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

Good morning. This is the Chorus Call operator. Welcome to the conference call of the Credem Group and we are presenting 2021 group results. [Operator Instructions] Let me now turn the conference over to Mr. Nazzareno Gregori, General Manager of Credem.

Thank you very much. Good morning to all of you, and thanks for joining us to this virtual meeting with the year-end -- 2021 year-end results. 2021 was indeed characterized by the economic recovery and the role the government and banks played was of fundamental importance to limit the risks entwined with the pandemic but also to fuel economic growth that we hope will be reconfirmed in the medium term as well. And for that specific reason, I am telling you that I am very pleased and satisfied with how the group is still supporting corporations and families not just to foster the recovery but also for them to be able to grow in a sustainable way in the long term by rolling the projects out from investments in companies to really enhancing the savings of households. We also know that we have to be very careful in looking up to 2022 to see the effects after the government measures and also looking at the international news that led to an increase in volatility already at the very beginning of 2022. Let me reiterate, however, that we will still bet on our business model because, thanks to the high diversification -- enables a sustainable growth of revenues, volumes and assets under management. And at the same time, it enables us to adequately control risks, as recently confirmed by the ECB as well. Before diving into the presentation. Let me thank all the people in the group, employees, financial advisers, who -- collaborators, because they prove to be very responsive and flexible in a year that saw us involved in the deal, the merger by -- integration -- the acquisition -- by integration of the Caricento bank. We try to grab all opportunities to keep generating value over time. And thanks to them, to these people, that we managed to achieve all-time highs for our bank and our group. 2021 further confirms that the way we do banking ensures to achieve consistent results even in different social and economic conditions. Our figures are telltale fact. And so our loans are increasing 10x faster than those of the system with a 13.2% yearly increase in revenues. And then our net inflows in the assets under management insurance is double versus 2020 and is still driving the revenue growth when it comes to fees. And as you can see, we are still standing out for our business model that is favoring a high level of diversification when it comes to revenue components, and in 2021, revenues from assets under management and insurance over the total amount stands at 40% of total income. And the excellent performance of these aggregate figures enabled us to achieve our best result ever, also net of the badwill stemming from the Caricento merger, still increasing our profitability levels. So despite or net of the one-off due to the merger by incorporation, we still have an ROTE in excess of 10%. And this is value at the top of the banking system and a true excellence in the banking system and universe. If you look at these results as a whole, they tell you how our strategy has been efficient, effective and able to adapt to the different scenarios and to really extract value from change. Let me say once again that, that was possible, thanks to the excellent and outstanding qualities of our human resources, of our people, who I'm sure will still be able to seize further opportunities going forward. That is to say in 2022. And I am also really pleased to talk about the ECB decision to reconfirm also for this year our P2R requirement. It's among the best Italian banks that are directly supervised by the ECB both in Italy and in Europe. And this result confirms our capital soundness and the excellent way the group monitors the rates. So CET ratio of 13.7% with a dividend proposal of EUR 0.30 per share; and ensures a strong buffer on minimum capital requirement, 614 basis points. And we are still very determined in following our digital pathway, our digital approach. That is of paramount importance to make processes more efficient and to meet customer needs, growing customer needs. I've always told you that, not only do we have to make our customer more aware of digital channels, but it is also of paramount importance again to come up with a proposition putting together all the benefits stemming from technology and merging them, blending them with the human interaction when delivering all service, from loans, investment and protection advisory. The growing numbers that you see are the result of the investments we made in the previous years. And let me confirm those investments will still have a core position in the group strategies. We want to really be very close to our customers throughout this digitalization process. 2021 was also a year where we improved and strengthened our sustainability strategy and climate risk management. We updated our governance for -- group sustainability was updated. And we have a risk and sustainability committee, and it was tasked with the goal to specifically focus on monitoring ESG risks. This enables us to be very effective and efficient in the next stages of transition, embedding ESG in lending process and achieving carbon neutrality by 2025. Our actions are also aimed at social actions -- are very happy about the new certifications we acquired again of equal salary and top employment certifications. All of these objectives, of course, were included in our business plan. And they will be made available to you in the different stages of reporting, as in the next nonfinancial report. More and more, we will be driven -- they will drive the strategic decisions of the group as they did in 2021. We've increased 168% our investment in -- our ESG investment in the wealth area, about EUR 4.2 billion. And at group level, we have adopted a social and sustainable green framework that led us to the issuance, the first issuance of a senior preferred green bond at the beginning of this year of 2022. We are aware it's still -- we still have a