Intesa Sanpaolo S.p.A.

Enrico Tommaso Cucchiani – Member of the Management Board, Chief Executive Officer, Managing Director Stefano Del Punta – Chief Financial Officer Carlo Messina – General Manager and Deputy to the CEO

Azzurra Guelfi – Citigroup Global Markets Ltd. Jean-François Neuez – Goldman Sachs International Matteo Ramenghi – UBS Italia SIM Matteo Ghilotti – Equita SIM SpA Carlo Digrandi – HSBC Bank Plc Antonio Rizzo – Barclays Capital, Inc.

Giovanni Carriere – Autonomous Research LLP Marta Bastoni – JPMorgan Securities Plc Ignacio Cerezo – Credit Suisse Securities Ltd. Anna Maria Benassi – Kepler Capital Markets SA Andrea Filtri – Mediobanca SpA Christian Carrese – Intermonte Sim SpA

Thank you. Good afternoon, ladies and gentlemen, and thank you for joining us on this call to discuss Intesa Sanpaolo’s results for the first half of 2013.

This is Enrico Cucchiani speaking, and as usual, I am joined by Carlo Messina, our General Manager and Deputy to the CEO; by Stefano Del Punta, CFO; and by Andrea Tamagnini and Marco Delfrate of the Investor Relations team. Before we analyze first half results, I believe it would be useful to review some significant development in the macro environment and in our industry.

As you may remember, Q1 was characterized by unsettling external developments such as Cyprus collapse and disconcerting outcome of the Italian elections. In light of these developments, ISP took a highly conservative position on both liquidity and NPL coverage.

This conservative approach translated into a substantial opportunity cost, sort of an insurance premium paid to protect and safeguard the bank against most adverse scenarios. If you bear with me, we can now turn to the macro environment as we see it today on Slide 1.

The Italian political situation is stabilizing. Latest government now in power for the foreseeable future is seeking the right balance between fiscal discipline and growth.

Consumer and business sentiment are showing the first signs of improvement in Italy, apparently on a trend that is even better than that experienced in other eurozone countries. In the U.S., higher interest rates and an ebullient economy make medium, long-term appreciation of the U.S.

dollar likely to happen, which would have positive impact on both eurozone and Italy’s exports. The ECB is determined to support economic recovery and to smooth volatility, and I would say that also after the German elections, I would expect to see an acceleration in structural reforms implemented across Europe.

Vis-à-vis these positives, however, the economic outlook for Italy still requires a cautious approach as GDP growth in 2013 has been revised downwards to minus 1.8%/minus 2.0. All-in-all, I would say that we have a better environment than three months ago, so uncertainties haven’t entirely cleared.

As far as the banking sector is concerned, key developments are summarized on page 2. In Italy, in the second quarter, the banking sector has registered signs of mild improvement in NPL formation.

However, I believe it is too soon to claim a clear trend reversal because we are still going through a period of prolonged and deep recession. In any case, it’s important to note that there is a significant time lag between real economy recovery and credit quality improvement.

Another key element with key impact on the P&L, are banking margins, which are at historical lows. Looking ahead, the upcoming ECB asset quality review and the EBA stress test exercise will likely put European banks’ balance sheets under further pressure.

It is not unlikely that these elements will all together create the need for capital increases in some banks across Europe, which will not be painless given the low profitability and value distraction levels prevailing in the sector. Let me however be absolutely clear about the fact that I am talking about the industry and not, I repeat, not about ISP, which capital wise, is in a very strong position as we will see.

In this context, a new phase of domestic and pan-European consolidation is being possible if not likely by many. Let us now turn to page 3, where you can see the elements of ISP strategy in this environment.

It is in this environment that we have set clear strategic priorities. First priority has been to enhance our relatively strong capital – already strong capital position.

This is important because it is a prerequisite for dividends sustainability and for building a strong negotiating position in case of a consolidation phase. Second, we have decided to further increase our loan loss provisions already at the highest level in the market in order to be prepared for the upcoming asset quality review and stress test exercise.

Third, we have decided to maintain very high levels of liquidity. Fourth, we have intensified our efforts to de-risk the bank in terms of leverage and loan to deposit ratio.

Fifth, in order to compensate lower margins and low interest rate levels, we have made a decisive shift in our business model with a stronger focus on wealth management and a new asset light strategy in corporate bank. Finally, sixth, we stressed our determined commitment to continue to drive down structural cost to be best-in-class.

Let us now turn to page 4 to verify the delivery against these priorities. Priority number one; capital, we remain one of the most solid best capitalized banks in the world, already Basel 3 compliant.

We enjoy an 11% fully-loaded common equity ratio, up 40 basis points versus year-end 2012, which means putting it into simple terms, that 40 basis points are equivalent to a capital increase of approximately €1.4 billion and 60 basis points, or course, to a capital increase of €2.2 billion. Priority number two, provisioning, the NPL coverage ratio already best-in-class, is up an additional 150 basis points versus the end of 2012 and 90 basis points versus Q1.

Priority number three, liquidity, we confirm that fourth LCR and net stable funding ratio are at a level well above 100 that is ahead of Basel 3 targets, even after €12 billion LTRO payback. Priority number four, de-risking, our leverage is now down to €17.9, our loan to deposit ratio stands at 96%, down 9 percentage points versus 2011 year-end.

Priority number five, increasing fees and commissions, as far as our operating performance is concerned, we compensate lower net interest income with a strong increase in net fees and commissions, which were up 15.2% year-on-year. Priority number six, driving down structural costs, we continue to drive down structural costs, minus 7.7% year-on-year.

Our cost income is best-in-class, just a fraction above 50%. All in all, we have clearly delivered on all priorities, not only that, if you do any benchmarking with our European peers; you will find out that we are best-in-class along all the six dimensions.

Turning to Slide 5, we can see the impact of our decision to address specific macro challenges occurred in the first half. As you may recall, in Q1, we decided to build an extraordinary liquidity buffer of about €20 billion in cash instruments in order to face extraordinary political and economic uncertainty related to Italian elections and the Cyprus crisis with all its implications on potential ransom deposits.

In the second quarter, we began to normalize our investment and liquidity position. We began releasing the liquidity cushion with a €12 billion LTRO payback completed at the end of June.

We continued increasing the focus on Wealth Management products, shifting €7 billion into this business by the end of 2013 and €2 billion have already been shifted in Q2. Finally, in July, we used the remaining €1.5 billion to execute a senior bond buyback that generated approximately €113 million of pre-tax profit, which are booked in Q3.

