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 First 9 Months 2024 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.

Good afternoon, everyone, and thank you for joining the first 9 months 2024 results of Banca Sistema. In the first 9 months, the bank consolidated and accelerated the trends recorded in the previous quarters. Revenues grew by 19% year-on-year compared to plus 11% year-on-year in the first half of the year, thanks to the excellent performance of adjusted net interest income. The improvement was the result of the positive commercial dynamics and the constant asset repricing, which helped to enhance the adjusted income margin. It's worth to highlight in the third quarter, a slight decrease of the cost of funding quarter-on-quarter, which, although growing year-on-year is showing first signs of improvement. From a commercial point of view, factoring confirmed double-digit growth in turnover, plus 12% year-on-year. Same trend for the pawn loans business, showing a 9% year-on-year increase in outstanding and for the CQ loans whose turnover grew by 16% year-on-year. Despite the strong new production, the CQ outstanding as planned, showed a 10% year-on-year decrease due to prepayments and portfolio disposals. The acceleration in total income growth, as said, was the result of the improvement in adjusted net interest income, but also in fees from factoring and pawn broking due to higher number of fee-based products sold to clientele. In the 9 months, there was also a slight increase year-on-year of revenues from treasury department and other revenues linked to CQ and factoring loans disposal. In particular, adjusted net interest income, which is the sum of net interest income and trading super bonus, reversed the trend of the last couple of years by recording plus 11% year-on-year growth compared to a 9% year-on-year decline in the first half of the year. The cost of funding, as expected, after a stabilization in the second quarter showed a slight improvement in the third quarter at 3.59% vis-a-vis 3.63% in the second quarter. Interest expenses as well showed a slight decrease quarter-on-quarter. Cost of risk was slightly up year-on-year to 20 basis points from 18 basis points in first 9 months 2023. Operating costs, including systemic charges, grew 17.6% year-on-year, but the increase stems from the accounting of deposit guarantee scheme provisions in the second quarter instead of the fourth quarter as was the case in previous years, which raised costs by EUR 5.1 million. Net of this effect, operating costs grew by 11% year-on-year. It's worth to highlight that these figures include investments embedded in the 3-year strategic plan presented last May, including those related to IT and AI developments. They also include costs linked to Kruso Kapital IPO and acquisition in Portugal. The adjusted pretax profit equaled to EUR 26.2 million, plus 37% year-on-year, while the adjusted net profit equal to EUR 15.8 million, plus 27% year-on-year. The adjustments have been made to exclude the deposit guarantee scheme and the single resolution fund from the calculation of the figure as the booking of the deposit guarantee scheme in the second quarter makes the year-on-year comparison less significant. Regarding the balance sheet, assets grew by 9% year-on-year, also thanks to the increase of the government bond portfolio vis-a-vis 9 months 2023, while the CET1 ratio and total capital ratio fully phased are growing year-on-year by plus 48 basis points and plus 26 basis points to 12.74% and 15.69%, respectively. The CET1 ratio and total capital ratio phased in stood at 12.91% and 15.86%, respectively. RWA grew quarter-on-quarter due to higher factoring to the private sector and a slight increase in NPEs. Turning to the performance of the factoring division. As mentioned, turnover grew 12% year-on-year, while outstanding was pretty stable quarter-on-quarter to EUR 1.6 billion or almost EUR 2 billion, including loans linked to trading super bonus. The decline in outstanding can be attributed to higher collections and some disposals. Nonrecourse component accounted for almost 60% of the total, while tax receivables accounted for 16%. In terms of the breakdown by Obligor, however, there has been a slight rebalancing toward nonpublic administration, which brought public administration to account for 58% of the total portfolio compared to 65% achieved in the first half of 2024. CQ dynamics are in line with what was envisaged in the plan just presented at the end of May. Turnover continues to grow with a more disciplined approach and serve to offset prepayments. The outstanding drops to EUR 747 million due to portfolio disposals and prepayments. The private sector accounts for 20%, while public sector employees and retirees account for 80% of the total. As for the pawn loans business, outstanding continues to grow almost double digit, equal to plus 9% year-on-year with total turnover, including renewals, rising to EUR 166 million in 9 months 2024 or plus 28% year-on-year. I turn the floor over to Ilaria to comment in detail the balance sheet and income statement numbers. Please, Ilaria.

