BPER Banca SpA (BPE) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the presentation of the BPER Banca business plan and thank you for joining in such a large number. Of course, the presentation of a business plan is a very important moment for the life of a company because it traces and lays down the future strategy. So we're happy to be in this museum that conjugates science with technology. And the first part of the morning, we'll see the intervention by Piero Luigi Montani, the CEO, for the introduction. And then it will be followed by the Chief Financial Officer, Roberto Ferrari, who will illustrate the details and the numbers. It will then be the turn of Elvio Sonnino, the Deputy General Manager and Chief Operating Officer, who will describe the projects of the plan. Then it will be the turn again of the CEO for the ESG part. And at the end, we will have the extensive question-and-answer session for analysts and institutional investors. Before the meeting presentation and before I give the floor to the CEO, I would like to show you a short video describing a road map of the last few years, which is definitely oriented to growth, not only from a quality perspective, and change. Thanks To you, and I wish you profitable proceedings. [Presentation]

Good morning. The video is over. Welcome to everyone. I am pleased to meet you again to discuss the future of our bank. We have had a long time of no meeting, so it's a pleasure for me to meet you in presence. And in this regard, I would like to thank, first of all, our Chair, who is patient enough to bear my presence every day; and the members of the Board of Directors, who supported and still, of course, support the Board, the bank, actually, and -- in its operations; and then, of course, our shareholders, the financial analysts, investors and journalists who are here today or in the room or are listening to us via the call. Before presenting the plan, I would also like to thank our colleagues and employees not only for their commitment to developing the plan but also for the dedication they showed in the pandemic period, which was really an extremely difficult period not only for us but for the rest of the country. And it was a period of great commitment, a strong transformation and growth of our bank, and I would remind you that 620 branches were integrated from UBI during the pandemic period. So the commitment was significant, and my gratitude is not only due but sincerely heartfelt. We wanted to concentrate the presentation or the plan in about 1 hour and then leave room for questions and insights. Finally, I would like to inform you that the presentation will be contributed to by Roberto Ferrari, the CFO; and Elvio Sonnino, who is not only the Chief Operating Officer, but he is also responsible for the integration of the group and so it's a huge responsibility he has; the members of the management team that we have on board and that we supplemented with some valuable additions from the market that have joined with harmony, I would say; the excellent team of professionals that were -- was already present in BPER before I arrived. We have organized the contents of our presentation into the following agenda that I will briefly scan through now. In the first section, as you could see through a video, we have briefly reviewed our recent history, which was made up of inorganic growth, successfully achieved, I would say, over the last 5 years, and which has allowed us to significantly increase our scale and positioning in the country with a shift towards a lighter business model with multiple growth engines. In the second section, I will explain the cornerstones of the transaction with Carige, which we aim to integrate in the time frame that we have already announced and enhance in BPER, and other extraordinary transactions that we will tell you about. In the third section, the CFO, Roberto Ferrari, will expand on the main numbers of the plan and the evolution of the business model. In the fourth section, Elvio Sonnino, the COO, will tell you about the evolution of the technological platform and the operating model. And finally, we will give you an update on ESG activities that are pervading life and the life of all companies, I would say. So I would say that I will rapidly go through the things that have already been seen during the video, so I'm not mentioning all of the integrations. But you know that about -- so 1,218 branches we had in 2017 have expanded to 1,742. The latest merger that we're going through follows the one that we had with UBI that was very successful. We're very happy with it. And I think that also, our colleagues from UBI are happy with the integration now that they have been -- become part of our bank. And it's a transaction that enabled the acquisition of 1.7 million customers, EUR 100 billion assets under management, and 5,100 employees have onboarded -- have been onboarded. So just to give you the overview of the extent of the transaction with UBI. Now we are going to have 800,000 onboarding with the acquisition of Carige and 3,300 employees. So this, of course, has enabled to increase and expand the scale and the operations, and the model is less traditional now. I would remind you that the number of customers has doubled from 1,200 -- actually from -- I'm sorry, so -- and also the assets from EUR 71 billion to EUR 160 billion. And the -- I think the volumes are also illustrated from EUR 41 billion to EUR 189 billion. So thanks to these transactions in terms of total assets and indirect funding, the bank is one of the most important players at national level. The M&As helped us to fine-tune and adjust the organizational engine, so to say, from both an operational and commercial, meaning sales and distribution, standpoint. So efficiency has increased, as you could see from the data that we have just looked at, from the -- with the latest merger. So the execution time and the IT migration of the operational model is one highlight. And then the second highlight is the increased productivity and the good capacity we have to retain customers. So the -- and expand the affluent customers from -- that we have acquired with UBI. And this -- we are even -- we have exceeded the levels -- the average levels of the banking sector in this because this testifies the good capacity we have for making mergers and acquisitions. Also, our geographical footprint has expanded -- has been expanded with some choices we have made. So to our traditional footprint, we have added some other regions. And now in terms of mix, and then there's a difference between deposits and loans, well, we've got about 60% of our operations based in the north of Italy. I would remind you, just for your information, that there are some territories or some regions that are more traditional, but then the provinces of Brescia, Bergamo, Varese and Milan have been strengthened because of the acquisitions. Emilia accounts for 21%, Centa -- the Center accounts for 16% of our footprint, the South accounts for 11% or 10%, and then 10% in Sardinia. In parallel, we've also acquired about 500 -- 450 branches. So the ratio -- I'm sorry, downsized the branch network. And in the 5 period, we have had an increase by 30%. I would also like to say that our presence in the Center, South and the islands, those are areas that will benefit a lot from the National Recovery Resilience Plan. You know that we have activated a development program for these areas and there is a work team that is working on this and is, of course, connected with the institutions, the territories, the regions. And so our coordinators are always in connection with the districts, with the companies. And in Sardinia, we've also planned to work on tourism a lot. The inorganic growth, however, was not the only front that we have worked on. Since 2014, that was the year when we entered the supervision by the bank -- by the European Central Bank, we have started a derisking path that has reduced by almost 18 percentage points our NPE ratio from 22.6%, almost 23%, to 4.9%. And this data has been maintained over the next quarters and -- the following quarters. So this transaction concerns or corresponds to about 7 billion NPEs, which is not negligible and also from a percentage standpoint but also in absolute terms. And this laid an excellent foundation for further actions to reduce the cost of risk that we will tell you about later. In summary, we believe that this is a solid bank, a reliable bank because its CET1 increased, with all of these mergers, from 10.9% to 13.5%. And it is reliable because by leveraging its local roots, it has always managed to report good balance sheet data even in the most critical times for the banking system in Italy. And we can say proudly that BPER was the second largest bank in the country by cumulative profits during the period of the great crisis from 2009 to the present. So the transformation path that -- we may have been little bit boring in the business plan with all of the details, but we needed to because the past represents a solid base for the development of the future. And so the transformation journey has continued in accelerated stages. Over the past year, we have completed and consolidated in record time the integration of the branch units that we call the Germany project from UBI with 100,000 of -- EUR 100 billion assets and 5,000 employees. So the operation was almost closed, but we closed it within the time frame. There were some things to adjust, but the project was almost closed by September. There has been a high-level management turnover with the onboarding of new specialist roles. I would just mention the COO, the CIB and insurance because the heads of these departments are important. But many others were onboarded not only because we have -- we had the acquisition from UBI but also from the markets, we acquired -- we recruited many others. But I cannot mention all of them, but my colleagues know whom I'm referring to. We have launched a new business plan and activated major stand-alone projects. We did this last year. I remember that in June or July last year, just at the time when we completed the acquisition of UBI branches, we worked -- we started working on the business plan because we knew we would have presented it in the meantime between -- in the period between September and December. Then the UBI merger speed made us think that the time was ripe for thinking of other acquisitions possibly. And so the bank that was being acquired, the numbers that we were seeing, the quality of the management that we had also on a combined basis made us consider that the bank was mature for other mergers. And this is why we started thinking about the merger acquisition that we'll talk about. And that's why we defined a project and we activated it. We activated a new top organization chart. And actually, all of the structures that report to me, to the CEO, and I'm thinking of the Board of Directors, and we actually revised the delegated power system by empowering managers more. It's not that we just simply empower them more, but we gave them more power to act. So we simplified their roles, and this made the operational action much more effective. And also, they have become responsible for more things, and so they have been empowered. And we have activated a new organization chart for the business area by segregating business from the credit area not because it was not working but because we thought that because of the size of the bank that was, of course, increasing, it was important to have a good segregation, credit as opposed to -- the credit area is supposed to operate a change and contribute to the value of a bank that is growing. And the same applies to the business area that had to focus on the numbers and grow the operations because the extent of the volumes that we were acquiring was substantial. And so there was an important concentration that we were pursuing on the market. We have a new network organization chart. So not only have we changed the coordinators and revised the regional departments, as we call them, we reduced them from 17 to 9. Not only did we reduce them, but we've also made all of the reporting lines younger, so to say. And the process has been regoverned, and we -- from 17 to 9 is easy to say, but it's, in fact, a -- it implies a deep cultural change. We have activated the Corporate Investment Banking (sic) [ Corporate & Investment Banking ] structures and the insurance department. So 110 people in the corporate and investment banking. It's not true that we didn't start from scratch because, of course, the bank already had a CIB department, but it needed to be enhanced both in terms of operations and also in the day-to-day business. And so we did the same also in the insurance segment because today, we've got about 60 people working there, plus there's an additional work -- team working in this area. The idea is that of expanding to 200, and Roberto, the CFO, will tell you more about it. But we have integrated this with the repositioning and redeployment of some employees internally and also recruiting people from outside because we want to give a lot of value to this department. We have activated a new organizational chart for the COO area. The COO is here next to me, around this table, and he will tell us more, but I would say that a lot has been reconverted in this area because the 5,500 people that we have acquired from UBI, 100 out of them went to the COO area. And he will tell us more about how many we will recruit from the market and how many we want to onboard in this area. We have centralized communications because it was very much diversified. We have defined and expanded in 2021 the first HR maneuver. EUR 220 million were earmarked on that, and we had to invest on people a lot. 1,100 people in BPER and 250 people coming from UBI. And we had temporary workers, about 600 temporary workers involved. And so we also, in the meantime, revised the gross annual remuneration of top management. We have relocated the governing bodies because -- not because we wanted to abandon the historic headquarters in San Carlo in the city center of Modena, but we have relocated the governing bodies over to the service center of Modena because it was important for the group to have a unified location where all people could see each other without moving from one area to another. And so it's much more functional, we save a lot of time, we can see each other in person. And I think it was a very important choice. And I think that Elvio will tell you more about the expansion in terms of real estate and head office and workspace. We have purchased a new workspace in Milan. We have a scattered layout now with four different centers with diversified operations. Now we have bought a space at Diamantino in Porta Nuova, Milan. We have started working there. We've got 60 or 70 people working there already permanently. And by July/August, we will have 400 workstations there. And in -- over the next months, we will have about 800, 900 people working at the Diamantino so that the other locations will be relinquished and we will work there. Now in Lombardy, we're working with about 3,000 employees scattered into different locations, but they are based there. So we have also revised the MBO system, the Management by Objectives system. We have aligned it with our expectations and diversified it by segments and sectors. We're working on it. It was a very important stronghold of our business plan, and Elvio will tell you more about it. We've also worked on the -- of course, on the Carige transaction. I think that the feedback from the market is positive. As I was saying before, when in September we understood that technically the UBI merger was almost technically closed, we thought it was -- well, bank