The opportunity cost of our conservative approach on liquidity totals €190 million for the half of 2013, but as explained, we have now normalized our position and benefits will show in Q3 and Q4. With respect to NPL coverage, you remember that we increased it by 60 basis points in Q1, while in Q2; we further increased it by 90 additional basis points despite an already best-in-class position and some evidence of improvements in credit trends.

We decided to do this in anticipation of the upcoming asset quality review and stress test exercise, and we believe that in this respect, our conservative policy clearly stands out from the pack. All in all, H1 2013 opportunity cost has been €640 million pre tax and €450 million on a net basis.

This strategy might be considered too conservative by some, but we firmly believe that in this challenging time, the cost of being unprepared would have been much higher for all stakeholders. We can now turn to page 6 for a quick summary of H1 results.

In an environment that continues to be challenging, ISP further strengthened an already strong balance sheet and delivered quality results. As already mentioned, ISP is one of the few banks in the world, already Basel 3 complaint with a very strong fully phased-in Basel 3 common equity ratio of 11%.

Core Tier 1 is also high and strengthened by 40 basis points versus year-end 2012 that reached to 11.7%. Even considering the new computation rules on insurance-related assets, the Core Tier 1 stands at a robust 11.1%.

The liquidity position is very strong. Unencumbered eligible assets at €85 billion are €18 billion above year-end 2012.

LCR at a 129% and net stable funding ratio at a 110% are well above the 2018-2019 Basel 3 target, even after the €12 billion LTRO payback. Loan to deposit ratio is down to 96% with a reduction of almost nine percentage points in 18 months only.

As mentioned, our NPL coverage ratio, already well above industry prevailing practices, is up a 150 basis points to at a level of 44.2%. Despite our out of the ordinary prudence, we reported quality results with net income at a respectable €422 million for the semester.

We reported a strong increase in net fees and commissions, which are up 15.2% versus last year. We continue to aggressively reduce operating costs, which are down 7.7% versus the same period last year allowing us to achieve a best-in-class cost income of 50.1%.

In addition, in July, we executed a €1.5 billion senior bond buyback, which has generated €113 million pre-tax profit, which are not included in the H1 figures. All in all, our balance sheet is extremely strong and our performance is solid given the context.

As far as dividends are concerned, our capital ratios at the end of June 2013, already factoring pro quota dividend accrued in the half of – for the year 2013. That is one half of the €832 million paid out in dividends in 2013 for the year 2012.

Dividend payment is a clear priority of management, and capital ratios as well as profitability at the end of June 2013, are consistent with this priority. Actual payment will, of course, reflect developments in the environment and regulators rules and measures.

On page 8, we can look at our capital base. In H1 2013, fully phased-in Basel 3 common equity further improved, as I said before, by 40 basis points versus year-end 2012, it went up to 11%, and improved 60 basis points relative to H1 2012.

In simple terms, this is equivalent to a capital increase of about €1.4 billion relative to the last reference and a capital increase of €2.2 billion relative to last year. Likewise the Core Tier 1 ratio at 11.7% has increased by 50 basis points versus the year-end 2012 and by 40 basis points versus the last quarter.

Even considering the new computation rules of insurance-related assets, Core Tier 1 ratio stands at a very solid level of 11.1% or to be precise 11.14%. Now, very, very important, all this ratio, as I said, are after pro quota dividends, which, just to remind you, once again, were €832 million last year.

We believe that a strong capital base is an important prerequisite for sustainable dividends, particularly under adverse scenarios. We now turn to page 9 to see how we stack up in terms of capital versus European peers.

Our Basel 3 common equity ratio stands out to be one of the highest among European banks. In fact, it is 400 basis points above non-SIFI requirements and 150 basis points above global SIFI level.

We now turn to page 10 to analyze liquidity. The liquidity position is very strong and has further improved during the past quarter even after the €12 billion LTRO payback, which was completed on June 26, in particular.

Unencumbered eligible assets with central banks, net of haircuts, rose to €85 billion as of June 30, 2013, representing a 70% increase versus June 30, 2012. Liquid assets increased to €127 billion at the end of the first half, up 14% versus first half of 2012.

Let me also remind you that at this point that at the end of Q1, we had already entirely covered our 2013 wholesale maturing bonds, and liquidity coverage ratio at 129% and NSFR at 110% well above a 100% even after the LTRO payback and this makes Intesa Sanpaolo already compliant with, as I said, 2018-2019 Basel 3 targets. On page 11, we analyze our loan to deposit ratio.

According to the analyst, loan to deposit ratios have been a key concern of Italian banks throughout 2011 and 2012, as they have stood at a level north of a 120%, a level much higher than for the rest of the eurozone. ISP has effectively adverse these concerns by bringing the loan to deposit ratio down to 96%, a nine percentage points reduction versus year-end 2011.

This has been achieved through a disciplined approach to credit underwriting coupled with selective deleveraging in segments with sub optimal risk return profiles as well as with an increase of €12 billion that is 3.3% in direct deposits versus 2011 year end. We now turn to page 12 to look at our leverage level.

Our leverage, which stands at 17.9 is deliberately low and keeps decreasing down from 19.1 at year end, as we see the effect of the decisive shift in our operating model with an asset light focus in corporate banking and a strong push on Wealth Management in retail. Please also note that we are in a good position to re-lever if the environment turns more positive.

We can now turn asset quality and look at the NPL inflow trends on page 13. As these two graphs demonstrate, credit trends are now starting to show some signs of improvement.

NPL inflows started in fact to follow a downward path with a new year and have stabilized in the last quarter. While these positive trends give us some reasons for optimist, the Italian GDP is expected to decline further throughout the rest of the year, and therefore, prudence is still required.

Let’s now look at NPL in comparison to the Italian peer group, if you can please turn with me to slide 14. Let us look, let’s analyze stocks.

ISP enjoys a substantial competitive advantage versus Italian peers, because of our conservative approach in underwriting and credit management. The relative quality of the ISP portfolio is quite evident.

Our gross NPL ratio at 12.5% is almost 30% better than the 17.5% average of Italian peers. Our net NPL ratio at 7.6% is almost 40% better than the average of Italian peers.

Let us now look at the formation of NPLs in comparison, obviously in comparison to peers. The ISP advantage over Italian peers goes even larger when analyzing the trends in NPL formation.

In this extremely difficult credit environment, we registered an increase in our gross and net NPL ratio that is almost half that of our Italian peers. ISP performance reflects the better quality of our portfolio and the impact of proactive, large scale credit management initiatives that were launched at the beginning of 2012 in Italy and that have been extended internationally in the second half of the year.

Let me now turn to page 16, when looking at the NPL ratio’s evolution, it is important to notice that overtime, the ISP advantage against peers has more than doubled, as it has increased from 71 basis points to 183 basis points in just five quarters. Please now turn to page 17 to take you look at the substantial increase in our provisions.