Thank you, Gianluca, and good afternoon. Total assets grew year-to-date by 4.5%, thanks to the government bond portfolio, which was completely replenished after the disposals that occurred at the end of 2023 and offset the decline in outstanding in both factoring and CQ. It is worth noting that the decline in factoring year-to-date is in line with expectations and is mainly related to the repayment of some big tickets originated at the end of 2023 and fully repaid as well as some transfers of receivables and finally, higher collections. Italian government bonds classified in the held-to-collect category remained unchanged year-to-date and amounted to EUR 61 million with a duration of 35 months, while those classified in the held to collect and sale category increased by EUR 664 million year-to-date and have a duration of 4 months. The held-to-collect category included an EUR 11 million investment in ABS notes. Due to banks declined 43% year-on-year or minus 50% year-to-date, mainly due to the TLTRO repayment, which now stands at EUR 262 billion. Due to customers, on the other hand, grew 19% year-on-year due to strong growth in term deposits that more than offset the reduction of current accounts and repos. The decline in debt securities is driven by lower structured funding with both factoring and CQ receivables collateral. Turning to revenue performance. Total gross income grew 39% year-on-year in the first 9 months, led by factoring, SMEs guaranteed loans and pawn loans. Slightly down on the other side was the contribution of salary guaranteed loans CQ due to disposals during the year and negative contribution from a legacy portfolio. Factoring benefited from the positive business performance, including super bonus credits. As far as factoring LPI from legal action, they were pretty flat year-on-year, thanks to higher extra collection contribution, which offset a lower contribution from accrual. Finally, the year-on-year comparison for factoring extra judicial LPI was positive. Superbonus revenues in the first 9 months 2024 amounted to EUR 24.8 million, of which EUR 23 million from trading Superbonus. As regards to adjusted income margin, very positive trend in factoring, which increased from 6.3% in 9 months 2023 to 8% in 9 months 2024 as well as in pawn loans, which increased from 19.2% to 22.1%. The margin of the CQ business was slightly down year-on-year. Looking at the breakdown of net revenues, adjusted net interest income reversed the negative trend year-on-year seen since the end of 2021 and showed an 11% increase year-on-year. thanks to factoring plus Superbonus and pawn loans contribution. Commissions also increased by 39% year-on-year, thanks to higher fee-based products sold to clients. And last but not least, the contribution of treasury department and asset disposals was also positive year-on-year. Noteworthy is the increase quarter-over-quarter of adjusted net interest income in the third quarter 2024, thanks to slightly lower interest expenses and better contribution from factoring plus Superbonus. In detail, the adjusted interest income grew in the third quarter by 42% quarter-on-quarter and 62% year-on-year. Turning to the cost base. Personnel costs grew 19.2% year-on-year due to the higher number of FTEs and the increase in the national labor contract. The comparison year-on-year is negatively affected by some release of bonus pool done in the third quarter of last year. Administrative costs decreased by 2% year-on-year and include some one-off costs, for example, industrial plant preparation, IPO of Kruso Kapital, M&A costs linked to acquisition in Portugal in the Pawn Broking segment. They also include some credit-related costs, for example, origination and collection and insurance costs on credit. Overall costs increased 18% year-on-year due to accounting of deposit guarantee scheme for EUR 5.1 million in second quarter instead of fourth quarter as occurred last year. Net of systemic charges, operating costs grew by a smaller 11% year-on-year. The next slide shows the contribution of individual business units to group net profit, which stood at EUR 15.8 million on an adjusted basis, excluding systemic charges. Factoring closed the first 9 months of the year with a net profit of EUR 23.2 million, registering a growth of 31% year-on-year. Still negative instead was the contribution of the CQ business, while the Pawn Broking division made a positive contribution of EUR 2 million figure, which is already net of minorities. We expect that in the last quarter of the year, repricing on the one hand and stabilization of the cost of funding may improve the divisional trends recorded in the 9 months. As for funding evolution, the bank has sharply increased retail funding year-on-year, bringing term deposits to EUR 2.6 billion vis-a-vis EUR 2.1 billion in first 9 months 2023. This trend more than offset the targeted reduction in current accounts and brings the weight of retail funding on total funding to 69% vis-a-vis 66% 1 year ago. We kept reducing the reliance on ECB funding by reimbursing EUR 278 million in the first 9 months of 2024, bringing the outstanding to EUR 262 million. In terms of cost of funding, it was equal to 3.59% or minus 4 basis points quarter-on-quarter, but higher by 91 basis points year-on-year with a narrowing of the spread between retail and wholesale funding cost to 10 basis points vis-a-vis 28 basis points in the first half of 2024. I now turn the floor over to Gianluca for some remarks on asset quality and capital ratios.

