Azimut Holding S.p.A. (AZM) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome. Thank you for joining the Azimut First Half 2026 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Giorgio Medda, Chief Executive Officer of Azimut Holding. Please go ahead, sir.

Thank you, and good afternoon, everyone, and thank you for joining us for the Azimut first half 2026 financial results and the business update call. I'm Giorgia Medda, Group CEO, and I'm delighted to welcome you to today's webcast. Here with me, we have in our headquarters in Milan, Alessandro Zambotti, CEO and Group CFO; and our Head of Investor Relations, Alex Soppera. So let me tell you that the first half of 2026 has been another milestone period for Azimut. We have delivered a very strong operational performance, continuing our history of strong cash generative growth. At the same time, we have taken a massive transformative leap forward in executing our Elevate 2030 strategic plan. Today, we are not just presenting a robust set of financial results, we will also be explaining you the transaction in Turkey with Yapi Kredi that we announced yesterday that establishes Azimut as the undisputed Italian champion of financial services worldwide. So let's turn to Slide 3, where we have the key highlights of this first half 2026. So there is one key message I would like to leave you with today is this Azimut's multigenerational global platform keeps growing, keeps on firing on all cylinders. So we have generated EUR 8.1 billion in net inflows for the first 6 months of the year. And this is not just another strong figure. This represents 81% of our original full year target achieved in just 6 months. This commercial strength, coupled with our strategic M&A allows us to significantly upgrade our full year net inflows guidance to more than EUR 35 billion and while confirming our net profit target of EUR 550 million for the year. Speaking of M&A, you might feel that from my voice. I'm very excited to give you more insights later on how we have catapulted Azimut as the #2 asset manager in Turkey through the acquisition of the Yapi Kredi Portfoy. And furthermore, in line with the strategic capital allocation framework under our Elevate 2030 plan, the Board just approved the launch of the first tranche of our share buyback program for EUR 250 million starting as early as next Monday morning. This program, which follows the EUR 284 million of dividends that we distributed at the end of May, underscores our disciplined approach to capital allocation and our commitment to returning substantial capital to our shareholders. So, now let's move to Slide 4 for the details behind these numbers in H1. So here, really the KPIs of our financial performance, starting with total revenues, EUR 781 million, driven by a powerful 16% increase in recurring revenues. This demonstrates the exceptional quality and stability of our business mix, resulting also in an operating profit growing to EUR 354 million with recurring EBIT up 10% year-on-year to EUR 310 million. On the bottom line, our reported group net profit stood at EUR 242 million, while our recurring net profit, which represents the true core earnings power of our business, increased by 6% to EUR 249 million. Importantly, our global operations generated EUR 37 million in net profit, representing 15% of our total group net profit. This intentional growth is also evident in our assets with total client assets reaching a record EUR 158 billion, up 12% year-to-date, fueled by more than EUR 8 billion in net inflows, out of which 53% came from our global operations. For those who have been historically been skeptical about the scale of our international expansion, this is a definitive answer to why we invested and focus so much over the last 10 years on investing outside Italy, and this is today a visible result of our growth. Our global business has become the primary engine of our growth, and we expect this contribution to accelerate significantly towards our Elevate 2030 plan. So moving swiftly to Slide 5, where we have our net profit bridge for the first half '26 versus 2025. And we look really under the hood of our net profit development, starting with our reported net profit of EUR 240 million in the first half of last year, where you can see how our core operational engine drove a EUR 29 million increase in recurring EBIT. That was also complemented by a EUR 33 million increase in performance fees, driven by strong market performance, both on funds and insurance products. The strong performance was offset by, let's say, EUR 63 million in other nonoperating items below EBIT, which included several nonrecurring or accounting driven items such as conservative extraordinary write-offs on proprietary investments in the second quarter, but Alessandro will detail on those later in the presentation. Despite these nonrecurring headwinds, the underlying power of the business shines through a recurring net profit rising by 6% to EUR 249 million, highlighting the steady, predictable compounding of our core franchise. Now let's look at the performance breakdown by business line in Slide 6 and 7. In Slide 6, we have our reclassified P&L by business line and reclassification that we have been now using for more than a year, where we have integrated solutions, which represent the DNA of the firm, combining our proprietary product factories with our exceptional financial adviser networks in Italy and beyond, continuing to act as our core powerhouse and command a superior stable recurring net profit margins of 69 basis point. Global Wealth Solution is showing strong commercial traction across all the jurisdictions where we're operating. And we see here how operating leverage is driven by excellent productivity and high net worth client acquisition in our hubs in Singapore and Monaco in particular. Our institutional and wholesale division has also expanded massively. Certainly, this is thanks to NSI & Nova, and we expect the full profitability to unfold progressively as these platforms mature. And finally, also let me highlight how our strategic affiliates continue to ramp up, representing a solid foundation of diversified global assets in the most attractive markets. And for the first year, this vertical showing breakeven as opposed to what we have seen over the last few years. This is starting to pay back years of focus and investments. So focusing on Slide 7, we have our geographical verticals, where we really proved the success of our global diversification strategy. Italy remains exceptionally strong, delivering EUR 218 million in recurring net profit, driven by stable domestic inflows, robust recurring fees and strict cost control. Globally, our international operations are accelerating, generating EUR 174 million in revenues and EUR 37 million net profit, which accounts for 15% of our total group net profit. If you compare this figure to 2019, when the international share represented less than 6% and consider that once the Yapi Kredi transaction is closed, this share is set to expand to nearly 30% of expected profit. So it is very clear how the recent transaction is a truly remarkable milestone in our global expansion. Our global operation are no longer just a long-term option. They are highly profitable reality that generate stable, diversifying cash flows across 20 countries. And very often, when I'm talking to you, I always keep hearing this argument that because of this diversification, Azimut deserves