BPER Banca SpA (BPE) Earnings Call Transcript & Summary

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Fourth Quarter 2025 BPER Consolidated Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Nicola Sponghi, Head of Investor Relations of BPER. Please go ahead.

Thank you, and good morning, everyone. I'm pleased to welcome you to our full year 2025 earnings conference call. Before I give the floor to our CEO, Gianni Giacomo Papa, please be reminded that our slide set and press release can be found on our corporate website. That said, after the presentation, our CEO and our CFO, Simone Marcucci, will take care of the Q&A session. I will reiterate that this is reserved for financial analysts whom I will kindly request to ask a maximum of two questions each so that everyone will have the opportunity to contribute to today's call. Thank you very much. I will now leave the stage to Mr. Papa, CEO of BPER.

Thank you, Nicola. Good morning to everyone, and welcome to our end of year results presentation. Before giving you details of the financial performance of BPER, I would highlight a number of key features of this last year. 2025 has been an intense year for both BPER and BPSO. Since August, the two banks have been extremely busy with the integration. Please note that the update of B:Dynamic | Full Value 2027 will be presented in the second half of this year. The combined group has been able to register outstanding results, thanks to a strong focus on commercial activities, both at revenue level and on the cost side. As you can see on the slide, despite a complicated macroeconomic context and ongoing geopolitical headwinds, we've been able to increase customer loans and TFAs to EUR 551 billion. And as you will appreciate later in the presentation, our capital position remains strong despite the BPSO acquisition, our business growth and the total return swap we implemented in Q4 '25. Financial year 2025 has proven to be a record year in terms of the bottom line, thanks to all the group companies and to all our employees. Despite the ongoing integration of BPSO, our colleagues have been able to focus relentlessly on commercial activities. NII has been resilient in spite of an acceleration of the reduction in interest rates and the progression of net commission income has been extraordinary, thanks to the effort of all our colleagues. We have transformed ourselves as a key domestic player with an 11% market share from 8% in 2023. In addition, we have achieved a very thorough presence in rich Northern Italy, where we are present with more than 58% of our branches compared to 47% in 2023. And finally, as you can appreciate on the slide, since April 2024, when the new Board of Directors took over BPER shareholders have benefited from a total shareholder remuneration, which is close to 220% versus 127% for the FTSE Italian Banks Index. Moreover, our market capitalization stands at more than EUR 24 billion, an important leap from a market capitalization of just EUR 6 billion in April 2024. As such, BPER has been included incrementally in more than 130 market indices, which have benefited the stock in terms of liquidity and purchasing momentum. Let's now move to our Q4 financials on the next slide. I would like to draw your attention to the continued progression of our dividends generation. As a result of net profit growth between 2021 and 2024 from approximately EUR 480 million to over EUR 1.4 billion, cumulative dividend payments in the same period amounted to over EUR 1.5 billion. And the payout ratio has increased in the same period from 17.8% to 60.6%. As you can see on the right side of the slide, for financial year 2025, the Board proposed a dividend distribution of almost EUR 1.370 billion, of which EUR 196 million have been paid in terms of interim dividend in November 2025, amounting to a payout ratio of approximately 75%. This follows our target dividend payout ratio following B:Dynamic | Full Value 2027. Let's turn the slide to BPER's key financial results. I'm extremely pleased about financial year 2025. In the first part of the year, both banks have focused significantly on business growth and their respective strategic plans. In a similar way, in the second half, despite the ongoing business integration, both banks performed extremely well. These outstanding results have been possible because of the remarkable commercial performance which led to continued and robust commission growth and resilient NII despite the acceleration of decreasing interest rates. This slide highlights the financials of the new group based on the consolidation of BPSO's second half results. As such, the impact of BPSO on the consolidated financials accounts for only 6 months. Please note that balance sheet items, on the other hand, include the full 12 months consolidation of BPSO. Also please note that as we mentioned in Q3, Alba Leasing has now been excluded from the consolidation. In order to ease the reading, on the right side of this slide, we have included on the bottom part of each box BPER's like-for-like results. As you can see, total revenues now amount to EUR 6.6 billion and net profit adjusted amounts to EUR 2.1 billion. The cost-to-income ratio stands at 45.7%, underlining the continued focus on cost efficiencies. Please bear in mind that on a like-for-like basis, the cost/income ratio stands at 47.2% and has improved by 314 basis points in the last 12 months. So a tremendous effort in operational efficiency has been carried out. Furthermore, the cost of risk stands at 24 basis points, while like-for-like, the cost of risk landed at 34 basis points, basically flat in the last 12 months. The return on tangible equity stood at 20% while the CET1 ratio continues to be very solid at 14.8%. Despite the acquisition of BPSO, business growth and the implementation of the total return swap in 2025, organic capital generation by BPER amounted to EUR 2.3 billion or 340 basis points in the last 12 months. In a similar way, the liquidity profile of the new group is sound with short- and long-term ratios well above regulatory thresholds. Slide 7. As we mentioned in Q3, please note that the figures reported on the left side of the table concern BPER on a like-for-like basis. We have included two columns with the consolidated financials which embed only 2 quarters of BPSO contribution. It seems to me pretty clear that BPER is reporting a set of record results. As you can appreciate, in the last 12 months, total revenues were up by over 2.5%, driven by a resilient net interest income and a very strong result in net commissions. The growth path on net commissions have been remarkable and better than planned. Moreover, the resilient performance of NII, as I will later explain, was supported, particularly by commercial efforts of our network. Our continued focus on operational efficiency ensure costs to come down by 5.1%, both in terms of HR and non-HR costs. Loan loss provisions stood at EUR 316 million on the back of our continued conservative approach. As a result, BPER's adjusted net profit almost reached EUR 1.8 billion, up by almost 27% in the last 12 months. Let's move on to Slide #8. As you can see, these outstanding results allowed us to perform better than our guidance for 2025, both on a like-for-like and on a combined basis. In this respect, I can say that we are well ahead of B:Dynamic | Full Value 2027. As far as 2026 is concerned, we expect BPER to continue this trajectory on a like-for-like basis. Further information on guidance, including BPSO will be given at the business plan update scheduled for the second half once the full integration will be completed. Let's move to the core part of the presentation. After some 15 months since the launch of B:Dynamic | Full Value 2027, a quick glance at the progress over plan is a must. The plan, I remind you, remains to date stand-alone, and the merger with BPSO is an accelerator of B:Dynamic | Full Value 2027. Here are some highlights. On Pillar 1, the strong commercial push enabled new lending to increase by 13% in the last 12 months to almost EUR 20 