Banco BPM S.p.A. (BAMI) Earnings Call Transcript & Summary

Good evening. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banco BPM Group H1 2025 Results Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Arne Riscassi, IR Manager of Banco BPM. Please go ahead, sir.

Good afternoon, everybody, and thanks for joining the Banco BPM half year results conference call. Giuseppe Castagna, our CEO; and Edoardo Ginevra, Joint General Manager and CFO, will take you through their presentation, which will follow by a Q&A session. Please just let me remind you to limit to maximum 2 questions each. I will hand over to Mr. Castagna.

Good evening, everybody. Welcome to our H1 presentation. Very happy to give you this presentation, which is full good results and state of art of our business plan target already reached in our H1. First of all, very good net income at an all-time high at EUR 1.21 billion, well on track on our target of this year, EUR 1.950 billion. Very good news also from capital. You remember that we had a guidance of 13%. We are already at 13.3% of CET1. Also of course, this will be the first presentation, which we have also consolidated from the second quarter Anima results. So I will try to give you both figure, one, like-for-like without Anima contribution. And of course, the stated one, which includes also Anima contribution, which means Q2 contribution plus the one-off on capital gain. Let's start from net income, 31% like-for-like increase from EUR 750 million of H1 last year to almost EUR 1 billion, EUR 984 million this first half of the year, to which we have to add EUR 230 million of global contribution of Anima. Let's say that this accounts for EUR 54 million being the contribution of Q2; EUR 200 million being the capital gain and minus EUR 25 million, which are the cost of both the successful Opa and the abandoned Ops. For a total, again, net income of more than EUR 1.2 billion in 6 months, which is -- which represents 62% of our guidance of almost EUR 1.950 billion for 2025. Again, the guidance will be overcome by our common equity Tier 1. And this is -- all these results, I would say, are thanks to our the confirmation of our model to be very close to our clients, to our territory and is well represented by the growth that we had bought in new lending for EUR 15.3 billion in the first 6 months of the year, which represents 50% more than the same period last year and also the sales of investment products, which is 12% plus year-on-year. Very good performance also on the management of our credit portfolio, which declined 23% year-on-year. And if we exclude considering net NPE, the loans with state guarantee, which we don't want to sell because they're very much well covered, then we can cash all the difference. We are below 1% to 0.84%. We confirm the interim dividend also for this year, which will be approved by the Board in November, and we paid the same month during 2025 for a total consideration of EUR 700 million, even though we have already accrued in the first half of the year, EUR 800 billion (sic) [EUR 800 million] of potential dividend to be distributed. Page 7, let's consider what happened to our bank with Anima consolidation to confirm the successful strategy that we had in launching the public offer for Anima. We have our group now handling EUR 155 billion of assets under management on top of the more than EUR 200 billion of the bank with a total consideration of EUR 383 billion managed by the group. Also the contribution to the fees and the net fees, the net income is very considerable. We increased with Anima pro forma -- on a pro forma basis, 23% net fees and 11% net income of the group. Another very important target that we have already reached, which was 1 of the main target for 2027 of our business plan was to even the contribution from Non-NII to the 1 given by NII. I'm sure you remember that our target was to reach 50% of Non-NII, let's say that after first half of the second year of the plan, but the first year with Anima inside we are already at 49% of Non-NII on total revenues contribution and also the contribution to net income from wealth management, asset management and protection is already at the level -- target level of 35%. And very consistent. It's also the increase of both return on equity, return on tangible equity, respectively, to 17% and 22.6% and also the pretax and pre one-off profit contribution is already at level of the final year of the business plan. So we are already at EUR 1.6 billion vis-a-vis EUR 1.577 million being an average of the results of 2027. The contribution comes from very solid growth in revenues. As you can see on the left, we grew notwithstanding EUR 124 million reduction in NII year-on-year we grew Non-NII EUR 213 million for a total consideration of EUR 2.833 billion, which is 3.2% like-for-like growth to which we have 2 other contribution second quarter of Anima, which is EUR 141 million, ending up to more than EUR 3 billion in the first half of the year. Again, the Non-NII revenues grew from 38% in the first half of '24 to 45% like-for-like. And if we have a pro forma consolidation of Anima for all the year, we are already, as I mentioned before, at 49% of contribution. This was coupled by a very strong cost control. We reduced our costs from 2.6% like-for-like, and we are basically at the same level of cost even of '24, even if we include the costs related to Anima for the second quarter. The same we can say for the declining of provision, which went down 24% from EUR 250 million to EUR 163 million, which comes from a reduction of LLPs from EUR 194 million to EUR 164 million and basically to reduce to 0 the other provision mainly on real estate. On Page 9, this was coupled again by a very strong capital position. We started, as you know, it's 15% of end of last year, we had face 2 very strong reduction coming from the Anima acquisition, of course, after the denial of the application of Danish Compromise, which accounted for 242 basis points and regulatory headwinds for 62 basis points, mainly related to Basel III. This ended up our capital to 12% to which where we were able to add both with organic capital generation and managerial action, mainly, I would say, regarding on fair value compressive income, DTA and so on the level of the capital above the 3% to 13.3%. The same comes from MDA buffer, which grew from an average level that we mentioned, Q1 of 350 basis points to