long way to go, but I must say I'm very proud of the great progress we made over 2021. And we will be confident in pursuing focusing on these themes also in the coming years, also going forward. Let's now dive into figures. Let's dive into our income statement. We are on Page 6. As you can see, our interest income -- operating income has been driven by all revenue components, both net interest income, noninterest income and fees. As you can see, this piece of information is -- these figures are mainly driven by recurrent lines. And if we exclude and we report the nonrecurring items, the operating income is still growing 9%, thus reconfirming the goodness and efficiency of our business model. And if we look at cost in -- after the effects of consolidating Caricento, we still have the merger charges and some one-offs, about EUR 15 million, of nonrecurring costs that were tied in with optimization, HR optimization actions and actions in support of the projects of the Group. Despite these -- well, net of these one-offs, our result is increasing more than 12%. That really tells you that our revenue dynamic is really efficient and sustainable, so -- and our -- we also have new policies on minimum thresholds, so there are no -- there's no further credit or loan deterioration. So LLPs remained at an extremely low level. And the net profit, in excess of EUR 352 million despite the EUR 42 million for resolution funds. It leads us to the very best result ever. If you look at the NII, the interest income. This has been reinforced, thanks to the securities portfolio and increase in NII; also thanks to the reduction of liquidity with ECB, thus reducing costs that have an impact on our NII. Looking at the current rates and the strong competition, because there's a lot of liquidity in the system, the impact on the customer spread are only limited and it's just 1 basis point. And also for 2022, our goal is to keep on reducing excess liquidity by enhancing the loan growth, thus ensuring the -- our NII, once we -- once the TLTRO benefit will expire at the end of 2022 -- Q3 2022. I'm not -- I know that pressures won't be lower in 2022 also because of the competitor scenario. What you see, the trends you see are the same for both Credem and the banking system with a system spread that declines 2 basis points versus 1 single basis point for our group. As I told you before, this is a partial vision which tells you how we interact with customers, but it doesn't include institutional funding that enables us to still have inflows at rates with a benefit on the aggregate figures. Further increases in rating, the average rating, of our exposure is improved. And we've also reduced to 40% the total amount of our Italian Govies. And of course, Italian Govies are -- 95% of them are accounted for as HTC in our portfolios so as to reduce the BTP-Bund -- contain the BTP-Bund portfolio. As to the noninterest income, let me highlight the nonrecurring items. The core NIM is growing 18% year-on-year, and it's really focusing on the current economic and financial scenario. And it really stresses the fact that it's very important to rely on a business model that strengthens revenue diversification and then in the results in Q4 recorded a 19% growth versus Q4 '20. Thanks to placements and also thanks to the ability of the group to increase both volumes and the medium -- the average profitability of the assets under management. Banking commissions were also very good, almost EUR 62 million in the last quarter. That's confirming our -- that, of course, economy is recovering. And that means that we can focus to growth performance -- performance growth, sorry, for this year too. And then in the insurance business, in excess of EUR 19 million this quarter, driven by the constant growth in our net inflows and also the central role bancassurance plays within our group. And then therefore, noninterest income growth, thanks to the -- some contribution of performance fees. In Q4, they are about EUR 49 million, as you can see on the slide, on Page 10. I am very confident, also looking ahead to 2022, that we manage to really protect our customers' assets, strongly focusing on how markets were performing. And at the same time, we are evolving and improving our offering, product offering, to always meet our customers' demands and needs and in an ever better way, so we have -- we are confident we can thus improve performance in revenues also for the coming quarterlies -- quarters. Let's focus on costs. In 2021, we have the mergers by integration of the Caricento. And that, of course, widened our consolidation scope and also our costs. We are sure the -- with the full integration of Cassa di Cento, there will be synergies unfolded. And in the last quarter, we were asked to bear nonrecurring costs, EUR 10 million for personnel to optimize our head count and about EUR 5 million for the startup of new projects. And we are on Page 11. Please consider that, over the last few quarters, we managed to accelerate, speed up the integration process with the Cassa di Cento. And in the last quarter of 2021, we started new projects again. Net of all these one-offs, so to say, we still have a cost performance that is in line with the previous quarters. And as you saw before, we are still supporting a strong business growth that is leading to a revenue growth. Despite D&As and costs -- well, costs are still in line with expectation, we want to focus on a well-targeted investment policy focusing on digitalization. And also cost trends are in line with what I've just told you. Let's talk about volumes now. We still have loans growing at an excellent pace in all segments of our loan portfolios. Also, net of the assets we inherited from Caricento the 8% growth pace is well above the system average. And also short-term loans are recovering, almost 9% up year-on-year. If you compare the latest quarters, thanks to the fact that companies could access facilities made available by the government, they went for medium-term loans. And then also let me stress the excellent contribution of Avvera for consumer lending, which I am sure will still play a role also in 2022 to increase our NII. And then the EUR 4 billion growth