Banca IFIS S.p.A. ($IF)

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banca IFIS First Quarter 2026 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Frederik Geertman, CEO of Banca IFIS. Please go ahead, sir.

Thank you, Madam, and good afternoon, everybody. Welcome to our first quarter 2026 results call. I'm joined today in the conference room here by our Chairman and Mr. Ernesto Fürstenberg Fassio and by my whole senior team, including the CFO and the Investor Relations representative, as usual. Let's go straight into the presentation. I will take you to Page 4 to the executive summary. As you will appreciate, today we will have both comments on results, Q1, and on more strategic matters. Page 4, active portfolio optimization in a clear strategic direction. We report steady profitability in a seasonally slightly softer quarter. So we had a net income of EUR 31 million was quite in line with what we were expecting. Performance supported by a strong contribution from Ilimity's turnaround segment. Following the restructuring of a large exposure, whilst the NPL revenues were a bit softer, driven by the timing and nature of our portfolio purchases. Noncore asset valorization is firmly underway. We are really pleased to report that we are in advanced negotiations for the disposal of 2 of our largest non-core subsidiaries, Aknetrix and Abideo, representing a significant step in operations and balance sheet simplification, subject to regulatory approvals, of course. Strategic optionality for the NPL business. You might have read in the press release in response to higher capital absorption linked to calendar provisioning that Banca IFIS is proactively evaluating a full range of strategic alternatives for the NPL platform, including possible deconsolidation. Capital strength, CET1 confirmed at 13.7% at 31st of March. That excludes the net income of the quarter and deducts the full dividend that will be paid out in May, confirming a solid capital position. Continuous focus on shareholder returns. You will recall overall dividends for 2025 at EUR 2.12 per share, of which EUR 1.20 was paid in November and the remaining EUR 0.92 will be paid on the 20th of May. Clear strategic direction. So we are proactively reshaping our business model towards a well-rounded SME banking specialist, ensuring proactive alignment with the regulatory environment and the risk profile of the group, and this refers to the NPL business, of course. The Ilimity acquisition in the Fürstenberg Bank division marks concrete milestones of a long-term transformation focused on sustainable value creation to be fully articulated in the business plan when we present it. Page 5, consolidated results. You will see that in the third quarter and the fourth quarter of 2025, we had quite violent swings in the net result. The third quarter benefited obviously from the badwill of the transaction. The fourth quarter obviously took into account the due diligence and the provisions we took on Illimity's assets. So the first quarter of 2026 represents a normalized or more normal, I would say, combined entity quarter, where we post EUR 31.3 million net profit. I would draw your attention to the revenue part. As mentioned, the NPL revenues were a bit softer given our repositioning towards forward flow agreements that serve the early disposal practices of the major originators. This is a strategy that implies a much more gradual recognition of revenues with lower upfront contributions than in the past. Whereas in the turnaround business, which is Illimity, performance reflects the successful early repayment of our exposure to an Italian mid-corporate following the entry of new shareholders. I would stress that this is maybe not completely recurring revenue, but it's the core business, and the turnaround segment will periodically contribute in this way to our quarterly results, maybe not every quarter, but this is intrinsic in the business model. So I wouldn't characterize it as an entirely one-off event. I would characterize it as core business. Page 6, to remind us what the long-term goal is here. To become the country's leading SME specialist by leveraging the excellencies of both Banca IFIS and Illimity with a well-rounded, comprehensive banking offer that includes digital retail based on Illimity's brand and platform, and includes private banking and investment banking on the Fürstenberg Bank brand. So that's the path we are on. And you should see in the slide also the disposals that we are working on in these months, as we reach this type of setup. Page 7, our path