Banca Mediolanum S.p.A. (BMED) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Banca Mediolanum 9 Months 2021 Results Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Alessandra Lanzone. Please go ahead.

Hi, everyone, and thank you for joining us today at this meeting. The presentation of the 9 months results will be led, as usual, by our CEO, Massimo Doris; our CFO, Angelo Lietti, will join in during the Q&A session. [Operator Instructions] So now I would like to leave the floor to Massimo. Thank you.

Thank you, Alessandra, and welcome, everybody. If at the half year point, we talked about our best quarter ever in terms of top line, today, I have the pleasure of confirming a reliable growth in our revenues, with an increasingly healthy contribution margin quarter after quarter. This is the result of our ongoing effort in broadening the base of our revenue streams, leading to a consistently strong operating margin. As you can see Slide #5, our net income reached EUR 375.8 million for the first 9 months, a notable result building consensus by a touch and the first 9 months last year by a clean margin, 50%. The income statement was solid as a whole. Sure, we had a nice contribution coming from the SIA shareholding value. and a favorable comparison versus last year. However, what continues to show staying power is the operating margin, which came in at over EUR 379 million, up 20% year-on-year and 11% quarter-on-quarter, demonstrating our capacity to produce sustainable growth over time. The contribution margin of EUR 905 million followed from the robust gross commission income at nearly EUR 1.3 billion, up 17%. Entry fees increased 11% on the back of higher volumes of flows into mutual funds. But it was mainly the recurring fees that were responsible for this superb achievement, with management fees growing 19% to EUR 928.5 million, some EUR 150 million more year-on-year and investment management fees increasing 22% to over EUR 142 million, thanks to strong fund flows and friendly markets overall. And basically, with no material change in profitability despite the rather declining of basis points over time, a trend we've discussed with you numerous times. In fact, in Slide #7, please note that the commission income from recurring fees of nearly EUR 1.1 billion in the first 9 months was stable all year long at 206 basis points on average assets and down 1 basis point since the end of 2020. This is attributable to the continuing success of the intelligent investment strategy program over the past few years and the increasing impact in the mix of the class of funds with lower management fees, which is a natural phenomenon since the other class of funds with higher management fees was taken off the shelf 3 years ago. So let's go on with gross commission income, looking at net insurance revenues. The strong increase of 27% is largely due to general insurance protection policies, which showed a 26% increase in gross premiums with stand-alone policies up 32% as you can see in Slide #15. Spain also made a notable contribution with an increase of EUR 4 million in unit-linked policies. Banking service fees, on the other hand, were down 2%, mainly due to lower fees from the German ATM business, which is being run off. Moving down the income statement, let's address acquisition costs, which rose 19%, perfectly in line with the higher management fees income as well as insurance revenues, both in Italy and Spain. Also consider that higher managed assets component of our flows up 56%, which is no small thing, translates into higher incentives as a matter of course. And just a record on other commission expenses, up 29% given the substantial increase of the average assets in the Ireland-based funds and also in part due to the performance fees provisions recognizing the good performance of the third-party asset managers. Net interest income totaled almost EUR 197 million, up 11%, therefore, higher than the slight increase we expected as a result of a few different factors. First of all, a lower retail cost of funding versus last year, which was impacted by the 2% time deposit. Although this comparison started to attenuate in Q3. And then we have a higher interest income originating from our growing credit book, thanks to our lending volumes in Italy and Spain. These 2 factors together effectively counterbalanced the lower yield on treasury activities. Net income on other investments were largely in line with the first 9 months last year, with slightly higher impairments on loans coming in at EUR 17.6 million, following the growth in our credit book. I assure you our commitment to credit quality continues to be solid. As you can see Slide #13, with an NPL ratio of 0.76% net at the group level or 1.38% growth and the cost of risk that we estimate as some 20 bps for year-end. Going back to our P&L, you can clearly appreciate the endurance of our contribution margin, which went up consistently quarter after quarter, registering a 14% growth year-on-year and reaching EUR 905 million. Our revenues increased at a much higher rate than our costs, having a positive jaws effect on operating margin, which went up 20%. In fact, the cost-income ratio normalized by excluding market effects from