billion. Net commission income growth continues to be very robust, particularly in Wealth Management and Bancassurance. And our customer base continued to grow significantly with over 50,000 net new customers acquired in 2025. On Pillar 2, the following highlights are important. Digital channels now process 93.8% of the bank transactions with approximately 28% of new customer acquisition and best-in-class completion rates. Digital sales continue to increase, thanks to higher cross-selling and product penetration. And we consolidated the digital human model and completed the end-to-end digital operating platform for business and corporate, launching Digital Corporate Banking and Smart Banking Business with fully digital SME credit solutions. As far as Pillar 3 is concerned, our conservative risk approach enables BPER to boast the most conservative asset quality ratios in Italy, while at the same time, we're increasing automated credit approvals for selected retail, small business and SMEs. And finally, on Pillar 4, on technology, security and AI, the group data center rationalization process and cloud implementation of all multichannel retail applications are fully completed. In this context, CapEx is running according to plan. Our commitment to ESG-related lending continues to be strong with some EUR 3.9 billion of new ESG lending in the last 12 months. And finally, over 4,000 colleagues have already been involved in BPER's Academy and training paths. Let's now turn to our financial performance. Despite the overall scenario characterized by an acceleration of the reduction of interest rates and continued geopolitical turmoil, BPER produced a set of remarkable results. Noteworthy, our total revenues, which increased by 2.5% on a like-for-like basis to over EUR 5.7 billion and almost to EUR 6.6 billion, including BPSO. Core revenues were stable at EUR 5.4 billion, driven by continued strength in net commissions and resilient NII. In this context, the ratio of net commission income to total revenues rose from 37% to 38% in 2025, proving the high quality of our revenues. As we will see later, I wish to highlight the commercial drive of NII, which increased between Q4 and Q3. Finally, it is important to underline how our productivity index, measured as net revenues on risk-weighted assets, has continued to improve relentlessly every quarter from 9.5% at the beginning of '24 to 10.1%. This is a remarkable result, and it is among the highest productivity ratios in the industry. Let's move on to the next slide, which focuses on net interest income. Although net interest income came down by some 3.2% in 2025, I'm extremely pleased about the outcome, given the context of lowering interest rates. As you can see on the slide, commercial spreads came down from 3.7% to 3.5% in the last 12 months, negatively impacting the NII line item. In the quarter, however, NII was slightly higher by 3.5%, driven by marginally higher commercial spreads from 3.4% to 3.5%. In an opposite direction, but to a lesser extent, lower impact of average loan volume and an important contribution of noncommercial drivers related to asset liability management exercise. Please note that loan volumes in the quarter actually increased by 2.1%, driven primarily by retail and factoring. In this particular context, commercial actions aimed at increasing the quality of loan volumes have been extremely effective. This had a positive effect on credit risk-weighted assets, which we will illustrate later. As I mentioned in the slide on progress of our business plan, new lending in the last 12 months increased by 13% to almost EUR 20 billion. Finally, I would like to highlight that our NII sensitivity on a like-for-like basis to 100 basis points movement equal to EUR 176 million in the quarter versus EUR 184 million in the previous quarter. Now let's move on to the development of net commission income. The trajectory of net commission income has been spectacular. As you can see on the slide, thanks to B:Dynamic | Full Value 2027, the performance of net commission income in each single quarter of 2025 was higher than in each quarter of 2024. As such, net commission income continued its strong progress up by 5% in 2025. To date, this performance is well above the targets of our plan. The mere fact that net commission income contribution on total revenues increased to 38% in '25 versus 37% in 2024 is a clear indication of the increasing high quality of our revenues. Our focus on capital-light, high-quality Wealth Management products is proven by an increasing proportion of this versus total commissions at almost 43% of total from 41% 12 months ago. The remarkable performance of Wealth Management fees is underlined by an increase of more than 10% in the last 12 months. Please note that Bancassurance fees in the last quarter are always positively influenced by performance fees, hence the 122% increase quarter-on-quarter. That said, the most important contributor remains Banking Services Fees, which almost reached EUR 1.1 billion. Although the contribution of this fees is coming down as a percentage of total commissions, we expect this to pick up significantly once BPER and BPSO will be fully integrated. Let's move to the next slide. As you can appreciate, since the launch of B:Dynamic | Full Value 2027, TFAs, the most important driver of commission income has been growing from approximately EUR 300 billion to almost EUR 330 billion on a like-for-like basis and to over EUR 420 billion with a new group perimeter. This is primarily as a result of BPER being increasingly perceived as a relevant player in Italian asset gathering. The integration of BPSO will allow us to further strengthen our focus on asset gathering activities and will ensure the exploitation of further commission-related potential. Key drivers in the quarter have been AuCs and AuMs. An important contributor, for example, is Arca Fondi SGR, which reported over EUR 50 billion in total AuMs at year-end versus EUR 45 billion at the end of 2024. Noteworthy to emphasize the fact that asset growth between AuMs and AuCs amounted to approximately EUR 16.7 billion, of which EUR 3.9 billion related to net inflows and EUR 12.8 billion related to market effects. In Q4, there has been an important asset rotation from deposits to AuCs mainly due to the issuance of certificates as well as bond and treasury placements. This is important as we are now increasing penetration of liquidity management for both corporate SMEs and private clients. Finally, it is important to note that at year-end, the loan-to-deposit ratio stood at 76.3%, stable quarter-on-quarter. This will enable us to continue to grow the loan book and to transform client liquidity into AuCs and AuMs. Let's move on to our performance on the cost side. Before I start commenting on costs, a topic of which I'm very proud of, let me anticipate that integration costs of approximately EUR 300 million are not included in these figures in order to show cost progress on a normalized basis. I'm extremely satisfied about the cost performance. The enormous effort of the whole bank on operational efficiency is bearing its fruit. Total costs were down by above 5% in 2025, and this has been achieved for both HR and non-HR costs. Our plan actions continue to reduce the cost/income ratio, which decreased from 50.3% to 47.2% in the last 12 months. Including BPSO, the cost/income ratio would further lower to 45.7%. On the HR side, at year-end, the total accounts came down to 19,000, 700 less than in 2024. In terms of the combined group, total accounts stood at 22,600 at year-end. In addition, as a result of previous agreements, we are expecting over 220 exits in 2026. And furthermore, we expect mainly in the same year, 800 additional exits aimed at the implementation of a generational change program in the bank. As a final note, the strong improvements of non-HR costs is the result of our relentless focus on cost efficiencies. As per our plan, we have significantly reduced outsourcing and consultancy costs. Slide 17. As you can see, the trajectory of