UniCredit S.p.A. (UCG) Earnings Call Transcript & Summary

Thanks very much, Ashik, and good morning, everybody. And of course, we're delighted to have Andrea Orcel, CEO of UniCredit, of course, with us this morning.

[indiscernible]

And we're going to start -- sorry about the polling. But we're going to start with a polling question this time on UniCredit itself. Can we put this up? So I'm not going to read the answers. Which of the following do you think, should be the UniCredit strategic priority with respect to excess capital allocation? We've got 10 seconds to answer that one. [Voting]

Well, that's good.

Yes. And I think, we will talk about it a little bit later. So it's -- and let's start maybe kind of top down, and talk about the transformation journey and, of course, the kind of further ambition to unlock value from a much more improved kind of baseline that you kind of finished 2022 with. So, when you talk about Unicredit, you talk about improved banks stepped-up profitability. Can you talk about that story again for us?

Yes. Thank you, Magdalena. So, I think, when I arrived at UniCredit, I had two convictions, but they were based on desktop analysis and all the people that I knew at UniCredit, that there was a lot of value within. And if you looked at the valuation, we focused on that. If you're trading at about EUR 17 billion with equity of above 45, 50 in some cases, depending on how you count, that's what needs to be the first focus. So, the first phase of transformation was quite simple but very difficult to execute, I guess. It was to give back the trust and empowerment to the front line, and frame their actions and make sure that they did that in a disciplined fashion. At the same time, it was to provide them with products and content that they had lost in the previous years. So everybody talked about absence of factories, absence of quality product, et cetera. It wasn't really the case. But, the question was, can we get the commercial machine to step back up. I remind everybody that in 2021, UniCredit have not posted one gross of revenue quarter or year in years. So, I had the question from everybody, who tells you that they can grow. And actually, already in 2021, just by reempowering the frontline framing and telling people, show me what you can do, they stepped up massively. Then at the end of that year, collecting all the views of everybody, and I think that that's why our plan is particularly strong because it is bottom up. We announced UniCredit Unlocked. And UniCredit Unlocked, it was about creating a better bank. It was about reigniting what used to be the UniCredit of the early 2000s. And we thought we had all the ingredients internally. And I think the commercial machine of the bank took the challenge, drove hard. And gradually, we stepped up the products and the support of client solution can give that machine. We reunited the franchise before we had -- the franchise was segmented by segment. Now we have a franchise, that is organized by countries with all the synergies. All the clients are cross-selling among themselves. And we're giving, what we have concentrated is the product factories. And those give benefit of scale and scope to all of the network. If you think about it, our strong point were SMEs and affluent in 13 markets or 14, depending how you count. And we have the benefit of proximity of banks who are there, but we also have a benefit of global factories or growth factories. So either we beat players like Morgan Stanley or JPMorgan, just because we have proximity with those clients or we beat our competitors market by market because we have the products, that global investment bank can sell: hedges, asset management, insurance, advisory and capital markets et cetera, et cetera, et cetera. So, I think what you see in 2022, is really the crystallization, the low-hanging fruit of what can this commercial machine do. And for us, 2022 is establishing a new floor for our earnings capacity, a new floor for our distributions. And now the challenge is, with granular actions grow from there. And I think, we can do that because what we didn't focus a lot on in '21 and '22 is to put back online our operating machine. So the operating machine usually is a drag to a front end that is running faster and faster. And as we take back control of our technology of our operations, as we streamline them, make them more efficient, they are supporting -- and then eventually digitalize, they're supporting the growth that we want to have on the front end. So that's how we look at it. And if I can put it in a way, I think we all moved from a desktop analysis, this sort of gut feeling that could be done. Now we have execution and numbers that it has been done. Another question -- and we have all the in-flight projects that we have, to move up from there, and therefore, it's a completely different approach to things. I'm much more optimistic than I was, when we published the plan.

Okay. Very good. we've got a follow-up from the polling question, of course, now. So, we had EUR 5.25 billion distribution in '22 because of similar distribution to be expected in 2023. This, of course, will bring your kind of '21-'23 distributions to EUR 14 billion. What happens after that? And to the question, how do you think about that excess capital?