the calculation, went down from 54.5% in 2020 to 50.1% for the first 9 months, below our target of 52.5% for full year 2021. In terms of provision for risk and charges, be aware that the growth of the assets in the Family Bankers portfolio created a greater base on which provisions are calculated. Now let's move down the income statement and take a look at market effects, which were significant compared to last year at almost EUR 108 million. However, if we focus on just the third quarter, the positive contribution of performance fees was almost entirely offset by the fair value line item. In fact, the shareholding in SIA that was revalued in H1 had a mark-to-market reduction in Q3 due to the substantial drop in the Nexi share price. So let's move to Slide #9, illustrating assets under administration and management, up 11% since the start of the year. Last June, we exceeded the milestone of EUR 100 billion, reaching EUR 102 billion. And by the end of September, EUR 104 billion. This gain was entirely due to our strong net inflows since the markets at the end of Q3 didn't help at all. In fact, as shown in Slide #11, the EUR 6.4 billion in total flows we achieved in the first 9 months were remarkable, particularly because over 72% went into high-quality and high-margin managed assets, bringing managed inflows to an extremely valuable EUR 4.6 billion at the 9-month point. But the true value in this number is that more than 90, 9-0, per cent of the fund flows so far this year are committed to equity investments directly or indirectly through intelligent investment strategy, where there are EUR 4 billion sitting in money market funds waiting to be shifted into equity over the course of the next 4 years. And since we are on the subject, be aware that our other automatic investment services continue to feed EUR 280 million into equity every month, through both installment plans and double channels. In the meantime, total net inflows already surpassed EUR 7.4 billion by the end of October. As you can see Slide #37, hitting EUR 5.2 billion in managed assets, an automate increase of 66% compared to 2020. also thanks to a significant growth in the private and wealth segments. And in addition to this, our lending business continued at a good pace in these first 10 months, bringing total loans granted to customers to nearly EUR 3.2 billion, up 29%, already passing the record for the entire year at a 10-month point. Meanwhile, inflows into general insurance premiums grew 24%, surpassing EUR 134 million, of which over EUR 21 million into new business of stand-alone policies up 15%. Now moving over to capital ratios for the banking group. Let's take a look at Slide #16. The common equity Tier 1 ratio at the end of September kept a very high level, coming up at 20.4% after the capitalization of only EUR 37 million for the first 9 months net income. We have repeated many times over the past year that we would go back to paying an interim dividend as soon as the dividend ban was lifted. And finally, we are able to do so. In fact, as you can see Slide #17, I'm pleased to announce that the Board of Directors has resolved to distribute an interim dividend of EUR 0.23, which corresponds to a payment of EUR 169 million, bringing total dividend per share paid in 2021 to EUR 1.01. Now let me quickly address a few points regarding our network in Italy. Looking at Slide #32. I'm pleased to share with you that we reached a total headcount of 4,252 Family Bankers already surpassing our goal for the entire year. This is attributable to the recruiting of 221 Family Bankers in the first 9 months and includes 13 new recruits from the project called Next, who are already actively working. We are definitely seeing signs of the success of our targeted recruiting approaches. Our Family Bankers average portfolio reached EUR 22 million at the end of September. And please take note that advisers with more than EUR 20 million in their portfolio increased by 5 percentage points in 9 months, reaching 43% of the network. Remember that just 10 years ago, this segment stood at 6%. The quality and productivity gains we have made over the past several years are evident and paying off. But I would really like to highlight the substantial increase in the number of private bankers and wealth advisers, now totaling 635 or 91, 9-1, 91 more advisers compared to the start of the year, as shown in Slide #33. Moving over to Spain on Slide 35. As most of you have noted, 2020 was a very good year for the business, and 2021 has not let up at all. In fact, the business in Spain is becoming very important to us, with a net income totaling EUR 25.7 million, 44% ahead of the 9-month point last year. Spain progressed all the way down the line with total assets reaching nearly EUR 8.5 billion, a solid gain of 18% since the start of the year, and with assets now over EUR 6 billion. The inflows in Spain kept up the pace of the domestic business, reaching EUR 961 million for the 9 months, nearly EUR 677 million of which emerged assets, up 36%. The lending business also continued to gain traction with the credit book heading EUR 971 million, an increase of 30% since the start of the year. The network saw a strong move up of 10% in headcount