we experienced in 2021 was not just driven by the government measures that are included in the other loan items but also thanks to an increase in loans; residential mortgages and leasing going up 13.4% and 6.8%, respectively. So thank -- I would like to thank our commercial network, our sales network that is still gaining market shares even in these very hard market conditions. Also, still staying on loans, let me tell you about the moratoria on state guaranteed loans, Page 13. As you can see, in January, the residual stock of moratoria is below EUR 100 million. And it's not having meaningful effect on the cost of risk. And that proves how the initial moratoria stock reflected the loan quality that is typical of our portfolio. And then in the last quarter of 2021, we went on playing our role in supporting the economy, still disbursing loans, state-backed loans, that went up to about EUR 3.5 billion. And then let me wrap up on loans showing you on Page 14 the excellent group overperformance, outperformance growing at 10x higher pace than that of the banking system. So also gaining new market shares, in 2021 up 2.11%, so doubling the 2010 levels. And I expect it to be even higher as soon as we get end-of-year December data, I mean. Let's now talk about inflows, deposits and inflows. Net inflows of assets under management and insurance have more than doubled versus last year, thanks to the excellent work of our product factories, distribution networks; and of course, the better performance of the market that channeled customer choices going for assets under management versus deposits. If you look at the values. There's a reverse trend: net inflows assets under management, EUR 1.3 billion, down -- sorry. Direct deposit inflows EUR 1.3 billion versus EUR 4.9 million in end of 2020. If you remember, 2020, our corporate clients, despite the moratoria strongly increased their cash positions. At the same time, we record a major development on our -- major growth on our stock. Assets under management are in excess of EUR 35 million (sic) [ EUR 35 billion ], 18% growth year-on-year, also thanks to the net origination that we've just seen and also thanks to market trends. Also growing our insurance reserves, up almost EUR 1 billion in the last year. All of these orders of magnitude will lead to an increase in revenues, thanks to insurance fees as well. Direct deposit, EUR 1.8 billion, it was cash [ assets ] from the Caricento. And that is indeed an opportunity to really foster investment and protection products so as to be able to further increase other economic items. Let's now talk about broad issuances and maturities. Although it's not part of 2021 transactions and deals, let me stress the first green issuance. It's a senior preferred green bond EUR 600 million, and it's consistent with MREL requirements. The framework we adopted enables us to be even more flexible in going for ESG facilities and instruments in our funding strategies. As to the issuances end of 2021, we paid back EUR 750 million of covered bond at maturity that we had replaced with a same-amount issuance in the first half of 2021. We look at market conditions and we look at our liquidity position. And therefore, we will also look into possible new issuances. At the end of this year, there could be the early redemption of a subordinated bond of about EUR 100 million. In -- let's talk about credit quality. We haven't witnessed any major inflows of nonperforming loans, so we keep on track. When it comes to reducing the NPL stock, they are down 5% on year and it's EUR 819 million. NPLs are declining because the numerator is reducing. We also made 2 small disposals. And at the beginning of the year, we are aiming to further reduce the impact of NPLs. And that happens, thanks to the excellent job performed to prevent them from being generated and also from having dedicated teams for every type of default. The overall net NPL is down EUR 40 million, per year. And we increased our coverage levels with a coverage of 74.4% on bad loans and 53.74% on total NPLs. If we look at the shortfall as well, the figure is at the top of the system, 86.4% on bad loans and 62.7% on total NPL, plus an extra level of coverage that is in line with both addendum and calendar provision requirements. Cost of risk, Page 20. The last couple of years were very important to analyze the effect the pandemic had on our LLPs. And we are quite happy with our asset quality. Cost of risk in 2021 was 10 basis points. And it's very close to our all-time lows and has a net -- well, net of a nonrecurring item of about EUR 6 million. And also thanks to the policies we adopted over the last quarter. Cost of risk for 2021 includes the -- what we recovered on the collective reporting, as we did at the end of H1 2021. We think cost of risk will be 20, 25 basis points, pre-pandemic levels, also given the uncertainty that is still hovering about when the government measures will come to an end. So assets and liabilities. You see the loans to customer increased in Q4. And then [ assets ]. Direct deposit [ assets ] went up, so our ECB stock went down. And due to banks -- decreased, thanks to the lower liquidity on the ECB account. And then institutional bonds decreased due to the maturity in October, et cetera. Liquidity indices, liquidity ratios, as you can see on Page 22, are always above minimum capital requirements. And therefore, it enables us to be -- to have greater flexibility in setting future funding strategies. Let me wrap up by focusing on consolidated capital ratios. As you see, we have a very sound and outstanding capital position. Our CET1 ratio still has a very meaningful level despite the merger with Cassa di Cento; and the increase in RWA that went up about EUR 2 billion in 2021; and a further increase of coverage, as I mentioned before, consistent with the addendum and calendar provisioning objectives. At Credemholding, the CET1 is -- stands at 13.7%. And we have a 614 bps buffer versus the SREP 2022. And then I can tell you that ratios include a proposal to increase the dividend payout from EUR 0.20 to EUR 0.30 per share. I think I can wrap up. Thank you for your attention, and please feel free to ask questions.

