Intesa Sanpaolo S.p.A. ($ISP)

Good afternoon, ladies and gentlemen, and welcome to the conference call of Intesa Sanpaolo for the presentation of the first quarter 2026 results hosted today by Mr. Carlo Messina, Chief Executive Officer. My name is Razia, and I will be your coordinator for today's conference. [Operator Instructions] This conference is being recorded. At this time, I'd like to turn the conference over to Mr. Carlo Messina, CEO. Sir, you may begin.

Welcome to our first quarter 2026 results conference call. This is Carlo Messina, Chief Executive Officer; and I'm here with Luca Bocca, our CFO; and Marco Delfrate and Andrea Tamagnini, Investor Relations Officers. Before we begin, I would like to state that suddenly, yesterday night, my mother passed away and so today, I will open this call with a very brief introduction and then Luca will go through the presentation of our results. So you will help me in making the presentation, why we will manage the question and answer together, and I will be at your disposal for all the strategic questions. Let me underline in any case that we just delivered our best ever quarterly net income at EUR 2.8 billion with an annualized return on equity of 21% and earnings per share up 8% on a yearly basis. These are excellent results confirming we are well on track to deliver EUR 10 billion net income this year. And in any case, we are not used to change our guidance in the first quarter of any kind of year. So in my opinion, to change guidance starting from the first quarter is not the right way to manage an organization. Execution, then I will elaborate on what we have as a driver that can allow us to have a very good performance also in the next quarters. Execution of our new business plan is already proceeding at full speed, and we are navigating the current market volatility from a position of strength thanks to our top-notch asset quality and our resilient and well-diversified business model. In the first 3 months, we delivered high quality and increased revenues supported by record commissions and best-ever insurance income. Net interest income can be the real surprise for 2026. We reduced costs, and we will continue to reduce cost, and we confirm our strong capital generation capabilities. Intesa Sanpaolo offers one of the highest dividend yields in European banking. In this year, we will return around EUR 9.4 billion, taking into account the main dividend, the November interim dividend and EUR 2.3 billion buyback to be launched in July. I'm proud of our results and thank our people for their excellent contribution. So let me underline that our strong profitability allows us to maintain a world-class position in social impact. I will now hand over to Luca, and thank you for your understanding.

