Good afternoon, everyone, and thank you for joining our earnings call for BFF Full Year 2025 financial results. We will start with a presentation led by our General Manager Giuseppe Sica, followed by the Q&A.

Let me hand over now to Giuseppe Sica.

Thank you, Caterina, and thank you to our participants for joining this call. Let me start on slide 3.

Our financial results for 2025 are solid. Our adjusted net profit is up 6% year on year.

This is underpinned by strong balance sheet, a more conservative approach, and continued growth across our diversified businesses. We also demonstrated our ability to generate capital.

As we announced a week ago, we have taken decisive actions to derisk the business that will support future growth. We will present medium targets with our new strategic plan in the second half of the year.

Moving now to the key financial metrics on slide 4. Let's look at the wider context.

We are a bank with a solid level of profitability, with adjusted RoE at around 23%. Even on an unadjusted basis, RoE still reached 11% despite the impact of the derisking actions.

I already mentioned adjusted net profit being up 6%. Our deposits in transaction services have grown 15% year on year.

Our loan-to-deposit ratio is at 75%. We generated over 300 basis points of capital in the year.

This allowed us to derisk the balance sheet while maintaining profitability. Finally, our common equity Tier 1 reached 14.1%, well above our 13% internal target and above the targets we communicated 1 week ago.

Let me touch here briefly on the dividend. Our dividend policy remains unchanged and targets a semiannual distribution of the adjusted net income generated in the period and in excess of 13%.

Today, the board of directors have made the decision not to propose a 2025 dividend to the AGM, and this is in order to solidify our derisking actions. Let me go back to business and P&L on slide 5.

As I've already mentioned, adjusted net income was up year on year thanks to both factoring and lending and the transaction services business, which both contribute positively to growth. Net revenues were up 1%.

On the cost side, opex was up 2%, and we continue to invest in key areas to support long-term growth and value creation. Profit before tax for factoring and lending was up 1% despite what we've discussed in other calls, the impact of reschedulings.

In our transaction service business, PBT has grown to around €50 million. I will provide more granular detail later on, but let me highlight profitability of this division would be significantly higher if they just invested their liquidity in BTPs.

Let's look at the factoring and lending results on slide 6. Net revenues are up slightly, and they're supported by the improved gross yield spread versus ECB MRO rate, which drives our funding costs.

This is despite the impact of rescheduling, which we announced last week. Let me remind you that thanks to the increase of the LPI collection days announced last week, reschedulings are also expected to go down going forward.

Finally, off-balance sheet funds remain an important source of value creation in the medium term, especially as we accelerate and will accelerate collections. Let me give you now some KPIs on our factoring and lending business on slide 7.

Volumes in factoring and lending are up year on year. Loan book was almost flat, this is thanks to collections.

We have a geographically diversified business and saw strong growth in several markets. Italy, our volumes increased 5%, while the loan book saw an improvement in collections at year-end.

France saw the loan book grow at 135%, while volumes increased by 155%, thus already surpassing Greece and demonstrating the significant growth potential of this strategically important market. We estimate the addressable market in France is double the size of Italy, meaning there is a lot of untapped growth for us to go after.

Moving to slide 8 on payments. Deposits showed a good performance and are up 4% year on year.

To provide some additional context, let me remind you that deposits from payments are remunerated at Euribor or below. If the payment division invested in variable Italian government bonds, PBT would have been around €70 million, 80% higher than what we reported of €40 million.

Moving to security services, this recorded a very strong growth in liquidity thanks to an increase in depositary bank assets and global custody assets. With a strong start of the year in 2026, where we added two significant and large clients for us.

Similar to what I mentioned on the previous slide, deposits from security services are remunerated at our internal transfer price of Euribor. If the division invested in Italian government bonds, PBT would have been nearly 4 times larger than reported, at around €50 million.

BFF, on the next slide, continues to invest in initiatives to support long-term value creation across our whole business. This resulted in a 2% year-on-year increase in costs.

The additional investment was focused on improving collections and improving digital technology for digital euro in the transaction service business units. Costs are also partly up due to inflation in Poland.

