Credito Emiliano Aktie

Good morning. This is the Chorus Call operator. Welcome to the Credem Preliminary Results 2025 Conference. [Operator Instructions]

Stefano Morellini is the General Director. I'm going to give the floor to him.

Thank you. Good morning, ladies and gentlemen, and thank you so much for connecting. Here close to me, we have the Co-General Director, Giuliano Cassinadri; and my colleagues managing the Valores or Value Add and investor related areas. I am so proud to walk you through very important numbers concerning excellent results, which is what we managed to have, thanks to our strategy, also thanks to the way we do banking and especially thanks to our people, their professionalism and their determination.

So also for 2025, we reconfirm our strengths. So this is much more the numbers or figures of data, we can say that we have turned those numbers into a real actual impact on the local communities, on the territory.

We've also strengthened and improved the trust of our economic partners and of our customers. As a matter of fact, you can see that the financial support to families and companies is growing. This is a commitment for us, and it translates into extraordinary results and into our concrete encouragement in order to grow the economic fabric of the country.

Now we've been doing this since 2013. Let me highlight this. So after 12 years, this is the 12th consecutive year where we can see an increase to loans to customers. We will strengthen our driving role into managing savings. So we are working together with our customers hand-in-hand with our customers with strategic advisory services and custom-made solutions for every single financial need.

Last but not least at all, we keep investing in technologies because we want to turn all of our internal processes, and we also want to change our services. So there's an unstoppable integration of digital systems, our multichannel proposal.

We are now able to offer easier, personalized, safe banking experience ready to take up the challenges of the future. So before sharing with you results, I would like to reiterate the following. Reaching those targets was made possible, thanks to the work and the commitment of an extraordinary team that every single day put our own mission right at the center of our effort.

We want to create value and well-being. They both have to be sustainable over the years. Once again, I would like to wholeheartedly thank our professionals and our staff. Thank you so much for what we have done.

Can I please have Slide #2. And let me start with the results of 2025. I will also be adding some comments on the growth performances we have enjoyed together with our positioning. Slide #3, please. Now you can see here the main results that we were able to get.

So the year closes with EUR 621.5 million benefit. That's a positive value generated by the merchant acquiring. So net of this, our profit would be EUR 522.8 million. This means that it is a normalized profitability that stays at a very high level, double digit. ROE, ROTE are 14.1% and 12.4%, respectively, once again.

As for AQ, asset quality, this is right at the top of the Italian and European banking system. NPL ratio is 1.6%. The net value of the indicator is 0.7%. So there's a very high level of capital generation. And this means that we can maintain a very solid capital position.

The CET1 ratio is 15.82%, and this is much higher than the regulatory minimum level for 2026. Now this asset ratio already includes the proposal of a dividend that will be EUR 0.75 per share.

Let me now walk you through the dimension growth values in Table #4. The growth strategy keeps generating better results versus the average of the system, thus confirming the effectiveness of our business model in different economic cycles.

Now in particular, I have to say that loans show a yearly growth by 3.6% versus the 1.1% of the general system. As for direct collection in this case, we have an increase by 3.8%. This is 2% points higher than the average number of the Italian banking industry.

We will wrap up 2025 with a significant reduction of net collection. This is our best number ever, and it reaches EUR 6.4 billion, of which 3 managed loans and insurance. Now this performance shows a very important message concerning the trust and confidence of our customers in terms of managing their savings.

All of this translates into a crucial element for the development of the commission components into the next phase, which will be the stabilization of the rates. So that is not just volumes because we keep developing our customer base. In the past 12 months, customer base is now 1.7 million customers with a yearly growth of 5.8%.

Let me now share with you the details on the sources of profits, which is Slide #5. So we keep rebalancing our inflows. What is more important is the incidence of recurrent services margin, which is now 45%, while what we can see is a reduction of the financial margin because it follows naturally the dynamics of the rates.

I would like to highlight that throughout 2025, the dynamic of the core revenues. Now even if the makeup or composition was different was on a quarterly basis, constantly growing up. Now this is an excellent message in terms of looking at the future. Well, especially because this is confirming that Credem Group can really leverage the diversification of its own business in order to support the revenue components, thus readappting, readjusting the various current scenarios, thus aiming at sustainable growth in the medium, long term.

In the next slide, #6, you will see the following. The commercial bankers together with the para banking companies plus CC or consumer credit. Even if the rates went down in the past 12 months, they have been able to close the year on excellent levels.

This is what happened, thanks to the excellent quality of the assets, Credem Banca not considering the capital gain, which is the session of the merchant acquiring, we have net profits of EUR 275.1 million.

Now the contribution is for more than 44% to the consolidated balance sheet, while the power banking sector, consumer credit and technology wraps up the year with EUR 86.1 million. In this case, the incidence of the consolidated result is around 14.4%, once again growing versus last year.

So thanks to the excellent development of the loans managed and the unstoppable work of our networks the aggregate world plus private closes 2025 with a comprehensive net result of EUR 175.1 million. Once again, this accounts for 28% of the total consolidated balance sheet.

Now these results confirm the importance of having a diversified business model. This means we can exploit to leverage at best all of the internal [ solutions ] in order to extract value plus profitability in a different market context. And I am pretty sure that for us, this will be a distinctive factor as well as a competitive advantage also in the near future.