the cost of risk is very sound. LLPs came down by 2% in the last 12 months, while the cost of risk stands at 34 basis points, slightly lower versus 2024. Including BPSO, the cost of risk would stand at 24 basis points. In the quarter, our continued conservative approach translated into an improvement -- improved NPE coverage ratio, which increased from 56.3% to 57.5%. This remains one of the highest among Italian peers and will act as a further buffer against any potential deterioration in asset quality. Moreover, our conservative approach is further confirmed as we report in Q4 2025 coverage ratio on performing loans at 60 basis points, mainly driven by an improvement of the rating classes of our credit counterparts. This ratio is among the highest in Italy. As we already mentioned in Q3, please note that when including BPSO coverage ratio are somewhat lower due to a technical factor. BPSO nonperforming loans are reported only on a net basis. As a result, the total NPE coverage ratio, which decreases from 57.5% to 52.8% in Q4 is driven by this reporting difference. Also, please note that the total NPE coverage ratio, including BPSO, improved significantly by 280 basis points from 50% to 52.8%. Moving forward, once full integration will have been accomplished, coverage ratios and NPE ratios will be calculated in a homogenous way. Let's move on to asset quality on the next slide. On asset quality, let me state that Q4 was characterized by some loan disposals of single names. As a result, the gross NPE stocks were lower versus the previous quarter at EUR 2.3 billion, and the gross NPE ratio came down to 2.4% from 2.7%. In any case, as in previous quarters, the quality of our loan book continues to show a very healthy state with net NPE ratios improving to 1.1%, one of the lowest in the Italian banking system. As far as the combined banks are concerned, attention should focus on the net NPE ratio, which stands at 1% and not on the gross NPE ratio. The reason is exactly the same as previously explained, which is that BPSO only reports on a net basis. Having finished with asset quality, let's move on to the development of the bank's risk-weighted assets. As you can see, in Q4 2025, total risk-weighted assets of BPER, including BPSO, decreased to EUR 80.1 billion. Despite higher volumes, credit risk-weighted assets were down by EUR 3.1 billion, thanks to high-quality lending and the deconsolidation of Alba Leasing. On the other hand, operational risk-weighted assets increased by EUR 900 million due to the annual update of operational risks. I will now turn to organic capital generation on the next slide. Despite the acquisition of BPSO, the total return swap of the robust -- and the robust business growth, the combined CET1 ratio at year-end stands at a very comfortable 14.8%. In the last 12 months, BPER continues to generate a very high level of organic capital. Organic capital generation amounted to EUR 2.3 billion or approximately 340 basis points. This result reaffirms BPER position as a highly resilient institution. Moving on to liquidity, let me point out that at the end of 2025, the bank's liquidity ratio remained high. As of the end of 2025, the LCR increased to 172% from 165% at the end of Q3. In the same period, the NSFR improved to 134% from 132%. And finally, the loan-to-deposit ratio stood at 76.3%, stable quarter-on-quarter, one of the lowest amongst Italian peers, which will enable us to continue to grow the loan book through increased loan generation and to transform client liquidity into AuCs and AuMs, thanks to our ability to attract customer liquidity. Turning now to the bond portfolio. Italian government bonds increased to EUR 15.6 billion and accounted for around 52% of total bonds. On a combined basis, including BPSO, Italian government bonds increased to EUR 21.7 billion and accounts to 50.4% of total. In Q4 2025, the duration increased majorly due to the position of CCTs equal to EUR 4.4 billion that were repriced in mid-October. Please note that the annualized average yield of the financial portfolio was 2.5% in Q4. And now a brief look at the latest bond issuance. Throughout 2025, as far as main wholesale issuance is concerned, BPER successfully placed the EUR 500 million senior nonpreferred bond and BPSO placed EUR 500 million of covered bonds. In addition, in November, BPER successfully placed an AT1 perpetual bond for a total amount of EUR 750 million. And finally, on top of our previous upgrades, in Q4 2025, Fitch and Moody's upgraded their long-term ratings on BPER. Let's move on to the business integration between BPER and BPSO. The integration plan, which involves 23 cross-bank work streams is fully running and will be completed at the end of April of this year. The major event since our last update is the regulatory green light on the merger by the ECB. This result was achieved in advance of our expectations. For what concern business and operations, we have finalized the product catalog analysis, and we are implementing the identified actions. And finally, the alignment of group policies is well in progress, as well as the implementation of the customer communication plan. As previously stated, we confirm that we will fully achieve EUR 290 million in synergies by the end of 2027. We also confirm that integration costs amount to EUR 400 million. Of this, 72% were already booked in Q4 '25, the remaining will be booked in 2026. Slide 26, as you can appreciate on the slide, not much has changed since our Q3 2025 result call. As of today, the next step will be the extraordinary shareholders' meeting of BPER and BPSO in order to approve the merger plan in March 2026. On Slide 28, we report the divisional financials for BPER on a like-for-like basis. I would like to draw your attention to the important results achieved on total wealth commission income across our divisions, which amounted to EUR 928 million, compared to EUR 840 million in 2024, an increase of above 10%. These results underline the important focus of the group on asset gathering activities. Let's move to the final remarks. Allow me to say that BPER results have been outstanding. Firstly, we achieved a record net profit on both on a like-for-like basis and on a combined basis. This set of results will translate in a proposed dividend payout ratio for financial year 2025 of 75%, amounting to approximately EUR 1.370 billion, of which EUR 186 million already paid in November 2025. Secondly, thanks to all our units, our colleagues and customers, we have been able to continue to focus on business growth, execution of B:Dynamic | Full Value 2027 and the regulatory, IT and business integration of business. The commercial strength of the bank has been remarkable. Reported NII was better than expected despite declining interest rates, while loan volumes have grown with respect to 2024. The trajectory of net commission income has been outstanding, fueled by growth in Wealth Management as BPER is gradually being increasingly recognized by our customer base as a leading Italian asset gatherer. Cost efficiency has been very thorough on both HR and non-HR. HR costs are very much under control. We are supported by our colleagues and trade unions to enable the bank to enhance a generational change while rendering the bank linear. On the non-HR front, we have taken decisive actions on outsourcing and consultancy costs, which led to significant savings. In this context of geopolitical headwinds and political turmoil, asset quality remains one of the best in the Italian banking sector, given that we are very selective with respect to whom we lend to. On the capital side, despite the acquisition of BPSO, business growth and implementation of the total return swap, we maintain a sound capital position with a CET1 ratio of 14.8%. In addition, we boast an outstanding organic capital generation amounting to 340 basis points in the last 12 months. And finally, we are fully on track to ensure a smooth, efficient and effective integration of the two banks before end April 2026. We are now ready to take your questions. Thanks.