Thank you, Carlo. We are all very sorry for your loss. And now let's start with Slide 1 for the key achievements of the quarter. In the first 3 months, we delivered record high profitability with the lowest ever cost-income ratio, excellent asset quality, rock solid capital position and is sustainable and increasing value creation and distribution. Please turn to Slide 2. In this slide, you can see the impressive and consistent growth in net income that has almost doubled in 5 years. Slide #3. In the first 3 months, we delivered a strong increase in EPS, DPS and tangible book value per share. In 2 weeks, we will pay the final dividend for 2025, which is 11% higher than last year. Please turn to Slide 4. As said before, thanks to this excellent start to the year, we are in a comfortable position to deliver EUR 10 billion net income in 2026 despite market volatility. Slide #5. Our excellent profitability allows us to benefit all our stakeholders and strongly support the fight against properties and in qualities. Please turn to Slide 6. In February, we presented our new business plan based on 3 pillars: one, cost reduction, benefiting from tech investments already deployed; two, conservative revenue growth, thanks to group synergies and additional people to strengthen our wealth management protection and advisory leadership; and three, low cost of risk driven by our 0 NPL bank status with bad loans near 0. The plan is proceeding at full speed. And in the appendix, you have an update of the most significant initiatives underway. Now let's move to Slide 8 for a closer look at our first quarter results. In a nutshell, in Q1, net income was up 6% year-on-year. We delivered the best quarter ever for revenues, operating margin and gross income. Costs were down and asset quality remained top notch with increased coverage and stable overlays. Please turn to Slide 9. In this slide, you have the detailed P&L for the quarter, showing improved results in almost all the lines on both quarterly and yearly basis. Let me underline that the tax rate is almost 3 percentage points higher than last year, mainly due to Italy's budget law. Slide #10. In Q1, revenues were up both quarterly and yearly. As usual, we manage our revenues in an integrated manner with higher profits from financial assets deducted as a natural hedge against the impact of market volatility. Please turn to Slide 11. This slide provides more detail on net interest income that was up year-on-year despite the strong reduction in Euribor. Net interest income also increased on a quarterly basis. when considering the fewer days in Q1. Let me highlight that loans to customers grew 3% yearly and 1% quarterly. Please now turn to Slide 12. Our wealth management and protection machine continued to deliver strong results. In fact, this was the best Q1 ever for commissions and the best quarter ever for insurance income. Asset under management gross inflows were up despite market volatility. Please turn to Slide 13. In Q1, commissions were up 3% yearly with 4% growth in wealth management and protection. The quarterly decline was due to performance fees and seasonality and commissions from commercial banking activities. Our top-notch advisory services are a stabilizer for the impact of market volatility on fees with 13% growth year-on-year in related additional commissions. Our fully owned product factories are a clear competitive advantage. Let me add that April was another good month for assets under management inflows. Slide 14. Non-Motor P&C was a driver of insurance income growth, and we still have significant upside potential. Please turn to Slide 15 now. Customer financial assets were up EUR 64 billion on a yearly basis to more than EUR 1.4 trillion. The quarterly decline was due to negative market performance. Please turn to Slide 16. We can counter on our unmatched client advisory network with 19,000 people dedicated to selling assets under management growth, reaching 22,500 people in 3 years. In Q1, we already added about 350 people and in the past 12 months, we have increased our global advisory network by almost 900 people. Slide 17. The contribution from commissions and insurance income to revenue is by far the highest in Europe after UBS. Slide 18. The cost/income ratio was lower than 36% in Q1, also thanks to our tech investment that are clearly paying off. Please turn to Slide 19. Operating costs were down 1% compared to last year. And in 12 months, we have a headcount reduction of over 1,900 people. Now turning to Slide 20. We have high flexibility to reduce cost further, thanks to our tech transformation. A significant portion of our workforce is approaching retirement. And we had 1,400 exits, and we hired 500 young people. By 2029, we will have more than 12,000 exits at no social cost while hiring more than 6,000 young people in Italy, mostly global adviser, with skill aligned to evolving business needs. This will enable EUR 570 million in cost savings at a rate with no impact on revenues. Slide 21. As you can see from this slide, we have a best-in-class cost income ratio in Europe. Let's move to Slide 22 for a look at our top-notch asset quality. Our annualized cost of risk was 16 basis points, with a strong increase in coverage and other laser release, and we see no signs of asset quality deterioration. Turning to Slide 23. We have a very low NPL stock with only EUR 3.9 billion net NPL and bad loans reset to near 0. NPL inflows were at historical lows, and we have a well-diversified loan portfolio with no material exposure to private credit. Let's move to Slide 24 for an update on capital. After having accrued EUR 2.6 billion for distribution in Q1, the common equity ratio was above 13%. In Q1, we had an impact of about 15 basis points from the valuation of reserves due to market volatility, 10 basis points were already recovered in April. The common equity ratio was 13.9%, including the benefit from DPA absorption. Please turn to Slide 25. We have best-in-class MREL ratio and the liquidity ratios are well above our business plan targets. Let's now move to Slide 27 to see how well equipped ISP is to succeed in any scenario. Our profitability and capital position remains strong, even under adverse conditions as shown in the EBA stress test, we have a very resilient and efficient business model with $5.7 billion investments in tech or already deployed. These are a key enabler for further efficiency gains and to win against the fintechs. Our net NPS stock is very low, we can count on a high-quality loan origination, and we have EUR 900 million in overlays. Last but not least, the management team has a strong track record in delivering results. Please turn to Slide 28. Intesa Sanpaolo stands out across key metrics and is better positioned than our peers to face any future challenge. Please turn to Slide 29. In this slide, you can appreciate our unique positioning, thanks to our efficient commission-driven business model supported by strong tech investments. Slide 30. As previously said, our NPS stock ratios are among the best in Europe. Slide 31. As you can see, we are also very well positioned in terms of Stage 2 that further declined in Q1. Please turn to Slide 32. Our NPL coverage is also among the best in Europe. Slide 33. Our Russia exposure is also close to 0. Please turn now to the next slide for a few words on the macro picture. The Italian economy remains resilient and we expect Italian GDP to grow this year and next. Please turn now to Slide 35. In this slide that you already know, but is very important you can see that Italian companies are now in a stronger position and more resilient to external shocks than in the past. Their debt-to-equity ratio has increased over time and their liquidity buffer are at all-time highs. Turn now to Slide 37. This slide offers a recap of our best-ever quarter and the reason why we are fully equipped to succeed in the future. To finish, please turn to Slide 38 for the outlook. For 2026, we are in a comfortable position to deliver a net income of EUR 10 billion. This performance reflects the strength of our business model with strong potential for growth. As always, we will continue to manage our revenues in an integrated manner, maintaining a strong focus on cost, asset quality and the sustainability of our results. We combine high-quality revenues, cost control, strong investment for growth, high capital generation and a very lower risk profile, making us 1 of the most resilient banks in Europe. We remain focused on delivering strong short-term results while continuing to invest for sustainable long-term value creation. That is why we are delivering 1 of the highest dividend yields in European banking, while maintaining solid capital and continue to lead on value creation and distribution and social impact. Thank you for your attention. We can now open the Q&A session.