almost 380 basis points. Let's see, generally speaking, you know that our business plan has been done with a strong top of transforming our bank from a pure commercial bank into a more consolidated bank with all the product factory contributing to the final results. And of course, in order to do that, we -- it takes time, but we were very quick to reach some of the target already forecast for '27 already in the first half of the year notwithstanding that, there is still a long way to complete. And we want just to say that for the different product factory that we consolidate, let's say, in the last 3 years, '23, '24 and '25 we are still halfway, I would say, to the final full steam that we think can be -- can happen from -- starting from 2026. For the different product factory, let's say, that the life insurance that we integrated in 2023, but we had the opportunity only to switch in terms of IT system during the second quarter of '25, we have completed the migration very successfully. Meanwhile, our joint venture, P&C is still under migration, which is to be completed in second part of 2025. This is just to say that these are very long consuming time transaction, which are already given very good results to our bank but still have to perform in the terms that we forecast in the business plan because still has to bring more value to our bank. The same we can say for the payment system our Numia joint venture with Iccrea and FSI. The transaction was completed in '24. We worked a lot last quarter, Q4, the first quarter '25 to complete the POS migration, which is completely successfully completed, but we are now starting with the issuing migration. So the issuing of credit cards to our clients. And this will take for the whole '25. So again, the full steam will be in '26. Last but not least, Anima, which was announced, the cash offer was announced on the 6th of November '24, as you know, has been completed April '25. This is the first quarter in which we consolidate Anima and the numbers are already very loudly speaking. But still, we think that with all the synergy, we can have full steam again in '26. So I would say, very good results up to now, but it's a long work, and we have to wait maybe another year to see better and stronger results that we expect. Let's have a look to the road map to the planned target. As you know, we plan to terminate 2027 with EUR 2.150 billion of net profit. We have on the right side of the Slide 11, split in 2 of course, the F1 and F2. Compared with H1 '25 pro forma, which means consolidating Anima for both quarters, not only for the 1 that is stated not considering, of course, the one-off and comparing this figure with our final plan target. As you can see, total revenues are almost there. We have performance EUR 3.150 billion as total revenues compared to EUR 3.180 billion of the target of the plan, which is we are slightly above in terms of NII, EUR 30 million above, slightly below EUR 70 million below in terms of fees and commission. This is why I explained to you that the roadmap for the inclusion of volumes of the product factory are still to come with core revenues, which are [EUR 3.100 billion] vis-a-vis [EUR 3.160 billion] with noninterest income contribution of 49% compared with 50% of the plan and operating costs, which are already at the level of the 2027 plan target. Cost income is already there 44%. We are below in terms of cost of risk with net income, excluding one-off and by for, minorities, which is almost EUR 1.60 billion compared to EUR 1.75 billion of the business plan. So still some room, but very close to the final target. Let's have a look compared to the main figure of our H1. Of course, we are comparing like-for-like in the first 2 columns, and we just put also the stated number on the fourth column of the slide. I will comment, of course, only the like-for-like. We are 7% below in terms of net interest income. If you consider the NII at full funding costs, which means including the cost of the reduction that we experienced the cost of certificates, the total NII cost has been 4.2% below last year's results. And this 4.2% has been completely replaced by increase of 4.4% in terms of net fees and commission, which grew 4.4%. Let's say that we had also a very strong increase in terms of income from insurance from EUR 25 million to EUR 80 million. We had a good net financial result from minus EUR 76 million to plus EUR 46 million, and this brought total revenues 3.2% vis-a-vis H1 '24. We already spoke about the reduction of 2.6% in terms of operating cost, which brings the pre-provision income to plus 8.5%. We experienced some reduction in total provision. So we grow the contribution of profit from continuing operation pretax to 14% and post tax to almost 18% more than the first 6 months of '24. Of course, '24 was impacted from the last tranche of systemic charge. So we end up with a 31% of increase like-for-like accounting, net income to EUR 984 million. Meanwhile, including Anima, we reach net profit stated of EUR 1.2 billion. On the right side, you're going to see the main trends, '23, '24, '25, both, of course, compared with the first with H1 of each year. And you see that the growth and the improvement was good in all the main line of the profit and loss revenues grew almost 12%. Cost income went down for a full point -- percentage point. LLP were down 36% and net profit from continuing operation was up 42%. Let's go through some items. NII, EUR 1.6 billion, the results of the year, minus 7% year-on-year. Meanwhile, we have Q2 compared to Q1 at only 3.9% below. If you exclude a one-off of Q1 related to interest on a previous litigation, we have like-for-like, an increase of 1% also Q2 on Q1 on net interest income. Let's consider how these 6 months results come from a reduction of Euribor, which in the first half of '24 was 3.87% and was down to 2.33% in H1 '25. The sensitivity would have brought down more than EUR 200 million our results, but we were able to recover EUR 91 million through managerial action. Through managerial action, excluding one-off, we have already recovered EUR 65 million out of the EUR 100 million we said in our presentation of the strategic plan, we would end up the 2027. So almost 2/3 of the recovery has already been done in the first 6 months. Let's pass to the trend of Commercial Spreads. Spreads are doing much better than the reduction of Euribor. As you can see, both