Poste Italiane S.p.A. (PST) Earnings Call Transcript & Summary

Thank you for joining us today and for your continued support for Poste Italiane ongoing transformation. Today, I'm going to provide a progress report 2 years into Deliver 2022 plan and almost 3 years since the current management took charge. I will focus on the key drivers of our performance and outline our operational priorities for 2020. I will then hand over to Guido to present our 2019 financial results and 2020 guidance. As usual, we will then be pleased to answer your questions. We wanted to start by addressing -- the impact of the COVID-19 situation. As I know, it is in front of mind for everyone. As a business, we're taking all necessary precautions to support national efforts to prevent the spread. This include the temporary closure of 13 post offices and the suspension of postal services in the affected communities. We have then since reopened the post office and restarted mail and parcel distribution in the affected areas. The closure represented less than 0.01% of our network, and normal service has now resumed in all affected municipalities. I personally want to thank our people who volunteered to reopen the post offices in the affected areas as well as everyone at Poste Italiane for their strong efforts at this time. Together, we're doing everything in our power to support our community across the country. Moving to Slide 4. After just 2 weeks, since the first confirmed cases in Italy, we do not foresee a material impact on our guidance, assuming the situation goes back to normal in a reasonable amount of time. This being said, Poste Italiane is an extremely resilient business. We're well positioned to face stress scenario, thanks to our industrial transformation and our diversified businesses that serves the daily needs of our retail customers. From our network monitoring tools, we can see that the average number of daily visitors to our post offices decreased in the days immediately after the preventive measures were announced. But just after a few more days, the average came back almost to normal at 1.3 million, which is actually slightly higher than last year. Our distribution capabilities also allow us to reach our customers in several ways. In addition to our post offices, we can call on our extensive web and app platform as well as our growing third-party networks. And in line with our innovation strategy, our digital channels grew 28% year-on-year in terms of daily usage for the month of February. While our alternative parcel delivery points across Italy now number 8,000 and as much as 40,000 in card top-ups. To give you a hypothetical scenario, if we were to stop all short-term commercial initiative, we will still retain about 75% of revenues. Our preliminary data from recent weeks shows an increase in voice and data traffic for our telecom business and slightly lower spending on cards, although with a greater emphasis on necessary items, especially in the affected areas. Let me also remind you that at a group level, we have a very flexible balance sheet with effectively no debt, and we generate positive cash flow. Our capital position in insurance has been reinforced significantly over the past 1.5 years, and we continue to work to reduce Solvency II volatility. As you know, our Financial Services business is capital-light, and we only distribute loan and mortgages with no credit risk. On this side, we have provided an overview of the key areas of potential impact as well as our view on the mitigating factors. Guido will address all of this in the presentation, but let me highlight a few items, starting with Mail & Parcel. We expected a limited impact on our P&L as China specifically represent below 5% of total Mail & Parcel revenues. Our B2B parcel business would be affected by a downturn in the economy, but our primary focus is on the growing B2C parcel sector, which is expected to maintain its growth. Looking at financial and insurance services, asset management activities are clearly exposed to current markets. But even after running stress scenario on lower net inflows, the impact is still manageable. Thanks to our wide product range with an emphasis on low and risk-free activities, such as deposits and postal savings, and our status as the most trusted institution in Italy. I also remind you that our asset management fee structure is not linked to performance. While our insurance accumulation products can smooth market volatility, increasing risk exposure gradually. In line with our plan, we are committed to EUR 0.3 billion capital gains in 2020, stable versus 2019. And to date, we have already secured more than 50% of this amount. For Payment and Mobile, the impact on revenues and operating profitability is not meaningful at the moment as we continue to improve our digital payment offer. And when it comes to our people, we're doing everything we can to keep them safe while ensuring business continuity supported by our infrastructure and advanced telecom capabilities. Taking this into consideration and making the assumption that the situation will soon recover, the new guidance we have provided today is achievable. So moving to 2019 performance on Slide 5, please. We're ahead of targets for the second consecutive year with increased EBIT, once again, supported by higher revenues and lower cost. In line with operating profitability and net profit annual growth on an adjusted basis, we are increasing our dividend by 5% versus 2018, as committed in our strategic plan. We also provide visibility on 2020 targets, which we are updating today. As previously communicated in Q3 last year, updated guidance for 2021 and 2022 will be provided during the fourth quarter this year and will include a review of our dividend policy. On Slide 6, we show our performance versus the plan, with targets exceeded for both 2018 and '19. We have doubled our net profit since 2016, and we're proud of the results achieved, which validate the strength and the credibility of our plan. Recurring revenues have grown steadily with positive contribution from all business areas, while HR and operational cost discipline has helped deliver bottom line growth. Thanks to this, we delivered a net profit of EUR 1.34 billion for 2019. And we will propose to the AGM, the distribution of a dividend of EUR 0.46 per share for 2019, in line with our Deliver 2022 dividend policy of 5% annual growth for 2018, '19 and '20. As a result of our performance to date, we're in the position to update our 2020 guidance. Underlying profitability will continue to increase with an EBIT target of EUR 1.8 billion. Before we look at the key performance drivers for 2019, let's watch a short video to remind ourselves of some key milestones since the launch of our strategic plan in February 2018. Please? [Presentation]

