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

Good day, and thank you for standing by. Welcome to the Banca Mediolanum H1 2022 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alessandra Lanzone. Please go ahead.

Good afternoon, everyone, and welcome to the presentation of our half year results for 2022. Massimo Doris, our CEO, will be leading the presentation today; and Angelo Lietti, our CFO, will be joining us during the Q&A. As usual, make sure that you ask your questions in the language you're connected to -- of the language line you're connected to. Either way, answers will be in English within -- sorry, in Italian with an English translation. And now Massimo, would you like to start it off -- start us off?

Of course. Thanks, Alessandra, and thanks, everyone, for taking the time out of your schedule to follow us today. So we're here to take a look at the first half year, a tough 6 months for sure, with market performance, depressing assets and a geopolitical backdrop creating uncertainty jitters for everyone. Yet, we were able to confront these adverse conditions extraordinarily well. Demonstrating an unmatched strength in delivering business performance, thanks to our effective investment strategy, automatic investment services and most importantly, the close and reliable relationship we have with our customers, who we've educated over time to beyond market declines. In fact, looking first at the business result highlights in Slide #4, we see that despite the market AUM decline, the harsh macro landscape had a negligible impact on our flows. Indeed, the FTSE MIB dropped by almost 22% in the first 6 months. The EURO STOXX 50 and the MSCI World tumbled by 20%. And even the Dow Jones was down over 15%, throwing off the business performance of all banks and networks with managed assets flows of our peers in Italy, falling significantly compared to H1 last year, down 61%. And yet, our inflows into high-quality managed assets came in at EUR 3.12 billion entirely into equity funds, declining only 5% versus our record H1 last year, with total net inflows reaching EUR 4.5 billion, down only 7%. At the end of the day, Banca Mediolanum repeatedly set itself apart. Thanks to a consistent staying power regardless of what's happening around us. Our outstanding flows into managed assets made it possible to moderate the effect of market shocks on our assets in the first half. As you can see Slide #15, total assets dropped in value, EUR 7.6 billion versus an actual EUR 10.7 billion due to market effects alone, remaining above the psychological threshold of EUR 100 billion, ending up at EUR 100.75 billion with a decline of 7% since the beginning of the year. To the contrary, thanks to loans granted, which came in at EUR 1.91 billion, making the same strong strides at H1 last year. Our credit book grew 7% year-to-date to almost EUR 15.4 billion as a result of our unswerving commitment to serve our customer base made up of households. Accordingly, our credit book quality continues to be very high with an extremely low net NPL ratio of 0.72% and a 12-month rolling cost of risk of only 10 bps. And lastly, we've maintained double-digit growth in our general insurance business with a 14% increase in gross premiums. As you know, we have a particular focus on stand-alone policies with annual premiums, which by the way, has the benefit of both high margins and modest capital requirements. As you see in Slide #5, our strong business results helped our economic performance in H1 this year more than ever. The net income of EUR 237.9 million, down 11% is a little bit misleading regarding the health of our other business, which was impacted by the drastically different dynamics in the year-on-year comparison in the market effects line item. In fact, our recurring business was not just solid, but truly striking and is well illustrated by the contribution margin, which was up 13%, but even more so by an unprecedented operating margin, up 25% to EUR 307.5 million. Thanks to an all-time high Q2 following a record Q1, showing just how efficient our core operations are. The only drawback on our P&L therefore is market effects, depressed by an unfair comparison to last year when we recorded a sizable one-off gain in fair value. But what is for certain is that we have a revenue stream that is reliable and substantial. First and foremost, a solid net commission income, up a healthy 8% to EUR 513 million, highlighting a positive progression in our core business, despite the market hurdles with recurring fees that reflect resilient average AUM, still above our record year 2021. Needless to say, our robust flow dynamics will support fee growth in the long-term. Furthermore, what comes as no surprise, a very strong net interest income, up 26% to nearly EUR 164 million. Thanks to the positive interest rate environment. Clearly, there was a stronger acceleration in NII than was projected. Thanks