There is structural evidence that could have led us to be less conservative in provisioning. The left hand side of the slide summarizes three key comparisons versus the Italian peers at the end of Q1 2013.

As you can see, Intesa enjoys a much lower incidence of NPL, a much better trend in deteriorated loans and a substantially higher NPL coverage. In spite of this favorable comparison, we decided once again to increase loan loss provisions by 25%.

They now stand at €2.6 billion with a cost of risk that is of a 143 basis points. We believe that this conservative provisioning puts us ahead of the curve as it will become of paramount importance in light of the asset quality review and stress test exercise that will soon take place.

In other words, we believe that being prepared will pay off. Please now turn to page 18, where we can take a look of – we can compare the coverage ratio Intesa versus peers.

As you can see on the left hand side, even in a situation where the deterioration of credit trends seems to be stabilizing, our NPL coverage, which was already significantly above Italian peers at the end of Q1, increased further to 44.2%, up 150 basis points versus year-end. ISP’s non-performing loans coverage ratio is more than 10 percentage points higher than the average of Italian peers recorded at the end of March.

On the right hand side, you can also appreciate the very high coverage level on doubtful loans, which stands above 61%, more than 12 percentage points higher than our domestic competitors. This ratio has also increased by 50 basis points in Q2.

On page 19, we see coverage ratio on performing loans. We just don’t have the highest coverage ratio on non-performing loans.

We also have superior coverage on performing loans. This coverage is 50% better than the average of our domestic competitors and is the highest among our Italian peers.

Relative to prevailing coverage levels, we have an extra buffer of approximately €700 million to €800 million. Turn now to page 20 to further analyze coverage.

When incorporating collateral and guarantees, you see that the total coverage level for doubtful loans stands at a comfortable level of 123%. The recovery rate is very high at 144%, and this gives us additional comfort on our provisioning policies.

Let us now move to the next chapter to analyze the P&L and I ask you to please move to slide number 22. The H1 waterfall analysis on this page shows the quality of our performance despite the challenging external environment and ISP’s very conservative approach.

Operating income is at €8.2 billion, down 8.3% versus H1 2012, but only down 4.3% on the like for like basis excluding capital gains from buybacks and the London Stock Exchange stake disposal of last year. Net interest income is heavily affected by the extraordinary liquidity buffer that, as explained, was built up in Q1 and reduced by the end of Q2, but we will comeback to this item to analyze it in greater details in a couple of slides.

Fees and commissions went up 15.2% and best-in-class performance by European standards. Profits on trading, apparently down 21.3%, were actually up 35.6% excluding the €368 million of capital gain we registered in the same period last year from buybacks and the sale of the London Stock Exchange stake.

Insurance delivers a performance broadly inline with 2012. Personnel and administrative costs continued to register significant reductions, reflecting aggressive cost management.

Personnel costs, in particular, are down by 10.6% and administrative costs are down 5.5%. Operating margins, margin is at €4.1 billion, down 8.9% versus H1 2012, but almost unchanged, when excluding the extraordinary items mentioned above.

Loans provisions at €2.6 billion reflect rigorous and conservative approach, and hence in view of the upcoming asset quality review and stress test exercise. Pre-tax income stands at €1.3 billion, including a €49 million of negative charges on Hungary, and €165 million impairments, of which €58 million are related to the Generali stake.

Net income is €422 million, €660 million on a normalized basis. Let’s now take a look at Q2 on slide 23, two strong and important positive standout; the robust increase in fees and commissions, and the effective cost management.

Operating income is in line with Q1 2013 at €4.1 billion, thanks to the strong contribution from net fees and commissions up 7.4% versus Q1. It is also worth highlighting the marginal improvement in net interest up 0.9% versus Q1.

That is the first positive development over the past five quarters. Personnel costs are down 8.7%, driving the operating margin to €2.1 billion, up 2.5% versus last quarter.

Loan loss provisions are 20% higher than last quarter. It is worth highlighting, however, that had ISP adopted prevailing industry practices, the provisions would have been €250 million lower, translating into an equivalent higher net income because as you know the bulk of loan loss provisions are not tax deductible.

So, I mean, this is to reiterate that the bottom line is heavily affected by our conservative stance. Net income is a modest €160 million and is affected, as I said, by provisioning, by impairments and also by an astonishingly high tax rate, which is in excess of 56%.

Let us now spend a few seconds on the evolution of net interest income in the first half. We see this on page 24.

Several factors have had an impact on net interest income. First of all, the market spread between interests on loans and interests on deposits have been reduced by almost 50% since the credit crisis started and the spread is now at a historical minimum level.

As far as ISP net interest income is concerned, the 17.6% reduction versus the first half of 2012 is broken down on the right hand side of the page. As you can see, the decline is explained by the rebalancing of our loan to deposit ratio, by the evolution of market spread, and by our conservative stance on liquidity and portfolio management.

On the positive side, as already mentioned, it should also be noted that after 5 consecutive quarters of decline in net interest income, we recorded a marginal improvement in Q2. Let’s now turn to page 25, where you can look at the performance of fees and commissions.

Net fees and commissions increased both versus the previous quarter, up 7.4%, and versus H1 2012, by 15.2%. The strong result has been driven by several initiatives including repricing and a decisive shift to an asset light business model in corporate bank.

It especially reflects our successful attempt to switch deposits into mutual funds with an increase in managed assets of €3.6 billion in Q2 2013 and on, an increase of over €20 billion since H2 2012. Please now turn to slide 26, where we underline our performance in net fees and commissions versus the European peers.

As the graph illustrates, ISP has recorded the highest percentage increase in net fees and commissions compared to any of our European peers. Please now turn to page 27 to focus on costs.

In a traditionally rigid labor market like Italy, we continue to show an exceptional ability to manage costs. Operating costs are down 7.7% compared to H1 2012 with savings of €341 million in nominal terms.

In real terms, that is net of inflation and contractual increases, the impact is actually equivalent to €430 million. That is a 10% reduction.

Personnel costs are down 10.6% and admin expenses have been reduced by 5.5%. It is also worth noting that our P&L enjoys a healthy tailwind as we were able to reduce headcount by 6,600 units in the past 18 months.

Furthermore, additional staff exits in Italy have already been agreed with labor unions. To be precise, we are talking about 600 additional FTEs.

In total, we are talking about a reduction of 7,200 FTEs. Please now turn to page 28, where we look at our cost/income ratio.

In this slide, you can see that ISP enjoys a best-in-class cost/income ratio, which is just a fraction above 50%. This compares to an average for our European peer group that stands at approximately 62%.