was mature enough to look at other opportunities. We reasoned about this opportunity coming up in December. When we understood that the bank was coherent, we thought that it was worth taking that opportunity. And in just a few months, we were able to go for it because we were not the only ones that wanted to go for the Carige transaction, but we were lucky enough to be the ones that could go on. The area for us of Liguria was an area where we were not -- we didn't have a good footprint and we had -- no, we didn't have many overlaps there. And we think that in that area, there are good reasons for development. The national resilience plan will help us on that. And you will see some other reasons of the rationale for the Carige transaction, and that's why we wanted to work on that project. And we closed the project in a very short time, well, regulatory speaking, and we are now working on the disposal of some branches because -- to comply with the antitrust requirements. We have also worked on the new appointments to the Board of Directors of the subsidiaries and affiliates, enhancing the value of the executives we have in BPER so that there's good synergy with the bank. We have initiated and launched new projects for four extraordinary transactions that we think have a high strategic value and give a lot of contribution to the plan that we're presenting today. And I'm referring to the merchant acquiring, leasing NPE platform in particular. We have designed a transformative plan, deeply transformative plan, that has to adapt to the new scale. You have seen the numbers, but -- the numbers are important, but it -- there needs to be a good culture and good mentality to go on. And so the transformation we want to achieve for our model is developed along eight fundamental lines that represent the pillars on which the plan rests. And these are the dimension that you can see on the left-hand side of the slide: the scale, the business model, the revenue generation model, credit model, the operating model, the human capital, ESG and capital strength that is important and needs to be combined with shareholder remuneration. We believe that we are a reliable group. We think we are reliable because we've always delivered what we promised. We're characterized by the presence of a stable core of shareholders who support it and support our growth path. With the scale-up, we now have the opportunity to create value, thanks to a business model that has already been vertically integrated and is oriented towards a stepwise specialization. We will selectively enhance our product factories and -- because we think they are an important resource -- in-house resource. And we will divest the noncore, nonscale businesses to focus on the key pillars of our strategy -- of this plan that is basically focused on wealth and asset management, bancassurance, corporate/investment banking, advisory, private and personal banking. And of course, the evolution of the National Recovery and Resilience Plan, that is going to be a very important plan for the economy of our country. We will further improve the risk profile, thanks to the derisking path carried out in recent years. And I've told you before how much we have downsized the NPE portfolio and the new levers of intervention that we have planned. And also, by these new levers, we're going to downsize the risk profile further. We will work to close the gaps we have in digital. That's why we have Elvio Sonnino with us, because we think he will fill the gaps in digital and IT. And we will continue on the path of establishing ourselves on a national scale with solid roots. I told you where we are concentrated. So without saying this, I do not want to be disrespectful of the other areas because we need all areas. And we will simplify the bank through an ambitious program of rotation from a branch-driven model to a fully omnichannel, digitally driven model. And thanks to our experience, because the bank has accumulated a lot of experience, we will operate with a dual track approach to pursue both the stand-alone transformation journey, because this is what we want to pursue and that's how we started, and we will also work on the Carige integration process and the other mergers and acquisitions. And I'm referring to the ones that are in the business plan and no other merger and acquisitions, that there's no other -- that I'm referring to. We want to build a story of value for both shareholders and key stakeholders, renewing our commitment to the environment, which we have always had but it's important, and our communities and our historical footprint regions and our people who have always been the soul of our group. We are satisfied and happy with the Carige transaction, which we strongly advocated and which we hope will close on schedule. And we're confident we will, even though we are a little bit in a rush but by the end of November. We are very satisfied because, yes, we want to close the transaction by the end of November. We are very satisfied because this transaction will allow us to grow in terms of operational scale. I would remind you that the bank has EUR 22 billion in total -- that Banca Carige has EUR 22 billion in total assets, EUR 50 billion in gross operating product (sic) [ gross banking product ], 800 (sic) [ 800,000 ] customers who have reduced their deposits and lending volumes. We know that. But we also know we -- that they have maintained their relationships with Carige Bank because it's a historical brand that has a 500-year-long history and that has always been a very important player in the region. But the transaction is very interesting because the impact -- the capital impact is very small. The combined asset quality will improve. It's interesting -- the transaction is important and interesting because the EPS will increase as early as from 2023. That will allow us to fully cover the one-off costs of the integration, and the -- it will allow us to generate value in a short time due to cost and revenue synergies. And finally, I believe it's a good transaction for many other reasons: for Carige's approximately 3,300 colleagues who will be joining a group marked by its well-known inclusive style. It's important for the Liguria territory, which has experienced the years of the bank crisis with much concern. And in this regard, I would like to thank all of Carige's stakeholders as they immediately showed appreciation, enthusiasm and positivity for the transaction, which gives us hope and -- for the future and for the successful outcome of the integration. For the institutions then, it's an important transaction for the Italian banking system as a whole because they contributed to -- materially to the settlement of this situation, the solution of this situation that had been on the table for some time. As far as the industrial synergies, based on the expertise we have gained in mergers and acquisitions, we expect we will have EUR 150 million in total of industrial synergies, with 80% from operating costs and funding, and a positive impact on capital estimated at 40 basis points of core Tier 1 due to the extension of BPER's [ ARB ] models to Carige. Funding synergies are estimated at about EUR 40 million due to the alignment of the cost of retail, corporate and institutional funding with that of the parent company; Carige's migration to BPER's operating model, the IT platform, operations, support services, combined with the rationalization of physical branches. And just incidentally, in 2023, out of the 368 branches of Carige, we have planned to close 60. It's not going to be 60 closures. It's more of a merging. Some -- these 60 branches are close to BPER branches. So they are just 600 to 800 meters distant branches. So that's why they are not being closed, it's merging the staff into one single branch if they are too close to each other. But all of this and other economies of scale on the control and governance functions front will reduce costs because the control and governing functions will check that the process is smooth. And this will reduce costs when fully implemented by more than EUR 85 million. The top line will obtain -- will make over EUR 30 million in additional revenues, thanks to the extension of BPER's commercial best practices to Carige in Wealth Management, non-life, Bancassurance and Corporate & Investment Banking. And then we should mention the in-sourcing of consumer credit, which we're thinking of by shifting placement over to BPER-owned product factories. It's another important element that we rely on because we've got a structure that works well. It's not that Carige's structure does not work well, but it's just that BPER's is larger and we want to concentrate the effort. And so the cost will reduce. And the cost of terminating the previous consumer credit distribution contract and those for life and non-life insurance was conservatively incorporated into the plan to the maximum extent. Then I think you have already seen the press release, but in relation to the Italian Competition Authority constraints, we signed an agreement with Banco Desio for the sale of 48 branches, 40 from Carige with 17 in Liguria, that we believe will allow us to settle the competitive or -- to solve the competitive procedure. And I think we have. The plan provides for migration by February 2023. We had concentrated too many activities, so it's going to be done by February. But the business unit includes 100,000 customers, RWAs, for EUR 600 million and allocated capital for EUR 82 million. The price was set at EUR 10 million. I think we are very happy and Banco Desio, I think, is happy too. I think I will have to move forward because time is short, but the business model, of course, is structured around vertical integration of production distribution. And so we've got Wealth Management with Arca. 57% is our ownership. Optima, we are -- we own it 100%. And then Cesare Ponti is a bank that we want to invest in. We want to expand this area. Then in insurance, we're going to go on with the product factories that we own 20% of, our Arca Vita and Arca Assicurazioni and factoring. We are going on well with BPER Factor. In personal finance, as I said before, we've got Bibanca that will be further strengthened, thanks to the in-sourcing of some activities. Then we're talking about the deconsolidation that you have on the right-hand side of the slide. We've got leasing and long-term rental that are going to be deconsolidated. Deconsolidation will deliver major benefits for sure in terms of RWA reduction by EUR 2.8 billion, and the maximum, so to say, impact comes from leasing that has a stronger incident, so to say. And one-off capital upside. One-off, you can see that in the acquiring area, EUR 320 million. And then the running impact is negative by EUR 42 million. By summing up all of this, it's as if we have the EUR 500 million upside. It's a little bit incorrect to put it that way, but it's as if we had made a capital increase of EUR 500 million. Then you have the time line in the next slide which I will not go into the details of, but I just wanted to say that for this year, we're going to concentrate a lot on the Carige transaction from -- for -- between what we did so far and what we will do next year. This is going to absorb a lot of our time. And that we were -- I mean, we're -- we'll also work on the acquiring/disposal. We will start next year with the disposal of the branches of Carige that we have mentioned to complete the activities, and we'll go on with the deconsolidation that we have already announced for the companies that I mentioned. Just very quickly, we can move on to the targets that, in fact, reflect all of this process. The targets we have set for 2025, I believe, are very satisfactory, and I'm sure they are satisfactory. We have built them with the right degree of ambition, we needed to, but also combining it with a good, conservative approach that has always characterized us in the -- in our operations. The net profit of around EUR 800 million, as you can see there, is 2x that of 2021 normalized, and it will generate an expected ROTE of more than 10%. Then the scale- and productivity-boosting actions will enable us to become aligned with Italian best practices in terms of productivity per employee, which means that for cost/income, we expect to land in the 57%, 58% area with an important contribution from a lot of other actions. We must take account of the fact that there will be -- we will pursue a cost discipline maneuver in a scenario that is not easy due to inflationary pressures that we have partly factored in, but there may be -- they may be heavier. On the risk front, we expect a further important decrease, I need to repeat this, it's important, although we expect there will be -- there may be an increase in the portfolio default rates. And when I meet the head of Credit, I'm always a little bit nervous. And so I asked him what -- how things are going, and he says that things are going on well. But still, you know that the repercussions of the Ukrainian crisis are there, and so we expect to achieve a gross NPE ratio of around 3.6%, starting from 4.9% at the end of 2021, which we still have now. And evidently, the merger now will have a little bit of an impact, but then it will grow again because it's going to be a gradual process. But as for capital and shareholders' remuneration, our policy will be to increase profit distribution while maintaining, however, solid capital profile so that we can operate safely even in the presence of possible worst-case scenarios or worsening scenarios that we have not factored in into the plan to date. But we project a fully loaded CET1 ratio of over 13%, which is a very important threshold that we do not want to go below that. And so the payout ratio will be -- so notwithstanding the CET1 ratio of 13%, the payout ratio would be around 40%, 45% in each year of the plan, but we believe that we will be able to get to that level much before, rising to 50% by the end of the plan. The targets I have just mentioned were, of course, defined by referring to a somewhat volatile and uncertain scenario that's dominated by known events and trends. It just takes opening up a newspaper and you can see the geopolitical conflict, tensions -- energy tensions, inflationary pressures, lack of commodities, the pandemic backlash, an attempt of deglobalization. I mean all of these factors are generating -- are sources of concern, of course, and they are generating a downward spiral and a slowdown in growth. In this context, we relied on the most recent scenario drawn by Prometeia, which, for the next 3 years, have made forecasts for the banking system and for our reference market. But Prometeia has outlined an overall picture scenario that is not so gloomy. The Italian GDP, as has been confirmed recently, is expected to slow down but still grow by 2% for 2022, and the growth rate is expected to be 2.50% in 2023 and remain in the area of 1.8% in the following 2 years. So the dynamics of the National Recovery and Resilience Plan will positively affect these estimates. Inflation, which we have incorporated into our forecasts by applying them to different categories of spending, to be precise, actually, we've got contracts with no automatic inflation adjustments. And so anyway, inflation predicts -- or a flare-up of inflation is predicted, but we -- and we are all experiencing it in 2022, but then it will continue with a growth of about 2% over the next 3 years. Rates are projected to rise appreciably after a decade of a Japanese scenario resulting in an upside on our projections, offsetting the negative effect from the phaseout of the TLTRO. I will now leave the floor to Roberto Ferrari, the CFO, who has the most difficult part of the business plan, but he's so good.