to, first, a better than expected yield on rolled over maturities. Second, the front-loading we carried out in Q1; and 3, the strong sensitivity to rates in our portfolio. And so net interest income at the end of 2022 is expected to benefit from a similar growth rate as in H1. And finally, a positive 3-month Euribor sets the stage for further growth of interest income from our retail credit book, which is mainly made up of viable rate mortgages and loans. And as such, we are now guiding a further increase in NII of about 25%, 30% in 2023 based on today's rate and not on the forward curve. Of course, in case of further increase of our interest income, we may consider raising the interest rates paid on our customer deposits, depending upon how the competitive environment shapes up. As you no doubt appreciate our diversified revenue stream is fueling our operating margin and is growing at a quicker pace than our expenses. Our cost/income ratio remained well under control at 49.1%, reflecting a cost base that was seasonally low in Q1 and back to normal in Q2. Our commitment to keep our cost/income ratio around 50% continues, and we are working to design it. The payout ratio to the network was fairly steady. Don't forget that due to seasonality, this ratio always increases toward year-end. Please note that the recurring fees margin was unchanged quarter-on-quarter at 203 basis points. As you see now this slide, since, ur customers do not shift around the asset allocation according to market flotation. Now let's switch gears from the income statement to the balance sheet in Slide #6, where we see a healthy and resilient CET1 ratio of 21.1%, compliant with MREL target for 2024 of 20.27%. Our leverage ratio of 6.1% is well above Basel III requirements. And here too, we are already compliant with MREL policy targets for 2024, namely 5.33% on the leverage ratio exposure. Finally, I would like to point out a few figures in Slide #7 that represent our principal growth and resilience drivers. First and foremost, our ongoing effort in customer acquisition resulted in a further jump of 91,700 new customers acquired in the first half. Thanks in part to the success of the Selfy account with some 11,400 new customers, and this led to an increase of 4% in our total bank customers to over 1,642,500 with a very high retention rate of 95%. And now let's turn to the network numbers. The growth momentum remains strong, bringing the total of Family Bankers at the group level to 5,947 at the end of June, an expansion of 3% since the start of the year. Lastly, let me talk about our automatic investment services. Just so you know, we now have EUR 4.37 billion parked in the money market funds of the intelligent investment strategy. Please note that the numerous automatic step-ins to equity funds in the first half reduced the level of the money market funds. On top of this, there are EUR 1.53 billion in the deposit accounts of Double Chance. The total between the 2, of almost EUR 6 billion is earmarked to be transferred to equity funds over the next few years on a monthly basis. On top of that, in the first half flows into installment plans reached a total of an additional EUR 1.6 billion annualized. And now let's take a quick look at our business in Spain in Slide #37, which is increasingly becoming a substantial contribution to the group's bottom line. Spain registered a robust net income in the first half, coming in at EUR 19.7 million, a strong increase of 28%. Total assets were down slightly at EUR 8.6 billion with net inflows into managed assets remaining strongly positive at EUR 402 million. Just like in Italy, we had some rather impressive increases in Spain since the beginning of this year with a credit book up 10% to EUR 1.13 billion. Family Bankers up 5% to EUR 1,586 million, and customers up 7%, quickly approaching the 200,000 mark. As you can see Slide #39, business progressed extremely well, even in July when net inflows registered strong volumes both in Italy and in Spain. We continue to deliver high-grade flows, generating EUR 419 million into managed assets or EUR 3.5 billion year-to-date, 8% below last year's record flows. Given the 100% equity component in the long-term investment solutions, these inflows are of an outstanding quality. More importantly, our customers were able to average down their investments so far this year through the strong flows into equity, benefiting once again from the volatility out there. Total inflows were strong as well, reaching EUR 5.1 billion since the beginning of the year, confirming our customers' confidence in us. And so despite the challenging macroeconomic environment, we are confident we can hit the target of EUR 6 billion in managed assets inflows for the full year. And that's because our advisory model we established back in the '80s is a proven model and responds better than anything else to whatever the market throws at you. Changing the