Credito Emiliano S.p.A. (CE) Earnings Call Transcript & Summary

Good morning. This is the Chorus Call operator. Welcome to Credem's 2020 Half Year Results presentation. [Operator Instructions] Let me now turn the conference over to the General Manager, Mr. Nazzareno Gregori. You have the floor.

Good morning to all of you, and thank you very much for dialing in, even though this is very close to the holidays. The COVID pandemic, as we all know, had a very strong impact on our economy, both at a local and global level. And in just a few months, the scenarios have changed dramatically, and we've all had to adapt to a change in paradigm and unprecedented change in paradigm. And let me underline the resilience, the great resilience our group showed during the lockdown phase because we granted the full operation of our networks, and we kept managing processes on an ongoing basis, leveraging flexibility and responsiveness of our teams, and that I've mentioned a number of times in the past already. And these features show the quality of our human capital and also the sense of belonging to a team that we have always shown and also the major investments we've made both in digital technologies, but also let me underline in the digital culture and the digital mindset of people who manage to leverage 100% the potential of the tools we made available, especially in remote working and in providing service to our clients. And that enabled us to achieve a very good result despite the difficult economic and health stage we've been through, and this is a telltale evidence that our group really stands out when times are tough. And before diving into data, let me thank all of our people and encourage them to head on in this direction. I'm really confident, I'm really reassured when it means tackling the future with them. As you can see on Page 1, our strategy led us to a set of results that show you the effectiveness of the way we actually engage in banking actions. Loans are growing. They're up 7.7% on year-on-year at a much faster pace than the industry. And despite the competition, we're showing excellent asset quality with an NPL ratio which is in line with the European average. And even though we won't be immune from the impact of the pandemic, we'll still be at the top, among the top players in Italy. We still have a very good profitability despite the adverse economic conditions, and that enabled us to generate -- to grow organically and be sound despite our capital position being already sound. And we are among the top players, as I said, not in Italy, not only in Italy, but also in Europe. And this is thanks to our people able to meet the challenge coming from our side. They're very professional, and they feel accountable for what they do, a sense of responsibility, and we want to generate value over time. This is our mission. And we were also very pleased and satisfied on the sustainability front. Our commitment to innovation led us to being mentioned by Google as best practice in Smart Working technology. That was an excellent tool to keep on working during the lockdown phase. And as you know, for a few years now, we have been focusing, and we will keep on focusing on the need to have a sustainable growth for our shareholders, for our people, for clients and, of course, where the environment will live in. Among the many activities we've been enacting within the carbon disclosure project, we started to assess our loan portfolio also based on risks related to climate change. And also, we are introducing ESG criteria when it comes investment in the investment processes of our wealth management companies. Over the last few months, we've noticed more and more that customer needs are rapidly changing, and it is our intention to be able to offer a physical and digital relationship, striking a balance between the importance of using technology, but also and at the same time, the essential need to retain human relations that is also strengthening the trust and confidence in us. And we have to make customer aware of the use of digital channel and strengthen the relationship between managers and clients when it comes to financing, protection. We have to listen to our clients, understand their needs and identify solutions for them. As you can see from the figures in this slide, we've constantly invested in technology and they've been a priority for us for quite some time now, and they've enabled us to successfully meet the challenge. And this is our focus on the COVID-19 emergency. So sustainable growth, as I said before, also means being careful and aware of one's people and one's clients that we've invested in digital technology. And during the lockdown, well, 85% of our people worked from home, and so smart working. And we've managed to keep our branches up and running with utmost safety, thanks to the digital tools that enabled interactions with clients also remotely from standard banking transactions to consulting services, thus strongly increasing customer migration to the digital world. And let me also advance some of your questions by telling you about our commitment to, of course, ensuring our clients can access government initiatives, 4.3 million of moratoria, and we've issued EUR 700 million of state backed loans. And with regard to loans, above EUR 30,000. The great -- of course, this is slowing down, the issuing of the loan, the grounding of the loan. But at the end of July, we've managed to increase those loans up to 900 million. So loans above EUR 30 million -- sorry, EUR 30,000. Let's now have a look at the highlights for the first half. You've seen the excellent loan growth, and at the same time, I'm very happy with the net inflows. After they sell-off in the market, we were back to assets under management that are in the positive with inflows of about EUR 700 million in the second quarter, proving that our clients are rewarding our business models and our competence and skills in assets under management. As to revenues, core revenues, that will manage to