So we're back on Slide #8. I want to talk about the 3 key drivers that have underpinned our industrial transformation to date at the strategic level. First, sustained CapEx deployment; second, accelerated workforce transformation; and third, our continued proactive ESG commitment. In 2018, we made a CapEx commitment of EUR 2.8 billion by 2022 in order to future-proof our businesses. EUR 1.3 billion have been deployed to date with a focus on advanced IT infrastructure as well as upgraded logistic facility such as our state-of-the-art parcel hub in Bologna. In Payment, investments have allowed us to develop the new digital commercial offers to retain and grow our customer base. While in financial and insurance services investment in centralized CRM capabilities and robo advisory tools have supported the development of our commercial frontline. We confirm our CapEx focus going forward. Automation remains the priority in Mail & Parcel with 2 new hubs in Central and Northern Italy operational by the end of 2020. In PMD, continued payments innovation will be the focus, including the ongoing rollout of our QR code offering. And in financial insurance, we will continue to invest in our customer advisory offering, significantly increasing relationship manager coverage. Moving to people. Our Deliver 2022 plan is built on a comprehensive workforce transformation, balancing specialist hires with headcount reduction from natural turnover and early retirements. Our total workforce in 2016 was over 150,000. By the end of 2019, this figure was under 130,000, having delivered 60% of the total 5-year target set by our plan. This we consider a remarkable result achieved with the support of the unions who agreed to both the headcount targets and the introduction of the joint delivery model, which extend service hours to afternoons, Saturdays and Sundays. The quota 100 law also led to accelerated early retirements. On the talent side, our target for new hires was 10,000 for the 5 years. Hiring has accelerated with 4,600 average new FTEs in 2018 and '19, bringing in specialists in digital, financial advisory and last-mile delivery. As a result, the average age of our workforce is now below 50, trending downwards, and this is the first time in the last 20 years. Workforce productivity has grown with the value-added per employee increasing from EUR 60,000 in 2017 to about EUR 67,000 in 2019. We will continue the pace of reduction in 2020 with over 8,000 departures through turnover and subsidized exits. At the same time, we will make over 6,000 hires in 2020 to ensure that we have the right skills in place to support growth. It is important to flag again that we benefit from a cooperative relationship with unions, which were fully supportive in our efforts to reopen offices in the most affected areas recently. Poste environmental, social and governance approach has been another key driver of change. Poste is, we can say, by nature, sustainable business. It has played a leading role in Italy development for over 150 years and will do for years to come. It was essential for us to be proactive when it comes to ESG as part of our business strategy, embedding targets and KPIs to monitor progress in line with global best practice. We started with the 17 UN SDGs, from which we selected the 6 areas of focus, best connected to our purpose and strategy. The first achievement was our initial integrated financial and ESG report published for 2018 financial year. And we're now, for the first time, proudly included in the most important ESG indices, such as Bloomberg for diversity and the Dow Jones Sustainability Indices. Our integrated approach ensures that business decisions create long-term value. We're going beyond statutory requirements, developing cross-segment action plans. ESG KPIs now account for 30% of management incentives, ensuring full alignment with stakeholder interest. As an integral part of our business strategy in 2018 and '19, we committed to support Italy's small municipalities with less than 5,000 inhabitants, guaranteeing continued service and offering financial and digital education, smart delivery option and other economic growth and social development initiatives. We are also committed to reduce CO2 emission generated by our fleet by 40% by 2022. This year, we have introduced 2 new sustainability pillars: innovation and diversity and inclusion to reflect their increasing importance in our daily activities. We're diverse and inclusive by nature, and we want to continue to lead the way. 54% of our people are female, the highest percentage amongst Italy's large corporates. Moving to Slide 9 and our businesses, where our ability to meet our targets has been driven by the strategic refocus of our segments. Let's look at progress since 2017. First, in terms of the key operational initiatives driving our B2C parcel focus. Our joint delivery model for Mail & Parcel is now fully rolled out with our Postini, and Postini delivering over 52 million parcel in 2019, up from 35 million in 2017. We have invested in automated sorting parcel capacity, which increased to 620,000 parcels per day in 2019 and refocus our Express Courier business, SDA, as an operating company to handle sorting for the entire group. Our line is also now an operating company, fully focused on cargo with an enhanced network. We have improved efficiency in long-haul road transformation, supported by our partnership with the German platform, sennder AG, who moved from 8 million parcel for us during the December 2019 peak period, and is now handling our entire full truckload business. Our subsidiary, now sennder Italia is now fully operational with a team of 90 staff focused on reducing the long-haul cost base and reduce CO2 emissions at the same time. These changes across the logistic value chain make us a competitive network for parcel delivery with an enhanced customer experience in B2C. Our PuntoPoste network now offers over 8,000 alternative delivery and collection points, well above the 2019 target of 3,500. We have introduced same-day delivery in large cities as well as scheduled delivery working with startup, Milkman. Services have been rolled out in Rome, Milan and Turin, and we'll extend it to 15 cities by 2021. This has positively impacted our B2C market share, up from 30% in 2017 to above 35% at year-end 2019, in line with our 2022 target of 40%. We have also seen a knock-on benefit on B2B parcel activity up a remarkable 20% since 2017 in an established market. In terms of our merchant customers revenues related to Amazon have increased, thanks to our competitive offer in terms of both coverage and services, but now represent a lower share of total B2C revenues, thanks to increasing contribution from other marketplaces. Next, our focus on digital payments. Poste is a trusted leader in the payment sector with 28.7 million cards in circulation, up 16% versus 2017. In 2019, we managed transactions worth EUR 33.1 billion, up 45% compared to 2017. We are building on our traditional strength in cards to become a leader in the entire digital payment value chain, adding new services and partnership, such that one signed with Swedish open banking specialist, Tink. We have a successful history of being the network to bring financial solution to the entire population and are playing a pivotal role in the transition from cash to digital payments. Our QR code offer will be gradually deployed in all Poste's offices by the end of the second quarter 2020 and to a wider merchant customer base across Italy. We're also increasing telco revenues in a competitive market, delivering more sustainable long-term contract and bundle offers. In financial insurance, we continue to maximize the power of our leading distribution network and offer the most appropriate services to our 35 million customers. Total financial assets continue to grow up to EUR 536 billion at year-end from EUR 510 billion in 2017, mainly thanks to strong retail net inflows, which almost tripled from EUR 1.2 billion in the same period. We have expanded our product range to become the one-stop shop for our customer and have built an effective