a discount, we believe that these results today prove that actually Azimut deserves a premium to its valuation considering the substantial reality of these figures. So now let's turn to the most exciting chapter of today presentation and moving to Slide 8, where we really go through the rationale behind the transaction that we announced yesterday. In Turkey, as I mentioned, this is a transformative milestone for the Azimut Group. Yesterday, we signed a binding agreement to acquire 100% of Yapi Kredi Portfoy, Yonetimi, the asset management subsidiary of Yapi Kredi Bank that is the fourth largest private bank in the country. And this acquisition, by the way, represents the largest deal that the group has made so far, and there are very good reasons why this is the case. Certainly, we need to look at this transaction in combination with our existing business in Turkey, Azimut Portfoy, combining Yapi Kredi Portfoy and Azimut Portfoy, we are creating a EUR 29 billion national champion, establishing what will become the second largest asset manager in the country and elevating certainly Turkey to our third largest market globally by assets under management. I would like to make a point here. Yes, we will be the second in terms of assets under management, that will be the first private asset management in the country consider the #1 is an entity controlled by the state banks with everything that results in this respect when it comes to the product and marketing proposition of that institution. So at the core, at the center of this important financial transaction, there is a 15-year exclusive distribution agreement that is essentially a long-term strategic alliance, providing Azimut Global investment platform with exclusive access to Yapi Kredi's Tier 1 network of over 18 million clients, 18 is pretty massive. More importantly, we have also implemented strict safeguard mechanisms, and we have aligned incentives. When it comes to the protection, I already mentioned that we have a comprehensive fee protection system and an explicit AUM targets that structurally lock in our operating margins and secure our total asset base from day 1. So combining this protection with a growth-linked earn-out structure, we have ensured a perfect alignment of interest with our partners, giving us highly visible recurring cash flows that are set to deliver EUR 65 million to EUR 75 million in pro forma net income in 2026, as well as an average 10% earnings per share accretion between '27 and '29 and that is before we take into account any synergies. So from a financial standpoint, as I said, this is the largest acquisition of the group to date. But apart from being very accretive, it's also an incredibly disciplined use of our capital. The EUR 305 million consideration implies a very attractive 7x PE multiple on 2026 estimated net income. And certainly, it's very important to mention that we have already secured a financing structure -- and certainly, we will provide specific details on that at a later stage once the closing of the transaction approach, but it's very important for me to stress that on our pro forma gross debt remains well below 1x EBITDA, preserving our pristine credit profile and financial flexibility. So, moving to Slide 9. I like really to explore and to highlight for you why Turkey and why we believe Turkey is a large and attractive market poised for sustained growth. So I mean, for some of you, Turkey might seem like an unconventional choice. Obviously, that goes beyond the fact that you have been operating in the country since 2011. And what I'm about to describe now is something that we believe and we have experienced that contributed significantly to our earnings growth over the years. So this is not simply representation of things observed or looked from times of a mighty way. This is something that we leave. And certainly, let me tell you that Turkey is one of the most compelling and dynamic growth stories in Europe today. First, demographics. Turkey represents the largest population in Europe with 86 million people, the youngest and faster-growing population in the continent that, as you know, is a pretty strong demographic fundamental structure for our business. Turkey maintains also one of the lowest public debt-to-GDP ratios in Europe at just 24% comparing very favorably with what we know well for the rest of the union, and that provides the country with substantial fiscal headroom and economic flexibility that in the past has already proven to be a key enabler of growth and stability even despite adverse market condition. The combination of demographic, energy, economic growth and fiscal discipline makes Turkey a uniquely compelling market for asset and wealth management. And we see that better represented in Slide 10, where we look at the economic KPIs of the macro fundamentals of the country where we can really see how since 2020, the country has undergone a highly successful policy pivot that has restored international investor confidence, particularly following the 2023 presidential elections, the economic authorities had what we can define without doubt, a U turn in terms of implementing a disciplined policy shift, anchoring the currency to a managed depreciation part and bringing inflation progressively under control. This stabilization has led to a significant rerating of Turkish credits in Turkish asset classes, in particular, the 5-year CDS spread has tightened dramatically dropping from their 2023 peak to the current levels of 235 basis points that in history is one of the lowest level ever recorded. And certainly reflecting this structural improvement, all the rating agencies have recognized that the situation has changed and all of them have upgraded the credit rating of the country, maintaining a positive outlook. So certainly, this economic rerating provides a highly supportive backdrop for our combined operations for what has been essentially what you can see in Slide 11, a pretty major change in the asset management industry that has, over the last few years, experienced a period of extraordinary rapid expansion. Certainly, driven by high interest rate environment and growing investor sophistication, total assets under management have grown from $49 billion in 2020 to more than $310 billion as of June 2026, representing a massive 40% compound annual growth rate or essentially an increase of 6x in net currency over the last 6 years or so. So we are talking about here at currency figures. I'm not talking about Turkish lira inflation-driven figures. We're talking about at currency real value growth for an industry that has also reflected in a pretty major growth and expansion also in terms of commission revenues rising to more than $1.1 billion with a very similar growth rate in the same period of time. The market is currently dominated by banks, captive managers with the top 5 commanding a combined 50% market share, of which Yapi Kredi Portfoy, the company that we have announced yesterday will be acquired by the group holds 8%. So we expect as rates and inflation will keep normalizing over the next coming years, we are anticipating really a structural shift in investor demand away from money market funds towards domestic and foreign equities and alternative products. This is exactly where our combined entity will excel and is best positioned to capture the highest margin flows. So let me go, Slide 12 on describing what Yapi Kredi Portfoy is. As I said, the fifth largest