Anyway, we'll be back on this topic in a few minutes. Next slide, #7, please. As for the financial margin, this is going up versus the previous quarter. And once again, this confirms the dynamic of the behavior that we saw throughout 2025. On a yearly basis, the impact has to do with the movement or evolution of rates, but we've been able to wrap up 2025 slightly better than our forecast.

What is very positive is the result of core services margin level. So net of the nonrecurring components, for example, the trading and the performance fees. Now this progression allows the total revenues to have a growth of more than 3% versus the previous quarter.

While on a yearly level, we have to consider the smaller financial margin. We also have to consider the smaller level of performance fees that have been significant in 2024. So despite the commitment, a strong commitment of the group in order to keep growing in terms of new hires, but also in terms of very intense activities made of projects and IT developments.

Again, I'll be back on IT in a few minutes. The growth of operating growth is limited. It is only 3.4%. Now this means that we have an excellent operating result, which is EUR 838.1 million. The cost of risk, as you can see here, is extremely small.

On a yearly basis, it reaches [ 13 ] basis points. So we wrap up 2025 with net profits at EUR 621.5 million or EUR 522.8 million net of the capital gain that I have mentioned before, having to do with the transfer of merchant acquiring MA. Next slide, please, #8.

Now as I said before, the financial margin or net interest income has registered throughout 2025 an excellent quarterly progression after the most significant effect having to do with the reduction of the first quarter and despite the continuous reduction of interest rates.

We are sure that for 2026, the biggest challenge will be to further reduce the volatility level of the interest income or financial margin, thanks to the expansion of volumes and the protection of the commercial bifurcation. In Slide #9, you can see that we confirm an excellent protection of our commercial profitability, especially when compared to the system level.

As compared to the Q4 2024, the average drop of our commercial bifurcation seems to be 31 basis points versus 57 bps or basis points on average for the system. This is due to the excellent capacity of the group in maintaining quite a good profitability on loans and especially in terms of reducing as quickly as possible the cost of direct collection.

That cost had been impacted throughout 2023 and 2024 by the strong request of deadline products. In Slide #10, you can see the securities portfolio. Well, in that case, we carried out purchases basically on Italian govies around EUR 900 million in Q4.

This means that the portfolio is now worth around EUR 12 billion. As for the duration of the Italian govies is reduced. So this means that we've been able to maintain our general portfolio duration at around 3.6 years. The incidence of Italian govies reaches 42% with HPC component, which is up to 82%.

We maintain an important focus on the market, and we do this because we would like to take advantage of possible benefits, but we also would like to take advantage of opportunities to increase volumes.

In Slide #11, you can see that we are absolutely satisfied, thanks to the expansion of commission levels. I would like to highlight that this aggregate number in terms of recurring components. So we have to exclude from the total the financial activity and the performance fees -- so as for Q4, we have seen an increase by around 4% versus the same quarter 2023.

Out of the total, you can see the incidence of smaller performance commissions versus Q4 2024 again. So it is with trust and confidence that I reiterate that this aggregate will be the main driver of the revenues components in the next quarters, thanks especially to the very strong synergies between the networks and the product firms that our business model is offering.

Let me give you some details. I mean, there's been a strong production of net collection this year. So this translates into an excellent evolution of management commission net of performances, which are able to reach EUR 135.1 million. Now this aggregate number this quarter also includes quite a good contribution, thanks to the placement effort. So a remarkable growth by around 9% versus the same time window of 2024.

So as for wealth management, we also have an increase of the insurance business, which reaches EUR 27.1 million that accounts for -- I mean, what accounts for the contribution of Banc commission is EUR 50 million. If you make a comparison with the rest of the year, of course, there's an impact due to the lesser contribution from merchant acquiring, which is what we have transferred at the beginning of 2025.

It is equal to 4. 4 is the contribution of the financial activity, and this is due to the fact that there haven't been significant benefits we got in the quarter. Slide #12. -- shows you that we can keep a sustainable cost level on a medium-term basis, and this is consistent with the growth of the size of the group.

You can see the number of hires going up in the last 12 months. This has driven the dynamics of staff cost. We have a low turnover level in terms of employees. We are focusing so much on further strengthening of the network together with young talents having specific external competencies and skills.

This is fundamental to drive the evolution of the group and the digital and technological profiles. Now the number of the last quarter is even better than the number we had in Q4 '24. And this is also due to the lesser impact of those components having to do with the evolution of operating income.

So as we already told you in the previous conference calls, the administrative fees are directly correlated to the IT developments plus the intense project activities in order to further improve the internal processes of our bank, the service model we implement as well as the IT architecture of the group with following consequent benefits in terms of the strategic positioning, considering the business we have in the future. In Slide #13, as I said before, you can see that this is the 12th year in a row where we see a growth of loans to customers.

This is what we have done going through different economic and financial scenarios. Now this confirms the extraordinary work done by our group, central offices, commercial or sales network. This is also due to the effectiveness of our business model.

So plus 3.6%. Once again, this is so significant, especially when compared to the growth of the system that only does plus 1.1%. Let me give you some details. I mean you can see a growth of 5.7% short-term loans, residential mortgage and leasing, respectively, 3.2% and 3.8%, while consumer credit CC is driven by Avvera shows an increase by 11.1% year-on-year and reaches EUR 4.1 billion. So as I previously told you when commenting the results of the first half of the year, we did an excellent job with our networks in terms of consulting and advisory services to companies. This translated into an increase of gross loans to companies in 2025 by plus 15.6% versus the number we had in 2024.