Thank you, Ilaria. From the asset quality point of view, we recorded in the first 9 months a substantial stability in both bad debts and unlikely to pay, actually a decrease in the latter, while there was an increase in past due loans. The cost of risk was 20 basis points in the 9-month period compared to 18 basis points in the first 9 months of 2023. From the perspective of capital ratios, the CET1 ratio and total capital ratio phased in stood at 12.91% and 15.86%, respectively, while the CET1 ratio and total capital ratio fully phased grew year-on-year by plus 48 basis points and plus 26 basis points to 12.74% and 15.69%, respectively. It's worth highlighting that the ratio fully phased improved both year-on-year and quarter-on-quarter despite an increase in RWA, thanks to higher earnings and lower held-to-collect and sale reserves. RWA increase was due mainly to higher exposure to private sector and the increase in NPEs. Current ratios confirm the ample capital buffer, circa 350 basis points, which the bank keeps with respect to SRP, which envisages a minimum common equity Tier 1 ratio set at 9.4%. In conclusion, the first 9 months results confirm the improvements in operating trends, particularly thanks to top line, which saw an acceleration in adjusted net interest income with the cost of funding, which started to go down. positive trend also in adjusted income margins. The 9 months 2024 were negatively impacted by the anticipation of DGS to the second quarter, a factor that should release earnings in the fourth quarter of the year. Capital ratios and liquidity ratios confirm the improvements seen over last year and support asset growth and the bank's ability to remunerate shareholders as it has always been done since the bank has been listed. Operator, we are ready now to answer any questions that will come from the audience.

[Operator Instructions] The first question is from Fabrizio Bernardi of Intermonte.

I have a couple of questions. The first is about if you could give us some color on the funding cost going forward. It seems your NII is improving and the ECB may cut Euribor rates even further. So, my point is to focus on the divisions that are performing good, so factoring and broking versus the divisions that has so far performed worse like the CQ. Secondly, I'm interested in the significant risk transfer you are setting in order to cut by, if I remember well, EUR100 million of RWA. How does it play with your expectations in CQ? I would also like to know your expectations about pond broking from Portugal. I think that this may be another part of your growing story. And last but not least, it would be positive to have your considerations about trading gains going forward. I understand that you are adjusting NII because of trading gains and this is meaningful because it is not a trading gain, it's just selling portfolios. So, I mean, what we could expect about trading gains on the 110 bonds portfolio as for 2025?

Okay. Thank you for the question. As you appreciate, let me start to say that as you know that there was avatar from me and Ilaria that present the results. I hope that is helpful for all participants.

It was very good in my opinion. It's a smart choice, to be honest.

Thank you very much. I will answer to your second question, and I will leave to Ilaria to answer about the cost of funding, Portugal and trading gains. About the significant risk transfer, this was part of our business plan that we presented, the 3-year business plan. This is the first transaction that is going to cover only the CQ asset, no other asset of the bank. It's something that is, I would say, is becoming a standard methodology. Many banks already use it. And this will allow to free up this EUR100 million in the area of EUR100 million of RWA. This free capital will be used on the factoring and it's not going to be used on the CQ business because it's more rewarding for us the return on factoring compared, of course, to the CQ, even the new production of the CQ is less profitable than the production on the factoring. So, the capital that we will be able to free up will be used on the factoring business. Maybe Ilaria, if you'd like to cover cost of funding. the contribution of Portugal and the trading gains going forward?

