Banca Sistema S.p.A. (BST) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banca Sistema 2020 full year results presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Gianluca Garbi, CEO of Banca Sistema. Please go ahead, sir.

Thank you very much, and good afternoon to everybody. I'm here connected with our CFO, Ilaria Bennati; and Carlo Di Pierro, our Investor Relator Director. Let me start by saying that it's almost 1 year since we started to talk about COVID-19, something that nobody probably expected. And for sure, none of us was used to deal with such strong exogenous event. So by saying that, I will also add that what we have done this year was something extraordinary that proved to me the resilience of our bank. We have done many things this year. Among all of them, we were also able to finalize our biggest acquisition in gold and jewelry-backed loans businesses. And we are happy that it is now fully integrated in our subsidiary, ProntoPegno. And as I will describe in a few minutes, we were also able to secure a joint venture in Spain, where we will be able to enter in a more structural way in the Spanish market. So moving to the Slide #2 of the presentation that has been made available, let me comment some of the numbers. So despite the negative economic environment caused by the pandemic situation, we have registered a good commercial performance, with a recovery on factoring new volume in the last 2 quarters of the year and with less big ticket, in particular, in tax receivable. If we exclude actually the tax receivable, our turnover was up 10% on a year-on-year basis versus a decline of the factoring market, based on the information provided by the association of factoring company, that was at minus 11%. Last year, we have purchased some portfolio of Spanish public administration receivable together with EBN Banco. EBN Banco is a Spanish bank specialized on factoring and corporate banking that has also follow the collection on those receivable that we have purchased. The result of this period of experiment was very positive. And at the end of last year, we have set up a joint venture with EBN Banco for the Spanish factoring market with public administration, in particular, on the health care side. We decided to enter this market through this joint venture, which is pari passu joint venture, 50-50, investing EUR 1 million, so with a negligible investment. The name of this JV is Ebnsistema Finance with headquarter in Madrid. And a General Manager has been appointed, Bosco Martínez-Echeverría, who has considerable experience in the factoring in Spain and was employed by EBN Banco to run this type of activity. The company -- the joint venture will commercialize or will offer to the supplier, to the Spanish public administration the possibility to sell their receivables. And those receivables will be directly by the 2 banks, Banca Sistema and EBN Banco, with the same proportion of the joint venture, so in other term, 50-50. And the collection of the receivable will be taken care by EBN Banco. So we will have a pari passu risk between us and our partner in Spain on the performance of the receivable that we collect, and those receivables will be in the 2 respected -- respective balance sheet on a basis on a pari passu basis, on 50%-50%. As you know, already comment probably in the past that the Spanish market is much smaller than the Italian one. But this -- with this initiative, I think that we will be able to continue our growth strategy in the factoring to the supplier of the public administration. To move on, on commenting on the other items. The CQS and CQP outstanding have reached EUR 934 million, an increase of 14% on year-on-year, less than the first 9 months of 2020 simply because we decide at the end of last year to sell a portfolio of loan to an Italian player, which is part of a commercial banking group. In 2020, also to make reference to what did go on, on the overall market, the CQ market performance was negative at minus 8.7% in term of new lending, while, as I just mentioned, we registered a positive performance of plus 14%. The gold and jewelry-backed loans outstanding have reached EUR 78 million, with an increase of 4% in 3 months. Clearly, the biggest step of the yearly growth comes from the acquisition of the business unit mentioned -- that I just mentioned at the beginning of this presentation. The total income end up to be equal to EUR 101.5 million, slightly up on a year-on-year basis. The cost of risk was equal to 42 basis point, slightly up on a year-on-year basis, but in line with our expectation. And Ilaria will comment more on that. The total operating costs were influenced by EUR 2.1 million of nonrecurring items related to the acquisition of the business unit, but also that took in consideration the contribution to the Single Resolution Fund that was up 75% versus last year. The net income end up to be EUR 25.8 million, down on a year-on-year. But if we exclude the previously mentioned nonrecurring items, the negative component of the PPA from ProntoPegno and on the other side, also the gain that we had with the sale of the 25% stake in ProntoPegno, our net income would have been reached EUR 26.1 million. The return on tangible equity is equal to 15.6%. And at the end, we closed the 2020 with a strong increase in our core Tier 1 ratio that reached the level of 12.6% and the total capital ratio that end up to be equal to 16.1%. Moving to the following slide, Slide #3. As you can see, the factoring outstanding trend show a decrease on quarter-on-quarter as the combined effect of the 2 main events. So the first one was the turnover on tax receivable that -- even though we expect to have a more favorable environment in the coming year when all the suspension of -- or postponement of payment by the authority as well as the return to normal turnover by corporate will allow to increase the acquisition of tax receivable. The second effect was a faster-than-expected collection, which does not mean that the public administration is now efficient in spending time, but simply means that due to the current situation, there's been some attempt by the authority to inject more liquidity to the system. And that had a positive effect in some payment that allow us to increase on one end the collection, but on the other hand, decrease the amount of outstanding. As you can see in term of moving to the CQ, the turnover was higher on year-on-year. This could have been even higher than that. But as I mentioned before, we decided to take the opportunity, a favorable one, I would say, opportunity to sell a part of the portfolio at the end of the year. This performance was, for sure, better than what we could have expected at the beginning of last year when the Italian government had announced the lockdown. And clearly, we expect a better contribution from direct origination coming this year. Following the acquisition of the gold and jewelry-backed loan, now this business represent more than 5% of our total income. And since we integrated the business unit, I'm also happy how the business is now performing. Now I will leave the floor to Ilaria, and then I will comment the regulatory capital at the end. Ilaria, the floor is yours.

