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 9 Months 2021 Results Conference Call. [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. Good afternoon to everybody. I'm on this call with Ilaria Bennati, our CFO; and Carlo Di Pierro, as usual. Let me start following the slide, Slide #2 that has been distributed and made available to all participants, with the usual comment on the commercial performance. As you can see, the factoring turnover was up 14% on a year-on-year basis. If we exclude the tax receivable that we already commented during the previous quarter have been underperforming and where we do expect a better performance next year when the tax filing in the next spring will be -- will make available more VAT to collect. So if you exclude this component of tax receivable, the turnover have registered an increase of 20% on a year-on-year basis. The CQ outstanding is almost stable on a quarter-on-quarter basis due to slightly higher prepayment than the previous quarter. The pawn loan reached EUR 87 million in term of outstanding and -- with an increase of 16% on a quarter-on-quarter basis. We have continued to roll out a loan government guaranteed, as we did in 2020, is only for our Factoring client. The net interest income end up to be equal to EUR 57 million with an increase of 7%. The same comment is that we made during the previous quarter relating to the fact that we have registered an increased amount of public funds available which have led to early repayment to the various public administration that clearly had an impact in the profitability of the factoring business as Ilaria will describe also better later on. This amount have been made available from the central government to the local government to tackle the liquidity problem deriving from the pandemic. In the last quarter compared to the previous one, we already have started see a decline in this payment, which means that the bulk amount that has been transferred from the central government to local authority has been almost all being used. And based on the new also information about money available for local authority in the government budget that is under discussion, we didn't see any extra fund available to local authorities. Therefore, going forward, probably the duration of the receivable will increase as in the past. The cost of funding has been reduced and have reached the amount of 40 basis point. The total income end out to be EUR 74.8 million with an increase of 3% on a year-on-year basis. The recurring cost of risk is 41 basis point with a loan loss provision at EUR 8.8 million. And I remind you that we already have discussed in the May presentation that we had 2 main effect: one was a conservatorship position on the municipality, which has been provisioned in the first quarter; as well as due to the lengthening of the collection from the court. This will add a time-value effect in terms of depreciation due to the -- as I said, the lengthening of the collection in quarter, which is going to be off-setted by more late payment interest in the future. The total operating costs have increased, and this is mainly due to the consolidation of the acquisition of the pawn loan business from Intesa that happened on the third quarter last year. At the end, the net income was equal to EUR 14.8 million. The core Tier 1 ratio and the total capital ratio is equal to 12.2% and 15.4%, respectively. But let me say that last night, we have received some clarification that probably also other banks have received from the regulator about the application of some of the new definition of default. And even though we haven't seen in details what are the impact, we expect that there could be a negative impact on the core Tier 1 of about 60 basis points, which is pretty much in line with what we had forecasted last year when I was asked the question, what is the impact of the application of the new definition of default? Clearly, we are talking about interpretation and, therefore, is always a gray area that during last year we have to consider. And now we have finally received some further calcification from the regulator. Moving to the next slide. As you can see, the Factoring outstanding remain almost flat despite the lower turnover on tax receivable and the faster-than-expected collection, as I mentioned before. The turnover growth was also driven by diversification in other segment and also the -- that include, for instance, our activity in Spain. Moving to the CQ and pawn loan commercial performance in the Slide #4. As you can see, the -- on a year-on-year basis, the outstanding increased a little bit with the split that remain unchanged compared to the previous year. The increase of activity of turnover was off-setted by the prepayment, which is also relevant in the outstanding trend. What I think that is a very good performance part is that the direct component of sourcing, as you remember, we do direct and indirect, so we buy portfolio as well, we originate directly the CQ. Now the direct component represent 26% of the total, which is a very good move on our CQ division, which is still working to strengthening its Asian intermediary network in order to originate more and more direct secured loan. Then thanks to the organic growth on the ProntoPegno after the acquisition of the Intesa division, we have registered a 5% growth on a quarter-on-quarter basis in term outstanding. And as I told you at the end of July, this quarter, we would have registered a good result in term of new volume and you will see that more and more the component of the [indiscernible] will have some effect on -- positive effect on P&L and the diversification. Now I leave the floor to Ilaria to go in detail to the balance sheet and to the P&L.

