BFF Bank S.p.A. (BFF) Earnings Call Transcript & Summary

Thank you. Thank you, everybody, for joining us today. I hope you're all safe and sound given what's happening around the world. We're pleased to report, on Page 3 of the presentation, our key results of the 9 months to date. I would say it's a continuation of the trends we have seen in the first 2 quarters with the bank continuing to deliver solid financial performance and profitability, a good control around risk, ample funding in capital, good volume growth and a portfolio which has been growing less than volumes given the ample liquidity that has been provided through the system. Overall, net income has been flat. If you take out the effect of LPI over-recoveries, though, it has been trending up 10% year-over-year. New volumes have been growing at double digit, 25% year-over-year to EUR 3.8 billion. And as I said, customer loans have grown instead only marginally year-over-year, 3%. That's a disappointing result in terms of volume growth, but it's significantly higher than the market given, as I said, the liquidity in the system. The effect of the COVID has meant that the LPI collection, as I mentioned, has been lower than usual. And therefore, the unrecognized off-balance sheet LPI fund has grown at EUR 423 million, a 6% increase year-over-year. We have been pretty prudent in managing our funding. We have almost EUR 1 billion of undrawn credit lines to prevent any shock into the system to impact our business, and therefore, funding has increased significantly. That has a marginal cost on the cost of funding, but in order to keep us safe and sound, we thought that was the right way to approach. Net NPLs have gone down year-over-year by 25% with a high coverage of 81% and the cost of risk of 10 bps, pretty much line with our historical numbers although we have provided almost EUR 2 million more this year than last year on some position, particularly in Poland. Capital is strong, higher than 15% total capital for the September reporting date. And therefore, we have almost EUR 130 million of dividend capacity comprising, on one side, the EUR 71 million of accrued dividend of 2019 and the earnings of the period, which, given our dividend policy, we have set aside as capital. Dividends are therefore important in terms of our shareholders. We're still planning, unless the regulators change their mind, to pay out dividends in January. And that's for 2019. And 2020 will be paid out at the beginning of 2020 with the approval of the accounts, which we expect to be at the end of March. COVID has impacted the business in terms of LPI over-recoveries and more difficulty in having new commercial development. But overall, operationally, we continue to perform as we have done in the first lockdown. We moved back to a shift approach at the end of August. And then we moved back all the people to remote working at the beginning of November once the COVID accelerated in terms of its spread in the country where we operate. In terms of overall impact on the business, the major one has been an acceleration in collection of the newest invoices given the liquidity that the governments have put in place to sustain the economy. And that has had some impact, which I will describe later on. The DEPObank acquisition proceeds in terms of the approval of Bank of Italy and the ECB, where we have continued the dialogue with the regulators. The closing and the merger are expected in the first quarter of 2021. In the meantime, we have continued to work with the DEPO management team to prepare for the merger. We have already spent EUR 7.4 million of the expected transaction and integration cost. We have selected the core banking provider for the combined entity that allows us to lock in a good part of the cost synergies that we have indicated to the market and importantly, the same core banking provider that BFF has today. And therefore, that will reduce also the integration complexity and integration cost. In terms of the effect of COVID on Page 4 in more detail. First of all, we remain fully operational. As I said, we moved back all the team to work in remote working. That's nothing new for us. We've done that already in the period March to July. And I think probably, we are much more prepared now than we were then, and that's important ahead of the busy hunting season of the last 2 months of the year. The Public Administration is not fully operational. And therefore, we are seeing less focus on the Public Administration negotiation of LPI settlement as we have seen in the first part of the year. We had a pickup in discussion with the Public Administration. But particularly on the health care side, we've seen in the last couple of weeks a slowdown on that front. Overall, the major impact of COVID has been for us further injection of capital and funding into the system by the government. And that has had the impact of accelerating the payment of the early -- of the newest invoices, reducing the amount of portfolios that we purchased on one side and churning the portfolio faster, which is what highlight in the bottom box. Overall, though, because we are exposed to Public Administration expenditure, volumes have grown positively anyway, both in terms of volumes and the portfolio of receivables we have in our books. And that's very different from what the factoring market has seen overall with a lower -- significantly lower