Thank you, Gianluca, and good afternoon to everybody. As usual, I will first comment the balance sheet on Slide 4. As shown in the table, total assets are overall down 2% year-on-year. And in particular, we have that loans at amortized costs is now EUR 2.7 billion and is down quarter-on-quarter, mainly due to the downward trend in factoring outstanding, as Gianluca commented. On the other side, both CQ loans and gold and jewelry-backed loans are significantly up, both on a quarter-on-quarter basis as well as on a year-on-year basis. The goodwill increase that occurred in Q3, as you remember, was due to the acquisition of the business unit. Goodwill related to this acquisition is slightly down quarter-on-quarter as a consequence of the final allocation of the purchase price. Govies portfolio is also down quarter-on-quarter at EUR 873 million, with an average duration of 13 months. The sale of govies that was performed over the quarters allowed us to register significant trading gains, as we'll comment later on in the -- with the income statement comments. On the liability side, due to banks quarter-on-quarter increase is driven by interbanking, while ECB funding is stable. Due to customers decreased quarter-on-quarter is mainly driven by the decrease in repo as a consequence of the govies portfolio reduction that has more than compensated the increase in the foreign component of term deposits. Debt securities quarter-on-quarter decrease is due to the repayment of the senior bond with an outstanding of EUR 175 million, which has been refinanced with different funding sources carrying a lower cost. We now move on to the next page where we'll discuss the P&L. We start from interest income. 2020 interest income is down 11%, and the drop is driven mainly by lower contribution of factoring in the second half of the year. Factoring now represents 66% of total interest income, while it was 74% in 2019. The lower income from factoring is mostly related to LPI from legal action and to fiscal receivables, which, in particular, had a stellar performance in the last quarter of 2019. Going more into the details of the LPI contribution, we register the following. The contribution of LPI from legal action now represents 33% of factoring interest income compared to the 36% in 2019. And in absolute terms, it's now equal to EUR 21.6 million compared to the EUR 29 million in 2019. The main reason behind the drop is the lower contribution of the update of accrual rates. This is not something new. Indeed, as anticipated during previous calls, the benefit of the update of accrual rates would be lower over time as the statistical model has now stabilized around the current level of accruals. Indeed, the update of the model performing in Q3 has provided accrual rates that were just slightly higher than the previous ones. As a result, the income effect of the change in accrual rate has been EUR 1 million compared to the EUR 5.1 million related to last year. Overall, the accrual component is now worth of EUR 10 million, which is down from the EUR 17 million in 2019. On the other side, in the extra collection segment, we've registered stable performance, where the EUR 11.6 million collections compare with the EUR 11.9 million collections in 2019. We have executed the sale of LPI in this quarter, as we did in Q4 last year. With regards to fiscal receivables, the contribution to this year earnings has been EUR 11.4 million compared to the EUR 18.5 million in 2019. The reason behind the drop is twofold: On one side, it's related to lower volumes, as we've already mentioned. And on the other side, it's a consequence of the fact that tax receivables had a particularly strong performance in the last quarter of 2019 due to anticipated collections on large positions. So the relative comparison is not rewarding. The contribution of the CQ business line has been slightly down year-on-year due to a larger-than-expected impact of early repayments on positions that have reached the 2/5 of the contract life and the start -- achieve the right to pre -- to be repaid. Since the past quarter, we started to see a significant contribution of the pawnbroking business, also thanks to the acquisition. The contribution to total interest income of the business line has been EUR 3.1 million. Let's now move on to margins. As you can see from the top right table, adjusted income margin is down year-on-year, driven by both factoring and CQ. CQ margins, since they have stabilized around the level since -- over the year, while factoring margins have been impacted by the lower contribution to earnings of LPI and tax receivables, as we have widely commented. However, compared to both the first half and the 9 months result, both factoring and CQ margins are now slightly higher. And in particular, margins on factoring commercial receivables have almost got back to levels seen at the end of 2019, which confirms that really the drop in income generation related to the factoring is only due and driven by LPI and tax receivables. Again, on margins, from now on, we will fully disclose and monitor gold-backed loans business margins, which are set at 13.9% for the full year, by far, the highest of all the 3 business lines. We now move on, as usual to discuss LPI. The stock of LPIs, which is described in the bottom left table, stands at EUR 155 million, of which EUR 98 million is part of the accrual perimeter. This is down