Well, we do know that we will have to consider a market scenario that will be very challenging, and we will also see an increase of competitiveness. Now we are absolutely sure that we will be able to keep having overperformances versus the industry, and we will keep increasing our market share also for 2026.

This is consistent with our organic growth project. Next slide will be #14. I'm so proud to tell you that we will be closing 2025 with the net production level, which is the highest ever. Net collection increases and reaches EUR 6.4 billion. If we exclude the corporate, we would be having EUR 6.7 billion.

What is significant is the net flows managed collection, EUR 3 billion. This goes well beyond the expectations we had at the very beginning of the year. So these levels are contributing and they will be contributing to our business in the next quarters.

So once again, they will increase the commission level. This means that they will increase the revenues in the current context of stabilization of interest rates. So we have an excellent result in terms of administered or managed the collection and the rent collection, both with a net production, which is around EUR 1.7 billion each. Let me highlight once again that the growth strategy, so the organic growth strategy also depends on the expansion of collection.

So it also depends on the fact of getting new customers. And at the same time, we want to keep being the real benchmark or reference point in terms of managing their savings. Now these numbers are showing you that we are doing all of this in the right way.

And yes, I can confirm you that we have challenging targets and objectives of this kind also for the years to come. Slide #15. Now the excellent dynamic of net production has given a contribution to the growth of collection from customers, reaching EUR 114 billion.

The direct collection growth by 3.8% versus the end of '24. What is significant is the expansion of the managed collection plus insurance business, reaching EUR 48.2 billion. The growth in that case is around 10% versus 2024.

Now this happened, thanks to the excellent net reduction that I have commented a couple of minutes ago. In Table 16, -- as I said before, we will close the year with a cost of risk, which is 13, 13 basis points. This is an excellent number in Italy, but also in the rest of Europe. Now this happens thanks to a very low level of deteriorated credit, and they are going down.

So now we have EUR 615 million. NPL ratio is 1.6%. Now we are not seeing a significant signs of deterioration and our default level is one of the lowest levels of the industry, which is only 0.43% for us.

Let me now talk about 2026. We will be focusing on the current economic scenario. But at the same time, I can confirm you that one of our targets is to be well below 20 bps in terms of cost of risk also for the next 12 months. This is Slide #17.

Now if you also analyze the hedging, so the coverage that we have in our group, well, AA Group itself is right at the top of the sector in Italy, but also in Europe. The coverage ratio is now 59.2%.

Now this number, if you consider also the additional coverage generated by coverage pillar 1 together with the addendum reaches in general 60.5%. Now those levels will guarantee the fact of having a competitive advantage position in case the scenario changes, which is what happened in the recent past.

This also gives us the opportunity to keep working with determination in our growth strategy. Next slide would be #18. So it is with so much satisfaction that I can tell you that our MREL requirement, so it has improved. MREL was reduced by more than 3% points versus the MREL required for 2025. Now MREL is going very well.

So once again, the authority told us that we did an excellent job. So the buffer improves. In terms of bonds, the only change versus the previous quarter is the use of the recall option on EUR 107.5 million of T2. In the next table, #19, you can see that also during the closing of 2025, we keep a very high level of NSFRNL.

Now basically, the first one is 141% LCR is 177%. In Slide #20, I would like to wrap up the first section of my presentation by showing you our asset position. As for CET1 ratio in terms of banking growth, but also in terms of credentials, so on Credemholding reached respectively, 16.99% and 15.82%, thus confirming the very strong capacity of the group to be able to generate capital in an organic way even if we grow at a high pace, much bigger, higher than the average of the system.

So the expansion of our risk-weighted assets, RWA, this is due to Basel IV, but this is also due to the expansion of the volumes. Now this is more than offset by benefits generated by also considering that there's a dividend proposal, which is EUR 0.75 per share already included into these numbers.

Furthermore, as for the ratio, we also have to consider the impact by 11 bps due to the sell-off, if you will, of the provisions due to the latest Italian financial law. Now the total requirement for 2026 is 8.55%. Now this requirement already includes the new P2R, which is 1.25%. This is the lowest in the Italian banks directly controlled by the European Central Bank. So our buffer stays very high, very reassuring -- which is 727 bps. Next slide will be #21.

Now just a couple of minutes for -- I mean, considering the growth and our future positioning. This is now Slide 22. Here we go. So in the last 4 years, we've been able to increase by more than 13%, the level of our loans to customers. In terms of absolute value, we have EUR 4.5 billion.

We have acquired a new direct collection money, EUR 6 billion. And first and foremost, we've been able to increase indirect collection in a very, very significant way. So from EUR 55.8 billion in '21, we now have EUR 73.4 billion in 2025.

Now the increase was around 31% and in absolute values, this turns into more than EUR 18 billion growth. Now this progression brought us to have a comprehensive growth of our TB total business by EUR 28.2 billion over the last 4 years, which means plus 23%.

Now this is confirming once again the execution capacity we have. So we can grow organically and sustainably. In Slide 23, you can see that after 2024, that was really excellent, well, 2025 is anyway on revenues levels versus 2021, which is still very significant.

This means we have increased our revenues components in a structural way by more than 40% Furthermore, our current size and the growth objectives we keep having will allow us to have continuous expansion of revenue flows. I can also tell you that we look at the next 24 months.