[Operator Instructions] And the first question comes from the line of Nicholas Binda with Intermonte.

I have 4 questions. One is about the net interest income. Could you elaborate or give us some color for 2022? There should be a lot of moving parts, the consolidation of Caricento, as you said; and the end of the TLTRO rates; softer rates. And then in Q1, net of performance fees, could this be a base of what you will be performing in 2022? Unrealized capital gains for your -- on your securities portfolio -- and then if you look, if we look at the bank consolidation, what's Credem's position in that or against -- in that scenario or against that backdrop?

Well, we expect 2022 to be consistent with 2021. Interest income should be 2%, 3% higher, whilst performance and management fees should improve to -- banking commissions should be growing 4%, 5%. And also we have the insurance business as well, with the objective of EUR 65 million within the year. These are the forecasts for 2022. And then commissions for the last quarter could act as a base, leaving performance fees aside, but they could represent a proxy for next year. I'll answer about the M&A, and then I'll leave the colleagues to answer the third question. Of course, and we proved that for Cassa di Cento, I must say that in the merger project and the merger deal we tried to somehow "industrialize" the process to benefit from other opportunities as well that we will be looking for in the market, but of course, you always know you need -- it needs two to tango. It needs two to make the deal. And so the growth by M&A is one of our objectives, but we still focus on growing organically as we did this year. And then the third question, I hand it over to Mr. Morlini.

As to the capital gain, unrealized capital gain. Our CET1 level, we have no particular gains because we have a quota of HTC securities that stabilize capital impact. From a management viewpoint, we took some benefit in the Q1, benefits stemming from disposals before the spike we have recently recorded on credit spreads.

Next question comes from the line of Giovanni Razzoli with Deutsche Bank.

I have 3 questions. First of all, I'd like to know whether you can -- we expect a 50 basis points increase in rates. Can you elaborate on that for -- well, going forward? This is a question we made in the past as well. Credem is the best group in Italy and also in Europe for asset quality, product factory, competitive position at least for quite a few years, but your payout is still very low. 30% is the lowest in Italy. Your competitors are 40%, so -- and they are well away from your standards. Shouldn't you probably make the shareholders aware of the results you've achieved; and the payout gap you still have versus other Italian or European banks, dividend payout, I mean? And then another, more, well, broader question: The way you present your group, I don't think you enhance enough the value of affluent and private segments. They are an excellence in the group. You did 300 million worth of profit with that. So the market is not really valuing these specific features you have, your product factories, et cetera. Is there a way for you to better enhance the value stemming from these segments giving to the group profit? Otherwise, you looked as a normal bank and those features do not stand out.