[Operator Instructions] And the question comes from the line of Antonio Reale from Bank of America.

Antonio from Bank of America. My sincere condolences to Carlo and your entire family, I'm very sorry to hear about the loss. I had a question on strategy, but I'll stick to questions for Luca. -- perhaps, so 1 on NII and 1 on costs. The first 1 is on your hedge portfolio. This quarter, you've added another EUR 10 billion or so to your hedging book. And every year, you have about EUR 30 billion of this maturing and these are broadly reinvested at sort of an interest rate on the front side of about 2.8%, 2.9%. which is a big tailwind to NII. You have a relatively low duration lower than your peers of 4 years. So my question is why are we not seeing a little bit more support to your NII. Maybe you can share how much the hedges contributed this quarter? And more importantly, why you're not increasing your guidance -- are there any other bits of the swap that is eroding some of this benefit? So that would be my first question. My second question is you're guiding for stable costs and by all means that comes with a lot of discipline when we account for inflation, IT investments but you've built quite a lot of buffers going into the business plan in the last quarter. So I wonder to what extent you'd be able to do sort of better than stable cost. So if you can elaborate a little bit more on this point.

Thank you, Antonio. We'll go to the 2 questions. On -- if you look at the trajectory year-on-year of the Q1 result compared to last year, we have more than 60 basis points decline in Euribor. So the contribution is really positive and the fact that we decreased only by EUR 100 million, the spread component is totally related to the hedge contribution that, as we have said at the beginning of the year, and we can confirm we'll give year-on-year EUR 500 million of positive contribution in the 2026 due to the increase of the last part of the curve, a positive contribution of EUR 500 million also in 2027 and then continue to give EUR 200 million, EUR 300 million contribution positive '28, '29. So it's clear that we are in a comfortable position to increase NII this year compared to 2025. And remember that our estimate are done with stable Euribor. So at the moment, we are looking forward rates that are above this level. So we have upside potential. On cost, we said that we want to be very prudent in estimate as usual, saying that the cost can remain stable this year. Of course, the starting point of the year is better than expectation. So probably we can do better on cost. It's clear that as Carlos said, we are at the beginning of the year. The scenario is very fluid. So we prefer to not change all the different lines of the guidance, but the result of first quarter on operative point of view are better.

And the question comes from the line of Delphine Lee from JPMorgan.

So -- and my sincere condolences as well to Carlo and his family and sorry for the loss. So the first question is just to understand a little bit sort of the trend so far, are you still seeing some impact of the current environment, the macro uncertainties situation in the Middle East in terms of like loan demand and has that impacted your inflows into wealth management? I mean, fees and commissions have grown at a decent pace in Q1, but just wondering how that pace is changing because of that. And my second question is on Generali. Sorry to ask about this, but the press keeps talking about mentioning Intesa, I know you've looked at it obviously in the past, but maybe could you just remind the market a little bit sort of what your thoughts were at the time and right now? And sort of your approach to this topic.

So I will answer to these questions because I think that my presence here today is just to talk about Generali. So I was sure that you were interested in making this question, and so that's the reason why I'm here today. So the point in Generali is always the same. We have a business model that is based on wealth management and protection. But we have also market share in Italy that can prevent us to make any kind of transaction in the banking sector and insurance sector because we have significant problem from an antitrust situation. So I think that today, Generali has in the last 2 years, a number of shareholders that are always the same, just with some change in the percentage that voted in the same way in the shareholder meetings because [indiscernible] UniCredit and Caltagirone had the same approach on the organization that was against the current management team. So I think that this point on Generali is a matter that has to be considered by different counterparties by different from Intesa Sanpaulo. So again, I can just point out that antitrust is a clear point for us that can prevent for make any kind of acquisition. On the point on impact on macro uncertainty and other trends, one other point that suggests me that to change the outlook in the first quarter is something that is not conservative also if you have very good results is because when you have uncertainty, it's much better to stay at your original forecast than to change just for the sake of increasing your currency because you have to make some extraordinary transaction. So my perception is that today, the situation in Italy is totally under control. So also with the kind of implication that we see from the conflict that can reduce the growth of the Italian GDP, but we do not see any kind of significant threats on the asset quality of our group. And we made a good job in reducing nonperforming loans just last year. So we are more than prepared to any kind of negative scenario. But today, this is not what we are considering. At the same time, also on fee and commissions, the starting point of the year has been very positive. So also in April, we continue to have a very positive trend and also the attitude of the clients to be more in favor of maintaining a good attitude towards wealth management is very positive. I have to add also in any case that we will consider with attention also the trend of the current accounts in the next quarters because -- and that's the reason why I think that the underlying trend of the organization are much, much better than what we have considered in making the forecast for the outlook in net interest income. As Luca said in the previous answer the forecast is based on Euribor that is below 2%. So all the -- what -- I'm pretty sure that we lean that will have to increase the interest rate will bring positive to our figures, but within the framework of an increase of 50 basis points. We will continue to have a very positive trend in fee and commissions but accelerating conversion of assets under administration and maintaining the current accounts because this will bring us a significant markdown contribution. That is what we are considering in the new target that we are giving to the people within the organization.