asset manager in the country, managing approximately $26 billion in assets and an 8% market share that represents approximately the same market share that Yapi Kredi Bank has, looking at the total banking assets in the country. The platform features a highly institutionalized product suite spanning 136 funds including 17 pension funds. The company has been benefiting in the past from exclusive distribution access to Yapi Kredi Bank's Tier 1 network of 730 branches across the country and over 18 million customers. And this massive retail and institutional distribution power has generated an exceptional financial track record between 2023 and '25. Let me tell you that the assets have grown over the same period by 74% annually, revenues by 40% and net profit has delivered an outstanding 57% annualized growth rate in the same period. The Yapi Kredi Portfoy is a pretty well-run company, highly efficient, high growth and immensely profitable machine with approximately 70 professionals and have always made -- created always a remarkable track record of operational excellence. And now let me actually give you more details in Slide 13 regarding Azimut own Turkish business. This is the first time. And certainly, we feel proud and immensely delighted in providing some look-through on the performance of our Turkish business. We have never provided access to single countries financial performance. But here, we feel compelled to do it. And I want to show you how Azimut Portfoy since 2018, has been an incredible story of growth, certainly driven by highly successful independent and high-margin platform operating in a country with its own logics, with its own dynamics, but with a strong backing of our global group. Through disciplined organic growth and successful acquisitions, Azimut Portfoy has become the profitability leader within the group. Our assets under management have grown over 16-fold since 2019, reaching now more than EUR 6 billion, while net profit in the same period has grown 22x to EUR 24 million last year and expected to be EUR 30 million this year. Azimut Portfoy operates as a high-value independent platform with 44 financial advisers, serving nearly 1,700 retail and institutional clients, supported by a physical footprint of regional offices in Ankara, Izmir, Bursa and Bodrum and having certainly a distribution reach with the retail market in the country with approximately 46,000 investors in its funds. Unlike the bankruptcy players, our asset mix is highly sophisticated with discretionary portfolio management representing 53% of our assets, delivering what is an incredibly competitive and profitable margin profile. So let's look now in Slide 14, what will be the combined, let's say, pro forma representation of both businesses, Yapi Kredi and Azimut Portfoy coming together. The combined platform I mentioned earlier, will manage EUR 29 billion or $33 billion in assets. From a profitability perspective, the combined business is expected to generate EUR 65 million to EUR 75 million or $75 million to $85 million in net income for 2026, and that is essentially representing a figure that takes into account, let's say, financing for the transaction and is excluding any synergies that I will detail later can be pretty meaningful and material. Yapi Kredi Portfoy will immediately benefit from Azimut's world-class sophisticated manufacturing capabilities and we will inject our proven expertise in the discretionary portfolio management business and strategies to transition retail clients into higher-margin solutions. We will certainly have a specific focus on real estate and private equity alternative fund, allowing us to capitalize on Turkey's rapidly growing demand for alternative assets. Again, here, a number that we have never commented before. But when you look at our Azimut Portfoy, assets under management, today 5% is actually accounted for alternative investments. I mean, Turkey has taken the same path of our Italian business in this respect. Essentially, we will be bringing our global equity funds expertise to Turkish investors, providing them seamless offshore access through our Luxembourg product hub. This is a clear blueprint for transforming, transforming massive scale into high margin profitability. So on Slide 15, I want to just mention briefly touch upon what are the potential synergies that could improve the financial impact that I mentioned earlier. First of all, as I said, there will be an amazing cross-selling opportunity through Yapi Kredi captive distribution network. Second of all, and that is very important, as we will expand our product suite, we will be able to achieve a better price mix and certainly to transition what is an existing business for Yapi Kredi Portfoy into a higher-margin product suite. And third, there is certainly a material opportunity to rationalize both personnel and non-personnel costs. I mean, Yapi Portfoy, as I said, is a pretty well-run company, a cost-income ratio of 25%, but combining 2 asset management businesses will allow here really to eliminate any duplication and have certainly a pretty major impact on what is already a low cost-income ratio, but bringing that even further down. So Slide 16, some sort of qualitative and last remarks on this transaction. Azimut becomes the second asset manager in Turkey, the first, if you take out from the peers panel, the largest that is controlled by the state banks. This is a transaction that transforms Azimut's global network, certainly makes us grow in Turkey, but it gives also another, let's say, proof of how Azimut is positioned itself as a trusted asset management platform for leading financial institutions operating across its global footprint. It's very important to say that this transaction comes with an exclusive 15-year distribution agreement that will allow us to certainly get and extract growth from this Tier 1 market reach of the bank, but certainly providing a very meaningful visibility in terms of earnings, in terms of cash flows. The transaction itself, as I mentioned, based on the EUR 305 million consideration implies a 7x multiple earnings that is an absolutely attractive level for a transaction of this type, even for a high-growth market like Turkey and the transaction brings an average 10% EPS accretion over the next 3 years, but starting with year 1 immediately at this level that I want to reiterate includes any financing cost for the transaction, and it excludes any potential synergies that are very likely to be extracted. And just to wrap it up, I want to just mention that this transaction proves that the power of our global vision is in the making. It's not longer a free or a dream, a free option, a dream is something that is happening today. Our international assets after the consolidation of Yapi Portfoy will stand above 50% of our total group assets and when you look at our earnings, we have accelerated our path towards generating 30% of our expected earnings from global operations under our Elevate 2030 road map. I want to say that this is definitely proof that Azimut is a true Italian champion of financial services worldwide. We are a global multigeneration advisory platform present in 20 countries, chosen by more than 2.5 million private clients globally, with networks and some of the largest institutional investors globally to manage their assets. With this, I'm going to hand over to Alessandro that will walk you through our financial results. Alessandro, the floor is yours.