Thanks, Gianluca. Good afternoon to everybody. As usual, I will start with comments on the balance sheet on Slide 5. As shown in the table, you see the total assets are down 5% versus year-end. And in particular, loans at amortized costs are now EUR 2.7 billion and are slightly up quarter-on-quarter, mainly thanks to the increasing factoring outstanding. Indeed, as Gianluca commented, the pace of collection seems to have slowed down in the last quarter. Secured loans are substantially stable quarter-on-quarter, while pawn loans are up quarter-on-quarter, thanks to the good origination of new volumes that Gianluca commented just earlier on. SME guaranteed loans are stable on the quarter. Govies portfolio is now equal to EUR 633 million and is slightly down quarter-on-quarter. On the liability side, due to customer quarter-on-quarter increase is mainly driven by the increase in repo. Also, the stock of term deposits and current accounts have registered the positive trend over the last 3 months. Debt securities decrease quarter-on-quarter is due to lower funding through ABS collateral. As commented already in the last call, year-on-year decrease in funding through debt securities is mainly driven by the maturity [indiscernible] by the repayment of 37.5 Tier 2 bonds that was executed simultaneously to the issuance of a new additional Tier 1 for the same amount and also to the reclassification of 8 million AT1 as an equity instrument. We now turn to comment P&L on the next slide. In line with the first half and as it will be up to year-end, the main factor driving the comparison between the first 9 months results with the first 9 months 2020 is a different perimeter of the pawn loan business. The dynamics underlying interest income are pretty much in line with the first half. As you can see in the table, interest income is down 3% year-on-year due to lower contribution of factoring business, partially compensated by pawn loans and SME-guaranteed loans. In a way, guaranteed loans are an alternative instrument for corporates to get financing and fact that can be considered as an alternative to factoring. As Gianluca mentioned and reminded we offer this product only to companies that are already customers for our factoring business. Factoring now represents 60% of total interest income, less than its relative contribution in September last year when it was around 66%. Within the factoring, a good LPI contribution has partially compensated lower contribution from tax receivables. Going more into the details of the LPI contribution, we registered the following: the contribution of LPI from recollection was equal to EUR 16.3 million compared to the EUR 16.1 million in 2020. So basically stable. Of this amount, the accrual accounts for EUR 9.1 million, which compares to the EUR 8.4 million in 2020, this EUR 9.1 million figure takes into account the effect of the annual update of the accrual model, which has been pretty much 0 this time. Indeed, the positive component related to the update of the percentages accrual has been totally offset by the increase of the expected collection times, which is the time value. Going forward, there is not going to be much of an upside in the update of the model as the accrual percentages have now stabilized, while the estimated time to collection will depend not only from our collection capabilities, but also from the core trials duration. In terms of collections, extra collection has been EUR 7.2 million compared to the EUR 7.7 million in 2020. The sale of LPI component in these 9 months has only been EUR 700,000 compared to the EUR 2.5 million last year. As a result of the different performance among the various segments, the factoring adjusted income margin is slightly down year-on-year. The contribution of the CQ business line has been slightly down year-on-year due to larger-than-expected impact of early repayments, which also explains the negligible growth in the outstanding over the quarter despite the strong origination activity. Lower interest income has been reflected on adjusted income margin reduction year-on-year. As already indicated in previous calls, since the past quarters, we started to see a significant contribution of the pawn broking business, also thanks to the acquisition. The contribution to total interest income of the business line has been EUR 4.3 million