performance. If you take Italy, for instance, the turnover of factoring is down 13.6%, and loan advances are down almost 12% year-over-year, as we are marginally positive. Going to the financial results on Page 5. We report adjusted net income, flat at EUR 60 million. That's despite LPI over-recoveries which have been almost EUR 9 million lower than the first 9 months of 2019. So if you take that into account, the underlying profitability has grown 10% year-over-year. That includes also more prudent provisioning of almost EUR 2 million year-over-year, which has increased the NPL coverage ratio from 71% to 81% at the end of September. And we think the book is quite well provided, and we shouldn't expect a major surprise given the approaches in taking on risk in the last 9 months. On Page 6, results have been driven, first of all, by the top line with interest income growing, up 4% year-over-year, 10% excluding the LPI over-recoveries effect. And as I mentioned, at the bottom -- as you can see at the bottom of the page, the LPI stock has increased to EUR 700 million, of which EUR 423 million haven't gone through the P&L yet, and therefore, represent the back book income reserve, which will be collected over time in the future quarters and years of our activity. Cost of funding, on Page 7, has gone down slightly compared to last year. That has been driven by -- in terms of -- in absolute level, EUR 37 million has been driven by an increase in average drawn funding to EUR 3.5 billion with a mix that is more online deposits and less wholesale lines. That has been a choice made at the beginning of this year to privilege term deposits instead of the wholesale market given the problem we could have envisaged in the funding market going forward given the COVID situation. And so we have prefunded a lot of our funding needs, which has resulted in higher percentage of undrawn committed lines, which have not been used. We have been using instead more expensive funding line. Nonetheless, cost of funding decreased marginally to 1.58%. And we should see the benefit throughout the last quarter also of the further reduction that the Bank of Poland has put through in the second quarter of the year on the base rate, and that will roll over in our accounts in the next quarter as well. Importantly, we have no funding costs linked to government bond yields. We don't have ECB funding in our books. And therefore, we are funding our balance sheet entirely with the market conditions. So we had a growing interest income. We had margin declining in relative terms, cost of funding. That has resulted in adjusted net interest income which has grown up 4% year-over-year, 11% if you exclude the LPI over-recovery effect. That's what you see on Page 8. And the same trends can be seen on the net banking income. Return on risk-weighted asset remains flat, which is a key index of our profitability. On Page 9, in terms of operating costs, we have continued despite the environment to invest in our business. It's -- September represents the full year of operation of the Polish branch, the first few months of operation of the Spanish branch, the first full year of having the cross-border activity in France. So we have a number of costs which have been put through the P&L to build our growth engine going forward. So operating costs went up year-over-year by 10%. Importantly, our operating cost over loans have remained actually flat year-over-year. It's a key measure of our efficiency. And we should see the benefit of scale when there will be more recovery of LPIs in terms of cost income and when the growth of the portfolio will grow at a faster rate as we expect going forward. Going to the portfolio on Page 10. We've grown 3% the portfolio. Italy has been flat with a strong performance, though, against the market. Spain has shown an important increase, 26% year-over-year, including IOS in the comparison. And that's despite the huge cash injection of the government to pay invoices held by the autonomous regions. Poland has been flat on a euro basis, marginally up on a zloty basis. We have actually had a pretty good performance in terms of volumes in Poland but also a lot of prepayments given the change in the zloty rate. And Portugal, the portfolio is down year-over-year given the cash injection that the government put through on the health care receivable, which represent the vast majority of our exposure to the Portuguese market. Overall, the dynamics of the Italian and international markets has represented a growth in our international exposure to 39% of the total loans, which is up from 37% at the end of 2019. As mentioned a few times volumes that you can see on Page 11. We continue to have a good performance in overall volume growth throughout many geographies with the exception of Italy. In Spain, Poland, Greece, Slovakia, France, we've grown the volumes in double digit in all those markets. Italy instead, as I said, has remained flat, which shows the continued effect that we've seen in the first 3 quarters of the year. And we are hopeful that, that trend can be reversed in the next few quarters, but certainly it's the area where we are less happy about in terms of our overall performance, although it has been much stronger than what we've seen in the market, as I mentioned earlier. And I pass the floor to Giorgio to present you the remaining points of the presentation. Thank you.