quarter-on-quarter, mainly due to cash collections. The amount of LPI currently recorded in the balance sheet is EUR 50.1 million, which is stable over the quarter. We now move on to total income on Slide 6. Total income in 2020 has registered a minor increase versus last year, with a 1% year-on-year growth, mainly thanks to the contribution of other income, which is treasury activity and the sale of factoring and CQ portfolios and net commissions, which have more than compensated the drop in net interest income. Indeed, net interest income decreased 8% year-on-year, driven by weaker interest income, as we've commented, while interest expenses are down 20% year-on-year. Total cost of funding is lower year-on-year at 0.6% compared to the 0.8% in 2019, thanks to a good balance between diversification of the funding sources, duration and cost. Net commissions is up year-on-year, thanks to the strong contribution of the gold and jewelry-backed business, which generated EUR 2.7 million commission income for the year. Other income is significantly up year-on-year and includes the contributions of the sale of portfolios, in particular, they're split as the following: EUR 2.5 million was the gain from the sale of a factoring portfolio and $1.4 million was the gain from the sale of a CQ portfolio. We expect to execute similar transactions in the future on both segments of the business. So we consider this type of revenues as recurring. Other income also includes the contribution of the sale of a portion of the govies portfolio for EUR 5.7 million. The overall contribution of the portfolio also includes EUR 4.4 million recorded in the NII for a total of EUR 10.1 million, which compares to the EUR 7 million in 2019. In the pie chart at the bottom of the slide, we represent, for the first time, the breakdown of the total income contribution of the 3 business lines, which shows that we were able to achieve a further diversification of revenues during 2020. The factoring business continues to represent the lion's share with a EUR 75.4 million contribution out of EUR 101.5 million total income, although it's relative weight has decreased from the 82% in 2019 to 74% this year. The CQ has increased its relative contribution from 16% to almost 20%. And the pawnbroking business has increased its contribution in absolute terms, reaching EUR 5.8 million income generation as well as in relative terms, moving to a 5.7% relative weight. Now we discuss costs on Page 7. I'll only briefly cover this section as the main drivers of the cost trend has been described in past quarters, in particular, in Q3, when discussing the integration of the business unit occurred in July. Q4 confirms the main driver -- confirms that the main driver of the cost increase has been the integration of the business unit. Indeed, the personnel expenses are up year-on-year due to higher FTEs following the acquisition. There is also a portion of personnel expenses related to the acquisition that are included in the integration costs and, therefore, are not recurring. Also, administrative expenses are up year-on-year due to the acquisition. Overall, nonrecurring expenses related to the acquisition of the business unit are equal to EUR 2.1 million for the full year. Also, as commented already in previous calls, other expenses item has been impacted by the contribution to the Single Resolution Fund, which came in EUR 900,000 higher than last year. If we exclude the acquisition and the Single Resolution Fund impact, operating costs are flat on a year-on-year basis. We now move on to the next slide to cover funding, Slide 8. As I mentioned before, cost of funding is lower year-on-year at 0.6% and stable quarter-on-quarter. Funding mix keeps on the imbalance between wholesale and retail. The wholesale component is now 41%, slightly down quarter-on-quarter due to the reduction of the repos funding the govies portfolio and the redemption of the senior bond, which has been refinanced using other funding sources, which carry a lower cost than a capital market issuance. ECB funding is stable at EUR 690 million, of which EUR 491 million is TLTRO III. Conversely, retail funding is up quarter-on-quarter due to the growth in term deposit stock after the trough reached in the first half. The average funding cost from this source has dropped by 30 basis points since the end of 2019 due to subsequent managed rate adjustments. We have recently revised interest rates for this year's funding. So the average cost should continue to trend down also in 2020. We now turn to Slide 9 to discuss asset quality. As you can see from the graph, nonperforming exposure is down quarter-on-quarter, driven by past due downward trend, which have decreased by EUR 10 million. Net bad loans represent 1% of total loans and is stable both quarter-on-quarter and year-on-year. In line with what we commented in previous calls, loan loss provisions are higher year-on-year. Part of the increase is a consequence of the update of our internal model to account for the worsening of the macroeconomic variables. We've also increased the coverage on specific factoring positions over the year and in particular in Q4. So the combined effect has been a 21% increase in loan loss provisions versus last year. As a consequence, cost of risk registered an increase at 42 basis points compared to the 36 basis points for 2019. I now hand the floor back to Gianluca. Thank you.