control open platform. Postal savings are back at the heart of our offer, exceeding our targets in a challenging rate environment, with net inflow of EUR 3.5 billion negative from EUR 7.9 billion in 2017, thanks to dedicated initiatives targeting maturing bonds and new inflows. Our digital postal saving offer, which has been operational since December 2018, contributed EUR 2.2 billion in inflows last year. Our capital-light loan and mortgage distribution platform built on effective banking partnership continue to perform well, with volume of EUR 3.6 billion, up 36% versus 2017. In insurance, over 35% of life gross written premiums are now multi class products, well ahead of schedule, given this was our target for the end of the plan. For context, just 2% of new production was multi class in 2017, and gross written premiums are now up 17x versus the start of the plan. All P&C product lines continue to grow, and we will leverage on our recently launched modular offer. From a service perspective, Poste now can count on 9,000 fully MiFID II and IDD compliant relationship managers, up 18% versus 2017. Let's move to Slide 10, please. In addition to the strategic focus of our business line, there are 3 additional factors driving performance. First, capital gains. Our diversified business with high recurring revenues and a focus on capital lighter product is key to sustainable growth. As you can see from the table on the slide, we no longer rely on capital gains on our ordinary business as their weight on net profit is now 18% from 69% back in 2016. Market condition allow us to secure a relevant part of the capital gains planned for 2020 through forward contracts increasing the visibility of revenue streams for 2020. This give us greater flexibility. We're looking at our investment portfolio from which we have been able to extract significant value with a proactive approach. Second, cost discipline. We met our 2019 targets for both HR and non-HR cost. Guido will explain how we reduced these with lower-than-expected early retirement charges, also thanks to the quota 100 law. With expanding business across different segments, our focus is on balancing operational efficiencies with the need to support growth. Metrics such as ordinary HR cost to revenue demonstrate that we are on the right track. Our Mail & Parcel network transformation was a key driver to accelerate cost efficiencies, not only due to the headcount changes already mentioned, but also through the adoption of new lean manufacturing techniques. Looking ahead, we will take a more targeted approach to cost efficiency measures, fully aligned with commercial opportunities. And finally, over innovation and distribution. We leveraged on our scale, resources and trusted status to be at the center of our customer digital journeys. As presented in London in January, we are blending internal innovations such as Postepay Connect and QR code with a new open innovation strategy. We're partnering with innovative player using an open API approach to accelerate the delivery of business-oriented solution. And we're also innovating in terms of distribution. A key proof point in this is the physical PuntoPoste alternative delivery network, which now handles more B2C and C2C parcel that our own post office network on a daily basis. Moving to Slide 11. Our goal is to be the distribution platform of choice in Italy, and we have a track record of successfully expanding our offer and reach. If you think about it, over time, we have progresses from distributing Poste products through our own post office network to expanding the marketplace for this product via our proprietary digital channels to selling third-party products across our channels and then leveraging on third-party networks and diversified partners for distribution. As discussed at our innovation workers, we have progressively modernized our IT system and now have a cloud-enabled open API platform, allowing us to activate synergies across our businesses and integrate exciting external players into our offer, such as sennder in logistics, Milkman in B2C, Tink in open banking and Moneyfarm in asset management. In fact, we have improved our proximity to customers beyond our network via a diversified third-party distribution network, which includes our PuntoPoste point as well as FIT, the Tobacconists, Lottomatica, Edenred and ENI location. This, in turn, drive us at Poste to continually innovate in our physical and digital offers and deliver a seamless experience to our customers wherever and however they interact with us. Our 35 million customers and their relationship with us is at the heart of everything we do in all segments at the strategic and operating level. Moving to Slide 12. The next phase of growth will be built on our diversified business model, serving our retail customer for their daily needs. I want to briefly look at our priority areas of focus across the group. Starting with B2C parcel. Our market share in 2019 was 35%, as we said, up from 30% in 2017, with average prices holding up. This is a significant jump for a sector where market share are very stable. Please also remember Italy low parcel per capita figure, up from 3 to 4 recently, but still a long way to go to catch up with more mature e-commerce markets. As I already mentioned, we will continue to diversify our e-commerce customer base as demonstrated by our recent agreement with the new client Zalando in 2019. And we are developing innovative services for all merchants, maintaining our focus on improving our e-shopper satisfaction. Next, in financial insurance, our diversified offer provides clear competitive advantage in terms of distribution, products, systems and advisory approach, which will both protect current business and create new opportunities. Starting with loans, we've been able to rapidly establish a significant market share of 9%, gaining 1.4 percentage points in 2019 in personal loans. We're helping our customers diversify the way from more traditional class I guaranteed products, offering new accumulation products in insurance and financial services, which allow a gradual exposure to markets. We have developed system and financial advisory strategy to better understand our customer with a differentiated approach fully embraced by our teams. We have shifted a significant part of our business towards multi-class products, reaching now the new production mix targeted for 2022, with 35% of gross written premium in multi classes. We have increased significantly our market share for this type of product and also have expanded our offer to include ESG-related insurance and mutual fund products. For P&C, we're now working to expand our offer. For motor insurance, we launched a pilot project at the end of last year, as planned, and we will continue development during this year. For nonmotor P&C cover, Italians are still significantly uninsured compared to the European peers. Customer trust Poste, and it's our view that we can contribute to drive a cultural shift and create a long-term wealth management partnership with them. Finally, in payment, Mobile & Digital, we will continue to build on our leadership in payments. This market is changing daily, both as a result of regulations such as PSD2 and of disruptions. We see significant upside in Italian market where 86% of transactions are still in cash. It is in our interest to drive this change, and we're fully aligned with the government priority of the war on cash. We have a strong customer base and are ready to support Italy's shift to digital, building on our over 15% market share in card transaction by value and 60% in the acquiring market. We're investing in acquiring to create a comprehensive payment offer using our QR code as a vehicle to capture both merchant and customer looking for low-cost and innovative payment services. We have increased our market share in mobile telecoms in a challenging environment, focusing on customer loyalty, and capitalizing on the convergence between payment and mobile. That's all from me. Guido will now present our 2019 financial results and guidance for 2020. Thank you. Guido?