[Operator Instructions] The first question comes from Lorenzo Giacometti of Intermonte.

Congratulations for the outstanding results. And then coming to my question, I have actually two. So the first one is if you can give us some color about your 2026 expectations in terms of top line, the main top line items and bottom line. And the second question is about remuneration. So shall we keep in mind your 75% payout ratio? Or shall we expect some surprises within the business plan also considering both your capital position and the derivative contract you entered? Yes, that is all.

Thank you, Lorenzo. So as much as your first question is concerned, let's say that the outstanding results allowed us to perform better than our guidance for 2025, both on a like-for-like and on a combined basis, as I mentioned before. And in this respect, we are, and I can say that we are well ahead of our B:Dynamic | Full Value 2027. Then in as much as 2026 is concerned, we expect BPER to continue the trajectory on a like-for-like basis and probably on the consolidated. But further information on guidance, including BPSO, will be given once the business plan update will be -- that is scheduled for the second half of the year, will be delivered. And this because we want first to go through the full integration, complete the full integration, and then we'll be in a better position to do that. But let me reconfirm that we -- I believe, BPER to continue the trajectory that -- as shown in 2025. And as I mentioned, we are well ahead of our plan. In as much as remuneration is concerned, we are -- we stick to our decision to pay a good dividend to our shareholders. You know that in our plan, in our strategic plan, we indicated 75% in terms of payout ratio. But I also mentioned in other presentations that if the bank will continue, as I believe, will continue to have such a strong organic capital generation which might also be accelerated by the full integration of BPSO, then we might revise also this payout ratio. And then here, I have to stop because we are living in difficult times. We have geopolitical situations, macroeconomic situation. So we want to make sure that we produce capital, that we have organic capital generation, and then we'll decide what to do.