react when we have containment measures that strongly reduced economic activities in the country. So both fee wise and thanks to interest income that despite the competitive scenario, it's still growing despite the situation. We're still at the top of the system when it comes to asset quality with an NPL ratio that -- also thanks to a disposal of EUR 40 million unsecured bad loans, and cost of risk includes EUR 29.5 million of nonrecurring item for the adjustment of our internal models post-COVID, and it's still very limited versus the system average. Our CET1 ratio is up to 13.9% and includes the first adjustment on the weighting of our insurance holding. And in the second half of the year, we are indeed going to focus on the economic recovery on further developments. From the regulation viewpoint, we expect a strong competition because of monetary policies, and that will compress margins. We think it's also very important to keep on digitalizing our bank to grant a better service to our clients and to be able to meet up at best the challenges coming from upside from the external backdrop. In our income statement, you see the operating income net of trading commission is going up versus the first quarter. And we've worked on the cost aggregate, down more than 5% on versus H1 2019, and we're still reconfirming our investment strategy, as you can see, from the growth in D&A. And the flexibility we showed enable that to keep our operating result stable both versus last quarter and versus the first half of 2019 despite the negative one-offs because we had to adjust our model. They account for EUR 26.5 million in this quarter alone. The net profit is slightly lower than that of the first 3 months of the year and is around EUR 78 million for the first half. More, if we drill down into a great level of detail, you see the net interest income after some shrinking, it's back to growing on a quarterly basis, as you can see. We've also leveraged volumes. This -- in the absence of repricing and with negative rates, we still can withstand in a virtuous way the existing scenario. The growth is driven by the lack of cost from Tier 2 that withdrew earlier and also from the resilience of our loan and securities portfolio. We don't see the contribution of the last auction of TLTRO3, but that will have an impact in following quarters. The competition I was mentioning before is still compressing the customer spread at system level, and it's the main new cash back of our secured loans that favor this situation. Our credit quality leads to a lower profitability on loans. However, it's less affected by the government initiatives. Our average lending rates are very close to those of guaranteed loans. And from the figures, you will see that impact on our customer spread is flat almost, whilst the system spread is down 6 basis points. If we look at the securities portfolio breakdown, spread levels enabled us to take up opportunity to rebuild our portfolio, thanks to the sales we performed in the first quarter. And we try to be more conservative, increasing positions on short maturity. Italian govies, 12 months normally. That's why we see -- we have an increase in exposure in Italian govies -- to Italian govies, and it's in the accounting category HTC. The average maturity is lower, and we are protected against hikes in volatility in case of the widening of the BTP/bund spread. So we want to be tactical on short-term maturities, and maybe you'll see that in the next quarters as well to efficiently manage liquidity excess we get from the TLTRO and to further support our financial -- our interest income. Let's now look at noninterest income. Let me again stress the resilience of our revenue sources. As you know, in Q2, we were strongly affected by the slowdown in our economy. Despite that, performance fees and management fees, thanks to EUR 3 million upfront fees for a placement we started at the end of June that will carry on in the coming months, banking fees managed to withstand the lockdown because lockdown simply reduced the number of transactions performed at the branch level. And then the other income and asset manager and insurance income. And then other income, as I said, mainly due to Credemtel issuing digital services to companies with a low capital absorption. And that really shows our commitment, and we've done so for years, to supporting our companies in digital transformation, which is essential for Italian companies to grow and develop. And these results are even more meaningful if we read them against the backdrop, the core margin, in the -- operating income is in line with the first -- with the last 2 quarters despite the health conditions and the economic conditions we've been facing lately. The flexibility I was mentioning is of paramount importance, and we managed to show it on the cost factors as well. Our business model enabled us to adjust cost. Of course, acting on the variable of our -- of what we -- of the salaries we pay, and we can offset the cost line to taking pressure on revenues -- to offset pressure on revenues. And Q2 is also taking stock of what happened in Q1, where we had expensed cost. And in the next 6 months, you should see data that are in line with the first half of 2020. Also consider that our responsiveness in resorting to remote working and smart working enables us to normally also manage the holiday days pool and with improved efficiency, thanks to discipline in managing costs and carefully managing costs. And doesn't imply we're going to change our strategy when it comes to CapEx and investment. As you can see from the constant growth in D&A's, our investment policy is very much targeted in a time of great transformation. So we want to support businesses and people. Let's now talk about aggregate. Let's talk about loans. Loans are up to billion versus H1 2019 and more than EUR 1 billion versus last quarter. Again, I'm really pleased when it comes to commenting this excellent performance if you take stock of what happened throughout the