Intesa Sanpaolo S.p.A.

Marco Del Frate – IR Andrea Tamagnini – IR Carlo Messina – CEO Stefano Del Punta – CFO

Jean-François Neuez - Goldman Sachs Matteo Ramenghi – UBS Alberto Cordara - Merrill Lynch Azzurra Guelfi - Citigroup Delphine Lee - JP Morgan Christian Carrese – Intermonte Domenico Santoro – Autonomous Marta Bastoni - Barclays Capital Andrea Filtri – Mediobanca Jaime Echenique - Bank of Santander Benjie Creelan-Sandford - Macquarie

So good afternoon, ladies and gentleman and thank you for joining us on this call to discuss Intesa Sanpaolo's nine month results. This is Carlo Messina and I’m joined by Stefano Del Punta, our Chief Financial Officer; by Marco Del Frate and Andrea Tamagnini our Investor Relations Officers.

Let me introduce the three key messages of this presentation. First of all, we delivered very strong economic performance in the first nine months.

This proves our resiliency despite an improving, but still unfavorable macroeconomic environment. Second, we prove to be a compressive assessment winner both in terms of capital and in terms of leverage.

Third, we're firmly on track to deliver on our business plan commitments. So at the end we won the competition of the compressive assessment and now we're ready to win the competition for revenue growth within the European banking system.

The net income of the first nine months supports our commitment to pay €1 billion in dividends for the year. So now let's go through the presentation and then I'll open the call up for your questions.

So slide number two, net income is up to €1.6 billion excluding the one-off increase in tax rate on the gain from the Bank of Italy stake but it is the real net income for the growth. Stated net income is up at €1.2 billion.

Pre-tax income is up 66% on a yearly basis to more than €3 billion. Operating income is up 4%, mainly driven by the positive trend in net interest income and double-digit growth in net fee and commission, the unique bank in Europe.

Operating margin is up 6%, with cost income ratio down to 48.5%, loan loss provisions decreased by 13% with lower NPL inflows and increased NPL and performing loss coverage. So ISP proved to be among the compressive assessment winners.

We had outstanding results both in the asset quality review exercise with a common equinity Tier 1 ratio, including capital measures that for us it is only the capital gain of Bank of Italy’s stake at 12.5% with €12.7 billion excess capital and in the stress test adverse scenario with a common equity Tier 1 ratio at 9% with €10.9 billion excess capital. We have a low leverage, leverage ratio at 6.7% based on budget recalculation.

The common equity Tier 1 ratio after dividends is up to 13% fully loaded at the end of September. Our liquidity and funding positions are very strong, with liquidity coverage ratio and net stable fund ratio well above 100% and with full year wholesale bond maturities already fully covered in the first half of the year.

NPL cash coverage ratios increased to 47.2%. Slide Number Four the year-on-year comparison is strongly positive.

Operating income grew by 4%, but it will be 8% excluding profits on trading; thanks to a net interest income increase mainly driven by reprising a lower cost of funding into a double-digit growth in commissions up 10%. Our ambition to change the mix of revenues towards a more fee intensive business is already showing significant results.

Operating costs are fairly stable despite the pro-quota incentives to support growth, which are already factored in personal cost. Operating margin is up 6%, but it will be 15% excluding profits on trading.

Loan loss provision decreased 13% as a result of better macroeconomic conditions and our efforts on proactive credit management. Net income is up 157% and stands at $1.6 billion excluding the one-off tax charge.

Let's now turn to Slide 5. As you can see in the chart compared to last year, net income in the first nine months almost doubled.

This growth was mainly driven by the reduction of loan loss provisions and the improvement in the core components of our revenue base such as net interest income, commissions and insurance income. This is only partially offset by the decrease in profits on trading and the one-off tax increase on the capital gain from the Bank of Italy stake.

We have delivered not only a growing net income, but also significant improvement in the quality and in the sustainability of our revenues. Slide Number 6, we delivered a positive third quarter with a net income at around €500 million more the doubling last year’s figure.

Operating income is up 9% excluding profits on trading. Operating margin is up 17% smoothing profits on trading and loan loss provisions are down by 15%.

Finally pre-tax income is up 55%. Slide Number 7, very important for me because this is the benchmark on which I am leading the organization.

So as the Slide illustrates, ISP has recorded a significant growth in operating revenue, especially when compared to most European peers who instead experienced a decrease. So Slide Number 8, at this stage, I guess somebody could be surprised our bank operating in a zero growth market is able to deliver such significant results.

This is even more surprising while looking at our European peers, which are delivering on average a decrease in revenues while operating in a positive macroeconomic environment. So let me explain the main reasons for these.

First of all Italian households have the second highest amount of saving [board] (ph) therefore Italian net wealth is coupled from GDP growth and we are ready to have all the increased deriving from the wealth of the Italian families. Second, the Italian banking market is underpenetrated and there is significant upside especially in the wealth management area.

Third, the Bund BTP spread is now low and so we are in a position to have a low cost of funding. Finally the excellent results achieved are justified by our superior execution capability relative to our peers.

