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

Good morning, ladies and gentlemen. A very warm welcome from all BFF management team. It is a great pleasure to have you with us today to the presentation of our 2028 strategic upgrade and 2026 financial targets. We are very [ numerous ] this morning. Some of you are here with us in London. Some of you are connected with our conference call. I'd like to give you a few details from the agenda. Max Belingheri, our group CEO, will start the conference with the key highlights, which will take approximately 30 minutes, followed by a section on the business, led by Michele Antognoli, Vice President, Factoring & Lending; and Enrico Tadiotto, Vice President, Transaction Services. This session will take approximately 40 minutes. Piergiorgio Bicci, our group CFO, will take you through the balance sheet management, sustainability path underpinning our business and 2026 financial targets. Max Belingheri will then close the event with the closing remarks as approximately 11:00, and thereafter, the Q&A session will be open. As to questions, we will start with you here in present in London. Just raise your hand, and we will pass you the mic. We will then continue with those of you that are connected via conference call to register to questions [Operator Instructions] So I think it is all from my side. Thank you again for being with us today, and I'll leave the floor to Max Belingheri.

Thank you. Thank you, Caterina and thank you, everybody, for being here. And thank you, Caterina also for organizing this event and also making sure the weather outside is horrible, so that you [ afford ] to be here with us today and also for the people outside not to listen to us from a [ park ]. But jokes aside, it's an exciting moment for us to present our 2028 strategy and the 2026 financial targets. The world around that has changed, and I think it's the right moment to take stock of where we are as a company and the future ahead of us. To do that, I think it's worth starting to recap who we are, what we do, the foundation of our success and why we think we are uniquely positioned to actually succeed in this new environment. We also always pride ourselves to be a bank like no other, and we truly are. Although we have a banking license, what we really do at our core is to be a specialized and trusted service provider for our customers who are companies or other financial institutions, where a bank different from others at by nature with specialized, agile, entrepreneurial by opportunity. We have a large addressable market, which is -- to a very large extent, untapped. So as the leader in the niches where we operate. We've been able to execute M&A opportunistically, where we saw value and the ability to diversify our business. And importantly, we are very different from other banks in terms of results with the long-term return on tangible equity, which is substantially above because of capital, strong capital generation and ability to reward our shareholders with both growth and cash. And importantly, from a risk perspective, no exposure to the credit cycle. We are a leading bank specialized in B2B relationship, and we really have 2 focus in our business. One is to be the leader in Europe for factoring and lending towards public entities. And second, we are a second level bank, which provides services in intermediary banking payments on one side, and we are the only Italian provider of security services to which we will go in a second. We operate across Europe. In that respect also, we are quite unique in 9 countries with our factoring and lending business and additional 3 with our deposit gathering capabilities. We also have a great value creation story that we are proud of. The company was founded almost 40 years ago with roughly EUR 0.25 million of invested capital. Our market cap today is EUR 1.8 billion. We've returned over EUR 1 billion of cash to the shareholders of which EUR 600 million after the IPO, roughly 3/4 of the IPO value being redistributed to the shareholders. So a great success from the founding of the company to the IPO and from the IPO to today. That has been consistent over time. And since 2013, when we got the banking license, we've been able to actually grow at a significant pace, our net income consistently over time. We had EUR 84 million when we listed and our targets for this year between EUR 180 million and EUR 190 million. So substantial growth, as you have seen challenging market environment, which is now shifting. This has resulted in very attractive returns to our shareholders, which made [ 250% ] return on the investment of [ that IPO ], if we include dividends compounded through that period. That's driven by what we call superior execution. We are -- if you look closely our latest business plan, the one we announced in 2021 with the acquisition of DEPObank. And the plan of that, we are ahead of those targets. We have reached those targets 1 year ahead, driven by very strong focus on our businesses, a strong management team, as you see, a strong team overall and the attractiveness of the markets where we operate. So this is where we have been and in a summary, also where we want to be. Where we want to be is to remain a leader in specialty finance. The unique value proposition in our reference market, with a high specialization and a sustainable bank like no other as we've always been. And the mission has not changed compared to the 2023 business plan, which we announced in 2021. So operating with honesty and transparency, respecting and valuing people, maintaining leadership in innovation, customer services and execution in our reference markets, maintaining a low-risk profile and high operational efficiency. So that's where we are, where we have been. But looking ahead, we should look at what is the opportunity for us. And I would say, it's synthesizing award, which is growth. Its growth in revenues, earnings per share and return on tangible equity, underpinned by context, which is very favorable for us, favorable macro context but also favorable market in terms of niches where we operate, with unexploited opportunities. We will be able to capture those opportunities through the characteristics of our organization, a good operating leverage across our division, a diversified funding we've built over the years and embedded profitability comes from our unique revenue model in factoring and lending, low credit risk, given our exposure to the public sector, a disciplined M&A strategy, which we have consistently applied over the years. Sustainable business, which is not only financial sustainable but sustainable in a community where we operate in the environment that is around us in the governance of -- on the few public companies in the Italian market. The team which is strong, diverse and has been growing, and which we are very proud of, anything which is also strongly aligned in terms of incentives to the shareholders, which we think is a cornerstone of delivering value to our stakeholders. Let me go through one by one these elements. First of all, we've entered truly a very different market environment, which is strongly favorable for our business. If we look back to the last few years, the previous 2 strategic plans, the external market context has been actually challenging for a business that provides liquidity, protection against a delay in payment from the public sector and generally, with a lot of -- with negative interest rates, and therefore, a lot of pressure on who provides financing to the market. That has changed dramatically over the last year. And therefore, the external environment that we are facing is actually, we think, full of tailwind for a change. Why? Because there's less liquidity and companies are finding more difficult to access finance, even the large companies which are the bedrock of our business. Positive interest rates after such a long spell of negative or zero rates are very positive for us since we charge 2 interests in our factoring and lending business and that should drive substantially our growth in the next few years. Inflation is a positive because we actually have a very low cost income and therefore, it impacts us very little on the cost side, but we buy on the factoring and lending business, nominal invoices and therefore, the volumes are expected to grow driven by that. We have more public expenditure, particularly around investment post-COVID. And we have a legislative framework, which is stable or favorable. We don't have a new definition of [ default ] coming on board. The split payment is expected to be the fear. That's not yet fully in our numbers. And importantly, the review of the late-payment directive is going in the direction, which will be neutral or favorable to us. And finally, in this different environment, we expect DSOs potentially to increase, driving throughout the business. The reason is simple, actually. DSOs are driven by the administrative complexity of the [ public ] administration, this actually remained beyond the target level of the European directive, but also driven by the health of public finances. When interest rates go up, historically, we have seen DSOs also going up. And as you see, there, that's also what has happened in Italy last year. Now it's an uptick. We don't know if it's a trend. We are not planning for massive substantial uptick, it's clearly an upside potential for our business after many years of stability or decline. So if you look at the growth opportunities, across our businesses. The second pillar is that we operate in niches where we have untapped potential. Largely in factoring and lending, where we are facing a EUR 1 trillion market opportunity in terms of yearly receivables to the public administration generates and where only a small portion of those receivables actually factored nonrecourse. Secondly, in payments, we are exposed to the shift from electronic, from cash to electronic payments and also the issue for banks of managing the legacy payment system, which provides opportunity for us to grow and to expand our services. In Finance Security Services, the higher nominal level of returns should drive more asset accumulation and more opportunity to us, specifically is also a transition in Italy for a class of pension funds that we need to have services like the one we provide plenty of opportunity for us to grow. So a great market backdrop, and we are positioning issues of business where we can grow. How we are going to capture that opportunity? First of all, operating with an efficient cost base. We have demonstrating high operating leverage across our division. In the years, we've invested heavily in our business in the last few years. And so we expect that actually growth will disproportionately come to the bottom line through a continued increase in our operating leverage. Importantly, in a world where funding and liquidity has become more of a focus for any financial institution. In the last few years, we've been able to diversify our funding sources massively through the acquisition of our transaction services business, which provides us plenty of operational deposits. The fact that we have kept and developed further our deposit gathering machine, which now operates in Italy, Spain, Poland and through a third-party distribution also in Germany, the Netherlands and Ireland. And because we've kept open also other revenue of funding, the bond market and the interbank market, which can provide plenty of opportunity to grow. By having diversified, we're now in a pretty healthy position in terms of taking advantage of the growth ahead. Our loan-to-deposit ratio is 75%, actually much better than before the acquisition of DEPObank that gives us plenty of buffer to continue to grow our balance sheet, our loan book and within our balance sheet, as Giorgio will explain in the years ahead. Unique feature of our business is also that we have plenty of value, which is embedded in it that is deferred over time. As many of you know, we book only half of what we have the right to collect in terms of late payment interest recovery cost towards the public administration, which gives us over EUR 0.5 billion of balance sheet reserve, a large portion of which will come through our P&L in the year ahead. And that not only is substantial deferred income that we will see coming through the P&L in the next few years. There is also an amount which will continue to compound given the higher level of interest rate. So significant protection to our P&L, a significant source of valuing capital going forward. Importantly, in an uncertain macro environment, we remain focused on our low-risk business model. And that's something which is important to realize, we're not a bank exposed to the normal credit cycle of other financial institutions. We have 95% of our loan book, which is exposed towards the public administration. We have an average cost of risk including [ general ] provision of less than 10 bps since the IPO and cumulative credit losses in our core factoring business of EUR 6.2 million over the last 16 years -- over the last 16 years. So basically zero cost business. We will continue to look at opportunities to use M&A to grow our business in our core verticals and the adjacent sectors, but also tactically to diversify as we've done successfully with acquisition of DEPObank. We want to maintain a low risk profile, leverage our unique competencies. And so we look at M&A if something might happen, we can't predict it, but certainly another source of value that we have demonstrated to be able to deliver. So we think we have a strong business uniquely placed succeed. We are also uniquely placed to have a positive impact in the society around. We work quite hard in a BFF way to focus on tangible targets for our environmental impact with a big shift of our workforce in working green buildings, the reduction on our consumption, so to have less of an impact from an environmental point of view in our operations. We remain strongly committed to our social impact, both with our team and with the community around us, a strong focus on diversity, which is not only male and female but that was also for a business which operates internationally and the ability to bring the best talent wherever it is, with a lot of investment in training, strong alignment and distribution of value also to the employees that are creating value for the shareholders and investment in our social impact foundation. From a governance point of view, also, we find ourselves to be at the forefront of good governance. We have one the few banks, actually in Italy it's the only bank that has presented a slate of the board of directors directly and we're really striving to be the best public company can be in our market. That has been recognized by also the external rating agency, which has given us a low risk or high rating in terms of sustainability. That would not be possible if we didn't have a very strong team. And actually, let me take the opportunity to thank all the employees in the company, but also the management team for the success that has been done and also for the work put in this business. And I think, again, uniquely, we haven't built a business plan with support of external consultant. It's been really a bottom-up exercise which will drive the thinking and the execution of the business going forward. It's a strong team, which is well balanced across markets, geography, gender, experiences, it's a management team, which is extremely strong, which has been together for a number of years, but also come from very different experiences as [ yang ] motivated, and I think it's really the bedrock of our success. It's also a team which is strongly aligned with shareholders. And that's a unique characteristic again, for a bank like no other as ours. A team, which has short-term incentives, which cover a large portion of the organization, which are linked again to shareholder value and are mostly paid for the risk takers in shares and an important stock option plan, which has been reaching over time that covers over 20% of our workforce, which I think is unique in the financial services -- in the financial services sector. So a team motivated to lead what is really a true public company with no controlling shareholders, good corporate governance and the management team highly invested in the shares of the business, so sure alignment of incentives with the shareholders themselves. So a great opportunity in the economic backdrop, great opportunity in the markets where we operate, we invested a lot to be able to capture that and leave now to my colleagues starting with Michele to describe how we're going to go about to succeed in that. Thank you.

