Intesa Sanpaolo S.p.A.

Carlo Messina - CEO Stefano Del Punta - CFO

Alberto Cordara - Merrill Lynch Johan de Mulder - Sanford Bernstein Matteo Ramenghi - UBS Azzurra Guelfi - Citigroup Delphine Lee - JPMorgan Alvaro Serrano - Morgan Stanley Ignacio Cerezo - Credit Suisse Gil Alboressa - Morgan Stanley Domenico Santoro - Autonomous Giovanni Razzoli - Equita Christian Carrese - Intermonte Jaime Echenique - Santander Benjie Creelan-Sandford - Macquarie

So good afternoon, welcome to our Q1 conference call. This is Carlos Messina, Chief Executive and I’m joined by Stefano Del Punta, our CFO; and by Marco Del Frate and Andrea Tamagnini our Investor Relations Officers.

Q1 has been a very good quarter and among the best over the past five years. So I'm very proud of these results and our people have delivered the very good results and I want to thank the entire Intesa Sanpaolo team for their hard work.

In our view these results illustrate where that ISP had strong momentum and it is well positioned to achieve the mid-term target set in the business plan and at the same time that is able to accelerate and deliver very strong performance in the short term. From now on we can also leverage on the fact that Italy is out of the recession.

These are strong results that places us at the top of the European rankings in particular we delivered $1.1 billion net income which is over 50% of our dividend commitment for the year, a 16% increase in revenues, a continued trend or reduction in new NPL inflow and the 30% decrease in loan loss provision while increasing NPL coverage and almost 90% increase in pretax income a robust common equity ratio fully loaded at 13.2%. Now let's go through the presentation and then I will open the call up for your question.

Please turn to slide two where you will see our performance in comparison to European peers. As you can see in this slide, ISP is a first class European bank in the top ranks in terms of growth in commissions, growth in operating income, cost income and growth in pretax income.

Slide number three, it is clear that the key enablers to the delivery of such strong results are our business model and our people. ISP is a delivery machine characterized by balance sheet strength, financial growth and operational efficiency.

We are committed to our mission as a real economy bank supporting families and businesses. We are and we continue to be the leader in retail banking in Italy with more than 11 million clients and we also have European scale serving over 8 million clients in 12 countries with the leading position is Slovakia, Croatia, Serbia and Egypt.

We are also European leader in high growth businesses like private banking, asset management, insurance. And at the same time we also are the leader in corporate investment banking in Italy with the first-in-class position of Banca IMI.

Moreover we are a simple yet innovative bank that is developing quickly into a truly multi-channel platform. All these factors allow ISP to reward shareholders with high and sustainable dividends which have been our and will remain a management priority and my personal priority.

Slide number four, all stakeholders benefiting from our performance in particular in Q1 families and businesses received EUR9 billion of new medium/long-term lending devoted to financing investments, employees received EUR1.3 billion in salaries and all our excess capacity of 4,500 people is being retained, the public sector received EUR800 million in taxes, we delivered the net income which is above 50% of our EUR2 billion commitment for this year. Slide number five, ISP operates as an accelerator for the growth of the real economy in Italy and as I told Italy is out of the recession so our important role is illustrated by the four boxes in the slide, our strong commitment to support Italian companies and families, we granted about EUR8 billion of new medium/long-term lending and helped about 12,500 companies to get back on the right track with a positive impact on Italian families and employment.

Our support to the internationalization of Italian companies we are the official global financial partner of Expo 2015 where 20 million visitors are expected. Our pavilion is as important as those of the participating countries and lost over 500 Italian companies.

Through ISP they have the chance to display the excellence of Italian business to foreign visitors. The role we play driving innovation, ISP Chief Innovation Officer is now fully operational in our innovation center located in the new ISP Tower in Turin in the heart of the Bank’s digitalization program our role is an engine for social sector initiatives with Banca Prossima being the largest social lender in Italy supporting closely less wealthy people.

Banca Prossima is a unique bank in the EU dedicated exclusively to serving the social economy. Slide number six, the Q1 highlights net income is the highest since Q1 2009, pre-tax income is up 87% on a yearly basis, revenue grow 16%, loan loss provision decreased by 30% with an increased NPL cash coverage, furthermore ISP demonstrated once again the solidity of its balance sheet and we have a low leverage and the common equity ratio after dividend is at 13.2% fully loaded.

Slide number eight, and year-on-year comparison is very positive, the main drivers for the strong revenue growth have been the highest growth ever in commission, insurance income up 35% and strong profit on trading also due to the very strong growth in customer driven activity. So not only profits on trading, the operating margin is up 31% loan loss provision decreased 30%, other charges include EUR75 million provisions for the European resolution fund, so our commitment for the year is already fully funded.

Net income more than doubled. Slide number nine, the waterfall analysis highlights our significant increase in profitability versus Q4 with an improvement in all relevant KPIs revenues across provisions, as a result net income is up by a multiple of more than 10 times.