Thank you very much. As to the sensitivity, maybe Daniele Morlini can answer that.

Sensitivity is about EUR 50 million. It's 100 bps increase in -- with a 100 bps rate increase. You said 50. You assume 50, so half of that.

As to the dividend payout, let me take this opportunity to clarify things -- this is Mr. Gregori speaking, and the role of managers and shareholders. We're always fully aware of their roles. And I think this is one of the reasons why we are consistent, as you said, in providing results, in generating results. We have full respect of all the different segments and areas. The payout is decided upon by the Board of Directors. We make presentations. We present all opportunities as we always do, but of course, the payout policy is up to the Board of Directors to decide upon. We've always said that. And the different analysis that are run -- indeed there could be a reason for a different payout policy, but let me state that our role is to produce results, deliver on results, come up with proposals but then, of course, follow the decisions made by the Board of Directors. As to the affluent and private segments, I share what you are saying about enhancing the value of these segments. And maybe in the coming months, you -- or in the coming 6 years, you will see actions in that respect or along those lines. Daniele, would you like to complete the answer?

Yes. we take stock of what you said also for revenue diversification. We've tried to focus on that. And we are trying to come up with a reporting enhancing the role of the different business lines, how they contribute. But we still have to look at the time line so that we have data in time to present them at conference calls. But we take stock of your comment because this is something we are really aware of.

I agree with this. And we also took into account to assess strategic or core projects because our positioning, as you were saying, has historically set somehow, so it's all very well to try and benefit from that as well. Those are very important components, but that, of course, has to be looked at against the total framework of other business lines as well.

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

Congratulations for the results you achieved. And again a sensitivity-based -- sensitivity question, sensitivity of your common equity Tier 1 should the BTP-Bund spread widen. And then cost of risk, I was wondering whether in the guidance of 20 -- you gave for 20, 25 basis points you are including results from the collective results. Or do you still have provisions that are not yet -- that you made in 2020 and that have not yet been used? Costs. They were affected by a number of one-offs, so what is the run rate of costs that we can expect in 2022, considering that you keep investing, having new projects that you are investing in? And then the last question is about Avvera. The 2021 growth was particularly strong for consumer credit, consumer lending. What is the outlook for 2022 in that segment? And what is the Avvera contribution in 2021 on your interest income?

For first question, about the BTP-Bund spread and the impact on CET1, as I said before, it's quite low because the Italian part of the portfolio is HTC -- is accounted for as HTC. So we don't have any Italian govies accounted for as HTCS. So the impact on the portfolio is very limited. As to the cost of risk, 20, 25 basis points that we are mentioning, giving as a guidance, is a prudential level that takes into account and factors in a lot of components. We did not give a general guide -- we gave a general guidance. We did not go into details because it will all depend on how things will evolve and how economy will perform as well. We don't have any specific problems because our asset quality is very high. However, this is the guidance we gave ourselves without really going too much in detail above and beyond the objectives we mentioned. Costs. Let me say that, as for 2022, we think costs will be reduced versus 2021 of about 1% of total operating costs, but let me reiterate and say that, as we have a complex business model -- we rely on a complex business model, so we have to keep investing to keep up with digital evolution but also to keep growing. And then I'll answer about Avvera: Avvera is a new business line that call for CapEx for investments to really fully exploit our positioning, so we will keep investing. And that doesn't mean, however, that we won't be careful about keeping costs at bay, of governing costs, even -- on the contrary, we know very well we have to invest. Our model, our business model, is complex, so we have -- we are very careful with costs and expenses and charges. We want to spend well, not less. Of course, if we can spend less, we try and spend less, but we want to spend well. And digital investments are not just focusing on our relationship with our customers. They are also aimed at optimizing internal costs so that we can extract benefit from that. As to Avvera, we are very, very satisfied, very happy with their performance in 2021. And we are confident that also in 2022 they will do very well because it's a market segment that we want to grow. And Avvera is indeed a vehicle that we deem suitable to further develop the business, to further grow the business, taking into account also our risk appetite, which is the typical -- which would be the typical feature to look at. Did I answer everything?

Did you have the Avvera contribution to your interest income?

Just a second. No, it's -- we don't have it now, but we'll get back to you with it.