Thank you, Massimiliano, and thank you all the participants in meeting. Let me introduce I'm Michele Antognoli, the Vice President of the factoring and lending department. I'm here today to guide you to the section of the business plan that is dedicated to our business line. And as Massimiliano was mentioning, is a business line that is in front of us, a lot of opportunity for achieve and capture faster growth. In particular, we are competing in a market that cumulate EUR 1 trillion asset of public spend in the geographies where we operate. And this is characterized by 2 factors. The first factor is the fact that in this market, we will expect an inertial growth of this market that will be driven by the surging inflation rate and by the dynamic that we see in the nominal GDP growth rate of the countries where we operate. And secondly, is a market that is usually under-penetrated by the factoring service versus the public administration receivables. And this, for us, is a strong opportunity. This opportunity is the base of our business plan and is the base of our journey. And my role today is to guide you through this journey and to show you how we can capture this growth. Let's go into the next slide. In this slide, we have listed here, the 3 foundation elements of our successful business. The first one, as I mentioned, is the fact of operating in a large under-penetrated market that accumulate more than EUR 1 trillion of assets that are available and where the products of BFF is still under-penetrated in the market. The second one is the fact of operating with a very unique business model that allows us to have a high profitability level, thanks to the 2 source of interest income that we have on one side from the customer and the one on the other side from the debtor and thanks to the fact that we have a negligible credit risk and the possibility to have a scalable business where the operating leverage can be faster explored. The third factor is fact of competing in a market where we have an unmatched competitive advantage. This has been built through the experience that we have at in those markets since 40 years, building a pan-European platform that makes -- that increase the loyalty of our customers and mix -- more easy for us to enter also new market and scale the business even further. Let's go now to the first element, the market itself. If you see here, we have this EUR 1 trillion market, as I mentioned, that is underserved. Let's look to the left part of the slide, where we showed up that in the market where we operate, we have almost EUR 964 billion of public spend. This spend is based on 3 categories. One is the intermediate consumption, the others is the contribution in kind and the third category is the CapEx or public investment that the public administration is before. As you can see here, BFF has a less than 2% market penetration in the first category that I mentioned and negligible market penetration in the other 2. So there is the potential to grow also in the other categories. The second element and the first element of our growth that we listed here is the [ spend ] growth over the year of the plan that here, we project at a 5% grow annual rate. This is based on the switch in inflation rate that we have seen at the beginning of the presentation, plus the nominal GDP growth in the countries where we operate. And this is the first component of our growth is the [ natural ] growth of the market at 5%, and a good part of it is that is in Asia. The second part is the increase of the market penetration. What is listed here as number two and this can be done across the various category of the spend of the public administration and across the various geographies where we operate. The third factor that we have listed here and is not included in our numbers of the financial plan is the possibility to increase and expand our geographical footprint and expand it to an area of the European Union, where we currently not operate. Here, we are listed Romania, Bulgaria and Hungary as an example, but there are areas that could add possibility and ample opportunities for us. All in all, this is making a 10% annual growth in volumes. That is our expected trend for our business line. Going that analyzing the opportunity that we have in increasing the market penetration that we have in the markets where we currently operate. Let's do an example on the Italian business. In the Italian business, as you can see here, we are operating in 2 business lines. The first is[indiscernible] , the national health system that is [indiscernible] is our historical business line, where we are operating since 40 years. Then the second business line is the rest of the public administration spend, where we are operating since 10 years and where we have a lower market penetration. So if we will be able to achieve the same market penetration that we have in the NHS system, that is 5% and match this market penetration also in the public administration, this is meaning getting EUR 2 billion of additional volumes in our assets in the next future. Yes, EUR 2 billion that are additional to EUR 3.4 billion that we currently have. And this is a huge opportunity for us that we want to capture. Let's do the same reasoning also at the European level. At the European level following the same reasoning, we can see that we have the famous EUR 964 billion spent at European level. And we have currently a market penetration that is on average, on all the countries, 0.4%. While in Italy, together, NHS and PA as a market -- BFF as a market penetration of 1.7 %. So in case we will be able in the future to accelerate our growth and achieve in all the markets and 1.7% penetration this will get to us EUR 9 billion of additional assets. This EUR 9 billion are accumulating with the EUR 7 billion that we currently have. So it's a very huge opportunity. How do we do that? We do that, investing in the relationship that we have with customers and investing in a structure that we -- on which we are operating. For instance, the opening of the branch in France would be a very huge driver for our growth. But let's go back to the second element of our foundation, of the foundation of our success. So the unique revenue generation model that we have in the effect. Let's look to the slide. In our model, we have being a factor and the factoring business, we have 2 customers essentially. We have, on one side, the public administration provider, so the large multinational companies that do provide services to our public administration and then the public administration itself. And this model is a model that is allowing us to have, first, a very scalable business because the number of counterparts are limited and they are limited in terms of number of large customers that we have in the portfolio and the other side in the number of debtors that we have in our portfolio we are managing. So with this limited number what we can do is that we can scale the business more easily. Then the second element is the negligible cost of risk that Massimiliano was explaining earlier. Thanks to the fact that we are transferring all the exposure to the public administration and being the public administration and entity that doesn't default by definition, this is giving us a very safe business with negligible cost of risk. And the third component, most important is that our source of revenues are coming from 2 sides. On one side, there is the maturity commission that we charge to their signers so to our customer that is an [ only fee ] that we charge and then we discount from the face value when we acquire the portfolio. And on the other side, the interest and the recovery rights that we charge to the public administration entities. And those interests and recovery rights are based on the interest on ECB rate plus 8% and on recovery right on EUR 40 for invoice. On our model, we accrued in our P&L only 50% of this value and the rest is deferred for the future. And I will show you later the implication of this. The base of this profitability and based on the late payment interest and recovery right, is based and protected by the European directive on the late payment. This European directive has been born in 2000, then reviewed in 2011 and then is undergoing review in these days. But the 2 elements that I want to flag about this regulatory framework are the following. First of all, is the regulatory framework that is protected by the EU law. That means that no individual country or no individual debtors can change the rules of the game -- change the rules of the game is very difficult. Then the second element that I want to flag is that over the years, EU has always have the same track that means protecting and protecting and enforcing the rights of the public administration provider in relationship to the terms of payment. And we expect that this trend will keep going also in the future. Going back on the 2 source of revenues that our business model is giving us -- you will see in this slide that we have in our funds actually more than EUR 1 billion of rights coming from the LPI and from the recovery rights. And as I said earlier, just 50% of it has already been accrued in the P&L and the rest has been deferred for the future. That means that in the next period, the next year and in the years of the plan, part of this value will come through the P&L. And here, as an example, we are listing and estimating almost EUR 240 million that are going to come in the P&L in the next year. And those are based on the fact -- on various components. The first component is related to the increase of the LPI rate from 8% to 12%. And the second component is the over-recovery that usually we have in our business versus the accrued 50% value that we have in our balance sheet. And this is valid for the recovery rights and for the EUR 40. This is an elusive example and doesn't include the factor of the expected growth that we have and will have in the plan, meaning the growth of the LPI rate that keeps growing, meaning the growth of the volumes and meaning the growth of the DSO that Massimiliano was saying, is expected to increase. Also, a number of invoice would grow because we are able to target in the development of the plan, industries where the number of invoices are more important than on others. All in all, this is explaining the fact that we are operating in a very unique and profitable business model with deferred value for the future. Let's go to the last session of our foundation and explain you what are the basis of the unmatchable competitive advantage that we have in our business. The first base is the fact that we have a scalable business with negligible cost of risk. And this is based on the fact that we are operating with large national and multinational provider of the public administration on one side, and then with the public debtors on the other side. So we are transferring all exposure risk to the public administration. Then the second element is the fact that we have a very unique international pan-European platform that is operating up in 9 countries. It can be faster explored, but we can add additional country with a very limited incremental cost. Then the last element is that we are having a very unique relationship with the public administration, meaning that the public administration entities for us are not customers, are only debtor. What does it mean this -- it means that we don't -- we do not come across conflict of interest when we are collecting back the credits and the LPI and the recovery rights. We don't have any other business as a bank dealing with the public administration. This is very important for us in the credit collection business. Credit collection that as a performance has been built on the history and on the experience of 40 years of more than 200 employees that are active in this field in our companies and are allowing us to have a recovery performance that allow us to have a series of data about our credit collection that have -- they gave us the opportunity to use the accrual methodologies versus the cash-in methodology. Then as a last point, we have ample and stable funding. We have the technology. We have the culture and the people that is needed to operate in this business with a successful approach. And all these elements that I have mentioned, are very unique. And the traditional banks, the other specialty finance operator or new entrants cannot match this advantage and these assets that we have in our company. So based on this 3 component of our business model, and in particular, the fact of operating in a large under-penetrated market, the fact of having a very unique business model and the third component of having a competitive advantage that is not matchable by competitors. We are viewing our future with a very optimistic view. And in this slide, we are projecting our expected trends in terms of the main KPI in which -- that we used to look to our business. So as I said earlier, in terms of volumes and the debt of average loans, we are expecting a trend in which we'll have a growth at a 10% plus growth rate going forward. In terms of gross yield on average loans, we are expecting an increase to a high single-digit number. And in terms of revenues that at the end is sum of the 2 is to 2 earlier factor. We expect to have revenues that are 2.5x the revenues that we had in 2022. This value for us, and values in terms of volumes that comes and are aligned with our long-term trajectory. Also the trajectory that we have seen in the past presented by Massimiliano and in terms of gross yield, the growth of the gross yield will be driven by the new interest rate environment and mostly also by the unique business model that we have, and we use with the 2 source of interest income that I explained earlier. On one side, the maturity Commission and on the other side, the LPI rights and the recovery rights that we charge to the debtors. I hope that you have now more clarity on our business line. I hope that you share the positive optimistic vision that we have for the future of our business line. And with this, I give the stage to Enrico Tadiotto, to present you the other 2 business of the bank. Thank you.