Slide number 10, as the slide illustrate ISP has recorded a significant growth in operating revenues which places us in the top three of our European peer group. Slide number 11, net interest margin as I highlighted clearly during the last full year conference call, we manage the securities portfolio in a smart way.

We will therefore see that the commercial component of our net interest margin is up quarter-on-quarter if you count for the different number of days in this period. The financial component is lower than last quarter simply because our smart portfolio management, in fact trading before profits increased during the quarter more than offsetting the reduction in net interest income.

As I've already said, the increase in trading profits is also due to the very strong growth in customer-driven activity more than 150 million euro arriving from customer-driven activity. Commissions slide number 12, our performance in commissions has consistently improved overtime.

This quarter we add the highest ever yearly growth in commission income, in fact we saw an accelerating trend in performance with a 3.8 growth quarter-on-quarter that is a 15% rise year-on-year. This confirms the growth trend in this area and underlines our ability to generate value in all our businesses.

Our ambition of focus which change the mix of revenues towards a more fantastic business is continuing to show results. Slide number 13 assets under management continue to grow in Q1 reaching 323 billion euro up 25% in 2013.

In the past 15 months clients some 23 billion from assets under administration to assets under management. Furthermore the relative way of assets under management compared to indirect deposits has increased to 65% up 5 percentage points in the past 15 months.

To date stock of the relevance of this result let me emphasize that the 65 billion increase in asset under management in 15 months is equivalent to depreciation of the number three asset gathering in Italian market and the depreciation of a new Banca dei Territori, so we created a new Banca dei Territori in 15 months. Slide number 14, as you can see the niches of our mutual funds continues to move towards asset classes that can generate higher value in a low interest environment.

The share of equity balanced it in flexible mutual funds significantly increased from 43 to 55, 54% in the past 15 months helping our clients to diversify their portfolios. Slide number 15, as the slide illustrates Intesa Sanpaolo has recorded the highest year-on-year in commission compared to each European PS a clear result of our focus strategy aim in growing this component of the business.

Slide number 16, while we have delivered very strong top line performance at the same time we have maintained our focus in efficiency. Intesa Sanpaolo continues to be extremely focused on cost management and is demonstrated by the further reduction in administrative expenses.

Slide number 17, our costing’s income ratio of 44.3% is the lowest ever for Intesa Sanpaolo and we are solidly inconsistently among the best in the European peer group. Slide number 18, what I consider really the key driver of the future success of the bank is the significant improvement in NPL inflows.

In Q1, we saw a strong decrease in NPL inflow, the lowest is Q1 2011. Net NPL inflow was down 52% quarter-on-quarter and 20% year-on-year.

As a result of improving macroeconomic environment as I told you Italy is out from the section and ISP's proactive credit and NPL management. Slide number 19, reflecting the improvement in NPL inflow will reduce provisions by 30% compare to last year and at the same time further increased NPL cash coverage by 30 basis points.

Note that this quarter’s loan loss provision are the lowest seen security 2011. Slide number 20, the continuing downward trend in NPL is being strongly impacted by our integrated credit management initiative which includes the roll out of new credit solutions.

The creation of new dedicated professional roles and capability building across the credit value chain, this key program has already shown very positive results and there is significant potential to be further captured. In deeding in pilot regions the in-flow to doubtful loans was more than 10 percentage points better than the average.

Slide number 21, when compare its European peers Intesa Sanpaolo has recorded one of the highest level of growth in pre-tax income underlying our ability to deliver even in low grow environment. ISP also ranks number three in net income growth.

Slide 22, despite of the very challenging market environment ISP is performing favorably compare to its Europe peers on several key performance indicators. ISP profitability on asset stands at 2.8% which is well above the peer average of 2.3% and net cost income ratio at 44.2% is best-in-class.

All in all this lines illustrates the ISP performance versus other European banks is not only very good but also build on strong fundamentals. Slide 23, before discussing the balance sheet let’s take a look at the results by business division.

As you can see, once again all divisions contribute positive to the groups result. Wealth management is our single large contributor in pre-tax income totaling 723 million and growing by 43% year-on-year.

Private banking delivers 34% growth reaching a pre-tax income of around 290 million. Asset management reaches around 130 million in pre-tax income recorded growth of 75% the highest in the group.

Insurance generates around 310 million pre-tax income we presenting a significant 39% growth. Last but not least it is worth remembering that our wealth management performances should also include commissions from wealth management in Banca dei Territori higher than €400 million revenues.

So Banca dei Territori post a 5% increase despite historic low interest rate Banca dei Territori is the group’s pillar and future source for billions in growth of operating income. Corporate and investment banking is as usual a good profit generator with almost 700 million.