towards this. A short time ago, you will remember, we sold the 50% stake in Hike. We continue to speedily execute strategic action that may mean accepting some earnings volatility in the quarters. As said, we are in advanced negotiations for the disposal of 2 of our largest non-core subsidiaries, Aknetrix and Abilio, representing a significant step in balance sheet simplification. These non-core disposals are essential to ensure the long-term success of the franchise. They may generate some earnings volatility, as mentioned, but they reflect both positive and negative one-offs as they happen. The second element or priority, if you will, is managing the external environment. You are surely aware of the geopolitical situation, including the conflict in the Middle East. May weigh on business volumes and asset quality. The impact remains difficult to quantify at this stage. It's expected to become more evident in the second and third quarters of 2026. So we are very carefully monitoring that, whilst making the integration a success in 2026. We are now primarily focused on executing a full merger, full integration, and securing the synergies for the future, and creating this well-rounded comprehensive banking offer, derisking and reinforcing our long-term resilience. By 2027, we will therefore achieve the full realization of the synergies and enhance Ilimity's commercial potential. We are really seeing the pipelines filling up. We're seeing an acceleration of the commercial activity, capturing the funding advantages and the strategic value creation created by the new competencies and business opportunities that are coming on board. That leads us to Page 8. So what are the priorities for 2026? Strengthening resilience while creating sustainable value. So on the left-hand side, the agenda for 2026. First and foremost, the commercial relaunch of Ilimity's core businesses. As I mentioned, we are really seeing some good progress on the pipeline and on the synergies with Banca IFIS's existing businesses. Legal entity integration, capturing IT synergies, and group simplification. We gave you a lot of details in February. So we take that as an item that we have discussed. Third, the strategic item, evolution of the NPL business model in response to the regulatory context. We will get into it later. Noncore assets disposal and derisking the 2 subsidiaries we mentioned, but also some additional portfolios and assets that we are looking at; consequently, some earnings volatility in this quarter. And that will lead us to be able to imagine a new business plan starting in 2027, with long-term value creation based on the unparalleled SME and corporate banking franchise at that point. We have a scalable digital retail banking platform, increased capital efficiency, growth of the Fürstenberg Bank division, mostly commission-oriented, so a very welcome addition to our revenue composition, and finally, sustainable and resilient earnings generation. We like to see ourselves as the leader in Italian specialty finance, guided by stable governance and long-term strategic vision focused on sustainability, capital discipline, and long-term value creation by the controlling shareholder, the Fürstenberg Bank family, which is the guarantor of this long-term approach. Page 9, NPL focus. First, optimizing performance in 2026. I mentioned that we are executing targeted purchases now. The strategy focuses on forward flow agreements with originator partners, a very fresh and low-vintage portfolio. And that is consistent with the evolution that we see in the market towards very early disposal programs by the major consumer finance originators. So, priorities are given to assets that offer faster turnaround and greater visibility on cash recovery. This targeted approach to forward flow entails a more gradual distribution of purchase volume over time with lower upfront contributions in the initial phase of portfolio onboarding. So as we transition towards this model, NPL-related revenues will experience a moderation in 2026. I draw your attention to the cash collection, which remains excellent. We are very close to collecting between EUR 90 million and EUR 100 million every quarter in this business. And the portfolio acquisition activity is supported by existing forward flow agreements that we have already in place with the major originators. The second item of priority is the workout efficiency. We privileged extrajudicial recovery strategies with the objective of accelerating recoveries and reducing the legal costs a bit. And also, we will continue at a moderate