Thank you, Michele, and good morning, everyone. My name is Enrico Tadiotto, the Vice President of the Transaction Service Department, which manage the other 2 business of BFF, the payment business and the security services business. Starting with the payment business. We operate in a market, the Italian digital payment market, which has grown significantly over the last few years, especially post-COVID and still has high growth potential which you could see that -- as you can see from Slide 37, that we are still behind compared to other European countries in terms of digital payment penetration rates. And on the other side, Italy can rely on a payment transacted that is already similar to the one of those countries, those European countries with a higher penetration of the digital payments. The growth for this market is supported also by the -- our national recovery and resilience plan which aims in general at the digitalization of our economy, which can have a direct or indirect impact on the digital payment. Just to give you an example of some initiatives of this plan with a direct impact. We have the initiatives that allow everyone that has to make a payment to a public entity to make such payments with the digital instrument and the other initiatives is the one that is making mandatory for all merchants in Italy to accept a payment with a digital instrument also for a small amount. Then we have a number of new regulations specific for this market, for example, the instant payment regulation that is making mandatory for all banks to provide instant payment services. Today, probably most of the PSP, the payment service provider are already able to receive an instant payment, but most of the smaller and medium Italian banks still not offer today clients the possibility to send an instant payment. Then we have the digital euro. I believe we are all familiar with this project. And there are still several topics that need to be clarified by the Central Bank. But what we know is that it is inevitable and probably will be launching 4 years' time. And that the instrument will be distributed by the bank. This means that all the banks will have to make a significant investment in order to be able to manage such instrument. And that probably the [ modern medium ] bank, we prefer to use the services of an intermediary bank like BFF in order to share such investment and also to leverage on our economic scale. Actually, we could play an important role to guarantee the interoperability and reachability of this new instrument, which are both crucial for its success. Then we have the PSD revision. The review of such directive should generate more cost and more investments for the PSD, and this will favor the outsourcing by the PSD of noncompetitive activities, which is actually what we offer. Then we have the innovation. Innovation [indiscernible] creates new player that can be served by BFF and creates a new type of digital payment instrument, and therefore, make it easier for an individual to access and to use a digital payment instruments, and therefore, favoring an increase of the number of digital payment transactions. So it's a market with high-growth quotation also supported by the government, by the new regulations and by the innovation. And We play an important role in this market because we are a Banca di Secondo Livello, a second level banker which provide efficiency, simplification and a level playing field for small players. A partner payment service provider that want to operate in this market can choose between 2 models, as you can see from Slide 39. The direct model, which requires us to have direct relations with all other participants in the market. That means they have to manage many relations with other participants, with other players, and they need to have access to all the payment system, so all the ACHs, [ target tool ] and et cetera. So obviously, this model requires a higher cost, both fixed and running cost, more investment and more complexity. On the other side, they can choose the intermediation model, which is what we offer. Based on this model, they can offer -- they need to open only one settlement account with us. And based on this account, they can set up all type of payments so they can offer to their client all type of payment instruments, digital but also other type of instruments. So obviously, these models requires lower cost, lower investment and generate less complexity especially for the small players. So with this role that we play, we allow for more competition in these markets because the smaller PSP can focus choosing the intermediation model, can focus the investment on the payment instrument, which is the more -- the competitive area of the same as the [indiscernible] rather than on the payment process, which is what we offer. So to manage the payment process, you need to follow the standard rule defined by the regulation. And in this way, they can compete with the largest PSPs that tend to choose the direct model. We have a strong competitive advantage in this market since we are the only intermediary banker that is not a competitor of other PSD in any segments. And obviously, a PSD doesn't want to share any information regarding their clients and especially regarding the payment floor of their clients with other PSD that are a competitor in this market. We have a competitive advantage also because we provide a full range of services that can be classified in 3 areas, as you can see on Page 40. The first part is the intermediation settlement, which provides services that manage all type of digital payment instruments. We serve all types of payment service providers, so banks, payment institution and electronic money institution. And this area has a high growth potential in line with the market trend that I explained before. The second area, check and receivable, is an area that manages the back office activities of payment instruments based on paper, like the check and receivable. And in this area, we serve as banks but also direct public administration and other corporates. Obviously, this area has a negative trend because the market trend for this type of instrument is decreasing. But actually, we believe we can partially offset this decreasing trend with new clients given that our banks with a decrease in volume, and therefore, with a higher cost per transaction, we prefer to outsource such activity to an external provider like BFF. Then the third area, provide payment services, all type of payment services directly to the final client. That can be a banker, a corporate or public administration. We don't serve individuals. And even if we serve the final client, we are not perceived as a competitor by other payment service provider because our clients needs a tailored solution that other players struggle to offer. In terms of expected trend, we expect a modest growth, both in terms of number of transactions and revenues given that the high growth in the digital payment instrument will be compensated partially by the decrease in plan of other instruments, as I explained before. And this is a business that generates also liquidity for the group, EUR 2.8 billion of liquidity. That is expected to decrease slightly in the future since we are expecting less liquidity in the overall banking system. So it's an important reason for the group that operates in a very attractive sector with a structural shift from the cash transaction to a digital transaction, and that is able to deliver steady growth and an important source of funding for the entire group to fund the business line of [indiscernible]. Moving to the other business of the transactional services department, the security services business. Also in this area, we operate in a market that has a positive trend, especially in the pension fund segment, as you can see on Page 43. If you remember, in the pension fund segment, we are the leading provider of depository bank for close pension fund, which represent more than 2/3 of the overall pension fund segment. It's also a market that is expanding in terms of potential clients, thanks to the recent change in regulation that is making mandatory also for cash liquidity data, which is a kind of a close pension fund for the professional worker. So it's making mandatory for them to appoint a depository bank. They will need to issue the public tender to select the depository bank in the next 6, 8 months. And if you consider the selection process and the migration process, probably the services that we start to be provided in 1 year or 1.5 years. So it's a new market worth about EUR 110 million of assets. Also, the alternative fund segment is very attractive. You don't see that represented here in the graph because no public data available for the overall segment. So it's very attractive in terms of size and liquidity, also because compared to other segments where the number of clients tend to be stable or actually sometimes decreasing, in this segment, the number of clients tend to increase because there are new asset managers entering the market, but especially because there are many new funds established both by the current player and also by the new entrants. This is a market where a security service provider, in order to be competitive, in general, need to add scale. But there are some European markets that are an exception to this rule. Italy is one of these markets but also like Spain or Germany. The reason is because in this market, there are many small and medium players on the client side that need a provider with a more flexible approach, a more customer-centric approach and that with tailored solution. So a local player like BFF in those type of markets can have a competitive advantage. Also if you look Italy, there are some difference among the several segments because if you take, for example, the mutual fund segment, it's the most concentrated one with more like -- more than 80% of the assets concentrated within the top 3 to 5 players. And those assets managers are served by the larger security service provider, also because they have a longer-term relations originated by the acquisition that they made in the past when the former controlling shareholder of the asset managers for the depository bank business. So we tend to concentrate on the smaller player, which represents a smaller portion of the segment. On the other side, in the other segments, pension funds, alternative funds, both on the banks and broker segment are the most fragmented. So as I said before, a local provider like BFF can have a competitive advantage. Also if you can see that we provide the full range of core services to manage the office activities of our clients, and that we are able to serve all types of clients, except the foreign funds. We are well positioning the domestic market that allowed us to continue to generate growth and liquidity for the group. In particular, we see many opportunities to delivery growth. Here on Page 45, we listed the main 4 drivers of our future growth. The first one is in the [indiscernible] fund segment. where we see a lot of opportunity to increase our penetration among this player. We already have a full coverage of service -- of core services for this player. We have also a wide range of value-added services. And in the past, we have demonstrated to be very normative because we are able to serve all type of funds investing in all type of assets. And we were able to acquire existing funds that migrated from other provider, security service provider. And this is very unusual for this segment, as you may know, because asset managers tend to avoid to migrate existing fund, considering also the short life cycle of the fund itself . And the feedback that we receive from our clients is that we provide better quality services compared to others. Then we have the new market, the Casse di Previdenza that I explained before, new market worth EUR 110 billion. It's a market -- the Casse di Previdenza are a kind of closed pension fund for professional worker. And if you remember, in the closed pension fund for employees, we are the leading provider with a market share of the above 35%. And so if you apply the same market share, that means we can generate more than EUR 35 billion of additional assets for BFF. We have also some customers that are already clients of BFF for some value-added services that we've developed in the past specifically for this type of clients and also ahead of the change in regulation to position ourself for this new opportunity. Then we will leverage more on our role as the only Italian security service provider still operating Italian market also to acquire new clients on the mutual fund segment, see some full Italian operators using services from other foreign provider. Then we will continue to add additional value-added service to our current offering also to serve new type of client. So thanks to the positive trend of the market and this opportunity and this driver of growth that I just explained, we expect to a double-digit growth in terms of assets under depository for the depository bank services and a low single-digit growth in terms of assets under custody for the global custody. The combination of these 2 growth is a high single-digit growth in terms of revenues. And also this business generates a significant funding for the group, EUR 3.2 billion, that we are expecting to double in the future, thanks to the high growth that we expect in the asset under depository. So also, this business is very important for the group with high-growth opportunities and -- so delivering also a significant source of funding to fund again the funding and lending business. So we present the plan -- Page 47. We presented a plan with the growth opportunity across all business lines. And on this page, we tried also to list what could be the potential challenge of this plan. Some of these challenges will have also a low probability. So for example, on the payment business, you know that there are a consolidation with Italian banking system that decreased the number of potential clients. There is a -- the challenge of the decrease in volume for some type of instruments, which can be also positive, as I said before. There could be some new products or some new technology that could reduce the need of our intermediation services. On the security service side, there is the pressure on pricing generated by the larger provider. We know that we cannot, at the moment, cover the foreign funds established by the Italian asset manager, which makes difficult sometime to acquire new clients and new asset manager that manage both Italian and any foreign funds. On depository lending side, also here, who is some potential challenges with low probability, The execution of the lender in terms of volume and collection, the managing of the past due exposure that requires a lot of discipline, the uncertainty around the net payment directive, and also a challenge that we could face is that -- would be in the case, if there is a dramatic shift in the macroeconomic environment, that could result also in a DSO decreases. Thank you for your attention, also to the participants from remote. And I will leave now the floor to Georgio, our CFO, for the next session.