We still maintained our cost-income ratio at 48%. Let's look at our balance sheet on slide 12.

Loans were flat year on year due to improved collections. We achieved strong growth in transaction services deposits, up 15% versus 2024, and this allowed us to reduce significantly online deposits while maintaining healthy loan-to-deposit ratio of 75%.

Please note also that in other assets we have around €600 million of reverse repos. The net balance of repos is much lower than shown on the slide.

As a final point, let me highlight equity increased by more than €150 million since 2023 declassification to more than €100 million, and this includes the negative effect of the derisking. The next slide, this is a new slide, just two points for you.

We have around €100 million of unrealized gain on the variable bond portfolio. As we have done in the last 5 years, we can manage this gain over time, and this €100 million is much higher than was in the past.

Number two, we have around €1 billion in fixed bonds yielding around 0.6% and expiring largely by 2027. This will provide a clear tailwind in the years to come.

Turning to slide 13. BFF is fully focused on maintaining a low risk profile.

Total NPLs, which mainly relate to conservatorships, are stable or decreasing at around €100 million and are largely under European Court of Human Rights, confirming the liability of the Italian State. UTPs are down thanks to our collections and agreements in Poland.

Total impaired loans would be down by more than €300 million year on year if we included the effect of the cure period of close to €200 million, largely driven by actions which we undertook in the fourth quarter. I would also remind again that our NPL exposure is almost entirely towards public administration.

You are familiar with the derisking actions we took 1 week ago, but let me provide some additional color on the next slide. We analyzed the perimeter of Italian negative court rulings.

This is equal to around 5% of the group loan book. And 98% of this are under appeal.

As we also have the right to return invoices to clients. The rulings mostly relate to legal claims which have followed the ordinary legal action procedure.

We have already returned, as to the use of injunctions, which we expect to speed up resolution times. It is important to note that these provisions are a reflection of a possible lower profitability on this portfolio, not to credit risk, mainly due to two factors: one, the differential between LPI rate and the retrocession rate to clients; and two, the longer average length for completion of claims following Italian ordinary legal actions compared to injunctions, which we started again in 2024.

The approach to provision is based on a ruling-by-ruling analysis and does not take into account out-of-court transactions or positive rulings. We expect that the court rulings on ordinary legal actions will come to a conclusion in '26 and partly '27, which is reflected also in our projections for 2026.

Finally, as I mentioned last week, BFF has €53 million in off-balance sheet revenues related to final positive court rulings which continue to generate LPI, €40 per and anatocism. We have a lot of sentences in positive ruling not yet final.

Moving to our past-due exposure on slide 15. Past-due would have more than halved since December 2024, excluding the net new volumes and the new debtors in past-due.

Going forward, past-due reduction will be supported by cure periods, the potential securitization, and the derisking actions. In particular, let me remind you the potential securitization, as I said on last week call, is not included in our estimates.

Moving to capital ratios on slide 16. On an organic basis, BFF generated more than 300 basis points of capital year on year before the one-offs.

Even after taking into account the one-offs, our capital position remains strong at 14.1%, above our internal target of 13% and well, well above the SREP. We've also continued to reduce, as we've said, RWAs and RWA density, and we have more opportunities to do so in the future.

Let me give you just one example. Our €180 million in cure period will also result in a reduction of more than €200 million in risk-weighted assets, probably closer to €250 million.

Now a quick summary on the next slide of this set of results before we move to Q&A. In 2025, BFF achieved solid level of profitability with an adjusted RoE of around 23%, and we demonstrated our ability to generate capital while taking significant actions to support for the next few years growth.

Thank you for your attention. I will now open to Q&A.

Hello and good evening. Thank you a lot for taking my question.

The first one is on the provisions so that would be very helpful to have a bit more color on your provisions in the current assumptions for 2026 so to help us to understand how the new policy in the provisioning translates into the numbers. The second one is on the dividends for 2025.

At the end, the CET1 ratio was at 14.1%, above the range you gave just 1 week ago. If you can help us understand why zero dividend for 2025 is the optimal choice.