Let us now turn to page 29 to analyze the results by business line. As you can see, all business units show a positive contribution to pre-tax income for H1 2013 and in particular, Italian Retail pre-tax income decreased versus last quarter mainly due to the strong increase of LLPs and the low interest environment.

However, it increased by a significant 22%, when comparing operating margin, that is before loan loss provisions. Wealth Management shows an excellent growth of 19.7% compared to H1 2012, reaching a total of €838 million across Private Banking, Insurance, Asset Management and Financial Advisors.

Pre-tax income from Asset Management, in particular, recorded a strong increase of 60% versus the same period of last year. Corporate and Investment banking registers a €963 million pre-tax profit.

The reduction in profit versus last year is mainly driven by the disposal of the stake in the London Stock Exchange, which benefitted 2012 results. Lastly, our international subsidiary businesses, which suffered significant losses from Hungarian and Ukrainian units in Q2, reported a positive contribution of €98 million in the first half of the year.

Let us now turn to page 30, where we look at ISP overall performance versus May, versus key European peers. Despite the Italian recessionary environment, ISP is performing favorably compared to its European peers on many performance indicators.

Most notably, ISP profitability on assets stands at 2.6%, which is above peers’ average of 2.3% and the cost/income at 50.1% is best-in-class. ISP’s higher cost of risk reflects both the Italian credit environment and our conservative provisioning policy.

While our return on tangible equity currently stands at 8.7%, it is worth reminding you that during H1 2013, we have continued to consider low leverage strength given the economic environment. Our return on tangible equity will exceed 17% if we were to apply average European cost of risk and tax rate, both factors being beyond management control.

All in all, this slide illustrates that ISP’s performance versus other European banks continues to be solid and built on strong fundamentals. Let us now turn to highlights and conclusions on page 32.

Let’s start with the scenario recap. In the macro environment, we have seen that there are signs of improvement as well as in consumer – there are also improvements in consumers and business sentiment, but positive trends still have to consolidate.

The GDP of Italy will stay negative at best neutral throughout 2013. The ongoing recession has a direct impact on credit quality, and at any rate; the time lag effect will influence NPL levels for a while even after the recovery starts.

asset quality review, stress test exercise and country ratings will add pressure and pose new challenges to the banking sector. Additional capital requirements and new phase of industry consolidation at domestic level for small and medium sized banks and at pan-European level for larger players is expected by many.

Turn to page 33 to recap the ISP’s strategy. Intesa continues to focus on balance sheet strength, de-risking, efficiency, fees and commissions growth.

This strategy has clear purpose that is number one, to stay away from capital increases in an environment of depressed valuations, capital increases are highly dilutive and therefore, they have to be avoided at all costs; second purpose of the strategy, to ensure a strong capital base that protects dividend generation capacity. third purpose, to anticipate impact of asset quality review and stress test exercise.

Fourth purpose is to be in a strong negotiating position if a phase of pan-European banking consolidation occurs. Inefficient players with weak capital positions and provisioning will succumb.

By contrast, strong and efficient banks will enjoy far more negotiating power in picking partners and defining and negotiating terms and conditions. Now let’s turn to page 34 to recap the H1 highlights.

As we said before, we had six priorities, priority number one, capital. We repeat this, because I think these are key messages.

We remain one of the most solid best capitalized bank in the world, already Basel 3 compliant. We enjoy an 11% fully loaded common equity ratio, up 40 basis points versus year end 2012, putting in simple terms, 40 basis points, equivalent to a capital increase of approximately €1.4 billion.

Priority number two, provisioning, the NPL coverage ratio, already best-in-class, is up an additional 150 basis points versus year-end 2012. Priority number three, liquidity.

We confirm that both LCR and net stable funding ratio are at a level well above a 100%. That is ahead of Basel 3 targets for 2018 and 2019, even after the €12 billion LTRO payback.

Priority number 4, de-risking, our leverage is now down at 17.9% and loan to deposit ratio is at 96%, down nine percentage points versus 2011. Priority number five, increasing fees and commission.

As far as our operating performance is concerned, we compensate lower net interest income with a strong increase in net fees and commissions, which were up 15.2% year-on-year. Priority number six, driving down structural costs, we continue to drive down structural cost 7.7%, year-on-year.

Our cost/income is best-in-class, as I said before several times, just a fraction above 50%. All in all, again, we have clearly delivered on all priorities, and as I said, if you do any benchmarking with our peers, European peers, you’d find out that we are best-in-class along the metrics of all six dimensions mentioned.

Let us now come to the conclusion. Wall Street Journal a few months ago titled a piece on ISP as nice bank, wrong country.

I believe that the country is making some progress, and of course, I strongly believe that this is a solid efficient well run nice bank. We are well prepared for the asset quality review and stress test exercise, and in fact, we are bold enough to think that in competitive terms, we will come out ahead of several other players.

Many believe that the asset quality review and the stress test exercise will stimulate a new face of consolidation in the European banking sector. If and when the consolidation happens, we believe we will be in a strong negotiating position.

In the meantime, on a pure valuation basis, we consider ourselves an attractive investment opportunity. We have solid, efficient cash rates and we are trading at a fraction of tangible book.

As such, we provide an attractive entry point for international investors looking for leverage play on European economic recovery. One final remark on dividends, our capital ratios at the end of June 2013 factoring pro quota dividends accrued in the first half of 2013, in proportion to the €832 million paid in 2013 for 2012.

Dividend payment is and continues to be a clear priority of management and capital ratios as well as profitability at the end of June 2013 are consistent with this priority. Actual payments will, of course, reflect developments in the environment and regulators rules and measures.

I thank you together with my colleagues for your kind attention and we are now ready to take your questions.

Hi, good afternoon. It’s Azzurra from Citi.

I have two questions, one is on the NPLs, and I think that you are looking ahead for the asset quality review, which is very wise in my opinion. One thing that I wanted to ask is, do you have a level at which you will be comfortable or have you already reached the level at which you feel comfortable considering what is the development that you’ve seen in the economy at the current status?

And the second question is about the lending, we have seen the lending decreasing by roughly 4% quarter-on-quarter and this seems worse than the data at industry level. Can you explain what are the dynamics behind this because you have a strong liquidity position, you have a solid capital position and so are you concerned of the asset quality or are you concerned of the return that you can have in terms of spread from this position that you have?

Thank you.

Thank you, Azzurra. It is difficult to predict what the asset quality review exercise will be like, and I don’t think we have any better cue than you have.

So what we do, I mean, is going through our portfolio with a fine comb and trying to be realistically conservative as we can. That is we don’t wait for others to tell us what to do.

We do what we believe is right, but then in the end, I mean, it will up to the Central Bank and the ECB to set the bar and it will be up to the EBA to define the criteria for the stress test. So I don’t think we even have to engage in guessing.