Well, I think two things. First of all, I think for all of us, but probably have more of a background in investment banking and M&A, what counts is cash flow. In banks, what counts is distributions. That's how you value a bank at the end of the day. How much can you distribute sustainably over time? I can have a relatively high return on tangible equity. But, if that return on tangible equity does not convert in distribution, it's very nice to see but actually does not convert. So that's why, we have chosen to focus a lot more on organic capital generation per share numbers. You should look at our earning per share, dividend per share, tangible book per share. And all that we do is to move those up. So, how do we look about distribution? The way we look at distribution is are they sustainable and are they recurrent. For me, they're sustainable and recurrent, if you can distribute them and keep your CET1 flat. At the end of the day, it's the ultimate confirmation. If I can make my distribution, my CET1 is flat or up, it means, I can support them. So then the second question is, can you repeat them? For us, I think we are, in part, it's the plan and in part, it's the starting point. I think we can -- everything else being equal, we can support these distributions for 5 or 6 years. Why? Because at the moment, as we said in the plan, we were going to distribute, what we said, we would distribute in the plan, generating organically 150 basis points of capital per year. That's EUR 4.5 billion. That equated to the old EUR 16 billion or in excess of EUR 16 billion. Last year, we generated 280 basis points of capital. That's almost EUR 6 billion, okay? So, the point for us is, can we keep up the capital generation above 200, going forward? And I think we can. I think we can, certainly in 2023, and we can most probably in 2024, if we're able to keep or grow our current profitability, and we are. We are going to do that. Then the question is, well, but how do you get to 5 years? Well, at the end of that, I am sitting currently at EUR 6 billion. But if you look at it forward looking more than EUR 6 billion of excess equity at a CET1 of 13%, then it means, that as my organic capital generation trends down because the capital efficiency with which I'm complementing, what I generate through net income compresses, I can underpin that gap with the excess capital that I haven't distributed before. And, I don't think that there is any player that I can see that has the combination of the two things: one, an ability to underpin their distribution with capital efficiency measures that allow us to distribute net income or more than net income ever year. And we stop our net income because cosmetically going over that is viewed as a little bit aggressive. But if you look at organic capital generation, this year of 2022, we will distribute EUR 5.25 billion while taking our CET1 from 14.1% to 14.9% post distribution. In theory, I should have been able to distribute another 80 basis points of capital. Every 50 is EUR 1.5 billion, okay? This year, if we repeat similar to last year, probably not 300 basis points of organic capital generation, probably in the 200s, we are going to be able to do both distribution and increase our exit capital further. And then we get to '24 and to '25. When the capital efficiency that we are doing on the back book compresses gradually down to 0, we will be able to distribute only a share of net income. But at that point, I will have a ton of excess capital with which I can complement for the following years, what I have. And for me, I think for investors in banks is ability to deliver continued distribution at an elevated level without shaving your balance sheet or your coverage and ensuring that, that is sustainable for as long as possible. So the other thing that I would add, because I show all of you how you look at that, in terms of distribution is obviously depending on where we see the share price versus book value, and depending on where we see the value of the group, which, at least from a management standpoint, we see much higher than where it is now. Obviously, we are tilting to share buybacks because we think we can create a lot more value. Look at EPS, DPS and tangible book value per share, doing that. As these changes, and we converge to a higher valuation, then they end as investors want to ensure a certain level of minimum current yielding cash. If you see -- you can see what we stroke the dividend this year, in order to get that dividend, then share price went over, but that was the idea. We will increase the cash portion and decrease the share buyback portion. So obviously, we're going to converge on the dividend yield.

Great. Well, thank you very much. Now we've talked about kind of profits and, of course, your '23 profit guidance, kind of broadly in line with '22. Could you run us through the tailwinds and the headwinds to those kind of -- to the numbers?