So thanks to the synergies with our networks and firms, in 2027, we think we will go back to the total revenues level we had in 2024 with a different balance, so much more balanced between commissions on the one side and financial interest on the other.

In Slide #24, you can see that in the recent years, in the past years, which is what we also told you in the previous conference calls, have been characterized by a strong commitment of our group in terms of technology and digital developments.

There's been an intense activity in terms of projects and it was aimed to generally refreshing the facility management backbones. Now this result is changing, and it will be improved in the future significantly.

It will change our IT backbone together with our positioning so that we can better seize the opportunities of the next technological evolutions, thus translating them into performance increases resiliency and once again, cybersecurity.

We will then be able to focus our future investments in 5 main strategic drivers, the growth and the range of products because, of course, we want to respond to the needs of our customers. We will support our supply chains to maximize synergies, thus improving efficiency and effectiveness of our business model.

The reduction of the expenditures and costs, thanks to the continuous optimization of processes plus adoption of an operating model, which will be more and more digital and effective.

We will have TI technological innovation so as to speed up the commitment of the group in the adoption and the use of new technologies. For example, the data intelligence at the service of the business together with the improvement of customer experience.

Last but not least, we will have a continuous improvement of IT safety and security systems improvement, thanks to the new IT backbone as well as the investments that we will take into account for new technologies. Slide #25, this is to draw the conclusions of this call.

Now I wish to highlight our competitive positioning today. Also in terms of the next challenges that we will be taking up. Now we will have a very high level of, let's say, challenge data. Our business model is diversified and comprehensive. We can generate value in many different economic cycles. The creation of synergies within the business model that we have will also go through our excellent capacity of execution.

And as we've been showing also in the past, this will be crucial in order to have the expansion of the size of our group. Furthermore, as I said a couple of minutes ago, the seamless internal innovation plus the digital evolution that we are performing will turn into a strong support to the management of human relations.

We would like to increase the value of our human digital model, which is absolutely essential in order to develop revenues, especially in terms of commission flows. Last but not least at all, in a scenario which is still characterized by strong uncertainties, our Credem Group is one of the soundest groups in Europe. So we have plenty of attractiveness in terms of new customers, but also in terms of sustainability because we believe in our growth strategy. We also would like to keep developing all of our business lines. Now this is it with my presentation. So don't hesitate if you have questions.

[Operator Instructions]

Question number one comes from Luigi De Bellis.

Luigi De Bellis fronm Equita SIM. I have 3 questions. The first one is on the interest margin. So considering [indiscernible] you give us some color on your expectations for 2026 and if it were possible to [indiscernible] because you talked about wanting to go back to the same levels you had in 2024, plus the main drivers on the [indiscernible] could you give us some color on the possibility on the interest margin considering rates increase, for example, with [indiscernible] to 100 basis points?

The last question is on the competitive scenario on the private banking wealth management measure project from Intesa Sao Paulo in order to increase the number of consults. Can this have an impact on the competition of the market at least from other networks? What is the competitive scenario you see in terms of recruiting and retention of consultants and also in terms of the collection for the managed savings in 2026?

Thank you. The first question on sensitivity would go to Mr. [indiscernible] from the Valores department. I will answer the second and the third question on the financial margin, 2026 expectations, together with the project concerning PB Private Banking.

Now as for the sensitivity, we have a parallel increase of 100 basis points. In that case, we have EUR 98 million in case of same time or parallel production, 100 basis points at minus EUR 54 million.

Now as for the other questions on the financial margin or interest margin, well, what we foresee for 2026 is an interest margin, which will be flat. Now if you consider the results we managed to reach in 2025, thanks to the volumes generated in 2025, but also due to the rate coverage strategy as well, they will be able to offset the impact of average rates that will be lower than the average of the recent months.

Now as for the -- well, attention, if you will, to volumes, well, our target was the following: we would like to reach at the end of 2026 with an increase, which will be slightly higher and growing. So the target is 3%, thus contributing with a significant dynamic also for the next year.

Now as for the topic having to do with, if you will, wealth management and private banking. Now first and foremost, I may tell you that for this year, 2026, the simple objective is EUR 4.5 billion of direct and indirect collection of which almost EUR 3 billion of managed collection and insurance business.

So under this profile, a very important role will be played by Credem [indiscernible] Private Banking. Now in the recent years, but also at the very beginning of this year, 2026, I have to say that we haven't had any difficulty in continuing our recruiting activity and development in terms of internal lines, but also thanks to, let's say, external recruitment, so private consultants and financial consultants as well. And among other things, in Credem [indiscernible] Private Banking, we will keep having them together with Credem Bance, where, as you know, we have another channel dedicated to financial consulting services.

So I have to say that competition will increase, as said well, but well, for the time being, no, we don't see any difficulty under this point of view. Well, rather the opposite. I mean, we are really seizing opportunities that are coming as a consequence of our transactions and operations on the market.

The next question is from Giovanni Razzoli, Deutsche Bank.

I just have one question. Will you ask European Central Bank, if all possible, to apply the calculation on assets on banking group level instead of holding level? And if so, how long would it take?

Giovanni, now as you now, at the end of 2025, so last year, the directive has been harmonized into Italian regulations. It was published in the official journal. Apart from those 2 steps, it may be necessary to wait for the harmonization of those instructions into the surveillance instructions of the so-called [ 285. ] So these are the steps required to define the right legal framework so that we can really work with the European [ surveillance ] systems so as to shift the scope.