The next question is from Matteo Panchetti of Mediobanca.

Yes. I have two questions. One on the derivatives and one on the clarification on PPAs...

Excuse me, sir. Are you able to speak without the headset because we don't hear you very clear?

Okay. Can you hear me better now?

Much better.

Yes. so you have previously stated that you have entered a derivative position based on your confidence in the company growth prospects and delivery. Since your announcement, the stock has been rally more than 20%. What is your current intention regarding these derivatives? Are you considering partially closing it and taking some profits to roll it and maintain exposure? Any color will be appreciated. Can you also confirm how much was the contribution of the TRS to the trading line this quarter? And if the sensitivity of plus/minus EUR 200 million for each 10% share price is still valid? And the last question is on the PPAs. I've seen this quarter you have benefit 5 basis points. I'm correct assuming that you still have EUR 400 million or roughly 40 basis points capital tailwind from this?

So I will take the first question. Thank you, Matteo, for your question. I will take the first one, and then I'll put through Simone Marcucci, our CFO. So in as much as the derivative is concerned, as you know, as we mentioned, when we informed the market about the derivative, the derivative has a 3-year life. And so we are not thinking neither to expand it, not to close it or whatever. So it will stay the way it is. And therefore, we don't see any variation in the position in terms of -- in as much as our position is concerned vis-a-vis the derivative itself. I'll put through Simone Marcucci now.

Thank you very much, Mr. Papa. The profit and loss effect of the derivatives in trading, as you mentioned, is EUR 28 million in Q4 2025. it's clearly now at the moment, higher than that amount. Regarding the PPA, the effect that you have seen, that we have shown in these lines is the total effect. There will be no other effect on the capital for the next quarters.

The next question is from Noemi Peruch of Morgan Stanley.

My first question is on growth and NII. Loan growth was around 2% at BPER and in the mid-single digit for Sondrio, well ahead of the market. So could you please elaborate on both banks' strategy to gain market share? And how do you see volume growth and NII evolving in 2026? And then I have a second question on distribution. How shall we -- first of all, what's the size of the equity swap right now? And how should we read this vis-a-vis a potential share buyback? And how potentially these two will kind of interact with each other?

Noemi, sorry, can you repeat the second question? Because the line was disturbed. I didn't get it properly.

Yes, absolutely. So my second question is on the equity swap. What's the current size at the minute? And how will this behave vis-a-vis a potential share buyback?

In terms of growth, so we indicated that 2025, we grew both BPER and Sondrio grew and that the two banks are proceeding based on their business plan that was presented for us in October '24 for BPSO in March '25, then it will be the integration in April. 2026, we foresee a growth, we will keep on growing. If you look at -- if you remember our presentation for the strategic plan, we indicated a growth of 3% CAGR. That is what we are delivering so far. And we believe that we'll be able to keep on growing this in -- to keep on growing on the loan side, both on the Corporate side as well as on the Retail side. So for different products, and we see constant growth there. In as much as NII is concerned, as I mentioned at the beginning, we see that -- we believe that BPER will continue the trajectory of growth on a like-for-like basis. Just one note, but we already indicated this when we presented the third quarter results. We are, as of today, based our budget on interest rates at 1.75%. So we have a conservative approach in terms of interest rates. So let's see what ECB will do going forward. But for the time being, we prefer to stay again, conservative rather than staying -- rather than projecting figures that are too aggressive. In as much as your second question is concerned, I take the second part of the question, and then I'll ask Simone to answer the first part. So buyback, as I mentioned, was the question of Lorenzo, we remain committed to our generous policy with a 75% payout ratio. That might increase in case of confirmation of our capability of generating capital. In as much as buyback is concerned, any decision will eventually be taken by the Board of Directors. Anyway, let me state that the derivative announced in October is intended to hedge a potential decision for buyback which might be then more convenient in the future. So this is where we stand today. Simone?

Regarding the TRS, we don't disclose the percentage, we disclose the effect. We have the effect in this quarter of around EUR 510 million of deduction in order to arrive to the completion of the TRS described in October. We still miss EUR 200 million of deduction that -- this will plan clearly on the price of the share.

The next question is from Giovanni Razzoli of Deutsche Bank.