Thank you, Michele. Thank you, Enrico and Max. Good morning to everybody. I'm Giorgio Bicci. I'm the CFO, and now I'd like [ to do ] the balance sheet management, the operating cost, sustainability at the end of the financial target. About our balance sheet, we are going to maintain the balance sheet stable in terms of dimension. And this would be driven by the strong growth in the factoring lending loans and receivables. But on the other side, we receive the reduction of the held to collect portfolio. On the liability side, we are going to increase our deposits, transactional deposits from the business of the depository bank and the payments and also the online deposit, and this will be compensated by the reduction of the repos. And also, we are also going to cover -- to get about [indiscernible] and to increase our liquidity ratio. Going deeply to the government bond portfolio. What will happen in next year is the reduction of the fixed part of our bond portfolio. At the end of 2026, the floater portion of the bond portfolio will be the 80% of the total amount of the portfolio. And this will give us a target of the 25% of bond portfolio compared to the total asset with an increase in terms of interest income that will be tripled compared to the interest income of the 2022. For the funding, we have a trajectory in order to maintain our diversification. The main fields are the deposits accounting for our business in transaction services. That will reach a range of between EUR 8 billion and EUR 9 billion, but also we are continuing to increase our online deposit and we expect also to open in new geographies. On the other side, we are reducing our repos and we are going to issue a bond in order to fulfill the model requirement here, and the bond will be in a range between EUR 300 million and EUR 500 million. We're now at Page 52. And in terms of investment, we're going to continue our strong investment in order to increase our efficiency. We are working on a new factoring system because we have to increase our volumes, increase our collection of operability and to extract more value that we can do also using the new technologies that are available. We are going to establish a branch in France in order to support the growth also in that market. We are working also to renew our online deposit infrastructure. And we started the project in order to have internal credit risk model that can be, going forward, some efficiency also on that side. And this is something that we don't have forecasted in our financial targets because it is a long process and we started to work on it. In terms of asset quality, we are going to maintain our distinctive character because 92% of our are impaired asset are towards the public administration. And we know that this is something in particular because we have to classify nonperforming -- some the part of our asset but we know that it wouldn't have a real credit risk. So it is in the lines of our capital, but the end, we know that we don't have losses, as shown before by Max. Going at Page 54. We maintain our dividend policy, We changed the threshold, which to has reaching from the total capital ratio to the CET1 in order to be aligned to other banks and capital target. And we are going to maintain the payment of the dividend twice a year, the first part after the first half results in August and the second half after -- at the end of the year. The starting capital position is very strong. So we know that we can fund our capital needs to retain [indiscernible], and we have the space considering our CET1 target of 12% to make the our portfolio increase in terms of loans, and we can solve any capital needs retaining also the earnings when we reach the level of the 12%. Now for the sustainability, we have the 3 pillars, The first one is the environmental. We have a target to have direct capital emission at zero at the end of 2026, thanks to the fact that we are -- we will have the 80% of the population buildings that are LEED certified and especially our new exporter that we are building. And this is a very good investment in order to have a good impact also on the carbon emission and to give also a sense of how it's really important also what we do for the environment, what we do for our employees and what we do for the community. We are going also to adopt also some important framework in terms of disclosure considering the effort that we're putting on that side and also to adopt some principles for a good banking and going forward. And we want to achieve other ESG rating, maintaining our low risk profile. In terms of social, we have 2 main pillars: the employees, so our population, our team. It's very important to push on the talent, on the diversification in terms of gender, also the nationality because we are an international group, So we want also to give the responsibility in terms of management team also to people that is not based in Italy but across our countries and also to reduction of gender pay gap. But on the other side, we are very care also on the community. So with the new shape of our foundation, we want to work for the community, for the society, that's why we have 3 pillars. One is the health, the second is the social protection and also the financial inclusion. The strategy of ESG is governance, Our Board published it's own list and they make an assessment in order to have all the competencies aligned also with our plan. So this is a way in order to be fully aligned with the best corporate governance. Saying that, we can pass to the financial target, and we are at Page 50, so a summary of the environment about the interest rate, where we are here -- here is GDP growth is expected to be around 2% for the next year in the countries where we are active. Also, the inflation is around 2% on average in our countries. And as we know, we have in a different environment in terms of [ waste ], they are significantly higher than in the past, and this can grant in terms of revenues coming from the LPIs increase compared to what we had in our -- in the past. So saying that our financial targets are, as said before, for the cost income, we have a target to stay below the 40%. We have a target of adjusted net profit in a range between EUR 255 million, EUR 265 million with Earnings per share that will be in a range of EUR 1.37 and EUR 1.43 per share. So after all, we can pay over EUR 720 million in terms of dividend, that is around the 40% of the current market cap with the target of CET1 that is higher than 12% and the return on tangible assets and tangible equity that is higher than the 50%. So in that, I leave the stage again to Max Belingheri in order to close -- to have the closing remarks and then to start the Q&A session. Thank you.