We are now going to proceed with our next question. And the question comes from the line of Ignacio Ulargui Lopez from BNP Paribas.

My sincere condolences to Carlo to you and your family. I have 2 questions. The first 1 is on loan growth, which we have seen a bit of an acceleration in the quarter. There was a very strong growth in the Corporate and Investment Banking business, but also there was an improvement in Banca territory I just wanted to get a bit of your thoughts on how should we see the acceleration with sectors you are prioritizing? And what should we expect going forward in terms of loan growth? And the second one is on insurance revenues. Iit has been a record quarter. How should we expect the non-motor part, the kind of the non-life and the life business performing into the year?

Thank you, Ignacio. I will go through the answer on long growth. Yes, you are right. We are satisfied of the loan growth, especially because derives from the corporate sector that is the one that lagged behind in the previous quarters, the strongest performance is made by the company that are linked to foreign environment in the corporate investment banking division, in infrastructure, in energy transition, all related to a GDP that is going above the level of Italy. So this is the main contributor, and we expect also for the future that this trend can continue and we can reach the target that we set in the business plan of a loan growth between 3%, 4% for the year. So this is our estimate at the moment. For what concerns insurance, you are right, again, the performance is leaded by the Property & Casualty, even if the performance in life insurance is very solid and is still recovering from the previous quarters. So the contribution of insurance can be very solid in mid-single digit for the year and the target for property and casualty, you know that we have more or less EUR 800 million starting from 2025 as contribution for sure, we can increase this target with the pace that we have forecasted during the business plan. So this is more or less the ambitious that we have.

We are now going to proceed with our next question. And the questions come from the line of Marco Nicolai from Jefferies.

First of all, I will join the colleagues in extending my condolences to Carlo and his family. I had a couple of questions on today's results. First of all, it's a follow-up on the commission income. So this quarter, you grew by 3% year-on-year. I think you were guiding for a CAGR of 4% in the business plan. So shall we expect that the pace is going to pick up again in the following quarters, perhaps after the volatility that we saw in the market in the first quarter is digested, so -- and then also, I have another question on fees. If I look at the commercial banking fees, so last year, this pool of commission actually contributed negatively on the year-on-year growth. But in 4Q '25 and the first quarter '26, we saw a little bit of a pickup in this. So do you expect this commission pool to actually bring a positive contribution to the growth this year? And perhaps also a follow-up on NII. Can you just remember as your rate sensitivity, if I'm not wrong, that's usually based on a 12-month horizon. But can you also give us a sensitivity or at least an idea on a 24, 36 months sensitivity to rates to higher rates?

So on sensitivity, Luca will give you the answer. On the first point on commissions, I want to elaborate because this point is very important for us. We think that we can continue this trend with an acceleration in terms of fee related to wealth management and protection. But at the same time, the real driver that in our expectation, will recover in the next quarter will be the area of commercial banking and commissions related with corporate lending because still after the growth and the starting point of the growth of the lending book, we are not seeing for the time being, evidence of these increasing commissions that will start from the second quarter of this year. But let me add that on fee commission, just to give you a point on the strategy and the strong correlation with the current account. As I told you, we will monitor also the dynamic of the Euribor because we think that in our trend of increase of customer financial assets, we will give also a particular attention of the growth of the current account because we think that our net interest income, we will have a very positive dynamic and also much higher than the analytical sensitivity that Luca will explain now to you.