Yes. Thank you, Giorgio. So we go back to numbers. So we can move to Slide 17, and it is a pleasure to present the financial results of a truly outstanding first half for the Azimut Group. And as usual, we will begin with the evolution of our top line performance. During the first half, the group recorded total revenues exceeding EUR 780 million (sic) [ EUR 781 million ], representing an outstanding 21% year-on-year growth compared to the first half of 2025. This is a fantastic top line expansion, was driven by a solid 16% increase in our recurring fees, which rose by EUR 92 million to reach EUR 653 million, driven by solid AUM growth, it's in our ongoing platform expansion. And looking at the main drivers, first of all, our global business has continued to expand and can grow by EUR 58 million year-on-year. And this is -- this was driven by changes in our consolidation perimeter and specifically adding EUR 25 million from NSI, EUR 2 million from Knox and EUR 11 million combined from the consolidation of Kennedy Capital and HighPost alongside robust organic growth in the U.S., Singapore, Brazil and Turkey. Second, Italy delivered a very robust domestic contribution, adding EUR 34 million year-on-year. This solid organic performance was broad-based across all of our core business lines, spanning open-ended mutual funds through the alternative assets and the next-generation advisory services and also we would like to mention also Nova. Moving to the performance fees from our fund solution increased by EUR 5 million year-on-year to reach nearly EUR 8 million, driven by strong investment results in Turkey and Monaco, which effectively offset the negative impact of the full consume mechanism. And turning to the insurance revenues, we achieved it's an year-on-year increase of EUR 31 million to reach EUR 91 million. This outstanding performance was driven by an exceptionally strong second quarter, which generated EUR 28 million in variable insurance fees, complemented by nearly EUR 3 million in recurring insurance revenue. Finally, the entry commission and the other income rose by EUR 8 million to reach EUR 30 million. And this is primarily supported by higher entry fees inflows from our international subs and in particular, Singapore, the Switzerland and Monaco business. So in general, what I would like also to mention is the evolution quarter-on-quarter basis to highlight our underlying operating momentum. On a sequential basis, we achieved overall revenue growth of approximately EUR 40 million. This incorporates a EUR 50 million increase in recurring fees, a EUR 20 million expansion in the insurance revenue and EUR 6 million in higher performance fee. In terms of domestic recurring fees, our Italian operation grew by EUR 7.3 million quarter-on-quarter, led by open-ended funds, which contributed EUR 4.5 million, supplemented by a EUR 1.8 million increase in private markets management fee and approximately EUR 1 million from Nova. Also our international operation also delivered strong sequential growth by -- up by EUR 8 million quarter-on-quarter. The main contributors were the U.S. with an increase of EUR 4 million, reflecting the successful ramp-up of NSI, Monaco with EUR 1.6 million, Singapore with EUR 1.2 million and Turkey with EUR 1 million. So now moving to next slide. Let us analyze the evolution of our operating expenses compared to the first half '25. Total costs increased by approximately EUR 74 million, an evolution directly correlated with the expansion of our business scale and the revenue growth we have just outlined. Let's examine the individual components. So first, we start with the distribution cost increased by EUR 21 million year-on-year to reach EUR 244 million, reflecting the direct growth of our recurring revenues, both in Italy and abroad and including a EUR 6 million perimeter effect from NSI. Italy accounted for a EUR 6 million increase, while the international business contributed EUR 15 million. Second, looking to the personnel and the SG&A expenses, we have an increase by EUR 44 million to reach EUR 165 million. This reflect the combined effect of consolidation perimeter changes totaling EUR 25 million, primarily it's again in U.S. for EUR 21 million, including on one side, EUR 15 million from NSI, EUR 6.5 million from HighPost and Kennedy Capital and as well, as we mentioned for the revenue, Brazil for EUR 1.5 million. And in general, we have an organic cost growth of EUR 19 million. The organic cost in Italy remained virtually flat, reflecting our disciplined cost management in domestic operation, while the international organic growth was mainly driven by Turkey, Brazil and UAE. It is critical to highlight that organic cost in Italy remained virtually flat. Again, as I mentioned before, so important to remark this point. Third, depreciation and amortization increased by EUR 88 million year-on-year to reach [ EUR 30 million ], which includes a