So, I think, we look at this a little bit differently from where many others look at it. For us, we are trying as much as possible within reason, obviously, not to guess beta. So it's not for me to guess, where rates are going to go. It's for me to be prepared for positive and negative, but it's not for me to tell you my plan is based on rates at this level within reason, as I say. And it's not for me to -- so if I look at it that way, if you look at UniCredit Unlocked, we were very conservative in terms of rates, and we were very conservative in terms of pass-through, and we were very conservative in terms of GDP growth. If you look at our new guidance, our new guidance is rates of 2.5% -- is based on rates of 2.5% because we thought that, that was a rock solid conservative view. Pass-through at 40. We closed the year around 20, and we're still pretty much there. So -- and a deep shallow recession. I think at the moment, we -- it's safe to say that we're probably going to have a shallow growth rather than -- depending on other events, right? So that macro, as it moves, will underpin things. But -- while I could argue with you that if we are very effective on the pass-through, that's management action, I can't argue with you that rates going up is value generated by this management team. But just so you know, for every point in rates, about EUR 600 million at least, in excess on NII. And for each point in pass-through below the 40 that we have, is more than EUR 100 million in additional NII. And then you can mix and match as you want. So if you look at the macro where it is now, obviously, it is better than that. Now, I would have answered your question on rates differently. I think we're going to go back to 1.5%, 2%. And that is why the management team is, of course, executing this year, but what we're obsessing about is '24 and '25. So, when in '24 and '25 rates go back down, whatever you think, let's say, 1.5%, 2% in our negative view of things, are we able to compensate the reduction in NII with fees, cost of risk, cost? And how much can we compensate on that? And where are we going to land on? Because I do think that if we believe, and we believe that we have a new floor where we are, and we need to grow from there, I need to use the year of high rates where there is tailwind to everybody, to build what I need so in '24 and '25, I pick it up and I go further. But of course, there will be a slight hump for everybody in '23 if rates continue to be at these levels. Headwinds. For headwinds could have been cost of risk, you never know. But we have EUR 1.8 billion of overlays over fully covered book. So actually, if I were to bleed this through the P&L in the next 2 years, my cost of risk would be below single digits. If I have a problem, then my cost of risk 30 to 35 remains very solid because I have about EUR 1.8 billion, which are 35 to 40 basis points, depending on how you count. The second one is cost inflation. In our plan for this year, we have EUR 500 million of adverse impact on cost and inflation. We're determined to grind out most of them. I don't know where we're going to count because now it's no longer low-hanging fruits of the easy delayering and the easy process simplification. We're going down really granular all the way down to the organization. And so it takes time to execute. I don't know if you're going to see the impact this year, but to a certain extent, I don't mind because I'll have NII. What I need to see the impact is in '24 and '25. And then you have fees. I think fees, people may be a little bit overconfident on where they land. Just because, if I can get BTP per [indiscernible], whatever it is, at 3%, 4%, usually -- and I see the markets as they are, usually, I see tight and then I look at what they are. That means your asset management fee fees, and the fees from life insurance reserves are more challenged. But again, the important things for me is what engines and building blocks can we create in '23 continuing on '22, so that when NII compresses they contribute. And for us, it's clearly protection, where we have a 20% growth, and we are continuing on that trend line. And I think it's capital-light. We like that very much. Secondly, we are reviewing what we can do on payments. It's premature to give you more than that, but we think it's a capital-light business and UniCredit captive in-house. And second -- and thirdly, on asset management, which has always been a big, big driver, trying to prepare by reinternalizing certain elements of the value chain. That does not mean buying an asset manager. It means reinternalizing, as much as we can of the value chain, so that we can have a fee impact on the same volume. And that's what you saw with one market that's what you saw with Nova. To a certain extent, you're going to see some other obvious things, as we try to bring back in part of the chain that was externalized. And that's pretty much what we're doing there.

Perfect. Now of course, we kind of -- we touched upon kind of, of course, our shifting expectations in terms of -- kind of the health of the economy overall, right, kind of we moved from a shallow recession to slower kind of growth of the market, as well. But what are you actually seeing in terms of the sentiment both on the corporate and the consumer side across your footprint? Is -- how has the year started? Are there any kind of concerns in your conversations?