Okay. I will start with the sensitivity at 12 months that I remember is a sensitivity made on a static balance sheet according to an increase of the rates versus the rates that are implied in the forward curve that is EUR 200 million or 50 basis points. But if we consider the sensitivity, the managerial sensitivity. So considering the evolution of the balance sheet on a real projection, I can say, the sensitivity is EUR 300 million for 50 basis points. And this is the sensitivity, of course, that means that if you have a movement on the Euribor moving from 2% to 2.5%, you will count in the net interest income for the quarter. Looking at a more longer sensitivity is something that can generate a more higher level of benefit. At the moment, I can say that if we use a forward rate for the NII at 2029, we can have EUR 500 million more contribution, but is, of course, something that is theoretical. The important aspect is that in 12 months based on managerial number, if we have 50 basis point increase, we can have EUR 300 million more contribution in NII.

Sorry, follow-up. The EUR 500 million you mentioned, is this still accelerate to 50 bps?

Yes, 50 bps on a long-term perspective, so between '28 and '29.

We are now going to proceed with our next question. And the questions come from the line of Noemi Peruch from Morgan Stanley. .

My sincere condolences as well. I have 2 questions. So 1 is on your market share evolution in Italy. If I look back in the past 2 years. This has been going down slightly between 1 and 2 percentage points. And I was wondering what is behind that? Do you see the market growing perhaps in segment that you don't like the margin on the asset quality over? And do you see this trend stabilizing or inverting perhaps? And the second question is on fees. -- at the moment in Q1, the growth pace is 3%. Do you expect a more optimistic outlook for the remaining of the year? And -- on this, we have seen asset gross AUM inflows flat Q-on-Q and up year-on-year. And I was wondering -- what do you see in terms of margins and on upfront fees.

Okay, Noemi. Our market share evolution, the situation is stabilizing. I want to start from this point. Of course, we have already spoken about this in previous meetings. The competition during the last 2 years, was very important, especially in the loan book arena. So in this respect, we prefer to maintain the right price on the loan and not enter in a battle for volume. And now the situation is stabilizing also because we think that our competitors are involved in integration and in external operation that permit us to maintain market share stable on deposit, as Carlos said, it's become a strategic asset for us in the environment. And so we continue to maintain a very stable market share in the deposit and current account that is the most important part for us. So we do not follow competition for having a corporate deposit with a margin of 0.01%. So this is the point. Instead, on fee. Fee, we have not registered the impact of the decline in the yield that we put in the business plan on medium, long term for having prudence on this. In the first quarter, the return on the asset is stable. Don't forget that during March, we have had a very important impact in the valuation of assets under management and assets under administration that has been totally recovered at the moment already in April and is continuing in May. So I can assume that we can recover the trajectory and in line with our business plan for the last part of the year.

We are now going to proceed with our next question. And the questions come from Sofie Peterzens from Goldman Sachs.

Here is Sofie from Goldman Sachs as well, very sorry to hear. My first question would be on your provisions. You guide for a significant decrease in provisions you have EUR 900 million over days. How should we think about this provision really or provision decrease over 2026 and 2027. And -- and do you consider releasing some of the overlays. And then the second question would be on capital. How should we think about potential SRTs? And do you see any capital headwinds or tailwinds on the horizon. .

No. On provisions, we are not expecting of release any kind of overlays not in 2026 and not in 2027. In the guidance, this is an important point. We put a cost of risk in line with the business plan, so between 25 and 30 basis points. We have currently run the bank at 16 basis points. So we have room to absorb eventual spike in the next quarter. And of course, over laser will be utilized only in case of a massive deterioration of the scenario, but at the moment, also in April, the inflows and net inflows of NPL are very, very limited. So we are continuing to do very well in the new credit disbursement. In SRT at the moment, we have a benefit in the common equity Tier 1 ratio that is 60 basis points stable compared to the last part of 2025. We are working to continue to increase the size of SRT. At the moment, the costs are in line with our expectation and with the previous years. I want only to remember that we have the cost of SRT in commission that is an accounting treatment, but it's important to you to remember that we have this kind of operation -- the cost of this kind of operation in commissions. Not any kind of headwinds in the future, remembering that we have tailwinds of DTAs because with such profitability high, we can absorb the 80 bps quite easily that we still have as a deduction of common equity to wait.

We are now going to proceed with our next question. And the questions come from the line of Pablo de la Torre Cuevas from RBC Capital Markets. .