Our international subsidiary contribute about 170 million. Slide 25, solid capital base, in Q1 in addition to delivering strong economic performance and growth in loans Intesa Sanpaolo further strengthen its balance sheet fully loaded common ratio improved by 60 basis points to 13.2% versus 12.6% one year ago.

This ratio is calculated after accounting for 500 million of pro-forma dividends in Q1 which assumes the quarterly growth of €2 billion cash dividend in our business plan for 2015. We continue to believe that the strong capital base is a fundamental condition for growth and success and represents a key source of competitive advantage.

Finally, we continue to be best in class in leverage compare to our peers 6.5% versus the 4.3% European average. Slide number 26, as you can see in this chart, our Basel III common equity ratio stands at very favorable level versus other European banks almost four percentage points above the maximum global CC level.

Slide number 27. ISP continues to enjoy a strong liquidity position with $110 billion of liquid assets and approximately $50 billion reserve of excess medium long-term liquidity.

Our liquidity coverage ratio and net stable funding ratio are well above Basel 3 future requirements. Slide 28 summarizes the very strong results we achieved in the quarter.

In three months we have delivered almost the same net income as all of 2014. Slide number 29, as you can see ISP is a growth bank in all asset categories.

Asset under management reduces the strongest growth versus last quarter. Slide number 31, as you can see all the initiatives implemented as part of our 2017 business are clearly producing very positive results.

Indeed we'd adjust a performance that is better than targeted in particular in commission and pretax income. We're well on track to deliver on our business plan targets.

Slide number 32, now let's go quickly through the main initiatives we have launched and implemented since 2014. As far as our new growth bank is concerned regarding Banca - equities more relied in the introduction of the new specialized model in more than 2200 branches with over 3000 dedicated relationship managers and revenue per client increased from EUR70 to EUR90.

Regarding the multichannel bank, the new processes we have introduced lead to 6000 new multi-channel clients confirming our number one position in online banking in Italy with 5 million clients. Regarding the private banking app, we have creating one new high network individual units will soon open in branch in London and strengthen Intesa Sanpaolo private bank suite.

Slide number 33. We closed 46 additional branches in Q1 reaching a total of around 320 branches since 2014 and we finalized the rationalization of seven product factories into one emerged for local banks into Intesa Sanpaolo.

Slide number 34, capitalized bank. We now have 630 people dedicated people in around $4.7 billion of asset deleveraging has already been achieved and new performance management system is already in place and it has generated an estimated positive impact for the group of $50 million since 2014.

Slide number 35, as you may remember our business plan has been developed internally with the stronger direct 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 of them has a 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 in achieving these great results allowing us to over deliver on the business plan. So slide 36 to conclude.

I would like to show you a slide we presented as our outlook for 2015 three months ago and confirm to you that we are well on track to make that how to a reality. This quarter we delivered the highest net income over the past five years with the strong improvement in operating margin and the significant decline in cost of risk.

As a result we delivered $1.1 billion net income. On top of these the macroeconomic outlook provides for farther upside.

The Eurozone is benefiting from quantity [ph] and Italy is profiting from reforms that trigger growth. We are also seeing better consumer and business sentiment.

In light of these considerations we reconfirm with even more confidence our commitment to deliver a $2 billion cash dividend for 2015. Now let me thank again all our people who are working are to deliver these impressive results who should have no doubts that Intesa Sanpaolo is a bank with a mission outlined in our business plan that serves the interest of all our stakeholders.

So thank you once again for listening and now I will do my best to answer any questions you may have.

Hi good afternoon this is Moriz [ph] from Goldman Sachs. I have two questions please; the first one is on loan seasonality.

Sometimes there is a pattern where by first quarter provisions are very low and can finish higher. I just wanted to see what's your outlook was in terms of this seasonality for this year also when compared to this very sharp fall in NPL formation that we've seen.

And my second question is on NII, I just wanted to know whether you could quantify maybe the impact that the fall in your - down to negative rate has this quarter and whether you expect any further carry-over into the next few quarters. And secondly we see strong loan and asset growth overall this quarter but it hasn't really doesn't look like is where that is translated into NII contribution because one slide on one slide you show that volumes even net of the fewer in the quarter even that they track at to NII.

So I just wanted to see whether you had more color or outlook to share with us on that particular point. Thank you very much.

So on loan loss provision seasonality, in my view will not be a significant item of this year because in reality the reduction in loan loss provision is driving from better performance in inflow from performing loans to non-performing loans. In my view it is its structural move and so also April is confirming this trend.

So my view is that seasonality can be something not significant so there could be a seasonality but not a major point during this year. So I confirm a significant decrease in 2015 in the line of loan loss provision.

Net interest margin so negative - in reality we had all the negative during 2014 so the negative - will not add significant negative point on our net interest margin. My view is that in reality this quarter we had reached the bottom level of net interest margin both of on markdown and on government portfolio securities.