Slide Number 9, as you can see from this slide, the under-penetration of wealth management products both in Italy and ISP is another factor that can support ISP sustainable profitability growth and our possibility and ability to grow also in the future. Slide Number 10, we are leader in pre-tax income growth in Europe in addition to farther reiterate the message about ISP strong economic performance, the slide shows that ISP has recorded year-over-year improvement in pre-tax income farther demonstrating our ability to deliver growth even in a low growth environment.

Slide Number 11, so incredible results in net fees and commissions our performance in commission has consistently improved over time with the highest year-to-date commission income since 2007, we saw an accelerating trend in quarterly performance with growth of 8.3% in the first quarter increasing to 11.5% in the third quarter of 2014, confirming the growth trend in this area and underlying our ability to extract value from all components, which are under management control. Slide Number 12 is the evidence of our strength.

Assets under management continue to grow reaching to €291 billion up 16% on a yearly basis and there remains considerable potential for further penetration of the management assets products in our customer base. This growth allows us to achieve 41% of business plan 2017 target for asset under management net inflow.

So an increase in total amount of €41 billion in a year. Also the relative wave of assets under management compare with indirect deposits increase to 64% up five percentage points in the past 12 months of which four percentage points have been delivered in the first nine months of the year.

Again in the first nine months, we succeeded in reaching around €16 billion from assets under administration to assets under management versus €10 billion per year envisaged in the business plan. ISP is still is around €170 billion of assets under administration and in addition, approximately €55 billion reserve of excess liquidity that ISP could will potentially use.

Slide Number 13 as the slide illustrates, ISP has recorded the highest year-on-year improvement in commissions compared with its European peers, a clear result of a strategy aimed at growing this part of the business. Slide Number 14, in the past two years, the bank has been focused on rebalancing the business mix that was fee intensive business and as you can see, the results are extremely positive.

Over the past 24 months the relative wave of commissions consistently increased, reaching 39% of operating income. This is even more remarkable if you consider that our commissions increased by 25% versus the first nine months of 2012.

This is fully consistent with our business plan where we expect to farther increase commission as a proportion of revenues to 43% by 2017. Slide Number 15, so now let's now take a look at another source of competitive advantage for ISP.

We continue to be extremely focused on cost management. Operating costs have been very fairly stable in the past 12 months with a further reduction in administrative expenses.

Pro-quota incentives to trigger growth have already been factored into personal cost. Our already best-in-class cost income further improved to 48.5%.

In Slide 16, you can see that our cost income ratio in an industry where the average is 63% positions us among the most efficient players in Europe. Slide Number 17, our conservative stance on provisions has been fully proven correct by the asset quality review, with limited additional provisions already fully factored in.

After years of operating in a very difficult market environment, we are starting to see improvement in NPL inflow, which is down roughly 20% on a yearly basis. Consistent with improvement in NPL inflow we reduced provisions by 13%, but we further increased the NPL cash coverage ratio to 47.2% two percentage points higher than one year ago.

Slide Number 18, now let's take a look at the results by business. As you can see, Banca dei Territori results are solid and experienced the IS growth in the group, up 138% on a yearly basis, thanks to the improvements delivered by the Banca dei Territori action plan, which is currently being implemented, strong growth in commissions and a decline in provisions, were the two main drivers for such good result.

Corporate and Investment Banking division is still our largest contributor to pre-tax income with €1.5 billion demonstrating its resilience to the challenging market. Our international subsidiaries contributed €375 million up 60%.

Private banking division delivered 20% growth reaching a pre-tax income of around €500 million. Asset management reached €422 million pre-tax income contribution, growing 35% on a yearly basis and last but not least, insurance generated $640 million pre-tax profit with 7% growth.

So Slide number 20, we can have a look on the asset quality review and compressive assessment. You have all seen the results of the compressive assessment.

ISP is a clear winner. Common equity Tier 1 ratio was 12.5% under the asset quality review with an excess capital of €12.7 billion above the 8% threshold, 12% under the stress-test baseline scenario with an excess capital of €11.6 billion above the 8% threshold and 9% under the stress-test adverse scenario with an excess capital of €10.9 billion above the 5.5% threshold.

But what it is very important on Slide 25. We believe we are the real winner of the ECB comprehensive assessment.

We rank second among our peers under the asset quality review with common equity Tier 1 ratio at 11.7% without considering the capital gain on the Bank of Italy stake. In any case, we are second among our peers and we rank second under the stress test adverse scenario with a common equity Tier 1 ratio of 9% but among the main players who are global systemic important banks with additional requirements ranging from 1% to 2.5 ISP ranks number one in terms of excess capital.

We are not a global SIFI. Number 22, leverage, very important.

Additional proof of ISP’s positive performance under the comprehensive assessment is the leverage benchmark analysis where ISP outperform its peers with a 6.1% leverage ratio, two percentage points higher than the peer average and higher than the average of German and French banks. We are at the top in this important ranking.