I'm deeply sorry to hear about your loss, Carlo. I just had a couple of follow-ups. The first one being on the hedge. I just wanted to check if you can disclose what are your current expectations for the growth in the size of the hedge going forward to 2029. The second one was just a quick follow-up on cost of risk. It seems like you've reconfirmed that you see the normalized level there. at 25 to 30 basis points. I just wanted to check if that includes the usual managerial actions at the end of each year. And also, it would be useful just to get some sort of sensitivity around what would that level be in a significantly more challenging macro environment, including a recession in Italy?

No. At the edge, we are not planning to increase the size of hedging because we maintain in our projection, EUR 170 billion, then it's clear that increasing the level of deposit, this is a very prudent assumptions. So as we have done this year, increasing by EUR 10 billion, the total volume under the hedge program can be that in the future, we can increase. But the estimate that we are providing are done with a stable EUR 170 billion of deposit hedged. And the contribution, just to be very, very clear, is EUR 500 million in '26 and '27, so more contribution of EUR 1 billion in 2 years. and then EUR 300 million in '28 and EUR 250 million in '29. So these are the number of hedge. And of course, as I said before, -- the target for the year is 25 or 30 basis points in cost of risk and include possible managerial action because, as I said before, -- we are running the bank between 16 and 20 basis points. So we maintain some room of prudence. According to sensitivity, it's clear that a deeper recession can change the number. But taking into consideration that we have basically 0 stock. So compared to the past, it's difficult to imagine a big increase in cost of risk the important aspect that is, at the moment, we are looking at GDP growth for Italy between 0.3%, 0.4%. And even if the situation can deteriorate, we do not expect a recession during 2026. So on cost of risk, we are very, very comfortable.

We are now going to proceed with our next question. And the questions come from the line of Andrea Lisi from Equita.

First of all, condolences to Carlo for your loss. Well, my question was on trading that provides a stronger contribution in the first quarter. If you can update us on your strategy in the management of the portfolio now it relates with the evolution of NII. So can we assume that the bulk of trading income in the current call depending on market condition, but assuming conditions stabilizing, has mineralized in this quarter. The other questions were related to capital dynamics. So if there is something that should be -- if you can update us on the capital evolution. So what should we expect for this year? And lastly, if you can give us an indication of the final tax rate should we expect for 2026. .

So Andrea, trading, we manage the revenue in an integrated manner. So it's difficult to give a specific guidance of trading. For sure, we are looking at a normalization of trading compared to the year 2022, 2023, we can increase the level of trading compared to 2025. How much it will depend also on NII and on the contribution that we can have by an increase in rate that, as Carlos said, is the more probable scenario now that is not included in our numbers. So I think that we have started very well the year. So we are in a comfortable position. We have a government bond portfolio that is higher than last year, so it's giving contribution to NII, and we have some recovery in the fair value of the position in April and in May. So very solid performance in trading also for the next quarter. But again, it's important to look at our revenue in an integrated way. Capital dynamic, we have a target above 13% for the business plan and we can confirm that we will remain above this level and above the level of today because -- of today of the presentation because we have had this impact of 15 basis points that has been a recovery in April and is continued also in this week. So the level of capital will be above 13%, in line with our estimate that we provided with the business plan. And tax rate, the level we have been very clear at the end of the 2025 giving the update, the level that we have registered 2.5% more or less increase in tax rate can be something that can arrive also on the year and, of course, we have EUR 1 trillion of assets. So we can try also to find some lever to optimize. But at the moment in the guidance, there is the increase of 2.5% in tax rate.

We are now going to proceed with our next question. And the questions come from the line of Andrea Filtri from Mediobanca.

First of all, Carlos, deep condolences for your loss. I have questions. I'll start with the first on loan growth. Mainly comes from the CIB, the loan growth you have shown in Q1. If you could provide us more granularity on the composition of the loan growth you are seeing, what sectors are accelerating your expectations going forward, given Carlo's comment on an expected pickup from Q2 in corporate lending fees. The second is on any compromise squared in case of acquisition of a significant stake in an insurance company, could you confirm you will be able to adopt the Danish Compromise squared regulatory treatment to the stake specifically? And finally, on regulation, and there is much talk about Europe on the front foot to review potentially improve the regulatory framework. Are you seeing any potential improvements? Is anything moving from your viewpoint?