subject. I'm sure you are all aware by now that Standard & Poor and Fitch assigned inaugural credit ratings to Banca Mediolanum in July, as laid out in Slide #52. I'm proud to share with you that both ratings are in line with those attributed to Italy and to the most important players in the Italian banking sector in the nutshell the best rating possible. In fact, both S&P and Fitch assigned us a rating equal to BBB with a stable outlook. And since we are on the subject of ratings, I'm also pleased to announce that we received a rating upgrade from Standard Ethics to EE- with positive outlook, as you can see in Slide #53. In fact, Standard Ethics affirmed within the last 3 years, Banca Mediolanum, achieved significant alignment with international ESG guidelines, adopting policies and strategies consistent with best industry practices. Recently, we also became an official signatory of the U.N. Principles for Responsible Banking, joining the largest global banking community focused on sustainable finance. The principles are the leading framework for ensuring that bank's strategy and practice align with the vision society has set out for its future in the U.N. Sustainable Development Goals. We feel proud to be part of this global movement, which drives a process of change in the financial system. One of our most notable efforts in the world of sustainability, as discussed in Slide #54, is the launch of the first ESG materiality metrics for banking, credit, and protection products. We carried out this project with the Department of Business and Economics at Cattolica University to create an unprecedented ESG rating model, which encompasses the entire offer of the bank, way beyond the scope of managed asset products, which is what the European regulators have focused on up until now and which Banca Mediolanum has already been concentrated on for quite some time. The endgame will be a composite index able to measure the sustainability of the overall interaction with single customer as with our bank. Another note, I want to share with you that the well-known monthly international financial publication, The Financial Times, The Banker, has just released its annual ranking of the best performing Italian banks of the year 2021. And Banca Mediolanum came out #1 out of Italy's 10 largest leaders, moving up from fifth place, the previous year with a very high score driven by the strength of our operational efficiency and return on risk. We also scored well for growth, profitability and liquidity. In conclusion, despite the headwinds we are all facing, we continue to deliver. We are going through some really complicated times. First, the ongoing pandemic with this variance I feel we will have to live with for a long time. Then the invasion of Ukraine, which brought back the atrocity of war in Europe after decades of uninterrupted peace. Exceptional events that, along with high inflation, inevitably produced profound repercussion of economic and financial nature all over the planet. The short-term prospects are anything, but we are showing. So I decided to write a personal letter to our stakeholders at the beginning of July. That was also published in the major Italian newspapers, trying to make sense of what was happening. A message with an optimistic vision that always distinguishes us and that appear to be very much appreciated. This is more or less what we tried to express. If we view this scenario with a greater context -- within a greater context, we see how much it is part of the history of the human being, the succession of positive and negative events, which have something in common, we move forward and there is always a similar outcome progress. Throughout history, humankind has shown that he is able to find resources, together energy and produce the best efforts just when faced with the most difficult times. Every generation, no one excluded has to deal with a big problem, but the human being is programmed to adapt and evolve and find the solutions necessary to progress. Personally, I am optimistic and confident by nature and trading. It is the same identity culture that I find in the women and men who work at Banca Mediolanum. A culture made up of values, history, experience and the competency of those who have shown that they can learn from the past to face the present and look to the future with full confidence. This is a certainty we have and that is not a small thing. So this encourages me to say once again that tough environments give us opportunities to prove our true strength, a successful model combining cutting-edge technology with qualified Family Bankers and a well thought out smart and disciplined advisory strategy that delivers real performance to our customer. As a result, we are confident that we can continue to grow a sustainable and ensure significant value for our current and new shareholders. Thank you, everyone. And now we can open up the floor to questions.