EUR 2 million perimeter effect from NSI. The remaining increase is primarily a baseline comparison effect as the second quarter of 2025 benefit from a provision release following a favorable legal resolution. So if we take out the effect of this positive one-off, D&A evolution is broadly in line. And again, trying to give you also an overview of the evolution of the group quarter-on-quarter. Distribution costs rose by EUR 68 million, in line with the recurring revenues. SG&A and administrative expenses remaining linear with a low growth of EUR 2 million. This again to remark as well the point related to the cost discipline. Moving to -- on the Slide 19. So moving below the operating line. The net impact of financial items and the nonoperating cost for the first half of the year was negative by EUR 30 million, which represents a market improvement compared to the negative EUR 38 million recorded in the first half of '25. This net performance was driven by 3 primary components: first, as a noncash IFRS 17 adjustment of approximately EUR 10 million; second, other nonoperating cost of EUR 5 million; and third, EUR 8 million related to the fair value option, equity participation and portfolio performance, which was impacted by EUR 25 million extraordinary nonrecurring write-off on proprietary investments in the second quarter. To provide some strategic context, this write-off relate to 2 specific venture capital holdings, one in technology and the other one in MedTech sector. As a global platform, we manage our property portfolio with the highest level of financial discipline, while investment activities naturally carry risk. So our track record demonstrates our ability to capture extraordinary upside as we did with our investment in Kennedy, Louis which returned first time since our initial capital and generated a capital gain of over $160 million. So equally, disciplined capital allocation means taking a conservative and proactive approach to valuation when necessary. By electing to write down these assets now, we clean our slate, protect the quality of our balance sheet and ensure our financial reporting remain reflection of our core recurring profitability. And then our adjusted tax rate stood at 21.7% for the first half of '26, and we are guiding to a full year tax rate approximately 24%, 25%. Putting it all together, the group achieved a reported net profit of EUR 242 million, and we are reflecting the true structural earnings power of our business. Our recurring net profit grew by a remarkable 6% year-on-year, reaching EUR 249 million. Moving to Slide 20. We present our net financial position, which remained tightly robust and positive of EUR 715 million, while this is lower compared to both the previous quarter and the end of last quarter, it is direct result of active capital allocation and shareholder return initiatives. Specifically during the period, we deployed EUR 89 million in M&A and strategic investments, EUR 58 million in tax advances, EUR 352 million in ordinary and preferred dividend distribution and then EUR 60 million in shares buyback. Probably the news is that in line with our commitment to maximizing shareholder value, the Board of Directors has today approved, as mentioned before, Giorgio, the launch of the first tranche of our new share buyback program for up to EUR 250 million scheduled to start at the beginning of August and to be completed within the next 6 months and represent exactly half of our total EUR 500 million authorized buyback capacity. This launch marks another milestone in executing our strategic capital allocation framework, more importantly, it directly delivers on our Elevate 2030 plan, reinforcing our formal commitment to return approximately 25% of the group market capitalization to shareholders through a combination of dividend and share buyback with subsequent share cancellation over the '26 and '27 period. This program is a powerful concrete testament to our exceptional cash generation, our robust balance sheet, our absolute focus on driving long-term capital appreciation. And now we can move to Slide 21. So before handing the call back to Giorgio, let me provide a brief strategic update on the TNB transaction. We have extended our framework agreement with FSI until December 20 of the 2026. The customary follow-up assessment by the Bank of Italy regarding the previously agreed remediation plan was completed in early July, and we are currently awaiting the official report from the regulator to formally conclude this stage, which represents a key prerequisite for obtaining final regulatory approvals for the overall transaction for the component authorities. Based on our current progress and highly collaborative and positive nature of our ongoing regulatory engagement, we remain fully confident that the transaction will be completed within the end of the year. So with that, I will hand the call back to Giorgio, and thank you.