I'd like to thank our CEO and say good morning to all of you on my behalf, too. Let me start on slide -- from Slide 19, Page 19, that's it, where we have highlighted how our plan is going to progress. So net profit. So you see 2022 is characterized by one-offs, not just Carige as a one-off but also all the transactions that were mentioned by our CEO that we'll be looking into in -- with a greater detail as we move on. Then 2023, '24 and '25, they are recurring years, as you can see on the slide. Why did we project this? Because we think we can acquire a linear progression in our results to get to the EUR 800 million net profit in 2025. So EUR 800 million net profit, that is to say more than 10% of ROTE. If we look at our gross NPE ratio, we've already mentioned it, we should land -- at the end of the plan, we should land at 3.6%. And why do we see a different progression? Because we are assuming to complete a strong derisking transaction with a strong disposal of nonperforming. And why do we expect -- we also expect default rates that I consider to be cautious, but default rates that are tied in with the high level of uncertainty we're now going through. So we have a slight increase in 2023 and 2024. Cost-to-income goes from 62% to below 58%. And as I said and as our CEO said, our CET1 ratio stayed comfortably above 13%, 1-3. And in the annex, Alessandro is telling me you can find -- in the annex, you can find the figures, the business plan figures from here to 2024 to make it easier for you to read through it. Let's go to the next slide. We're on Page 20. On the left-hand side, you see how our funding is faring, total funding. Let me focus on one thing. We are very much pushing on the assets under management and life assets under management related to insurance. And you'll see the positive impact of Carige. We should get to EUR 100 billion of assets under management as a whole. We've also embedded a negative impact that we've seen in the first 6 months of this year. It's the worst 6 months we've seen so far when it comes to financial assets. We haven't seen it in a long time. So we've embedded the negative market effect in our estimates. But also, we embedded the positive impact from a net funding throughout the business plan to get to EUR 100 billion. So assets -- well, a, you see -- here we see we have met big institutional investor -- wholesale investors who are -- have deposited their -- well, depositing their assets with us. On the right-hand side, we see how our loans are faring. Pro forma figure is EUR 89 billion, including deconsolidation actions that we've already mentioned. And we expect a growth of about EUR 13 billion, 1-3, broken down into retail, residential, EUR 5 billion; consumer credit, EUR 1 billion; corporate, EUR 3 billion; and Corporate & Investment Banking at EUR 4 billion. We're very much focusing on Corporate & Investment Banking. We'll see a detailed sort of EUR 4 billion there. And then disposals and deconsolidation negative effects. And it's mainly NPE disposals, and it's a EUR 4 billion negative effect. We'll land in 2025 around EUR 98 billion. We're talking about NPEs. Let's have a look on Page 21. We start from a stock of EUR 4 billion. Carige has about EUR 620 million of NPEs. And if you look at the PPAs and the net ratio, we almost zero set that effect. We expect EUR 6 billion new default flows within the business plan time framework, and they will reduce our stock. We will reduce our NPE stock through internal workout, EUR 2.7 billion worth of internal workout. The collection activities are working really well even in the first quarters of 2022. And then disposals, around EUR 4 billion. We'll see the one-off disposal we're about to complete by the end of this year or, at the latest, beginning of next year. And so where do we land? We'll land EUR 3.5 billion. And we have to underline that the breakdown, the combination, changes. It's EUR 2 billion UTPs and EUR 2 billion bad loans. At the end of the plan, we'll have more UTPs versus bad loans. Bad loans will be EUR 1 billion. On the right-hand side, you see default rates per year. And I asked our CRO for confirmation. We do not see any deterioration signs on the credit quality side. But there's a lot of uncertainty in the market. You must be aware of that. And taking into account that the economic growth is going to slow down over the coming years, so what we wanted to do is a cautionary approach with default rates that were considered as high 1. It's the -- we are the first bank presenting a business plan after the Ukraine war started. And let's also take into account that -- some of the one-off actions the government took on impaired loans that they took during the pandemic, such as moratoria, and we do not yet see any deterioration sign there; and granted -- loans granted by the state where debtors will start to repay or pay the relevant quotas. And then we're to dispose of our UTP platform, bad loan collection platform. We've already started some talks and negotiations, and we can say that there's a strong interest. And then we'll -- we're going to dispose the NPE platform and a sizable stock of NPEs, no lower than -- not lower than EUR 2.5 billion. And that will take us below 3%. We are thinking about 2.6%, 2.7% growth as a figure. And we will have an RWA benefit, down EUR 500 million. And whatever -- well, assets that we'll move -- well, people -- the headcount will be of 120 people moving to the disposed-off platform. Then we're going to simplify the bank, as we said before. So this is the plan we have on the branch network. The Carige -- including the Carige branches, we have 2,100 branches, and we have signed a deconsolidation contract with antitrust purposes by end of June. So 48 branches will be deconsolidated. And we've already closed 140 branches in May. And by the end of 2024, another 420, roughly, branches will be closed to get to 2025 with a total of branches landing at 1,500, 1,500. And the criteria to identify closures are listed on the right-hand side, and it's mainly P&L reasons, cost-income reasons. And we also look very much at the geography component, where they are located geographically, so as to be able to retain customers. And we also look at the attractiveness, so to say, of a given area and the potential for growth in that specific area. Of course, branch cutting and deconsolidation also implies moving the customer relationship towards digital channel, and we're heavily investing in digital channels to improve our offering. And Mr. Sonnino will tell you about the investments we're making in that area. And on Page 24, you see this is tied in with the branch cutting. You see how also the workforce, the headcount, will be reduced. Together with Carige, including deconsolidation, it's 1,200 people. 3,300 will leave the bank because of already expensed activity in our P&L or partly unit turnover. We have 1,450 new hirings in the pipeline, too. And in the different areas of specialty where competencies and skills are included, we are very much focusing on these hiring. Some of them have already been performed. So 1,450 new hirings over the time of the plan. And then in 2025, we'll land with 19,400 as a headcount. And then you see personnel costs. The combined is EUR 1.585 billion. And let's bear in mind that we are the first to present a business plan that has to factor in the strong price increases. So contract revisions and -- has to be taking inflation into account for 2021 and 2022 with the major impact to be factored in that will be offset by turnover -- headcount turnover activities and actions. And there will be an increase then in the numbers, thanks to the new hirings. And in 2025, we should land at a level that is hovering around the 2021 one. So thanks to the different actions, we will be able to offset the inflation effect from our contracts. 2025, I'm going to be very brief. It will be presented in detail by our COO at a later stage today. And this is our investment plan, our CapEx plan. We come from years in which our CapEx plan was not fully sized and used. In this plan, instead, we have an investment plan that is major in size, a very, very sizable, especially on the IT side. And I'm not going to dwell on it. And on a page that I think it's of interest to the analysts is Page 26. As you can see, we start from a 13.5% CET1 retained earnings net of dividends that we are going to pay out at 2.5%. The Carige impact, it's a neutral one. And then the business growth and loan -- increase in loans in areas with a -- which have a high RWA density but the return, the yield, is also affecting the -- or sorry, offsetting the capital absorption, so they take out 2% in our CET ratio. And then we've embedded all the regulatory headwinds stemming from Basel IV. So FRTB, Basel IV, Basel IV operating risk, Basel IV subsidies. And all of these effects are partly offset by the [ ARB ] models and some deconsolidation actions that are included in the plan. All of these impacts, let me say, because we run a very accurate and precise exercise, we included the coupons from the additional Tier 1 we are paying and the amortization of the intangible investments. Having said that, our focus on [ ARB ] models will almost fully offset the Basel IV impacts. Payout, level of payout target, it should be 40 -- sorry, 55% (sic) [ 50% ] by 2025. So in excess of EUR 1 billion cumulated dividends. Our target is -- in excess of EUR 1 billion dividend per share by 2025 is 4x the dividend payout in 2021. Let's now move on to Page 26 -- sorry, 28. Let me say that we have five pillars. We are multi-specialist bank on a national scale. We focus our growth not just on loans but also on capital light and fees and commissions factors. So you see fees and commissions have gone up versus NII. It'll -- and we hope that our NII will also improve over the years with a well-balanced relationship within the different pillars. And we want to cooperate more and more. We have a stronger, stronger cooperation between business and IT with a strong focus on increasing our volumes. And we are investing in our IT platform to simplify processes so that the bank is simpler and simpler and using and leveraging digital channels more and more. Last but not least, we are investing on people, on our human resources. This is something we've always done as a bank. Page 30 in the presentation, and here you see how we -- these are not the only areas we are going to invest in. These are some of the areas where we are applying changes and areas where we expect the strongest growth results when it comes to revenue growth. And then asset management, retail, consumer credit or consumer loans, where we've been growing a lot, corporate and Corporate & Investment Banking. In the following slides, we will see in detail what we mean by these different activities. So Page 31, we see the growth we have experienced between 2027 (sic) [ 2017 ] and 2021, and we've embedded -- we've included Carige as well. The EUR 248 billion worth of indirect funding, for us that is a very sizable figure. And over the years, we've acquired control of Arca SGR. We've included the private clients from UBI, UBI group and the Intesa branches. And we must also say that we still have a very strong untapped potential because we have about EUR 40 billion worth of affluent clients that could be a good base for further growth. Slide 32, what is our ambition? We want to put Wealth Management and asset management in a dedicated vehicle, and we did so through the Banca Carige because the vehicle is going to be Banca Cesare Ponti. And we want this vehicle to be specialized for both the private network and the investment centers within the BPER Group. We want to maximize the unfolding or synergies among distribution networks and our product factories, as you see on the right-hand side. They are listed on the right-hand side. And more and more, we want to come up with an incentive policy focused on growing both assets under management and business. What are our targets? Page 33, targets by 2025. There are ambitious targets. We're factoring in the negative market effect from 2022. So we have a decline in assets under management that is not driven by the net funding but rather it's tied in with the market effect. Net funding, EUR 14 billion over the 4 years. We want to get to EUR 100 billion, it's assets under management and life, by 2025. And we want to grow also in the business -- sorry, in the commission and fee, going from EUR 780 million we have now. Then the attrition -- market attrition will take out EUR 30 million. But by 2025 -- by the end of 2025, we want to increase our assets under management and land at, at least EUR 830 million worth of fees and commissions stemming from Wealth Management and assets under management. And then we talked about Bancassurance. It's a dedicated setup with a new person in charge. And last year, we strongly increased the number of people who are active in that department, 125. Some of them were acquired from the market. Others were retrained from within the company. But we went from 55 to 225. So that's from here to 2025. But most of the growth has been achieved in the first quarters of 2022. So this is a department that will be growing. So targets will be growing accordingly. And we expect a yearly growth of 16, 1-6 percent, with a target of EUR 360 million of premiums and bancassurance products by 2025, premiums of a high-margin for the bank. And there again, we expect a 16% growth, going from EUR 60 million in 2021 to EUR 110 million in 2025. Then consumer credit. We have centralized our production into the vehicle we have available, the Bibanca vehicle. We've worked more and more to digitalize the process and the product offering, and we want to leverage remote channels in interacting with clients. We are also changing our scoring models to increase the consumer credit penetration. And also, we have a main growth target for our stock, going from EUR 3.3 billion to EUR 4.3 billion, granted credits from EUR 1.1 billion to EUR 1.8 billion, a sizable growth, 14%. And also taking into funding cost account, so this is net of funding cost, it goes from -- so the operating income goes from EUR 135 million to EUR 210 million, almost doubling. CIB, our CEO talked about it, we have a new person in charge. We are somehow revising it. We are in excess of 100 people as a headcount for that division. We will get to 170 by 2025, but we'll get there sooner, possibly. And there, too, we expect a slight increase in the stock of CIB loans from EUR 7.4 billion to about EUR 11 billion. And there, too, we expect a positive growth of operating income, net of the funding and financing, again going from EUR 75 million to EUR 150 million. We are working -- still working, of course, on lending. We are a commercial bank. Our department there was up and running already. Our vehicle there is up and running. But on credit, we are investing. We are changing our goals. We have a lot of projects in the pipeline. And just to mention a few targets in a nutshell, the most important ones are: we want to be more specialized on a segment level; and also, for the supply chain-specific credits, we have targeted actions to prospect customers; and we are trying more and more to digitalize our processes when it comes to credit granting or loan granting procedures using our also nontraditional data to do that to improve and increase our loan stock and also to speed up the credit issuing or granting process. I hope I could stick to my allotted time, and I hand it over to our COO, Mr. Elvio Sonnino.