Thank you. Going to Page 12. We have the strong liquidity position. We increased our available funding up to EUR 4 billion, and we have EUR 0.9 billion of excess of liquidity. And this is the prefunding in order to prevent any possibility of this that we can face in the next month. We continue our diversification in the funding base. We increased also the online deposit that are, as I said before, a very stable kind of funding. And this is, for us, a good point also to prevent any problem that we can have on the liquidity market in the next month. We didn't recourse to TLTRO. All of our funding is on the market. And we expect on the liquidity position of the stable funding ratio, we are over the -- over 100%. We are over 110%. And we are expecting a positive increase after the mid of 2021 due to the change in the regulation, and this can boost our stable funding ratio up to 146%. Also on the short-term liquidity, so the LCR, liquidity coverage ratio, we are, as usual, in a very strong position because we are roughly around the 100%. After the announcement of the acquisition of DEPO, Moody's confirmed the ratings of BFF. And they put the developing outlook from positive for the long-term issue and a positive outlook for the long-term deposit. Going to the next page, we have a fortress balance sheet. And our customer loans are funded, as I said, with a very diversified funding. We continue in our conservative asset and liability management. And regarding the ForEx asset, we funded with ForEx liability. So we put in place a natural hedging. So we don't have any issue related to the ForEx exchange rate. Regarding the government bond portfolio, the portfolio is stable around 20% of total assets if you exclude the portfolio acquired with the DEPObank deal. And our held-to-collect portfolio has a positive mark-to-market value around EUR 30 million after tax that has not been recognized in our P&L. About the provisioning, so Page 14. We continue also our prudent provisioning, also considering that there is a negligible credit risk because we are -- we have -- we work with the public entities. And if we exclude the Italian municipalities in conservatorship, our ratio are very, very low, you can say that are close to 0 and despite the coverage ratio that is -- that has a very prudent approach. We have to consider also that our annualized cost of risk is around 10 bps and also including the impact of the change in the macroeconomic scenario due to the COVID-19. And this is also a demonstration of the resilience of our business. If we put our attention on the -- also on the past due, we are continuing to manage it properly. And it remained stable, a bit lower compared to the first half of 2020 and a bit higher than the year-over-year. But we have to consider the portfolio growth in the -- during the last 12 months. About the past due, one important point is the new definition of the force -- is the new regulation that we'll have to enforce the 1st of January of next year with more stringent rules in order to classify from performing to past due the exposures. And this regulation can affect the banking business in general. And we put in place and we started to work on it more than 2 years ago in order to be prepared to the change of the regulation. The main point that we need to have -- we need to be more selective with our portfolio. And we put in place -- we already put in place more stringent criteria in order to acquire a core portfolio. And also, we can -- we have a very, very strong credit management process because we must be more proactive in order to manage the collection. And our approach is something that is particular for our business, for BFF, and it's very different if we going to compare to the traditional bank that they don't have such stringent procedure because -- due to the different projects they have with the customers and with the debtors. Considering also the very close relation that we have with our blue chip clients, for us, it makes it easier to review and renew our agreements in order to avoid any problems in the future. One important point that we have to consider also in the change of the regulation is that the changing in how to calculate if an exposure is past due or not, we have to consider the original date of the invoice. And in this case, if we are going to apply the regulation in that way, and we must do it, we have to consider that all our exposure towards the public entities are less than 3 months duration. In this case, we can apply a preferential treatment that is the 20% on RWAs -- RWA. And this can be a boost in our capital ratio because actually, in Italy, for example, we apply 100% of -- for NHS, the same in Portugal and for example, 50% in Slovakia. For the bonis part of the portfolio, we can have an increase in the capital ratio. And so this is also a good point in order to have our -- to present our capital position. Going back to -- going to Page 16. Sorry, it's not back. It's forward. Today, considering the actual regulation, we have a very strong capital position. We have EUR 127 million of dividend capacity. As I said before, the portion of EUR 70 million -- more than EUR 70 million is related to the 2019 dividend, and almost EUR 60 million are related to the first 9 months of the current year. We don't put this dividend in our capital. So our capital ratio are the 16.5% total capital ratio and CET1 is 12%. If we put also the dividend that we have not included, we can reach a total capital ratio of 22.2%. But considering our dividend policy, and we can pay dividends if we are over 15%, we have that all these dividends are payable. So we maintain our dividend capacity strong, as we did also in the past. It's important to highlight that this consideration are based on the current application of the regulation. So what I have said before that today, we're applying RWA also 100%, for example, for the Italian NHS. If we look forward to the next year, also with the new regulation on default, we know that we can have a boost also on the capital ratios.