So, we're still pretty much where we were last year, where we spent the entire year waiting for the big shock, and then it didn't come. And we pushed it to 2023. So in terms of cost of risk, we don't see any deviation. So at the moment, I would be much more positive on cost of risk for us. But what there is, is we saw a slowdown in business activity, both families and SMEs in, let's say, the summer to October, beginning of November. Then, there was a rebound with people starting getting on with life and saying, okay, fine. It's not going to be Armageddon. We need to get back to life, and do things. I think that with the, let's say, mid-January, there is a concern, meaning -- but it's uncertainty, meaning people went from -- it's going to be a disaster to it's going to be fine to it's going to be mixed. So, there is more thoroughness on reviewing investments. There is more thoroughness in assessing what they're going to do. So it's more -- it's lower. It's not -- but it's not reflected in cost of risk because just people are reviewing what they need to do given a very uncertain environment.

And would you say that's across your footprint, across what you're seeing...

Yes. I think everybody is trying -- well, quite counter what people usually expect, we see Italy doing very well on a relative basis, very well because at the end of the day, exports, investments, continuation of what Draghi had set up in terms of changes, stability from a government standpoint and policies. The new budget was much more conservative than people expected, it would be. And I think, it's marching quite well. There is a lot of adjustment on the value chain, and I'm particularly impressed. I think everybody felt that given the shock and the change in business model, Germany would be a negative growth. I don't think they're going to be. I think they're going to be close to 0-plus something, but not being at the growth because the adjustment is occurring much faster. And secondly, government is supporting to a much greater degree. We all made our projection assuming in inverter commerce limited or no support, but the support is massive at the moment. When I start moving into the CEE, I think these are economies and the families and companies that are used to work in uncertain, inflationary, higher growth environment. Granted, inflation at 4%, 5% is not inflation at -- it got in certain places, 12%, 13%, 14%, but now it's coming back down. And I think, the degree of adjustment is quite good. And the numbers vary -- has always been about managing the jaws in a positive way, and they continue to do that.

Perfect. I've got a couple of more questions, so I'm going to check in with the audience, whether there's any questions, from anyone. Okay. I'll come back, so look at the resi. Andrea, you kind of started answering my next question. But really, it still is about some investors, particularly on the kind of global side, kind of still cite the Italian sovereign kind of risk or the load of kind of sovereign debt, as a kind of obstacle from a perspective of investing. How do you react to that?

So on the one hand, I have spent a large, large majority of my life outside of Italy, and I used to sympathize with a lot of those concerns. And we cannot deny that the debt-to-GDP is high. That said, I think that there are a few things that needs to put it in context: one, a much greater degree of integration with EU, and people don't consider that; two, much greater family wealth. Because when you look at economies -- so for example, I used to think in the past, Spain and Italy, very different. Spain, low debt-to-GDP from a government standpoint, the wealths in family or high indebtedness of family; Italy, high debt-to-GDP, low indebtedness of families. You need to tie things together because depending on where you're going, if there is a shock, the 2 are tied. And we never do that. And so -- and finally, I think people underestimate the impact of the next generation of EU funds. I mean, I think that for decades, Italy has not invested in its own economy, decades. I remember when I was at university that when you had a budget, that invested EUR 10 billion, everybody was kind of, oh my God, it's massive. We have EUR 200 billion to invest. Even if we don't investment well, we have EUR 200 billion to invest. It's massive for Italy. And the convergence and the changes that it will bring are high. So is there a risk? Of course, there is. Is it a little bit -- if I may, sometimes I feel that Italy is a little bit like UniCredit. If you look at backward-looking, you take a view. If you look at now in forward-looking, maybe you take another one. And I hope I'm right with that. But for the time being, I think that last summer, everybody felt spreads would go to [ 400 or 300 ], et cetera. For us, it was great in terms of managing our portfolio and margin because we knew very well they were not going to go. So I do think, that the corridor where spreads are moving is much tighter than it was in the past because of further integration and a number of other fundamentals.