system. EUR 700 million of guaranteed loan issued end of June. The growth was mainly driven by traditional standard business. More than -- we have more than 30% growth of other loans. It's funding -- medium-term funding for our businesses, for our companies. And they'd rather have a longer-term financing, funding. And then residential mortgages went up 9.9% year-on-year. So overall shows the commitment of the group to support households and businesses with utmost care to credit quality at a difficult time like the one we are now going through. If we compare ourselves against the market, you see how the group stands out from the system because we have 4x -- we're growing 4x faster than the system. I would like to complement our sales network that managed to seize an opportunity and gain market shares. They got 1.816% of growth versus the same month in 2019. So they went up 8 basis points. Let's now talk about inflows. Again, this proves the effectiveness of our business model. After a decline in Q1, given to the wait-and-see approach, clients showed, but assets under management went up EUR 700 million in Q2 alone, barging the negative gap with net inflows of EUR 450 million from the beginning of the year. And also, direct funding leave room for further increasing in the next quarters for assets under management. And the declining consumption may have enhanced its phenomenon. But the level we reached, it's a clear way our clients are showing their trust vis-à-vis our group. And if you consider EUR 1.1 billion worth of inflows from corporates with that deposit, their liquidity and as a medium-term finance, the remaining EUR 8.1 billion are a retail inflows at the top level of the last years. And then direct inflows shows our outperformance versus the system, and the market trend enabled us to further recover on the assets under management side. We have to pay attention to the market. But the growth dynamics we had makes me -- well, make sure I'm positive about the coming quarters when it comes to aggregate figures. Let's talk about bond issuances. In March, we recalled EUR 25 million worth of Tier 2. We have a high level of total capital despite that subordinated loan, and that enables us to be more flexible to wait for the right time to replace that issues because the MREL requirement has to be complied with at the end of 2021. And in the second half of this year, we want to go back the market with a similar issuance. In the first week in July, EUR 500 million of corporate bond reached maturity. And given the new ECB measure for -- and the senior nonpreferred issue and high liquidity position, we can quite confidently assess whether or not we need to replace that type of instrument or issuance. Let's now talk about another very important topics. And again -- once again, let me reiterate that the group is a player of excellence in credit quality. Our NPL ratio is better, 6.4%, also thanks to the disposal of EUR 40 million worth of bad loans, unsecured bad loans. So for -- between now and 2021, we won't be immune from the effects the pandemic, but the further reduction in our NPL stock makes us be very confident to manage the future. And I'm very confident in our credit quality and the ability of our clients to somehow fair well during this economic crisis despite the increase in gross NPL. Because of the new definition of default, we still have 1.8% net NPL ratio, and we further reduced net NPLs below 0.6% now and the net bad loans ratio. And again, the industry instead shows a 1.5% figure. Bad loans coverage and NPL coverage have improved, thanks to the disposal of bad loans, and therefore, reduces the impact of bad loans on total NPE or NPL. And we have calendar provision. We have ECB, so we have to take ECB regulations. So we have to take shortfall into account. We are at the top of the industry with a coverage level in excess of 62.88 when it comes to NPLS. Also for performing loans, we have an extra coverage that is fully deducted from our CET1. As you can see from this, extra coverage enabled us to take in the impact coming from statutory coverage requirements and also a positive impact on capital ratios, thanks to the tax benefits. If we look at the cost of risk, we adjusted our models and account for EUR 29.5 million in the half year. The recurring figures would be around 17, 1-7, basis points despite the fact that we could not pick up from the beginning of the year. Overall cost of risk at year-end should be between 45 and 55 basis points. If we look up to 2021, if the economy starts getting better, we think we'll be benefiting from some write-backs that could mitigate and offset possible increase in coverage on NPLS. Let me now look at the main movements on income. So you see the TLTRO3, we add them -- we drew the maximum available so it's now EUR 7.100 billion, the take-up, the maximum take-up. And then loans to customers were increased in the first half. Our securities portfolio is up EUR 2 billion in the HTC component and loans to bank as well. Equity went up, thanks to valuation reserves, and we include the profit. Liquidity ratios, as you can see, all of our ratios are well above regulatory requirements, and that enables us to be very flexible when it comes to the defining funding strategies. This slide shows our capital soundness. Indeed, regulators' quick fix of CRR2 and the limited growth in RWA because of guaranteed loans led to an increase in the ratio. However, we've managed to be able to show that we can organically generate liquidity and capital and have a very strong buffer. And when it comes to somehow offsetting the insurance holding and be able to fully adjust it from here to year-end, then the total capital change is because we early -- because of the early redemption of the Tier 2 in March. If we look at that, as a matter of fact, this is all extremely positive. So we think ratios will go again once we've issued a similar issuance. That's it from my part. Thank you very much for you attention, and it's now up to you for questions.