[Operator Instructions] The first question comes from the line of Giovanni Razzoli.

I have a number of questions. First of all, could you share with us the contribution given by inflation linkers to interest income in the second quarter. And also as far as NII is concerned. Thank you for providing us with the guidance. Do you expect a 2022 full year with a growth rate similar to the first quarter, i.e., about 25% and a growth of 30%, 35% in 2023? I'd like to understand whether you can confirm what I inferred from your comments in the press. The second question, any impact on the Spanish business that performed very well in the second quarter in terms of income due to the taxation that may be passed by the Spanish government and may affect the banking industry. Third question, what dividend policy for 2022? How much have you accrued during the first half? How much have you earmarked for dividends in the first quarter? And the final question, you have confirmed EUR 6 billion inflows into managed assets. I consider this a very good result. Could you give us a guidance as far as installment plans are concerned for the second half of the year compared to the first half.

Okay. I'll take it from the top. The contribution to -- by inflation linkers, Angelo, EUR 12 million coupons generated by inflation linkers, coupons in second quarter. As far as NII is concerned, we expect to confirm the plus 25% at year-end as well compared to 2021 NII. As to 2023, at current rolling -- at current rates, so we're not relying on the curve. So based on today's running rates, we expect a 25%, 30% NII. Should rates go become steeper or be higher, we expect higher NII. As far as the Spanish Taxation Act, which hasn't been passed yet. Should actually regard the banks of a certain size. That's to say, banks that have NII plus commission income in excess of EUR 800 million. Banca Mediolanum is around EUR 400 million. So we are quite far from that target -- I'm sorry, EUR 40 million. So we are quite far away from that threshold -- target threshold. But of course, you are waiting for the act to be actually written and passed. We capitalized a 31% of June's results. So our Tier 1 capital includes 31% of net income, which was your third question. Then you asked a question about net inflows, if I got it right, into AUM, and you expect this to be generated by both installment plans as well as the as well as Double Chance generated in this quarter. Well, we expect about EUR 330 million per month, which is more or less the same amount we generated in the first half of the year. So there shouldn't be a big difference. Please consider that EUR 330 million is just gross inflows. There are also outflows to be taken into account. So the difference is not between EUR 330 million and what we'll actually do. So it's not going to be EUR 151 million or EUR 100 million because we also have to strip out outflows. But like I said, the contribution generated on a gross basis per month is EUR 330 million. Thank you, Giovanni. Let's move on to the next question.

Next question from Gian Luca Ferrari.

I go back to what Giovanni was asking on NII. I would like to understand whether you can provide us with the maturities of the fixed rate investment portfolio between EUR 8.5 billion to EUR 9 billion, I believe, in 2022, so how much is going to come due and how much is going to be rolled over? Second question, during the first quarter call, you gave a guidance of plus 9%. Now it's plus 8% this quarter with a second quarter that was more or less plus 6%. And then Massimo, can you explain this plus 9, what is -- what are the projects and plans underlying it? And what is the guidance?

I didn't get whether you were mentioning maturities for 2022 or 2023?

I was referring to 2022. But if you give me both years, that will be even better.

With respect to 2023, we have a EUR 2.4 billion worth of notes coming due and fixed rate would be EUR 2 billion. So most of them is fixed rate. With respect to 2022, just give me a sec because I still have to make sure, which are still -- how much of them is still due. So I'll soon come back to you with the answer. Gian Luca, I didn't really understand the second question because I had a connection glitch. So can you please repeat?

I was just going back to your plus 9% guidance for G&A expenses you gave for the first quarter. So I was just asking to get more color on the plans and projects. So what does this plus 9% G&A expense refer to? What are the extraordinary expenses compared to run-of-the-mill operations?

There has been an increase in costs that relate to the fact that Commercial businesses that travels started once again, so as to go and visit the network meetings with our customers. And so this, of course, led to an increase in G&A expenses. And then, of course we also have to include Ireland, where costs have increased because of the growth in assets under management and also to obtain and to generate a better performance, so that we reached 155, if I remember well, people making up the Irish team. These are the main reasons for this increase in costs and expenses. And then of course, we have variable costs and expenses that come with the business.

Great. That was clear.

Gian Luca, let me finish off with the previous question. In 2022, we are going EUR 1.7 billion or due EUR 1.5 billion of which fixed rate.

And let me also step in with respect to cost, generally speaking, we are reporting a increase in costs. We have this 9%, but 6% of which is due to growth projects and variable costs, which, of course, are always linked to cost. Whereas out of the 9%, less than 3% refers to the natural growth of G&A expenses. Gian Luca, I guess we covered it all, right?

