rate until a level of 50 basis points, our expectation we will remain more or less at the same level. This will depend also on the market performance of the equity markets. Then we will see what can happen.

Our base case is that our fee and commissions can increase in a significant way during 2026 and 2027. Looking at the M&A environment in Italy, I have to tell you that I don't think that there will be some significant move in the next months during 2026, we will see what can happen for the other competitors that didn't close deal during 2026. In any case, Intesa Sanpaolo will be not part of any kind of consolidation in the banking and insurance framework.

Now we'll go and take our next question. And it comes from the line of Andrea Lisi from Equita.

The first question is if you can already provide us an indication on the managerial action you are aiming to put in place in the fourth quarter, especially given your indication regarding the new business plan that will be a plan of further efficiencies. And so if you can provide some color on them.

The second is if you can provide an update of your direct digital platform from 2026, how is evolving the collaboration with BlackRock to create the new digital wealth management platform for European private and affluent clients, what should we expect and what should we have updates? And how should we make in your international growth in this segment?

So looking at the managerial actions, we will obviously wait for the final figures of 2025 in order to define the managerial action and the focus will be on the sustainability of future results. The first part of the job [indiscernible] the cost base. So this will mean that we will work on some areas in which we can anticipate some cost reduction that we can have for the future. So making some write-off in some areas in which we can improve profitability, mainly related to the IT system cost base. This will be the majority of the efforts that we are doing in terms of studying the potentiality.

Then we still have a significant number of people that asked to leave the organization at the timing of our agreement, and we didn't -- we were not in a position to allow them to leave the organization. At the same time, we remain also with some areas of potential reinforcement also on the credit side, if this will bring to a potential reduction in terms of risk for the future. And so we will also work in this part of the story considering that we are in a very good position in terms of run rate of the cost of risk. So these are the most important areas in which we will concentrate in order to evaluate the managerial actions. On the BlackRock, I will ask Luca to answer to your question.

Yes. The partnership is continuing to develop. In Italy, Aladin solution is fully operative on all the different clients that we have, especially in the Private Banking division. So you see the very good performance in commission are also driven to the excellent level of service that we offer to the Italian client. On the European platform, we are planning, as you can see at Page 60 to launch the platform not only in Belgium but in the fourth quarter of this year and some hundred million of new financial asset can arrive in the next quarter. But again, in the business plan, we will provide also a number on this kind of lever. Anyway, we are starting to have also new inflow of money in Belgium and Luxembourg.

Now we're going to take our next question. And it comes from the line of Andrew Coombs from Citi.

Just follow up with a couple of numbers questions. Firstly, just on the trading income, the client contribution was fairly stable, but the capital markets are fair bit weaker. Could you just elaborate on what drove that swing in the capital markets trading results? And then the second question, just coming back to the deposit hedge on Slide 15. You talked about EUR 2.5 billion maturing a month, so close to EUR 30 billion a year. If I take that implies the entire book would turnover in about 5.5 years. So your average duration would be just shy of 3 and you said it's 4. So can you just help me square the circle on that one, please?

So on the trading income, we had some negative mark-to-market, especially in some participation, mainly we can mention the Euronext participation that was really strong positive in the last quarters and this has reduced the positive contribution. So this is the most important part of these items in the trading income. Then in any case, we decided to be very conservative in order not to force profitability in this quarter because we have already reached the level of our profitability that we want to deliver this year. And so we are already to prepare for the new business plan. In the second question, I will ask Luca.

The duration is 4 years because it's the average duration based on the different buckets that we cover with a different level of our stable deposit. So it's 4 years with repricing of more or less EUR 3 billion every month in the region of EUR 9 billion every quarter. So it's something that you need to wait for the different bucket of our deposit. In any case, you can assume a repricing at the level of today of 10 basis points more or less every quarter, and this is the reason why we are have another increase in the yield of our hedging portfolio in the 2026 of around EUR 400 million of positive contribution.

And now we're going to take our last question for today. Just give us a moment, and it comes from the line of Delphine Lee from JPMorgan.

Just 2 on my side. So I just wanted to ask on fees because you've had a very strong year, fees growing mid-single digit, but that includes wealth management fees growing double digit. Going forward, do you think you can continue to achieve the same kind of levels -- or just if you can give us any color of how you're thinking about the moving parts within fees?

And then my second question is just a follow-up. I can't remember if you responded to the question, but another question around the cash dividend payout. Considering other banks, other Italian banks are looking at increasing meaningfully their dividend payout ratio. Is this something you're considering as well as part of your new business plan?

So on fees, I can confirm you that we are working in order to have a double-digit growth in terms of wealth management and commissions. This will be part of the strategic story of the group and the increase in terms of amount of assets under administration and deposits that can be transformed into asset under management and the increase in people that we will have during the business plan, global advisers and the 360-degree services, this will bring us to have trend in terms of fee and commissions income that is and will remain the most important part of the story of our business model.

In terms of cash dividend payout, as I told in the first question, I think that this will be evaluated with all the new dividend policy of the group. It is clear that until some months ago, we were the best-in-class in terms of cash dividend. Today, there are other players that can be considered as part of benchmarking that we can analyze in terms of evaluating the new dividend policies. But do not forget that we will have to deal also with a significant excess capital. So the mix between dividend payout and share buyback, we will be part of the new dividend policy. But 70% would be a minimum for sure.

Thank you. Dear speakers, there are no further questions for today. I would now like to hand the conference over to the management team for any closing remarks.

No, only thank you very much, and we will have the occasion to have also the analysis of the business plan in the next presentation, and you will have all the drivers that will allow us to be a sustainable 20% ROE bank. So thank you very much.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.