year-on-year compared with Q2 '24, we have had a Euribor down 170 basis points with the Commercial Spread down only 118 basis points. Meanwhile, Q2 and Q1 '25, the reduction of -- sorry, of Q2 '25 to Q4 '24. So in the last 6 months, the reduction of the Euribor was 91 basis points. Meanwhile, we managed to reduce commercial spread only 66 basis points on the bottom side of the right part of the slide, you will find the update on the managerial action that you well know, we have increased our replicating portfolio to EUR 26.5 billion, up from EUR 22 billion end of the year with an average receiving yield of 2.1% and the duration of 2.7 years. The share of index current accounts stayed at 36% compared with 34% full year -- and you can see also some indication about the low cost of wholesale funding that we have experienced thanks to the better perception of our risk profile confirmed by the rating agency also after the abundant of our Ops very recently. We will tell afterwards some detail. But the reduction of the spread, as you can see, is really massive contributing to the bettering of our results vis-a-vis the final target of the industrial plan. We have been reaching these results, continuing to do the work that we do better, supporting our client, our territory putting all our effort in serving our corporate and retail clients, which led us to increase 50% of the new lending granted Specifically, we increased the lending to households. So the mortgage side to private individuals, 68% year-on-year and almost 40% of the new lending to small business. And the new lending to small business has been 59% guaranteed by state guarantee vis-a-vis 52%, which was the average in 2024. The stock of performing loans basically is the same level of end of the year, but this is just because will reduce EUR 1.6 billion, our exposure to some institutional big ticket. Meanwhile, both in the household, we grew 1% in the stock and in Non-Financial Corporates, we grew 1.8% toward the end of the year. All in all, 52% of Non-Financial Corporate portfolio is secured 27% State Guarantee and 25% with Collateral. In terms of Direct Customer Funding driven -- this is driven by deposits, which grew from EUR 100 million to EUR 101.9 billion. Meanwhile, the certificates reduction was EUR 400 million, bringing the total Direct Customer Funding to EUR 107.3 billion. On Page 16, let's have a look to the growth of the commission. Like-for-like, we grew 4.4%, but normalizing for the reduction in the ecobonus and the instant payments, we have a growth of more than 7% year-on-year and of course, the stated results is much higher because we consider also the integration of Anima to EUR 1.2 billion. If we would consider a pro forma with the full consolidation of running for the first 6 months, the contribution of net fees would go up to EUR 1.340 million. Our growth was mainly in investment products fees, which grew 12% which is exactly the growth that we experienced in the investment product placement going from EUR 10.6 billion in 6 months '24 to almost EUR 12 billion in 6 months '25. Let me assure that also in July, we had investment product sales for EUR 2 billion, which is exactly the average of the first 6 months. Going into the details. Upfront fees grew 27%, Running fees 3% to which we have to add the EUR 140 million coming from the second Q of Anima consolidation. Very strong results also on other fees, even though it appears to be flat but just consider that we have almost EUR 30 million less in the first half '25 coming from the reduction of the fiscal credit fees, the famous ecobonus, and the impact of the instant payment. This reduction was completely offset by the other fees, mainly speeds from specialized activities, meaning corporate investment bank is structured fine trade finance, which grew from EUR 140 million to EUR 176 million. Let's have a look to the number with the consolidation of Anima, of the Indirect Customer Funding, which grew EUR 3 billion like-for-like without Anima from EUR 160 billion to EUR 119 billion. And of course, as I mentioned before, end up to EUR 275 million consolidating Anima of which EUR 222 million of assets under management and EUR 54 billion of assets under custody. It is worth to notice that there is EUR 1 billion growth higher than last year of net assets and net flows of assets under management growing from EUR 300 million last year to EUR 1.3 billion of this year. The cost income, again, a good reduction, 2.6% bring in the cost income down from 48% to 45.2% like-for-like, 44.6% including Anima basically with a flat contribution from the staff cost. Let's remind that the main impact of the early retiring scheme will appear in the second half of this year, which will amount in a saving of EUR 40 million, of course, more than offsetting both the new labor contract and also the new hiring that we continue to make. Very good results also in other administrative expenses and D&A with a total reduction of 7.8%. Cost of risk down to 33 basis points driven by all the trading management over the life cycle, meaning very strong credit policy in granting new loans, mostly granted by the state very effective management throughout the life of the loan with all the attention to the deterioration -- possible deterioration of credit and early intervention in order to minimize the potential effect of the cost of credit. This brought us to a reduction of 23% total NPE year-on-year. And excluding the NPEs with state guarantee, we have a reduction of almost 30% year-on-year. Let's consider on the bottom side on the left of the page 19, that the Net Bad Loan, excluding state guarantees, represent only 0.2% of total new loans. This is basically to make evident that we basically don't have any other Net Bad Loans other than the 1 who are guaranteed by the state. On the right side, some figure about ratio. Cost of risk, again, down to 33 basis points. Default rate better to below 1% to 0.9%, a good increase in Q rate to 7.5%. And also the coverage, which appeared to grow also on the total NPEs. Again, on the right side, if you exclude the state guarantee, the guaranteed by the state, we increased the coverage of the other bad loans from 73% to 75% of UTP from 41.4% to 41.9% and globally, it grew to 53%, the full coverage of the other loan not guaranteed by the state. Let's give the floor to Edoardo Ginevra, which will bring you through the financial and capital issue.