Thank you, Alessandro. And the last slide, Slide 22, just a look through of our guidance upgrade in terms of net inflows for 2026. We are upgrading the original EUR 10 billion target to EUR 35 billion target, at least EUR 35 billion target, resulting from the impact of the acquisition of Yapi Kredi that we expect to be closed following regulatory approvals by October, November this year and an organic upgrade in our inflows of at least EUR 4 billion. If you compare this slide to what we have shown last year, same time, you would find a very similar upgrade. So we are really looking to continuing delivering strong commercial momentum and certainly to benefit from what we are able to achieve in terms of nonorganic growth as well. And with this, I will open the floor to any questions.

[Operator Instructions] The first question is from Gian Luca Ferrari of Mediobanca.

Four questions for me, please. The first one is Page 7, when you give the verticals by region. I was wondering what happened in the global business, looking at the dynamic of assets, the dynamic of revenues and the dynamic of EBIT and net profit. It seems that something on the cost base has changed this year. And I was wondering what was that? And if it is a one-off item or something more structural? The second is on the deal you made in and announced yesterday. I was curious to hear some thoughts on the hyperinflation. What are the currency risks there? How you are isolating Forex risk and how are you hedging this kind of risk? The third question is if you can help us in modeling in a bit more predictable way, the net interest income for 2026 with all the moving parts, the derivatives and stuff like that. And if in the extraordinary items, we should expect only, let's say, the level of first half as a run rate for full year? And the final one is you are reiterating the EUR 450 million net income guidance ex extraordinary items, what are you considering extraordinary in the first half? Is the write-offs in the technology and MedTech is the only component we have to isolate in the EUR 450 million? And linked to this, can you remind us how much you invested from your prop investments as seed money in venture capital overall?

Okay. Gian Luca, I'll take some of your questions and leave Alessandro for the others. So Page 7, you rightly pointed out, we have increased assets and operating margins or operating earnings have not increased linearly. This is that we already commented for Q1. I mean the increase in assets reflects the consolidation of NSI. We said at the very beginning that the first quarters of this transaction following the consolidation of the assets would have implied a dilution in margins as the platform gets integrated into the group as a number of, let's say, one-off nonrecurring items are absorbed over time. And obviously, we are not going into the details now of NSI financials, but we've already seen a material improvement in the second quarter versus the first quarter, and we see that continuing unfolding over the next few months. We're expecting NSI to be contributing positively to the net income. We provided at the time of the acquisition some guidance in terms of EPS accretion, all those outstanding. We were mentioning back then that we're expecting a 5% EPS accretion over the first 2 years. All that is standing. It's a pretty large firm, more than $22 billion of assets, a lot of products, a lot of counterparties linked to launch of new products. We launched at the end of June, 2 of the first 5 active ETFs built for the American market. Let me tell you that we had a very strong sales response, more than $150 million invested in these 2 products in the first month. All this is resulting in some, let's say, headwinds that, as I said, will be absorbed as the business keeps integrating and keeps growing. And there's no change whatsoever in our view on how this will contribute to our earnings. In terms of the deal in Turkey, look, the numbers that we are showing here are all accounting for hyperinflation accounting. Sorry for the repetition, but one thing I want to tell you that hyperinflation accounting is expected to be discontinued in 2027 as inflation has normalized. There is one key aspect when it comes to the asset management business. Hyperinflation accounting had a very limited impact in general. The numbers that we have shown are already post those adjustments. But the beauty of this business is that we invest in assets, we invest in locally denominated asset classes. That obviously start with the base return that is the local interest rate yield, and that is reflected in inflation. So, whatever you might see in terms of inflation essentially provides and let's say, naturally hedged at the fund performance level as funds always start with the risk-free rate, if you look at this now in excess of 40%. So, even if the currency depreciates has been depreciated by the interest rate differential, we have through the organic development as much as the ability to beat the market, this incredible growth delivered on top of any currency devaluation. And that is very, very important to remember and Turkey has not experienced any major currency volatility for the last 5 years, almost 6 and that is the result of the normalization in the macroeconomic policies implemented by the Central Bank. And we think that, that will continue, and there are no reasons to expect this to be a problem. But even if some is worried about these problems, we have been there since 2011. We have experienced all sorts of volatility in the markets, in the country, result is that every single time something is happening, even if that is bad, we have been able to turn that into an opportunity for our business. And certainly, the fact that we are a global manager helps investors to look at diversified portfolios and basically we provide them a way to hedge any local risk through our portfolio management capabilities. Now you were asking about the net interest income for 2026. We didn't catch whether you were referring to Yapi Portfoy or you were looking at the group level and depending on which one of the 2, either me or Alessandro will reply to that question. Hello? Gian Luca, we didn't hear you. Gian Luca? Hello? Hello? Can you hear us?