Thank you, Roberto, and good morning, everybody. To support the business model, we have the operational model and its IT technological platform. So we'll start with the IT evolution that you can see on Slide 39 with the main lines of IT transformation. On the one hand, you have -- we have the development and modernization of the application architecture in a digital, data-driven logic because the governance of data is a fundamental issue to build and construct the digital -- an effective digital infrastructure and of course also to steer the multichannel approach accordingly. So the modernization of our legacy systems will open up to open banking market solutions so that in an opportunistic way, we can accelerate development and apply vertical solutions that are already there. And -- so that the business area can in fact -- we're on Page 39, yes -- yes, sorry -- so that we can get, by the end of the plan period, to a shift of the legacy systems to open architecture systems, open banking systems by about 20%, 25% of our workload. Then speaking about the hybrid infrastructure, what we are meaning there is that we're going to go towards a hybrid path where we have going -- we're going to have both a public cloud, a public access cloud, which means that opportunistically, once again, we will have some cloud infrastructures available internally, but we will also, a, be able to use the ones available on the market. By driving modernization to digital, we want, of course, to reinforce cybersecurity as well. And we have started to rationalize the data centers in particular with an evident saving in terms of carbon footprint reduction. So we want to -- we're thinking of reducing the carbon footprint by 15% to 20%. As far as the third main line of IT transformation is concerned, we are centralizing our group IT governance so that we can have a unified approach group-wide and we will see how the information technology structure has been revised. And we want to change our relationship with the main external players that we have that are turning from being vendors to partners. And this will help us accelerate our growth again and will also facilitate some growth paths or career paths internally so that the people we have inside can manage investments adequately because they have doubled. And so they're starting -- we're starting from external providers, but we want to grow the skills of the internal people we have. And so the fourth main line of IT transformation is an industrialized integration model that will enable us to manage activities like the merger of Banca Carige or other mergers and acquisition transactions without altering and changing the development of the plan or without having an impact on the IT architecture so that we can grant business continuity because the bank needs to have a good integration process underway but with dedicated teams that will, on the one hand, work on the integrations in the best way possible. And at the same time, these teams will have -- will not prevent other teams from working on other areas that the bank will need to focus its operations on. Then you can see on the next slide the pillars that underpin the plan we have. So with respect to the prior plan, the investments have doubled actually 2.5x the investment plan -- last investment plan. So EUR 500 million will be invested with EUR 300 million being dedicated to the business model evolution. But in terms of compliance with the regulatory rules, EUR 90 million is instead invested on the IT renewal. So the things that I mentioned before, basically, the infrastructure, data centers, all of this will be dedicated to the IT technology -- information technology. And then there's -- so EUR 110 million for corporate regulatory projects and EUR 90 million for the IT renewal, EUR 300 million instead for the business model evolution so that our business units can work better. But all of this EUR 500 million will need to be managed by a consistent team of people that can have a comprehensive overview of all of these investments. And in fact, you can see that in 2019, we started with 320 people in the IT department, and now we are at 520, but our objective is that of exceeding 600 people by 2025. But in fact, thanks to the incorporation merger -- with that merger, we will be at -- we will reach that 600 target next year. So this is important for us to go on with this development. And then in parallel, we have already turned around basically the management of information technology by promoting and upgrading some people internally and also acquiring people from outside. 70% were, in fact, recruited. But starting in December last year, we have now a new organizational structure in place that is much more vertical and its concentrated on some areas of development that has enabled us to create some sort of a -- we call it a digital factory. That is a structure that works on digital applications across the areas of the bank with some specialist career paths for our employees working in the IT -- in IT technology. And to do this and also to include young people, we have created some academies that will enable the young people, and even if they are starting to work in this area too, in fact, work with us and then be included in our staff. Then on the next slide, you can see the first results we have achieved partly because you know that in the IT world, you need to give good service to users that need to apply these solutions. And so we need to start in advance with some projects which started some time ago. And we can already say that in fact, some results will be delivered over this month and will be consolidated in the following months. And you can see that on the left, you've got the enablers for us to develop these applications. And so as I was saying before, the new architecture, the introduction of open banking solutions, digital factory, the data-driven bank, they need to be quite robust. And so this made it possible for us to digitalize products, and this digitalization will go on throughout the plan period. We have already revised the suite of products in the -- and I'm referring to apps and other services that are available to customers in -- last month, we had the first release of a suite of products with more accessibility and functionality features, basically. And then there's a digital wealth management products that we have thought of with a qualified certified signature. And then we are rolling out a CRM -- a new CRM structure in the branches and a new marketing system. And we're working all of this because we want to start with the digitalization of processes that will enable us also to remove basically the -- eliminate the consumption of paper from the distribution network. In the corporate banking business, we are replacing the entire catalog, so to say, of the digital products that enable our corporates and businesses to work with better solutions. So we're working both in the large corporate and the small business areas to improve digitalization. At the same time, we are quite determined in achieving a good integration of the systems we have in Carige and in the group. So of course, I'm referring to Banca Carige and Monte di Lucca. They will be integrated whereas Cesare Ponti will remain as a separate legal entity. And so then, we will go on with the disposal of those branches that need to be disposed of, and we'll go on with the integration of the networks. But in more concrete terms, to understand what happens in the different market segments and what will -- what the approach will be that we're going to adopt, on the next slide, we -- you can see the different segments with the existing solutions that we are building on so that we can reinforce the digital path, so to say. And the solution -- the existing solution we already have is the DOTS solution that you have there. It's virtual card apps for young people in particular but not only, for all of those who are familiar with the digital solutions so that -- we want to expand that product catalog offered with open banking-white label collaboration. Then we are focusing on machine learning as well because it needs -- it's needed for -- to expand this service. And also, the omnichannel approach is important and the hybrid approach is important as well because a customer may start his relationship with the bank from one channel and complete it in another channel. So for instance, you may -- he may be contacted by the contact center and then go to the branch and formalize the agreements with a relationship manager or actually complete the whole process through the app. So that's a hybrid approach. Then in the affluent banking system, there's -- the digital wealth is important for us, as is bancassurance. And support needs to be given to our advisers both for relationships with the customers and in terms of relations with our colleagues. They need to have more evolved and advanced instruments and tools to expand their relations. So the platform will support the corporate customers in a differentiated way. So it will be more sophisticated for the corporate banking customers and less sophisticated but very effective and fast for the small market player segment. In parallel with this, we will also industrialize the end-to-end internal processes without reengineering the process but rethinking of it anyway with the objective of eliminating paper consumption, as I was saying, from our work processes. And this will enable us to, in fact, support omnichannel sales reaching 40% of total. And by omnichannel, what we mean is some sort of a hybrid approach between digital sales and sales on the other channels. In the next slide, we talked about this before, but all of this that we are doing cannot be done unless there's special focus devoted to something that we're used to, that is people. And so that's why we have dedicated four main pillars of development and growth to the HR. So on the one hand, we've got the revision -- the overall revision of the performance and rewarding system. So the LTI and the -- so the management -- so the Management by Objectives system and the long-term incentive system are being revised with new logic of correlation between performance and remuneration. And the revision of the performance management system is also being focused upon. Then as far as sustainable workforce and sustainability, diversity are concerned, we want to improve our gender mix so that over 30% of our management will be women in management, so will be female managers. And that's why we've thought of some leadership programs so that we can even exceed the targets we have set. Then we have that -- the ESG column there because that's -- the third pillar is about people experience, which means that we need to have a good knowledge of the needs of our people so that we can create a continuous path, an evolving path, because, of course, changes are very rapid, for upskilling and reskilling that is needed for our resources to manage in the better way our different areas of development. So that's why we have started a project for a better information sharing with our colleagues. Then after the pandemic period in particular, we have realized that the way of working has changed. So the remote work-from-home is very much appreciated because it's fast, it's effective and it enables workers to achieve results that are not only comparable with traditional results but even exceed them. So when we evaluated the UBI branches after the merger, we understood that remote work really was imbalanced. And so we needed to have a good approach for reconciling space with the needs of people. And that's why we are going to develop this further, and you can see that on the next slide, where the workspace is being revised. The restructuring of our buildings is being pursued so that we have one single design for all group headquarters, standardized technology to support hybrid work and the creation of a smart workplace, as we call it, and -- so that people can manage in a flexible way remote work with co-working, with physical spaces or working in presence. And to do this, we are going to concentrate all of our management in one single headquarter, and we have already purchased this headquarter in Porta Nuova that has been referred to by the CEO before that is very efficient. And then we've got about 1,000 people that are going to be working there. And the restructuring of all of these buildings -- EUR 170 million investment is going to be dedicated to the rationalization of our buildings. I'm just displaying a couple here, but there are so many buildings that we're working on so that the head office in Modena, for instance, will double its space to host twice as many employees as today. And the technology is going to be oriented towards the use of smart working and shared spaces. And with an orientation towards sustainability, even before the pandemic, we had already installed a very important photovoltaic park that enables to fuel the entire building by 30%. So 30% of the building is being energized, thanks to the photovoltaic path -- photovoltaic park. This means that even before the pandemic, we had already considered ESG. I think I have completed my section, and I will give the floor to you.