Thank you. And moving to the Slide #10, regulatory capital. So the regulatory capital, core Tier 1 ratio and total capital ratio were well above our expectation and the minimum requirement. Vis-à-vis the situation on the result of 2020 in -- with the past and in line with the approvals of quarterly reports, and taking into account the current and the future COVID-19-related impact on capital strength and on the business growth outlook, the Board of Directors today has confirmed that we'll propose to the shareholders at the general meeting to retain 75% of the parent company net income corresponding to EUR 25.7 million. Then upon discussing with the Bank of Italy, as required by the recommendation issued by regulator, the Board of Directors will prepare its proposal to be submitted to the shareholders for the part of profit that are not retained as a reserve. In the number of the core Tier 1, clearly, the 12.6% already consider 75% of the net profit being retained, while the other remaining 25% not being retained. At the same time, talking about the 2019 dividend, also the -- in today's Board meeting has been agreed to convene a general shareholder meeting on March 25 to resolve on the 2019 dividend payment for the financial year ended in 2019 as during the general meeting that has been held on the 27th of November of last year, the shareholders has decided to postpone the decision to a new meeting to be called by the end of the first quarter. In the same meeting of today, also the Board of Directors has also resolved to promptly engage in a dialogue with the regulator about the 2019 dividend. As I said before, we are satisfied with the resilience of our bank, even though the factoring LPI contribution was lower on year-on-year. But commercially speaking, we have registered good performance and also how the net income has allowed to absorb the relevant acquisition this year that will generate profit for next year. Last point is that in the next month in March, we will approve our Business Plan, and we will show to you our strategy for the next 3 years. Thank you very much. Now we remain available for any question that you may have. Thank you.