But this is not automatic. So don't forget about this. So today, we have significant [indiscernible]. But in terms of timing, as I said before, well, it depends on when we are able to start the dialogue, I would say, reasonably within 2026, and we will be able to get some indications about this, but this is not sure.

Next question is from Matteo Panchetti, Mediobanca.

I have a couple of questions. The first one concerns your commissions. So what are the expectations for 2026? Can you give us some color on the key drivers? And my second question is on the distribution of capital because we saw that over the years, CET1 growth. And have you considered a possible increase of the -- well, dividend payment? Third question, as for P&L, where do you see possible upside in 2027, I mean, the highest level?

Question number one. It concerns the commission levels. As for the 2026 guidance of banking fees, what we expect is slightly better result versus the one we got in 2025. Let me talk about the management and intermediation or brokerage commission because the dynamic of the 2025 production will guarantee a high level of returns on management recurring commissions, so net of the performance fees. In '25, but also in 2026, this line will be the main driver for the growth of income. This is what I've highlighted previously. We're very happy of the attractiveness dynamic, I mean, new flows of money that happened in 2025. This will lead to an increase of this revenue line.

Once again, we won't consider performance fees, and it will be well above 5%. Of course, it depends on the evolution and development of the market because, as you know very well, they may have an impact on the value of the masses. So as for this question, I think this is it. I mean, I've given you the main drivers that will guide us also this year.

Now as for the other question concerning the payment of dividend, as you must have seen, the Board of Directors decided to propose the confirmation of the dividend we already had last year. But I need to highlight this. I mean, our profit level in terms of recurrent levels, well, this level is lower than the one we had last year.

And I think this is an important positive message because it shows a very special focus on the market. And again, it confirms a very stable remuneration for our solid shareholders' base. This means that there will be a growth of [ DPS ] over the years. We've always shown as a group to be able also in difficult economic cycle,to distribute, I mean, to pay always and consistently dividends. This is what we've been doing for almost 20 years. The exception was 2020 because of the ECB recommendations anyway. Well, the future, if you will, strategy of the dividend will be decided once again by the Board of Directors.

As for your last question, if I'm not mistaken the question was on our work position on income, I mean, for 2026, right? So well, we do have a target. We would like to get close, as I said before, to what we got in 2025. So this means we want to guarantee stability and growth, especially on some components.

[Operator Instructions]

For the time being. We don't have other questions prebooked.

Thank you very much. I would like to thank you for listening, to your patience. And I wish you a nice continuation of the day. Thank you very much for attending.

This is the Chorus call operator. The conference call is over, and you can disconnect your devices.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good morning. This is the Chorus Call operator. Welcome to the conference call presenting Credem's H1 2025 Results. [Operator Instructions]

Let me now turn the conference over to Mr. Stefano Morellini, General Manager of Credem. Mr. Morellini, please go ahead.

Thank you very much. Good morning to all of you. Thanks for joining us today, especially because we are very close to the summer holiday. Next to me, we have Giuliano Cassinadri, the Deputy General Manager and CFO of our group; Alessandro Cucchi, who is in charge of Area Valore Strategic Planning and Capital Management; and Aharon Sperduti, who's in charge of the IR team.

The first half of the year was characterized by a certain level of uncertainty at global level. And in addition to that, of course, there were tariffs adding to the pre-existing political tension. Unfortunately, even within Credem, we have recently experienced a tragic event and the passing of Angelo Campani, a highly valuable human being, a professional who had vision and high confidence in guiding our bank over the last few years. I took over from him, and I have a deep sense of responsibility in doing so and I do confirm that we will provide consistency when it comes to the group growth pathway ahead. More specifically, our team. Our team has been particularly responsive and capable in hard times to produce excellent results, just like the ones I'm about to disclose to you.

Let's move on to Page 2 in the presentation. In H1, in the first half of 2025 where we confirm our spreads, we closed the first 6 months with a net profit of almost EUR 372 million and EUR 278 million normalized net profit, net of the capital gain stemming from selling the merchant acquiring. And retaining high profitability, even though normalized is still a double-digit profitability. And it translated in an annualized ROTE of 15.4% and an ROE of with annualized of 13%, 13.6%. Asset quality is at the top of the banking system, not just in Italy, but also in Europe with an NPL ratio of 1.6% and a net value for that ratio, net NPL ratio equal to 0.7%, and our capitalization level is very high that our capital soundness is good and that enables us to face confidently our growth path. Our CET1 ratio lands at 15.83%, with a buffer in excess of 740 basis points. The requirement also includes the SRB, systemic risk buffer component that is coming into force as of June 30.

Let's have a look at the size results. We are on Page 3 of the presentation. And we are very determined in unfolding our strategy, generating overperformance -- strong overperformance, vis-a-vis the rest of the banking and that reconfirms our ability in the execution field regardless of the economic cycle. Loans are up year-on-year are up 4.3% versus a system growth, a banking system growth, which is 0.5%. And direct funding went up 2.6%, more than 1.6 percentage points higher than the average system, well, Italian banking system average. And our net production level was very meaningful landing at EUR 1.5 billion, almost entirely driven by new net inflows, both in AUM and insurance. And that has a very important distinct feature for us, reconfirming our ability, the group's ability to leverage the full potential of a diversified business problem that ensure us an excellent support to our revenues and driving our revenues at stay in an area where rates are being reduced. And that leads to a customer base that has been growing 6% over the last year and now at 1.6 million.