Looking at the contribution from asset growth the loan growth is taking momentum but starting from mid-February so we add mid-February the start of the growth now our loan portfolio and especially in March we had an increase a significant increase in volumes coming from export related companies and also partially from internal demand related company. Our on the EUR8 billion of medium term loans that we granted in the first quarter EUR4 billion has been granted in the month of March and those for April is confirming to be a good month.

So my expectation is that the loan volume contribution will take momentum during 2015.

Okay just as a quick follow up, you have I think your guidance is at a bit top of my head for the provisions in 2017 if I'm not mistaken. We are now ready at 88 basis points and if you're not increasing - going forward.

Just wanted to know whether you change your view on your further out guidance on a…

So when we presented a business plan we gave a clear disclosure to market that the embedded figures using the model with the correlation, with the GDP could be in the range of 70 basis points. So we maintain 10 basis points as a conservative approach, so now coming back to reality and not to model stimulation the correlation between the inflow and the cost of credit now lead to 87 for this quarter than I cannot give you what will be reality for the next quarter but as I told you in the month of April we having confirmation of this good trend then we will see the next quarter, but year-on-year I can confirm you will see a significant reduction in cost of risk so I don’t give guidance of cost of credit in percentage points, in basis points, but in absolute terms you can see a significant reduction comparing to 2014.

Excellent. Thank you so much.

Hi good afternoon. I like your new divisional disclosure because finally you gave us an idea of the insurance business so that has always been touched away inside Banca dei Territori so I am seeing insurance as a management to private and now the one point that I am getting from this disclosure is that the combination of these three businesses in the quarter gave you EUR476 million of net profit which if I multiply by four and annualize it gives me close to EUR2 billion now this very number and it seems to me that is a differentiating point versus other Italian banks so you have a profit buffer that other guys doing only trade do not have and the question that I have is this gives you a competitive advantage I mean if maybe you can price launch more aggressively than others because you have this profit buffer that clearly is quite unique.

The other point is I mean you have a very strong profit in the quarter it was great obviously but then when I look at your common equity tier 1 this the ratio did not improve quarter-on-quarter there was some risk weighted asset inflation and my question is does this are the inflated related to growth in loans or so did you change your internal model, use you roll them over to reflect new PD and LGD in connection maybe with 2014? The reason I am asking is that this morning another bank told us that there would be a risk weighted asset inflation but only in Q2 because they still have to change models.

And finally the last question is I mean the trade commission is very strong but we see that some of the domestic banks have a lot of up front loaded fees so I just wanted to clarify with you what percentage of fees are front loaded? And sorry for asking but repeat of a previous answer that you gave you said that NII for in this quarter has reached the bottom if that is correctly so starting from Q2 we should see a positive evolution from NII I hope I got it correctly?

Okay. So starting from the last one interest income in my view has reached the bottom level so we have all the negative that you can have in the net interest margin markdown and the contribution of government bond reducing because the yield are reducing the market but also because we may dispose of portfolio and we realized capital gain during this quarter but my view is that this quarter is the very low one than difficult to say what could be the forecast for net interest margin but my expectation on volumes and spreads are that this component the commercial one will increase during 2015.

Then the question on the trending commission, on the front-loaded fee, we have a component of front-loaded fee, because when we have such an increase in volumes, you have also entry fees, so this is for sure, but it is not so significant, on the 3%, 4%, 5% of our total revenues is coming from upfronts. It is not an amount that I can see the significant.

And on the other side, you told about the common equity TR1, 13.2% and the reduction of 10 basis points from 13.3%, we add in this quarter a growth in risk weighted assets because we had a growth in volume as I told you in the last two months, one month and a half for this quarter, we had a significant increase in loan book, so we had an increase in risk weighted assets and then we had also an increase deriving from a change of calculation that is a one upfront impact so there is the impact also in this quarter and it is related to waiting of the government assets extra EU especially in a coming to a risk weighting of 100% and the total amount is 4 billion euros of risk weighted assets coming from south as I have said you but it is as I told you a one upfronts impact no other impact during next quarters. Then you have the growth in revenues in risk weighted assets coming from the growth on loans book side and if we had if we have increase in loan book that could be rather increase in risk weighted assets but in this case we remain with such excess capital that is absolutely in line with our expectation.

Then coming to the point of profit buffer in adding a buffer in pricing loans I don't want to have a buffer in pricing loans, because I want my people to give the maximum earning also on the loan book side, so it is true that we have a sustainable revenue base coming from wealth management, because at the end, we are now mainly a wealth management company so that is probably not so proceeded by the market, but we are, we just made the growth into a wealth management company with a significant corporate investment banking and the retail banking within the group, but by the end, I do want to use this power in reducing the capital generation within the group. So theoretically it is possible to use but I don't want to give my people the perception of possibility to reduce the market cap in order to generate volumes, I want to maintain an EVA positive generation from new loans.

Many thanks. Very clear.

Hi, good afternoon. First of all I wanted to ask you about the insurance business performance.