Yes, sure. So, in terms of cost of funding, the Q2, as you may remember, the Q2 figure in terms of cost of funding was stable vis-a-vis Q1 cost of funding at 3.6%, while Q3 funding cost is around 10 basis points lower than Q2 funding cost. So, the cost of funding for Q3 was 3.52% to give you a precise figure, which means that after reaching the plateau and after remaining at the plateau for a couple of quarters, we might have started see a slow decrease in funding cost. In terms of outlook for Q4, we expect the funding cost for Q4 to trend even lower than that, so to set below 3.5%. But in terms of expectation and estimate for the full 2024 funding cost, we confirm the original 3.6% because 3.6% is going to be the blended figure for the whole year which is the average of a slightly higher funding cost for the first half and a slightly lower funding cost for the second half. We have raised more funding in the first half than in the second one, which is why the funding cost of the first part of 2024 is going on a relative basis, with more than the one raised in the second part of the year. Having said that, we see a lower trend to have kicked in, and we have good expectations for 2025 and 2026. You might recall that in the business plan we presented in May, we indicated an estimate for 2025 funding cost below 3.5%. Exactly the figure was around 3.3% and the figure for 2026 was around 2.8%. If ECB cuts rate at a faster pace than the one in this, we believe there might be an upside in terms of beating expectations for 2025 and 2026 in terms of average funding cost.

Sorry, if I can say something more about the turnover in factoring, I remember that last year, you had some big tickets in the last part of the year. I was wondering whether the turnover may, let's say, record the same kind of track record in a way in the other, maybe the fast it can be similar.

We don't have visibility of any extraordinary ticket. The turnover will grow in terms of turnover. As you have seen, we have an outstanding that is more linked to private sector risk. This can either because we have some obligor on the private sector or because we have done new transaction with recourse rather than without recourse. The turnover will most likely, in our view, will continue to grow, but without any major ticket. Then it can happen like last year was not forecasted a major ticket. And if there will be something, we always be prepared to evaluate those tickets. This turnover with private, it can be in -- remain in our balance sheet or as we did on the third quarter or as we have done also in the past, we have a line in place to resell this private sector receivable. Clearly, the decision of reselling or maintaining the position will be driven by our decision based on the new other turnover coming in that give space to this additional turnover that may be more rewarding than what we have in our book. So it's always been an activity that is monitored on a regular basis. But overall, the turnover of the full year, we expect to be higher than the turnover of the previous year without big ticket.

So moving to the question on Portugal, just a couple of figures. We have bought assets for around EUR 16 million, business which operates for 16 branches. And in terms of contribution to net income, the contribution for 2024 clearly is going to be negligible considering the remaining time to year-end and considering, of course, that we've had transaction costs. But if we look at 2025 and 2026, the estimate is that this business will contribute by around a little bit more than EUR 1 million in 2025 and just a little less than EUR 1.5 million in 2026 without including any -- so in terms of like business as usual, so without including any growth -- specific growth in the business. This is, of course, I'm giving you a contribution to the net income figure. And then you were asking about the contribution of what we call trading super bonus, right? So in terms of contribution for 2024, well, for the first 9 months, we've recorded a contribution, which is around EUR 23 million, so slightly less than EUR 25 million, which is going to increase even further in Q4, reaching a little bit more than EUR 30 million. As we've commented already in previous calls, this is going to be the peak in terms of super bonus. So Q4 is going to be the peak in terms of quarters and 2024 is going to be the peak in terms of financial years. Having said that, the contribution of trading super bonus will still be meaningful for the years to come. Clearly, the figure is not going to be EUR 30 million for 2025, but we can envisage something around EUR 20 million and a little bit less in for 2025 and a little bit less than that in 2026. This is, of course, based on the current origination. So without including any upside in further origination, which may always occur.

Maybe the only piece to add to the Ecobonus is that we are active in 3 different ways. We have assets that are in our balance sheet. We have assets where we are a senior investor in a securitization. And then we are also a servicer into a securitization that is totally underwritten by other investors. So these are the 3 lines of business. For 2024, almost all the due amount of the tax credit that were in our balance sheet has been sold to people that have a tax capability. So there's not much that need to sell again, and so this is pretty much the situation of the super bonds.

The next question is from Davide Rimini of Intesa Sanpaolo.

If I may, just a sort of follow-up on each topic. The first one is on factoring, we understand from competitors of yours that they've seen sort of volumes sharply declining over the last quarter. And I was just wondering whether you might actually in Italy and where in Spain, they have highlighted a strong volume growth. I was just wondering whether you can follow up in terms of the competitive arena briefly, giving us some commentary on the way the market, especially regarding the public administration will evolve from here. This is the first follow-up question.