The next question is from Villa Alberto.

Alessandro, I have a few. Thanks for the deep dive on Yapi Kredi Portfoy, very helpful. I was wondering if you can give us some more color about the expected growth of the business going forward. I've seen a tremendous growth in the last 3 years of the AUM, but a slowdown in growth in the first half of this year. I don't know, maybe there are specific reasons for that. But going forward in your expectations, what we should bake in, in terms of expected AUM progression going forward? And well, any additional color you can provide us on the agreement -- distribution agreement with the bank would be particularly helpful because it's one of the most relevant point of the deal, I guess. And secondly, still on Yapi Kredi, I understand that there are also earn-outs and other considerations. Maybe you can detail a little bit better how they could work if they kick in and the 7x PE multiple is based on the initial consideration. So just to understand the final amount that could be paid in case everything goes in the right direction. And the second question is on the fact that you are operating now in 20 countries and some of them are now contributing significantly to your results, other are a little bit less relevant. So I was wondering if you are considering some sort of rationalization in terms of the portfolio of countries in which you operate or you believe there are opportunities in all the 20 countries you are currently operating. The third question is more related to the, let's say, updated target on net inflows, which is obviously impacted by M&A. But stripping out the M&A component, it seems quite conservative. This is aligned with what you have been doing in terms of guidance on net inflows. But I was wondering if you can provide us on outlook on what was the trend in July? And if you expect organic or same perimeter net inflows to continue to be solid going forward. And the final question is a more generic one on margin evolution going forward. We have been hearing about potential pressure. But at the end of the day, probably also market contributed positively on mix and so on. In general, in your view, are you experiencing any pressure on margins in any of your jurisdictions?

Okay. Alberto, can you confirm that you can hear us?

Yes, I can.

Okay. Cool. Okay because we lost Gian Luca earlier, but we will come back to him offline. So going through a very long list of questions, but hopefully, we have an answer for all of them. So in terms of growth assumptions for Yapi Kredi Portfoy, I mean, it happens that the businesses can grow at different rates over the medium and long term. What happened over the last first month, it was actually the first 2 months of 2026 has been, as a matter of fact, compensated by very robust growth over the last couple of months at the end of the first half. So our basic assumption that through the distribution agreement, we can achieve between 7% and 10% organic growth for Yapi Kredi Portfoy assets. This is significantly below what the company has delivered over the last few years and reflects what is our underlying view of organic potential for the market. But it can be easily higher, but this is what we have reflected in our valuation and base case scenario. For distribution agreements, look, there are a lot of things in the distribution agreement that we have put under the label of safeguard mechanisms. Essentially, we have very clear rules, if I can define them so in terms of margins, we have a baseline margins defined below which the bank will have to essentially compensate in terms of lower retrocessions from our part. I have to say that on the other hand, we provided them an incentive to shift the product mix towards different solutions. So they have, if you want in this respect, an alignment of interest in improving the underlying, let's say, profitability of the business. When it comes to the assets, similarly, we have set some thresholds below which there will be initially a compensation calculated and representing the basis for lower retrocessions over the short term. There are even threshold below which we might be entitled to some compensation as opposed to the original consideration. I have to say that all this has been negotiated with the bank, but we generally believe that none of these thresholds will actually kick in. We have really sort of felt during the negotiations that there is a genuine focus from the bank's management to use asset management in this partnership with Azimut to increase the market share, both for the banking business and the asset management business. So we really believe it's good sleeping at night to know that there are things that will protect us. But I have to say that this transaction represents even for the bank, and I think they have been very open yesterday commenting as they want to start really a new as far as the asset management business is concerned following this transaction. The earn-out will be relatively limited. We are expecting for the first 5 years an overall amount of EUR 20 million. The way the earn-outs work is based on certain targets of growth. So, there are really milestones. It's more of an asset kicker system. So as soon as certain thresholds are hit, then the bank gets an additional consideration. To give you a ballpark measure of how these earn-outs are calculated for the EUR 20 million, that amount will be paid if the bank increases organically by 75% the existing assets under management. So we are talking about, obviously, an earn-out that is important financially, but there is a very compelling case in terms of growth as far as the different milestones that have been set for that to be paid. We also have for the longer term, we didn't really want to leave anything unattended in terms of incentives, we also defined a system where we already agreed that beyond the initial 5 years, there will be an alignment in terms of commercial incentives as the business will continue growing. I wouldn't call this earn-out. I would call it more as high retrocession, but something that will not impair or affect the overall profitability of the business. So the 7x PE multiple is calculated on the EUR 305 million consideration. I told you EUR 20 million is the maximum earn-out to be paid over the first 5 year based on these growth target. We will acquire a business that will have some cash in it. And certainly, that cash is also part of the consideration on top of what I mentioned, but it's cash against cash. So it doesn't really account for the multiple calculation. And then you asked a very fair question. You are now in 20 countries. So, is there any plan to exit some or to rationalize? Hard to tell you that it's very hard for me right now, not because I'm an optimist by nature, but it's very hard for me to think that Azimut will ever leave any of these countries for the simple reason that the business is operating as a truly integrated platform. It doesn't matter whether in Taiwan, we have a relatively small business as opposed to Singapore. We have a lot of cross-border relationships. We have a lot of interactions between different teams within closer countries, within same regions. We have a lot of things happening between the U.S. and Brazil, between Europe and the Middle East. So, we have passed that sort of position where we're looking at the world as a globe with flags planted on the ground. We are really operating the business as a global platform. And today, the geographic breakdown represents very little in terms of what we are doing every day. And as a matter of fact, the business lines are more representative of the approach and strategic focus that we have on the day-to-day business. Now you also were asking in terms of the trends for the net new money, I mean, for the upgraded guidance. Look, I think you have seen over the last couple of months, market conditions being a little bit jittery. I think there is a bit of reckoning across a number of sectors. I mean, valuation reckoning, this volatility cannot be overlooked. We are not concerned. We are not scared. We don't think that we are in face of any major systemic correction. Yet risk propensity, portfolio construction and commercial activity might be affected. So I think it's pretty reasonable, actually very sensible for us to take the conservative path in terms of upgrading our guidance. We don't want to hide. We don't want to sort of low ball to impress you later. We did the same thing last year. We ended up very much close to what we told you at the end of July, and we are doing the same this year and market conditions are the main reason why we are taking this stance. And that's it. I don't know whether we have left any question unanswered?