If you, what are you considering the first quarter contribution as the new base and what, how should we look at this business going forward, one can you describe the movement in the segment portfolio what was the contribution in terms of net interest income and what was the change in yield and basically where do you see it going forward? And the last question on fee income, the mix, well first of all thank you very much for showing the change in business mix that's very interesting, if you can give us an indication of where do you see this, the, the change in mix of the mutual fund going in the future?

Thank you.

Okay. So starting from insurance, the insurance business, we will, we maintain a significant positive contribution during 2015 and during until 17 by definition because this is a component of the group but it is having a very good performance.

In the next quarters I'm not sure that we can deliver the same performance of the first quarter but in any case we remain significant contribution. If you look also the first quarter of 2014, the contribution was very high and so we will maintain a high contribution from this business.

You have to consider that we have any case a very low penetration on this business because we have only 11% of penetration of insurance products. So the potential arriving from volume increase and cross selling is very high within the group also with these figures.

Servant portfolio, so servant portfolio so it is something that's we changed completely the percentage of the Italian government bonds compared with all the other countries. If you compare the first quarter 2014 government bond portfolio with first quarter 2015, you have more or less the same volume level but with the completely different percentage 80% was at the beginning of 2014.

Now it is more closely to 55% from Italian government portfolio. So this means that we had a reduction in contribution and increase in a reduction in risk profile perceived the risk profile.

So we reduce the concentration and it is something that we consider very important from risk concentration point of view. At the end, we reduced yield in our portfolio and the impact could be in the range of 13 basis points but we think that we are in a good position compared to the concentration of risk.

And at the same time, we have the possibility to have trading profit during the quarter. Fee income, we think that the higher opportunity of increasing the mix the worse equity balance in flexible funds.

The level could be 60% 65% I don't know. We have to consider also what the expectations of the clients are because we are not forcing clients to move into different asset classes.

It is the zero low environment that is bringing clients to have a different approach and we are in a very good position, because we set the machine to in order to move clients from a cluster to the other respecting that. And so at the end the expectation could be another increase in this percentage.

Thank you very much. Just a very quick follow up.

So the reduction in contribution of itself invoke this is for the banking is that's correct?

Yes that's correct, it is banking both. Yes.

Alright thanks.

Thank you. Johan from Bernstein first of all congratulation on the good set of members.

And just two questions one is again on the core equity tier 1. We also saw that the market risk are to be able to going up and we are wondering what the main driver for them is.

And then the second one is about your assets under management. So we see the assets on the management have grown significantly.

We I understand that this is also because of a shift from assets under administrations to assets under management. But could you give an indication how much is also from organic growth where you been your business basically in terms of assets under management not just the shifts from assets under custody.

And then the last thing is about the initiatives that we hear in Italy about changing tax treatments and a change potentially bankruptcy procedures where there would be shortened. And what kind of impact that would have on your bad debt situation and at potential sales of that loans for Intesa.

Thank you.

So thank you very much also for your congratulations. The core tier 1 and also a not significant impact deriving from change in model also in the market risk so there was a change in the internal model related to market risk.

Looking at us at under management the increase if we look at the figures and we talk about on a yearly basis so the starting from the end of 2015 so just looking at EUR65 million so you can have a look on what is the generation from the starting point of the business plan looking at this EUR65 billion, EUR23 billion is coming from under administration EUR20 billion is coming from performance effect and the remaining part so EUR22 billion is coming from both direct deposits and new firms. New firms are in the range of EUR5 billion.

Okay.

And looking at the tax treatment and what can happen looking at bad loans. I don’t have a simulation of what could be the impact because at lower it could be that the real solution that the government driving but in any case the impact could be significant because having in mind that the tax treatment and also the timing that is more or less between five year and 10 year to have a recovery in our bad loan portfolio if you have reduction in this timing and a good tax treatment you can have a significant improvement in the positioning of the collateral that are already increasing because the real estate market is recovering in Italy and is recovering in a significant way also related with increase in mortgages with individual that are looking for new houses but this could be really emerging to speed-up the possible disposal of non-performing loans but you have no quantification.

Thank you very much indeed.

Thank you.

Good afternoon and thank you for the presentation. I have two questions left, the first one is about loan growth.

A very encouraging sign and a very positive development I think I was wondering if you could provide some more color as per the mix of this new loans and in particular if there is a components of long-term financing. Just to get some information on perhaps a CapEx recovery at last.

And second, if you can give us some benchmark as to the yield on the new loans and that compares to the back book just to see where the spreads are going? Thank you very much.

On the loan growth we are having an increase in especially in medium-term loans so medium-term loans is taking and that is the reason why I am really confident on the evolution of real economy in Italy because these are loans devoted to investments, to production and so this means that Italy is my view completely out from this very difficult debt produces the minus 10 GDP. I am conveyance that this is evidence that now we can look at a growth in the loan book and the medium-term loan book could be really driver of this increase.