The third one, a very quick one, I'm just trying to understand if the longer collection assumption for the late payment interest should mechanically depress earnings from 2026 onwards. Thank you.

Thank you, Tommaso. I will try to answer your questions to the best of what I can say.

Provisions: the €72 million was a one-off and was the result of several years of ordinary legal actions. That they started in 2020, '21, '22, '23, it was several years.

The number for 2026 will be a fraction of that. We don't give number, but you can build a reasonable estimate based on what I said.

This estimate is already included in €160 million that we gave for 2026. As I said, for me, what is more important is that these ordinary legal actions will die off after 2027 based on the timing of Italian court rulings, okay?

You still have some headwinds in 2026, not much on 2027, and then we should be in a more normalized and positive environment. On the dividend, as I said, dividend policy remains unchanged.

We have announced certain actions. We have announced that there are potential other actions, and I, as the new general manager, want to solidify these actions.

I remain committed, and that's why I said it in the introduction, to the dividend policy of the bank. Was this the best decision from the board?

The market will judge. I look at the market in the long term; I don't look at the market tomorrow.

That would be my answer to this point. I think we have shown that we can create a lot of capital, and that's why I also pushed to take a certain approach on the rulings.

On the lengthening of the days, I think there are two effects which more or less offset each other. On the one hand, you have a lower discount in time for LPIs; on the other hand, you have less reschedulings.

The two will more or less even out.

Thank you a lot.

Good evening, and thank you for taking my questions. The first one is on the common equity Tier 1.

At the end, you end up with a 14.1% common equity Tier 1. You guided for 13 13.2% to 13.5% just 1 week ago.

I would like to understand what has generated this change between last week and today. The second question is on the securitization that you are working on.

Could you please share with us what is the size of the securitized portfolio, what is the timing that you are expected to have, and what will be the recurring impact on your profitability? The third question is on the calendar provisioning.

I would like to know if you can share with us what is the impact of the calendar provisioning that you are assuming in 2026-2027. Another question on the negative court ruling portfolio, I'm wondering if it is exactly the same of the contagiced portfolio.

Finally, I would like to do a confirmation about the fact that you are going to pay the coupon on the additional Tier 1. Thank you.

Thank you. On the common equity Tier 1, as I said in various calls, I prefer overdeliver, there was a buffer in my best estimate.

Frankly, I think we were very efficient in the way we managed our balance sheet at year-end, so that was a positive surprise. I hope is the first of many.

The securitization, as I said, we have been working on it. The actions that we undertook 1 week ago were also the result of that work.

It's a bit too early to give you now the portfolio. I think obviously if we do it, it's going to be positive for the bank, otherwise, by definition, we will not do it, okay?

It's not in the estimates that we have provided to the market. I think you have seen the impact, for instance, of the cure periods in terms of capital creation, yeah?

This cost a few basis points in terms of cost of risk in 2025. We have huge levers to reduce the RWA once we do a securitization.

It's not in our estimates. On the calendar provisioning, I can give you the number for 2025, which is not negligible.

We already taken some impacts in the course of 2025 and stands at around €50 million. We are going to change disclosure on this, but obviously I can't give too much detail on this call.

What I can say is that in our estimates the risk of calendar is fully manageable with internal actions without taking into account a securitization. We have reduced it.

If you look at the contagiced portfolio, we have been continued to reduce it. We have actions, managerial actions in mind to put in place in the first half of the year.

Related to this, I think there was a question on negative rulings and overlap with the contagiced portfolio. By memory, it should be around 50% overlap.

What we did there will have an impact also on the calendar and frankly possibly on the securitization because, as you can imagine, the focus will be for the securitization to address the contagiced portfolio. We have no reason to get rid of invoices which are past-due, but we collect in 2 months.

As we have shown, we have collected already 50% of the past-due that we had at the beginning of 2025. That's how quick the rotation of our portfolio is.

On the AT1, I'm surprised that you ask the question. I think we already paid the coupon in January.