Thank you, Matteo. Good morning, everyone. Today, I'm going to take you through an overview of our financial results for the full year 2019 and our new guidance for 2020 within the context of our strategic plan. As Matteo said, our 2020 guidance is based on a forecasting exercise carried out in recent months which, of course, did not include the effects of COVID-19. However, assuming the situation goes back to normal in a reasonable amount of time, we believe that there would be no material impact on our guidance. Still, it is impossible at this time to estimate the impact for 2020 in a scenario where the situation persists at length. We continue to monitor the situation closely and are preparing for a number of different scenarios at both group and business unit level. Given the amount of ground to cover, we will focus on the full year 2019 numbers. Our standard Q4 and full year 2019 results presentation is available on the Investor Relations section on our website. So starting with an overview of our group financial results for 2019, on Slide 14. All segments have contributed to strong growth in operating profitability, especially when considered on an adjusted basis. Just to remind you that when we say adjusted, we refer to a series of one-offs that we report on a quarterly basis, detailing full on Slide 35. In 2019, on top of key adjustments related to capital gains of EUR 353 million and early retirement charges of EUR 342 million, we have included below EBIT the revaluation of our minority stake in F SIA worth EUR 88 million. This revaluation became necessary following the loss of joint controlled status of F SIA as a result of the acquisition of a significant stake in SIA by CDP, who now has full control. F SIA is now treated as an associate company for Poste. Adjusted revenues increased by 3.2% for the full year. Adjusted EBIT was EUR 1.8 billion for 2019, up 5.5% as we continue to increase revenues while reducing costs mainly related to early retirements. As a result, net profit was EUR 1.3 billion, increasing 7.3% on an adjusted basis. To follow up briefly on Matteo's comments on our financial achievements since the start of Deliver '22 on Slide 15. We delivered steady and consistent progress in both 2018 and 2019, which gives us continuing confidence in our growth trajectory. We confirm our Deliver 2022 dividend policy with EUR 0.46 dividend per share in 2019, up 5% year-on-year. On the basis of our performance, we are updating the guidance for 2020. Our EBIT target is EUR 1.8 billion, expected to grow on a mid- single-digit basis versus 2019, leading to EUR 1.3 billion in net profit. In addition to the operational factors already mentioned by Matteo, I want to confirm our ability in meeting this guidance, assuming a progressive economic recovery in a reasonable amount of time. Our business model is very resilient with about 75% of group revenues not linked to short-term commercial initiatives. We have a strong balance sheet. Our retail-focused financial services business model is capital light. We only act as distributors of personal loans and mortgages, bearing no credit risk. The solvency ratio of our insurance business is much stronger and less volatile than in the past. I will provide more detail of this later on. We also have very limited leverage as well as access to significant undrawn committed credit lines. Let's now look at these results on a segment-by-segment basis within the context of our 2018 and 2019 performance and on the new guidance provided for 2020. On the grounds of current information, I will also comment on COVID-19 impact in specific areas. Starting with Mail, Parcel & Distribution, on Slide 16. Operating profitability improved by some 20%, supported by distribution revenues and lower early retirement charges. Continued parcel revenue growth is mitigating the impact of the anticipated mail decline. Segment revenues were down 2% in 2019, mainly mail revenues were down 6%, slightly more than the 5% embedded in our strategic plan. This was primarily due to accelerated e-substitution by corporate clients in the second half of 2019. The year-on-year comparison is also related to a stronger-than-expected 2018 mail performance, which benefited from specific factors, including MiFID II and PSD2 correspondence volumes. Mail decline is unavoidable, and our primary strategic focus is to growing parcel sector. As a result, parcel revenues were up 12% for the year, ahead of expectations as we continue to outpace the market in B2C. B2B revenues also improved year-on-year, with the synergies from B2C, thanks to our leading parcel delivery platform. Our revenue guidance for 2020 for Mail, Parcel & Distribution remains broadly flat year-on-year. Mail revenues will decline, confirming the long-term trajectory embedded in Deliver 2022. Parcel revenues will continue to grow benefiting from the successful turnaround of our logistic chain in the past 2 years. In terms of potential impact on revenues of the current situation, we assume no significant change for Mail, although we are seeing a slowdown in mail volumes from China. We would not expect B2C revenues to be materially impacted as flows from China currently represent a limited share of the total. We will instead expect lower B2B revenues in a prolonged scenario tied to any economic slowdown. Our 2020 EBIT target will continue to improve. Moving to Slide 17. On the key volumes and price trends for Mail & Parcel. Overall, mail volumes on average have declined by 6.4% per year since 2017, predominantly related to accelerated e-substitution. Lower-margin products, such as unrecorded mail and direct marketing saw the biggest drop, in line with recent trends. Average mail prices were up slightly year-on-year, benefiting fully from the repricing of July 2018. Looking ahead, we are targeting a decline in mail volumes in 2020, in line with the long-term trend. On potential effects of COVID-19 on revenues, we would expect direct marketing, C2C and outbound products to be impacted in case of a prolonged lower commercial activity. Excluding the localized disruption in specific areas of Lombardy and Veneto in the last 10 days, we have not experienced significant variations in delivery and collection services at this stage. Mail prices are expected to be broadly in line with 2019 figures. According to plan, a new mail tariff increase is under assessment, but would only take effect late in 2020. Moving to the right-hand side of the slide, parcel volumes continue to increase, up 14.5% on average per year since 2017. 2019 was another record year for B2C. Volumes are up 26%, thanks to the successful implementation of our strategy. In December, we managed 20% higher volumes year-on-year with improved service compared to 2018. We also had 2 days in which we delivered more than 1 million parcels per day, a new record. B2C prices were up in the year in a highly competitive market. This is a strong validation of our strategy to provide value-added services such as scheduled and same-day delivery to increase e-shopper satisfaction. The average price index for parcels was down 4% in the year, but only because the higher share of B2C in the overall mix. Going forward, we expect parcel volume growth to continue above the market in 2020. Just to flag briefly, inbound volumes from China currently only represent between 3% and 5% of total volumes in Mail & Parcels. Moving to Slide 18. On Payments, Mobile & Digital, where our leadership in the growing payments market continues to deliver financial returns. Segment revenues grew by over 12% year-on-year, with EBIT up 19%. Card payment revenues were up strongly by 16% with a growing number of Postepay cards and higher transaction volumes across both physical and digital channels. This has been driven by targeted commercial initiatives to transition customers from pay as you go Postepay cards to more sustainable yearly fee model as well as our bundled telco and digital payments offer, Postepay Connect. Other payment revenues grew year-on-year, also benefiting from a new international digital money transfer partnership with Western Union. Telco revenues also grew 11%, an outstanding achievement in what remains a highly competitive environment, supported by commercial initiatives through our physical and digital channels. In terms of 2020 targets, both revenue and EBIT will show continued growth, while we'll keep investing in new services like our QR code payment app. So far, our data shows limited impact on our payment and mobile business as a result of recent events. In a scenario where retail consumption is affected for an extended period of time, we would expect to see an impact on card issuing and transaction volumes. We would expect limited effect on traditional payment services, given that overall network traffic has not been broadly affected so far. As mentioned by Matteo, boosting our network by over 8,000 locations, including local convenience stores and Eni service station is also increasing our reach. In telcos, we would expect no impact on overall mobile SIM activity, while we plan to counter any potential negative impact on land lines by maximizing their values as part of bundled broadband offers to increase home connectivity. Moving to Slide 19, on financial services. Before we look at the numbers, I want to highlight that we are now showing distribution fees within the revenue split. BancoPosta is now fully coordinating the commercial strategy on financial and insurance products, connecting the network on one side with the production factory and partnerships on the other, maximizing overall effectiveness. As you may expect, insurance distribution represent the majority of fees within the revenue mix. Should the current market volatility persist, we envisage a manageable impact on inflows leveraging on a different mix and our long-standing customer relationship as the most trusted institution in Italy, service -- serving retail customers and their daily needs. Gross revenues increased by 1%, driven by growth in product distribution activities. In particular, capital-light loan and mortgage distribution revenues were up 19% while asset management revenues grew by 12%, without taking into account the Anima one-off in 2018. Postal saving distribution fees were in line with 2019 targets. Thanks to a range of commercial initiatives, including our new fully digital offer. Transaction banking fees were up 5%. This is related to the write-off of expired liabilities, which provided an increase of about EUR 50 million year-on-year. The long-term trend for transaction banking though is an expected 5% annual decrease. As mentioned by Matteo earlier, the share of capital gains on net profit went down from 68% in 2017 to 19% at the end of 2019, and we have already booked or secured most of the planned gains for 2020. As a result, EBIT and net profit for 2019 are in line with expectations, up 2% and 4%, respectively. Looking ahead to 2020, we will continue to focus on recurring revenues across all key product lines, capitalizing on our effective distribution platform and expanded product portfolio. Gross revenues for 2020 will be broadly flat. We expect insurance fees to increase in 2020, together with other items, such as fees from postal savings and loan and mortgage distribution. These growing business lines will compensate the decline of interest income projected 2 years ago in a completely different rate