No, maybe on margins, if you have any comment on [indiscernible].

Look, I mean, this has been -- it's very often we talk about evergreen funds. This has been an evergreen question, what's happening to our margins and what's happening to fees. It would be silly for me to tell you that we don't feel any pressure. Let me tell you that we are able to cope with the pressure very well. It's always a mix match of top line being sometimes exposed to the competitive forces of the market and our ability through cost management to overcompensate for that. The margin mix of Azimut will remain always within this 35 to 45 basis points range. These are the baseline of our Elevate 2030 plan. There might be seasonality, there might be acquisition, there might be things that might affect this temporarily. But I think that we do not see anything major to check the house and even the expected changes in regulation in Europe with the retail investment strategy, although we only read about these changes. So we have not really seen any actual directive or law enforcement, but we know that we will be able to adjust and to accommodate with our operating performance for any pressure on fees.

The next question is from David Giuliano of Equita.

I have just 2 as many of them were already answered. The first one is on Turkey. How much room do you see for margin improvement over the coming years from the upselling initiatives you may have? And then second one on net inflows during second quarter, we have seen a progressive slowdown in mutual fund inflows in May and June. Can you provide some indication on the underlying dynamics, in particular, qualitative split of the dynamics of the various moving parts, including Nova, if possible?

Okay. I'll take the first question as we work for the second. So in terms of upselling or pricing mix, let me be very factual here. Average management fees in the market are below 1%, clearly affected by money market funds. I have to say that Yapi Kredi Portfoy has been always compared to its peers, a good performer, average management fees between 1.1%, 1.2%. But then I look what we have been able to achieve with Azimut Portfoy above 1.4% historically. So if I look at translation of the business and ability to work with the same mix that we have been able to implement with our clients, I think the top line can certainly 10% to 20% upside that we can deliver over the short and the medium term. Nothing will be automatic, but certainly the distribution agreement has been built in a way where the bank is opening the doors of the branches to our teams. And certainly, there will be a lot of education with their personnel, with the clients as well. One thing I didn't mention, I mentioned that briefly only when we're talking about alternatives, Turkey right now is experiencing what is a very fast-growing stage when it comes to alternatives. I have to say investors' preferences, particularly among high net worth individuals, resemble significantly what we see in other more mature markets. There is maybe because of the country, these were the country, an entrepreneurial spirit, there is an entrepreneurial culture. And high net worth individuals are very ready to put the money at work in liquid investments, private equity, venture capital, private debt. And the bank itself is looking to add these products to the mix offered to their clients. And these are products like elsewhere that have significantly higher fees. We start always with 2% and something that Azimut Portfoy, our affiliate has been able really to seize as an opportunity over the last 18 months. We have now approximately $300 million of alternative investments for our clients. And the way we have been able to engage with them, certainly what we have learned in Italy, in the U.S. today is very conducive of effective marketing -- an effective marketing proposition with clients, and we will translate that, we will bring that to Yapi Kredi network. Obviously, we are talking about a very significant asset base there. So I'm not expecting to get to 5% of Yapi Kredi Portfoy investing into alternative assets. But in the business plan that they presented to us, there was more than a double-digit exposure to alternative investments. So I think we can work towards that.