Especially in the export related companies because the evolution of Europe is producing a massive impact on the production of the Italian report related companies and you know that is really one of the friend of our countries but also the internal demand relate company that also real estate related loans can have mortgages can have impact from new positive situation. In the medium term loan side we are having a positive contribution on the new medium term loan in the range of 10 basis points.

Thank you.

Hi good afternoon Azzurra from Citi just have a two quick question because I understood clearly the development on seasonal loans which what that if you wanted to big positive surprising this assets. On the AFS the improvement in the AFS is been the biggest increase in your book value quarter-on-quarter.

Can you update us on what is the status of it in the second quarter because there is been some market volatility? And the second one is can you confirm to us that you're only interested in acquisition in the asset management space.

Thank you.

So interest in acquisitions I can confirm that only the asset management in private banking sector could be the one of interest for the group. Then on the AFS we had an increase in this in the first quarter and we are seeing a flat dynamic in the first months of this quarter and then only we are seeing a slight reduction.

Yes good afternoon. Just a few questions from my side first of all is just to confirm that your 75 million for the single resolution fund that's the amount you're going to take in your P&L for the whole year I guess I thought the number was a little bit higher than that.

So it's just to confirm that is only 75 million rather than closer to $200 million. And the second question is just to come back on net interest income, so whether you kind a as you're seeing any pressure on the assets spreads in the coming I mean in the coming quarters or is that going to be more than offset by the pickup in the lending volumes and do you think you can still achieve something closer to 3% which is what you had last year in terms of NII growth.

And the last one is just very quick on leverage ratio just noticed that it has declined quarter-on-quarter if you could just give a little bit color on as to why. Thank you.

So decline in leverage is due to increase in volume both in loan and also in government bond especially French and German it was the main part of the increasing government bond portfolio. The NII we have I don't think that we can consider pressure on assets spreads.

So my view is that spread will remain positive in the asset side, volume contribution can increase. But we can have also positive impact from cost of funding.

So there is another point of the spread contribution if '18 can have positive impact in the next quarters and for sure on the yearly basis. Looking at the contribution from the single resolution fund, this is the amount that we have to consider for the full year so we have already funded.

But it is missing but we have no evidence for the moment is the Italian resolution fund by the amount could be for the total in the range of EUR50 million EUR60 million. But we have no specific indication at the moment so we were not in the position of make the provisioning of this amount.

Great thanks very much.

Hi just a very quick follow up questions three follow up questions. Can you confirm then there wasn't any adjustment from now GD in the credit portfolio in the quarter and it would just be the bonds and the market loan growth.

Second, I've understand that you said that the hit from the so the loan portfolio this was the lowest quarter in terms of contribution, can you give us the yield the portfolio and also what that would mean what's the reasonable amount for trading that forward if you're not going to rotate it maybe the portfolios much and last, in terms of the legal changes what type of loans do you have, do you have a in mind that it's might be likely for these changes to be introduced? Thank you.

So no adjustment in loss during the quarter, so looking at DLM so a question asked if you and your colleagues to into 46 just give you the clear vision and you can work on this slide in relation we 44 because to just give you the real contribution on our not a land position but managing the real management of treasury department and investment banking area especially the one that rotate to make trading profit, because at the end, this portion of government bond is managed not to maximize the net interest margin, but to maximize revenues. So I want from to maximize revenue, I don't care about having an increase in net interest margin and the reduction in profit for tradings, because I want to consider the combination of these two items, if you look the trading and treasury contribution in slide 46, these 354 this is a contribution coming from trading in Banca IMI and treasury department and then you have all the other components that are customer capital markets that are customer driven so this component is one that is not to banking from our securities portfolio on the other side on page 44 you have the impact of the financial components in the quarter that is mainly related to the reduction in our Italian government portfolio driving from this region and as I told you the reduction from being of 30 basis points of yield on this portfolio.

And I can confirm that my people are not managing line by line in this area that's on total amount of revenues. In total amount of revenues, we expect to grow in 2015.

And on the calendar...?

And sorry, yes, on the, on the, on the timing, difficult to say I know that this could be in the next, within the next two months, but not I'm not so sure.

Okay. And just compared from the LGT there is no adjustments and you don't anticipate adjustments making any adjustments going forward there is nothing that might be expected for future or as the bank this morning was mentioned that they were going to do it in Q2, all the competitors have done it in Q4?

We do not anticipate any loss given the role change and we think that it is possible to compensate without a conservative approach and yeah having another portion while with risk weighted assets so it is something that we will see during this year, but we do not see any significant impact and within there would be possibility to compensate with other items.

Yeah. That's right.

Thank you very much.

Thank you.

Yeah, hello, good afternoon, a couple of questions from my side. First one is on the cost of funding follow up with your recent comments, if you can give us some figures in from book on the main funding instruments both on a retail bond side and wholesale instruments?