Okay. So that kind of brings us quite nicely to an industry question, I wanted to ask you. So of course, we've got higher interest rates, the final kind of innings of the regulatory reform coming up. Of course, at the same time, along -- over the last 2 -- few years, kind of digitalization as such, has, of course, also transformed the kind of the banking, particularly on the kind of commercial retail side, as we know it. And of course, the rates have kind of really, particularly for us in Europe, transformed the bank's profitability. And with that, of course, the payouts. So we're in kind of in that situation kind of today. But -- so how do you assess, if I kind of bring you back a little bit, how would you assess the health of the European banking today, versus pre-COVID, let's just say, 2019? And how sustainable you think those returns?

I think there are two ways of looking at this. The first one is negative rates is unhealthy. And we've all gotten accustomed to the reality that we have a minus 50 rates for 15 years. I mean, it's not how it should be. But a lot of generation have lived most of their lives -- working life with negative rates. So what we're seeing now is a stabilization of what it is because, in my opinion, structural inflation in all the West will be higher. As we fracture out of Russia, as we have topics with China, as we do all of these things and we reinternalize by definition, it's less efficient than it was before. So structural inflation is going up. If structural inflation is going up, rates are going to remain up. What does up mean? It doesn't mean 5% necessarily or 4%, maybe means 1% or 1.5% or 2%. But do you know the transformative effect that a 1% 1.5% or 2% has on a bank from minus 50? It's completely transformed your business, completely. And so, I do think that we are back to a situation where even if now we say, oh, the impact on NII is going to be really negative, if we go from an expectation of 3% or 3.5% back to 1.5%, 2%. But if I had asked to anybody in this audience 3 years ago, how would you react to the sector if rates were at 1.5%, 2%, I think we would all have opened a bottle of champagne. So, it allows banks to go back to their role of intermediation, making money out of it, which wasn't the case before. So that, I think, is transformative. And it's not necessarily banks are making too much money. In my opinion, then you get to the second thing. Banks have tried to grind their way through having negative rates, meaning their core business was not profitable. But that means that they have done a lot of work on cost, capital efficiency, on fees because the rest was not working, which, by the way, is the same thing that I tell my team: don't look at rates at the moment, let's continue that work on the other things. So now, when you pile on what had been done before, the propeller of higher rate, you see better structural profitability. I think European banks are well capitalized. I think, it's difficult for any of us to look at really disastrous cases out there. We could have looked at a lot more, 5 years ago. They're very liquid. For us, when I look at certain news, I mean, our LCR is way above 150%, probably trending to 160%; NSFR above 130%; cash and liquid asset, well above EUR 200 billion. And we are particularly liquid given the conservative nature of how we run the business, but I don't think any bank is really crushed on the other end of the spectrum. So, I do think that from a capital and a liquidity standpoint, European banks are good. On coverage, it's more spotty, in my opinion, because people take different views on things. And, it's not more spotty because people do the wrong things but because they take different views. We take quite a conservative views looking forward, or it could apply my models looking back and have a completely different cost of risk. But we don't want to do that. But that's not to say, that there are big issues somewhere. So, I do think that, if we use the NII impact without losing the attention to cost, to fees, to cost of risk. And we become more capital-efficient in an environment where, at the end of the day, Europe has applied in full bowl. We're going to get bowl full in '25. Will there be tweaks? Yes. Okay. But if you look at the trajectory of what banks have had to internalize, every time the density was going up, it's like for us, it's issuing. And this year, we are going to have 0 effect from regulatory headwinds. And we're like, when is the last time we had something like that? It's very difficult to remember. And so, as we do that, then the capital efficiency measure bleed through because they don't need to compensate for regulatory headwinds that are absorbing part of your net income, capital generation, et cetera. They don't. They just go down to the bottom line. So, I think, these things are positive. Now, we need to test the sector on continued uncertainty, the effect of the war and these kind of things. But I think, it is a solid sector at this point.

Perfect. Okay. We've got questions. Oh, we've got questions. So maybe, the gentleman right at the back will start, and we'll come back to the second row right after.