versus EUR 1.9 million in the first 9 months last year, while the commission's figure is EUR 4.8 million versus EUR 1.1 million last year. So overall, EUR 9.1 million revenues were generated by the pawn loan business in the period. In line with the first half, the margin has been confirmed above 15%. So overall, total adjusted income margin is down by 10 basis points year-on-year, driven by both factoring and CQ. We now move on to total income on the next slide. Total income is up 3% year-on-year, driven by the increase in net interest income, which is up, mainly thanks to interest rate expenses, which are down 31% year-on-year. Total cost of funding, as Gianluca mentioned, is equal to 0.4% and is lower in both retail and wholesale components. Net commissions are stable as lower factoring commissions have been compensated by higher contribution from pawn loans. Other income also includes EUR 1.4 million gain from the sale of factoring portfolio and EUR 4.2 million from the govies portfolio activity. The contribution of the govies portfolio was overall lower than last year as the contribution to the net interest income was significantly lower. In the pie chart at the bottom of the slide, we represent the breakdown of the total income contribution of the 3 businesses. What's evident is the decreasing weight of the factoring business relative to the others. The factoring continues the biggest contributor to the revenues, while its relative weight has decreased below 70%, while the pawn loans has increased above 10%. The CQ is stable around 20%. We now move to costs on Page 8. I will be very brief on this section on costs as there isn't much to add to the comments on total operating costs with respect to what we've been commenting in the past quarters. Total costs are up mainly for the consolidation of the pawn loan business unit, which mainly impacts personnel expenses and G&A due to the rental costs of the pawn loan branches. Let's turn now to funding on the next page, Slide 9. As I mentioned before, cost of funding is lower year-on-year at 0.4% and also lower quarter-on-quarter. In the quarter, we've registered a significant relative increase in retail funding compared to the wholesale funding, mainly driven by the increase in term deposits and the decrease in ECB funding. Retail funding now represents 68% of total. In the Wholesale segment, I remind again that all senior bonds have been redeemed. With the replacement of the Tier 2 bonds with AT1s and with the reclassification of the AT1 bond as equity instrument, now the bonds and ABS component includes only ABS funding. We now turn to the next slide to discuss asset quality. Without taking into account the adoption of the new guidelines from the Bank of Italy, a gross nonperforming will be pretty much unchanged with respect to Q2. The current level and composition of gross NPE is so far the result of the dynamics occurred in Q1 and Q2. As you remember, we've had an increase in past-due in Q1, driven by introduction from the 1st of January of the new definition of default. While in Q2, the exposures versus municipalities in conservatorship have been all reclassified as bad loans from UTPs. The level of past-dues represented in this slide then doesn't take into account the guidelines in relation to the adoption of the new definition of default. As Gianluca mentioned, indeed, we are still finalizing the impact of the interpretation of the regulations in line with the new guidelines. At the moment, the estimated impact is around EUR 60 million of additional past-due and will be eventually reflected in the Q4 figures. Gross NPE ratio is at 10.9%, slightly lower than in June and the increase we expect to year-end is, as we mentioned and commented, a consequence of the adoption of the New DoD in the first quarter. The NPE ratio as well will be impacted by the above-mentioned New DoD guidelines. The amount of loan loss provisions equal to EUR 8.8 million has been driven by the dynamics occurred in the first quarters, while the provisions in Q3 were lower than the quarterly average. Compared to last year, 9 months loan loss provisions are still up, but we expect them to revert to a level in line with last year by the last quarter. The cost of credit risk, considering most of the provisions as nonrecurring, is 41 basis points. I now hand the floor back to Gianluca.