since the beginning of the year, reaching 1,445 Family Bankers. Our special interest is also the number of customers in Spain, which increased by 14% since the beginning of the year, reaching well over 179,000. So now I'd like to give you an update on what's going on over here in the world of Banca Mediolanum. Starting off with Flowe. You know we've been recognized as a game changer in the area of front-end design and user experience. And on top of the awards we've already received, the Industrial Design Association included Flowe in their 2021 Design Index, leading us on the short list of the Italian Compasso d'Oro, one of the most celebrated design awards in the world. As you know, Flowe set 2 objectives for 2021. One, to concentrate on the building up and activation of the mass of customers we were able to attract in just a few months in 2020; and two, to broaden the offer of banking services. As a matter of fact, activated users have already tripled since the beginning of the year. which is just the sign we were looking for. And now we are about to launch a number of new services that will push this trend forward, such as, for example, Flowe Jr. which was introduced at the end of October and will be advertised on addressable TV starting this weekend. This new prepaid card designed for teams between the age of 12 and 17 is not just any card. Like the classic Flowe, it's fast, safe and green. But the plus of Flowe Jr. is that the parents have the full control of the account, and this is a valuable feature given the age range. These young teens can receive, pay and withdraw cash even when they are abroad. And the parents can top up the card when they want to, set up an automatic allowance, follow the transaction and set spending limits, each from their own app, but everything is under parental control. So this is our Flowe right in line with our underlying mission, works in tandem with parents in educating their children about the correct use of their money and the building of savings approach in a manner that is not only safe but also a lot of fun. In the first part of December, we will also add the flex profile to the current offer of the fund and friends profile, which has a fee of EUR 2.5 per month, providing an intermediate option. We will also be introducing instant credit as well as the possibility to deposit cash and in a bit also withdraw cash at authorized retailers like tobacco and betting shops. And lastly, Flowe adopted an innovative marketing automation platform designed for the mobile experience, which allows highly targeted push notification. And I guarantee you that we are working on some exciting new features for 2022. And on that, more on that later. Before closing, we do have some additional news to share with you. First of all, as many of you already know, having surpassed EUR 30 billion in bank assets to be specific, EUR 36 billion, we have been recognized as a significant bank and will be under the authority of the ECB no longer of the Bank of Italy starting in 2022. Another bit of news you've probably heard is that Banca Mediolanum entered the MIB ESG index. The new environmental social and governance index launched October '18 by Euronext and Borsa Italiana. The index includes a ranking of the top 40 companies based on ESG criteria according to analysis conducted by [ video Ares ] a company of Moody's ESG solutions. The index represents a fundamental contribution to the growing demand for sustainable investment. And I'd like to quote our Chief innovability and Value Strategy Officer, Oscar DiBontini, who I believe perfectly sum up our sentiment. Being sustainable is a concrete commitment for Banca Mediolanum that is integrated into all of our actions, starting from our strategy based on economic responsibility and responsibility to our customers, employees, the environment and the community. We've been on this path for a very long time. And now being recognized among the top 40 companies of the Italian ESG index is yet another confirmation that our pledge to human lovability will allow us to make strides as a conscious innovators. In other words, innovators who use intelligence to not just grow but to innovate humanity through an entrepreneurial mindset, a social spirit and an eco-friendly soul. Last but not least, in the extraordinary shareholder meeting last week Ennio Doris, my father, was appointed Honorary Chairman of Banca Mediolanum. This followed his leaving the role of Chairman last September. Although some proxy advisers had voting instructions to the contrary, we believe that the appointment is an appropriate recognition of the founder of the company. It is not irrelevant that the number of shareholders expressed a similar and very consistent sentiment at the AGM regarding the professional profile of Ennio Doris which is particularly pertinent given the distinctive characteristics of the bank as well as concerning the governance since this role as defined in the administrative report would not result in any undue influence least of all to the detriment of the minor shareholders. Let's remember what we did with Lehman Brothers. So while I think this summarized the quarter very well. So now let's move to the Q&A session. Thank you.