I think we just have to apply our best knowledge in understanding of our credit portfolio and react accordingly. We believe that we are more conservative than the rest of the industry and we believe that this is good.

We do not expect to have a major impact from either the asset quality review or the stress test, but we believe that it’s better to prepare ourselves ahead of time. Concerning lending, again, it’s not related to any limitation on account of liquidity or capital or whatever, it simply reflects selective approach to risk underwriting, and of course, 4% is an average, but there are categories in which, in reality we are not shrinking and others, in which, we are shrinking more, but perhaps Carlo can add some more figures.

You have to consider that we have also a reduction in the repos with our institutional clients that is included in the credit amounts. So the real reduction is only in the range of 2% related with the real clients.

Okay, thank you. Can I just ask one follow-up on the asset quality if possible?

Please.

Azzurra, the point is that you have to consider two factors in the cost of risk of our loan book because the first one is related to the inflows and the inflows cost of risk is more or less in the range of what we had in mind at the beginning of the year, so in the range 120 basis points. So the cost of risk of the running of the deterioration of the credit quality is in the range of 120 basis points.

The other part is the ebbing that we made increasing the coverage during the first six months of the year. So looking at the inflows, the dynamics in my opinion can allow us to stay more or less in the range of 120 to 125 basis points.

The extra coverage will depend also on our extra cash flow that we can generate in the next six months of the year.

Okay, thanks a lot. Thank you.

Thank you, Azzurra. Next please.

Hello and good afternoon. I just wanted to ask a question about the lending decline and to try and figure out essentially what is due to your own sort of functioning of your portfolio and maybe the lack of willingness to extend credit to some or if it’s more than to demand?

And with regards then to the provisioning and the asset quality review, so you are saying that your provisioning ahead of that to be fully ready and that you don’t expect so much of an impact from the stress test and the asset quality review, I just wondered if that is because you think you will have to continue preparing and adding extra provisions going forward or you feel that now after this you are pretty much done with this type of adjustments? Thank you.

So, the first point is more related to demand. So we have no demand for good credit.

So there’s a phase in economy in which there’s a lack of good demand. Looking at the second point, difficult to say what could be the right level for they asked what is your review and especially for the stress test, and in case they confirm that if we have availability of extra cash flow, we can increase the coverage, otherwise we will work only on the coverage for the inflows as usual.

And if you don’t mind following up just quickly, you also were talking about the consolidation potential after the stress test, I just wonder to what degree you’re willing to do this, is this the situation whereby you would be “Gifted” another competitor where you would be looking or would you be more active in pursuing opportunity at that stage?

Well, first of all, this is a guess and I mean it’s not what we think necessarily it’s what a lot of people think that after the stress test and the asset quality review, there might be some discontinuity in the industry and this discontinuity will translate in the need for some banks to recapitalize to inject more capital and there will be an opportunity for a general reconfiguration of the sector. And presumably this reconfiguration will be at two different levels.

At the domestic level for small and medium size banks, at the pan-European level for larger banks. Now it’s also curious to notice that our customers, industrial customers with turnover let’s say of €200 million, €300 million, already optimized their value chain on a global scale.

Second, we have a European union and we are building a banking union. Three, strength enough we don’t have a single truly European Bank.

So if you put this situation, if you look at this situation in conjunction with the possible outcomes of an asset quality review and a stress test, I would say that from a rationale point of view, it would be quite reasonable to speculate that there is going to be a reconfiguration of the industry. And I’m not saying whether that we will look or stay way or whatever, I mean it’s simply a fact and it is likely or at least not an unlikely event and we have to be prepared, it’s as simple as that.

To be more specific in any case, we would certainly not be interested in a purely domestic consolidation. Okay, because we believe that our presence in the country is very significant, we are the number one bank, we have antitrust issues, and I mean we are fine the way we are.

We can optimize our presence given what we have. It’s simply, if there is a consolidation on a pan-European level then we have to be prepared, because I mean if that happens, you have to be ready regardless of what is your own personal propensity.

Excellent and thank you very much for the clarification on the latter part of the question, it was very useful.

Thank you.

Yes, thank you. Good afternoon to everyone and thank you for the presentation.

I have three questions that are though fairly quick, the first one is on asset management, the industry has been very strong in Italy, I think some €32 billion inflows year-to-date. Within that, Eurizon has been a particularly strong player, which is also visible in your results and I was wondering, is that trend sustainable in your view and what are the key drivers, is there any change also in the customer behavior.

Second on the lending, I was wondering if there is any specific product or factor while you think it may be the time to make a strategic portion already. And steadily on Hungary, while we have again discussions on the foreign currency mortgages in the country.

And I was wondering if you feel already well is, there a product obviously, you had been very prudent in the last few quarters in that part of the work? Thank you.

Yeah. I didn’t hear the question on Hungary if you can kindly repeat.

Sure. There are again discussions on restructuring the foreign currency mortgages and I was wondering it’s based on what is known.

Now you think you’re already well reserved that given the provisions that has been taken in the last two quarters for what may come?

So looking at the first question related to asset under management, the trend is sustainable, because is the way in which we are using the excess of liquidity. So in our opinion, the trends both in Banca dei Territori, in which we have the increasing commissions and in Eurizon Capital and also in Intesa Vita, because it is also related with the bank assurance products is sustainable, and it is a strategic goal that in our Banca dei Territori, we have, as the engine for growth.

Looking at the second question, so the lending area, the product sectors the real point is that the export related clients are the clients in which, we are trying to increase market share, but it is not easy, because all banks are trying to increase market share. and then we have also at least of 30,000 clients on which we are trying to increase the share wallet also in Banca dei Territori and a specific target that we gave to our people in field.

Okay. on Hungary, it’s always difficult to make a comment on Hungary, it reminds me of that scene in Forrest Gump when the mother is dying and on her deathbed, she says, life is just like a box of chocolate, you never know what you’re going to get.

So it depends upon the flavor of the day, I mean we have to deal with it in a very careful way, difficult to make predictions. We try our best to understand the situation to cooperate and see what we can do.

In any case, our exposure to mortgages in FX is not huge, it’s south of €700 million and it’s not a huge risk. It is of course, something that is an issue and that we monitor it, but we don’t think it is a fatal issue.

I mean we are much more concerned about the general situation and hopefully, at one point, things will settle and Hungary will become once again, an interesting market. Thank you.

Thank you very much. Thank you.

Next please.

Good afternoon. I have two questions, the first one is on cost, because the labor cost was down by €100 million quarter-on-quarter and my question is, if this improvement is sustainable or if you impart it to a kind of a one-off effect like a recalculation of the bonuses for the full year.