Thank you, Ilaria. I don't have much to add to the Slide 11 because we already have comment the total capital ratio in the core Tier 1. So I will be happy to take any question from the floor.

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

The first one is on net interest income. We see some pressure on -- from factoring, both in terms of margins and the outstanding is down, I think, year-on-year. I was wondering if you can give us a guidance for the full year, in particular, if you are expecting to do some disposals also on LPI in the fourth quarter or if there will be anything extraordinary that will be done in the fourth quarter? This is for net interesting. And the second question is on capital. If you can elaborate a little bit on the conversation with Bank of Italy. So the impact you said 60 basis points -- the expected impact, 60 basis points on Common Equity Tier 1 is deriving from what? And if Ilaria, -- just a clarification, Ilaria, you said, EUR 60 million additional past-due you expect in the fourth quarter due to this kind of new, let's say, rules with Bank of Italy? And finally, on the common equity Tier 1, you set a target of common equity above 12% in the business plan on a pro forma basis, you will go down below 12% in terms of common equity Tier 1. Earnings, unfortunately, due to COVID-19 went down in the last couple of years. So I was wondering if -- do you see any constraint in terms of capital distribution or still the 25% payout ratio is feasible for you?

Okay. Thank you for your question. Well, first of all, in terms of how we see from now to year-end, I think that the situation in terms of P&L will not change in a sense that the extra flow of payment from public administration will have also an effect. We may have some disposal towards the year-end, in line with the disposal that we have in the past and has been already embedded. So we don't necessarily want to do more disposal simply to offset the decline, which we believe is extraordinary due to the extraordinary amount of money that has been put on the ground by the central government. There's no reason to make more disposal. And so on that front, I think that the trend from now to year-end will not change. For next year, the situation we think that will different. Just also to give you an idea the fact that of this early repayment from the public administration did have some effect or the fact of this huge amount of liquidity available have some effect on the entire factoring business. If I look at the Asia statistic, the turnover on the -- up until the end of August have increased of a bit more than 10%, but the outstanding has been declined to 25%. So I think that this is a sign of this additional amount of money that has been put forward. But as I said during the last quarter, we have seen the incoming flow to reduce. In terms of capital impact, well, first of all, again, we are happy that we received finally some clarification because these new rules is -- are subject to various interpretation. And so we are more than welcome. On one hand, we will have this impact of about 60 basis points on our core Tier 1 based on what are the specificity, and in particular, what the regulator said is that when 2 parties or the seller -- will agree a postponement of payment, this cannot be considered a valid argument for the suspension of the accounting of the delay. When I said that I'm positive about that because if we know the rules, we can also, going forward, offer contract that are able to maximize the return on regulatory capital. So the fact that there are uncertainty that did not allow us to switch from one type of contract to another type of contract because at the end of the day, for us, it's pretty much indifferent to use one type of contract or another one. So this impact that is based -- the 60 basis point are based on the end of September data. Clearly, we'll -- as soon as we have digested internally this interpretation, we can also commercially decide where to push and which type of concept are more interesting for our return compare other type of construct in terms, again, of return on regulatory capital. The core Tier 1 at around 11.5%, I think that is a level that is still well above our requirement, which I remind you that is in term of VAT is 7.75, and this include the calculation, the 25% payout anyhow. Because in our calculation of the core Tier 1, the 25% of dividend is already embedded and is not taken into consideration in the calculation. So we continue to deduct the 25% potential dividend distribution.

Just to understand on the Bank of Italy clarification. This is something that you expect have been notified to all players or it's just an ad-hoc?

No. I think so because that was -- there's been many conversation discussion with Bank of Italy in the past months. As you can see from the player in the market, you have a 3 listed company in the Italian market that are some specificity on the public sector. And the past-due for us did represent an amount of, as being reported by Ilaria, of -- in the slide, the past-due is EUR 90 million. Then you have another player that does exactly the same business with the same obligor, the same counter party that has almost 0 in terms of past-due. And then you have another one that is about EUR 20 million of overdue of past-due. The rules are the same, the assets are the same, the obligor are the same and very often, even the clients are the same. So there is a clear issue in terms of interpretation. And I think that these guidelines, this formal interpretation will put forward a level playing field to all the players. So I do expect that -- well, at least this is what Bank of Italy told us that the same clarification has been sent to all the relevant players in the market.

So basically, there should be similar impact -- not similar, but negative impact of all the players in terms of commercial policy. In simple words, we should expect higher discount when you go to buy an invoice or not.

Yes and no, in a sense that if we know the rules, we have a contract, for instance, if you don't notify the obligor, you don't have the overdue because that is what guideline clearly state. So rather than doing a contract with notification, you can do a contract without notification, for instance. Or if you are able to collect from our collector on the ground that there is any impediment and you're able to formalize the fact that there is an impediment, this suspend the calculation of the accounting of the past-due and -- means that we need to act as quick as possible to collect this type of information to save this information in order to not incur an overdue. So the point is, up until now, we have worked in a cloud [indiscernible] interpretation that [indiscernible] have done in line with the association of the factoring company to some extent, but also with our own internal interpretation. But it seems that we had that -- the outcome was different from player to player. As I said, we had EUR 90 million of the past-due. Other players in the market have 0. So clearly, how could it be? And -- but at the end, going forward, if we know the rules, we are able to offer product that are able to minimize the use of capital, then of course, we will have past-due because this will not cover 100% of the business. But certainly, we are able to reduce the waste of usage of regulatory capital. I say waste because we are talking about the obligor that is a public administration. So the risk that the public administration will not pay is close to 0. So at the end of the day, the increase of capital absorption is not really justified by the risk of credit, but we need to follow the rules, and not always the rules are written in a very clear way, and in particular, the nonnecessary written in the taking full in consideration the behavior of the European public administration because the guidelines of EBA are not only for Italy, but for every single country.

So in terms of classification, you don't expect any further different classification from the first year -- I mean, I was referring to the first quarter or maybe first quarter reclassification of bad loans, you don't expect to increase the coverage or the creditworthiness will be the same?

Yes. Because -- I mean, we are not talking about bad loans, we are talking about past-due. So we don't take any provision on the past due because...

No. I was referring to the other countries that you classified that you don't expect any additional coverage on that, as you did...

No, no. We take all the provision on the municipality and conservatorship.

Very clear.