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

A couple of clarifications, if I may. After the sensitivity to the rate movements, this EUR 60 million that you disclosed for a parallel movement of 100 -- curve, rate curve, of 100 basis points.

Sorry. Could you speak louder?

On the long side of the curve, without the short parts of the curve. And then risk-weighted assets: There was a big expansion over the last time frame. Are there any expectations on your side? What can we expect for 2022? Will they go in line with the growth of the loan portfolio, or will there be other components that come into play? And as to costs, could you give me a clarification on restructuring costs that were accounted for in 2021? What part is contributed by Caricento? And what part instead -- or how much instead is tied in with projects that -- you mentioned projects, but I don't understand exactly what you're referring to. And are these costs completed, these restructuring costs? And when will they start generating -- when will we start seeing any synergies from the Caricento integration?

I start from the last question. The Caricento is -- on 2021 is EUR 22.5 million. That won't be there in 2022. And then the others are throughout the group. We can give you a more detailed answer if you need it. It's clear that we used the last few months of 2021 to commercially integrate Caricento. And we think that, starting from this quarter, we should be reaping the first benefits; and they will be growing as the integration will progress. And the operating and cultural integration will move on. And then Daniele Morlini will answer the other question.

As to that part of the curve, we don't have any specific detail, but we can check with -- if there's room to provide you with more data. And then RWA performance, we don't expect anything special. As a matter of fact, there should be some benefits to be reaped because Caricento volumes should get into the internal model. So we don't see any regulatory impacts of negative nature or -- and will add something positive, if ever. And the growth should be in-line. The RWA growth should be in line with the previous year.

But the benefit to be shifted into the internal model is a few hundred millions or lower RWA. Is that what you imply?

Should be around 15, 1-5, bps or basis points of a positive impact.

Next question comes from the line of Andrea Vercellone with BNP Exane.

A few questions. The first one is on capital. Did you make any estimates or -- as to Basel IV impact from here to 2025; and on the insurance side, IFRS 17 in 2023? Second question is -- have you made any assumptions on that? Second question is on costs. Could you elaborate again on what you said before? You said minus 1% in 2022. I can't get there with my calculation, so could you tell me what you are factoring in and out? And how many employees will leave the company after the actions you performed in the -- in Q4? And then the MREL requirement, the last question. To keep your MREL requirement in the coming years, are you going to issue only senior notes or senior nonpreferred? Or do you also need to issue Tier 2?

Starting from the last question. As to the MREL progress, we are already compliant with the requirements. And so basically we should be issuing senior. We don't have any subordination requirements. And that enables us to be more flexible, as it does not require any senior nonpreferred issuance or Tier 2 issuance. As to costs, this minus 1% is on a like-for-like basis. If we take operating costs included -- that is also one-offs, we expect that, accounting-wise, we should be closing at minus 1% year-on-year versus 2022. So on the one hand, you have the absence of recurring costs. And on the other hand, we keep pursuing our investment policies to support the group's growth.

And I asked a specific question -- well, you asked a specific question on personnel leaving the company. We do -- we, of course, have year-on-year opportunities, windows of opportunities to leave the company also for a generational shift because, of course, we want to renew generation, but we don't want an impact on our staff. So even with the Cassa di Cento deal, there are -- there's not much info on that -- I'm not -- there's not a lot that could have -- or an impact on the costs of the people leaving the company. We are aware of it. And we've been governing the phenomenon, the turnover with our personnel. And we share information with them. Your capital and the impact on Basel IV. On Basel IV, we have 2 items, a positive and a negative one; and they offset each other. One is to deal with weighting. And the data is 370, and it should go down to 270. And we should have an impact on operating risk. And as I said, these 2 items offset one another. We will see how the regulation will actually give details. Floor will be a different thing above and beyond having a much longer time frame. We will have to optimize loans and RWA to try and reduce their, fully, operating impact. And on the insurance side and IFRS 17, we've started a dedicated project for that. It's still early to have -- to see a special impact. Or it's a project we can give you an update on as we move through the year because right now we don't have anything to stress or disclose about it. There are no specific impacts to be disclosed.

Next question comes from the line of Luigi De Bellis with Equita SIM.