Thank you, Giuseppe, and good evening, everyone. In Page 20, we see the contribution of the financial part of our balance sheet, both to capital and to lower financial activities to P&I. So in terms of contribution to capital. Our negative reserves are down now to of EUR 3.65 million on a net basis, thanks to the reduced from the initial level in the beginning of the year of EUR 500 million, thanks to the active management of our bond portfolio. Similarly, we had a positive trend in unrealized losses on debt securities at amortized cost, which is now almost 0, minus EUR 27 million end of June. And we worked actively to improve the resilience of the contribution of net interest of our bond profit net interest income, increasing its BPV now at EUR 2 million, EUR 2.1 million, of which only EUR 0.8 million coming from Italian government bonds. Net financial result is now at EUR 72.7 million in the quarter stated, thanks to various factors, among which it's important to notice the dividend we received from Monte Paschi, the EUR 97 million -- more than EUR 97 million the active management of our bond portfolio, the reduction in the cost of certificates, which 1 year ago was EUR 75 million per quarter. Now it's near to half that amount at only 41.9 million, thanks to both the reduction in rates and improvement in our credit spread. Page 21, quite flat, the evolution of the portfolio versus the previous quarter. You may observe that all data are very stable 46.7% in the total, 8.5 corporate and nongovernment bonds 38.2 of government bonds, 69% the amortized cost component. Finally, Italian government bonds remaining below 40%, exactly at 38.9%. Liquidity in this environment grew significantly. Now we have cash plus unencumbered assets at almost EUR 54 million this owing to the evolution of eligible assets, especially total direct funding is at EUR 135 million, with a EUR 4 million increase in bonds that we issued that we have in our balance sheet whose success was facilitated also by the improvement in our standing with the credit rating agencies. So DBRS upgraded our rating to BBB high in April. Recently, S&P, Moody's and Fitch all the three of them upgraded our outlook to Positive. And this is very important to note this was after the conclusion after the withdrawal of the offer -- of the tender offer of our shares. So with no external support so to speak -- so to speak. LCR, is now up at 160%, NSFR 127%. Net ECB position is slightly below EUR 9 billion MREL buffer, almost 8%, [7.92] basis points. Bear in mind that we have absorbed also from an MREL perspective, the impact of the acquisition of Anima with no Danish Compromise. And talking about this impact, let's recap the evolution of capital to that very strong 13.3% that we are printing in June. So we started in March at 14.76. Then performance in this quarter, and I'm talking about organic -- sorry, recurring performance, not accounting for the EUR 200 million of revaluation in the stake of Anima allowed you to bring 85 basis points positive contribution, 72 basis points are the part that is dedicated to the payment -- the dividend that is maturing during this quarter. 41 basis points is the contribution of DTAs and fair value comprehensive income reserves apart from other minor points, the minor contributors our support to the economy, thanks also to the high-quality mix of the new lending and to the contribution of state guarantees is costing only 9 basis points in terms of reduction in capital. Acquisition of Anima gives 189 basis points on top of the 53 already booked in Q1, leading to the total 242 that we've shown in the previous slide. So coming at the end, resulting in the end 13.32% which is more than 30 basis points above the planned target. MDA and CET1 buffer on the right part of this slide have been reduced following not only the decrease in CET1 ratio but also the systemic risk buffer increase the phasing of systemic risk buffer that was introduced 1 year ago by Bank of Italy and was planned to enter into to be adopted into separate installments. So now the buffer is at 379 basis it's well above the planned target. One final point on this slide is that this contribution that I mentioned from DTA and fair value the comprehensive income is an organic capital generation that the bank will continue to materialize in the coming quarters. So until the end of the plan, we expect to generate capital with the source for uncomfortable h basis points. Now final remarks. Page 25 is an updated presentation of our guidance in terms of profitability and the confirmation of the interim dividend. Guidance is confirmed our net profit as far as net profit is concerned, at EUR 1.95 billion despite further decline in rates. Now we're modeling full year Euribor which is very close to the 2% that is the end state of our strategic plan. 62% of this EUR 1.95 billion have been already achieved in the first half of this year, and to get the remaining 38%, we're expecting single digit, mid-single-digit decline in NII, a full funding costs, so including the certificates, double-digit increase in net fees and commissions which will, of course, enjoy the benefit of the contribution of Anima for the total part of the second half of this year instead of just 1 quarter is in the first half continuation in the reduction in the trend in cost income and a significant reduction in provisions again in comparison with last year. As already mentioned in the beginning of the presentation, the guidance of the dividend is EUR 700 million compared to the EUR 600 million the previous year, EUR 0.46 per share as expected dividend per share this to be confirmed or finally defined by the Board in November when also the payment date is expected an increase of 17% versus the previous year. We are, in total, a 2.2% dividends, including this EUR 700 million, which means that we are at proceeding at the right pace towards our target of EUR 6 billion until 2027. The dividend yield is a strong 8% following also the very good performance of our share price in the last weeks. The accrued dividend is EUR 800 million to be compared with the EUR 700 million that we are guiding the market towards. Finally, common equity what ratio is confirmed also end of the year to stay above the 13%, which is the minimum target. Now leaving the floor to Giuseppe.