pace with the disposal of portfolio sales. We hope you appreciated that in the last few years, we took away some EUR 10 billion of gross book value, a very small amount of net book value, realizing some small capital gains, but creating a lot of efficiency in the overall system. On the Illimity NPL side, so the legacy Illimity NPL portfolio, you will remember that during 2025, more conservative assumptions were adopted on recovery time frames and cash collection. So that has led in 2025 to very significant write-downs. We are now executing a runoff strategy primarily through the natural workout of the positions to be complemented by some opportunistic asset disposals as they come about. So, less exposure to single portfolio acquisitions improved quality, visibility, and sustainability in the medium term. Leading Page 10 to our assessment of the current environment and taking a slightly longer-term perspective, what did we communicate today on the NPL business? In response to increasing capital absorption driven by calendar provisioning, we have started the evaluation of options for the evolution of the business model, the strategic opportunity for capital and profitability optimization of the whole group. Specifically, Banca IFIS is evaluating a spectrum of strategic alternatives. We will calibrate the features of these alternatives as needed, also on the basis of dialogues with strategic partners and potential investors, and they may include the disposal of a stake in our NPL business, leading to deconsolidation. The chosen approach that's the future business model will be based on the evaluation of the long-term profit and capital contribution of the NPL business in dialogues, obviously, with co-investors and partners to ensure full compliance with regulatory requirements. And so the future contribution of the NPL business to the group to its earnings will reflect the business model ultimately adopted. This strategic review is a precursor to the new business plan. So, the strategic review will be incorporated into the new business plan that will reflect the transformation that the group has initiated with this strategic review. Structurally higher equity requirements are expected in any case to lead to a lower NPL contribution to group earnings. So, proactively freeing up capital will allow us to benefit from the growing profitability of the SME and corporate banking franchise, the development of Illimity's businesses, and the growth of the Fürstenberg Bank division. That's the key, probably, to read through this strategic review that we have initiated. Page 11, back to our more typical communications on the quarter. We show you the funding maturities that we have in the next 4 quarters. Between the second and the fourth quarter of 2026, you can see that we have roughly EUR 3 billion of funding maturities. These deposits, they come at depending on the bond and the retail side at higher prices than the market offers today. So we expect to progressively refinance funding maturities at significantly lower rates. Page 12, asset quality. You can see a bit of an increase in the asset quality ratios. A couple of comments on that. The first is a denominator effect. Typically, we have seasonality in Q1 because the peak of assets in our business is normally on the 31st of December. So there's a bit of denominator contraction. There's also a bit of flow towards nonperforming exposures, roughly EUR 90 million. The majority of this is guaranteed. A good part of it is the b-ilty portfolio, which has MCC government guarantees. There are also some corporate exposures that have other types of public guarantees. There are some real estate businesses with very, very comfortable real estate securities behind them. So, fairly modest impact on the P&L with the EUR 90 million flow that represents the continuous cleanup, if you will, of the balance sheet. Net of the b-ilty portfolio, you could read 5.1% gross and 2.9% net in terms of asset quality. Page 13, capital. We start at a CET1 ratio of 12.95%. You will remember that we pro forma that when we discussed it the last time because we had already shown the impact of the transactions that we had made. But we start from the formal number on the 31st of December, which was 12.95%. And there, you can see the walk to 13.71%, slightly below our 14% target that we like to keep as an overall guideline as an overall target, but where we may have some variation around in the quarters as they progress. I would stop here with the presentation, and I'm very happy to take your questions should you have any.