No. On loan growth, Andrea, you are right. As I said before, the corporate investment banking will be the key driver, not only in first quarter, but also continuing positively in the second quarter. As I said, more or less 50% of the new disbursements are made by international clients. So these are the ones that can benefit for a more higher growth in terms of GDP in the world compared to Italy. So we can continue to have benefit on this side. There is also another important asset that you do not see increase of stock or big increase of stock in Banca the territory as in corporate investment banking, but this is related also a substitution of the previous COVID loans that now are expiring, substituting by normal, I can say, normal loans. And so the stock is remaining stable, but the markup is increasing. So in terms of new disbursement of medium, long-term loans, also banked territory and the SME sector specifically is doing a very good job. On commission, of course, it's clear that we have had March that has been impacted by the very difficult situation. So some pipeline has been moved in April and in general, in the second quarter. So we can expect a pickup in the second quarter structure field related to loans. I leave it to Carlo for consideration on the Danish Compromise.

So first of all, on regulatory framework, we do not see any kind of improvement. So I don't think that we can have some visible improvement in the next quarters and for my understanding also in the next years because there is a clear difference in attitude from politicians and supervisors. So my expectation is that it is difficult that can be -- that we can have some improvement like system. Talking about the Danish Compromise square and talking about the insurance business, obviously, if you remain in the insurance business environment, my expectation is that in case of an acquisition of an insurance company, the Danish Compromise can be considered something not difficult to be confirmed by the supervisors. So just to make it in a clear word if Intesa Sanpaolo should make something in the insurance as my expectation is that we can have the confirmation of our Danish Compromise. This is based on the fact that we have a significant dimension in our insurance business. And at the same time, it is really unbelievable that if you make a significant acquisition in something that can diversify your business model, you can be treated like nonperforming loans because if you consider the complete reduction of a participation, insurance business is equivalent to have nonperforming loans in your asset book. So this is crazy. And it is obvious that -- the most important part of the story is that you should have the governance and the risk control that is able to function as a complete group and not obviously maintaining as a separate entity. But in my perception, also your analysis that reading different paper on the benefit that can derive from the Danish Compromise square are absolutely likely and there also something that it is reasonable because when you make a diversification, it is crazy to consider that you are making an acquisition of the nonperforming loans or also with the Danish Compromise, you will remain with a risk weighting that is much higher than a credit. So also in this case, the Danish Compromise, if you make a good acquisition in insurance business can create significant capital. The real point is that an acquisition from a bank in comparison with an insurance as a significant earnings per share problem. So if you consider this, you can have benefit in terms of capital, but you can lose in terms of earnings per share. Having said that, this is theoretical, I can confirm that we have antitrust problem to make the acquisition of Generali.

We are now going to proceed with our next question. And the questions come from the line of Britta Schmidt from [indiscernible]. .

Yes. First, let me really condolences to Carlo. Just 2 quick follow-ups. On the valuation movements this quarter, -- can you give us a little bit of an insight into what was -- what caused the movements there? And maybe also update us on some of the sensitivities to credit spreads or valuations. And then secondly, what sort of cost for certificates do you expect to book this year in the trading income? And how should we expect that to move or reprice potentially with changes in rates.

Now I want to start with the second one. The cost of certificates is in line with the level of 2025 because we are assuming that the Euribor remains stable. As I said before, in the NII, we have set this prudent approach, and this is the reason why also on cost of certificates remain stable. Of course, if we will have an increase in Euribor, we can have a small impact in trading, but definitely higher impact positive in NII. So net-net is positive. On sensitivity of the impact of valuation reserve. First of all, again, we have an impact of 15 basis points because basically, all the government bonds, not only the Italian one, have had an impact on the different -- on the credit spread. So you can use the actual number to have sensitivity looking what happened in the month of March and the impact has been 15 basis points. So is the best way to have a sensitivity on our number. Just to remember that we have recovered 10 basis points in April and looking the number of today we have the other 5 basis point recovery. So all in all, at the moment, we have resolved all the impact of the alone.

We are now going to proceed with our next question. And the questions come from the rand of Giovanni Razzoli from Deutsche Bank.

My confidence is also to Mr. Messina and hi sfamily for the loss. On the questions, 2 very quick ones, please. The first one is on the deposits because it seems to me that Intesa so far is the best performing bank in terms of deposit growth or 1 of the best one in Italy with or 4%. We have seen that most of it was in the corporate segment. But you said that your strategy does not envisage clearly to enter into competition for money or temporary deposits. I was wondering, so if going forward for the rest of the year, we shall assume that this deposit base will be maintained and progressively increase as you also plan to expand your reach into the bank are territory as per the business plan. So that's my first question. And the second question, if you can remind us what is the time line for the 80 basis points of [indiscernible] I would say, 20, 30 basis points per year over the next 3, 4 years is a reasonable assumption.