Yes. Just some very brief, but I think very due final consideration about what happened in the last 9 months that we leave together, let me try to drive you through what happened on the market to our stock and our shareholders after Anima announcement, which I think was a pillar stone in all the M&A fast that has been creating in Italy after our announcement on the public offer of Anima, which has been concluded successfully. As you may remember, I mentioned in the presentation on the business plan that, of course, the consensus needed always some months to acknowledge the results that we're presenting year-by-year. The same happened, but more quickly this time, as you can see, the first figure was the 1 related to Anima to the -- our consensus of net profit before -- immediately after annual announcement this was the figure of EUR 1.3 billion of net profit for 2027. This was, let's call it, the undisturbed the figure of -- which was considered. But immediately after, after the presentation of our business plan, first part of 2024 -- February 2024, the consensus grew to EUR 1.6 billion. After Q1 results. Again, it grew to EUR 1.8 billion and currently is already EUR 1.9 billion. So of course, this helped a lot the performance, the share price of our stock which grew 70% during the same period, more than the FTSE Italy Banks, which grew 40%. But more important, this gave a material impact to our return total shareholder return for our shareholders, which in the last 9 months was 91% compared to the lower down of our peers. This, for us, is very important because, of course, we still have some room. We still have the 10% between the consensus and our target, which is EUR 2.150 billion, and we really believe that this can still add some move to our stock price and to remuneration for our shareholders. Let me conclude with a final page, which is more qualitative, but is very important because it only 6 months, basically, we have already put the base for having the bank that we presented in our business plan. We said that we would have wanted to have a bank well balanced between NII and Non-NII a bank which would have overcome 17% in term 16% in terms of ROE, we are already at 17%, 21% ROTE target, and we're already at 22.6%. Net income quarter -- 6 months net income of EUR 1.75 million, we are at EUR 1.6 million, but the qualitative part is very important for us which brings our bank to transform -- to be transformed from a pure commercial bank to a more capital-light model of bank. You can see that the wealth and asset management plus protection grew from 24% over last year to 35% of this first half year which is completely already in line with the results that we presented for 2027. Specialty Banking Solutions, 9% vis-a-vis 10% to 15% of the planned target, commercial banking activities reducing from 65% to 56% of this first part of the year compared to with a 50%, 55% of our target plan. This means that we are really on the right pattern for transforming our bank in less capital intensive in a less risky kind of bank. We think that this should bring to some consideration also in terms of multiple to be considered for the net result of our bank and we are really very proud that only in 6 months, we're already able to give you this very strong pattern for the future of our bank. Of course, again, we still have a lot to do in terms of completion of the productivity of our product factory, but all these things has been done very recently in the last couple of years and we could start only in the final part of '24 to really manage some of the new joint venture we did, and we are really sure that this number can only improve once all the product factory will be at full stream. So thank you very much for your attention. We will give you some time for the Q&A section. And of course, very, very happy to answer.