[Operator Instructions] The first question is from Lorenzo Giacometti with Intermonte.

Let me just say that I think that your new strategy for the NPL business is very proactive. But in terms of the question, I actually have 3. So the first one is what regulatory headwinds do you expect from basically the calendar provisioning going on? And the second one is also regarding the NPL strategy. Why did you change the strategy in NPL? And I mean, has this changed due to a request from the regulator or from other items? And the third one is basically, what is your estimate of the structurally lower contribution from the NPL business in the coming years?

Lorenzo. On the first question, what regulatory headwinds do you expect? Well, the key issue is the impact of calendar provisioning on the capital intensity of the NPL business. Recovery times, if you do a responsible type of NPL recovery, are multiyear processes. Both judicial and extrajudicial recoveries take a number of years. It looks incompatible with the timeline of the calendar provisioning, leading, therefore, to have in your book a very, very capital-intensive type of business, which may, in the end, still be profitable. But as long as you have them on your books, it is very, very, very capital-intensive. And our assessment is that this regulatory environment will become more challenging over time as less significant institutions are being asked to apply the rules that the significant institutions have been applying over the last few years. So we are preferred to proactively address it, this regulatory environment, if I may call it, given this context. On your second question, why did you change the strategy? Well, the backdrop, I guess, was in your first question, the regulator, no, risk management and capital discipline are key anchors for Banca IFIS, always have been. So we'd like to proactively address regulatory evolution rather than being forced to react to it. I think you may recall that we took the same approach with respect to our presence in the pharma segment, where we had the purchase of invoices to the Italian public health system, which has generated some issues in the market that everybody is aware of. We exited it in 2022 before it became an issue, and we want to have the same approach, which is consistent with the expectations that our controlling shareholder, the Fürstenberg family, has of the behavior of the bank. So we started evaluating a broad range of strategic alternatives. They may include deconsolidation with the objective of optimizing capital usage. So that's it. Finally, of course, the setup and decision will be based on the overall evaluation of profit contribution and capital intensity of the solution that we find, and obviously, on dialogues with potential partners. We hope to define a clear path for our objective is to define a clear path in this new environment before the next business plan, so that we can clearly present a plan on the basis of a solid perimeter and a clear understanding of where we are in terms of business mix. Finally, an estimate of the contribution, it's too early to quantify a precise impact, as we mentioned, the definition of this strategy will require at least a few quarters, and it will depend on the structure that we ultimately decide on. We will update the market as these decisions are finalized. So the future contribution will depend on those decisions. We want to do this in a transparent approach. I hope you may appreciate that we are today sharing with the market the initiation of this evaluation, and we'd like to keep this a constructive dialogue whilst we are assessing different options and calibrating the features as needed. So this is, I think, as specific as we can get at this stage on the future contribution, Larenzo. So, I hope this is adequate for your questions.

The next question comes from Irene Rossetto from Banca Akros.

A few questions from my side. So the first quarter net income of walk us through the main drivers of this delta and when we should expect the group to fully? Can you explain the change in the asset quality ratio in the last 2 quarters? Then, can you provide guidance for the 2026 tax? Finally, if you can comment on the risk profile of Banca IFIS post the acquisition, if you perceive that something has changed?

So I'll start with the first one. So the sources of change, if you will, from last year's net income to this year's. Let me first say that certain businesses like NPL, the equity investment business, the turnaround business, they provide a fairly stable contribution to revenues on an annualized basis, but they can be in a quarterly perspective, they can show some seasonality. So you should probably assess those in a full-year perspective. The first quarter of 2025 was particularly fortunate in that respect. We had a lot of pleasant contributions a year ago. You can also see that if you compare with the quarters that followed that were a bit softer. And in the first quarter of this year, as you mentioned, we had this contribution from the turnaround division. They executed a transaction, which is a good example of Illimity's specializations, enhancing our ability to support the SMEs even in periods of difficulty. And that gave a fairly robust -- I wouldn't exactly call it a one-off, but certainly a very robust contribution in the first month. And then NPLs, as we've discussed, there's a repositioning going on towards forward flow with a much more gradual revenue contribution. Also, I would add, we had a bit of a slowdown in judicial recovery, given that we restructured the way we manage the outside legal counsel when we recover loans. So that gave us a bit of complexity, a bit of need to adapt, and led to a bit of slowdown. So, these 2 items more or less offset each other. And in that way, the quarterly profit ended up roughly in line with our expectations. You asked us about the guidance. Well, we've just seen the first quarter results. They were broadly in line with our expectations. So at this early stage, with 3 quarters to go, we wouldn't offer any elements that would lead us to revise it. I would state, though, our strategy is focused on execution, derisking, and capital management, and we are in a transition year. So, we will be focused primarily on reinforcing long-term resilience, also when we sell portfolios or businesses. I would signal there is a need for a degree of prudence, both in terms of macro. If we look at the conflict in the Middle East, it has implications both for volumes and for asset quality. We believe they will become apparent during 2026. And so, expect some earnings volatility, and here is a word of caution in the outlook. That said, at this stage, we would for now confirm the guidance and add that we are actively monitoring risk factors that could materialize and that we will obviously prioritize the execution of our simplification and integration strategy. Asset quality is more or less what I mentioned when I presented the slide; there's not a lot more to say. Most of it is deterioration of loans with some form of guarantee behind it. B-ility is a big contributor. Builty was the small business MCC lending business of illimity. It's been placed in runoff. So we are managing the portfolio, and we are seeing flows to default that are typical of that type of business model, which historically Banca IFIS stayed away from and which, in illimity, we have placed in runoff. So, most of it is that. Guidance on the tax rate, I'm looking at the CFO. I think he's better placed than I to answer it. I give the word to Roberto Ferrari.