So my first question is on the net interest income outlook for the short term. I've seen that you have a very strong growth of the volumes in this quarter but the growth of the NII was mainly related to the financial component. So my understanding is that the growth of the stock has not yet translated into higher NII. So I was wondering whether my understanding is correct so that we can anticipate for the coming quarters still confirmation or even better run rate of the NII when compared with Q4. And another question is on the CET1 ratio. In 2026, you plan to complete the merger with Popolare di Sondrio. If you can share with us what could be the CET1 ratio on a like-for-like basis. So if we were to assume the completion at year-end of the merger with Sondrio, what would be the 14.8% look like? And the last question is on the asset quality, is more a broader top-down question. I've seen yesterday Credit Agricole for the first time mentioning some prudent messages in terms of acceleration of defaults in SMEs. I was wondering what are you seeing on the ground right now. You have a very strong coverage ratios. So you have overlays, so it's not a matter of cost of risk, but was more interesting to the trend evolution for 2026 in terms of potential risk from this segment.

Thank you, Giovanni, for your questions. So in as much as CET1 ratio is concerned after the integration of BPSO, we confirm that we'll be above 14.5%. So we need to go through the full integration, but the confirmation is that we'll be above 14.5%. In terms of NII, and then I will put through also Simone. In reality, we had an increase, given -- I mean if you look at NII, we have on Commercial rates on Page 13 of the presentation, EUR 10 billion increase for rates, then we had on average volumes went down a little bit, and the noncommercial, as you mentioned, is the major component on the growth. You are right in saying that we are also repricing because we are conducting also a repricing exercise of the loans. And we believe that in the next months, we will see an improvement in the NII driven by both volume side and -- on one side and the repricing exercise that we are making on the other side.

Yes. Thank you very much, Mr. Papa. Regarding the net interest income and not commercial components, as you can see, we have described in the presentation that our Head of Finance take the opportunity to decrease the cost of funding and we have repaid an instrument Tier 2, and this was a one-off effect that we have described in the presentation. There were other effect on the liability side and also on the bond portfolio you see that we have taken the moment and in the last quarter, we have slightly increased the bond portfolio, and this is also the effect that is shown in the noncommercial side of net interest income.

And in as much as asset quality is concerned, I don't see deterioration actually, but I'll pass the stage to Valerio Rodilossi that is a colleague of the CRO area. Please, Valerio.

Thank you for the question. I can confirm that we don't see a structural deterioration of the credit portfolio. The default rate for 2025 is in area of 1%. So comparable with the previous year. And also for the different asset classes, there are no differences with previous year. Our lending policies are very conservative. We are concentrated on the best rating classes. So at the moment, we don't envisage any deterioration of the credit portfolio.

The next question is from Andrea Lisi of Equita.

The first one is kind of a broad one related to the integration of Popolare di Sondrio, in particular. In relation if you can share with us some color on how the clientele of Sondrio is answering to the acquisition after 6 months from the completion of the acquisition as well as if you have observed some elements that are a bit more tougher than what we would have initially expected or others that are going better? Then the other question is on fee. In particular, I want to ask you as regards BPER standalone, if you can indicate us why banking and Bancassurance fees are slightly down year-on-year in the last quarter and which trend should we expect going on?

Thank you, Andrea, for your questions. So in as much as the first question is concerned, I think the integration is proceeding very well. As I mentioned, we have 23 work streams that are taking care of covering all the different aspects of the integration. I would say that in answer to your question could come also by the very good results of BPSO. You saw that BPSO posted a very good net profit. And if you consider that the operation, the acquisition of BPSO was concluded in July. So you have basically 5 months in which the customers of BPSO have reacted very positively to the acquisition, to the fact that BPSO is now part of a larger group. And we believe that this will be reflected also in 2026. We have analyzed the different aspect of the integration. We don't have much overlapping. And we do see a possible growth also on those customers that are common with BPSO. In as much as fees is concerned, so banking services, the fees, the banking services commission are down in terms -- if I understood correctly your question, are down in terms of percentage because we are growing very much on the wealth management Bancassurance fees. But we have a growth that is year-on-year of 0.6%. And this on the back of the fact that we are growing the number of customers. So we are talking about 50,000 net new customers in 2025 and the fact that we are also shifting -- we have been shifting in the last couple of years our activity on the corporate side, and we have become, in more situations, a bank of reference rather than the pure relationship bank. And therefore, we see more commercial activity coming also from corporate customers. In as much as Bancassurance is concerned, year-on-year, we have a slight decrease. But in reality, financial year on financial year, you see we grew by 7.5%, which is, I think, is a healthy growth. And because we go from EUR 128 million to EUR 138 million financial year on financial year. And therefore, I see also here if we look also the volumes of our Bancassurance products that have been sold in 2025, we are on a very good trajectory in terms of growth there. So it might depend also on the fact that in certain cases, we are selling products where we have fees that are paid not upfront but are paid on different tiers. And therefore, you might see this as a difference. But in reality, we have a growth in terms of volumes.

The next question is from Adele Palama of UBS.

Yes. Couple of questions from me. So the first one is on the NII. Just a clarification. Can you tell us the impact in the quarter of the Ecobonus, maybe in the quarter, also in the full year. And how do we need to think about this impact going forward? Then the second question is on cost evolution. So looking only at BPER standalone, so you had like quite an impressive reduction. I want to understand how sustainable is this reduction like going forward? And then if there is any consideration around the cost synergies that you're expecting from Sondrio, if there is room for higher cost synergies than what has been announced previously? And then the last one, sorry, is on the capital. So I just want to double check that there is no other moving parts left in the capital in terms of regulatory headwinds, or I mean, probably there is only the last part of the restructuring costs, but you are basically taking everything related to the Sondrio acquisition. So from now on, we should just expect organic growth of the capital and if there is any impact from RWA optimization left?