Yes, let's see if we can be short enough. We had left one section at the end, and it's ESG, not because it comes last; on the contrary, it predominantly prevails in the life of companies now, which means that probably in the previous meetings, we have not communicated enough the progress we have made on the ESG front. The bank, as all banks, in fact, that are deeply rooted locally has always had in its root, so to say, a natural focus on ESG issues. And I'm referring in particular to the social and community part of the ESG program. And in recent years and in this last period, we have been working a lot on these dimensions. We know that we have to be fast and work a lot, but we are on schedule. So as far as governance and competencies are concerned, we have established a Board internal committee dedicated to this topic. And in the organizational changes we have made, we have now created an ESG function that now reports to the Board of Directors because it needed to be reporting to the Board. And thanks to the sensitivity of our Chair on these issues, the service is -- or the office is, in fact, headed by Giovanna Zacchi that is well reputed in this area. And positive acknowledgments we have received from specialized rating companies make us realize that we are on the right track. On the social front, we started from the top management. So the diversity and the gender mix actually, the gender mix of our Board of Directors, is 47%. And this is the orientation that we want to have for all of the bank. In March 2021, we issued the first social band for -- or social bond for EUR 500 million. And we have been working for some time on culture and ESG issues across the board with all staff. And it's not difficult because our personnel know that -- knows that this is the orientation for the future. So we are in line with the expectations from the market. On the environmental front, we have already set up the models for measuring our carbon footprint, both in our loan and investment portfolios and in our operating model, which are the basis for measuring the evolution we want to have for the next 3 years. And in 2022, BPER joined the Net Zero Banking Alliance, an initiative promoted by the United Nations with the aim of accelerating sustainable transition for the banking sector. The ambition we have is that of defining some sort of a manifesto of concrete things to do and clear things to do that will then be assimilated and -- by all our colleagues. It has long way to go, but -- we have a lot of things to do, but we have a good starting point and we will continue to work in this direction. On the environmental front, we will accelerate our role as an enabler of our customers' green transition by further integrating and strengthening our credit policies and credit assessment models from an ESG perspective. At the same time, our workplace renewal, energy management, digitalization, cloud transition programs will further reduce our carbon footprint. To that -- and BPER -- as Elvio was saying before, we produced a very large part of its energy, actually, to -- actually -- so -- with its photovoltaic panels. So 109% was built -- was obtained from this in 2021. But we will still continue to work on this and on inclusion, speaking about the social area. And we will strengthen governance for these areas. In support of these objectives, we have declined -- we have rolled out an action plan to disseminate the ESG culture in each transformative pillar of the plan. The goal is to impact the mechanisms of the bank operations, bringing ESG issues to the heart of how we do banking. For all of these actions, we have identified some KPIs. So at least EUR 7 billion of credit has been disbursed to the benefit of our customers' green transformation. Reduction of CO2 emissions by 23% within the business plan time horizon. And 50 -- the use of 100% energy from renewable sources as early as from 2023, but we will get there much sooner. And we want to grow the share of our female executives and middle managers to up -- to 35% at the end of the plan. We want to involve young people, and 400,000 people will be involved in our financial education programs focusing particularly on the youth segment. And we want to support the weakest sections of society in our footprint areas by providing also some donations to nonprofit organizations. We introduced ESG targets in the Long-Term Incentive Plan of our top manager. We set ourselves the goal of being best-in-class in ESG rankings performed by major international agencies. I know that I've been fast in summarizing, but a major -- it's a major commitment. But I know that people really believe in these issues. It's a sensitivity that is not to be found in the bank only but in society in general. That's why it's easy to transmit and convey. It's something that we are investing a lot on. And you can see there are a lot of activities there. You can see them as separate activities, but they're not. They are in fact across the board with all of the other business activities that we have. As Elvio was saying before, the plan includes all of these ESG activities and intertwines them with the operations of the bank because it's something that does not affect ESG only, it's affecting the bank and society in general. That's why we are understanding whether -- we're trying to understand whether ESG should be embedded in planning -- in the planning department so that it's now more of an across-the-board approach. But I would like to complete the presentation by saying that going back, in fact, to the numbers we saw at the beginning, we can say that the objectives are very important. I mean this is the -- some sort of a light that illuminates all of our pathway. And so we will go along this path with determination because these are objectives that we want to reach. We started by telling you a story of growth. We had to do that because it was important to start from the story of growth. We have presented the future growth plans that we want to pursue and -- so that we can get to these numbers that we are displaying now. We also talked about the aspirations, the ambitions, and it's a little bit of the objective we have of building the future together. It's a very exhaustive plan. I do not want to be misunderstood. I'm not talking about competitors. I'm talking about myself and the bank. It's an extraordinary plan that you do not see very often. Normally, plans are just are focused on a few elements of the capacity of developing growth, and they tell you how you get to that growth. And the business plans in general tell you how they reduce costs, and that's the other pillar, and then there may be some intermediate activities that they hint at, but it's hard to find business plans that give you details about so many things. I think this is a very exhaustive plan with the different engines of growth that have been exhaustively talked about in different areas. We started from the scale-up, but then we're speaking about the modernization of the operational model, human capital both in terms of governance of the projects but also to reduce the average age of our headcount. And then we have mentioned the business model. As Roberto was saying before, there are a lot of aspects concerning that. And then there's the revenue model that is very different from that of a traditional bank. So these are objectives that we really are -- that we really believe in. We are convinced that we will achieve them. And we will work not only to achieve them but to exceed them. We know what to do, and you now know what you can measure us against for the future. There will be uncertainty. We will find some problems. Problems are always emerging, but it would be a good thing. And success is going to be the keynote of this plan. Well, I forgot to tell you. I forgot to tell you that -- first of all, I would like to thank you for the patience and attention. These things are lengthy and sometimes a little bit be boring and you were there listening to us. It's not difficult for me to admit it because many occasions I have been sitting in the same chair as you are now. And so thank you for your attention and patience. We are -- so do not hesitate to contact us for questions. There's a short time we have available because of the press conference that we're going to have just after this, meeting with you. So we are here for your questions. But if you -- if we're not able to cover all of the questions, of course, that we have our structure and the colleagues that will be willing to answer your questions. There are some annexes that Alessandro has already prepared and should be extensively clear, I think.