Yes. So far, we did not see much decline because we are active in many different areas that involve public administration. Therefore, we have not focused on a specific asset class. For instance, we have seen a decline in activity on the health care space. And going forward, probably this will continue. But on the other hand, we have seen other transaction involving public administration that may be also linked to the PNRR, linked to renewable subsidies and so on that is also continuing in terms of activity. We have also the area of entertainment that continue to be interesting. Most of these assets, while not public administration are insured, and therefore, the risk is similar to public administration. So far, our visibility, it is not a decline on the activity. So there's not much I can add. The prove is that our turnover remain stable, positive in the course of the year.

And is there any sort of additional commentary that you might say sort of in the Spanish market?

The Spanish market for us is overall is a smaller market in the total situation. I would say that we have seen an activity that if I compare well year-on-year is slightly below, but when I say slightly, probably in the area of EUR 10 million turnover less, which is not significant. But we expect towards year-end to remain in a positive trend. We have noticed some difference from Italy in Spain, some slowdown actually in payment by public administration, and that may incentivize more corporate to sell assets compared to the past. But this is a more recent trend which is based on our own information and not necessarily on the market overall situation.

Second follow-up question was on the scenario of interest rate scenarios, which looks to be or at least the macroeconomic scenario weakening looks to suggest sort of confirm sort of a decline in interest rates, which was sort of the assumptions behind your business plan you presented back in May. The question from my side, the follow-up questions is specifically on the CQ business. And I was just wondering whether sort of you might add a few words on: (a) sort of the level of profitability recovery of that business; and (b) whether sort of the actions of downsizing through portfolio disposals might accelerate in a scenario of a quicker fall in interest rates?

Okay. Well, first, in terms of overall decline scenario, I don't want to make comment, macroeconomic comment that probably are more expert than me. But certainly, on one hand, the trend of reduction of interest rate that we believe will continue. Then with the important changes happening in the states, we have to see whether long term where it's going to land this scenario. Just to make a comment that is also related to your previous point about factoring turnover. If, for instance, Europe will be asked to spend more money on defense, this will increase our turnover in factoring because that imply more spending on that area. On the CQ side, what we are doing is, on one hand, to continue to see that the old portfolio will -- month by month is going to reduce relative to the total outstanding. The fact that interest rates are going down is accelerating the process of refinancing. The business of CQ is a business that at half of the life of the loan, very often individual refinance their position. When interest rates were high, this refinancing had slowed down because the amount in absolute term of money that you would be able to give to the individual actually was minimal or even close to 0 because if you have a cap up to 1/5 of your salary, at the end, if you refinance with higher interest rate, you're not going to get money in terms of in absolute term back. If interest rate goes down, what will happen is that more people will reconsider their position and will start to refinance. And that can have an acceleration in the refinancing of all the portfolio that are at a low interest rate. Clearly, when we make disposal of the CQ, we are not making disposal on all portfolio because nobody wants a return that is at 2% when interest rates in the market are higher. So when we make disposal is we make disposal on the new portfolio, simply not to increase too much the capital allocation of this asset. That means that on one hand, if you look at the division as such, you may see a negative result of the division, but simply because we are moving -- we are allocating the spare capital into factoring that is higher reward. Even as I mentioned before, the SRT that is coming from CQ, we are not allocating it to the CQ. We are allocating to something else. But we are able to do the SRT because we have the CQ, okay? So it is -- when you look at the result of the division, clearly, you need to take in consideration all the possible picture that you have on that. Clearly, for the time being, we are reducing overall. We are selling more third-party product just to keep our network fully engaged. When interest rate will be reduced, then -- if on the other hand, on the top line, the level of return will eventually be interesting for us, we can decide eventually to re-expand the position on the CQ. But for the time being, we have the legacy portfolio that will continue to reduce. And the 2026, we will have the majority of this portfolio being offloaded. It can be accelerated if there will be more refinancing by individual that clearly with more lower interest rate they can refinance. And the new portfolio is that we are originating is in absolute term is not going to replace what is the normal decline of the legacy portfolio.

The third question, if I may, the follow-up question is on trading income on Superbonus. And I got sort of the full answer already. I just wonder since if I understood correctly, so the projections that you've been giving is assuming no further origination. Now I've seen sort of that you've been originating more on your balance sheet tax assets on Superbonus over the last few quarters. So I just wonder how you would suggest to us to think about it in terms of sort of potential to further adding tax assets, so further originating new businesses for Superbonus.