Let's now look at revenues when I am on Page 4 of the presentation. As expected, our revenue mix is as follows: It witnesses a constant growth of recurring, well NIM and versus 2024, there was a shrinking of NII that, of course, follows and tracks the rate performance that really proves how the group can leverage on the federation of business to drive revenues, thanks to the positive performance provided by recurring commissions and core NIM that account for 44% of revenue for this half of the year and always also for the next half of the year, we expect a further reconfiguration of our sources of income. And I'm really confident that going forward, the synergies being unfolded between our networks and product factories will still deliver strong support to our revenues and income ensuring excellent performance under different economic scenario and cycles.

Let's now look at the results of individual business lines, we have Page 5 in the presentation. Despite the drop in rates, we retain good profitability, both in the commercial banking field and Credem Bank lands at EUR 170.5 million, giving a 46% contribution to net profit and also expanded banking services, providing producing EUR 43.4 million, accounting for 12% of our consolidated results for the first 6 months of the year. And that was specifically thanks to an excellent quality of our efforts. The way we manage to protect commercial trading spread and a strong development that I've already mentioned, a strong development of volumes.

Let's now talk about wealth and private lines, including both wealth management product factories and Credem [indiscernible] and Private Banking. The overall result is EUR 75.2 million, accounting for about 20% of the group's net profit. And really that was thanks to the growth of assets under management is still despite the high volatility affecting the markets in Q2, I'm confident that our distinct positioning in managing savings and wealth management and experience our network show will keep providing us a competitive edge, especially now against this backdrop with rates being reduced -- being cut.

Page 6 of the presentation now. We -- as we said before, despite the further cutting rates, our NII is growing despite the last quarter. And then core NIM played contribution and fees and commissions pay. The total revenues is affected if we compare it to the previous quarter of a lower performance of trading and lower performance fees. The results we achieved are still showing a very meaningful value and are equal to more than EUR 461 million for the quarter and EUR 937 million in the first 6 months of 2025. We can manage cost and expenses very well. And at the same time, we are retaining our commitment in of course, focusing on projects and IT to support the growth in size in our group. And personnel expenses, as you can see, is very virtuous and we stress that very merged down more than 6% versus the previous quarter, while admin expenses are mainly driven by costs tied in with ICT and project costs. We are at a cost of risk, which is quite limited, 3 basis points, and it's also benefiting from gains stemming from the disposal of some NPL that on the end the gains is EUR 8.9 million growth in the second half. That's the contribution. And then we also expensed EUR 3.6 million for the charges stemming from systemic funds for life policies. And we closed H1 2025 with a net profit of EUR 371.8 million in addition to EUR 278 million net of the capital gain stemming from the disposal of merchant acquiring that was completed in Q1 2025.

Let's now move on to individual P&L items, and we are on Page 7 of the presentation. As you can see on the slide, we are really defending our NII despite the further decline in rates in Q2, and this trend stems from the ability of our networks to buffer the impact on commercial spread and trading spread and to benefit from some effects on the hedging strategies that instead penalized the first 3 months of the year for Q1 and against the backdrop of the sending of declining rates, will be able to support our NII. These factors and this element will further enable us to reduce the volatility of our NII also across the next quarter and thinking of 2026, where we expect rates to be lower to the ones expected for 2025.

Let's now move to Page 8 in the presentation. As I said before, we're really protecting our profitability, commercial profitability, not just in absolute terms, but also compared to average system data. And over the last quarter, our average loan rate, lending rate has been, well, the cost of funding from customers in the group was 19 basis points and offsets the profitability of commercial loans and we protect the funding from customers for 19 basis points versus a system that instead is focusing on 12 basis points as an average cost of funding of 12 basis points. And that really leads us to have a very stable customer spread versus the 8.8 basis points on the average of the system -- banking system average.

Let's now move to Page 9. In the first half of 2025, we really took some opportunities available in the market to take profits and we seized some more opportunities during Q2 as well. And now the goal is to rebuild our portfolio. And given in the current Fed level, we are waiting for the right time to maximize our support to the NII, and currently, we have EUR 11.2 billion worth of securities, the security portfolio and is highly diversified. Italian govies account for about 37% of the total portfolio and a position is almost all what is accounted in HTC. And so with gains, gross of taxes -- before taxes equal to EUR 23 million.

Let's now talk about commissions. We're on Page 10 of the presentation. Noninterest margin is in excess of EUR 221 million and growing versus 2024. I am very happy to tell you that recurring components, EUR 202 million, up about 8% versus the same time frame last year, reconfirming our growth pathway when it comes to NIM. And I'm sure it will still drive and support group revenues sizably also going forward. And management fees, EUR 123.4 million thanks to the work our networks are putting in and despite market volatility in Q2. And this value is growing. This item is growing. And value versus Q2 '24, it's outperforming Q2 2024 by 12%. And also insurance is doing really well, EUR 22.1 million. And profit taking was lower on the securities portfolio versus Q1, while still stable is the contribution of banking fees and commissions.

Let's now move on to Page 11 in the presentation. In addition to the ability to protect our revenue items and to keep on growing sustainably, we managed to keep costs under control without giving up our commitment to support the growth in size of our group with a number of projects. And then personnel expenses are down more than 1% versus the same period last year and now further shrinking vis-a-vis Q1 this year. There was a first seasonality effect that was tied in with for instance, holidays. And then, of course, we have already expressed our commitment to support our growth, and we have operating costs equal to EUR 79 million in the quarter.