Thank you, Giorgio. On Page 17, we just want to remind everybody that we have become, due to the sell-down of BFF Luxembourg, one of the few Italian public companies with our largest shareholder owning less than 8% of the stock. And overall, the free float, as you can see on the right, even after DEPO merger, will be over 80% of the ownership of the company. And therefore, on that basis, the Board has taken the decision to prepare for presenting to the shareholders its own slate of directors with a process which has started in terms of the Board's self-assessment and will be continued. So by the beginning of February, we should have the Board presenting the director slate directly, as is the best practice for public companies. One of those directors, once the merger goes ahead, will be indicated by Equinova, but it will be an independent director anyway. And with this, I conclude the presentation. I'll leave to Caterina just to sum up a few events that are waiting for you on Page 18.

Thank you, Massimiliano. Good afternoon to everybody. Just a word on the next company event. You can refer to Page 18. We have the virtual roadshow related to our 9 months 2020 results. It will be from the 11th to the 19 of November. We will cover Europe, U.K. and U.S. We will take part to the Exane BNP Paribas' Third European MidCap CEO Conference. It will be a virtual conference, as you probably already know. It will be held on the 18th of November. And then finally, at the end of -- or towards January 2021, we expect to hold the shareholders' meeting for the distribution of the 2019 dividend, of course, assuming that the regulatory guidelines are not going to change. And for now, this is all. I think we have finished the presentation. Now we'll leave space to the Q&A.

[Operator Instructions] The first question is from Antonio Reale with Morgan Stanley.

I have actually 3 questions. So looking at the numbers so far, ROTE has basically dropped from 33% to 30%. And this is mostly on the back of LPI over-recovery. I would almost say entirely on the back of LPI over-recovery, which is important to understand that it's basically a loss of -- it's not a lost source of earnings but rather a delayed earnings opportunity. So this lead into my first question. So first question is you have a net profit growth target of about 10% a year. And if I look at your reported net profit year-on-year, it was basically flat. But as you flag, adjusting for the lower LPI, it's consistent with your 10% growth. So my question is, where do you stand on that 10% growth guidance? How should we think about it? And how quickly would you expect to recover the LPIs going forward? The second question is, can you talk about volumes in Italy? And what do you expect into next year going forward, especially in light of the liquidity injections we've seen? Maybe you can talk a bit more about those. Does your 10% guidance for volumes next year still hold? And lastly, just a question on funding. Why not use some of the TLTRO? I mean at the end of the day, even if you're not a bank in the sort of strictest definition, you still pay the price for being one. And thinking about the contributions to the deposit guarantee scheme, the new definition of default, the dividend ban. So why not use some of the benefits of being a bank? Is it to do with the accrual and the definition of lending targets? Or it's just -- or is it related to anything else?

Thank you, Antonio. Thanks for the questions. Let me take the TLTRO. It's not that we don't choose it because we don't like it. So we don't choose it because for a quirk in the rules, we can't. And the quirk in the rules is that you can use it only for private sector exposure. So although -- and the factoring association is lobbying hard to change the approach. So although we are providing funding to private companies, the suppliers of the public administration, in reality, we have exposure to the debtor, which is public sector entities. And the TLTRO looks at the exposures, not where you give the money to. And so given that restriction, which is totally irrational, but that's what is in the rule, we can't actually access the TLTRO. The major exposures we have on the private sector side is actually in Poland. It's also marginal part of the portfolio, but then it's zloty up. It is not new assets. So when we say, look, we are not actually accessing the TLTRO, it is not because we disregard making money if the ECB allows to. It's simply the nature of the portfolio doesn't allow. What it means is at the same time, we are writing business, which is not subsidized by the ECB, and we are pricing it at market rate. That's what we indicate when we say that. In terms of the ROTE and the LPI question, my answer will be yes in the sense that, as you correctly pointed out, we are growing the business in the right direction if we exclude the potential lumpiness of the LPI. We flagged at the beginning of the year with the first quarter results after COVID that the LPI collection would be a function of how the Public Administration would react to the lockdown and in general to the disruption to the third quarter. We haven't seen a huge recovery on that front. We have some interesting discussion at the moment. But at the same time, the lockdown has just started in certain countries. So we need to see how it ends up with the year-end. But as you correctly pointed out, it is not jam today, jam tomorrow. It's an issue of recovery. And we think once the operations of the Public Administration will go back to normal, hopefully, at the beginning of next year, then we should see a gradual recovery of that effect. Volumes in Italy. So volumes in Italy has been affected by the liquidity. And liquidity has 2 effects. One, clearly less customer demand from new customers, as you would expect. But also, we have a lot of revolving contracts in Italy. So -- and a lot of those revolving contracts are end-of-the-quarter contracts, sometimes end of the month. And if the NHS particularly is quite fast in paying invoices, then actually the portfolio we're buying are smaller. So yes, we have added new customers. We haven't lost any major customer. Simply the portfolios at [ franc ]. So the team has actually been adding new relationships. But you have had this deflation of the purchase portfolio, which bodes well, though, for next year, we expect. Why? Because we think that the public sector will not have the same access to liquidity. Expenditure will go up. We will be a bit more constrained. But also importantly, a number of customers will start to reinvoice a bit more. And so we should see the impact of the new customer we have taken onboard to drive also the like-for-like growth in the portfolio. So those are the major trends we have seen in the market. And Italy has suffered more than other countries because we start from a larger base. So if you want, the effect on the stock is more important, the start of existing customer than the impact of the new customers.