Low leverage has always been a keep priority for ISPs. Banks typically fail not of for a lack of capital, but for excessive leverage.

So Page Number 23, we are not only a winner of the comprehensive assessment, but at the end of September we further strengthened our capital base because our fully loaded common equity Tier 1 ratio is now equal to 13% up 70 basis points versus the end of last year and our phased-in common equity Tier 1 ratio is equal to 13.3% up 140 basis points versus the end of last year. So on Slide 24, you can see that our pro forma fully loaded Basel 3 common equity ratio stands at very favorable level versus other European Banks only Northern and UBS are better than us.

Slide 25, on liquidity ISP continues to enjoy a strong liquidity position with more than €10 billion of liquid assets and our Liquidity Coverage Ratio and Net Stable Funding Ratio are well above Basel 3 requirement. In addition, full year wholesale bond maturities had been already fully covered in the first half of the year.

Slide Number 26, our strong provisioning despite lower NPL inflow has driven an increase in NPL cash coverage to 47.2% up 120 basis points on a yearly basis and 10 percentage points higher than the average of our domestic competitors. Cash coverage ratio on performing loans also increased to 84 basis points around 30 basis points higher than the average of our domestic competitors.

Slide Number 27. Our total NPL coverage ratio including collaterals is at very high level of 135% and this goes even higher to 156, if you also consider personal guarantees.

The Slide Number 29, so talking about the delivery on our business plan, we're firmly on track to deliver our business plan and some very important actions have been implemented recently. In particular the new group organization has been approved with the creation of three new divisions, private banking, asset management, insurance, which are the three pillars to grow our fee based business.

Then the creation of a new regulatory affairs unit deal with the regulatory bodies and the appointment of a Chief Innovation Officer to promote innovation in the Group, the creation of the capital like bank to reduce non-core assets. Altogether a new organizational structured for Banca dei Territori is being defined with the creation of three commercial value chains, retail, personal SMEs in existing branch network.

The creation of the new sales and marketing unit, the appointment of a new generation of sales and marketing managers and regional managers on average 10 years younger than the previous generation. Finally cooperate investment banking organizational structure as being revised and is now structured with four units, international network and global industries, corporate and public finance, global banking intersection, merchant banking.

Banca EMA as ISP groups investment bank. Slide Number 30, in line with our new business plan, we have already launched and implemented several new actions.

Among these actions is worth highlighting for the new Growth Bank, Banca 5 where we have already introduced the new specialized model in around 1,400 branches and increased revenues per client from €70 to more than €80 on five million customers. New multichannel processes have been successfully tested leading to 370,000 new multichannel clients, confirming our number one position in online banking in Italy with 4.8 million clients.

Then the new service model for Banca dei Territori has been identified with three commercial value chain. For the core growth bank, we closed an additional 13 branches in the third quarter, reaching a total of 218 branches in the first nine months and we finalized the rationalization of seven product factories into one and merged two local banks into ISP.

For the Capital Light Bank, around €2.5 billion of the leveraging has been already achieved and the key for the key leaders, people and investment the big financial data program is under implementation, the Innovational Center has been created in Turin and the investment in the plan for the group employees is being finalized. On Slide 31, all the action implemented are already showing very positive results.

Indeed in the past nine months, we registered a better performance than expected in our business plant targets in particular in core revenues and pre-tax income significantly supported by the strong asset under management growth. As I told you, 41% of the business plan 2017 target for asset under management and net inflows has already been achieved.

I am glad to say that we are well on track to deliver on our business plan target. Slide Number 32.

Thanks to the contribution of all our people. As you may remember our business plan has been developed with a strong desired contribution from all our people in order to align, motivate, and mobilize the entire organization.

This reflects the fact that we strongly believe that our people are our key assets, each one of them is or her own business plan to deliver and they are all actively contributing to group targets. The combined effort of all our people has been a key enabling factor to achieve these positive results putting us on track to deliver on the business plan.

So Slide number 33, in conclusion I would like to sum up the key messages of the presentation. First of all we delivered a very strong economic performance in the first nine months proving our resilient despite the improving but still unfavorable macroeconomic environment with growth in revenue in the specially net fee income in commissions.

Second, we proved to be a compressive assessment winner both in terms of capital and in terms of leverage. Third, we are firmly on track to deliver on our business plan commitments and the net income of the first nine months supports our commitment to pay €1 billion dividends for the year of which €750 is already factored into our capital ratio.

Now let me take this opportunity to thank all our people who are working hard to deliver these impressive results. Thank you once again for listening and will now do my best to answer to any questions you may have.

Hi good afternoon. I have two questions please.

The first question is on the excess capital that you've shown in your slides both in AQR and also in the reported number and so now that the AQR is done, now that the leverage ratio, the regulation has been finalized and so on. I was wondering what is the main obstacle that prevents you from going further than the planned dividend on common earnings and potentially distribute part of this excess capital, what are the next road signs that we need to look at for us to be more confident that this excess capital is actually distributable as opposed to trapped in the company?