Thank you, Adele. So I take the question on cost. So we, I think, have performed a fantastic job on the cost reduction. We started in 2024. You might remember that a couple of years ago, 2, 3 years ago, we were at around 62%. If I take BPER stand-alone, we are at 47.2%; on combined basis, around 45%. We keep on working very much on cost reduction. In terms of HR costs, as I mentioned, we do expect to have a further reduction because we have more than 200 FTEs that will -- head count that will leave the bank based on previous agreement with the unions. And as you know, we reached an agreement in December for the exit of an additional 800 accounts based on this new agreement, and most of this will be exiting the bank by year-end. Now we are collecting the request coming from the colleagues that want to leave the bank and we are talking about retirement or preretirement schemes. In as much as non-HR cost is concerned, based also on our B:Dynamic plan, we keep on reorganizing ourselves, bringing back activities that we had outsourced as we had done in 2025. And therefore, we will keep on, I believe, reducing also non-HR costs in order to further improve our position in this case. But, if I look at the combined basis, today, we are already at 45%. And considering that we are a bank only based in Italy basically and not having subsidiaries in Eastern Europe or other countries where the cost are lower than in Italy, I think that we have already reached quite a good percentage in terms of cost/income. Now I put through Simone for the other two questions.

Yes, sorry. Regarding the Ecobonus, we have the EUR 260 million in 2025. More or less EUR 270 million, EUR 224 million in the quarter was more or less constant. Clearly, in the next years, the Ecobonus will tend to decrease a little bit more in '26 and more then in '27 and clearly '28. Regarding the component of CET1 ratio for the next year, we clearly, we will have the benefit from the merger of Popolare di Sondrio. We will have the effect of the TRS that I mentioned before, EUR 200 million, then we will have the positive effect clearly of the deal of Nexi. And then we will have the usual operative risk at the end of the year for around 20 bps. This is what we see at the moment. We don't see other particular effects that you mentioned.

The next question is from Luis Manuel Grillo Pratas of Autonomous.

My first question is on the PPA information on Slide 33. So essentially, you mentioned that post tax fair value adjustments were slightly above EUR 700 million. I was wondering what is the expected P&L effect from the reversal of these fair value adjustments in the coming years, how much shall we expect per year and how many years this will be a negative in the P&L? And then on the tax rate, if you could please provide the guidance on the tax rate in 2026, considering the increase on the IRAP part of the budget law. And then just a small clarification. How much of Bancassurance performance fees did you book in Q4?

Yes. Thank you very much for your question. I'll start from the last one. Bancassurance one-off, the usual one-off is EUR 27 million, at the level of last year, more or less. Regarding the PPA, Page 33, we will have an effect of around 2 mid-digit, still clarifying, but it should be 2 mid-digit negative per year for the next years. And then tax rate guidance, you know that -- you see that we have now 31%, this is our correct tax rate for the year. Clearly, 25% in the fourth quarter, but is -- or let me say, a one-off, an adjustment, but 31% is correct one. For the next year, you have to take in account there is 2% IRAP, so around 33%, 34% is the guidance.

Just a quick follow-up. Like when you say 2 mid effect, do you mean like EUR 200 million per year?

No. Two mid-digit. Two-digit, not EUR 200 million.

Around EUR 50 million?

We are still look at something more, but two-digit, not EUR 200 million.

The next question is from Ignacio Ulargui of BNP Paribas.

I have three questions, if I may. I mean the first one is on NII on the noncommercial part on the wholesale funding. How should we think about that in terms of your rating is improving the issuance that you need to refinance into 2026, how that should be supportive into NII, if there is any tailwind from there in 2026? Linked to that, just a clarification on the EUR 22 million of the quarter. You see it as a one-off, so it will come back down into the coming quarters? Or it's kind of a jump because of the lower funding or lower cost of the Tier 2? The second question is on deposit growth. How do you see the deposits growing into 2026? And how should we think as a trade-off between leaving that deposits in terms of liquidity financing lending versus in reinvesting in AuC or AuM, given that profitability probably is better in the former in keeping that on balance sheet? The third question is, if I just look to the cost growth and the cost targets, I think, Mr. Papa, you said that you don't see much more scope for a decline in the cost to income. But if I just see your revenues should grow ahead of cost. So intuitively, your cost to income should keep on improving as you keep on accelerating commercial activity. What do I am missing there?