Thank you, Giorgio, and thank you, Michele and Enrico, for the presentation. We're truly a bank like no other because we are actually 20 minutes ahead of schedule, which I think is miracle in a Capital Markets Day. It's actually a pleasure to conclude the presentation and summarize where we are because it's actually an exciting time for us as a business. We're really looking for the future ahead with, as somebody said, we're optimistic in a positive way, view. And the reason is the market opportunity ahead of us is very exciting. The context has changed, and we are uniquely positioned to capture what is the opportunity because we've invested along the way in the last few years to be ready for this shift. We have a strong operation. We have ample funding, a strong track record of execution in very different times, and we've built a business which is long-term sustainable. Now today, we're not only presenting business, we present it to you as shareholders or potential shareholders, what is the opportunity ahead. The opportunity ahead is actually a strong growth in returns both in terms of profit growth with over 75% earnings growth projected to the next 3 years and, frankly, a lot of potential beyond that and 40% cash return, which means over 110% return if we look ahead, which we think is an exceeding attractive proposition, particularly because we're actually not exposed to what other banks are exposed to. Our liabilities have already been repriced. We are not exposed to the credit risk. A higher level of interest rate should benefit us on the yield side. And so we are, we think, extremely well positioned to do well. We want to continue, therefore, to remain -- and be even more bank like no other, either in specialty finance with a unique value proposition of our reference market, remaining highly specialized and sustainable financially in the society where we operate. Operating, as we've done so far, we don't have seen transparency expecting value our team and to continue the leadership in innovation, customer service and execution in our reference markets and with a low risk profile and high operational efficiency. Giorgio presented the target that we have given to 2026. I think it's also important to think that our business is a long-term investment for the potential it has well beyond that.

With that, well ahead of schedule. I'll leave the floor to the questions. We'll start first with the people we have here in London and then with the people that are connected from [ Omaha. ]

It's Antonio Reale from Bank of America. I've got a couple of questions, please. First one, while you're back to steady growth and with your decision to allocate more of your capital to fund growth in the business, you're basically securing your P&L for the next 6 years. And you're one of the few -- very few to offer steady growth as well as a very generous dividend yield. So can you give us a bit more details in sort of the level of growth, you are targeting? And you talked about above 5%, but if you've done some of the maths right, this is closer to 15% than 10%. And how do you see the balance sheet evolve between here and 2026 and particularly your RWA density because there's different moving parts? So I'd like to do a bit more about that. And my second question is on the NII. Can you help us understand what are the key drivers of net interest income going forward and particularly the evolution that you see for margins between now and 2026?

Thank you, Antonio. Let me go through, if I missed some of the questions, please repeat them. In terms of growth, We have a 10% plus growth in the factoring and lending business. That's what we have indicated. You should take the different components, We have nominal GP growing at roughly 5%, and then we have more penetration in the markets where we operate, now really in an uncertain environment. And so we're targeting a level which is similar to what we are targeting in a very different environment, which means probably we are still in terms of opportunity on the upside compared to the target. But we can't control what our clients do. And so we're going to be prudent in that respect. In terms of balance sheet, if you look back to the structure of it, the message that Giorgio gave is that we don't plan to increase the overall size of the balance sheet. The reason is because there are MREL requirements and leverage requirement actually, it's not that interesting for us to inflate the balance sheet necessarily. And so the -- while our bond portfolio will amortize over time, and we expect to grow our factoring and lending business assets, we'll have a recomposition of that. Recomposition, also in the liabilities with repo becoming less important, partially also because, frankly, the deposit spread becomes more interesting for us even compared to normal repos. We will continue to have a pretty healthy liquidity. What we are projecting is a world which is different than the one we've seen but with no shocks. And actually shocks are usually good for us because companies then tend to sell more receivable, our DSOs tend to grow, the balance sheet tends to expand. And so we always want to be in a position to take advantage of that. In terms of oyou're diviDensity, I think we are assuming a constant RWA density over the plan. Again, that's a combination of being prudent. I think on the past [ due ] capital absorption and the development of our factoring and lending business. In terms of net interest income margin, you've heard from Giorgio some comments on the bond portfolio. You have the growth at the bottom on the interest income, which is 3x what we have in 2022 that we need to then have the cost of the repos mostly taking into account. But as you can see here, the fixed part of our bond portfolio will decrease significantly, and that's for amortization. And what you also have, if we expect interest rates to go down, that remains the negative carry on the fixed part of the portfolio will also go down. What I described on the floaters will remain the same. In terms of the other big component, net interest income, which is what Michele spoke about before, we are saying, I think, 2.5x the revenues from factoring and lending. Again, that's on the gross yield and then lead to the back the cost of funding, which is modeling to the level of the EURIBOR. So I think that's the way we try to give you an indication of where we end up. Did I miss something? Okay. Thank you.

Andrea Lisi from Equita. Two questions from my side on the factoring and lending, 3 questions actually and 1 on the capital. The first one is on the evolution of the volumes and the loan portfolio. And in particular, you said that above 10% with 5 percentage is part inertial. My question is how do you think you will be able to increase the penetration towards the public administration, not a [ net ] national persistent in Italy? And why so far the penetration was so lower? And how do you think you can -- confidence that you can arrive to the -- or closer to the gap towards the level you have, towards the national [ health care ] system, and the same for the penetration approved in the other markets? The other question is on the assumption you have in the plan in terms of LPI over recovery. because in the past it was higher than it went down. So just to understand a bit with other assumptions there. And also the assumption you have made in terms of DSOs with respect to what you are preserving currently in the market. And the last question is on capital. If you can provide -- if you have an idea of how long will be the process for the obtaining the internal models and if you already have an idea of which could be the impact -- the benefit you have on capital from the internal model.