We have a buffer of probably 4 or 5 percentage points on our SREP. We have plenty of capital to pay any coupon that may be needed, and as I said, it was not an easy decision, but a decision that I support not to pay dividend now.

For sure we did pay in January the coupon on the AT1. We will continue to pay the coupon for the foreseeable future.

Thank you. The

Hi, good evening, and thank you for taking my question. I have some.

The first one is on the business outlook. I know it's only been a week, perhaps it's still too early.

Have you noticed any concern or impact from your customers regarding recent events, particularly with regard to factoring business and the custodian bank customers? The second one on the rulings, can you give us an idea of the credits that are still in legal dispute in the first instance of the judgment, not yet receiving either a positive or negative outcome?

Do you see risks on this credit going forward? The third one on the contagiced portfolio, can we assume that the decline in contagicing exposure from €296 million in Q3 to €269 million this quarter is entirely attributable to the adjustments made, or have you recovered something?

Can you give us some details on the moving parts? The last one regarding CET1, looking at capital in absolute terms, can you provide us with the moving parts that occurred during the quarter because, at first glance, it would appear that there was a negative impact or approximately to €20 million that I cannot reconcile?

Is it related to calendar provisioning you were referring before? Thank you.

Okay. Thank you for your questions.

On the business outlook and related to the reaction of the recent announcement, frankly, we have had negative surprises when Bank of Italy imposed a dividend ban. What we did last week was a surprise.

The market reacted in a certain way, probably they thought it was a negative surprise. These were actions that we undertook thinking about the next few years of the company.

I would be surprised if, apart from rumor on the press, any of our clients would have had any negative reaction. Our factoring and lending clients need us to do business for them.

In the custody business, I've had a couple of calls with some of our 100 of counterparts to explain the situation. I've not seen any negative sign.

Nothing really related to what was announced. The business outlook for the year in general is the one that we gave last week with our new target of net income.

As I said, I hope that the surprise on the common equity Tier 1 is something that can be repeated in the future. Yes, on capital, you are right.

The difference that you probably cannot reconcile was around €20 million of calendar provisioning, probably was a bit less that we had in the quarter, but that's what you are unable to reconcile. Of course, in our estimates for the provisions, we take into account whatever is not included or in the judgment.

Our estimates for 2026 already include the impact of what is not under negative court ruling, but that may go under negative court ruling. Of course, it's an estimate, because if we knew it would go into negative, then we would take the provisions this year.

It's definitely in our numbers.

Thank you for your answers. Just a follow-up on the contagiced portfolio, is the reduction entirely be attributable to the provision you have made, or have you recovered something during the quarter?

Just to understand the evolution of the portfolio.

No, we have we have we have recovered. We have we have recovered.

We have recovered. That's not going It's a mix of the two, probably collection was higher than the impact on the provisions.

Thank you.

Yes, good evening. The first question is on volumes.

There is a drop in the last quarter, which is around 13% excluding Polska. Could you elaborate a bit on this, what happened in the quarter on the commercial side, and what are the assumptions on volumes and loan growth in the guidance for 2026?

Another question on the provision that you made on that portfolio, do you always have the right to retrocede the asset to the seller no matter what, in any case? Thank you.

Oh,

thank you for the question, Simonetta. On the volumes, I think fourth quarter was underwhelming.

We accept that, and we've incorporated this trend in the estimates for 2026. We did not provide the detail of volumes for 2026, but as we wrote in the last week press release, that's one of the key reasons we have revised the budget.

The announcements that we made last week also took a lot of management time. That's not an excuse, and we know that we have to do more.

We can do more. Our budget frankly is not, in terms of net income, is not overly ambitious.

The second question

Yes,

on the right to put back the receivables, yes. On the put back receivables, yes, we always have the right to put back the receivables.

The right is there, and it's very clear. The credit that we buy, they have to be certain, liquid, and collectible.

That's what we have in every single contract with our client. I'm not aware of any exception, but these are the three key words that we have in our contracts.

If they cannot be collected because there is a negative court ruling, they can be put back to clients. Now why did we take the provisions?