[Operator Instructions] First question comes from the line of Giovanni Razzoli with Equita.

I have 2 questions. When it comes to -- well, in general terms, your results are as if COVID had never happened somehow, looking at them from the top down perspective. But according to you, how sustainable is the trend we've seen in Q2, especially when it comes to fees? From the total of reference, you seem to be very happy with this performance. But there are some one-offs there. So we have the feeling you feel that this is sustainable over time, but can you please confirm it? And then could you elaborate on the [ CR 100 ] transaction and what are the next steps? And then one last point, more on the strategy side. You said that you fully leverage the remote working, smart working. And generally speaking, do you think the benefits you got from this shift cost-wise, could they become permanent because you've saved on costs by having people work remotely? Can you retain that? And what will be the benefit?

Let me answer first question. Yes, we consider -- we don't have any one-offs in the first half. So we think that this trend in fees should carry on, and we are confident that we can provide a good performance starting from the next quarter already. As to the [ CR 100 ] we are well completing the due diligence, things are going as expected, and we think that we can get to closing the contract in October. Hopefully, in the first half of October. At the smart working, I think this is a very fair question. Smart working enabled us -- remote working enabled us to understand that we can work in a different way. We can work in a different way with benefit, cost-wise. Think of real estate costs, heating costs. Halfway through March, we switched off our heating, the heating in our buildings, just to really have a feeling of what this means, hands-on feeling. And we are thinking about how we can structurally change the way we are organized, not just from the building and real estate viewpoint, with the exact value from this opportunity. And let me also say that we also supported households and families a lot. Children were home from school. And people, they could actually work from home. So that really -- social issues because they could still, for instance, look after their children despite working. And -- but however, we think that not everything will have to be done remotely through what we call smart working. We could somehow recover the physical aspect, the physical factor of work in a given way because the corporate culture can be created and disseminated through physical vicinity. And you cannot do everything through chat or remote working, but we are pondering upon it, and we think that the savings will be meaningful. Of course, we are computing things based on the way we are organized and our business is organized. And I must say, and it's not an advantage for us because we said we talked about sustainability, and this approach strongly reduces emissions. Think of heating, think of transportation. We have 85% of people, so more than 5,000 people who were not traveling, and that was a main signal sent out to society for a change that will have to affect society at large.