So in terms of origination, really, I would say that the most of the market of Superbonus has been already placed in balance sheet. Remember that the majority of our Superbonus credit comes from acquisition that we have made from other smaller banks, local banks, okay? So they have those portfolio. They don't have the capability of finding on the other hand, people that are corporate that have a tax capability. So we bought those portfolio, and we warehouse up until we are able to sell it to people that have capability. We may continue some sort of origination, but a very low pace. And most of it will be to fill in the securitization that are in place. The one where we are a senior investor and the other one where we are the servicer and we don't have any investment on it. So we may see this turnover rather than appearing in our balance sheet simply appear as additional fee or revenue that we gain through our role of servicer for investors that in both cases, are non-Italian investor of this securitization. But the market, I would say that there are some spare Superbonus around but clearly not of the size of the past. So there may be some increase, but not significant going forward.

If I may still sort of add another sort of follow-up question is on sort of pawn business. As we mentioned the Portugal acquisition closing. If I'm not mistaken, you've also announced in Italy over the week, a portfolio in Tuscany acquisition. And my question is, from time to time, I collected the message that you identified these opportunities. So the general question -- 2 questions actually. One, whether you might comment on these specific acquisitions and the price paid? And the second one is on sort of the size of this portfolio looks bigger than the previous one you announced over the summer. So I just wonder whether you might add a few words whether there are many opportunities around or there are just fewer opportunities around given the size of Kruso Kapital already reached in the market.

Yes. These are, first of all, different from Portugal. Portugal is an acquisition of a company with employee branches with the authorization of the 2 regulators. So it is an acquisition of a growing structure and well-performing traction. The portfolio acquisition, these are actually really portfolio. So our pawn broker that they have, in this case, the seller is another bank. So they may have a residual activity that is insignificant vis-a-vis the overall business. And in this case, they decided that it was for them not worth to maintain such a small position, better for them to sell the portfolio. So this portfolio is about EUR 8.5 million. The size of the portfolio may have increased over time, thanks also to the price of the gold because don't forget that gold price keep going up. And as far as we can see is that the situation is not changing because in Africa, there are Central Bank that decided to issue new currency linked to the gold. You have a situation in a country like Turkey, where people are buying gold because when you have an inflation that is above 70%, you don't trust the banks, you don't trust the currency and you start to buy gold. So the gold price keep going up. And so those portfolio may change, may become even bigger over time. In this year, we have also bought a couple of other portfolios. It may happen they are pretty small in terms of size. but always economy of scale for Kruso Kapital because any portfolio we buy, we don't have to add resources. We already have the infrastructure. It is a full economy of scale. And this may happen also in Portugal. In Portugal, there are 2 major players. One, we bought it. But then there are also some smaller players. And this may happen that over time, there may be portfolio available that we can incorporate in our company in Kruso Kapital. But it will always be not big size, but really valuable because this business is a business where on the bottom, you have the gold and the return is interesting and the economy of scale are quite interesting as well.

One last question from my side was sort of on a topic which I'm not so sure whether sort of has been covered already, and it was about the cost of risk. If I'm not mistaken, you signaled in the previous call that this year, you're probably going to register a cost of risk higher than last year, though last year was significantly lower than historical average. First of all, whether sort of collected sort of the right message. Now there has been an uptick in the quarter, but it's still way below the historical 35 basis points that you signaled at the business plan in May. So I just wonder whether you might fine-tune at this point of the year, sort of whether sort of it's not the 17 basis points of last year, but it's not going to be as well the 34 basis points or 35 basis points signaled as historical average in the past of the company.

As you correctly pointed out, there has been an uptick in cost of risk this quarter, and we envisage a further uptick in Q4. So in terms of cost of risk for the whole 2024, we have envisaged something around between 25 and 30 bps -- no, definitely less than 30 bps, so say, around 25 bps, which is definitely higher than the 17 basis points that we have registered last year. But as you also said, the 17 bps was particularly lower vis-a-vis historical average. So 2024 cost of risk is going to be more in line with what we have registered over the years. There isn't any specific reason behind this increase. We simply manage the loan loss provisions with a different phasing over the year -- over the course in this year.

I don't remember by heart, what is the coverage ratio of excluding public administration?

I don't have it handy. No, I don't have it handy, but we can definitely follow up.

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

So thank you very much, everybody, and have a nice weekend. Take care.

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