And notably I wanted to ask your view about these recent comments about the inclusion of DTAs which have been transformed into tax credits and the validity of these in the capital ratios and he distributability of that capital? My second question was on loan loss provisions, so they are coming down next year consensus is round about for the full year at the level that you have reported for the first nine months and the NPL inflow is also falling but is still about €2 billon a quarter year-to-date.

So I just wanted to know whether you are saying that about €3.5 billion to €3.7 billion of loan losses for next year is doable or may be premature? Thanks.

So thank you for your questions. Looking at capital we have a clear rule stated in the business plan that is we want to wait until 2016 and in that timing we will decide how to do the excess of capital for the organizational.

So my petition is that during 2015 we will have a clear rule of the game for the minimal level of capital for the organization in the banking system and then we can decide, we can be in a position to decide what to do of the excess of capital. For the time being the asset quality review and compressive assessment can give us a strong confidence on the possibility of giving the €10 billion ordinary dividend.

Then in any case we will evaluate for the excess capital when we will have the rule of the game for all the European banks. We are in a good position also because we are not Global SIBs.

Looking at the DTA okay, DTA we will see that the rule of the game in any case we can compensate the DTA with the Danish compromise related assurance situation. So for us we will not change in a significant way could be those in our best files.

Looking at non-operation I want to give guidance for that the presses the figure for the 2015 looking at provisions. What I can confirm is that I'm sure that in 2017 we'll be 80 basis points in next year there will be a reduction in provision compared with 2014.

Excellent and just to follow-up on the rule of the game that you are still expecting to be finalized next year, what are they more precisely?

I don’t know, the real point is that I'm considering that now ECB as all the banks within the supervision. So it is not possible that each bank has a different capital ratio to be expected.

What is very important what will be very important would be to have a level playing field also on the rule of the game for the minimal level of capital. So we cannot be sure that it will be 8% like in the AQR.

So we will see what could be the rule of the game. In any case it could be 9, it could be 10, but we are at 13% so I'm sure that we will remain with an excess of capital that can be deployed into our shareholders.

Good afternoon and thank you for the…

Sorry Matteo I can't hear you.

Is it better now?

Yes.

Yes.

Sorry about that. Yes, I have two questions.

The first one is on the business plan target which have been confirmed in spite of the tougher outlook basically since the plan was presented and there was one that what have been the elements which have been performing better the newest packet in this first part of the plan to offset a more difficult macro environment particularly with regards to interest rate? And the second question was about loan growth which was slightly positive in the quarter related to Q2 and I was wondering if it is just a small detail and we should then really focus or rather is there anything we should extrapolate for maintenance?

Thank you.

So thank you Matteo. Looking at the business plan targets we are much better on the cost of funding and the plan was really conservative on this point, but we are really much better on commissions and on growth of asset management volumes.

So what it is very important for me is the growth in volume because volume growth is the sustainable increase in revenues, sustainable possibility to exceed our business plan revenues target relating to the wealth management area. So I'm really comfortable that it is possible to compensate in any case a much negative environment with a significant growth in revenues both in net interest margins and commission side.

Looking at the loss issue not consider the repose in our loan volume for this quarter loan volume is substantially flat. And so you cannot extrapolate growth by the figures of this quarter.

What I can tell you is that we are seeing significant of recovery in the medium term lending that we are doing with corporate clients mainly export related because devaluation of the euro is increasing the potential for the export related companies and so I'm confident that in this quarter we can have some signal of recoveries. My expectation is in any case to have increase next year.

Thank you very much.

Thank you.

Hi good afternoon. I was just looking at Slide 59 where you detailed the maturities for the year and it seems to me that you still have relatively high amount of retail bonds that are maturing in this part of the year.

So my question is, whether this retail bonds will security replace by the dei Territori and you said it is the case whether we should expect support to the top line coming from the cheaper sources social funding which is the you should be minding the sources of retail bonds. Then the other point is essentially, I mean in this quarter you have been clearly stating that you've been affected by this HR splinter related to the AQR €190 million?

And in the previous two quarters you took the other part of the adjustment those are required of you. So there is nothing left to do.

So excluding this €190 million loan losses would be materially lower than the one that you have reported and we see also in the flows that there is a normalization trend affording, but just on this point I mean where are some of the initiatives that you have been carrying out real estate through this top of the Intesa? And also areas that you may renegotiate your agreement with interbancarie regarding the sourcing of details so you may bring the LTRO in-house.

I just wanted if possible for you to comment on this initiative and whether a more active management on MPS could further strengthen the trend that we have seen of improvement in terms of a deal formation? Thank you.

So thank you for your question. Looking at the medium, long term bond maturities, you have to consider that we can use the LTRO but there is another point that is strategic for us is that we can start to move from retail bonds to asset under management products.

So there's a combination of these two levers that can bring us to different positioning looking at the maturities of our retail bonds. So I'm in a position to say that we cannot issue the retail bonds and we can use these proceeds in order to increase asset under management if our clients are willing to invest in asset under management that expect to finish.