Next question comes from the line Manuela Meroni of Intesa Sanpaolo -- with Intesa Sanpaolo.

I have a few questions. First of all, on the interest income. What is the impact you expect from the TLTRO as you took the maximum take-up in June, but the impact on the NII will be on how -- it will depend on how the funds will be used, whether it's going to be loans, securities, will be -- whether they will be deposited with the ECB. So what is the expected impact of TLTRO on the NII? And you talked about a strong competitive scenario, and yet your NII is holding ground -- holding its ground. So how do you expect the NII to move it over 2020? And then capital regulations. Could you remind us the impact you expect in the second half of 2020 on capital due to capital regulations and then also for 2022? And then dividend policy. It's clear that you have a very sound common equity Tier 1 or CET1. In 2020, you could not pay out dividends. And maybe you could elaborate on what you are going to do in 2021. So are you going to increase your dividend payout by then?

Let me start on the last question. Of course, when it comes to dividend policy, we have to wait and see. We have to wait for the regulators to express their view. And this year, in our quarterly report, we said 0.11 -- well, EUR 0.11 per share. It's a 24% payout. Because of the rule, you have to take the maximum of the last 3 years and compute the average. So that's what we did. And then it's up to the Board of Directors, as I've said a number of times, to make a decision as to what has -- what will have to be done also in compliance and following what the regulators will issue as rules. As to the TLTRO impact on NII, in the second half, we expect an EUR 8 million benefit that will be added to the EUR 6 million we've already taken home in the first half. So it's going to be EUR 8 million plus EUR 6 million, EUR 614 million. As to the capital soundness, Daniele Morlini, who is in charge of this, and he will give you a more detailed answer.

Mr. Morlini speaking. As to capital, we expect an impact of 45 basis points in the second half of the year. Because of the stronger weighting, and it's going to be 170%. And this is what we can expect in the coming years as well in 2021 and 2022. We have no special expectations or forecasts. And currently, we expect positive effects, but they should be offset by not further burdening the capital.

This is again Mr. Gregori speaking. As to the NII, you we expect by the end of 2020 for it to be flat, around 1%, 2% less than 2019, but that means still a very positive performance in the next quarters driven by the increase in loans and in the securities portfolio, the growth of loans and securities portfolio.

Next question comes from the line of Luigi Tramontana with Banca Akros.

I was very struck by the flexibility you've shown cost-wise, especially on personnel costs. That is still stable, same personnel and yet costs are declining. That's impressive. Is it mainly driven by the variable component of the compensation? Or what is the reason? And then a strategic -- question on strategy. You've clearly shown the ability to gain market share organically, controlling risks better than any other player in order to come to have a one-off transaction with CR 100. It's a very big transaction seen in the Italian system with a major consolidation. After Casa de Cento, do you think you could envisage other or look into the transaction? Or are the deals, as you said in the past, among unlisted banks, there might be difficulties ahead of them in the coming months because taking home money or capital without being listed, it's going to be hard. You have always excluded or ruled out bailing out other players or something like that.