[Operator Instructions] The first question is from Christian Carrese, Intermonte.

I have a few questions. The first one is on net interest income. This year, of course, due to the COVID-19, we saw a drop in net interest income. So I was wondering if we can look at this year level as a floor in terms of net interest income, and in particular, I would like to understand if you are planning to increase the TLTRO III tick up in 2021. And in general sense, also, I would like to understand what are your thoughts on Draghi appointment as Prime Minister in terms of possibility to reduce the public administration arrears. And if I'm not mistaken, you worked with Draghi several years -- a few years ago. So if you can share with us your thoughts on Draghi himself. The second question is on the acquisition. If you can give us some details on the Spanish joint venture in terms of new production and some details. The third question is on asset quality. I saw a decrease in past due in this quarter. What should we expect for 2021 in terms of NPE evolution and in terms of cost of risk? So if you -- you said that maybe you have done some of, like, in 2021 early provisions. And you also said some specific provisions, some customers in the fourth quarter. So if you can give some details on that? And finally, on capital and dividend, you said that the capital ratio, the full year capital ratio, 12.6% include 75% retained earnings, but it's not clear to me. The 2019 dividend not paid is still out of this ratio. So if you're not going to pay the 2019 dividend, we should see an increase in the common equity Tier 1.

Okay. Thank you very much for all the questions. I may take some of the questions, then I will leave maybe to Ilaria the answer to other question. First of all, about the appointment of Mario Draghi as the Prime Minister, let me clarify first on top of everything that I'm very happy to be CEO of Banca Sistema. And at the same time, I'm very happy that -- to have a good relationship with my former boss that is going to become Prime Minister. In terms of the agenda based on what are the available information that are not many, the focus of the government will be on getting out of the current situation, of vaccination. To speed up the -- at least based on what are the information that are available today, is to try to speed up the process for new infrastructure in -- and reduce the bureaucracy in that front. At the same time, the other goal is to use the money of the recovery fund to increase the investment in order to give more breadth to the economy, which I think that a good sign for -- also for our business. Where our business is to allow the company to use the liquidity faster, quicker by discounting -- by selling a discount, the receivable towards the public administration. In terms of the question about Spain, as I mentioned before, this is a joint venture. The joint venture and the company, which is called Ebnsistema, will not take any asset on their balance sheet. So the joint venture has been created to act as introducer, let me use this word, on behalf of the 2 banks. That the 2 banks will acquire the asset on pro rata basis, pari passu. So there's not going to be any privilege or any situation where there could be any conflict among the assets that are going to be purchased because we will purchase 50% of every receivable or revenue invoice. So at that front, we will not have any -- the 2 banks are 100% aligned in the purchase, in the evaluation and in the collection of the receivable. As I mentioned, the Spanish market is much smaller than the Italian market, but we could expect that maybe an amount of EUR 200 million, EUR 250 million of receivable can come from the Spanish market. Being, in particular, asset related to the health care, the Bank of Spain has clarified that the RWA is 0% of those receivable. The seller are multinational -- mainly multinational company that are supplier to the health care system in Spain. And part or the biggest part of the return will come from LPI. In terms of dividend, and then I'll leave the other 2 questions to Ilaria. In term of capital and dividend, it's correct that the core Tier 1 at 12.6% already exclude the 25% of the 2019 dividend as well as the 25% of the 2020 profit. So in case, for whatever reason, which we don't see today, but the general assembly decide to cancel the decision to -- or to change its decision to allocate as reserve only 75% -- and when I use the word only, I think that 75% of net profit being allocated as reserve is a hyper-prudent allocation of capital because we only distribute in the past 25%. But in case, for whatever reason, the general assembly will decide to post also the 25% of amount that are not allocated as reserve, the 12.6% will increase by this amount. That will become net asset, which is not the case today. So the 2019 as well as 25% of the net profit of 2020 are not accounted as regulatory capital. In terms of net interest income, before I will leave the answer to Ilaria. But let me say that there's not any correlation between COVID-19 and reduction of net interest income. So, so far, and I don't see any reason why the situation should change, the performance of the bank was not affected by the COVID-19. There's been some change, change of mix and so on. But some eventually cost savings because we have people that are not traveling. There -- so we save some money in term of travel expenses and so on. But in terms of margin, the COVID-19 did not generate any impact on the margin and not even on the NPE or past due. The most relevant item that generate a reduction of the NII compared to the past is the LPI. And in particular, among the LPI is the part of accrual because as Ilaria mentioned before, after several years where we have adjusted our accrual based on the model that we have in terms of accruing LPI, now we have reached a situation where the level is in line with the expected collection. So we will now have a boost, which in the past typically happened on the third quarter of the year. And this is what, if you compare 2019 with 2020, generate most of the reason of the reduction of NII, which, again, has nothing to do with COVID-19. But I will leave it to Ilaria to further comment and also on the TLTRO that you mentioned. As well as, Ilaria, the other question was related to the past due and the cost of risk. Ilaria?