[Operator Instructions] First question is from Giovanni Razzoli, Deutsche Bank.

Two questions on my side. The first 1 is on the CET1 ratio. You mentioned that over the -- by 2027, you expect to released a 140 basis points of CET1 via DTA and Fair value on other comprehensive income. I was wondering whether there are other managerial actions that you can activate in order to improve further your CET1 ratio from the already, in my view, strong level of 13.3%. And then a clarification again on the CET1 ratio you reported in the second quarter because you said that you have accrued EUR 0.8 billion of dividends, but you plan to distribute EUR 0.7 billion. So shall I interpret this as kind of EUR 100 million of capital buffer so that your CET1 ratio would be around 15 basis points higher in the second quarter when compared to the 13.3% that you have reported. And the final to conclude on the CET1 ratio, if I put all this into the context, I would assume that your CET1 ratio would be closer to 14% rather than above 13%. So what are the other moving parts that may instead bring it just above 13% and on 14%. And the last question, NII. You're replicating portfolio has a duration that is more or less half the amount of your competitors, 2 of them report a duration that is above 4 years. Yours is flat at 2.7 years. I was wondering whether you can increase -- or your target to increase the duration of your replicating portfolio to improve the contribution to NII as other peers are doing or you don't want to stretch your balance sheet in this respect and you don't plan any changes.