So there is huge opportunity in my view on both, on net interest margin and on commissions side from this big area of liquidity that can mature that can expire in the next 2015. So Slide 49 and it is it is clear that we have a huge potential just to give you the figures our excess medium term liquidity it is now in the range of €55 billion.

So let's say the funding ratio exceeded by €55 billion the 100% trigger. If you look at NPD the provisions and what the trend for provisions I am quite sure that we will not have significant seasonality in the last quarter so we can have a significant benefit compared with last year provisioning and the action that we are doing through the [indiscernible] is getting momentum because in significant number of auctions we made price you know that there is now a difficult situation in the real estate market especially related to doubtful loans because there is no participation to the auction, now through the Rio core we are making price and we are moving some competitors in the real estate market that want to make money through this lack of price into the auction and we are moving then to give price during the auction.

So we are improving the collateral situation of our assets and so through these improvements we are improving also the provisioning of our nonperforming loans. So looking at the tough agreement would be on the new nonperforming loans, but also from this agreement into the traction of the capital like bank we think to have significant contribution to reduce the amount of provision related to the stock of nonperforming loans.

Okay, thank you very much, this is very interesting. Just a very brief follow up from a previous question, I mean you committed yourself to one of the strongest payout of dividend in Europe, the dividend in Intesa is going forward the highest of any European banks.

Now from the question there before you are mentioning that there is also possibility to distribute even more capital on top of that. Have I understood correctly or…?

Not. Not before the 2016.

So this is the point.

Okay.

But I’m really confident that full 2016 also having demand in new rules will remain with significant excess of capital.

Okay, great. Thank you very much.

Yes, good afternoon. I was wondering if you can comment briefly on M&A.

You said, while you call yourself out off from that, I was wondering if you can give us the main reason. Is it a of matter of cost, is it a matter that you don’t believe those franchises are very good?

You think it’s too early in time considering the cycle in Italy is there a specific reason? Thank you.

Sorry for that. In a significant situation I told what is the policy for growth of Intesa Sanpaolo.

We are committed to deliver a business plan. So we are executing and in my opinion, we are executing in a very good way our business plan.

So we want to deliver our business plan. In our business plan we are working on an area of growth that is wealth management but we are also working on Banca [indiscernible] that is a bank of five million of clients on which we are having not a significant profitability and we are working through people devoted to increase revenues.

So I have already made my acquisitions through the acquisition of my Banca [indiscernible]. So I don’t need to make any kind of different acquisition different from Banca Intesa in Italy.

Outside of Italy, the story is different, but at the end it is something that is related to execution of a business plan. So in Italy I had all the opportunities that I can have in a very strong country, in my opinion Italy is a very strong country because I’m seeing savings in export relating companies so also savings and export oriented company are very strong.

And on the other side, I cannot have synergies having operation in Italy. Outside of Italy, is a matter of ability to make the deal, because as I told in different occasion the track record of Intesa Sanpaolo making small acquisition it is not good and so I want to be really devoted on delivering my business plan.

Garcias.

Hi, good afternoon. So question one is on the net interest income and one is on the provision.

The net interest income, it’s very interesting your comment to that the funding cost is getting better, but what about the asset spread at industry level, is the cheapest funding going to feed through somehow through your lower asset spread, do you think this is something that we will see at the system level? And the second question is that is on provision.

Provisions are definitely potentially showing an improvement next year and I wanted to ask your view on potential for recovery given that the coverage have been higher and now the if you want the balance sheet and the asset quality of the bank has been rubberstamped by the ECB. Thank you.

Okay, so net interest income, I don’t see any kind of possible reduction of our spreads through these action of that the - dei Territori because it is a winning part on the cost of funding and so in the real spread that we are having with our clients can all improve and not deteriorate. You cannot apply on the stock and so I don’t see any kind of possible reduction of our spreads on the asset side from this area.

Looking at provisions I think that there is room for recovery, there is also significant room for recovery, but I'd want to give over expectation and so I would prefer to wait until the preparation of my budget 2015 and then we will see the real figure, but in any case there would be a trend of significant recovery.

Yes, good afternoon, a few quick questions on my side. First off all just to come back on NII if you may be could comment a little bit on the latest trends on loan margins, especially on SMEs and cooperates, but also mortgages if possible?

And secondly, just on NPL, I mean have you see the inflows those are also declining, but when do you think we could see absolute growth NPL decline? Is that sometime mid next year, end next year or do you have any visibility on this or any color to give us please?

And the last one is, just to comeback on Capital, do you expect on there it should be supervision any risk of additional capital requirements whether it will to or do you feel comfortable with your current risk voids or especially on the sub side or any other assumptions that that could come up please? Thank you.

So, thank you for your questions. Net interest income, if we look at our low margin we are recovering spreads, so we are increasing mar-cap also in this quarter.