I think so. So we can certainly go to the next question.

The next question comes from the line of Alberto Villa.

Congrats on your results. Could you please share with us a few comments on this rising rate scenario, especially in Europe? And also, what kind of impact this could have commercially in terms of the volumes dynamics in terms of lending? Do you expect maybe a deceleration in new loans in the next few quarters, you kind of entered to the issue during the presentation. But we'd really be interested in knowing also what kind of remuneration would you envisage for your customers' cash comparing also, of course, your deposits with other competitors that may be pricing their deposits more aggressively. Isn't there any parameter you are relying on to any index, any parameter that you are relying on to explain to us what kind of short-term rate level could lead to initiatives in terms of remunerating rewarding customers for their cash deposits with you? Also, tax rate, the tax rate seems to be higher due to the higher contribution by NII to overall revenues. So concerning the network, the sales network growth, I see that Family Bankers are growing, but private and wealth advisers seem to be stagnating in terms of number. Should we expect a growth there to? I mean, I'm referring to the top layer of the sales network?

Okay. I'll take the first question about NII first. We expected this kind of growth for next year, we expected an additional 30%, 35% growth based on current rates. Should we calculate that growth based on the curve, the growth level would be double that level theoretically? Why do I say theoretically? Because if the rates were actually equal to the curve level, then the cost of deposits to the cost of the retail cost of funding would increase as well. But I don't think this is going to be the case. As far as the retail cost of funding, I don't think it's going to be significantly -- it's going to be significantly higher, if rates stay at the current level. We'll put in place some initiatives, but mainly centered to bolstering to actually try and accelerate managed assets. We could say dear customer; I'll pay you x amount on your cash deposits provided you invest in our managed assets in our AUM products. So we are not just going to offer them to remunerate banking accounts or deposits as such, unless rates keep going up. I mean, if the Euribor rate hits 2%, I think that all competitors will have to raise the offer rate on deposits. So we too will have to follow suit. I think that the first movers will be small banks. But small banks really don't make you know, the market -- won't roil the market. But if the big shots start moving, then we'll have once again to follow suit.

How are these higher rates going to impact the demand for mortgaging and loans, how well?

They will have an impact for sure. But if you've got to buy a home, you've got to buy a home and then you just go ahead, even though rates are slightly higher. I mean, we would lend mortgage loans even when rates were at 18% or 20%. Of course, inflation rate would match that level -- used to match that level back then and hopefully, we will not go back there, but things are going very well in terms of lending. We are breaking record after record. So even though rates moved slightly higher and mortgage rates to follow suit, I'm not really concerned. As to our tax rate, if there's going to be a significant increase in NII to the detriment of commission fees. Yes, there might be a change. But what I expect is really a minimum difference a really tiny change in the tax rate. The network -- okay, the total number of bankers went up, but we have seen the private bankers and wealth advisers declined in number. This decline didn't happen because we shed people. But simply, we raised the parameters. We raised the targets in Italy and the numbers I mentioned earlier included Spain. But here in Italy for the sales network, we raised the bar for those bankers that want to skip over to -- from Family Bankers to private banker or wealth advisers. So you have to do more. You have to have a bigger client portfolio. Then also there are private bankers and wealth advisers who just retire. So we do have exits there too. But I'm not concerned. The number -- the decline in the number of private bankers and wealth advisers is essential due to the fact that we have raised the bar. They will have to work harder. And also, they will have to do that against the backdrop, which is characterized by declining -- in declining assets under management because of the market effect because of the down market essentially. So no worries at all there.

So just to make sure -- thank you very much for your answers. But just to make sure that 2023, the guidance is plus 30% to 35%.

The guidance, let me correct that is 25% to 30% at current rates. Okay. So let me rephrase that. Let me repeat that once again, plus 25%, 30% to be added to the plus 25% we expect for this year.

Next question from Elena Perini.