Thank you. We can now start the Q&A session.

[Operator Instructions] Questions will be recorded. Domenico Santoro, HBC has the first question.

This is Domenico from HSBC. Two questions. First one is about the pay out and the capital you have considered for this year? And the second question is the margin that is growing in the fourth quarter, quarter-on-quarter, which is essentially due to higher lending volumes. Could you please give us a little guidance as to the upcoming quarters and next year? Please.

As to payout, we considered to provision EUR 0.46 for 2021. -- This is in line with the dividend policy that we started, but was then interrupted or actually brought to a sudden hold by the dividend ban, but our payout policy is based on an intention to pay a higher and higher dividend year after year, so increasing the cents we pay out every year. This year, we would like to pay out at least EUR 0.46, so EUR 0.23 will be paid out now in November as resolved upon by the Board of Directors, and EUR 0.23 more will be the balance dividend that will be distributed later on. Of course, if income and performance fees are -- Please consider that at present, in the quarterly report, we have already recorded EUR 33 million performance fee, an additional EUR 330 million is the additional performance fees potential. But as you know, those EUR 330 million could go up to EUR 400 million down to EUR 100 million or go down to 0 between now and the end of the year. If this EUR 330 million are confirmed, we may think also of something more, meaning distributing a little more, but it's too early right now to say so. But like I said, EUR 0.46 is what we are going to -- is the minimum we are going to propose and submit to the next shareholders meeting. As far as NII is concerned, the interest margin is concerned, growth is due to 2 factors, to 2 main factors. Number one, the cost of funding turned out to be lower than last year. And the second thing is this, there was an increase in retail inflows, in retail volumes, which compensated for lower treasury activity and also lower activity by the retail book because interest rates have steadily been declining. So also the retail loan book is less profitable, but we increased volumes so much that we managed to compensate for that effect. Next year, we expect NII -- a stable NII in line with 2021. Do you want to add something?

May I May I ask a follow-up question on the dividend just to avoid any misunderstanding? So next year, in 2022 and then in 2023, do you expect it will still be growing? I mean, are we actually expecting an ascending, an increasing dividend? Or you are just paying out a hefty dividend this year to then cut back on it next year?

Well, as far as the base dividend is concerned, this year, it's going to be EUR 0.46. Last year, it was EUR 0.44. But you know it's difficult to compare these 2 base dividends because a lot happened in between the 2. In 2022, it's probably going to be EUR 0.48 and so on. So the base dividend will steadily keep growing. If the -- if a given year, we will close the year with a very high net income because of a given favorable market effect as it happened in 2019, we may decide to pay out a special dividend. So say we distribute an additional EUR 0.10 special dividend, then it would be rather natural, it would be rather natural, as I was saying, barring special market conditions that would account for a very special and high net income, we may decide to just downward the base dividend if we pay out a special dividend. So we will have to adjust to market conditions as well.

Please consider that in Slide 60, we have illustrated exactly the concept that Massimo has explained right now, where you can see that the base dividend is meant to steadily grow year after year, while the special dividend as the word says, it's going to be special. So we can move on to the next question.

Next question, Gian Luca Ferrari, Mediobanca.

Masimo, first question. The share in Nexi, what is the mark-to-market of the fourth quarter to date? I think there is still a minus EUR 10 million mark-to-market. In the past, you showed that you focused on trying to smooth out volatility on your income statement. Are you planning to do something on your Nexi share in order to curb this level of volatility brought about by the mark-to-market of the shareholding? Second question, Spain, once again, very good results. In particular, there has been a EUR 2.5 million difference between the results in first quarter and second quarter, a positive difference. Maybe you talked about this, but I didn't hear it. What is the reason for this positive jump in Q3 in Spain?