You have to consider that in all the different areas or corporate loans and mortgages loans we were really under the market average by 50 basis points starting the year. Now we are only at 15 basis points, so we are under our competitors, so we have enough room to increase mar-cap and deal the average market position by 15 basis points, so we have 15 basis points of extra of the pricing in order to reach the level of our competitors.

But margins are improving and I see, I don’t see any kind of risk of reduction of the strength. Looking at NPL, stock also the inflow recovering in a significant way.

My expectation is that in 2015 we can see a change in the trend also for the stock. I cannot be sure to say half of 2015, but during 2015 it is my expectation.

Capital in the additional charge possible from the ECB, if there will be additional charge it will be for all the European Banks, so that’s by my position and having reminded we are stronger than the other we can be in a good position in any case. Looking at sovereign risk because sovereign risk it is typical of the Italian and Spanish, but in any case Italian situation if you look at our government and bond portfolio we had a significant reduction.

Now we have €44 billion so the Italian government bonds compared to more than €60 billion at the beginning of 2013. So we are moving in a trend that is related also to the low yield of this government bond, but also to a diversification of our portfolio through there the action of the Italian government bonds.

In any case you have to remember that looking at the additional for capital in risk weighted assets Bank of Italy has proven to be really conservative.

Great, thank you.

Yes, good afternoon, I have two questions. The first one is on loans still you said flat to basically net of repos for the quarter.

I presume that will be difficult to see a growth by line items of growth. I was wondering what do you, and what should we expect in terms of loan growth from a bank like Intesa Sanpaolo with such a solid capital base in 2015 assuming a slight increase in terms of GDP in Italy?

And the second question is on NPL, sorry, if you already answer may be I missed you increased the coverage of the fiscal duration on NPLs, what about disposal of your NPLs, so are you in favor of this process or do you think that you can get higher returns by working out the portfolio in-house? Thank you.

So, thank you very much. See looking at the loan side it is difficult to say what will be the growth in next year because it is difficult to make the forecast of the GDP in next year.

So now we are ready to support €170 billion of medium term lending of which €25 billion we have already granted in the first nine months of this year. So it is our value proposal for the real economy, but we have to have demand in order to transform the offer into real loans.

So the point of Intesa Sanpaolo is that we are very strong. We are ready to give money, we are seeing signal of recovery and we are having a lot of requests also for the LTRO and they can confirm that we’ll be in a position to give €12.5 billion of TLTRO funding within the end of December, but for the growth rates difficult to say what could be the growth rate.

My expectation is that the evaluation of the Euro will bring significant contribution to the increase in loans and also this could be a factor of increase of the GDP that could be also in the range of 0.8 the effect of these the evaluation of the Euro then you’ve add or negative factors difficult to say what could be the growth of GDP next year but this could be really an engine for growth deriving from the evaluation of the Euro. On the NPLs cash coverage ratio, we are in a very good position, especially if you look at the collateral.

So the main points to work on disposal is collateral is the value of collateral and we will work early with our workout units but if the we will have a recovery in the real estate market and the value of collateral will increase during next year we can evaluate some disposal. Today to make disposal it is only an action that you have to do if you need to do disposal, but having in mind that Intesa Sanpaolo doesn’t need many cases to make disposal.

I will wait for a recovery in the real estate market so where recovery in the very old collateral and in the end in a recovery of the value of my non performing loss portfolio.

Do you expect some recovery 2015 of the real estate.

Yes, that’s right. We are seeing signal of recovery because increasing in mortgages is a clear signal of coming back to transaction in real estate markets and so I see that for next year we will have increase also in the evaluation of collateral.

Thank you.

Hello, hi good afternoon thank you for the presentation. Just a few details on the NII so it will come back here.

I see that you already gave a great deal of visibility at page 41 I was just wondering whether you can give us more color on the main moving part here on the spread on this plus €8 million that they see how much is coming basically from reduction of the cost of funding, how much it might come from asset spread compression even if you said that basically there wasn’t any and maybe also some color on the --- basically exposure and how much is the contribution quarter-on-quarter. I know that you gave already some disability here, but it will be very nice actually to have more numbers?

And then on the, it would be very nice actually to have more numbers? And then on the fee side I see in your presentation that there was a gain a very strong performance in Q3 despite the seasonality even better than Q2.

So I was just wondering whether you can give us a bit of color on the new generation of products that's basically you distributed in the quarter, how much was insurance, how much was asset management and how much was in particular the distribution of structured products and whether there was any upfront fees here? Thank you very much.

So you want a lot of color. So you are really looking for information, analytical information and so it is better to talk with my Investor Relations Department.

I will give you just some general description of this point and then you can have a conversation with Marco Del Frate and Andrea Tamagnini that can give you all the details that you want on this point. Looking at the net interest income, the contribution within the spread contribution of mar-cap and on the cost of funding is more or less 60% cost of fund and 40% mar-cap.

On a yearly basis this contribution is 70% cost of funding and 30% mar-cap. Looking at the sovereign contribution more or less is in the same range because we make some increased in the duration of our government bond portfolio and so we had more or less the same contribution in also looking at the government bond portfolio.