Christian, to follow up on this question on the last point regarding the amount of past-due. The increase -- potential increase by EUR 60 million in past-due is absolutely in line and consistent with what Gianluca mentioned regarding the impact on the CET1 ratio of 60 basis points. So the potential impact calculated on the current situation, so the situation as of the 30th of -- end of September, of an increase in past-due will have an impact of 60 basis point on the core Tier 1 ratio. So the 2 figures are absolutely consistent within each other. And again, they are an estimate based on the existing situation. And there is another thing that I would like to add on the first question regarding the outlook. You asked the question specifically on whether we can forecast any additional disposal of assets? Your question was related to the factoring. So exactly, as Gianluca said, we are not expecting to do additional disposals within the factoring business. But we have forecasted already to do some asset disposal within the secured space, and I wanted to mention it because you will see it by year-end, but it's not a consequence of the performance of the business, it's something which has already been decided and forecasted. And it's really in line with the strategy of the business line. So every year, we'll stabilize the P&L by finalizing some asset disposals.

This would be seen in the net interest income line or in the other income?

In the total income.

Total income. Okay.

Yes.

The next question is from Manuela Meroni with Intesa Sanpaolo.

Yes. I have 4 questions. So the first one is a follow-up on the impact of the new definition of default. You mentioned that you may use different types of contractor products in order to mitigate this 60 basis point impact on the capital. So I'm wondering how much of this 60 basis points you think you could recover by using a different commercial approach? The second question is on the adjusted income margin in factoring. It declined from 5.2% in the first half to 4.8% in 9 month. This is not easy to be understand for me because the weight of tax receivable has declined. So as tax receivable interest margin that is lower compared with other receivable, I would have expected at least the stabilization of the margin. So if you, please, you can elaborate a bit more on this decline in adjusted EBITDA margin for factoring? The third question is on the cost of risk, very low in the quarter. So I don't know if there has been some been some write-backs or other? And if you can guide us for the full year in terms of cost of risk? And final question on your business plan targets. 2021 represents a slow start of your business plan. I'm wondering if you are still confident on your volume targets and on your RoTE above 16% target in 2023?

Okay. So I will take the first and the last question. So the first question is whether this 60 basis point will continue in the future? Well, as I said, we can use other commercial instrument. And this will certainly reduce this amount of past-due, but it will take time because the average duration of the asset is about 11 months. So we need to get out from the past-due before being able to reduce this amount. So it may take probably 1 year to been able to switch from certain other type of contract when the renewal will come true. So it will not be immediate effect, but we believe that this will have an effect probably towards the year-end when during the course of the next year other commercial product has been used in alternative to the one that generate more overdue. In term of the business plan, for the time being, we don't have much to add. As I said, in the first year, -- actually, this is the first 9 months of the 3-year business plan, so we are not at the point today to say that the business plan will not be -- we will not be perform as plan. We need also to see next year what is going to happen. If you take, for example, what is going on, on the last couple of days with the spread widening, Italian risk coming up, if this will continue, clearly, the performance will increase because interest rates will go up, and we will take advantage of it. At the same time, if there's going to be more perception of Italian risk, there will be more people to sell receivable. So there can be some impact. As at the end of the day, most of our business is a business of a very short duration. And therefore, at the end of every year, the portfolio is totally changed and is replaced with the new portfolio. So it's probably too early to say that the business plan is -- will not be met at the end of the third year. I will leave maybe to Ilaria to answer to the other question.

Yes, sure. The first question was regarding margins for the factoring. You are absolutely right. The decrease in margins is not due to risk receivables, but it's entirely due to a decrease in marginality of commercial receivables. Probably the commercial receivables segment average has registered weakest marginality this quarter ever. The reason of the decrease in marginality is not due to additional competition or to additional pricing tensions when we purchase the credits. But it's a byproduct, it's a direct consequence of the additional liquidity that was injected in the public administration system that Gianluca reminded earlier on during the call. The reason is the following: for commercial receivables, we have 2 type of products that we offer to clients. There is one product which is called Pro Soluto so no recourse with upfront discount. And there is another product which is still no recourse transaction, but where the discount is paid partly upfront and partly through monthly commission, which is accruing over time. So what happens is that if there are collections -- collections that are occurring quicker than expected, with the first type of products, nothing happens in terms of profitability of the transaction because the discount has been already fixed upfront. But if an earlier pace of collections occur for the second type of transactions, we register a decrease in profitability because we simply receive less discount overall because the commissions stop accruing once the credits have been collected and cashed in. So really, if there is additional liquidity injected in the system and if there are quicker-than-expected collections, the result is that for these transactions that have been executed through a type of commission products, the profitability is lower-than-expected. And the result of what I'm saying is clearly described in terms of numbers. If you look at the commission income line, you see there has been a significant drop in commissions over the past couple of quarters with respect to year-end, last year or even the first quarter. So this is really the result of the situation that Gianluca and myself described. So because the adjusted income margin is calculated as the ratio between revenues and average credits where the revenues is a sum of interest income as well as commission income, the result of this phenomenon is a decrease in overall marginality for the factoring business.