environment, confirming our ability to successfully adapt to changing scenarios. Our 2020 operating profitability will be in line with previous guidance, down year-on-year due to higher intersegment distribution costs paid to our network. Based on our preliminary assessment, should the current market environment persist, we would expect a certain impact on our business lines. Distribution of new personal loans and mortgages as well as new production of insurance and asset management products would be the most affected. As Matteo already said, however, Poste can leverage on specific mitigating features. First, we only distribute personal loans and mortgages without bearing any of the credit risk. Second, in asset management and Class III insurance product, we do not charge performance fees, and we do not encourage churn in our customers' portfolios. Third, in such scenarios, customers turn to liquid risk-free products, such as postal savings and deposits, both providing significant contribution to our revenues by way of distribution fees and interest income. This being said, 90% of financial services revenues are not related to short-term commercial initiatives. Moving to Slide 20 and group total financial assets. Total financial assets increased by EUR 22 billion in 2018, driven by positive market effects and EUR 2.9 billion net inflows, mainly made up of insurance products with EUR 5.3 billion unit-linked and multi class. Deposits contributed with EUR 2.9 billion, benefiting from retail and public administration inflows. Mutual funds posted positive net inflows of EUR 0.3 billion. Postal saving outflows were ahead of our target for 2019, successfully navigating the low rate environment, thanks to specific offers to attract new inflows and retain clients, also via our digital channels. On Slide 21. We demonstrate the resilience of revenues from BancoPosta investment portfolio to the current rates environment and different spread scenarios. Projections for 2020 are based on the new guidance provided today, while those for 2022 are based on Deliver 2022 targets, which will be updated later this year. We have run 2 alternative scenarios based on the current yield curve, that implies a 10-year swap rate at slightly negative in 2021 and basically 0 in 2022, implying a prolonged low rate scenario. The sensitivities do not consider any proactive portfolio management with maturity reinvested at the rate implied by the yield curve and net new deposits estimated at historically low levels. The base case scenario features the 10-year rate interest rate swap curve plus a flat credit spread of 125 basis points until 2022. The stress scenario shows the BTP-Bund spread increasing to 300 basis points or decreasing down to 100 basis points for a year before returning to 120 basis points the following year. Here, you can see how under both scenarios, we can manage significant market volatility, confirming the balanced structure of our BTP portfolio. A few additional upsides are not taken into account here. First, as demonstrated in 2018 and in 2019, we've been able to adapt to different market scenarios with an active portfolio strategy. Second, we are assuming no leverage in this exercise and minimal inflows, while an increase in deposits is to be expected at times of lower consumption. Third, low rates for longer would also allow us to avoid interest expenses. These are accounted as the cost line and represent a buffer to absorb any impact on operating profitability by as much as the EUR 0.3 billion originally expected in 2022. Moving to Slide 22 now. On insurance services, segment revenues grew strongly, up 14% year-on-year on higher volumes and margins. Life insurance revenues were up 13% as we confirmed our market leadership and continued shift away from capital guaranteed products into multi-class products. This now represent 35% of total gross written premiums, a target originally set for 2022. 2019 also saw an increased investment margin. P&C revenues grew by 17% in 2019, with positive contribution from all product lines. As a result, EBIT and net profit were both ahead of target. In 2020, we are targeting further revenue growth, driven by our continued focus on multi-class products in Life, including a new accumulation product launched in January, which allows customers gradual exposure to market performance. Also P&C revenues are expected to increase, thanks to our new modular offer. Should the current market volatility persist, some impact must be expected on net inflows and financial margin in 2020 revenues, bearing in mind that our commercial initiatives could target a different mix, depending on changing customer needs. Operating profit is optically stable in 2020 because the distribution agreement with PosteVita embedded in Deliver 2022 envisages higher distribution fees to financial services. Group-wise, this is irrelevant as we are booking the correspondent fees as intersegment revenues in financial services, where we have shown growth. On Slide 23 now. When we look at PosteVita's Solvency II ratio, which was 276% or 312%, including transitional measures at December 2019, well above our managerial ambition of 200% through the cycle. In terms of key drivers during the last quarter of 2019, the positive impact from risk-free rates offset the B2B -- the BTP-Bund spread increase, providing an additional 13 percentage points. Ongoing asset diversification had a negative impact of 11 percentage points with new flows invested in assets other than BTPs whose share of total portfolio went down to 59% in 2019 from 62% in 2018. On the one hand, there is an initial capital charge. But on the other hand, this charge -- this change of allocation results in lower future volatility. Some changes were introduced by the regulator and the standard model. Those revised regulatory hypotheses had a negative impact of 21 percentage points, mainly related to countercyclical buffers in equity exposure and different hypotheses to calculate redemptions. Transitional measures approved by the regulator in Q3 are not considered in our managerial ambition, but they would provide an additional 36 percentage points buffer to the ratio to address market volatility. In line with the recent past, the dividend payout from PosteVita to Poste Italiane is confirmed at 50% in 2020 to support business growth. On Slide 24, we are providing a breakdown of the core solvency components. Slide 24, please. Thank you. Core Solvency II ratio is up to 159%, thanks to 4 factors. First, the outright implementation of ancillary-owned funds for a maximum of EUR 1.75 billion early in 2019. Second, new PosteVita dividend policy allows our insurance company to retain EUR 1 billion earnings with no impact on our group dividend policy. Third, the diversification of liability as well as the strong progression in multi-class products. Finally, the transitional measures that have been approved by the regulator, providing additional 36 percentage points to address market volatility. As a result of the above-mentioned actions, we managed to reduce our solvency volatility contributing further to the resilience of the ratio to market shocks. Moving to Slide 25 on Solvency II ratio sensitivities. We stood at 276% at the end of December, above our managerial ambition of 200% through the cycle under all scenarios without considering the benefit of transitional measures. On this slide, we have outlined the impact of sudden increase of Italian government spread by 100 and 200 basis points. To remind you, at plus 200 basis points, the country-specific volatility adjustment would be triggered. As you can see, we are very well positioned against potential market volatility. We have reduced sensitivity, thanks to ongoing managerial actions, including investment and product diversification. Finally, the Board of Directors of PosteVita has approved an internal model development process. This process, which will be closely defined in coordination with the regulator, is expected to take a few years. We believe the outcome will deliver more realistic assumptions with a better fit with our business, contributing to further reduce Solvency II volatility in the future. Moving to Slide 26 now, where we discuss cost and FTE for the group. In 2019, average headcount decreased by 5,200 FTEs, well ahead of the planned target of 3,000 as a result of accelerated voluntary exits. We have hired 3,500 specialists to support key areas of industrial development, such as last mile delivery and financial advisory. In 2020, we will continue with a balanced workforce renewal with 6,400 new hires to further drive business transformation, leading to an average headcount reduction of 1,600 FTEs. We continue to see an increase in the value-added per employee from EUR 60,000 to EUR 67,000 per FTE between 2017 and 2019, a figure expected to increase gradually in 2020 as a result of continued productivity enhancement. Moving to Slide 27 on cost discipline. Our cost efficiency initiatives have been successfully executing, delivering a positive result. Provisions for early retirement incentives decreased to EUR 342 million in 2019 from EUR 619 million in 2018. This is lower than the EUR 0.5 billion originally planned for 2019 as we efficiently managed the process and benefited from the quota 100 law. Ordinary HR costs are broadly stable in 2019. Lower FTEs reduced costs by EUR 220 million, more than compensating the EUR 85 million increase in salary and other benefits. Other factors seen in 2019 are not expected to be repeated in 2020, such as the lump-sum payment recognized following the most recent union agreement and the charge related to national paid holidays, accounting for an additional EUR 134 million combined. HR cost for 2020 will be down primarily as a result of lower provisions for early retirement incentives. We have progressed significantly on FTE reduction, and we will prioritize workforce renewal going forward ensuring we have the right skills in place to deliver growth. Non-HR costs, including D&A increased to support business activity across all segments in line with the plan. Looking ahead, we are envisaging higher operating cost with an increase directly linked to growth in the areas described so far, such as transportation and higher D&A related to increased investments. As per the revenue slide, we confirm guidance on cost based on current COVID-19 visibility in the short term. Should the effects persist, we can leverage on a variable and flexible cost to mitigate the impact. In particular, labor cost of EUR 0.8 billion have some degree of flexibility and are directly related to the achievement of commercial objectives, while over EUR 1 billion in cost of goods sold are related to volume growth. As you can see on Page 28, we continue to increase our capital expenditure in key areas of development across our business units. In 2019, we invested over EUR 700 million, a figure that will increase to around EUR 800 million in 2020. So to summarize on Slide 29. All segments have contributed to strong growth in operating profitability in 2019 and will continue to do so in 2020. Taking into account our progress to date and improved business resilience and based on our current assumption that the COVID-2 (sic) [ COVID-19 ] situation will recover in a reasonable time period, we believe that the new targets are achievable. Let me hand over to Matteo for some concluding remarks. Thank you.