Let's open the Q&A session. We'll gather questions from those who are here in presence, and then we'll have questions from the conference call. We will gather the questions from the first three analysts and then they will be answered once they are collected.

Good morning to all of you. Thank you, Mr. Montani, for the very clear presentation. Let me start from the Carige issue. You know the bank very well.

Indeed, I do.

And can you elaborate on how the bad will was used or is going to be used? It should be around EUR 1.8 billion, if I calculate it right, including the interbank fund, the FITD fund. And what are the agreements? Are there any penalties? Is the question -- are you going to fully disassemble the net NPE stock, which is quite limited and then the branch issue? And on the IT front, is there room to somehow write-down some of -- some items, some line items? And then the closing of branches, 400 branches, 380 are Carige. So you're going to close a lot of branches. Just as many as the ones you are acquiring. 60-plus branches from the rest of the group. Can you elaborate on the geographies where you will be closing those branches? And then another question for Roberto. On the NII Slide, Page 55, I can see that there's an evolution that is tied in with the rates. You are the first bank presenting a business plan with a different scenario -- interest rate scenario versus a few months ago. So I'd like to focus on the asset spread. You pushed on corporate. So what do you expect, spread-wise -- overall spread-wise in the loan portfolio and also on the financial portfolio that seems to have a net contribution between funding and portfolio by 2025, which is in the negative? So TLTRO, as the funding on TLTRO will be computed over the last 3 years. I think there might be a further positive effect stemming from it, from now until the next 2 years. And then third question on capital, Slide 26. The Carige impact is neutral, as you said, but did you factor in the 300-something, 388 DTA and the government decreed that are able to turn those DTAs into capital somehow, or that they are no longer deducted deferred tangible assets? And there are off-balance sheet DTAs from Carige. Will they be used to boost capital and to cut the tax burden over the next few years? Or -- and then Mr. Montani, the Carige performing loans, do you see any risk on the performing loans of Carige? Or is it a bank that was fully cleaned up over the next last few years, so there are no criticalities there?

You put a lot of questions. I hope I remember them all. Normally, I try to go by heart. So if I forget something, Roberto will help me to get back to whatever I've forgotten. First of all, bad will, bad will is the first thing is a bit higher than it should be from what you said, but I said that we were going to use -- that it was an interesting transaction because bad will was going to cover the one-off costs. Roberto will mention them in a few minutes. Let me say a few things. I don't remember correctly about the branches. 383 branches from Carige. I hope I mentioned -- I remember correctly. The closing of branches, it's the bank branches, not Carige branches. There are two problems. One is the antitrust issue. We completed the deal because we're going to cover a geography where we didn't have a franchise. And for that reason, we knew we were not encountering overlapping. And then for AGCM is doing their own -- are doing their own calculations, that the authority, and they are much more restrictive on some provinces. So there'll be 40 Carige branch closing. But in Liguria, as a region, which is a prevailing geography because Carige has two faces somehow, it was Carige and Carige Italia, if you remember, historical Carige is Liguria based on north of Tuscany, if you wish. But for that part of the historical Carige, the closings are only 17, 1-5, which are the ones that we were forced to close. The others are not included. Now I know mentioned there are other closings, but they are merging somehow. We are putting together branches, especially in the northern areas, they are very close -- physically close to one another There are 300 meters from -- we have 200 meters from one another so that are going to be put together whilst the actual closings are included in the overall business plan are higher figure-wise. And we also talked about a benefit stemming from that and getting close to what other banks are doing. We come from a past where we have been slower in doing what other banks have done faster in closing branches. We did a few closings. And today, we have to maximize efficiency. It's not that we don't want to support our clients or want to support them less. It's not that. Sonnino is working to provide a sizable digital support to our clients, but we're going to close more branches than we did in the past. But at the same time, we're going to work to provide service and support models to our clients in such a way that we want the losing customer, we'll be retaining them. As to the branch closure, I looked at the data, not very long ago, we did more than 100 closings but the churn rate of customers leaving the bank was a very limited rate, was very low and well within the average of this type of transaction. As to NPEs, let me say, a bad word, or easier to understand, it's the -- somehow, the troubled loans, we want to clean everything of distressed loans, if you wish. We want to clean them up. As Roberto was speaking before, we put a slide where it was showing that there was an offsetting effect. So we have -- we've factored that in. And as to performing loans, let me say that they are absolutely performing for a number of reasons. I was there a few years ago. And of the time already, they were acting well. But even those who came after me, they put utmost care, let me say, in focusing on those performing loans because the bank over the last 6 years went through a lot of Board of Directors being changed, the auditors being changed. They weren't in controlled administration and the authorities were really focusing, were really breathing on their necks. So they performed well because they have the ability to do so, and I know they have the ability to do so. And that was a situation that would not allow them to act in a different way. And also, I'm aware of how the industry is faring in Liguria. Although we're not there because I love the region, have affection for the region, but I did not get any rumors from the market and saying that there were very dangerous situations around or similar situation to what Carige was experiencing. So I do not expect surprises, so to say. I do not expect anything from what we've heard so far officially. What else? I don't remember what else were the questions. Would you like to carry on?

Yes. bad will to go into a greater level of detail, EUR 1.7 billion, that was the figure through the writing down, the impairment of NPEs and greater coverage in Stage 2 and the impairment of some of the Carige assets that are tied in with the IT platform. The penalties we've embedded, we've included. And then it's a conservative -- exercise we've been running. We're putting the maximum penalty and we expect to pay less than that. And all of these items decreased the bad will to a level of about EUR 1 billion -- just above EUR 1 billion, starting from EUR 1.7 billion. And DTAs, I think there was a question on DTAs. I can answer that question, too, if you want. There's an interesting question that you might probably on net interest income. If I remember Slide 58 or probably it should be 55, the one about sensitivity where we show -- well, this is important too, and it's 55, but I would then go to 58. Anyway, 55, you can see the evolution of our net interest income combined from 2021 to 2025 and the growth. So -- whereby the number that you can see as Interbank and other also includes the phaseout of the TLTRO, which means that you have to net it out of the TLTRO and the benefit from the securities portfolio, the delta is up 280, but all of the others are effects from the volumes and mix from our loans. So why do we have this stronger rates effect? And that's why I wanted to take you to Slide 58 because the delta we have, and this is once again a conservative estimate that we made. But our commercial spread, as we call it, goes from 280 to 10. Why is that so? Because on the asset side, we've got floating rates for a percentage of 61% that is going to go up, probably and 39% fixed. Part of that is TLTRO, 15%. And then a part of it is the customer accounts of retail customers that we define as low sensitivity, which means that they only follow partly the hike in rates. And just to give you color on that, in 2008, the average was 4.22% with remuneration being 1.92%. So the markdown, as you call it, was 1.13%. Now with the compression of rates, we've got a markdown, negative of 0.56% because the Euribor in 2021 was negative by 56, 57 basis points, and we still give remuneration to our customers, and -- which means that the expectation we have is that in terms of increasing rates until we have positive rates, there will be no effects on the liabilities. Then there will be 50 basis points in effects. But then what we call beta. So how much of this retail deposits is reparametered over to the rising rates increases in the future will have a different development. But by incorporating the increasing rating of April and not the ones of today, by embedding this increase, we've got 30 basis points effect in net interest income with those 200 -- I'm sorry, EUR 25 million -- EUR 225 million increase. But it could be higher, I mean, in the title. But -- then there was another question. Every day, we need to change our calculations. Just a few days ago, we calculated the upside because you know that the TLTRO on the liabilities has an effect of the 3 years with two rates of minus 0.50% and it gets the timing, but the point in time rate from that date onwards, but still, the liabilities rate has 2 years of initial negative rates and then liquidity is reinvested with the companies and the interest rate is point in time. Well, the interest rate that is incorporated today gives us an upside of EUR 186 billion for the next years. So actually until the maturity of our TLTRO, which is a material upside that we have not incorporated in our estimates for 2023 and partly for 2024 because we made our estimates in April where we're thinking of 4 or 5 hikes and now instead, we're going to have 7 hikes of 25 and 1 by 50%.

But just to complete what you were saying, no -- please, please. I thought you had completed it. Yes. As far as DTAs are concerned, of course, we have calculated them. We've just locked at those that are in the balance sheet, of course, in the financial statements. When I was saying that we're trying to complete things quickly by the end of the year. I was saying that because that -- by acquiring 80%, we've got -- we've done something, but we need to go to the merger to benefit entirely from the DTAs. And there's a benefit of about 25% in the first year that is partly lost because of all of the things that we have to pay on the other fronts. And then in the second year, you have a benefit of 75%. So that's why it is important to close the transaction by the end of this year so that we can benefit shortly from the two components. This is what we have calculated, but it's true that there are -- you were asking if there are some off-balance sheet DTAs. Of course, there are. They will give us a benefit and an upside. But within or as part of the calculations that we have provided, we limited ourselves to only calculating the payment of the guarantee fund and the DTAs that I've just mentioned. There will be some others that will imply an upside for the future that we did not incorporate. Then I think you were asking where the branches will be closed. So what I was thinking of is that as far as Carige are concerned, I'm thinking of Savona, partly, Genova, partly and partly also the northern part of Tuscany. This is where they're going to be more concentrated. And then there are some others but these are closures, yes. Then there are those that will be closed because of the antitrust regions. Then there are some others going to be closed in Lombardy. No, I'm not speaking about our closures. It's Carige's closures. Then are the closures will be communicated while we go along with the plan and we will select them, single them out based on the customers, the cost income of each branch and the capacity of the branch and the bank to produce basically IT and digital products that can, of course, preserve the service quality as it is. So it will not -- I mean people and customers will be given a service. We will have to settle things. And then once we have the machine working, then we will close the branches. The objective is not to lose any customers and not to treat them badly. This is important. And then, of course, convenience is important as well, where we have 99% of cost income, then it will be difficult for us to maintain them. So in our dreams world, but if it's -- if they need to be closed, they will be closed.

If I can integrate what you said about the off-balance sheet DTAs that we have not incorporated in the numbers, we should start getting some accounting treatment benefit in terms of reduced tax rate from this year or actually from next year. It's not going to be capital upside because in order to do that, we need to have a tax rate benefit first. We will have that from 2025 for the most part, and then it will go on later on, but it's not been included in the evolution of our capital trend and estimates.