And now we're on Page 12 in the presentation, loans to customers. We reconfirm our ability to increase market share. As you see, there's a positive trend year-on-year as far as loans to customers are concerned that we confirm the effectiveness of our strategy, focusing on organic growth. That is very important also going forward to support our NII. And that was achieved thanks to the strong synergies that were unfolded in our business model. And the one-of-a-kind work, our commercial networks performed, and I would like to congratulate them considering the performance, the banking system gave. And then residential mortgages and consumer credit are growing, and they played a very important role in 2025. And then there was a good pickup in the corporate loans reconfirming our strong consultancy work, consultancy to corporate made by our network. In the first few months of 2025, we have increased our disbursement to corporate by 26% versus the first 6 months of 2024. That indeed is a new market scenario, a very challenging one, but we are confident in that next year or two, we will still grow and grow our volumes consistently with our organic growth strategy.

Next page, we have group customers funding. We had excellent results in net inflows, net of the corporate. We are in the positive by EUR 2.3 billion and including corporate, it lands at EUR 1.5 billion. And you see the results are very good. We are EUR 1.5 billion worth of net inflows. And we already have a good point in achieving the -- well, the EUR 2 billion goal we set at the beginning of the year. The net inflows is flat, but if we exclude corporates, that inflows would be EUR 190 million. And then we had more than EUR 200 million of AUC net inflows.

If we move to Page 14, we see deposited assets under managed and insurance year-on-year, it's 2.6% to the increase, whilst quite flat from the beginning of the year. Very meaningful is the development of AUM and the insurance reserves growing more than EUR 1 billion versus the end of 2024, thanks to, as I said before, the excellent net production and performance, but more than offset a slight negative market effect.

Let's now move to the details about our asset quality, Page 15 in the presentation, you see our gross nonperforming loans portfolio, and we've managed to collect and sometimes the dispose of gross NPL with total disposal amounting EUR 56 million. Our NPL ratio is now at 1.6% and lower, both through the Italian and European system average. The default rate and cost of risk are at our all-time lows, 0.45% and 3 basis points, confirming that they are absolute excellence levels not just for Italian standards but also for European standards. We expect to keep the targets we have provided guidance on and to stay well below 20 basis points in 2025, more in the 15 basis point area. And for 2026, we will sorry, -- and looking ahead to 2026, we will very much focus on the global economic scenario, but I'm sure we will be able to reconfirm our asset quality also next year.

Let's now focus on NPL coverage. We're on Page 16 of the presentation. Our coverage is still at very high levels, the coverage of group P&L. It's 57.8% and including the additional coverage shortfall -- coming from shortfall pillar 1 and addendum. So that leads up to 57.2%. Also, despite these metrics, again, applying these metrics, we're well above Italian and European system operate data. That really enables us to further pursue our growth strategy and make us aware of the fact that we do have a significant sizable competitive edge as we learned in the past in case economic cycle change abruptly.

We are on Page 17 now in the presentation, bond issuances and maturities. When it comes to institutional funding, you probably saw in the market in maybe the EUR 200 million issuance at Tier 2 issuance, and we have refinanced our Tier 2, EUR 200 million Tier 2 that we can come back in September as we've already had clearance by the regulator and redeem. As to the MREL margin versus vis-à-vis the requirement, we are still at high level and with more than 5 percentage points of margin.

That's how I look at liquidity ratio, Page 18, the high level of NSFR and LCR enable us to be very flexible when it comes to focusing on funding decisions because we learned at 134% and 62%.

We are on Page 19 now. capital ratios. Our capital ratios are reconfirmed at a very high level, both at Credem Group and at Credem Holding level, respectively, 17% and 15.8%, and they reconfirm our excellent -- well, the excellent capital soundness of the group, driving our organic growth strategy and supporting us offsetting the RWA expansion because, of course, we increased loan that enables us to soundly take up the impact of market quality, market volatility of external scenarios, and regulatory adjustments, as you witnessed in Q1 after the introduction by Q1. The buffer is 742 basis points, and it's above the minimum requirement and also factors in the effect of SRB, systemic risk buffer in force end of June.

That's it on my part. And thank you very much for joining us. And now it's up to you for questions.

[Operator Instructions] The first question comes from the line of Luigi De Bellis with Equita SIM.

I have 3 questions. The first 1 is on the NII. What can we expect going forward? What are the expectations by end of 2025 and early in 2026 with your hedging policies and the actual rate curve. Could you elaborate on the possible growth of loans and deposits in the second half of 2025? And how is the competition behavior in that respect?

And then management fees net inflows from customers. You talked about EUR 2 billion but you already had EUR 1.6 billion, EUR 0.46 billion in the first year. So how is the -- how are things faring now in July?

And then cost of risk, you mentioned 15 basis points for this year after the 3 basis points of the first half. Do you expect an impact of tariffs on your subsidiaries and on your asset quality, if you look at 2026 or the second half? Or have you just been very conservative despite having well performed in the first half?