Thank you, Andrea. On the ARB, we are not giving in the plan -- we're not assuming any plan, any benefit. So as we're saying, look, it's going to be beyond the planned horizon, but we have the costs of actually implementing ARB, which is not immaterial, as you know. So that's -- in a sense, we've built an option in there. We think there are 2 areas of benefit which are to materialize. One is a benefit on capital, but we're already at a low capital level model. So there is an output floor. So it's not important but not dramatic. And also, it changes the way the past deals are treated because it has more granularity, and therefore, can have a good impact on the exposure and also the kind of provision which is linked to further exposure. So those are, I would say, the impacts. In terms of LPI overrecovery, we distinguish 2 things: one, the percentage of overrecovery and then the amount of overrecovery. In terms of percentage of our recovery has been, frankly, significantly higher than what we account for and creeping up over time. So it's actually going in the right direction. In terms of euro amount, in moments as we have seen during COVID where public administration tended to push for paying quite fast to new invoices, they actually left behind the old ones. So the volumes of collections were smaller. But we expect that to continue in the plan with a very prudent approach on other recoveries in general because again, that's a level we don't control fully. In terms of the loan profit, then I leave to Michele to comment, we also country by country. Let me put it this way. We have grown 15% plus since 2014 when we had split payment, a reduction in DSOs, a lot of liquidity, no worry on public administration paying, okay? And we're saying the world has changed and we're growing at 10%. So I think in terms of -- sorry, I may forgot something, which is actually nominal GDP growth was closer to 2%, 3%, not 5%, 6% as we have now. So overall, the macro trend is very positive as supportive and we don't have as many headwinds. We have a lot of tailwinds. We have strengthened the team over the last few years. Michele taken the leadership in the combined Italian-International business. We have a new Commercial Director in Italy, a new Commercial Director in Spain. We've invested in the presence in other markets. And so we are quite positive on the opportunity ahead. As you know, the growth comes from the decision of customers of dealing differently -- with the higher penetration, dealing differently with our own customers. And what we offer is not only a financial product but is also collection service into way to separate the sale of the goods from the collection. And it means also the customers need to be happy the way we are going to collect will not damage the customer relationship, which creates, on a positive side, a lot of lock-in. We never lose customers. But it takes a long time to actually convert them. We're seeing now, given the shift in the interest rate environment, the liquidity is a good month to push for incremental growth, but we can control that only to a certain extent. I'll leave to Michele to complete the answer. Yes.

Massimiliano. You mentioned the factor that are actually a factor that can support us in the increase on the penetration. But let's say, on the Italian side, clearly, we -- what we noticed is the renovated appetite for our products, thanks to the new liquidity environment, to the new interest rate environment. That's for sure. The area of the public administration is there in which we have grown significantly also in the last year. It's an area which we see the potential of growth. Also, the usage of the EUR 40 recovery rights is something that in the rest of the public administration, not NHS, it's more relevant in terms of -- because they have usually a well-fragmented portfolio, so more invoices there and support also our value proposition because we are the only one that value this part of -- in our value proposition. And this would be all levers there to support the growth on the public administration site in Italy. On the other countries, what we do see is that as you know, our countries where we have been starting our operation more recently, like, for instance, Greece, Portugal and France. And there is an initial growth -- is growth that is driven by the team, but is a growth that can be there and the market is pretty virgin and can be penetrated much, much better than the Italian market with a very high potential. Part of this growth, as I mentioned, is -- will be related also to the French business, where we plan to open operating banking branch locally in France at mid of next year and this is also a shift because till now, we were operating from Italy. So you can imagine the difficulties on operating in the market, having -- not having a local presence. When we will have a local presence, we think that we can have a lot of satisfaction from that decision. Thank you.

Good morning. It's Giovanni Razzoli from Deutsche Bank. I have sort of 3 questions. One on the factoring, one on the payments and one of -- on the group targets. On the factoring, it's quite a comprehensive question. So can you please elaborate feedback on the repricing process of the maturity fee that we have launched last year and what's the feedback of the clients, what you expect the contribution from this on the plan? And regarding the growth of the volumes, you mentioned that the operating leverage that is clear in your business. Can you provide us with an example or elaborate a bit more on this point, which is crucial for your operating profit growth going forward. And related to this during the presentation, you mentioned that you plan to grow and to expand in some new sectors with more granular tickets, so for the benefits of the recovery rights, if you can elaborate a bit more on this? And the very last question on the factoring. I was wondering, in what scenario, you see a risk of significant decrease in the DSO from here. That's for the factoring. For the payment, it's more straight forward. You've provided a very clear example of how we expect the market to grow in the next couple of years that there are secular trends, regulatory changes, product offerings, which are expanding. But despite these, you seem to have incorporated a rapid prudent assumption in terms of growth of the revenue, low single digit in a market that is growing high double digit or high single digit. So what are the elements, which explains the details. Do you see pricing pressure or more competition or what?. And another area is referring to the good targets. I was wondering whether you can give us an indication of what are the potential adjustments to the net income in 2026 because you mentioned that you will stick to 100% to your policy on adjusted earnings. So we see that there are impact of the stock options, if you can clarify this. And then the very last one on the -- we have significant hidden value from the LPI and recovery rights, [ client ] not recognized in the P&L. I was wondering whether is there a way to crystallize this upfront with some kind of financial engineering transaction, so to get this upfront rather than over time.

Giovanni. Look, the easiest way to recognize it upfront is simply to recognize it upfront. As we have the right to -- we have the right. We have under IFRS to provide the evaluation of the recovery rate based on our expected recovery rate and if there is anything actually we have discussions with the auditors that -- because we are having higher collection, how far we are from between 50% and the actual collection. So as there is upside there but we're quite prudent in general because we don't also want to inflate our P&L and also constrain our negotiation with the public administration. So see financial engineering will be coming to a decision by the Board to recognize more and that's clearly a potential. In terms of 2026 targets, we indicate we're going to pay out 40% of market cap, EUR 720 million to 2026 which is exactly the same mechanism we always had. We pay out the excess capital that is not needed for our growth in order to keep the 12% Core Equity Tier 1. I think it's worth highlighting 3 factors which are potentially not that clear to the market or why we don't have what appear to be a 100% payout ratio compared to the earnings we generate. First of all, we are growing a little bit. We have excess capital, as Giorgio explained, that support the growth, a certain point when the growth -- and we lead into the capital level then we need to retain earnings to fund the capital portion of that growth. But importantly, there are 3 things which worth mentioning. First of all, the AT1 coupon comes out of the equity from an accounting perspective. And so that's around EUR 25 million of the planned timeline, which is on dividend, it goes to be 81 holders. We have a very prudent approach on calendar provisioning, we have given targets, which is another EUR 30 million plus over the planned horizon. And then importantly, we mentioned how important it is, our equity incentives to the team. Until we have stock options there, part of which are actually paid with the buying back at the stock synthetically. And that accounts another EUR 60 million of capital, which will get absorbed, which is translating low valuation to the shareholders. So you see the dilution in terms of earnings per share is roughly 2.8%. The stock option plans are a larger amount in terms of overall dilution. Capital dilution is covered by consumption of capital that you see on the balance sheet mostly. So those are the indications. In terms of payments, I will leave it to Enrico to comment. But in general, one of the moving parts. There are some payment instruments, which are long-term decline, checks and receivables. There are shifts usage of instruments and new payment instruments are coming through, instant payments. And so we've always said, look, actually, it's a dynamic world where because we are exposed to the overall environment and there's also some fee pressure in terms of particularly the new instrument of payment. Now the overall growth is going to be more in the single digits but remains a very important business for us, which generates liquidity. And also, it has beyond the plan horizon the opportunity to improve the profitability, mean to negotiate the fee contract with Nexi in 2026, which is not included. And so we see quite a lot of opportunity to continue to do well. Enrico?

The reason -- the main reason is the one that Massimiliano just explained. So the [ hydro ] potential of the digital payment is compensated by the decrease in trend in checks & receivable. Also to those, now the checks & receivables has a significant decrease in trend, more than 15%, probably around 20%. But at some point, we'll [ stabilize it ] it's not a payment [ tool ] that will disappear from the market. So this impact would be still meaningful in the -- in our plan until 2026. Probably if you go beyond that data, the impact will reduce also, how our growth will be higher compared to the modest growth that we see in the next 3 years. And also because of the other area of growth for this market are the new player in the market. So the new -- the payment institution, the electronic institution that -- now they are just -- they just started the business and the volume of this players are relatively small compared to the volume of banks, which are our historical client for this business. So if you go beyond our planned horizon, probably you'll see higher growth compared to the modest one that we indicated for the next 3 years.