So first of all, personnel costs, HR costs. Of course, it's -- this is tied in with the variable component of compensation, but that has a double effect. On the one hand, it indeed cut costs, and it also drives people to perform at best because if they really understand that the results depends -- relies our action, this really is a driver for them. And what we've seen over the last few months really proves that it's true, but it's not just a variable component of compensation, but also the effect of smart working with people were not traveling, we did training remotely. So it's other costs that are not tied in with a variable component of compensation that led to the savings we achieved. And also, we managed to operate on costs to enact on cost responsively to cope with the situation, and we are thinking of coming up with actions that can turn these savings into factual fixed ones, permanent ones. When it comes to one-offs, one-off deals, let me say the following and reiterate the following. We have to grow. It's imperative for us to grow. We are growing organically because if we cannot grow, otherwise, we have to grow organically. And of course, we are interested in other deals in addition to the Casa de Cento. By retaining, however, the same principles I've always mentioned, we are going to engage in value-generating deals. Because for us, it's not just a matter of growing to be on a bigger scale, to achieve a larger scale, to be able to benefit from investment, but we have to enhance our business model. We have a group that's made up of many different company deals with digital systems. If we increase our customer base, we can leverage our product factories, our product companies. So it's twice as important for us to grow and at a faster pace than the ordinary growth we have achieved so far. And in order to do that, you need to have the right conditions. You have to need -- you need an opening up of the market in addition to what the regulators are doing and saying. The pressure banks are feeling on the profitability side will probably lead to an opening of the market to look into different types of deals, and we will be there, and we'd rather do than simply talk about it. We want to put words to practice.

Next question comes from the line of Riccardo Ruggeri with Mediobanca.

A couple of things I'd like you to elaborate on. If I understand correctly, you expect cost of risk around 45 to 50 bps. I wanted to be sure. On dividend accrual that you hinted out before, EUR 0.11 per share. If I take your number of shares in the quarter, it would be a payout of 50% in the quarter -- sorry, in the half. You've recurred about EUR 30 million in the half? Or do I have to divide it by 2 and it's 11 annualized -- EUR 0.11 annualized? And then could you elaborate on the following, going back to costs. Whatever you said from whatever you said, I understood that smart working, remote working, maybe it won't be used as massively as you did during the COVID lockdown, but that maybe costs may go up a bit because now you've used remote working from a massive perspective. But costs will still structurally be lower going forward than what we were used to until the end of 2019. Have I interpreted your words more or less correctly or not? And then another question on the volume growth, 7.7% is a lot. So I'd like to better understand if over the last time period, companies wanted to take liquidity home and if it's reasonable to expect a strong speed down or deceleration -- slowing down of this trend, and then the TLTRO had an impact on the NII. Can we consider debt instruments to grow or to decline going forward?

So the securities portfolio will be increased to face up to this liquidity abundance, this excess liquidity. And then going backward, your question on cost, yes, you understood my words correctly. We have learned a few things. Of course, it won't be exactly as we've seen so far, so there'll be a slight cost increase. But from what we've learned, I was saying before, the real estate cost, so we will benefit from what we learned. And what is important to -- even if it's not a direct effect, it's not so much on costs, but rather on the new way of we are organized. We do more things. We are more productive in the new -- this "new deal". And so it's not just personnel cost savings, but also costs declining, thanks to the learning curve we managed to put in place over this time period. And let me say a couple of things. The first is that the variable component of compensations should the results would be even more positive, this will have a virtuous impact. It will grow because revenues will grow as well. And then investments. We've talked about costs. But for us, investments are a must. As I've always said, there are costs because if we give up these investments, we really harm our group, and it's going to be felt in the 2, 3 years, and we cannot afford it. If we go back in the history, 3, 4 years ago when we were saying the same things, today, we are reaping the fruit, the benefits of what we invested in 3, 4 years ago. So it's not just the leap of faith. We are confident. We really believe this is true. And we're going to be conservative. We're going to be smart in doing them, but we will keep on investing. That's why growth is paramount for us because it means making our P&L even more sustainable when it comes to investments. And to dividends, let me hand it over to Mr. Morlini, who will give you more details.

Mr. Morlini speaking. The figures we gave you are yearly accruals. The dividend accruals is on a yearly basis. So you have to divide it by 2 if you want it for the half year. It's the payout -- it's a payout ratio of about 24%, 25% on a yearly basis. As we were saying before, this is a technical payout because the regulation for accrual of profits is based on the average of the previous 3 years that was lower -- that became lower because of the calculations. But then it will be up to the Board to come up with the dividend proposal. And the AGM will vote on it, we'll resolve on it. Because as a group, we want to keep on growing, and we want to grow our payout as well.