So if the €2 billion cost base that we saw in the second quarter is something that we can use for the forecast going forward or it’s a bit to go to – I’d say to use it as a projection. The second question is again, on consolidation, just to understand if I was right in, let’s say, listening to your words.

You said that you are not interested in a domestic consolidation and therefore, no way Intesa can be involved in the bailout of a weak domestic player like the ones that we’ve seen mentioned from time-to-time in the newspaper if you can confirm that? Thank you.

Thank you, Matteo. On labor cost, positives and negatives.

I think it would not be a reasonable in this environment to expect that we will continue to draw down costs at this level, okay. I think we have been particularly aggressive and particularly successful, I mean a reduction of 7200 FTEs in Italy, I think it is indeed a remarkable achievement and also, let me point out one thing, everybody talks about cost reduction.

and I always hear claims from everyone from other banks, and including Italian banks saying that they are going to do this and they are going to do that and that. Reality is that one thing is announcing, the intention of doing something and another thing is executing.

we have generally been rather shy in the announcements or rather quiet in the announcements and rather strong in the delivery and that is the way we intend to be, okay, because we are very much focused on that, but we are dealing with an environment, which is beyond our control. Frankly, last year if you had asked me to commit to these figures, I would have not committed, okay, but we did it.

For sure, there is a limit, okay, and the limit is not a physiological limit, deriving by the fact that is not possible to improve efficiency beyond this level. It’s simply a matter of labor market, okay.

Now, I think that we have been very good in one thing, in being better than the others. Today, someone else was asking me at the Board, when we presented the results about similar questions and I said look, in a competitive environment, it is a little bit like the story of the two guys that go hiking on the mountains and at one point they decide to have a picnic, and they pull out a blanket and they start eating their sandwiches, and they take off their shoes.

All of a sudden, a bear appears, and one rushes to put on the shoes and the other guy says what are you doing, that the bear is much faster than you are and the other guys answers well, whom do you think the bear will eat first. That is actually in a competitive environment, the important thing is to be ahead of the others.

The rules are the same for everybody. We just hope to be better than the others in playing then.

The positive thing is that when we look around, we always see pockets of inefficiency that we can tackle. So the potential is certainly there, the determination is certainly here, the regulations are also and the constraints are also there.

So I am not committing to go on at the same rate, but we’ll certainly give it a try and if there are chances and points of discontinuity, we will do even better. Second question on consolidation, domestic consolidation, I can only reiterate what I said before, no desire from our side to participate in the bailout of any domestic player.

Thank you.

Sure. Thank you.

Next please.

Yes, good afternoon. Two question.

You just mentioned in your slides a lot about the EBA stress test, asset quality, et cetera. I know it’s early stage at this point to discuss this, but what is your feeling until now, what is the EBA looking for, what do you see.

You made some strong comments about the possible recap of the sector et cetera. So what is that that you see as a possible outcome out of this and on a European basis, what is that you see that the EBA stress test will impact the sector with?

And the second question is on the leverage ratio figure. Can you please provide it to us, given the fact that most of the European banks that reported in Q2 have already provided a figure?

Thank you very much.

Thank you. I am afraid that on the EBA test, I mean, my speculation would be just as good as you are and given that, I mean, the asset quality in the end, you go in and you look at actual situations.

So in a sense, it is easier to predict. When you are talking about stress test, it depends upon how you decide to frame the stress test and you can frame it as paradox, so that everybody goes through without scars.

You can frame it in a way that, so that everybody gets the serious damage and you can frame it in a way whereby some get some damage and some don’t. Very difficult, I mean, I’ve tried to – I mean, I tried.

I talk to several regulators not only in Italy, but also in other countries, and frankly, I have not had consistent answers on what to expect. If they don’t have consistent answers, I’m afraid I’m not in a position to give anything persistent.

What I believe is though that the better prepared you are, the less you have to be concerned about, okay. On the other side, if you coverages are inadequate, if you don’t take into account realistic recovery values and so on, you’re open for surprises, and that we want to avoid at all costs.

Of course, when you are talking about the stress test, the stress test reflects also the assumption on GDP movement as there is a perfect inverse correlation between credit deterioration and GDP development. And so, I mean, if they assume a GDP shrinking of 5% or whatever, then of course, there would be substantial potential for revision, but I use this as a figure, just as an example, not because anyone has indicated anything like that of course.

So it’s pure speculation.

Thank you. On the leverage?

On the leverage? Carlo, you want to…

Yes, on the leverage, looking at the accounting figures, you have a specific slide on slide 12. If you want to have some color on the new rules, but we are not sure that all competitor are using the same rules.

In any case, we would be well above 4%.

That’s what I wanted. Thank you.

Okay.

The key point is that if you talk to most bankers in Europe, there is a very significant concern and fear I would say about leverage regulations. but in our case, we frankly, we’ve looked at it from many different angles, but we feel quite comfortable.

And I mean we went in this direction way before the debate, the U.S. debate on leverage started.

Okay, thank you.

Thank you.

Hi, there. My first question on net interest income, you’ve deployed €20 billion liquidity to support revenues, can you quantify the benefit for NII from this strategy.

And also I might expect going forward and can you also expand on the customer spread, which seems to be improving in the quarter, how do you see the spread moving going forward? And then if I may another additional question on your coverage ratio, in particular on collaterals, can you give us an idea of what portion is residential real estate, and if I can add one more question on retail bonds, what’s the amount of retail bonds here switched into time deposits.

I think that was, is with your strategy typically on the year and what is the benefit for the P&L from this? Thank you.

Thank you, Antonio. So first question related to net interest margin, if you go to page 45, you can see that there is another area of increase of €12 billion.

In this €12 billion, we have something like €5 million, is increased in the release of liquidity in this quarter. The 0.44 the next quarter is related to the use of this excess liquidity.

As I told the real point for us is to increase net fee and commission. So looking at net interest margin in my opinion, we will not have more than €30 million of increase related to this extra liquidity that we are releasing in the next quarter.

So you have not to wait an increase in the net interest margin, but increase in net fee and commissions. Related to spread, we are increasing net cap, because the repricing actions are taking momentum.

So we are increasing the repricing action and the expectation is that we can maintain this increase in pricing especially in the last quarter of the year, because we launched repricing actions that we’ll start in September. Then looking at collateral, the majority of the collateral is related with the residential areas.

So for us, all substantially all the collateral are related to the residential. And so the last question on time deposit, we had an increase in time deposits, if you look at the page in which we talk about the funding is page 56, the amount of time deposit that we have placed in the first semester is €10 billion and out of this €10 billion, €5 billion is related to the switch between retail bonds and time deposits.