Yes. The assumption of DTA is correct. This year, we can have 25, 30 basis points. It depends, of course, on the net profitability. But -- for sure, we will absorb the 80 bps during the next 3 years. So this is on capital. And on deposits, I can say that the start of the year is very positive on all the different part. Of course, the lion part is made by our household current account where the cost is 0. And so this is the target that we want to achieve on the other sector, we will follow the trend of the market, remembering that the Italian quality of the -- quality of the Italian corporate semi is increasing and they are very liquid as we've shown in the presentation. So basically, we can have some benefit also in the trend of deposit for corporate sector without paying too much money for maintaining them. So this is the answer.

We are now going to take the last question. And the last questions come from Ignacio Cerezo from UBS.

Obviously, extending my condolences to Carlo and his family as well. On the question -- first one is on it looks like the kind of messaging from you is reasonably optimistic on things like hedge volumes, but you haven't really changed your NII guidance for the year being higher basically than 2025. So just basically asking if you can be slightly more precise around how much higher basically than last year concerns or is a plus 2. So just having getting some color beyond actually, if you can in terms of how much higher you can have. And related to this, if there is any negative we need to think about actually in terms of the net interest income progression through the year? And then the second question is on the EUR 421 million of dividend and placement of securities fees, the upfront components. If you can at least give some color on how that number is split between the different products and how sustainable that number is into coming quarters.

On NII, I think that we have given details, but I want to be more clear again. It's clear that we have assumed to have increased in the region that we have said during the business plan, so 2%, 3% with stable rates. It's clear that 50 basis points can give us EUR 300 million more. So this is the best situation to calculate how NII can be, of course, during Q2 after 6 months we can give an update on the guidance also for NII for the end of the year, we can say that we can do better than 2025 in a discrete way. So in a very important way, not more at the moment, but will be higher than our expectation. This is for sure. And can you repeat the second question because it is on commission, but I didn't catch the specific question.

Yes. The question was around the upfront component basically of the market fees, EUR 421 million. I think you call it dealing and placement of securities. If you can split that number between different products, and if you can let us know how sustainable you think that number is -- has grown actually versus Q4 and it has grown as well versus Q1 last year. I think is the highest number in this year.

I think that we can provide detail with our investor relations team in a follow-up. Of course, the placement -- I can say that the placement of securities is very positive because, as Carlos said, we have been able to maintain our ability to have gross inflows during this quarter. Remember that 1 month has been high impact by the situation in Middle East. So I think that the placement, the commission deriving from the placement of security is totally sustainable and represent only a portion of our commission base that part has been impacted instead in the recurring fee during the month of March. So I think that the largest part of our commission base can be higher during second quarter due to the recovery in asset under management and asset administration stock. Generally in placement of securities, we have certificates third-parties bond and mutual fund and so it's a typical activity that our Banca de territory and Wealth Management division will continue to do so are completely sustainable for the future.

This is the end of the question-and-answer session. I will now hand back to the management team for closing remarks.

So first of all, thank you very much for your condolences. I much appreciated your condolences. What I want just to focus at the end of the presentation is just an executive summary of our expectation for 2026, so that you can have clear lever that we are using within the organization. So on net interest income, our expectation is that the macro environment will give us a significant further contribution. And in this -- for this reason, we are accelerating the work on the current account just in order to be in a position to have growth in terms of markdown. In terms of commissions, we are continuing to have significant gross inflow accelerating in all the different areas of wealth management and protection, but also in terms of lending commissions. If we look at trading, we will continue to have a good performance. Insurance income, we continue to have a good contribution looking at property and trace that is increasing in terms of penetration. Cost will be the real surprise for 2026 because we would be in a position to exceed in a significant way our expectation. Also, if you look at loan loss provisions, the significant reduction in terms of nonperforming loans will allow us to have a very good performance and if needed, to make other and further managerial actions. So net-net, our expectation is to continue to have a good trend for 2026. Also the condition in Italy is a condition that obviously is affected by the crisis that geopolitical condition that for sure. But I think that the government is making a good job in managing the situation, both Georgia Benoni and Giancarlo Georgetti, in my opinion, have the right approach on managing the situation. And if needed, I think that Italy should be in a position to increase also the public expenditure, especially if this will be in connection with a potential further reduction of the public debt through disposal of the real estate that are in the end of the government and the public. So net-net, my view is also positive on the country, obviously, provided that geopoliti conditions. We reduced the growth within the country. So thank you very much, and we will leave occasion to see in roadshow or in other occasion. Thank you.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.