Thank you, Fred. Charlie Raine. Tax rate last year, we benefited from the patent box. So the tax rate was very low at around 30% this year, we need to take into consideration the increase in Europe for 2%, and not deductibility on negative interest rates for 4%. So, actually, we have a projection of a 38% tax rate for 2026. And at the same time, as we said last time, we have EUR 60 million of DTA that we should recover in 2026 when we merge with illimity at the end of the year.

Irene, your final question on the risk profile. I think you mean after the Ilimity acquisition.

Yes, correct.

So following an acquisition like that, a major acquisition, it is obvious that we would go through the combined entities' activities to reassess them and to realign them. Ilimity brings a significant long-term value to the group in terms of its specializations, especially in SME, and also the retail banking platform, which we didn't have anything that was closed, and that works very nicely also in terms of cheaper funding. I would say, if you look at risk, there are 2 things you should consider, I think, risk. One is complexity. So, being in businesses that are not typical of banks in our country, or owning assets that are not typically placed on the balance sheet of banks in our country. And the other is the actual risk. So the inherent risk in the assets that you hold. We are progressively executing a strategy to derisk both in terms of complexity. So the first type of risk I mentioned is in terms of the type of assets we want to hold. And as we progress, we will obviously monitor the CET1 ratio and the P&L impact of what we do in order to have a path that is manageable. I wouldn't call it anything extraordinary. I think it is quite normal if you make an acquisition of the type we made, right, that you reevaluate the businesses that were there. There was a lot of diversification in illimity also in things that are a bit further away from what we consider core. They had also, by the way, initiated a simplification already before the OPA, and we are fundamentally still executing that.

The next question comes from Simonetta Chiriotti with Mediobanca.

So, regarding the NPL, the project of establishing joint ventures had already been mentioned in the past. So, is it correct to interpret today's communication as an acceleration that could lead to an exit from this segment? And what could be the potential impact on the capital ratios of the group and on stand-alone profit in the last few years? So, in light of this, how do you see the guidance that you gave for 2, and also remaining on the NPL, looking at first quarter results, there is a strong reduction in revenues. You mentioned the focus on forward flow. I think that is something that characterized also previous quarters. So, if you could elaborate a bit more on the trend in revenues of this segment. And finally, in factoring, revenues declined by 9%, and the net profit of this segment is just 1 quarter, but also on factoring, could you comment on the fundamentals of this segment?