And On the cost of risk?

Yes. The cost of risk. The cost of risk has decreased since the beginning of the year because the amount of loan loss provisions set aside in the quarter has been significantly less than what happened in Q1 and Q2. So really the cost of risk for the 9 months is clearly lower than the cost of risk for the first quarter and will be even lower by year-end when the overall amount of the annual provisions will revert back to an amount which is more in line with what I've seen in the past, and for example, last year. So we've registered the cost of risk of 41 basis point. We expect it to reduce to 39 basis point by year-end. So the increase in cost of risk in Q1 and Q2 was really dependent on the particularly high amount of loan loss provisions that were due to the 2 specific situations that Gianluca reminded. So the provisions related to the agreement, the specific agreement on the position vis-à-vis the municipality financial distress and the other one is related to the increase in the expected collections time due to, again, municipalities in conservatorship. For the quarter, there has -- for this quarter, there hasn't been any significant provision related to a specific situation.

And no release as well...

No release...

This was one of the question I think that was if we had any release of -- not release on the third quarter? So simply not provisioning.

The next question is from Luigi Tramontana with Banca Akros.

Yes. First on the NII. You said that there may be an impact from different collection time expectations. Do you have any guidance on this item? And the second question is rather on the operating evolution of your business. If I remember well, in your business plan, you had a budget for your JV in Spain for a turnover of between EUR 200 million and EUR 250 million for this year. Just wanted to know how is it going on? Are you happy with the JV? Do you think that the budget will be reached? And what do you expect for the next few years?

Okay. Ilaria, do you want to take the question?

Yes, sure. In relation to the first question, we can only confirm what Gianluca mentioned at the beginning of the call regarding the trend in terms of liquidity injections to public administration entities. We do not expect this to continue forever. For example, even in the last quarter, we have seen a slightly decrease in terms of a quicker pace of collections and cash. So really, this would be very much dependent from the general behavior of the public finances, but we don't expect this phenomenon to continue for the foreseeable future.

There's no provision in the draft of the government budget for additional money to be given to the local authorities. Okay. Sorry. Go ahead, Ilaria.

So nothing more to add on to this comment because as we said, the decrease in the commission income was pretty much related to this type of event. So really, there is nothing more to say around this. We haven't seen, for example, a decrease in terms of offering of this product to customers. The appetite from customers for this type of product is exactly unchanged. Simply, the profitability is very different. And there isn't any way -- there isn't the possibility to switch with these customers, the product offering from a commission product to an upfront discount product simply because their appetite for this specific byproduct of the factoring. So we simply have to -- we've tried already clearly to see whether there was any chance to switch their appetite from one product to another, but we haven't been successful. So we simply have to wait until the situation recovers to more normalized levels of collections. And the other question was, sorry?

No. The other question was about Spain. Yes, the JV in Spain. I don't have the precise number, but I think that at the mid of the year, we have purchased as the JV, something above EUR 100 million, out of which is 50-50 between us and the Spanish Bank and the activity is growing also in Spain, like what was the situation in Italy, but more in particular in Spain because it's a pharmaceutical industry, there will be probably more big ticket at close to the year-end. So we are quite happy with what is going on in Spain. We have several client. We are collecting in line with the expectation. Bear in mind that different from what we do in Italy, we don't take any accrual of LPI. So we -- the LPI are all collected on a cash basis. So the turnover will not contribute much to the P&L because we don't take any accrual on the LPI. And the only small portion that we have is relating to the discount. But in Spain, like in the pharmaceutical industry in Italy, the acquisition price is close to par because the margin comes purely from the LPI that are paid by the obligor.

Mr. Gianluca, Ms. Bennati, there are no more questions registered at this time.

So thank you very much to everybody, and have a nice weekend. Thank you. Bye.

Thank you. Bye-bye.