The next question is from Luigi Tramontana with Banca Akros.

First question is just a detail regarding the transaction and integration costs related to DEPObank. You already expensed EUR 7.5 million in the first 9 months. What are the total expected expenses related to that? Do you think that you're going to take another chunk of that in Q4 and the rest in 2021? If you can please guide us the timing of the remaining extra costs related to the acquisition. And the second question is rather on the new definition of default. Clearly, there is potential in terms of capital related to the lower risk weighting. So my question is, do you want -- do you think that you're going to use this option? If so, I think that you have a benefit in terms of capital. But on the other hand, you have a negative impact in terms of profitability because your cost of risk should go up. So it would be interesting to understand, first, how many RWAs related to NHS do you have in Italy. So what could be potentially the benefit coming from this capital upside? Second, what is the cost of risk we should assume if you use this option? Should it be 60 bps, 70 bps or, I don't know, another figure? And final question is the impact that such an option would have on your dividend policy.

Yes. Okay. On the transaction cost, the transaction -- we expense the transaction cost as we incur them. So a portion of them will be incurred only at closing. But if you want, part of the IT integration, part of the consultants we are using to support the business in working through various steps of integration will be expensed as we incur them. So I think in the first half of the year, we had expensed already EUR 6 million. In the second quarter -- in the third quarter before, we have expensed roughly EUR 1.5 million. And so we should probably have that level of run rate. I think we close the one -- once we close, we should have another large chunk of cost. We have indicated EUR 25 million of transaction and integration cost. That is in the presentation that we gave when we announced the deal. So we are, if you want, roughly 1/3, slightly less through that. And then we need to see actually if we're going to need to use all of that. That includes, clearly, all that were going to be done to make also the company more efficient going forward. On the new definition of default, I think look, you've asked some interesting questions. But I think it's important to go back to what Giorgio said before. The new definition of default does not automatically means that you're going to have more past due. It requires to avoid the past dues on the -- I'm talking obviously about the public sector, to manage the portfolio more actively. When -- we highlight that we think it's not a big problem for us compared to the other players in the market because already we manage the portfolio actively. We have our collection team in-house. Now we'll start legal actions. We have a large customer with whom we can do no notification deals, which don't generate past dues, for instance. So there are a number of tools that we think actually should be significant mitigants to that risk, which, by the way, is a technical risk, not risk in the portfolio because we know that the public sector always pays at the end of the day. And we have 35 years of experience to demonstrate that. So what we've been working in the last 3 years since the new definition of default was introduced by EBA in 2017 is actually to change our processes, our contracts, our IT system to manage this new world starting from the 1st of January 2021. So we don't expect a major impact on our RWA. We think that -- actually, we know that given the use of the preferential treatment, there should be a benefit. Now we want to be extremely sure that everything works as expected on the 1st of January before giving you the forecasted number. But we are quite confident that, overall, it should be positive both from a capital perspective on one side but also from a market perspective because as I said, it will require other players to manage their business differently. We think some of them may also decide not to enter this market anymore, to exit it. And importantly, the capital benefit that we might have is something which is not available for some of our key competitors because they already used that preferential treatment in their capital calculation. And so for them, in that sense, there is only downside. Whereas for us, the position should be more neutral. And that should reinforce our competitive position.

The next question is from Simonetta Chiriotti with Mediobanca.

Well, most of my questions have already been answered. I would just have another question on the new definition of default. You mentioned that more selectivity is required and that you have already started to run the business with the new approach. Did this have an impact on the volumes of the first 9 months? So this is the first question. And the second question is on LPI over-recovery. So in the first 9 months, it was negative by almost EUR 6 million, including also rescheduling, and a EUR 2.5 million negative in the third quarter. In the first weeks of the last quarter, which is the most important usually, which are the trends so far? You mentioned that a new slowdown came in with the new lockdown. So if you could elaborate a little bit more on this important element for the overall profitability of the bank.