And the second question is I know it's something that's been asked with you many times in the last couple of years or so but given the decline in the base of NPL generation do you really have a view in terms of when NPLs can be flat within the next round of three-six quarters?

Yes this on NPL flat is now becoming a reality, so could be now the timing of having this question because the last two years was not so easy to say that we were close to have the flattish dynamic on if you look at stock of non-performing loans I think that during 2015 we are reaching really the peak and so my expectation is that we can have also a reduction in these numbers. Looking at cost of funding there are two main areas of which we can have positive contribution, one is bonds and in a sense also wholesale bonds because there is significant correlation between the two items I think that a reduction in the cost of funding in the range between 60 and 80 basis points would be something reasonable and the other area is the term deposit on which we can have another significant reduction in the cost of funding again in the range of between 50 and 70 basis points.

And those gains happen over which period of time, you see 2015 or 2015 and ‘16?

During 2015 yes this could be really the central case then we will see reality this is our expectation.

Okay. Thank you very much.

Hi, thank you very much. So I have a few quick questions, the first one is that you have yet to issue an 81 and I am wondering when you are thinking of perhaps doing that if you can give us any guidance on that?

Secondly my question is on - we are wondering with the Solvency II ratios are and if you have any plans to sell the business? And then in terms of the requirements if you consider those to be part of your MDA or outside of your MDA requirements and what that figure is if you can disclose it?

Sorry I didn’t understand the second question, for additional tier 1 we can consider issuance of these instruments second part of this year so this could be a good year for launching additional tier 1 and if you can repeat the second question because I really didn’t understand.

Sure I am looking for those Solvency II ratios for - and if you have any plans to sell that business?

Sorry the severance?

Solvency II.

Solvency II so you are talking about the assurance areas, yes so we think that we can have a positive impact from these new regulations, so our expectation is that we can benefit from Solvency II.

Okay and do you have the figure for all the ratios?

No do not disclose this figure but it any case it is positive.

Great okay, thank you. And for your requirements?

For the extra requirements on what?

No, no. So your additional buffers that the regulator requires you to hold in capital.

Sorry if you can have this question to my - so we can give you all the details on this point, I am sure that this is positive but if you want to have the figures you can have conversation with Marco Del Frate and [indiscernible].

Great. Thank you very much.

Thank you very much.

Hello good afternoon couple of question from my side. First of all can you give us the number in terms of contribution realized gains from the sale of sovereign in the insurance business?

The second is on net fees again there is a strong performance of asset management I just wonder how much of this EUR584 million growth is due to distribution of so called productiveness or from the [indiscernible]. Instead if you can give us the average recovery time that you used in the evaluation of your non-performing loans and what is the discount rate.

Thank you.

So realized gain on insurance business as usual because each quarter is more or less similar is 90% of the total amount of the insurance results. So looking at the contribution in terms of volumes of the so called [indiscernible] is you meaning in terms of on performance fees or in terms of because in terms of performance fee the EUR30 million was like to have is all concentrated in only one that are maturing performance fee each year.

And so now the one that we sold in the first quarter of 2014 as innovating performance fees during this year.

Correct. Do we have also the total fee booked in the quarter and maybe also the volumes they [indiscernible].

The total book is EUR60 million. Okay.

Just related to a product if you have from the... correct.

Yes. Then sorry did the last question is?

That was if you can give us the number I mean the assumption that you're using in your model to value basically non-performing on an average let's say. The recovery time and also the discount rate.

So the average timing could be five years.

Okay thank you. Can I just have a follow up questions sorry on the NII?

I understand that basically what you said before is that you expect commercial NII to go up. And you remain as basically to realize NII in trading in order to get a revenue base which is going to be higher over the next quarters.

But can we just focus for - on the NII evolution because there was a negative contribution that you has been delivered in Q1 from the treasury. And my understanding is that - have grown up in the second quarter.

So what is going to happen in the second quarter? Do you expect to sale more - or and basically this is going to have a negative impact or NII or you will enjoy in a way the inclusion yield and that there is EUR57 million will revert into positive number.

We started from a four year plan then we are looking on only yearly basis and now on a quarterly basis on specific items. So please let me add possibility not to give you a clear disclosure on a daily basis on what we are doing on different line of business.

Just to give you a flavor of the possibility if there is an opportunity I would have a disposal in our government bond portfolio. So I'm looking as I told you not as line-by-line but one of the revenue total.

And I think that this can happen also this quarter but we have to see what the real dynamics of the yield is during the next part of this quarter.

Okay fair enough. Thank you.

Good afternoon thank you for taking my question and I have just one relating to the cost of risk. You already extensively discussed about the structural reduction the cost of risk across the route.