I had a bit of difficulty understanding you, but I think your first question was about the impact of this strategic review on the earnings contribution in the future of the NPL business. Well, as I mentioned before, I understand your need for facts and for clarity. The future role of this business will depend obviously on the business model that we choose. That's currently under review. So, towards the end of the year, we will have definitive clarity about what setup that is going to be. Obviously, we are searching for regulatory efficiency, meaning capital efficiency. And so we will see how we can construct that in the best way, both in terms of flows and in terms of the existing stock. So our preferred outcome would be to operate under a capital-efficient partnership-oriented model. Okay? That will be partially offset or maybe entirely offset over time by allocating capital and growth. That will be offset by proactively reshaping, towards growth in SME banking, and therefore, substituting that type of capital commitment with more SME-oriented typical, if you will, banking capital commitments. And the way that's going to pan out, I think it's a little bit early to say. You asked about the quarterly reduction in revenues. You noticed that there was quite a significant reduction. I would say it's a long-term trend. Once again, if you compare quarter-by-quarter and you go into the details, you're going to find that maybe in some quarters, you had the contribution of a portfolio sale, maybe in another quarter, you had the release of a new portfolio that you bought, and that gave you some upfront I think broadly, what we mentioned is what you should keep in mind if you think about future contribution of this business, expect in the next quarter, if I had to make a prediction, a gradual improvement of the economics. But the NPL business, and I think this is important to, I think, to put into perspective, the historical contribution of the NPL business in the golden years, if you will, of the bank is unlikely to repeat itself in the next couple of years. So also, if we think about what the consequences are going to be of substituting this business, we are not substituting something that would make the type of revenue contribution that it made in the past. Factoring, we see a certain contraction in terms of revenues year-on-year. Part of this is the base rate effect. In the first quarter of last year, we still had Euribor that was slightly higher. Part of it is a mix effect. So slightly more exposure towards slightly safer and larger corporates that pay a bit less. So the aggregate spread of that business has decreased a little bit. Part of that is the base rate effect, of course. If you look at the net revenues over the customer loans in the first quarter of 2025, it was 6%. Now it's 5.6%. Once again, it's a combination of the mix effect, client effects, and the base rate effect. Still a very healthy business. We have an average spread of 3.6% on top of the base rate plus commissions. So it's still a very, very healthy business, but slightly less than a year ago.

The next question comes from David Giuliano with Equita.

I have 3. The first one on the 2 assets that you want to divest in the second quarter, I mean, Aknetrix and Abilio. Can you give us more color on the 2 assets that you want to divest? What impact can we expect in the coming quarters? Are there any other assets that you are considering for disposal among the illimity non-core assets, and eventually, what is the expected time frame? The second one regarding asset quality. I was wondering if you could provide us with a comment on asset quality for SMEs right now? Are you seeing signs of significant asset quality deterioration in the early second Q? The very last one on the CET1 ratio, what do you expect at year-end on this front?

Thank you, David. Very clear. Yes. The 2 assets that we are in advanced negotiations about, I want to use the right words formally. One of them is a very competent servicer, but that is active in a type of NPL business that's different from what we did historically. The other is fundamentally a real estate agency business, so very different from what we normally do. It's quite a significant result if we manage to confirm these divestments. The 2 assets together in terms of net profit contribution, if you add them up, they're more or less neutral. So, we will not see a contraction of net profit due to the sale of those assets. They are quite significant in terms of size. The combined size of the 2 companies is roughly 250 full-time equivalents. If you consider that Illimity in total has about 630 now, the subgroup. You can appreciate that it is a very, very significant simplification of the perimeter of the group and of the complexity that we need to manage. Other assets that we're looking at some portfolios and we're looking at some specific assets. In general, we would comment on them when we are a little bit further in the process. So, I would maybe stop here and say that, yes, there are additional conversations going on on certain items, but we will make them apparent when we're a little bit further down the road. Asset quality deterioration outlook, yes, we get that question almost every time. So obviously, there's macroeconomic uncertainty. There's dislocation in terms of energy. There are 1 billion barrels of oil missing, even if the Strait of Hormuz were to open tomorrow morning. There are all sorts of raw materials that are experiencing stress levels in terms of availability; you would expect a macro impact. But at this stage, we don't have any signal, even in our forward-looking risk indicators. You may remember that we always put payment times, for instance, in the presentation, and it's all looking very normal and regular today. The only thing I would say is that it appears that companies are slowing down a bit on their CapEx decisions. We see it in leasing, for instance, since March, not quite clear whether it's fiscal tactics as they wait for certain laws and regulations to become clear, or whether it's general uncertainty and postponement of CapEx decisions. But we see a bit of slowdown in terms of long-term lending and capital expenditure. That's basically it. Typically, there's a time lag before these macro items materialize and before they impact your balance sheet. I think we can say a bit more about it in Q2 and Q3. Definitely, we are taking a cautious and prudent approach to the outlook. And I would stress that it may become necessary to have more provisions in the coming quarters than what we've seen in the last quarters. Finally, the CET1 ratio, I'll give it to Roberto.