I have 4 questions. One is on the loan growth. What's your new production for 2022? And then on loans, could you tell us about your exposure to SMEs? And what industries are you most exposed to? And what are the dynamics you're seeing? And then you have more than 140,000 new customers. What was the churn rate in 2021? And what are your objectives for these new customers in 2022? A follow-up on M&As. Do you see any impact for you or the banking system from the BPER, Carige consolidation deal? And in the private universe, I want to -- do you want to grow your wealth management position through acquisitions?

As to the loan growth, we expect a 4% to 5% growth in 2022. The industries we are mainly exposed to, for corporates, it's less-critical industries. That's why our asset quality is much higher. For instance, we don't have a very high concentration in building and construction. Let me give you an example. Of course, we would have to drill down to a greater level of detail and I don't have the data here for all the industries, but I can tell you that, over the pandemic crisis, we've looked at the different industries to see how exposed we were to each of them. So I have the aggregated figures: manufacturing industry, 38%; services, printing industry, 24%; distribution, 23%; farming, agriculture, 5%; building and construction, 4%; transportation, 4%; energy, 1%; below 1% in steel and iron or mining industry. So that's just to give you a brief overview of how we are positioned in the different industries. And therefore, you can deduct the type of exposure we have to the risks that may be affecting us going forward. As to M&A. Well, look. I think that we will have to see whether or not the BPER, Carige deal will be completed, finalized, but I hope -- I think we all have to wish that it will for a number of factors. But it's clear that, as far as we are concerned, I don't think that deal will entail -- above and beyond us maybe in some regions or geographies where we are overlapping. There are not very many, in Sicily especially where Carige has branches where we also have a franchise. In other regions, we don't have or we have very little exposure, so I don't think there'll be major effect on us. As to our M&A policy, I'm not repeating what I said before. It's clear that, if we talk about M&As, we are not just looking at commercial banks. There could be opportunities to be seized in other areas. For instance, you mentioned private banking. I don't think that -- I hope you did not interpret my previous answer when I said, in the coming months, you will see our initiatives, because I was not referring to an M&A transaction, but we know that the market is active and we are active in the market. So we will try and seize any opportunity to increase value for the group, generate value for the group and leverage economies of scale that are good for us cost-wise because they also dilute the investments and reduce the type of investments we have to come up with. As to the customers, I can tell you that, over this year, in the course of this year, we have engaged in a cleaning exercise. If -- maybe cleaning is not the right word, but we've done a cleaning exercise on clients because over time we'd had positions with a number of clients that were -- that did not generate a lot of value. So the 2021 data are affected by that actions. We also -- we always want to grow our customers in number as well. We have a strategy. I don't recall offhand the actual figure, but it's around 20,000, 30,000 -- sorry, 2%, 3% of customers. So -- sorry. [ Mr. Gregori apologizes for the -- for not giving the exact figures. ]

Next question comes from the line of [indiscernible] with [indiscernible].

Something about the payout policy. May -- I missed out some of the questions. In the past, you had a mantra: not a fixed payout but a growing dividend year in, year out. Can we assume, the EUR 0.30 in 2021, we can use them as a base from now on? Or has something changed? It's clear that, if next year -- if we won't see the same performance and fees we had in Q4, maybe the payout will grow. Is your dividend policy still unchanged versus the past?

Well, our dividend policy, let me reiterate, is something the Board of Directors has to take care of. It's not up to us to define it. It's clear that the growth we experienced from last year to this year -- and the fact that, in 2019, we could not pay out dividends. I -- even though we -- it was an interesting year result-wise. So we did not decide anything. We haven't changed our payout policy for the future, but year in, year out, we take stock of the situation around us. This is our mindset. This is our approach. We'll see if something changes going forward, but for sure, EUR 0.30 per share is a meaningful step and it's also a drive to do better result-wise as well.

Next question is a follow-up with Riccardo Rovere, Mediobanca.

Going back to what Mr. Vercellone, if I'm not mistaken, was asking. Given the fact -- given what you've said so far, capital optimization -- [Sorry, but the sound is not very clear.]

We don't have any specific comment to make on this. The buffer -- they were talking about the buffer versus the requirements. So it's a very wide buffer. And so the dividend policy was something that is not necessarily tied in with AT1 issuances and capital strategy. So it's not something that's under our radar so far.

[Operator Instructions] Mr. Gregori, there are no more questions at the time in the queue.

Very well. I would like to thank all of you for joining this conference call. My best wishes to all of you. And see you on the next conference call. Goodbye.

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