In terms of many questions on the factoring and lending business, repricing process underway. If we've not done it entirely this year, our contracts also expire next year. So that will come through going forward. Going back to what Michele has said, the fact that we have the ability to collect late-payment interest and also [indiscernible], this is actually flexibility on how we structure the pricing for customers that other players don't have. And that's actually quite a competitive advantage, as Michele has pointed out in his part of the presentation, it's actually very difficult for other people to replicate what we have also because they don't have the track record to collect those accessory -- ancillary revenues. In terms of the decrease in DSO, we put it there as a risk. We are always a bit paranoid as management team to always thinking what can now change compared to the environment, I think that's the right mindset. That could happen I would think only if we enter into an environment of a sharply decreasing interest rate and again, a huge injection from the public sector. We go through another financial crisis and suddenly, there's a lot of European solidarity, there's no pressure on the Italian sovereign, on the peripheral sovereign, but there's an injection of cash into the system. How that is likely to happen? Probably very unlikely, but we keep that always in mind. So the way we always think about the business is we need to grow our customer base and then if we grow our customer base, then that takes care of a lot of other risks that we can't necessarily control. If we look at the distribution of probability, there's probably more distribution on the upside of DSOs in terms of longer DSOs than in the other. Let's also bear in mind that that's something which sometimes we also tend to forget. When you buy 2% of EUR 1 trillion market, actually, the average matters only to a point. What matters is the distribution, how many debt players there are in the market. Michele mentioned France. France has EUR 0.25 trillion of receivables. So EUR 120 billion of receivables generated for goods and services, only 20% are paid late. Well, only 20% of EUR 120 billion is EUR 25 billion, okay? So compared to us buying EUR 7 billion overall in Europe is gigantic market. So what matters at the end of the day is the distribution, not only the average. In terms of the operating leverage, we have put through the plan quite a bit of investment still. The new factoring system that we launched for the group as a whole, which impact factoring substantially, the new branch in France. But we have a business in [ evidently, ] the more it grows, the more it becomes efficient. We have the same number of collectors in Italian healthcare that we had 8 years ago. Why? Because frankly, there are only the number of [ debt ] hospitals in a country. And so once we enter a country, we need to have a fixed cost infrastructure, we tend to grow much slower than the growth of our customers or the growth of our debtors. If I buy today, leading to the example you're asking, a portfolio of healthcare receivable in Spain or in Italy and marginal cost to serve, zero. Why? Because they already have the collectors who call up the healthcare authorities in Italy or the 16 comunidades in Spain and making a call for collecting EUR 1 million or collecting EUR 2 million or collecting EUR 5 million. Does it take materially longer? Yes, at the margin, clearly there are more invoices that have been saved but [ restocking ] the margin. Therefore, the more we grow, the more we become efficient, which is actually quite important in terms of competitive position because our scale is much bigger than any other player in the market. And if anything, we will become bigger than actually -- and it's impossible for a new entrant to actually get that scale quickly in a fixed cost base, where is there a competitive advantage in pricing. That's why we generate substantially higher return on capital. In terms of the volumes and the dynamics that Michele mentioned it before, but leaving it to him to comment further. We are seeing more customers being interested in the product because we've seen the shift in the last few months from us knocking at the door to actually people knocking at our door which makes at least, sales a bit easier overall. And so we are quite positive in the outlook, particularly the environment remains the same. Now I would say if interest rates were actually to remain higher for longer then it can be even more attractive. Michele, I don't know if you want to comment.

Yes. Just 2 comments. On our product, clearly, the main advantage of our products are mainly the fact that the customer can derecognize -- to the recognition of the -- in their balance sheet [indiscernible] that we have a product, we can also avoid multinational company. We can also avoid to have a country risk. That is something that is back in the agenda of the international companies because all of the tension that we are living in Europe and also outside Europe. And then clearly, there is the cash component of the liquidity that clearly has increased the interest of the customer on our products. And more than that, there is also the service, the service meaning the operational service that we provide to customer because many customers did to enter in a revolving contracts with us. That's meaning that essentially, they are externalizing their recovery collection versus the public administration. And all these elements that we had also in the past in our value proposition now for several reasons, with the change of the microeconomic and macroeconomic environment has an increased appetite for our customer. Because as I said, the recognition is important when there is a recession that is upcoming. Liquidity is important when because we have less liquidity in the market. The counter risk is back on the agenda of multinational companies. And the effect of optimizing the cost base is part of the decision to sterilize the service of the critical action. So for all these reasons, we see a renovated appetite for our products. Thank you.

Hello. Can you hear me? So on the -- and do you -- fines coming through, what's the timeline on the benefit there and the potential point of -- and is that included in your guidance already?

There are 2 effects there. One is a more public sector investment, more invoices being created, more opportunity. We are including that in the overall sum of money available and overall amount of invoices which is the addressable market. We're still doing a bottom-up valuation of debt timing most in the next 3 years. There's been delays in disbursement in Italy. And frankly, it's a signal also of the [ bit of ] recognization really manage their operations. There's also an effect on payments in terms of the reforms, the generation the new funds are driving in Italy and that's more short term. But what for us is important will be a shift on the payment side on customers' willingness to use the electronic invoicing in the system, which is driven, again, the local penetration of the product.

And second question, when is the decision on the new LTI directive due?

We expect -- we are monitoring the situation very closely through directly and also through our participation in the various factoring associations across Europe. We've participated and I said recently participated in a workshop in Brussels around that expectations that there will be probably a proposal in September. The direction of travel is actually quite transparent in the sense if you look at the submission, there has been an open inquiry, there's submission by various parties, the parliament has issued papers 3 years ago. We expect, therefore, no real changes in payment times and interest rate or the recovery cost collection. We've asked actually to have it adjusted for inflation uplift. We see if that happens, I think that would be a big positive. I think we would need some push to have an easier enforcement of the collection of LTI and EUR 40. Overall, we see those discussion being more in the business-to-business relationship. So the debate in Europe at the moment is how can small companies being protected versus large companies, more than B2B transaction. So we've assumed a stable or favorable environment on the directive and no negative change, to be honest.

Good morning to everybody. It's Michele Baldelli from BNP Paribas Exane. I have 2 questions on the development of your funding strategy, [ EUR 2 billion, EUR 3 billion ] of deposits that should come from transaction services. I was wondering what is -- of the EUR 110 billion of this segment that is already using depository services. Do you have an idea? Or is it completely, let's say, not using this kind of services? And are these subjects anyhow already kind of your plans in other segments or part of other groups where you have already a certain market share or not? The other point that I just wanted to have a confirmation of sort that I had. When you spoke about over collection and the percentage that went up compared to the 50%. Is it anyhow driven by the [ targets payment ] in last few years has grown? And therefore, let's say, the percentage is probably has gone up for this reason. And in the future, even at Spain that last couple of years was a bit weak on the loan book could drive back that kind of percentage to the normal level? Just to hear your thoughts about this. Thirdly, on the growth that you project on loan book volumes, how much can we say is driven by increasing share of wallet of your already client? How much is inclined? And on this, I would specify if possible, so how much is driven by funds?

Coming from a French bank, we can answer not that much.

In French-wise.