Thank you for asking, Davide. We do expect our CET1 ratio to land between 13.5% and 14% by year-end. We also need to consider the usual seasonality on our loan book, mainly factoring in that we have at the end of the year. I also underline the fact that our last quarter is richer in terms of profitability compared to the previous 3 quarters. So, actually, it is normally linked to growth in loans at the end of the year. Thank you for asking.

And just a follow-up on DTAs. Do you expect DTAs to write up, let's say, in the third quarter or in the fourth quarter?

We will book DTAs when we complete the merger with illimity, so the full integration and it should be in the last quarter of the year.

[Operator Instructions] The next question is from Giuseppe Grimaldi with BNP Paribas.

I actually have 2 questions. The first is around the trajectory of the NII. As far as I understand, this quarter has been impacted by the lower, let's say, performance of the NPL business. So, I would like to understand what we should expect in the quarters to come in terms of NII progression, also on the back of the most recent rate movement. The second question relates to the 2027 guidance that you gave at the time the deal was presented. I know it's pretty early days, but do you still feel comfortable confirming that kind of outcome for '27? Maybe just a third one, which is around the capital allocation. You said clearly that you want to prioritize capital allocation outside the NPL business. What is basically the main business in which you want to allocate capital? Is it at the moment, the main alternative you have, corporate lending, or are you thinking of something else?

Thank you. So the NII trajectory is going to be impacted by a couple of things. One is a little bit of funding benefit that we showed on the slide. So we expect that to help us. The second is a little bit of Euribor sensitivity. We've seen some increase in the base rates given the macro situation. So these are pluses. We hope to have a little bit more contribution on the NPL side also in the next quarters, not something that is going to be materially different, but a little bit more would be nice. So I would imagine a slightly improving NII path going forward. In addition, obviously, the other contributors to the P&L. In terms of 2027 guidance, yes, it's a bit early days. Now, first of all, I would reunderline that the external environment has become a lot more uncertain with implications for volumes and asset quality, especially when we get to 2027. The second thing I would underline is that we have initiated the strategic review of the NPL business, right? So we are assessing a range of options. And before we know how we land there, it's going to be hard to have a firm understanding of the 2027 profit contribution of that business. We note that analyst expectations have become a lot more cautious. So we are now seeing a cluster around roughly EUR 190 million. We would agree that caution is reasonable. And so, in confirming the synergies, as we presented them previously and reporting that we are happy with the progress on the integration, this is, I think, as much as we can say today in 2027. We will revisit the numbers when we have clarity on the business setup and on the perimeter of the group. Finally, capital allocation. Yes, if we were to free up capital from the NPL business, we would have some available. In that case, I think we could definitely see a number of specializations in terms of SME banking, where it's worthwhile to do it. Generally, I think we would be looking at types of businesses where specialization matters. Spreads are important, and where you don't compete with the large institutions on the cost of funding. Because on that item, obviously, we wouldn't be the best player. So, this is probably the way we're thinking about where to allocate capital. And then obviously, when we write the business plan, there will also be maybe some thinking about new businesses to enter and new things to evaluate.

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

Well, thank you very much. Thanks for your time and attention. We will see you with the 6-month results in early August. And in the meantime, I wish you a pleasant afternoon and a good evening. Thank you all for your time and attention.

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