That we are clear. We took the provisions because there can be a different interest rate between LPI rate and retrocession rate.

This impact is exacerbated by the fact that ordinary legal actions take a long time. There may be residual risks, for instance, in cases where our client has gone bankrupt.

As we work with large multinationals. When I think about my cost of risk, let me remind our counterpart is the State if you look at the underlying cost of risk.

Our counterpart is the State, and we have a recourse to our clients. When we compare our cost of risk to that of a commercial bank, the credit risk should take into account these two factors.

I have described it as a possible lower profitability, which I think is the right description for the provisions that we took.

Okay.

Hi, good evening to everybody. I have a few questions.

The first one relates to the let's say negative court ruling. Let's say because in the last reporting you adjusted for those, and therefore the adjusted net profit 2025 was not impacted by these €72 million.

I was wondering on the net profit target 2026, shall we apply the same reasoning that you will not include in the adjusted net profit this negative court ruling? The second question relates to the seven let's say to the 64% that you disclosed of the past-due that were collected in the last year.

Can you give us an idea since the start of the investigation of the Bank of Italy what could be the same percentage and therefore how much it is still present in the balance sheet in the let's say total past-due since the start of the investigation? Finally, the other point was more on the let's say nominal credit, the €400 million that you have on the negative on total nominal.

How much are let's say related to the contagion portfolio, and how much is outside, just to understand if there is anything in the past-due and, in case, if some of these €400 million are also outside of the past-due, if you can give some visibility, please? Thank you.

Grazie, Michele. The portfolio, I start with the last question, the portfolio of €400 million, by the way, this is the gross book value, the net book value is lower because, as we accrue for only around 65% and probably lower percent of all the accessories, has some overlap with the contagiced portfolio.

As I think I said, it's around 50%. That will have an impact.

There may be, and there certainly is, something which is not in past-due. It's a small number.

I don't have here the number of what we collect since Bank of Italy investigation. However, I can give you a sense of, in terms of capital and invoices we collected, of things that we bought in 2023, we collected around 90%, 95% of those invoices.

That's a healthy number. Our front book rotates very quickly.

On the court rulings, we treated the one-off this year as a one-off because it was a conservative change in provisioning policy, which was the result of a backlog of several years. For next year, it won't be a one-off.

It will be in our numbers and is in our numbers. I answered before one of the calls asking what is the number.

We don't give the number, but as 72 is the result of several years, you can form a view of what the number can be. What is not in our number is the impact of the positive rulings, okay?

Not only we are not accounting for them today, but also we've not included them in our budget.

Thank you very much. Just a last one, a curiosity.

The assets of the ecobonus, until when you can let's say use them, collect them, and how much of those you can sell?

We have three two parts of the business model related to this. We have a very clear portfolio which we buy and sell, but we only buy once we are certain that we can sell.

Then we have another part on which we have collection curves that go down another couple of years. That's the best estimate I can give you now.

It's basically 5 years if I remember well the legislation, do you agree?

Around 5 years, yeah. We have another couple of years left.

Yeah. Thank you very much.

Yes, thank you, sorry. My question is on future provisions.

What happens if you have a negative ruling in second degree, should we expect further provisions? Second, assuming that you have now a more conservative approach, can you help us to understand if there are other areas where you could start provisioning, so, for example, if you receive an opposition to an injunction or considering the collection process in general, can you help us to understand if there are steps that could trigger further provisions?

Thank you.

Thank you for the questions, which are very detailed. On future provisions, most of the provisions are related to first-order rulings, also because we assume that we are unable to turn around the vast majority of them.

If there is an effect, it's a second-order effect. On the injunctions, as it's a very quick process, which explains why I'm much more positive on the effect of this post-2027 action.

It's a very quick process. We know what is missing if we were to lose, we would know immediately after 3 months what is missing.

If the client give us what we need, we can go under appeal; otherwise, we put back the receivables. That's the way we're going to run business.

I would like to thank all the participants, and I look forward to speaking to you again when we present our first quarter results. Thank you very much, and have a great rest of the week.