Thank you, Guido. So before we open to questions, a few remarks. Our performance, as you have seen is -- in 2019, is confirming the transformation process we initiated in 2017. We are delivering continued recurring revenues growth, with contribution from all segments and bottom line progression, driven by operational and headcount cost discipline. The next phase of Poste Italiane journey is already under way, powered by sustained investment, ongoing workforce transformation, a committed approach to ESG and an innovation mindset. At a business level, further support is provided by our focus on parcel, digital payments and enhanced financial and insurance offer via expanded distribution channels. These efforts are underpinned by our balanced cost discipline and effective open innovation platform. I will open now for questions. Thanking you for your attention. Thank you.

[Operator Instructions] The first question is from Giovanni Razzoli from Equita.

A couple of questions on my side. You have been very much clear into detailing the impact of the coronavirus on the different business segments. Can you summarize with what you said that the most direct impact may affect that market in the B2B business based on a full year basis are what something like EUR 250 of revenues? First of all, is my understanding correct? And I was wondering whether you can share with us what are the main feedback that you can provide us in terms of impact on the volumes in these real weeks as you are -- really can give us any feedback on the ground, in terms of economic activity in the country? The second question related to the guidance that you are giving us in terms of Payment, Mobile & Distribution division. Where, if I'm not mistaken, the guidance implies an improvement in the EBIT margin in 2020 vis-à-vis 2019. If I'm not mistaken, there is something like 10% increase in EBIT margin. I was wondering whether this is related to a change in mix of products sold, or if there is something else here? And the very last question. I've seen that the volumes in the B2C have grown by 22% in the Q4, while revenues went up by 27% in the Q4 in the B2C. So reasonable to suggest there has been some positive contribution from pricing. And I was wondering whether, you can give us some clarification on this.

Okay. Thank you. I'll start with the last one, if I may. The last quarter in B2C is a peak period. And obviously, in that part of the year, we have a higher pricing power versus our clients because resources in the delivery networks are scarce. So that's why you see a higher growth of revenues versus volume in the quarter. I will leave to Guido the one on PMD and take the first 2. Yes. I mean, the virus impact, we anticipate, as Guido highlighted, you can basically look in 3 buckets. The first bucket relates to the inbound flows from China. And there, our share of volumes is limited, it's below 5%. And in terms of the first -- evidence of the first, let's say, a couple of weeks or 3 weeks, if you consider the -- when it started all back in China, there is a very limited impact on Parcel. There is a more or less 30% reduction on the Mail component, which is coming through China Post into Italy, and this is the first bucket. The second bucket is related to direct marketing and commercial activity, which, if there is a slowdown in the Italian economy, obviously, will be affected. These premature plans were already in place to have a feeling on those volumes. And the third, as Guido highlighted relates to the B2B business if there is a slowdown in the Italian economy. And that's something that is, again, a bit premature. We start to see some single-digit reduction, but it's premature. On the other hand, on this aspect, we are also looking at the possible action or the possible remedies. Certainly, there is an embedded component of variable costs that come with the B2B business. We have -- we are highlighting all the fully variable cost versus the semi variable ones. And there is space. I mean, on volumes, you can get almost EUR 270 million, if not higher reduction of the cost base versus the reduction of the revenues. And obviously, we are starting to consider all the action that we might need to take if this process gets worse or doesn't get better anytime soon. And on the mix in PMD, Guido, please?

Yes. So very quickly. Yes, you're right. The update on guidance for PMD for 2020 is a little bit better than planned. Reason for that is, as you saw in 2019 and in 2018, we are seeing an acceleration of our card payments business, and we expect that to continue in 2019. We see the Telco business flat with the slow decrease -- the minor decrease in the Telco business in the mobile business to be compensated, fully compensated on -- from the digital -- sorry, from the fixed lines, which we are -- which we have done in 2019 already, and we're pushing into 2020. And there's also a small effect on costs, which we are reducing, especially on the intersegment costs in 2020. So this is what we feel a very strong guidance.

Next question is from Musaddi, Ashik from JPMorgan.

I'm hoping everything is well there. Clearly, not a great time at the moment globally, but I'm hoping everything is fine. I have a few questions. If you can help me? So sorry, if I missed, say, last 15, 20 minutes of the call, so in case it has already been answered. So first of all, how should we think about COVID-19? I mean, let's say if Italy -- if there is some concerns on Italy, if people start not moving around anymore, people don't come to your post office, what happens then? I mean, how should we think about where could be the loss of revenues, capital, et cetera? What sort of comfort you can give us on that thing? That would be first one. Second thing, can you help us about, say, interest rate risk? I mean, how do you see managing the capital gains and managing investment income? And do you believe that EUR 1.5 billion guidance you have given is kind of all right, so there won't be a material impact on that? And thirdly, I have like 1 cost -- one question about non-HR cost, where you are guiding for EUR 2.7 billion, which is EUR 100 million higher. I mean, why would that go up? Because if I understand correctly, you'll be trying to cut cost rather than grow cost. So what am I missing it? Is it just like a buffer you are keeping, so that if things go wrong, you have some buffer in your plan? So these 3 questions would be great.

Thank you, Ashik. I mean, how do we look at COVID-19? Our main objective, and we're very focused on that, is to protect our people, our workforce, and if we manage to protect our workforce, we will allow our presence in the country to support this difficult times. And we are doing this with a very serious, very focused approach. Just to give you an example, yesterday, we had our Board meeting approving what we're presenting today. It was taken in 7 different rooms. I was alone in mine. So we take this from the top level to our people fronting clients with mail. We agreed with the mail supervisory authorities that registered mail can be passed with a signature of the Postino as opposed to wait for the client to come down and keep the signature in front of the Postino. As I said in my presentation, we have provided all the protection to our people in the post offices to continue serving our clients with the maximum level of protection and security. And the aim, again, is to avoid the spread of the virus. The assumption is in the plan that we're going to have a few more weeks of pain in our business, but by definition, with the heat in the summer season, everything will be gone, in terms of the emergency. What is going to be left clearly is an economic impact, but you have to remind that, at least on our side, we are a retail company? So our clients are individuals that are coming to Poste for their daily needs. And that's why we have shown that a very large portion of our revenues are coming from noncommercially-related initiatives. So that was behind the plan. If the weeks that will take to normalize the system will be longer than we expect, this guidance is still confirmed, it's going to be clearly more of a challenge. And as I said, we're going to look at all cost reduction measures to face our commitments. And specifically, I will let Guido answer on non-HR cost. On managing interest rate income, to be entirely honest, the answer is totally, yes. We are just about EUR 100 million short of capital gains we have in the plan. We've done the bulk of the forward contracts already, and if anything, in wider spread as it happened around 1 year ago, it's helping us investing at higher returns than we had in the plan. And so the interest rate component, you see in the plan is not creating any worry to us. Please, Guido?