Thank you, Ignacio. I take the last two questions, and then I'll ask Simone to answer the first two. Deposit growth. But in reality, if you look at our presentation on Page 15, you see that quarter after quarter, we have been growing the deposits BPER stand-alone. And obviously, with the integration, the full integration of Sondrio, we see a progression also under this point of view. There is a lot of attention. We pay a lot of attention to liquidity. All the teams, all the commercial colleagues are very much pushing on gathering liquidity from customers, both retail and corporate, because -- and this is of paramount importance for us. We have been concentrating on that in the last couple of years, and we will keep on going like that. Why? Because this will allow us to transform liquidity into Asset under Management or Asset under Custody, which is what we have been doing in the last couple of years. And at the same time also to grow on the loan side without -- always keeping a loan-to-deposit ratio that, as you see, is stable at around 76%, which give us ample room to in case accelerate even further the growth both on asset management as well as loan growth. So -- but we want to stay at this level of loan-to-deposit ratio in order to make sure that we have always a reserve or liquidity to further push for business. In terms of cost target, I didn't say that we are not going to lower the cost. In fact, on the HR cost, I believe that this will be lowering for the simple reason that we have, as I mentioned, and we know we have over 200 people that will be exiting the bank, BPER stand-alone, based on previous agreement with the unions. BPSO never had any agreement with the unions. Then in December, we signed a new agreement with the unions for the exiting of an additional 800 colleagues. Let's see what is the number we are going to reach. We are in progress now, as I said, of collecting the request from the colleagues. And most of these colleagues will be leaving the bank, the new group by year-end. You know that -- you know also that in the agreement with the unions, we will hire one new colleague for every two colleagues that are exiting the bank. So the net-net will be minus 400 because -- but this will be done across the years, not this year, not only next year. And then we keep on monitoring and pushing very much also on non-HR cost. One of the activities that allow us to reduce the non-HR cost has been the reinsourcing of activities that were outsourced in the past years. This has been done in 2025. We keep on doing this. So we see also further reduction on non-HR cost on, as I said, reinsourcing of activities as well as reduction of costs related to consultancy and so on. So hopefully, we'll be able to further lower the cost/income ratio. What I mentioned before is that I believe that the 45-ish is already quite good, considering that, as I said, the bank is based in Italy, doesn't have subsidiaries in countries with much lower cost of both HR costs and non-HR cost. But there is a relentless activity to reduce cost driven also, obviously, by the fact that we will be pushing on the revenue side, and we see a progression also on the revenue side.

Thank you so much for the question. Regarding the EUR 22.8 million on Page 13, as we have stated in the page on the top right, 11 -- EUR 13 million is a one-off. So of the remaining EUR 10 million, we cannot say that each quarter will have a EUR 10 million on the -- positive on the noncommercial. But as you mentioned, for sure, we will have a benefit on cost of funding coming mainly from the positive effect of the merger of the two banks.

The next question is from Juan Pablo Lopez Cobo of Santander.

I got a follow-up on OpEx regarding the 800 exits that you mentioned. Could you clarify if this is already included, let's say, in the BPSO synergies, or this will be on top of? And also the savings in euros that we could expect from this 800 that you mentioned, it's going to be 400 net? And my second question is related to capital. If I look to your presentation in Slide 19, you mentioned positive impacts coming on risk-weighted assets from the active portfolio management, around EUR 600 million, and also models around EUR 400 million. If you could provide a bit more color regarding this, it will be useful. And also, if you are planning to execute any SRTs. We have seen other banks in Europe quite active in Italy as well. We know that your capital position is very strong, so there is no need for that. But still, given the relatively cost of capital of SRTs, I was wondering if you are planning to do something.

Thank you, Pablo, for your questions. So in as much as OpEx is concerned, the 800 exit are already included in the synergies, cost synergies that we've been indicated as synergies coming from the integration of BPSO. We -- as you know, we indicated EUR 190 million, of which around 40% to 45% come from the HR costs. So we will see a reduction. Obviously, you will see this impact in 2027, because as I mentioned, most of these colleagues will be exiting by year-end. But when I say by year-end, it means year-end, so not across the year. In as much as the 400 hirings that we are going to perform, this will not happen in neither this year nor next year, will happen in the year to come. So we will have an increase coming from that. Nevertheless, you have to consider the fact that whoever exit has a much higher cost than whoever comes in. Because we are hiring younger people out of university for this generational change that you want to bring also to the bank. And therefore, there will be eventually an increasing cost, but it will happen throughout a few years. In as much as the asset -- the risk-weighted assets, I'll let the colleague to answer.

Yes. Thank you for the question. With regard to the RWA dynamic in the quarter, under the label of active portfolio management, we observed a reduction of corporate and financial bond securities with a positive impact on the RWA. And on regulatory models in October, we received an authorization by ECB to extend our internal model to some corporate portfolios previously not covered by internal model and treated under standardized approach, for example, the exposure inherited by Carige. And also this positive impact, and then we had the business dynamic due to the increase of the volumes. Regarding the SRT, it was one of the pillar of our plan. We have created the structure. We are ready in any moment. When we will need, we will execute it. For the time being, nothing planned.

The next question is a follow-up from Giovanni Razzoli of Deutsche Bank.

Yes. Just a follow-up to one of Simone' answers about the moving part on the CET1 in 2026. You mentioned that you're going to have EUR 200 million from the TRS next year. And you also mentioned the agreement with Nexi. So I'm not -- it's not clear to me whether this is going to be an impact in 2026 or not because I've seen that in Slide 33 that you have already booked EUR 100 million as a merchant acquiring impact in the PPA. So I was wondering whether there is something else or what was you referring to in this answer?

Yes. Thank you very much for your question. As you correctly mentioned, on Page 33, this is the PPA accounting, not the CET1 effect. We have EUR 105 million of merchant acquiring that is Nexi. This has been taken account during the PPA, but we still don't have the effect in the CET1, and this will happen in 2026 when the deal will be finalized.

[Operator Instructions] Gentlemen, at this time, there are no questions registered.

Okay. Thank you very much to all. Thank you.

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