As far as market effects are concerned, let me answer. We don't have Nexi shares. We have SEA shares. We hope we are going to have them by the end of the year. Once we are going to hold the shares, I don't think we will keep them -- we will keep holding them in our portfolio because based on our treasury, these are nonrecurring investments within Mediolanum. In today's values, we expect to have a minus EUR 8.5 million reduction in the fourth quarter.

As to Spain and this positive jump with respect to net income in the third quarter, this was due to performance fees and also it was a result of good management. There were very good inflows and an increase in assets under -- in assets.

Elena Perini, Intesa Sanpaolo.

I have a couple of questions. The first one is about renewed guidance. You may want to share with us as far as asset management is concerned. I see that managed assets are performing very well. So between now and the end of the year. And considering also the seasonality effect of both November and December, I'd like to know whether you can share with us your opinion and what you expect for next year. Then I have another question about CET1. Maybe you talked about it earlier, but I had to disconnect, and I may have missed the answer. There was a decline between June and September. And I'd like to know whether you could shed some light on it, please.

I'll take your second question first. CET1 declined because we provisioned or better, we capitalized only a small portion of the 9 months' income because we have already considered EUR 0.46 dividend, or at least EUR 0.46 dividend to be paid out in 2021. So we have already accrued and set aside that amount. So if we pay that amount, CET1 would go to 20.4% in Q4. So that is the reason because we have set aside the dividend to be paid out. As far as net managed assets are concerned, your first question, barring negative surprises, I believe we'll cross the EUR 6 billion line. We will be well above EUR 6 billion next year and the target for next year will be at least just as much. We want to replicate with the result. Once again, we have to consider markets. Markets may be favorable. And if they help us achieving the EUR 6 billion mark next year as well as within reach, should markets crash or plummet, of course, inflows would be negatively impacted. But all else being equal, I believe that our objective is at least make as much as we've done this year. So replicate the same results. Most likely will exceed EUR 8 billion total net inflows. This year, we are at the BRL 7.4 billion. We reached EUR 7.4 billion at the end of October. So in 2 months, it should be really doable to make an additional EUR 600 million. And like I said, EUR 8 billion for total inflows and EUR 6 billion instead in terms of managed assets.

Giovanni Razzoli, Deutsche Bank.

I have some follow-up questions. Just a clarification. You have EUR 230 million to date with respect to performance fees. Is that regarding the end of September or already end of October? Second question. With respect to the dividend policy, Mediolanum's is the most attractive and appealing within the Italian banking system. You said you start from a base dividend of EUR 0.46 and maybe you're going to scale it up. But the leverage ratio is what really is important to value a company such as yours and you are sitting really on a lot of equity. So in the longer term, I'm not talking about 2022 or '23, how would you employ this capital? Because if you keep on this profitability, this is going to erode returns. So what are your plans with respect to this evolution? Then on Page -- on Slide 32, you showed a very marked improvement on your Family Bankers profile, where the average assets under management are more than EUR 20 million. Do you think that this trend is going to continue, and recruiting is going to remain the same also in 2022 so that you are going to recruit once again some 200-and-odd Family Bankers?

First question, performance, EUR 330 million, not EUR 230 million. EUR 330 million, like this is the latest data, 330 million that should the year end today, we would be able to cash in. I'm talking once again about EUR 330 million. As to your question on Family Bankers. This average portfolio of EUR 20 million, it was EUR 8.6 million back in 2011, so much, much lower. And the 43% of Family Bankers with more than EUR 20 million worth of assets under management. In the past, they would -- 10 years ago, they would account for only 6% of the network. This was not a result we achieved by chance. It was a target we had set for ourselves. We wanted to improve our network's quality. We wanted to improve also the level of our average customer and so on and so forth. So I believe this trend is here to stay. The percentage of Family Bankers who are going to manage more than EUR 20 million is going to grow. There is no doubt about this. And also with respect to recruiting, more than 220 new Family Bankers joined our network. So the target is at least to replicate the same development last year, but never to the detriment of quality. We -- last year and this year, as a consequence, I mean, it was implemented this year, we have revised our recruiting selection process, and we are now it's now bearing fruit. So we are increasing the number of family bankers in absolute terms, and also their quality is increasing likewise. And again, the same trend is going to keep on and continue also in the future. Again, talking about leverage ratio, dividends and capital. Let me hand it over to Mr. Lietti.