So Ashik, I think you're totally right. Our plan is to reduce costs, but definitely not a variable cost that are linked to growth. And as you saw in 2019, that component, the variable component is actually going up because it's supporting the growth, especially in 2 businesses that have double-digit growth, the Parcel and especially the B2C growth and the cards which tend to have significant cost attached to their growth, the significant variable cost. But if you want those costs that are exactly the ones I've highlighted in my speech saying, those are the ones that -- almost EUR 1 billion, I mentioned, while leverage that we have in case of reduced activity, those are the ones that we think we will have in case that reduced activity doesn't happen. While I will just add on interest rates very quickly on Page 21, we try to revisit the same analysis we have done for -- in Deliver 2022 in 1918 -- in 2018, and we've done exactly the same thing we've done at that point. If you go there, you can see maybe we can put it on the screen on Page 18 -- 21, that 2020, it's practically done. We don't expect significant variation with the spread or the rates moving. The -- obviously, what would impact is the future years. But I think the fact that we have not incorporated in this analysis our management actions, obviously, we have demonstrated that those have a lot of value and ability in days like today, with the spread with boom reaching more than 180, these are days where for us could have some opportunities.

Guido, just one follow-up on the cost again. So is it fair to say that if, let's say, because of macroeconomic activity, you fall short in -- a bit in, say, Parcels business and a bit in new business sales for insurance, you will have some buffers in cost in that other non-HR costs to offset that? Is it fair to say that?

Yes. As I said in my speech, we have obviously buffer, both in terms of HR and non-HR costs. Obviously, the non-HR costs are the ones that are immediately related to volumes. So those are the ones that would be activated immediately.

[Operator Instructions] The next question is from Gian Luca Ferrari, Mediobanca.

Let me jump once again on the sensitivity to spreads widening, i.e., the Page 21 of the guidance '20 presentation, but also you put the sensitivity at Page 26 of the Q4 '19 result document. In that document, a figure showing that 1 basis point in spreads is generating EUR 66 million decline in annualized gains, which means basically EUR 6.6 billion for 100 basis points. I cannot reconcile that with the sensitivity at Page 21 and with what happened in 2018, when spreads widened at the 100 bps and the IFRS reserve went down by EUR 3 billion. So if you can clarify that? Second question is on the EIOPA impact study published this Monday regarding [ UFR ], [ VA ] and risk margin. I was wondering if you get a look to the study and if you can anticipate any kind of impact for PosteVita? The third and final question is, if you have any update on the renewal of the agreement with CDP and the negotiation with Amazon you mentioned in London in January?

Okay. The EUR 66 million per basis point is correct, that is a mark-to-market component. On Page 21, you see the capital gain and interest income that we have in the income statement. So we don't reflect in the -- on Page 21, the mark-to-market of the portfolio.

Page 21, I think there is also something called unrealized capital gains, I was supposing it was mark-to-market as well.

Is the gross capital gain? And the portfolio is made of different buckets. So the way we look at the activity is we generate the maximum interest income, obviously. And then assuming the revenue target needs capital gain, we will select the portion of the portfolio and for example, as of last night, obviously, with the spread widening, the gross capital gain on the portfolio was down to EUR 1 billion, but that EUR 1 billion has component, obviously, of positive and component of negative. And obviously, we take in terms of market timing and specific part of the curve, the one that are more appropriate to realize the capital gain and bring it into the income statement and then reach the revenue target. On the last question, yes, I mean, the -- both contracts starting with CDP. And with the 31st of December of 2019, sorry, for CDP, so before December, we will need to start renegotiating the contract with them. We haven't started to be entirely honest, but we are covered up to the end of this year. In the case of Amazon, is an update of the contract that, as a matter of fact, expires in next year. But we will also, starting from the month of April, I believe, consider how we can adjust and evolve the contract and the volumes and the activity we do with the platform of Amazon. On the second question, we saw no basically update. This is the short answer to look.

I really didn't hear well. Can you please tell me again what you were asking on risk margin?

I was questioning the EIOPA impact study that was announced.

Yes, sorry, I -- now I get it. Yes. No, I think it's a bit too early to get the effects from us. Obviously, I would point you out more to what I said in my speech that I think is very relevant in general is the fact that the Board of PosteVita has approved the internal model. As you know, this is a lengthy process but in general, this will provide us more stability, and this is just a good news. But obviously, it's not necessarily related just to this point.

Yes. And sorry, if I can take if I can take the opportunity, I mean, one important point was stressing with the presentation, we reached 58% of BTPs for the first time in the PosteVita portfolio, so we're lowering our exposure to credit specifically. And I think we both mentioned the fact that the new multi-class products are taking a fair chunk of our life offering, is 35%. More importantly, that offering is now on a product that we likely, I must say, started distributing. And it's the only product we distribute in our 13,000 postal offices today. In January, we started -- is a product that has a long accumulation phase. So the target noncapital guaranteed component, which is, on average, between 30% and 40%, is invested over 18 months. So the product starts with basically 90-plus percent of capital guaranteed. Then over time, the exposure to the market gets to the target 18 months down the road, asset allocation. This is something that we believe is very important. Obviously, in current market condition is limiting the exposure of the latest clients that have bought those products and is also making our network much more comfortable to keep selling products in any market scenario. So this is an important specification I wanted to make with respect to our PosteVita business.

The next question is from Matija Gergolet, Goldman Sachs.

Four questions from me, 3 on the business and 1 just for modeling. Firstly, it's going to actually start with, I think, the Mail & Parcels. You mentioned that you expect a price increase and tariff increase later this year. If you could please give us some sense of the magnitude that you would expect? And also, whether do you expect any changes to the USO compensation that you're currently getting of EUR 260 million or so per year? Second question is on insurance. On P&C, specifically, can you elaborate a little bit more on what is the modular offering that you are now providing, and maybe also put it in context, it seems that in the fourth quarter, there was a bit of slowdown, I saw 11% growth in P&C compared to 17% for the full year. Just if you can give us a bit more color on what is going on there? Thirdly, on payments. So I think on Page 12, you show a market share of 15.6%. I think last year, you were giving like an 18% market share in your presentation on the Capital Markets Day. I presumably say that maybe the numbers are on a different base. But can you just confirm whether last year you gained or lost market share in card transaction basically in the incoming payments? And lastly, just more on the modeling side. Just a quick one. So I think you mentioned that for 2020, you expect higher distribution fees to be paid by insurance to the Financial Services division. I want to just see if you could just give us a bit of order of magnitude, so that helps our modeling, and maybe also the rationale behind the change in the fees.

I'll start with the -- Matija, the modular offer. The modular offer is basically a platform for our IDD compliant consultants that allow the consultant to identify the exposure, the risk, the interest of the client and then show a simulation in front of the client and then print a single contract for him. In the past, we were running with different lines. So if you were to buy insurance for the house, you would give all the details and then have a contract for that. And then if you wanted to move into welfare, you would have a new process restarting again. So this is an important habilitating factor to reduce the number -- the amount of time that our consultants are spending with the client discussing the product and is giving more confidence to the client itself, and if I may say, also a more professional approach from our colleagues. In terms of the 11% versus 17%, I think it's probably due to the fact that it was the time we were basically doing the rollout of the offer. I don't consider this marginal slowdown as meaningful because at the end of the day, I consider the base of this business still well below our weight. So I think Poste has the opportunity to have a much larger share of the nonlife business, and I think this year, we will have to really get our act together on this.

Yes. On the other 2 points left. First, on price increase, again, first of all, let me remind you that this is something we're still considering for Q4, and is between EUR 10 million and EUR 15 million. On distribution fees, again, this is internal distribution fees and are paid from the insurance to BancoPosta, then in turn it pays the network. This amounts to about EUR 100 million. And as I said, this was planned back in '22 and was a way to support the growth of consultants that will have been hired, will be hired and to support sales, basically.