And if you want to calculate the effect, it would be in the range, the difference between the spread of 200% over Euribor and that is the retail bonds and a spread of 50 basis points that is the one that we are paying on the time deposit.

Next please?

Yes, good afternoon. A couple of quick questions, the first one I see from the slide in the notes that your total government bond portfolio increased to, I think over €100 billion, so it’s about plus €10 billion versus last quarter, what is the rationale given that you’ve paid off deals that is that part of deals this quarter and if you would give us what was the contribution to NII, last quarter and this quarter?

Second, the tax rate what are you doing to decrease it from 56% level and that if you are not going to add coverage top ups in the next couple of quarters, should we assume that it goes down or it’s actually relative sustainable level and then last – I’m surprised that you didn’t taken an impairment on Telco, because I think Mediobanca has done so. Is it a good ratio or is there any other reason?

Thank you.

So related to the government bond, the increase was €7 billion with very short maturities, the maturity, the average duration, we reduced the duration from 1.9 to 1.7. so it’s really short-term government bonds.

it’s a way of reinvesting liquidity during the months. So it’s typical treasury movement.

The contribution is the other portion of the other components, so €5 million is related to the reimbursement of the ACB and the other portion is related to the increase of this government bond portfolio, but it is only a treasury reimbursement. so we are not sure that we will maintain the amount at this level in the treasury portfolio.

Concerning telecom, to the best of my knowledge, Mediobanca has not revised the values, has done no impairments as nobody else has. and frankly, I think it’s a bit premature.

we have to wait for developments there. And while it is true that I mean the situation is complex, but I think we all believe that there are also opportunities there that are by now not fully appreciated.

So that is what I can say. Thank you.

Next question please.

Good evening. I have three questions.

The first one is, if you can give us a little bit of update on the asset light part of your strategy for investment bank, then a little bit of a follow-up on the industry consolidation. If you can give us an idea of which geography you would be looking at in terms of possible interest and then you have partially already answered, but I just wanted to ask a little bit of an update on the assets repricing going forward, and whether you’re planning to do any change in your lending strategy?

Thank you.

Thank you, Marta. On asset light strategy, traditionally, you know that in Italy, Corporate and Investment Banking has leveraged significantly on credit lending.

Okay, that is credit was really the key business, and everything else was ancillary. We are trying to push more towards advisory and markets, and we try to lead the way of course, the Italian industrial fabric is such where you cannot do that overnight, but that is the direction in which we are moving that is less emphasis on lending, more on helping corporate to substitute lending with other forms of funding and a push for more advisory services.

On consolidation, you say, which geographies, I think it is totally premature, as I said, if and when and if and when we will see. and again, we’ll have to see, I think it is totally premature to discuss that.

We are simply in the state where we wanted to be prepared in case that becomes an opportunity or something that happens in the market. And on asset pricing, maybe Carlo, you want to take that?

So we made the pricing on €10 billion of medium term loans and we have €18 billion expiring, during the second half of the year. So we think that we can reprice also in this portion of the portfolio, in case of the new loans and looking at the short-term loans on a total amount of €80 billion, we made repricing on €30 billion.

so we can work on €50 billion and we are also increasing the repricing actions. And so we think that we can have an increase and filling a portion of the gap that we have with the market.

Just to remind that our gap with the market is 50 basis points. so we have room for make repricing.

So that I understand, what you are talking about for this year would be this €18 billion and then?

€80 billion on the medium term loans and €50 billion on the short-term loans.

I see.

For the second part of the year.

And you are planning to reprice them in a way that is margin neutral given that the actual interest rate is declining?

So probably it is better to talk about the result on the end of September, so we can talk about the result and not of the forecast. Okay.

Okay.

Yeah, hello. A couple of follow-ups on asset quality and sorry for coming back on this, but if you can give us a little bit of flavor in terms of what explains the coverage increase if it’s because of mix or more conservative approach in terms of collaterals?

And the second question is, I know it’s a bit of crystal ball again, but considering that the NPL growth number in the quarter has been probably a little bit higher than people expected, which is your best estimates of when the NPLs are going to be peaking in Italy? Thank you.

So the increase in coverage is related – you have to look at two different figures. The one in the bad loans, so in the bad loss area, it is more related to an increase in the coverage due to the collateral and looking at the substandard, we decided to increase due to mix in the other elements.

But in any case, as I told you, the real driver is the extra cash flow that we can put in order to be ready for a tough asset quality review and stress test exercise. Looking at the peaking of NPL, it is difficult to say.

For sure, we think that we will have increase in bad loans. So we will have a movement from the substandard to bad loans, and so the real peak for the bad loans could be in the next few quarters.

Looking at substandard, we offer to be at the peak of the negative environment, but not easy to say.

Okay, thank you.

The NPL development will be related to the development of the economy and here we have a range of use from the ones that believe that in the fourth quarter, we will see some improvements to the ones that say will happen at the beginning of 2014, to the ones, to the pessimist that say will occur in 2015. Frankly, it’s difficult to assess probabilities.

It’s also because I think it is contingent upon several other things, upon and more specifically about the developments of the economies in other parts of the world, is contingent upon developments in from the German elections. Overall, I would tend to be cautiously optimistic, okay, that is I think that the probabilities that the situation will start improving overall in Europe, I mean, and we’ll start to see some trends taking shape from the fourth quarter of 2013, I think it’s fairly high, but frankly, with an asset quality review in the horizon, stress test on the horizon and this in any case our expectations rather than fact, I think it is fair to stay prudent and to be guided by this.

If we are prudent and we know that we are not going to be in for bad surprises, someone else decides to be more optimistic about it well, it’s a legitimate position and we respected that, but under the circumstances as we said, we stick to a conservative stance.

Next please?

Thank you.

Good afternoon. I have just two questions.

Can you kindly speak louder, Anna.

Yeah. Do you hear me?

Yeah. Now, yes.

Thank you.

Thank you, Anna. I will take the dividends and leave Carlo the pleasure of illustrating what is happening in retail banking and all the other things.

I think I’d made exactly the same comment at each quarter’s results presentation saying that a strong capital position is a prerequisite for protecting dividends. So I don’t think I said anything new.

It’s just consistent with what we have said. The fact is that we have provisioned in our capital calculations exactly the same dividends, and right now, dividends are consistent with what we have achieved.

That’s all what we have said. I think it’s perfectly consistent with the past.

What we have said is that we don’t know what shape and form the future exercise will take, and so I mean, there are elements that are beyond our control and that’s as simple as that.

So looking at the risk weighted assets, the reduction in risk weighted asset is not only related to volumes because we had the structural benefit related to the operative risk weighted assets. So it is in the range of €3 billion, and so it is a relevant significant contribution that we add to our reduction in liquid asset, so improvement in the quarter one and in Basel 3 ratio.