I do have a few follow-ups. Again, let me focus on net interest income. As far as I understood, for next year as well, the guidance does not include checking account promos on deposit rate. With respect to guidance you confirmed EUR 6 billion for assets under manage for managed assets, and you're really performing very well. I was wondering whether the total managed assets target is confirmed. Are total inflows are going to be confirmed? And then I did not get your answer on the new taxation in Spain. So I would really ask you to repeat the answer? And then the EMTN plan with respect to the new capital requirements, can you give us some color on this matter?

So first question on net interest income. The 2023 -- net interest income growth is 25% to 30%, which does not consider increases in the deposit rate or the cost of retail cost of funding because it's based on the current interest rates. And at current interest rates, I don't expect the market to offer special promotions or others. We are going to make special offerings when this is tied to managed assets as usual, otherwise not. However, if we go along the interest rate forward curve, then the net interest income growth would be more substantial. And in that case, I am sure that the retail cost of funding is going to increase accordingly. But again, also the net interest income would increase even more. With respect to managed assets, I actually talked about a EUR 6 billion target. I did not talk about total managed assets, but I expect that if we have a EUR 6 billion worth of managed assets, our total inflows would be EUR 8 billion. Again, with respect to Spain taxation, the actual regulation has not been published yet, it's not been issued. They are -- have been talking about taxing banks, increasing the tax rate on banks. These are still rumors. However, there is no official regulation that has been issued, and it seems -- it appears that they are -- this is going to involve banks, whose net interest income plus fees and commission that exceed EUR 800 million are going to be involved in this taxation. So we're talking about quite sizable banks. But if we add together these 2 line items with Banca Mediolanum, we get to some EUR 40 million, so we should not be involved. But again, we have to wait for the regulation to be actually issued because these are nothing but rumors. Then with respect to EMTN, we have a 2024 target for a total capital ratio of 2027. With our Common Equity Tier 1, we have already exceeded the 2027, but we are sort of brushing that level. So we are sort of getting prepared with issuance plan. So that if necessary, we will be able to obtain a wider buffer than the 2027 target that we would get with MREL with the funds that come from another source that does not come from retained earnings. Next year, we'll see whether it's a matter of issuing these notes or not. We just wanted to be ready. And also the rating is start to this being rated. And again, we wanted to be ready to issue if we decide to do so. With respect to leverage, we are very easy there as well. And this should be -- and I mean, issuance could be useful on that side as well. It's just a matter of being extremely conservative and being as flexible as possible and having as much as leeway as possible. Would you like to add something?

You just said all of it and it was all correct.

There are no other questions from the Italian line. So I hand it over to the English line. [Operator Instructions] And the first question comes from the line of Angeliki Bairaktari from Autonomous.

2 clarifications, please. First of all, on the insurance revenues, which increased quite substantially quarter-on-quarter. Can you give us some color behind that move? And what should be a get run rate of insurance revenues for the second half of the year? And second question with regards to the management fee margin. In my calculations, I actually find that this increased slightly quarter-on-quarter and was particularly strong in the second quarter. And what should we expect again for the second half of the year? And is that because the equity allocation remains very, very strong, as you pointed out that you have quite a lot of inflows into equity funds year-to-date.

I did not really understand well the question about insurance revenue because probably you were actually comparing quarter on -- that's right, quarter-on-quarter because half year compared to last half year, the level is the same. Angelo, can you help me out here?

Sure. Let me just prepare the answer and then I'll step in later.

Okay. Let's move on. And to second question, recurring fees, well, Q2 in reality turned out to be lower than Q1 because the average assets were lower in amount. Always, the assets were in excess of the first -- I mean, were higher, sorry, than last year's first half. But the average amount of assets was slightly lower. Markets in July picked up a bit. Things are kind of improving. So we expect a growth compared to last year, but that will really depend on markets and how markets fair. And I hope I've answered your second question. Let me see whether Angelo meantime is ready to answer.