Okay. Sorry, on the...

One on payments -- sorry, the one on payments, I think, we have a different base. We have grown market share. And that's what it says on -- in the slide that the delta versus 2007 (sic) [ 2017 ] and '18 has gone up.

Because you might have 2 different -- we will look into this on details, but you have 2 definitions. It's number of transactions and amount of euro transacted.

Okay, okay. Yes. And lastly, on the USO, do you expect any change potentially there, on the USO payment?

No.

It's stable for the next 5 years.

The next question is from Federico Braga, UBS.

I have 4 questions, if you don't mind, 2 on 2019 results and 2 on 2020 guidance. So starting with the 2019 results. Can you please help us understand if there is any one-off in the banking transaction revenues in Q4? They spiked to more than EUR 300 million in the quarter. So I was wondering if you could quantify, if any -- if you could quantify the amount of one-off revenues in that line. The second question on 2019 numbers is related on the average current accounts in the Financial Services division. I noticed that they declined quarter-on-quarter, driving the sequential decline to NII in Q4. And it's been the first time in a while that average current accounts declined on a sequential basis. So I was wondering if there is any one-off in there that can explain the decline? Or what was the reason for this decline? And looking at the 2020 numbers, starting with the insurance revenues guidance, this has been the driver of the higher revenue guidance. You increased your gross written premium expectations for 2020, you assume a 21% growth in 2020, up from 7% growth in 2019. So I was wondering, it looks a little bit ambitious to me, but I was wondering what are the key drivers behind this increase in assumptions. And also looking at the last couple of years, the reported gross written premiums came below the regional guidance, but in the end, you always beat on the expectation in the insurance division, driven by stronger investment margin and investment returns. So I was wondering, just looking at 2020 guidance for insurance revenues, how much is dependent on investment margin and investment return, just to have a better view -- better understanding of this? And then the last question on the dividend, you kept your guidance for 5% growth. It seems to me that you have a little bit room to increase your dividend payout ratios for this year, actually. But yes, I just was wondering what was the key rationale behind keeping the flat guidance on the dividends.

Thank you, Federico, I will start with the last one -- last question, and then let Guido answer the one related to '19 and '20. Yes, we have a payout ratio, which is below 50%. And potentially, there would be room. As I stated in my speech, we will be back in the last quarter with a formal update of Deliver 2022 plan. And the update of the plan will consider also the dividend policy. We think that in current market conditions and macroeconomic, economic and social conditions, it would probably not be the best signal to increase the dividend beyond what we have committed to, and that's a decision that the Board has taken yesterday. Please, Guido?

Yes. So on the variations you see on the private pension plan, this is just a change and is a one-off related to a change in accounting. Then can you repeat the other -- the third question, please? You've seen a variation -- yes, and in current, you had one in current account on -- but that's seasonal. That's just a seasonal change.

Okay. But -- yes, the first question was on the transaction banking. So if there is any one-off?

Yes. That is -- as I said in my speech, that is, we didn't call it one-off because it's not necessarily a one-off. Those are expired liabilities, which amount to about EUR 50 million. And then you have a question on -- thank you for repeating, I had one-offs, but I didn't remember that one. And on insurance...

The insurance guidance.

Yes, you're right. I would agree. It is a strong growth. And -- but you spot it, and it's right. I don't think there's much to comment. I think it's achievable. We intend to have a focus. As Matteo was saying, there was going to be a lot of focus on multi-class and the launch of this product, a product that gradually takes clients into more risk, but starts at 0 risk, comes particularly handy at this point because it's 100% plus 1% at the beginning. And then increases exposure to class III over 18 months. So people that have bought these products in February have seen no effects on their mark-to-market, and we expect this to be a differentiating factor for the commercial activity.

And the -- if I may add, the current situation is unfortunately for the economic system, creating uncertainty and, in history, Poste benefits from uncertainty in terms of net inflows. So the question will be how much more inflows and funds we will collect over the next few weeks, and how much we will be able to convert into life products. Having said that, the bulk of the EBIT growth that you see, is mainly related to enforce, so products -- the insurance business has at least 1 year delay, so the growth you see this year is based on the strong performance of last year. We were still the #1 net and gross life company in 2019.

[Operator Instructions] We have a question from Anna Maria Benassi of Kepler from webcast.

The question -- the first question is, the outbreak of the virus has changed the [ habits ] of many towns and cities in Italy. You are present everywhere. How did you deal with the emergency situation? What did you see in terms of business flows? And also what did you learn in the ability to manage a sudden significant emergency situation? Second question on SIA. You have reevaluated your stake. We are aware the company is preparing for an IPO. What is your view in the business perspective of SIA? And more importantly, do you believe us and support a stand-alone strategy?

I'll start before I leave Guido to finish. Thank you, Anna Maria. I don't know whether she would be able to listen. I assume, yes. Yes, we're learning a lot, unfortunately. And as I say, our first objective is to protect our employees, our colleagues, and give them the maximum support to keep operating in all the restricted areas. We're taking all the precautions to keep delivering our services and both on the banking, on the postal, on the couriers, in all the sectors. Several players are not open for business at the moment. So this is a process of extreme, as I say, focus and care on protecting our people and allowing our people to keep supporting their communities. On SIA, as I said a few times, it has never been a strategic asset and on more of the accounting implication, why we have recognized this initial mark-to-market gain, I will let it to Guido, please?

Yes, I tried to explain in my speech. I think one bit, it should be clear. We have changed the book value by a bit more than EUR 85 million, and this was due to the fact that we had to change the way we accounted for it. It was first jointly controlled through a vehicle called F SIA. We control SIA together with CDP. The fact that CDP has bought some shares outside this vehicle and it's gone above 50% in transparency, means that they are actually in control. So the -- lost the joint control status at F SIA level and now it's gone all to SIA, which makes it, for us, necessary to take the value at the most recent transaction. And those mean most recent transactions are actually the ones that CDP has done. So -- the -- we reevaluate to a price, which is the closest to market price to where CDP has bought their stakes from F2i and Orizzonte. Obviously, this price is almost a year old, is based on an old EBIT -- EBITDA for SIA. So those multiples are different and higher now and obviously, that debt EBITDA for 2020 in the new plan is higher. So this is a conservative new book value for us.

We have the last question from Giovanni Razzoli, Equita.

A clarification on what Guido said before in terms of potentially pricing increase in the Mail business. You've mentioned EUR 10 million, EUR 15 million in the Q4 2020. So shall we annualize this figure for '21? Or is it one-off?

No, no, no. It's not a one-off. It's the effect. Obviously, I'm imagining in a full quarter, that's why I gave you a range, but that continues, yes.

Yes -- but so it is for 1 quarter, so it's EUR 80 million, let's say, for 4Q now -- 4Q on similar basis.

EUR 80 million, if you do by -- 20 x 4, then it is between EUR 40 million and EUR 60 million, I will say.

Okay, EUR 60 million, okay. Okay, okay, but this is a major amount.

So I thank everybody for your time, and I wish everybody good luck. Thank you.

Bye-bye.

Bye.