Thank you very much. Let's start from the first on the NII -- on our NII. In our guidance, we provided the market during the last conference call, it was low double digit. The Euribor 3 months was 2.4% on average. What we witnessed a much more abrupt decline in rates than expected, but yet we managed so far to protect our commercial spread and then some maneuvers on derivatives in the first quarter that have penalized the first 3 months of the year. And now instead providing the good support to our NII. And as the 3-month Euribor or an average or a yearly is expected to be slightly above 2%. We are only just doing a fine-tuning of our guidance on our NII, considering the result of 2025, the overall result of 2025 of about 15% lower than 2024 data. As to the 2026 trends, despite the current rates curve, that leads to a further declining Euribor versus 2024. It is expected to be around 1.8% on average. We could, therefore, be affected by, well, a very flat trend, slightly declining, but flat. So being reconfirmed in an area that's very close to what we produced in 2025. That as far as NII is concerned.

Whilst as to the loans, we expect to still have a sustainable pace in growth for this item for loans. Indeed, the driving force is going to be private customer with residential mortgages and consumer credit that are showing a good performance. But even corporate, on the short-term side, could see an improvement of demand given the decline of rates I hinted at before. But honestly, still more challenging. And here, let me focus on another part of your question, increasing midterm volumes on corporates for 2 reasons. First of all, the strong competition available in the market, but also the investment demand coming from customers.

So for 2025, we confirm a growth of our loans around 2.5% to 3% roughly. And we are very much focusing on having a similar growth also for this item also in 2026. And as far as commissions are concerned, management fees, management and brokerage fees, you asked that in your question. As you were reminding us, the excellent production we've achieved it from the beginning of the year enabled us to fight market volatilities and the negative effects on average capital positions and net of the performance contribution of -- performance fees contribution which we do not expect to be as high as last year, with still management and brokerage fees are still growing above 5%. As to the volume growth, from that perspective, it is true that EUR 1 billion is a sizable result, sizable performance. And when it comes to production, we -- it was EUR 1.5 billion and we are confident we can further improve the EUR 2 billion we have set as a target at the beginning of the year and to be achieved by the end of 2025. That will also enable us to have a good start for 2026 as well.

As far as the cost of risk question, and the impact of tariffs. If I remember correctly, it was your third question, if I'm not mistaken. Let me go straight to answering it in a very simple way. Of course, we are very much focusing on our companies and on the clients we have and that could be affected by tariffs. And we are constantly monitoring the positioning we have is excellent, by the way, and I can reconfirm that, and therefore, the impact we might have in 2025 and in 2026 has already been factored into our estimates that we -- about 15 basis points. That's what we discounted for 2025.

The next question comes from the line of Fabrizio Bernardi with Intermonte.

Is there a time horizon where your regulatory ratios, capital ratios, would go from the holding to the group, because if I'm not mistaken, it's about 120 basis points of difference.

And then the second question, as you underlined, there are many M&A deals and are progressing somehow net organic growth, are you also interested in looking into the option of buying, maybe those branches that could be disposed of for reasons of overlapping or whatever reasons.

Sorry, but the sound was very poor. As to the first question, Mr. Cucchi will take the answer.

As to excluding the holding from the regulatory framework of scope, we have to wait for CRD4 to be enforced by the different member states and that will be at the beginning of 2026. And then we will have a greater clarity on that on what we do about that. And then maybe possibly then I look for the exclusion. It's still an open issue.

As to the question on M&A and branches. But generally speaking, I can say that we are a group focusing on growth, and we also look into external growth opportunities, M&A opportunity. And we are fully flexible, thanks to our business model to look into opportunities for vertical integration. I mean -- and in this case, it would be deals with a high priority, but they have to be accretive and they have to create value, and they should not, in any way, impair our spend that is to the quality of our assets and the soundness of our capital position and the consolidation theme, of course, poses the question of size or brands. And we know we can take advantage of these moments in time to acquire market shares that are not truly going to be dispersed through M&A deals. But we think that growth by external lines could be an enabling factor for the future also to leverage our business model and benefit from the generation of economies of scale to further increase our profitability and our market positioning.

And here, I come to the second -- to your second question. The acquisition of branches or business line is one of the possible ways to increase our total business, but size, generally speaking, will also be increased with that, but so possible recently, we've looked into the UCG one. So it could have been an opportunity. But of course, for this type of business unit, and we have to consider scale or size where these branches are located. And as we've said, more than 1 should there be opportunities we are there ready to look into them, not just as far as branches are concerned, but the other types of deals as well. But for us, it's always [indiscernible]. And let me reiterate it once again, we do not want to jeopardize our trend that is to say, asset quality and capital soundness. And at the same time, we want to unfold synergies to generate value for our shareholders.

Another question. In the light of what you've told us about capital ratios and your willingness to grow externally as well by -- and when it comes to payout ratio, are we looking at the historical ones, expecting improvement, one of improvement or for the current year? Or is it as always, business as usual?

As far as dividends are concerned. We've already said that more than once, dividend are to be resolved a point by the Board of Directors. And last year, our Board of Directors showed a certain propensity towards resulting to dividend payout. Even though we did not have the peak as last year, the profitability this year is going to be sizable. So that could lead to a possible taking into account remuneration that is at least in line with that 2024. But let me reiterate, this is a matter for the board terms over phone, and they will deep dive into this at year-end when we will have more details about the results that we will have achieved in 2025.

Mr. Morellini, there are no more questions in the queue for the time being. I'll give you the floor back for conclusion.

I would like to thank all of you for joining us, for the questions you asked and wish you a very good summer. Thank you very much.

This is Chorus Call operator. The conference call has come to an end. You may disconnect your phones. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]