Yes. So we have a double effect on the quarter. The first one is new business that was higher in the second quarter compared to the first one. And the second one is a discounting effect. When you discount costs at higher rates, they generated an advantage on the insurance reserve. So these 2 effects combined led to a stronger second quarter for insurance revenue. So do you think that this is going to continue in the second part of the year? Well, we don't think that we will enjoy the same discounting benefit in the second half of the year. So probably things would normalize and go back to more normal levels in the second part of the year. Thank you, Angeliki. So did we answer all your questions. Have we answered?

I would like to hand back over to my colleague on the Italian call. Yes, we do have another question from the Italian line actually from Luigi De Bellis.

I do have a few questions. Dividends. Can you give us an update with respect to your dividend policy for 2022 based on the expected year-end result and the net interest income scenario? What is the minimum net income level that would allow you to confirm an ordinary earnings per share as in 2021? Often at the end of the year -- I mean, second question is a cost-income ratio at the end of the year and acquisition costs, whether they are going to decline compared to 2021. And then our managed assets, where do you see them going comparing -- considering the rebound in July?

As for dividends, we believe that based on our figures, we will be able to distribute an ordinary dividend that is going to be higher than last year. So EUR 0.01 or EUR 0.02 more compared to the EUR 0.46 that we distributed last year. So this is our projection. Then you asked about the cost income ratio. The second -- in the second half of the year, generally speaking, there is an increase in cost -- the cost income ratio, of course, is also tied to revenues. But what we expect is approximately 50% might nudge up a little bit, but it should really hover around this figure. With respect to acquisition costs, declined due to the fact that we have lower net inflows with respect to managed assets. And then the other reason is that one of the network distribution cost is the bonus we pay on net managed assets for each family banker. How does this work? Let me explain this. In order to get this bonus on the Family Bankers yearly inflows, the total assets for the Family Banker had to be EUR 1 million. So if our total assets would be more than EUR 1 million, out of the managed assets, he would be given a bonus. As of this year, the bar has been raised. It's EUR 1.5 million. So this bonus on managed assets is more difficult to be achieved is sort of a little bit far away. But again, I believe that the acquisition cost compared to last year, also due to this reason, it's going to be slightly -- is going to increase at a slower pace and in July, we recovered EUR 2.5 billion, this was the rebound in July. These rebounds, of course, do have a sizable impact if they keep on and they have an impact on recurring fees.

And banking fees for the next 2 quarters, are they?

Right. I think they should keep going along this trend because they too are tied to the distribution of certificates, which, in turn, depend on market terms and conditions. I mean if there is the possibility of structuring interesting products appealing to our clients, considering the interest rate level and the circumstances in the past, there have been times when it was really difficult to structure interesting products. So we would not distribute them now is a much better time from this point of view. It is much more interesting to design and structure these products once again. And therefore, I believe that we are going to see a positive contribution from this line item.

There are no other questions from either line. So we hand it over to Alessandra Lanzone.

Again, okay, then we are ready to conclude. Massimo, do you want to make some final remarks before I officially wrap it up?

Yes. Okay. I think that despite the difficult situation, things are going very well. The number of customers is growing significantly. The network, the sales network is expanding significantly. Inflows are quite robust, even though slightly below last year's level. But if you concentrate on managed assets, we are faring way better than our competitors as usual. In terms of businesses because we don't engage into gathering assets only, but rather we lend money, and we engage in general insurance as well. And these 2 businesses, lending and general insurance are growing well and the growth is highly qualitative. So I am extremely positive as far as the performance we'll report in 2022 between now and the end of the year. How much how much lower this year's inflows are going to be? Well, that really depends on market performance itself. The tougher the market, the more difficult it is to gather assets. But in relative terms, comparing us to competitors is when the going gets tough. Normally, we slowed down less than others. Plus, we've got 2 business in our range of products, which is lending and general insurance, where we are performing very well. Last year for lending, we achieved an all-time high. And in general insurance, we did very well as well, and we have set an all-time record. So we are really very positive. I am very positive. And I'm looking at the year-end through this rosy screen, lower length. Okay, we'll get together again on November 9th for the first 9 months of the year results. Thank you so much.

This concludes today's conference call. Thank you for your participation. You may disconnect now. [Statements in English on this transcript were spoken by an interpreter present on the live call.]