Okay. So thanks a lot, Giovanni, for the 2 questions, plus 2 questions. Let me start with capital. We continue to be very active on various fronts for improving our capital position as thanks for noting the point on DTAs and fair value comprehensive income other managerial actions we have already implemented 2 synthetic securitizations in the first quarter of this year and we are making room for implementing a third 1 potentially in the fourth quarter. We are living a little bit on the background optimizations on the composition of our group, especially as far as assets that are currently generating goodwill in Anima, who could be transferred from Anima to Banco BPM beta originating treatment directly at Danish Compromise. This is an option we are living for the future, but not something that we are currently actively pushing in the current context the accrued dividend as opposed to the EUR 700 million, we are using only simply the criteria that we are smoothing the overall payment of the dividend between the first and the second -- the second part of the interim and the final balance. So this means correctly that we are prudent in capital calculation in this quarter, and we will release the same capital when we pay the second installment at the end of the year. Moving parts of capital. We are happy to be above 13%, but we have to bear in mind that there could be risks from interest rate environment that may generate so to say, that will require us to be well equipped whenever an evolution in interest rates may materialize. So for the time being, we are confident that we can -- we are very good at the current level of 13.3%. Let's see what will happen in the future. On the duration of the replicating portfolio. On 1 hand, we are happy that this is limited. We are not locked with this replicating portfolio for a very long period of time. Still, we are generating a satisfactory return on it now in area of positive carry after the reduction, the recent reduction in Euribor increased duration may have some price because, of course, there is some yield pickup given the current shape of the curve. At the same time, may create some unnecessary rigidities in the overall assets and liability management. So we will continue to replace the maturities that we have in the replicating portfolio on the increase in the duration unless there are say, the material changes in the shape of the curve, I don't believe this is a choice we will adopt.

If may I add just a note on the what you envisage the potential 14%. We were said that after the Anima, we would have been down to below 12%, we showed with the Q1 that we're already on track for 20%. We were obliged to change our guidance of the original plan before the Non-approval of Danish Compromise from 14% target or ending part to 13%. As you see in a couple of quarters, we are already above 13%. 13.3% is a very good result and with all moving parts which are going to increase as we have already done since 7, 8 years, we were very able to manage our capital structure to improve our capital base also in the old time of the NPE disposal, and we will never were short of capital. We are a bank which can produce capital and we very soon will be ready maybe to change our guidance also on the business plan.

Next question is from Antonio Reale, Bank of America.

It's Antonio from Bank of America. I have two questions, please, one on strategy and one on the effects of Golden Power, please. So starting with strategy, I think you made your stand-alone case clear, and I think you're well on track, if not ahead, when I look at your planned targets, which is why I'd like to ask you, well, what's next for the bank? I mean your other possibility rules now you've been open to explore opportunities. I think you want a stake in Monte Paschi, you've been open to explore for the commercial partnerships. At the same time, your main shareholder credit recall is rounded up its stake in the bank. So my question is where do you see Banco BPM going from here? And what role do you want to play in this Italian M&A wave? And the second question is on Golden Power, which is partly interlinked with my previous question. I mean the conditions imposed by the Italian government on UniCredit have meant that there was a cap to the value your shareholders could extract from a potential improvement of the offer. Now I'm conscious we are talking about a purely theoretical exercise, as UniCredit never improved the offer and their bid remained below your share price throughout the offer period. So we never got to see the true value potential, but the theoretical upside value of the bank could have been capped somehow by Golden Power, which I mean is a serious matter, it creates a precedent, and I'm sure you're a board and you as a management team have considered that. So how should we think about this in the future? Is it going to prevent to limit future M&A opportunities for the bank? And more importantly, any value creation for your shareholders. I'd like to hear your thoughts.