The first question I answered last, and it's the guidance as to the cost of risk. For us, yes, it's a 45% to 50%, the guidance as to cost of risk for 2020. And it applies 2020 -- it applies to 2020. Yes, 2020.

I'm trying, maybe you won't answer. For 2021, do you feel confident you can -- on cost of risk or generally no on cost of risk?

Well, cost of risk in 2021, well, it's your right to ask a question. But of course, we will see. It very much depends on how the second wave of the pandemic effect in the economy. We hope it won't be there. And then moratoria and guaranteed loans will only have an effect up to a certain extent, but it's still a date that will have to be serviced. And as we said in the presentation, indeed, that will have an impact on -- even on single names, negative effects, I mean, and thus, the normal trend, the expected trend. But we think what we want is to focus on -- we have a customer with such quality from the -- credit quality perspective that they should react better than average. Indeed, we -- the way -- we expect a worsening, but we are confident that our clients will be able to manage it. Maybe there might be a write-back on performing loans, and that will offset the transition from UTP to bad loan that we will see in the first months of 2021.

One last thing on loans. Can we expect a strong slowing down in the near future or not?

On the growth of our figure of 77%, it's -- of course, it includes moratoria and guaranteed loans, state guaranteed loans. So we have to expect a slowing down in the growth rate. But this growth rate should be always around 3 -- hovering around 3%, 3.5%. So it's the historical growth rate we have had in the last few years.

Perfect. And apologies, Daniele, if I take up some more of your time. There -- as to the SME supporting factor, could you maybe elaborate on it? Maybe a better treatment of the total impact? Or is it what you've seen over the last quarter?

SME supporting factor is something we already we've looked at in the quarter, and the benefit stemming from it was about 25 basis points. Soft intangibles, if I understand correctly, we did not book anything in that respect. We are waiting for the EBA to end its consultations. Sorry, the sound is intermittent. I cannot clearly understand and hear what is being said. But the impact over the next 2, 3 years could be higher. The depreciation and amortization time is 5 years. So the closer we get to the 5 years, the more -- the intangibles are then restored into -- within the 5 years. We have to wait for the EBA consultation to be finished before we can have more precise data.

Next question comes from the line of [ Fabrizio Bernardi ] with Fidelity.

I want to be a bit provocative in my question. If you were to say how likely it is for the ECB to ask banks to pay -- sorry, allow banks to pay a dividend in 2020 -- on 2019. What would be the likeliness, 0 or 1? Let's have a binary because we talk about the fact that banks are accruing -- are making accrual for dividend payout. But could you maybe tell us more about it? You have a capital position that could lead to much greater dividends than the ones you are actually paying. We all know that, and many analysts are telling you that. But if you were to really come forward and say something, do you think that in 2020, there will be a bank paying dividend?

Well, the fact that we have to somehow come out of the darkness and take stock, but we would be taking stock when faced with the full uncertainty.

We know. I'm not asking you to sign it off. I'm just saying to express your thoughts on the matter.

No. If I answer, I can say and I can underline that it's a personal opinion, and it's, of course, affected by what -- it will be affected by whatever will happen. If there won't be another COVID wave, there might be an opening and opening also, focusing on the capital levels that each bank has. Of course, they cannot do it now because they would have already given judgments and assessment on individual banks. But with the delays, these authorities, I think that there might be an opening. Of course, if we were -- if there was to be another wave of contagion, that would completely change the situation because we would still be in an extraordinary situation. But should be -- should there be a recurring or organic situation, there might be an opening.

[Operator Instructions] Gentlemen, there are no more questions in the queue right now. You have the floor for any conclusion you want to make.

If there are no more questions, I would like to thank all of you for joining today, those who asked questions, and we will talk at the next opportunity. Thank you.

This is the Chorus Call operator. The conference call has come to an end. You may disconnect your phones. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]