So, if we look at '24, '25 and beyond, first question, at what co-equity Tier 1 ratio, you would like to run the bank instead of normal macroeconomic circumstances? And second question, assuming all the surplus capital is distributed by them and the rates will stay where you expect 1.5%, 2%, what return on tangible UniCredit can generate? Because it seems to be current aspiration of 10% is a bit on conservative side.

So first of all, with respect to capital, we have been clear that we had a -- we have a target of 12.5%, 13%, okay? And we're sticking to that target. Personally, I think that -- and maybe, I will change my mind and I can be wrong, but saving capital to increase RoTE can come back and haunt you. And if you're talking EUR 1.5 billion more distribution in the big scheme of things with the risk you could have later, I'm more cautious about saving capital. So 12.5%, 13% based on what we know now, is the right number for us. That's point number one. Point number two, there are -- you say, '24-'25. So in '24-'25, we will not be at 12.5%, 14%, unless we use the capital elsewhere or God forbid, we have a shock. But we will not be because actually, in '24 -- in '23, we're still aiming for distribution that are neutral to capital. So the capital you see is going to be -- at least our management ambition is to keep it flat. So we, in theory, will be back if we are successful at [ 49 ]. And then as we go into '24, maybe some of the efficiency because as I said, the capital generation we have is profitability and capital efficiency of the back book. We thought, we could extract about EUR 30 billion of RWAs during the plan in capital efficiency. Look at how much we've done last year. And so we are -- at some point, this is going to run out. When it runs out, I'm going to use the excess capital to keep the distribution where they are, or grow them. It will depend where we are then. So, my objective is to generate the maximum amount of capital organically while keeping high coverage, while not stressing the bank; distributing what I can afford, which is around what I generate per year. Actually, in the last 2 years, we've distributed way less than we generated in the year. At some point, where the capital efficiency measures compress, the capital we generate will be a portion of a net income of a year. And I hope, that by that time, my net income and my profitability will be significantly higher than it is today. Then from there, I will underpin with the excess capital. What can change that? And I've said it before. What can change that is, at some point, we see a value-accretive acquisition and we deploy reassess to do that transaction. But again, if you see how I'm approaching and we are approaching as a team, that the way I will approach it is, okay, I can use this capital to underpin and give certainty on my distribution for 5 or 6 years, at these levels or -- but then after 5 or 6 years, I go to 12.5%, 13% and I'm normalized. Or, I can use it in part to acquire something, but then that needs to juice up my distribution on a per-share basis. So I reapply what I've done in UniCredit to the target, and we extend or we increase the amount of distribution per share we can afford. If we don't feed that parameters, you won't see me moving. And I know, a lot of people are going to be frustrated, but no. If we get that parameter, then it means, that I convert a time of depletion of capital, which is 3 or 4 years, into a perpetuity. And I'll take the perpetuity any day. With respect to the ambition on return on tangible equity, in UniCredit Unlocked when obviously, rich environment was very different, we said we wanted to exceed the cost of equity. At that time, the weighted cost of equity for the group was between 9% and 10%. Today, we've reached very different. It's between -- it's around 11%. So we are determined to exceed our cost of equity no matter what. And by the way, it is cost of equity that is true cost of equity. So, when we look at our net income, we look at our net income post payment of AT1 and CASHES. We look at our net income excluding noncash charges. We look at our net income, including all the hits. And we look at the tangible book per share. Why? Because I could have a net income which is higher, but then my FX reserve depletes my book value because of the capital I have in markets -- in emerging markets as I do, I need to take that into consideration in how, I create value for shareholders. So, I do think, that for the time being, these targets are correct. We will reassess our guidance with the numbers of Q1. At that point, we will have had 4 months in the year, and I think it's a good moment to reassess. For the time being, we are where we are.

Yes, I think it was the second row.

[indiscernible] from Lazard. Just two questions on -- regarding SVB situation. So number one is, how sticky your deposit base is versus your peers in terms of mix and in terms of the franchise, of course? And, if there's anything making you more concerned regarding liquidity versus Thursday last week? And secondly, will this somehow give some concern to the ECB, regarding the [indiscernible] approval, in your mind?