Let's start from the first part. I think I was quite open in saying that we have -- we will wait to see the -- after the round 1 of consolidation, what will be the situation. Of course, as you rightly were rightly saying, we have already two things that are -- that are quite, let's say, something that can show the way. One is our participation in Monte Paschi on 9%. And of course, you cannot forget that as well as for Anima offer. Also, our participation in Monte Paschi was before all the Ops round first round. So we will see what happened to Monte Paschi after the conclusion of Mediobanca transaction. Second, in the meantime, thanks to the offer from UniCredit. I recall had the opportunity to grow to -- from 9.9% to 19.9% we read yesterday that as they were announcing there now 20-plus. So we will see you at how as a shareholder, they will ask or today will want to do, and we will examine full independence at the best for our shareholders. And this comes to the second question, frankly speaking, I never saw Golden Power as a limit for our shareholders. This was announced as a EUR 10 billion M&A when it started. Now we have a bank that is already almost EUR 17 billion worth. So no limit for our bank, no limit stand-alone, no limit for further consolidation. I cannot do anything if somebody was stopped by the fear of Golden Power but it's not the question that you have to do to myself. I think that we have been able to bring the bank to the good work. As I mentioned before, we still have a couple of hundred million to recover in order to have the value of the bank until the next update of the plan and also the capital generation is proving that maybe we can have some more for our shareholders. So I don't think really that the Golden Power can impact. And in any case, it's not something that we can decide. So what to say in Germany, it's not Golden Power, Spain is not Golden Power. In Portugal, it's not Golden Power, but it's something else with which the bank has to work with. So I think it's the new normal.

Next question is from Noemi peruch, Mediobanca.

I have two. The first one is on your target. So you have reported EUR 1.2 billion of net profit as of H1 and your target is EUR 1.95 billion. So this implies clearly a lower run rate going forward, even excluding one-offs. So I was wondering on which lines do you feel you have been particularly conservative. And my second question is on [SRT]. We have been pretty active in this market, especially in Q1 this year after the denial of the Danish Compromise square. So I was wondering if you saw part of it as nonrecurring. So i.e., if you're not going to roll over part of it in the future? And if so, how much it is in terms of basis points.

Okay. Let me end the first part of -- the first question, then I will give it to Eduardo for the second question. No, it's not that we are conservative, I would say, I think we are assuming the same pace of growth of the second half as well as the other bank who preceded us in the announcement of the results. Of course, first part of the year is always the best one. We had also many one-offs. We gave our guidance before. We don't think that just in 1 quarter, we can change our guidance -- of course, as Edoardo was saying, there are some indication for the opportunity that we have. The most important, I would say, do not depend really on us. We have already considered another cut to 175 Euribor, let's say, starting from the end of Q3. If this won't happen, we can have a better NII for commission, I think the growth that we experienced is massive, and we are replicating the same growth of Q2 over Q3 and Q4, which normally are much harder because of August and December. Cost of risk still have possibly some room, but we cannot avoid to think the geopolitical assumptions that are now still present in Europe. So of course, there is a degree of prudence but there is a lot of commitment also in some other lines like commission. So we are trying to make something quite comfortable for the market to believe in -- of course, if there will be some progress in Q3, we will communicate and our expectation is already to always to beat the guidance. It's not a target, it's a guidance. Edoardo, do you want to...

No, no. I just wanted to stress a little bit more the concept of the seasonality. So it's not that the pace in the second half of the year is then the best estimator for the pace of the following years until the end of the plan. There are some areas of the P&L where in the first half of the year, you produce a better result commission is the most important example. But for example, in trading, we account for the dividend of NPS, which is EUR 100 million almost net. And this is something that happens once a year according to the plan of the bank. This is confirmed for the years to come or even has some potential to improve. Sorry, the question is, as you said correctly, we are very active. I believe that in our roster of banks. We are the most active in Italy in this instrument, and we are comparable also with larger international players. So we have printed two deals in March. We are planning a new one, as I said, answering to a previous question, in the first quarter. And the pace for us will be always to at least replace the amortizing deals with the new ones so that we preserve the capital optimization lever in the area where it is, of course, assuming that the conditions in the market in terms of cost of equity do not worsen significantly from current level. We are in a comparable single-digit area in terms of cost of capital when we close these deals, we've been always in Italian in the last 2 years or so. And we observe that the market seems -- continues to be conducive for similar condition and to be replicated in the near future.