If we look in the fee side, the significant contribution is deriving from the asset under management product so it is the majority of the contribution from asset management products and then there is a significant contribution but if you look at the trend of growth it become marginal from the insurance business. For all the details you can have a look at page 79 in which we have the description of commissions by business lines.

Okay, thank you very much.

Hello, good afternoon. I have a couple of questions, first one is on Hungary, I don’t think actually you have booked the charge for Hungarian losses this quarter other than the loan loss provisions in the country.

So I was wondering if we should be expecting a charge in the FQ of the year? And second question is on net interest income and you can quantify how much of a headwind lower interest rates are going to be in the fourth quarter of the year?

And the third one is a follow up on copy. If you can give us a bit of a flavor basically in terms of the first impressions of your talks with ECB about the methodology or the approach you are going to be taking in terms of dividends if it is going to be a blanket approach across entities or there are going to be differentiated between banks actually in terms of the capital position and the dividend capacity they have to pay?

Thank you.

So looking at Hungary this year these nine months we the provisions with $65 million increase due to the new legislation of the Hungary parliament. We are having good news looking at the foreign exchange rules of the game and so related on these items we have to better understand but it seems not to give charges in the next quarter for the bank.

Then for the other specific area of pricing and other items related to the Hungarian situation we have to wait for the low but my expectation is that difficulty to say now a number but the problem is now reducing in a significant way. Looking at net interest income for the fourth quarter if I understood correctly your answer difficult to say what could be the trend.

I' really positive also on net interest margin but I don’t want to give specific guidance on the quarter. I just can confirm that I'm really positive on interest margin and strong positive on commission for the last quarter of this year.

Looking at capital we are now at the starting point of the relations with ECB. So my expectation is that we can wait for a common level of capital for all the European peers but I can tell you in the next months what could be the real situation.

Okay, thank you.

Hi, thank you for the call. I have a couple of questions.

First of all in terms of quarterly performance I was wondering if anything has changed in terms of your hedging position because I can see it positive in the quarter which is a bit surprising. And then I wanted to ask you about the reduction in the sovereign book, what was the capital gain associated with that and whether you are investing it in maybe higher yield assets and whether that was actually connected with the hedging position?

And last, about the loan book, can you tell us a little bit of detail on where the growth in the outstanding stock of loan is coming from? Thank you very much.

So looking at the quarterly performance of the hedging facility you have to consider that net interest rate went down in this court. So we had the benefit just for the reduction of the interest rate it is typical in the hedging facility.

But in any case more or less we remain at the same level the twin gave is the indication for the market for the rear end it would be between €800 million and €850 million. Looking at the sovereign book we had a reduction in the book, but mainly deriving from the expiring maturities of our government bond portfolio so we do not have significant capital gain on our trading book and their investment that was made the only partially especially in core country of the Eurozone.

Then looking at the stocks of loans I have already said that there is a significant contribution from repos, if you will not consider repose, their loan book is the Spanish really flat mainly driven by individual mortgages.

Hello, hi thank you I just wanted understand your funding policy a little bit more especially around the excess liquidity. I think you mentioned some €65 billion above the NSFR target?

So I won't answer at this time why you're keeping so much excess liquidity. Head of all the opportunity cost of this excess liquidity and when we could see some unwind of these?

Please if you could answer this it would be great. Thank you.

As you know we passed through probably the worst crisis for the Italian real economy in the last four years we had negative GDP minus 10% spread B2B bonds 500 basis points and during the timing we decided to create the strongest banks in Europe not only by capital but also by liquidity. So now we have an excess of liquidity with that we created during the very negative phase of the cycle and now we are in the unique position that we can decide the timing in which we can reduce this excessive liquidity.

We decided to work in this action through the expiring maturities of our retail bonds. So we can work in parallel with the expiring maturities of the retail bonds, because retail bonds can allow us to ask to your clients to move towards asset management products.

In any case, I consider very important to maintain extra liquidity position because it is safe. In São Paulo we remain in any case, very safe bank and so we will maintain a portion of this extra liquidity.

For the time being our action will use the 2015 maturities in the retail bonds as an area in which we can reduce this extra liquidity position.

But are you committing to any reductions there or you still have to…

I am not committing. We are making conversation on this point and I am having with you my personal position, because at the end what it is very important it is also the loan growth.

What it is very important is the attitude of the clients, because if my client prefers to maintain retail bonds, we will give them retail bonds. It’s a matter of having very friendly and serious relation with your clients.

So I cannot commit on a specific action on this point. I can tell you that they have a huge potential.

I agree. Okay.

What I can commit to is that I want to increase the reduction of the asset under administration and the reach of asset under administration into asset under management.

Okay. Thank you.

Thank you.

Good afternoon. First question is on TLAC.

How do you look at it? And would you have to follow the new regulation for GCC or could this become a competitive advantage given that you are not among the GCC banks.