Yes. So on the LPI over-recoveries, I would say it's a function a lot of what the Public Administration is working. We had the same thing, as we also talked in the presentation, a more positive outlook, I would say, in September, October because we saw more dialogue being held with the Public Administrations. We are seeing also the dialogue continuing with the non-health care side. In the last 10 days, we've seen a slowdown. There's been also a shock to the system given the restriction in COVID on the health care side. So we don't know where that will lead towards the year-end. It's -- we're really playing day by day. What is important for us is that we are not pushing for more discounts in order to hit a certain number. We think it's a -- because it's a repeat game, as I keep saying in the various presentation we had, it's a repeat game with the debtor. You don't want actually to drop your recovery rate because that is going to be the next level of negotiation next time you approach them in a good time. So it's important to keep consistency and sacrifice, if you want, more of the flow but not in peril your negotiating position. I think that's playing out okay. If we would like to have more flow in the market, we're seeing a bit more coming from the international business. And we need to see what will happen in Slovakia, where we have a large book of business. And the government has announced a prepayment plan, and that could lead some upside. But as I said, there are multiple countries, multiple counterparties. What is I was in a sense saying is we are going back to the situation we were in March, April probably. The Public Administration is more prepared now than it was then, but there could be -- the slowdown in collection could be an effect. I'm sorry, Simonetta, on the new definition of default, can you repeat the question? Because I didn't take note.

Yes. I think that you mentioned the fact that to work efficiently in the new world, let's say, more selectivity is required on interacting volumes. So I was wondering if this will have an impact on volumes and already had an impact on volumes in the first 9 months.

Yes. I mean I would say, if there is, it's going to be marginal because we don't expect to have that impact on volumes on the large customers. We need to be a bit more selective, if you want, with longer-dated receivable from smaller customers. So don't think, frankly, it will move the needle much. We have started to do that. But as I said kind of blame that for the numbers, for instance, as you have seen in Italy in terms of lack of growth in our portfolio and volumes there. So that's part of the activity, but I don't think it will move materially the needle in the short term. I think the opportunity for us is really to get out from the series of investments we've done in the past in the various geographies, the full productivity of our sales force.

[Operator Instructions] The next question is from Joan Esteve with Alondra Capital.

I wanted to ask because the company is having a long-term growth vision. I wanted to know, more or less, for the current operating costs, which part is the growth of the cost -- which part of the growth of the cost comes from this growing of the company and not, let's say, the underlying stable business?

Okay. Look, nothing I have in my hands at the moment the exact split. But if you take as a good proxy the head count that we have had in the last few years on Page 9 and you take what -- the total amount, you should see that we've actually added -- with 527 we have today, roughly 30, the internalization of external costs that we have. So we're running at roughly 500 and -- 490. And so in the last 2 years, we've added basically 20 people per year. And that has comprised 6 people in Poland for the branch, 4 people more in Greece for the Greek branch, a few people more in Portugal. So the overall platform of the business has remained fairly steady throughout the last few years. So most of the growth in costs have come actually in adding more deposit platforms, more presence on the ground. And if we look at where the plan for the business is to grow, the only market where it would make sense for us to open a presence, it's probably France. But we need to see the market developing, having enough customers, reaching a level where it would make sense to actually have on-the-ground presence. We've done that in Portugal. We've done that in Greece when it came -- when the time was right. And opening a branch at the cost of roughly EUR 1 million, EUR 1.5 million of overall OpEx. So if you think about that, it will be the order of magnitude for the investment. We -- with the past due, certainly, we need to be more disciplined on our operations. We will see an uptick in legal costs, most likely, particularly in the short term. But overall, we think that the scale benefit of adding assets to the platform should outweigh to those investments. And that's why we highlight at the top of this page on adjusted operating cost over loans the cost of service in the loan portfolio. It's an imperfect measure because, for instance, the portfolio has shrunk -- sorry, shrunk, has not grown in the last 9 months compared to the previous year. But we have been able to maintain a good operating performance. We expect the loan portfolio to grow -- to continue to grow at 10% plus going forward, as we indicated in the investment plan. And so we should expect a positive [ jaw ] between cost and the growth of the portfolio, the growth in revenues and for the growth in profit.

There is no question at the moment. This concludes our question-and-answer session. I would like to turn the conference back over to Max Belingheri and Giorgio Bicci for any closing remarks.

Thank you for joining us today and for the insightful questions. And look forward to keeping the dialogue open with you and with all the investors. Thank you very much. Stay safe.