Exactly. Now in terms of loan growth [indiscernible]. But to give you, in general, we have still one in [indiscernible] we tend to buy the entire portfolio in other segments of our customer base, we are not buying the entire portfolio. So there is growth opportunity in that. Also something which is we don't stress enough, is the opportunity to service our customers across different geographies. If we take our top 10 customers and if we were to serve them across all our geographies, we will grow more than we indicated in the plan, okay? Simply because actually, we are serving customers rarely across multiple geographies. Why? Because it actually it takes a bit of time to -- people to be convinced to sell the receivable on our revolving basis. So that's the first point of call, selling the service across more geographies for our existing customers, new customers and then the positive impact of France with the establishment of branch is pretty much in the plan. We think there's a big potential, but we want first to be there and see and then establish targets. In terms of the collection, in reality, now, we've had -- we have a stable collection in Spain of 100% over the years. In the other markets, it has been going up. So there's no mix effect to speak of in that respect. So we have seen the same trend. In general, actually, we've seen we've been able to collect better in terms of recovery in the rest of the public administration compared to healthcare simply because in healthcare, there were habits of how much we will discount. And so it was more difficult to negotiate different levels with the healthcare entities, if you have a new counterparty, then you start afresh, you can set the expected recovery rate in negotiations at a different level. In terms of funding, we leave to Enrico to comment on specifically on that. But let's go back to the mix, first of all. It's important to flag that the retail deposits for us are relatively small in the context of the overall balance sheet. And for us, [ making it better. ] From liquidity, we can manage depending on the different funding conditions. So for instance, at the moment, we have, I think out of memory, EUR 100 million, EUR 150 million in retail deposits in Italy. It's [ market down ] really covered. Why? Because it's cheaper to collect in Spain, for instance, or swap rate also in Poland. So we can actually play around that. We see big opportunity to grow in transaction services, which is driven, yes, by the Cassa, and Enrico will talk about the penetration of the depository bank services there. But also in pension funds, where we are the leader in Italy and we're -- there are actually a number of tenders that are coming up for customers which are not ours. So -- they're not ours, we don't run the risk of losing them and we should gain them, if not, some of them. And so it's not only the EUR 110 billion, EUR 120 billion of Cassa, which -- if you do the math, if we were to get the same market share we have in pension funds, we mean roughly EUR 40 billion, 5% of EUR 2 billion of liquidity just there. So this is also the rest of the market. And also, it's not forgetting pension plans, particularly, we are still in the accumulation phase in Italy for the pension fund, less in the Cassa. And so there's also a compounding effect of that over the next few years.

Yes, [indiscernible], also the alternative fund segment will provide significant funding. So the all 3 category, Cassa -- so in order of priority, Cassa, 300 pension funds, and also the alternative fund segment will generate liquidity for the group. Regarding your question on the depository bank service for the Cassa, as you know, the depository bank services are regulated services. So the regulations specify which type of activity we have to perform. And at the moment, as I said before, this service is not mandatory for them. And so they are a fund, so they have to deposit the asset somewhere. So they use it, but they tend to use more than one provider, more than one custodian. And sometimes only a few of them, they ask some of these custodians to perform some control, which are kind of activity basing toward depository bank services, but there are only a few of them. So in general, no, the answer is no. They don't have, at the moment, a provider that provides depository bank services, but they have more -- they use more than one custodian for the assets. The second part of the question, if I understood correctly, you're wondering if some of them are already clients of BFF. Yes, some of them are already client of BFF because in the past, we developed some value-added services specifically for these type of clients because we wanted positioning -- to position ourselves ahead of the change regulation in order to have some relation with this type of client.

If I may just a follow-up. If first, I have to look to the spread of funding cost between the transaction services and the online deposits. What could be the difference of funding cost between the two? 50 basis points, 100 basis points? What could be in 2026 your model?

Yes. We've been prudently assuming that the retail funding cost is more expensive than the security services cost. And overall, the funding cost will be more expensive than today in terms of spread.

So just maybe to clarify also on the previous question on Cassa. Since there is this change in regulation, it's mandatory for them to public a tender offer to select a depository bank. So even if they use a custodian that is making some control of the asset, with this change in regulation, they have to publish a tender offer, a public tender offer to go through a process of -- for the selection of the depository bank. So all of them, they have to do that.

There's no more questions on the floor. We have some questions from people who are connected virtually.

The next question from the conference call is from Simonetta Chiriotti with Mediobanca.

I have 3 questions. The first one is on the evolution of earnings. So you have given a target for 2026. We have a target for 2023 which advise a higher growth in '23 rather to the average growth projected in the plan. So how do you see the evolution of earnings roughly speaking in '24, '25? And how will we approach the target in '26 with the steady growth? Or do you see -- is there anything to comment on this? The second question is on dividend. In the press release, you said that there's a possibility of expanding the RWA by EUR 1.1 billion, maintaining 100% payout. So should we expect this to happen relatively soon? Or should we expect [ this ] in 2024? And you commented before that you don't see higher RWA density and not given -- my question is don't you see higher RWA density not even for the mix? There are some assets that are sold more profitable than others. And finally, I'm referring to [ July '26 ] where you give an idea of the potential market. In the potential market, there are also social transfers In kind and public investments, the CapEx. You are not in that segment. Are you targeting that segment? And how would this be different with the aspect of your current market?

All right. On earnings, well, we've given 2026 targets. We are not giving intermediate targets. We have a big step up in earnings this year. We are investing in the business and the trajectory will be distributed but not evenly across the 3 years. In terms of dividend, let me flag one thing. Because we absorb capital for operating risk because we're highly profitable, the fact that we're saying the average RWA density remains flat is actually couldn't because the RWA density actually of our lending business at the margin is more around 20%. So that's clearly something which assumes a constant RWA density, the same level of past due over the total portfolio and also more absorption on the operating risk. So overall, there is some buffer there. I think having higher RWA density will mean having significantly higher past dues because inherently the public sector receivables have a lower RWA density than our average. In terms of segment, let me start with a joke. Frankly, we do EUR 7 billion of purchases. Even if it's on EUR 0.5 trillion, there's still plenty of room to grow even in there. But your question is actually a good one because the other 2 categories have a different credit risk profile. And we've done historically very little there because we are quite prudent and we continue to be quite prudent, which doesn't mean that we can do anything there. The transfers in kind are mostly on the healthcare side, services are provided by private hospital to the public sector, which has a different risk profile. If you buy within budget or set budget in a contract, outside the contract. So we have the tools to do work there, at the moment, [indiscernible]. The other category is on CapEx where again, there is more risk, with [ this ] on the receivables. Again, in certain countries, there's no risk on there and other is different. There are different bigger procedure to go about it. And again, we see an opportunity there. Particularly we're seeing also more demand from customers in both sides. So overall, EUR 1 trillion market, EUR 0.5 trillion covered by goods and services, the rest by the 2 markets where we've been less present and it provides further opportunity. Is there any other question online?

The next question is from [ Jack White ] with Anker Capital.

I've got 2 questions. I was wondering if you could approximately give some color on the cost of Cassa, BFF and the renovation of BFF's real estate. And with that, how do you think about the strategic process of the subsidiary, BFF Immobiliare? And my second question is regarding to the payment segment. Can you talk about the importance of the Nexi partnership? And how much of the business is driven through the Nexi partnership?

I'll answer you, if you don't mind then repeat your first question, it was difficult to hear. On the relationship with Nexi, Nexi is our distributor in Italy, where the contract goes to 2026. It's also our IT service provider where the contract also goes to 2026, although we had some options to expand part of the contract already to 2029. It's an important part and it's an important client as well because it's one of our major clients in the payment business. So we have an enterprise relationship, we offer to them services, as Enrico pointed out that we would have to buy otherwise from another bank, be them servicing various banks and has not been competition with other banks, it's a [ very good ] provider. Also we are intertwined to their IT system again they provide most of it and so it's easier for them to use us. And in terms of the IT platform, clearly, they have -- they are the largest IT payment provider in Italy. They're going through upgrade on their IT platform. So for us, we can piggyback on the investments. And because we've been part of the same company until 4 years ago, there are actually a lot of -- so relationship makes the things easier. So we have a good working relationship with Nexi. We'll discuss the expansion of the contracts in due course. But it's an important partner and supplier for us. Do you want to add something a bit on the topic?

So my first question was regarding the cost of Cassa BFF and the renovation of the BFF's real estate? And then about the strategic practice of the subsidiary of BFF Immobiliare?

Immobiliare, okay. Sorry. The -- on the real estate, I always joke there are 2 signs when the CEO goes crazy. One is when he gets a private plane and second, a new headquarter. So to reassure -- we don't have a private plane, but we have a new headquarter building. So I want to reassure on that. [ I think ] it is actually a pretty attractive proposition. Why it's a pretty attractive proposition? Because, first of all, we bought the land at a period of time, I think, 2022. It's in an area which is being redeveloped around us, which frankly will be another time. And because from an accounting perspective, if you leave a building, you have actually to incorporate in RWA, the full payment of the leases until the expiration of the lease, actually -- usually a 6 year lease, actually, having a building in our balance sheet doesn't absorb much more capital and we can fund building not with the cost of funding of the real estate developer, but with the cost of funding of the bank. We will sell our existing headquarter which should give us a release of capital as well. So all in all, we think at a normal cap rate that once we concluded the construction of the building, we'll actually generate capital in terms of the value we have on the building compared to the cost of building it. So -- and the strategy will be to maintain it in our balance sheet. We don't have any more questions from the virtual audience. I don't know if there are any questions from the audience here? Otherwise, thank you for -- all of you for attending today. We are sharply on time. Thank you again.