Sure. Yes, in line with what Gianluca mentioned, we don't expect the NII to further decrease next year. Indeed, we expect higher interest income, and at the same time, lower interest expenses. So I think it's a good indication to take 2020 net interest income as the bottom of -- in terms of next year outlook. As we mentioned and as Gianluca restated, the 2 drivers -- the 2 main drivers of the drop in the net interest income this year were the performance of LPI and fiscal receivables. Really, on LPI, for the reasons we mentioned, we don't expect any upside in the future. But on fiscal receivable, we might see some potential upside. So this is why I say that taking 2020 net interest income as the bottom can be a good indication in terms of outlook. Because the performance of fiscal receivable may really make the difference between last year and the next year. In terms of drawing under the TLTRO, we don't expect to draw further amounts as we have already reached our maximum allowance at EUR 491 million.

There was maybe some 10% top up that you could do with the change of the rules.

Okay. So we'll -- I'll get back to you on this point. I think, to the best of my knowledge, we have already reached our maximum allowance, but we can always get back. There is one upside in terms of potential further drawing from the Eurosystem funding, which is given by the fact that CQ assets since last year have been considered eligible as a collateral. So really, the more we grow the assets origination in the CQ space, the farther we grow our eligible collateral. So we can always use this additional collateral that becomes available to draw under different sources, for example, the parent draw. But we're not planning to increase the TLTRO III. But as I said, we'll get back on this point. In terms of past due, really, the performance and the trend of past due in 2020 will be a function of the implementation of the new definition of default approach. We haven't changed our estimate with respect to the last update we gave in the previous call. So we are estimating the impact of the new order to be around 70 basis point in terms of CET1 ratio. In terms of loan loss provisions, you're right. We have already set aside enough provisions to really to be -- to reach a comfortable level for 2020. The coverage ratio of -- on our nonperforming exposure has increased from the 15.15% at the end of 2020 to 18.7% at the end of -- sorry, at the end of 2019, so last year, to 18.7% at the end of 2020. So this gives us enough buffer to be at a comfortable level, which means, as you correctly pointed out that the core -- the cost of risk for 2020 should become more -- should be -- should get back to levels more in line with what we've seen in the past, which is around 35, 36 basis point.

Maybe one, just to clarify, because has been mentioned, the definition of default, there still will be a range because when we look at the most recent exercise on our asset, if we apply what are the provided by the Italian factoring association, actually this will have a positive impact on our core Tier 1 of 20 basis point. If we use other nonimpact indication, that is where, as Ilaria mentioned, it can have a negative impact that goes from 60 to 70 basis point. But at this stage, this is a range. So it can be even plus 20 basis point down to minus 70 basis point.

The next question is from Manuela Meroni of Intesa Sanpaolo.