Related to the Banca dei Territori, we will have time in the future to discuss on this point, but just to give you two points; one is that the short-term levers that according with a recall, we decided to put in place in Banca dei Territori and is repricing. So we made some repricing, but also as I told you, a very strong action that we want to put in place starting from September and the increase in Wealth Management placement and we decided to increase by €7 billion the placement of mutual funds in bank assurance products in the next six months.

Looking at (inaudible), is just to have most easy way to conduct the Banca dei Territori to reduce complexity and to reinforce the role of the add of the different so called Direzione Regionale, and the purpose is to increase people that we can use in order to serve our clients. Now, we will have time to talk about the plan in the Banca dei Territori.

If I may add on the sense of the reorganization, I think, there are two clear and powerful messages. The simplification aims to be closer to our customers and we are moving in the direction of empowerment of people that know the customers best.

So we’re making a leaner bank, shorter line of comment, more focused on customers, and with faster response time. Thank you, Anna.

Thank you.

Yes, good afternoon. I have got questions on four topics.

Carry trade, what has been the euro million P&L contribution of carry trade in Q2 2013 and are you planning to reduce your suburban exposure ahead of the next EBA stress test? And on asset quality, how much has been the direct gross migration of performing loans into substandard or doubtful loans this quarter, so not going through restructured or past due?

On regulation, how do you anticipate the EU Council proposal on banking resolution is going to impact your funding costs and policy and will you stop placing senior bonds to reach their clients on the back of this? Finally, on tax rate, are you aware of any plan to increase the taxability of provision from loans and could this be a way to discover significant in coming quarters?

Thank you.

So looking at carry trade, the quarter contribution could be in the range of between €60 million and €70 million deriving from the carry trade on a quarterly basis. We have no plan of making reduction of government bond portfolio in the sense of that now for us it is something that we are using for treasury purposes.

So if we have an excess of liquidity in the short-term, we would put in covenant bonds, otherwise if we have the opportunity of using for increasing asset under management, sort of using the placement of the bonds in the markets, we can decide to do. So for us, the very short duration is the real possibility that we would have no significant impact having in mind the EBA stress test or the ratio of 1.7 it is something that can allow us to be in a very good position looking at the EBA stress test.

In any case, the amount of portfolio will not be in a significant way different from the one that we have today.

The €60 million, €70 million is net of tax or gross?

Is the gross tax.

Thank you.

Then looking at migration, we have all the information in the presentation, so you have all the different inflows and outflows in our bad loans and we will not elaborate more on this point.

On this one, we don’t have this data in the sense that it’s hard to reconcile, if there is an increase in the doubtful bucket or in the substandard bucket that comes from performing loans are going directly into those two buckets instead of an internal migration within the impaired loans group that’s what there was quoted that.

So the real point is that the increase in the bad loans are coming only from substandard, as I told you and I told to your colleagues in the other question, the real point for us is that we are seeing increase in bad loans deriving from substandard. And it is what we expected at the beginning of the year.

so when we made the forecast for 2013. the real point for us was to consider an increase in bad loans deriving from substandard and it is what is happening.

Then looking at banking resolution and senior bond placements in Italy, we are reducing the placement, but we are reducing also, because we want to push time deposit. so for sure, you will see a reduction in the total amount of progressive reduction, a total amount of senior bonds and a progressive increase in time deposit.

then tax rate plan, I don’t know how it is possible to make a tax rate plan. A tax rate, it is not something that you can especially relate it to provision that you can plan.

It is something that you can only put from an accounting point of view in the amount, if you add so…

I was meaning from the government that we have read under pressure that there could be plans to give one year of tax that could be at the provisions to help bank increase coverage?

Andrea, I understood your question, I think that we can have a positive and negative view of that. the fact is that in government, the reason awareness that this is an issue, and I think that it’s certainly the Minister of Economy, Saccomanni understands this problem very well, and also the Prime Minister understands it.

However, there is one little problem, they need the money. So, frankly if you ask me, I would be high, be long on their ability to understand the issue and short on their ability to execute and do something.

Thank you very much.

Welcome. Thanks.

Next please. Thank you.

Our next question comes from Domenico Santoro of KBW. Please go ahead.

Yes. Thank you for all these details, just a kind of question very quick.

What drove basically the negative swing in capital reserve in the second quarter? And second am I right, when Mr.

Messina mentioned the €30 million before NII. I’ll be coming from release of the liquidity buffer and in the third quarter whether this had already happened?

Thank you.

Looking at €30 million is a six months result, so is €50 million per quarter and it is the impact of the reimbursement of the €12 billion in European Central Bank. I did understand that capital reserve, the reduction in capital reserve are you talking about?

I’m just looking at page 23 of the press release basically, there is a negative swing in reserves of about let’s say, €800 million, €900 million that basically drives down the net tangible book value, so and just understand what’s the reason there?

So probably it is the payment of the dividend in the first part of the year, because we have no deduction in our net equity, so…

Okay, thank you.

Believe that this the kind of swing you all like.

Thank you.

Next please?

Hi, yes, and a just quick question on the LTRO repayment, am I right. If I say that the €33 million per quarter of additional commission comes from the lower commission on the state guaranteed bonds and the second question is on NPS if we look at the coverage on the non-performing on Sofferenze, you’re the best-in-class 61%, I was wondering if there is any news in terms of Sofferenze disposal or NPL disposal, the gap between the seller and the buyer is closing or if you can give us an update please?

Thank you.

So looking at the LTRO, I was talking about the benefit in the net interest margin driving from the – if you consider €12 billion with zero reinvestment, because that was the yield that we had on the €12 billion. Now we have no more and we paid 50 basis points, now we are not more paying 50 basis points and now we have no more zero yield.

So that’s the way in which the €50 million per quarter was calculated. The real point is that we can have an extra contribution that it is not already embedded in the figures that can be related to commissions, that is related to the €12 billion that the government guarantees, because the amount that we had reimbursed that was one with the government guarantee.

We have negotiated with the Ministry of Economy, the possibly or not paying the commissions and, so we would see in the next month of how could it be possible. But in other case, it will be on commissions.

So €50 million, the aggregate, €50 million from net interest, €345 from commissions?

€50 million could be from net interest margin per quarter and looking commission, it was €70 million per year.

Per year, okay.

Okay. So I see no more, no one else in line for questions and I’d like together with my colleagues to take the opportunity to thank you for your attention, we’ll see many of you in London in September and for those of you who are able to do so, I wish you splendid vacations, possibly quality vacation and stressless vacations.

Thank you very much indeed. All the best.

Bye.