Talking about the Page 55 slide, increase of the financial portfolio and the portfolio rollover, the current portfolio rollover with Italian govies as well. Given what is happening today in the market after Mrs. [ Lagarde's ] comfort spreads on Italy a wider, you have 1 or 2 times tangible equity invested in Italian govies. Are you going to reduce the weight throughout the business plan or not?

No. Volatility, unfortunately, is there, and we have to take it. But we made a decision to put our assets, our notes in HTCs, so it doesn't have any impact on the P&L and on our total assets, unless there are any dramatic events taking place because in Italy, we have other problems, but not these. So the govies coming to maturity, we reinvest them with higher coupons, if you wish. And we still retain in HTC. So it's 55%. Our portfolio is 55% floating rate that was, and 40% is fixed rate. If we include Carige, more than 60% is floating rate and 40% in fixed rate. The maturity of our TLTRO March 2024, we won 70% of our portfolio at floating rate. So we're going to benefit from the rate hikes throughout the portfolio. Thank you.

Thank you. Thanks for presenting the plan. A couple of questions concerning the payout ratio. You said you disclosed one -- higher than EUR 1 billion, the payout to the shareholders. That is a sizable amount also considering your market capitalization as a bank. But did you think of well, you refer -- you talk about dividends rather than share buyback in your press release. But have you taken into account buyback opportunities? Part of the payout, is it happening through share buyback or what?

No, we haven't thought about that yet. We haven't gotten to that level of detail yet. We have -- we just expressed the will to increase the shareholders' remuneration because given the projections we've provided you with, we are reasonably confident on the fact that we are going to retain a CET1 above 13%. So there's room to better remunerate our shareholders. We have not yet thought about how we can remunerate them. We'll think about it for the future going forward, depending also on how markets are faring.

And as to 2022, you said that we can get to 50 -- you can get to 50% even before that.

But do allow me, I understand -- sorry if I interrupt you. But I understand because we have to be quick in our answers because then we have to leave. 2022 is a transition year. You've already seen results for Q1. And I'm not saying that they are beyond expectations because we were somehow expecting those results, but it's results that -- well, we did well despite the market, how markets were faring. They were faring negatively. So we managed to retain our performance also on the fee and commission, and it was not taken -- to be taken for granted. So we have the feeling that even the second part of the year, we have no certainties yet, but the feeling we have is that it won't be negative. So we expect a positive performance still. But in the second part of the year, we cannot. But take into account the fact that the Carige merger will have a weight. And part of the costs, about EUR 70 million will be discharged from this part -- from this year already. So this year, you cannot take into account what I said. We reasonably think we can achieve that target earlier, but not in 2022, of course. In 2022, there are a lot of nonrecurring items to be taken into account, Nexi for instance. And that is still part of the Carige integration process because there are a lot of items on the -- so the base for adjusted profit, somehow, I don't like the adjusted because it is that if we were doing adjustments overnight. No, it's going to be a nonrecurring profit but not adjusted.

And one last thing. It's not probably the best time to ask this question, but let me ask it. I didn't see any issuances -- AT1 issuances. What is your take on this point?

Let me say that today is not the right day to talk about AT1 issuances. But you're right, it's an assumption, but we'll look into the market opportunities, so to say. In our ideal capital structure, having completed our derisking exercise and having built and having reached an interesting profitable -- or satisfactory profitability level. Our capital level should be [ 12.50 ] common equity Tier 1, 1 point of additional Q1, and 2 points of Tier 2. That is what we have in mind, so to say, while market will have to give us the opportunity to do that. Should we see an opportunity window for an AT1 issuance and also to increase our capital distribution, we will do so provided we are above well above 13%. Thank you.

Thank you very much, Andrea Lisi with Equita. I would like to ask a question on your internal models. And when do you expect to get the green light for the transitional models transferred to Carige as well? And then on capital as well in 2022, where do you think you'll be landing capital-wise? And the regulatory headwinds, how far will they have an impact on you? And then cost of risk, what kind of default rate are you seeing? And what is the amount of overlays you still have to tap from? And another general question. What are the contingency headroom you have, should the scenario evolve more negatively than you have factored into your plan so that you can still achieve your targets?

Well, talking about the internal models, we think we will be able to get to that extension by the end of 2023. Then as for the other topics are concerned, I would give answers during the first half report that is going to be in a short time because otherwise, I would give you in advance some information that is probably going to be more accurate by that time. And then I will give the floor to Roberto for the next answer.

So in Basel IV impact, the exercise we made was conservative again. The exercise was driven by the risk department that is probably more -- even more prudential than I am, and I must underline that. And I will try to be as conservative as they were. So we have included in the Basel IV impact, everything that could be included. The fundamental risk of the trading book was included as if the operations were the same as we are doing today. But we will have an option to do somethings on options and swaptions that may include other elements. But we have included RTB. We have included Basel IV impact, the CVA of Basel IV operating risks. So all of this leads to an increase between EUR 4 billion and EUR 5 billion RWA. So the RWA density is increasing from 47% to slightly above 50%. But I would like to underline again that the exercise we carried out was prudential. As for room for maneuver, so to say, we have that for -- in case of a worsening scenario, starting from costs and investments, particularly in real estate.

Unless there are any other questions from the people in the room, we can go back to the conference call. Let's get the questions from the conference call.

First question comes from the line of Domenico Santoro with HSBC.

I have a few questions on capital. You've already said something, but from Slide 26, could you elaborate on those 50 negative basis points, 40 basis points higher ARB models and then the relevant -- sorry -- to try and understand the breakdown, it's one -- the box on the right on the chart, if I understand correctly. And then cost reduction synergies and then the one-offs, the negative one-offs we may expect.

I couldn't get the last question because there was an echo in the room there saying -- could you repeat the first part of the question they are saying from the room because -- until costs because we could not hear it properly in the room.

So a question on capital. These 50 negative basis points you have in the chart as a waterfall. Could you elaborate on it, tell us the positive and negatives connected to it to get to those 50 basis points. Basel IV and other regulatory headwinds, ARB models, 40 basis points maybe and then capital gains positive. And then on the one-off -- positive one-offs for 2022 and 2023, and then if cost performance is linear across the plan or whether you foresee an increase in 2022 and 2023 and then an offset thanks to the synergies with Carige.

Let me start. Okay. I'll start from the question on Basel IV and the capital impact. So partly are driven by Basel IV. Let me summarize what I said before. Basel IV, we've included everything FRTB, which is about EUR 1.4 billion. Basel IV credits, which is an impact around EUR 2 billion. CVA and operating risk, and it's a marginal. It's about EUR 800 million as a whole, operating risk and CVA. And then we have the benefits of ARB rollout. And we have the deconsolidation effect, the NPE disposal and the branch deconsolidation, which of course, has an impact on RWA. So this 50 bps, it's EUR 100 million intangible investment deduction and the coupons of the additional Tier 1 over the 4 years of the business plan. We have to take that into account, too.

As for costs, as for costs, we do not expect incremental impacts. They have already been estimated. And I would say that the trend can be defined as essentially linear, so there's not going to be an impact -- an unexpected impact. As for the evolution from 2022 to '23 that we have already assumed by saying that part of the cost will be taken this year, I would say that the snapshot that we're going to take will be taken in June when we present the first half results so that we have more concrete numbers to present. '23, '24 and '25 for us are running. '22 is the year where we have the impact of a lot of one-offs. Some of them being positive. We talked about the bad will, which we're going to use for all of the efficiency increasing actions and the integration of Banca Carige. Then extraordinary effects on 2022. What we've got in the last part of the HR maneuver that will have an impact by about 540 yes, employees that are going to be early retired. Yes, it's 540 that we're going to be expanding basically this year, but they are not going to be -- to retire just now the cost is being taken in advance, but there are 144 for Carige. I think that had already been talked about. And so as a whole, we're going to have about 800 as a headcount in this maneuver, but 150 is the amount. I was saying only figure 150, but it's in fact a lot. But instead, I mean, for -- in terms of impact, from HR. Then in terms of extraordinary impacts, I would remind you of the transactions that the CEO talked about before, the acquired merchant acquiring business is going to give us a good capital gain.

Next question is from the conference call, please.

Next comes from Azzurra Guelfi from Citi.

My question is mainly on cost of risk, cost of credit. You're assuming a reduction through the reduction of the NPE stock. But if I look at the cost of risk over the business plan time frame, it's still quite high. And is it due to the fact that you are a special lending activity? Or could you elaborate on what is connected to this level of cost of risk? And the second question is on fees and commissions. Up until now, we've seen an increase in commissions that was stronger than that of the interest income. As you said before, we have to look at the entire curve rate-wise. But if we look at the ratio between commissions increase and the net interest income increase, probably you are more conservative on the NII? Or is there another -- is there a buffer or something else stringing the higher growth of cost of risk?

So cost of risk, it was a constant in our policies. Last year, it's been pointed out to us time and again saying that our cost of risk is much higher. If it's higher than yours, it means your credit quality is worth it. But we've always explained, and let me reiterate it now that the cost of risk is not -- that it was higher because had we based everything on our calculation, it would have been much lower. We've had it higher because when it comes to provisions, we made provisions that were stronger, to have a stronger coverage with stronger hedging. And EUR 836 million adjustments were made last year. But we kept the NPE coverage in excess of 73%. And NPEs, in general, were covered for more than 63% impaired loans, so to say. But as we have to engage and do transaction using -- well, transactions concerning the IT platform, we can have benefits stemming from the provisions we made. Cost of risk, we said 60 bps, even though we know that there are other banks that have values around 40 bps or below. But we do this for the same reason I've just explained. We want get to post platform disposal with a coverage in excess of 50%, 5-0 and with a loan stock that is more UTP than bad loans. So we want to have more UTPs than bad loans. So we have to have a very strong and robust provisioning. It's not that the credit quality is lower. Our models provide for a credit cost that is lower. We're just more cautionary, so to say, than our peers. Thank you.

I would like to thank the CEO as to commissions. If I understood your question correctly, Azzurra, let me welcome you to the conference call. The change versus the past, in the past, we have the margins suffering from the fact that rates -- interest rates were in the negative domain. So -- and net NII and commissions had a different performance fortunately. Now we have rate hikes that will have a positive impact on our NII. So going forward, commissions will go up again. And at the same time, NII will go up benefiting from the new tax backdrop or environment. I hope I answered your question. But this is what we embedded in the plan and NII increasing, thanks to rate hikes.