Yes, I would also like to spend a few words on performance fees, just to demonstrate how volatile this data is. We had EUR 190 million back in 30th of September. Now it's EUR 330 million. So you see that it took just a few weeks to really go up steeply. EUR 190 million is what you're going to find in a 9-month financial statement. As to capital ratios, leverage -- the leverage ratio is one of the capital ratios. But considering that Banca Mediolanum is now going -- is now a significant bank, in addition to these rep indicate ratio that is 12.2% for 2020, which should be confirmed also for 2021. The Board is going to provide us also the MREL indicators. Fineco has already received this guidance. The MREL limit is above 20%. So what our CEO was saying before, based on our view, is that there is the possibility of growing dividends over time, thanks to our business year after year. Now we are waiting to see the new MREL ratios to see what we want to do with the capital we are sitting on, as you said. But we can certainly say that the base dividend growth is confirmed also for the coming years.

Let me add that as our history shows, we've always been rather generous with our shareholders. Considering that my family is the main shareholder, and the other large shareholders Fininvest and we were always happy that dividends were distributed. But in addition to considering dividend distribution, we also take into due consideration the possibility of making it a sustainable process so as to be able to keep on distributing in the future. So within our dividend distribution choices, one thing is rewarding shareholders, but never to the detriment of the future sustainability of dividend distribution in the future. As our CFO was correctly saying, we are going to be notified a given MREL target. So before saying we are going to distribute a percentage of capital we have -- because we have an excess capital, we want to see what the MREL limit is. MREL can be achieved not only through core capital, but also through other instruments. So we're going to make all the necessary assessments. If we take a look at rep only, every year, they add something to it. So we always have to consider -- to have a forward-looking view. But one thing is certain. If we can distribute dividend without eroding the bank's future, be assured that we are going to distribute dividends.

Luigi De Bellis, Equita SIM has the next question.

I have 2 questions. First one, could you please provide some indications concerning the banking service fees for the fourth quarter and 2022 and also acquisition costs expected in the fourth quarter? Also, do you think that the ECB supervision would imply additional constraints or stricter capital ratios, higher ratios maybe, now that you are under the ECB supervision?

I'll take your second question first. In theory, there should be no difference with the exception of MREL, which nonetheless, is tied to the single resolution board, but the big change is represented by the fact that we have been classified as a significant banking institution. All the rest, I really don't expect major changes as far as the rest is concerned. Acquisition costs are entirely dependent upon volumes. So looking forward -- and maybe we can also take a look at the last quarter later. But looking at next year, I think that if we achieve the objective of having inflows, at least the same as the one reported in 2021, then acquisition costs are going to be same as 2021 or better said, higher because acquisition costs don't only depend on inflows, but also on managed assets. And next year, managed assets are going to be higher than this year's managed assets. And as a consequence, acquisition costs, since we pay out management fees, will be on the upswing. We don't expect, we haven't planned any change in the network payout. We will not change that. So any payout will only be tied to an increase in volumes. So why don't you answer the other question?

Yes. As far as the quarter is concerned, we have EUR 4.6 million in the third quarter, and we don't expect major changes quarter-to-quarter as far as the banking service fees are concerned.

I believe that the banking service fees may be kind of disrupted or made more volatile, but the sale of certificates. So depending on how markets are faring, depending on how interest rates are faring, we may try and place, try and sell certificates, so they turn out to be more or less appealing. So that sell well or less well. But quarter-on-quarter, I believe that the delta is really negligible. Yes, I was taking a look at our international business, seems to be like EUR 30 million contribution there.

There are no other questions from the Italian channel. I hand it over to the English operator. [Operator Instructions] Your first question comes from the line of Hubert Lam from Bank of America.