On NPLs do you see the bid coming in line with post your evaluation and given the low funding costs and high capital ratios of ISP what sort of evaluation versus face value due you consider attractive to sell secured NPLs at this point in time. And finally on asset management, we're seeing most Italian Banks repositioning the asset management operations, so some are selling and some are merging them, what sort of strategy do you consider best for Intesa?

Is there a set of products or certain scale that you consider necessary? Thank you.

So thank you. Looking at TLAC we are not global SIFI and this is by definition and a competitive advantage compared to our peers.

It is not possible to say what could be the disadvantage. What I can tell you is that looking at our internal stimulation if we consider the additional Tier 1 that we have already embedded in our business plan for the next few years, we would be compliant also with the level of TLAC as it appears on the newspaper.

So I can tell you that we can be compliant also on this point not being a global SIFI. My expectation is that this could be a real competitive advantage for Intesa Sanpaolo.

Looking at the level of possible pricing, which we can sell secured NPL it is difficult to say what could be the price, but I am waiting for a recovery in the collateral area that could be between 10% and 20% because we share to consider the devaluation of collateral was between 40% and 60% so there is a huge room to increase the value of our collateral. I have to wait for the recovery of the real estate market and then we can have a clear conversation on this point with all the figures on the table.

Looking at asset management I think that we have a very straightforward model with good product factories Eurizon Capital and Fideuram Asset Management are very good companies, very well managed and the Head of these two companies is very strong guide. So I think that we have all the products that we can have within the organization the same also in the insurance products.

What we can work in order to increase could be the private banking sectors and looking at product banking sectors, we are now moving into a program of hiring of team from their competitors. So having set the division, now we're moving to an acquisition of team and so acquisition of volumes through the acquisition of teams.

Then if there will be some good opportunities in private banking sectors I can evaluate.

Thank you.

Hi good afternoon. So you touched upon this just a moment ago, but we're just wondering what your plan is exactly to issue AT1 is that going to be in the next six months or in the next year or in the capital fund that you mentioned perhaps in 2015.

No we were talking about the possibility of making additions during the period of the business plan. So we have considered in the period of business plan, the cost for these instruments within 7% and 8% in 2015, 2016, and 2017, but the total amount we will decide looking at market conditions.

Great. Thank you very much.

Hi, good evening. I would like to ask with regards to the Italian books, what's the covering costs of deposits for the front and bank book and guidance for 2015 and 2016 if possible and were you seeing the impact for loan yields?

Thank you.

Sorry. I didn’t understand the first question, sorry.

I was asking regarding the Italian Book, what's the current cost of deposits for the front and back book and guidance for 2015 and 2016 if possible and the same question for the loan yield. Did you hear me properly?

No, no. I understood your question.

Okay. Thank you.

So the average cost of funding of the Group today is the total amount of our liability side is the range of 1.4 is the total cost of the liability side of Intesa Sanpaolo including the wholesale funding. If you consider only Italy is 90 basis points and looking at what it aspiring and what is the potential from the new issuance that we have a potential between 30 and 50 basis points of reduction in cost of funding.

If you look at the loan side, I see only opportunities because the interest rate on which we are granting money today is much higher. The spread is much higher than in the past, so we can reach also 80 basis points of increase in contribution from the mark-up side.

Okay. Thank you.

Thank you.

Yes. Good afternoon everyone.

I just had a sort of a more general question around Central Bank policy. Obviously there continues to be quite a lot of speculation about the ECB potentially taking more aggressive policy measures.

I am just wondering first of all given what you see in the bank, do you think more that Central Bank measures would be helpful for the Italian Economy and perhaps more specifically for the bank. If there was say QE through sovereign corporate bond purchases, would you expect that to be positive for profitability given perhaps the prospect for higher volume growth or would there be negative impact in terms of what the implication would be for reference rates and margins going forward.

So I think that the evaluation of the Euro is the main driver of growth for the real economy in Italy. So through these measures, it is possible to allow a devaluation of the Euro and so this is the way in which we can have benefits from the action of the ECB adding to the TLTRO because by the finish on TLTRO is giving chip money to the companies in Italy.

And so it is really a way of increasing the potential for the real economy. But the significant amount as I told we think that there could be contribution of the Italian GTP or the evaluation of 10% of the Euro.

This could be a contribution of 0.8% increase in the Italian GDP due to this significant position of the export related companies in Italy. So through these actions so if there would be a quantitative easing, my expectation is that we can have a devaluation of the Euro and so through the devaluation of the Euro, we can have an increase in the Italian real economy, but not only Italian, but all the European economy that are having relation with the export areas, export countries.

Okay. Thank you.

So I want just to close remembering that now we are really in a growing mode. Our expectation is to continue our revenue growth.

Now having in mind that we are the best in capital and liquidity we are becoming the best also in growth, in revenue. This will be your session of the next quarter and we demonstrated that it is possible to growth also in a zero grow country due to the really strong positioning of the Italian household that are the real point of strength of Italy.

So thank you very much and see you London.