So I do think, there a few things. When you have a direct effect -- do you have exposure to some of the banks that have gotten on the press? Or do you have exposure to other banks that could be vulnerable? As we say all the time, we are a European bank, and we focus on our core markets. So our exposure to other continents is de minimis to none because that's the business model, right? And in Europe, Bal III Bal IV is applied to all the banks, not in segments. Therefore, it's much more difficult that you find in terms of counterparty risk issues like that one. That does not mean that they are not banks that are weaker than others, but that degree on the Bal, not possible to do, okay? So that's point number one. Point number two, you go back to deposit beta. Okay. So, if you look at UniCredit every crisis, and it's not only UniCredit. It's usually large reference banks vis-à-vis smaller, more nimble banks. Every time there is a shock, we have affluence of deposits. And with the shock of last week, it wasn't different. So, we got clients that were, let's say, a little bit more stretched for the 0.5 point somewhere else that came in and said, I'll take SVB, I'll take UniCredit, I'll take Zagrebacka, okay? So usually, we see the opposite because there is a flight to quality to banks like us. Then the question is, how sticky are our deposits? They are very sticky. 60% of our deposits are retail. We have more corporates than others, but the large majority is retail. Retail doesn't move. The deposit beta of retail in Italy, but to a certain extent even in Germany, is low single digits. And banks are holding the line -- large banks are holding the line. So the banks you see -- the banks or financial intermediary you see increasing rates are smaller, and they pay. Banks don't move, and we're not having deposit outflow. Then, I think there is another element that is interesting because when things like that happen, you rechallenge everything you thought you knew. What about the replicating portfolio? If you are -- if you have been aggressive in replicating, meaning long-dated, large majority, you -- have your models given the stickiness, but you've gone as far as you could because in the past, margins were very low. So for a sticky deposit, you stretched. Clearly, if you are like that, you're more vulnerable to deposit outflow because if you have a deposit outflow, the balancing goes out. We've never been stretched. We've been very conservative, which has costed us on our NII, but now gives us the benefits in, a, liquidity that we have; and b, the ability to replicate in higher rates. So, I think we're not done with the analysis. I think it would be superficial to be. And you need to look at it not only on what happened in the U.S. but also on, okay. That happened for those drivers. Can similar drivers do to us something slightly different? Because you're never hit by the same issue twice. But you need to look at those things and say, okay, this happens and look at what happened. And then what does it say about -- is it right for me to hold the line on deposit beta? Or should I lessen a little bit? For the time being, we see absolutely no pressure in lessening because the impact we've had from corporate has already bled through, and we anticipate the final bleed through the pass-through of this year. And the rest is very, very, very stable. Now people are probably more worried about making sure that, that is there, and safe rather than going and look for 1 point away. So I do think we are reviewing the liquidity. But certainly, Europe has been obsessed with capital in banks. For a decade, I think this rebalances the debate on liquidity as well, but with the confirmation that the liquidity has not been an issue because it was plentiful. Now the ECB is pulling back in, but most banks have liquidity ratio that are off the charts. So, unless it dramatically dislocates from where it is now, but then I see the ECB intervening, but -- and I don't see any reason why it should dramatically dislocate now. We are in a relatively different situation. With respect to ECB, I don't have a crystal ball. I think -- I remind you that share buybacks are approved. They are not done and then vetted. They are up like dividends. They are approved. To get them approved, you need to do 3 years stress plan that touch liquidity, that touch profitability, that touch recession on the economy. And they see, whether or not in any plan by approving your share buyback, you are at risk, or you get to a level that is below the guard. And we've never even close to that also, one, because of our organic capital generation; and two, because of our starting point. If you look at UniCredit in the past, it was high stock, low flow, meaning high capital, not generating any. Now we are high stock and high flow, which allows us to be quite defensive in all the scenarios that you look at.

Yes. Well, thank you very much. And, I think that on that note, we will finish. Thank you very much, Andrea.

Thank you, everyone. Thank you.

Thank you very much for being with us.