Yes. Can I have a follow-up? On commissions, how much do you think rising rates will have an impact on that and on assets and savings from your clients?

We have embedded that. And we've also embedded the market effect. And that is also part of what you were saying before. This impact is clearly negative. So we do have growth, but it cannot be the same growth we had in the past, in the past years.

Okay. We can move on to the next question from the conference call.

The next question is from Anna Benassi from Kepler Cheuvreux.

I've got a few questions. One is about the digital proposition of the bank since you mentioned it, but I didn't see details about what your target is going to be in terms of proposition, where you want to go? And how much of the investments you have planned will be allocated to this? And I'm saying this also because the level of cost -- of overall costs, of course, the cost/income ratio is improving. But still, in my opinion, the level of cost is still quite high. And so I would like to understand why the absolute value, including synergies, closures of branches, cost discipline. Why can't you get to a lower level of cost than indicated? And as far as the integration of Carige is concerned, I think that it would be important for us to have an update on the retention of customers from UBI and Intesa and also the level of branches you have reached so that we can have an idea of what may happen to the Carige customers or what dynamics and what assumptions you made on these two, in fact, define EUR 150 million worth of synergies. And then I would also go back to a question that was made by Azzurra before. The cost of risk, even though -- of course, I listened to your response about your cautious approach. We know that it's sometimes your characteristic. But thinking of 2025 with the disposal of the NPLs that is going to be very much concentrated between 2022 and 2023, so how is it impossible to have a so high cost of risk level, not to mention the 78 basis points in 2024 with the gross NPE ratio of 3.6%? So by looking at these numbers and looking at the years ahead, I think that numbers do not square. And if I can say the calculation of your capital ratios imply that you will be at 13% in 2025 pro forma by including everything, Basel IV included. So -- that means that I'm not mentioning the 2022 year that is going to be extraordinary. But 2023 and '24, I think the capital ratio should be higher than 13.4%. So a 50% payout ratio is better than 40%, but it could have been more generous. And -- but probably I've lost some pieces of the puzzle. Thank you for your answer.

Well, speaking about the churn rate and attrition rate of customers, well, I would -- well, or probably, I saw another question before -- I listened to another question about costs. The cost income is indicated as lower than 58% and it includes evidently the impact from the energy costs and inflation costs at a time when we are going to incur expenses because of the major investments that are going to be concentrated largely in the first part of the business plan period. So it's quite understandable that we have to include all of this as much as we have to include the cost of closures because they are quite high in terms of number of branches closed, then we may discuss whether it's better to do that in advance or later, but we have to close these branches. So immediately, it's a cost. Then for the future, we will have revenues, of course, but the costs, of course, emerge because -- I'm just summarizing. But of course, the personnel stays there, but needs to be reconverted. And the costs for closures, of course, have an impact because you have to renovate the premises before selling them or before giving them back. And so let's say, chunk that cannot be easily assimilated and it needs to be -- it takes time to digest this type of process. And this is one part of the effect. Then in terms of inflation pressures, we have made some assumptions that we have talked about in the introduction, and Roberto also expanded on during his part of the presentation, it's true that we were cautious, but it's the way -- it's our conviction that this should be the approach. Then in terms of the churn rate of UBI and Carige or -- I mean, it's separate things. UBI was a bank that was going very well whose customers were loyal, and they were located in a part of the market that not only is important, but is traditionally a -- sees the footprint of many other banks. When the merger was done and the carve-out was purchased then we may have expected a completely different feedback from the customers with a churn rate -- with a higher churn rate because of proximity with other local banks or because the emotional reaction could have been different. And we should also add the fact that at that time, BPER was less known in that territory. So the bank was considered, and I'm saying this with affection, a bank of Modena. So a bank from another region, not a local bank from Lombardy. And -- so on the other side, instead, we have Carige that is locally rooted. So anyway, we may have expected a different churn rate. Now with Carige, we are with a different -- we are in front of a different scenario. The bank is very deeply rooted in Liguria, has a history of 500 years. There's -- there are many customers that have maintained their relations and current accounts with the bank. So they're very loyal to Carige. It must also be said that during these 5 years when problems started with -- for Carige, a lot of customers found themselves in this situation. Sometimes they had large deposits and they thought were probably because they're prudent or probably because they were loyal to some other banks, competitors, that we're in a different situation and probably also because Carige could not meet some conditions that they were requesting, they have shifted. They have gone over to other competitors. And the same place to entrepreneurs who probably encounter difficulties in having their requirements met by the bank also because the capital of Carige was more distressed, so to say. And so with Carige, I do not expect -- I definitely do not expect there will be a loss or a flight of customers now. There's no rational reason for thinking of that. What is rational is instead thinking that if a good policy is produced with a generous catalog of products and services, starting from the needs of customers and not from the needs of the bank, then there will be a good way to win back those volumes that the bank lost. So it's completely a different situation. It's a cap size situation. It's more of a situation of growth that we need to intercept. So the sooner, we intercept this need, the better service we will be able to provide and the better return and feedback we will have from Carige. As far as the cost of risk or the NPE ratio is concerned, well, we made some assumptions we should consider that the default rates on the market are going to increase. And so based on those default rates, we have calculated how much we may get in terms of a worst case, so how much we will suffer in the worst case and how much instead we will benefit from -- with the transactions. And the trade-off is very high. So we're starting from EUR 4 billion in the portfolio to get to 3.5 NPE, I think. So this is the assumptions we made. And so 3.6 is the value we have by the end of the plan period. But of course, if in '23 particularly, we can close everything, then if we can close these transactions by 2023, then the rate -- the ratio will go very much below 3.6%. So it will be closer to 3%. And so we will have to see the real default rates. We will have to see what the impacts of the crisis will be because now we're making estimates. But of course, estimates are a little bit uncertain because there are changes every day. But we think our estimates were correct. We're convinced they are. And so prudentially, we confirm 3.6%. It's likely that the number may or will improve because, as I was saying, this is the light that is illuminating the pathway. We will work to improve the figures. We have never communicated that we would have gotten to 4.9% by the end of last year, and we were probably saying that we would have reached 5% or a little bit higher. And instead, we could have a good result. So we hope it would be the same for the future. For capital ratios and the evolution, it's true that in the first years they may be higher, and then we will have the impact from Basel IV, so we'll have to reschedule everything. But it's true that the dividend growth is generous. So the payout is generous, and we'll see if we have margin for improving it even further, but we should also consider the impacts for -- in view of 2025 and the RWAs.

I think we have the last question. Probably, there's a question on the digital part.

Yes, on digitalization, let's go to the core issues and the details of the pathways we are embracing. So on the one hand, we've got digitalization of the external services. So all of the services we provide to customers, then there is a digitalization of internal processes for our colleagues. So as far as the proposition for our customers is concerned, we're working on the entire catalog of products and services available for our customers in terms of a multichannel approach. So there's a -- the apps and the web are being improved. In particular, the apps, we have seen that they're being used more and more in the banking system. Actually, apps are being used even more than they are at BPER and so we want to get aligned with that so that we can get to a very complete offering with sophisticated products that not only include operations, but also sales activities, trading and other things. So the sales of products is contemplated to be online and hybrid, which means that the relationship between the contact center, the relationship managers and the customers will be enhanced. So the tools will have to be aligned so that there's a good interaction for a good customer relationship management. And we are working on digitalization for -- particularly for those young customers that do not even want to have a physical credit card. So that's why we will provide a virtual credit app to them on their mobile phone that is going to be available to the customers, they want that. And there's going to be targeted offering for other segments, other customer segments, like, for instance, support to wealth management products, with remote sales through the customer relationship managers of the affluent or private banking customers. So the -- there will be a sophisticated catalog provided to corporate, to the businesses, both in terms of funding and in terms of consumer finance and lending and all of the -- and what we call the instant lending. So credit cards and debit card, installments will all be digitalized in terms of processing. Internal processes will be digitalized with the most complex ones being automated to increase efficiency and productivity, but also inside the branches, there are going to be -- and you're already probably noticed that, you may have seen the cash in, cash out machines that are important to eliminate the teller position in a way because the customer may be assisted by a banker can, of course, make the automatic cash-in and cash-out transactions without going to the teller. And then in terms of the quantity of investments on digital, out of the total, that's going to be 30% to 40%, even though that if -- it's a little bit misleading when we talk about investments being digital or non-digital because all of the developments tend to be native digital now.

I think we have another question from the English line. Hugo Cruz, KBW. Go ahead, sir.

I just wanted to ask you about M&A. I think a lot of investors are a bit worried that you could do more M&A and potentially use your excess capital to fund that M&A. So I was wondering if you do another deal, what kind of EPS -- a large deal, what kind of EPS accretion would you want to target? And how low would you be willing to go with our CET1 ratio in order to deliver such a deal?

Thank you. Thank you very much. I'm very pleased to have this question because that gives me the chance to correct --. It's not that we're going to engage in other M&A deals. What I can say is that the transactions we have made were necessary to fund the one-off actions or transactions within the plan. So for instance, the deconsolidation deals. As a bank today, we are only focusing on one thing. Our main target is to integrate Carige as we have stated in the times and ways, and then focus on the business plan. Should there be new -- for the time being, there are no new M&A transactions that we are either looking into or that we have in the pipeline. We think that the plan we've come up with it is more than enough to go ahead with. And I understand that it would be easier for us. We're dealing with it every day. A bank that within a very short period of time has doubled its size, both branch-wise and headcount needs to, first of all, to integrate what's been added. And then once we've completed the integration, and it will take time, only then we will be able to think of other transactions. For the time being, we have to industrially integrate, and also from a point of view of the corporate culture, we have to integrate the additions. And we have to focus on the business plan targets and objectives and on our ability be able to pay higher dividends than we have so far. So that is it. This is the main objective. So this is it for the time being. There are no more questions. I am told. We have to run because we have other meetings to return. But any clarification you may need, even at a later stage, please feel free to contact the colleagues you see here to get an answer. And even if you need to ask more questions again at a later stage, we are fully available at any point in time to answer them. Thank you very much for your attention and for bearing with us for so long. Thank you so much. Goodbye.