I have a few questions. The first one is on the new definition of default. But just to be sure, 60, 70 basis point is the worst-case scenario for you. So we can expect nothing more than that in terms of impact of the new definition of default. The second question is on dividend. You mentioned some discussion with the regulator around 2019, 2020 dividend payment. So I'm wondering at what stage are these discussions? And when you expect to have a final outcome on that? And I'm wondering if you feel confident to be able to pay 2019, 2020 dividend at least after September 2021. The third question is on margins. Margins are declining both in factoring and CQS year-on-year, but they are stabilizing in the last few quarters. I'm wondering what we can expect going forward. I would expect some increase in margin in CQS as the direct business should increase and maybe some further pressure on the factoring due to the increase in tax receivable. But please lead me, give me any comment on this. That will be extremely helpful. Then I'm wondering on the pawn business, pawnbroking business, the growth rate of this quarter was very high, 3.6% just in 1 quarter. So I'm wondering what we can expect in 2021. We can assume a double-digit growth for this kind of business. And last question is on the staff cost. Staff cost increased significantly in the last quarter. I'm wondering if we can use this level as a run rate for the next few quarters or if it has been expected one -- by some nonrecurring items.

Okay. Let me try to take some of the questions here. On the, first of all, new definition of default, clearly, we live in a world where it's very difficult to have a black and white situation. We always live in a world where the interpretation and, to a certain extent, lack of clarity depending on the different point of view. So our position, looking at the various possible interpretation was, as I mentioned in using the association of factoring -- association interpretation is an increase of 20 basis point. Using what we believe is the -- are the worst-case scenario of the interpretation is 70 basis point. But as we live in a world of interpretation, as of today, we haven't seen any other possible interpretation that can change from this range. But at the same time, who knows what can be the, to certain extent, the creativity on the various possible interpretation, if at the end of the day, not even the association of all factoring company, that include all the banks, is consider the correct interpretation. So as of today, I would say that for us, the 70 basis point is the worst-case scenario. In term of dividend, just to be clear, today, the Board decided to call for the general assembly. And today, the Board will start the dialogue with the regulator. So the stage of the discussion start -- will start today. In a few hours, I will say, a formal request will be made to the regulator. So where we are at the stage? We are at the stage of zero in a sense that the director -- the decision to call the meeting on the 25th has been taken today and -- of March -- 25th of March for 2019 has been taken today. As I mentioned, the -- today, both the 2019 and -- let's say, the 2019 profit has been accounted as debt in favor of shareholder, so it's not being classified as dividend because in order to have a dividend, you need to define a record date. So the record date has not been defined. So in our balance sheet, this net income has not been allocated to reserve, either that towards shareholders. It's not yet defined as a dividend. So in order to answer to your question, if we will be able to distribute after September '21, I would say that unless the shareholder will make a change on their decision and will decide to book what are today the amount to be distributed to shareholders and reserve, this amount will be paid to shareholders after September '21. So that is where we are in term of dividend. So it could end up in a situation where the 2-year dividend of 2019 and 2020 may end up to be fully distributed only in September 2021. So that is -- that we don't know. It is -- it's also important to say that reading the recommendation -- and it's very difficult to have different interpretation, it's written crystal and clear that the dividend restriction will not apply if the payment will not cause a reduction of core Tier 1. And this has been stated in the second recommendation, but also in the last recommendation of the regulator. As in our case, the dividend will not affect the core Tier 1 because the amount has been already deducted from the core Tier 1, we have to see why we cannot immediately distribute the dividend. As it seems to us at least that it's not a question of interpretation. It's only a question of reading what is written on the recommendation and nothing else. But let's see if there are different interpretation that need to be also justified. In terms of pawnbroking business, I can confirm that the double-digit growth is also foreseen for 2021. In terms of staff cost increase, bear in mind that with the acquisition, we have increased 58 head count coming from the acquisition from Intesa. So the increase of staff cost is mainly driven by the -- this new account through the acquisition of Intesa. Ilaria, if you want to comment on the margin? Or if you like to add any other comment also in the other point. We are not in the same room. If you would like to comment, please do it.