I've got 2 questions. Firstly, on NII, maybe I missed it, but can you give us your -- again, your guidance for this year? Is it still -- do you still expect NII to rise 5% this year? And I think you also said that for next year, you expect it to be stable on the 2021 number. Can you just confirm if that's the case? And the second question is on cost income ratio. I think you said within the first 9 months, the cost income ratio is around -- cost income ratio is about 50%. It's below the guidance you gave last time of 52.5% for the year. Just given that the strong results so far year-to-date, do you expect the cost income ratio now to be below your 52.5% that you originally guided for?

As to net interest income, we expect to have a 7% increase by the end of the year. Now it's EUR 11 million. And compared to next -- to last year, it's going to be 7% more. As to cost income, 50.1% right now, so well below the 52.5%. From 50.1%, it might slightly increase during the last quarter. But for sure, it's going to stay below 52.5%, that had been our guidance at the beginning of the year. I don't think it's going to go below 50%. That would really be unlikely. But we are always talking about a cost income ratio, excluding market effects. If we include performance fees, then it's going to dip down.

Your next question comes from the line of Angeliki Bairaktari from Autonomous Research.

Just a few follow-ups from my side. First of all, could you please explain what were the $4.9 million extraordinary items that you saw in the third quarter? Then second question, could the fact that you're now supervised by the ECP change anything with regards to governance and sort of the ownership of the group? And third question, I think you made some comments at the press call earlier today with regards to an approach by Mediobanca where you mentioned according to Bloomberg that you were approached and that you rejected their offer. Is that something that you could consider over the medium term? Or is that something that sort of the current ownership doesn't really envisage for the future either.

Again, I will take your second question first. We don't expect any governance change or any reshuffling in the bank's organization because now we report to the ECB. As far as Mediobanca, in press conferences, in every single press conference, we are asked a question about Mediobanca. This time, they asked me whether Mr. Nagel had called me up to propose a merger -- to propose to merger with Mediobanca. I met with Nagel frequently in the past. We haven't met any more since COVID broke out. We may have spoken over the phone once maybe. So a year ago or even longer ago, we actually -- he actually mentioned the -- how opportune and how fitting a merger between Mediobanca and Mediolanum would be. I thanked him for having considered Mediolanum. I was very happy with this. And I really appreciate what he did and he's still doing for Mediobanca. We are very happy, Mediobanca's shareholders, because we are cashing in hefty dividends. But I explained to Mr. Nagel that even though on paper we dovetail, this is something that does not reflect my vision as the main shareholder, the major shareholder and the CEO of this bank. I'd rather have this bank stay focused on its business, which is managing assets. So I did thank him, but turned down the offer. I said, no. And in the medium term, I'm not going to change my mind. I cannot say I will never do that because, in the future, things may change. But I can say with a lot of peace of mind that both in the short as well as in the medium term, I'm not going to change my mind.

Well that amount of money you asked about is the nonrecurring item was the contribution we provided to bail out the Bank of Bari. This is not the run-of-the-mill contribution we pay to the banking system. This was a nonrecurring contribution to bail out Bank of Bari.

There are currently no question on the English call. I will hand it back to the Italian operator, Barbara. Please go ahead. We have no further questions. I hand it over to Mrs. Lanzone.

Fine. So let me hand the floor to Massimo Doris for his final remarks.

Well, we can say these 9 months have been very good. They were excellent, operating margin grew by 20%. So a very positive period. The business performance has been really very good. So this year, I expect to end the year with historical record in terms of total inflows, record in terms of managed assets and also a historical record in terms of loans and in terms of protection insurance premiums. These are 4 items that are really under our control, our -- within our reach, and we believe -- I believe we are going to make it. As to the historical record of net income, this depends on the market, too. And so we hope we're going to celebrate this record as well.

Thank you, Massimo. Have a nice evening. We'll come back on February 10 when the results for financial year 2021 are going to be published. Thank you. Good evening.

Ladies and gentlemen, thank you for taking part in today's conference. You can now disconnect. Thank you.