As you seen that in the very [indiscernible] environment for the [indiscernible] where the cost of risk prove pretty much low. I wondered whether there were some extraordinary right backs in this figure or if it's also you are reflecting this time is also you are reflecting a structural reduction of the NPL inflow thank you.

t is mainly structural reduction in NPL but we are also improving right backs because of the capitalized bank is moving with as I told in the presentation 630 people devoted to increase the write back and so there is also a contribution but not extraordinary but this is a result of the work they are doing. But the contributor is the reduction in NPL generation.

Also because we have reached an amount of coverage on the stock that is clearly good position for us so need only to make provision for the new inflow?

Okay, thank you.

Yes, good afternoon Christian Carrese, Intermonte. Just two questions only.

First one on slide 14, if you can give us the evolution or the emerging on average from 2014 to 2015 and do you see room to further reach the asset under capital around 70 billion asset to assets under management going forward and the other question was on cost evolution. I saw a 1% increase year-on-year of cost in the first quarter.

I was wondering if you can give us guidance for the full year for cost. Thank you

No, I don’t give guidance for the year. I want to respect what I considered target of the business plan in any case the increase in personal cost in this quarter is only due to incentive I would be to increase gain this means that we are over reaching out targets.

Then again you have to remember a 44 cost to income ratio. On the asset under cash study there is in my view significant room to convert into asset under management the target in the business plan was €10 per year we are over delivering and I am conveyance then we can over deliver also in the next year sir.

The margin contribution is as you can understand much higher from the equity balance than flexible funds you can consider that could be a contributor that could be higher 13 basis points 15 basis points moving from a class to other class then you have to see the specific line on lie but is on average.

Just if I may on last question on the MPIS compare too few quarters ago do you see room to sell MPIS portfolio now compare to let’s say for the quarter 2014 or are you preferred to work out in-house?

No, I prefer to wait until the absolute recovery of collateral because the value of collateral is increasing my expectation for the year of the year we can increase in various collateral in the range between 10% and 20% so there could be a significant that is my expectation evaluation due to the company back of transaction in the real estate market do not forget we made the evaluation of collateral in up sense of transaction so with a very conservative approach so I don’t have any kind of intension to make disposal today price because I am convinced that we can have a much higher price - on the next year.

Thank you.

I have no need to make disposal so that is the reason why I can wait for better price.

Stefano, thank you.

Thank you.

Thanks for the question. Can you give us a little bit more color on the - what is going on with horizon on [indiscernible] please?

Thank you.

Yes, on the asset management area so the horizon they are performing very well and my expectation they can grow internally but also through acquisition we have no target on the table but in any case my view is that one of the businesses in which we can grow maintaining the absolute control of the factory of asset under management. On Fideuram, same points did the contribution is increasing there, they are doing an extraordinary job.

And also in this area I see room for a wing not only internal growth because we are opening branches in London reinforcing this with unit of Fideuram but also we can consider possible. At the moment I have nothing on the table but these are two areas in which it is possible growth.

And what about floating either Eurozone or Fideuram Mr. Messina?

The point on floatation it is very clear though a floatation you can have a clear view on the value of your business units but now at the market it is clear that also a significant wealth management company so I don’t need who make the floatation in order to have the value embedded in my value. At the end, the other targets could be to have capital increase and I don’t need to have capital increase because I have a significant excess of capital and the result could be only having a reduction in net income.

So for the time being the consideration is that I don’t need and it is not a value creation for my investors. It is completely for - if you want to make an acquisition of the floated target because you need to have the same currency because you know that this kind of business are at a price to book and the price earning that is I heard and the one of the banking group in this case I can consider the quotation as a means to make the acquisition.

Okay.

Thank you.

Hi, good afternoon. I have two questions, please.

The first one is just to go back on long growth and you made from common fund on what’s driving that loan growth but given where out the early stages of the economic recovery how good do you think long growth could guess for your business over the next 12 months. And apart from the let’s say one-off that you explained to the impact on risk weighted assets this quarter would you expect broadly speaking that loan growth to be reflected in risk weighted asset growth.

And then a second question on the potential bad bank under you’ve made common on this before but just how do you viewed the impact of us having on your delivery either to sell and NPL assuming that a bad bank was set up and could have a positive impact even your internal valuation of NPL? Thank you.

So, on the long growth I think that we will continue to have long growth so in the next 12 months we will long growth and to the same time, we will have at least weighted assets growth. I didn’t understand the second question, so if you can repeat please.

Perhaps, just assuming that a bad bank were to be set up in Italy and how do you see that impacting your balance sheet would you be willing sell up to the bad bank? Would you see it impacting your ability to dispose of NPLs into the wider markets and could it have an impact on your valuation of collateral?

Yes. Okay.

I understood the point. No, I don’t think that this could have significant on my position because I am working already on significant recovery and at the end what is important for the investors is the value of collateral and you have to consider bank-by-banks the value of collateral.

So, I don’t think that this could have significant impact. In any case what could be really important could be the fiscal position because if they want to set a bad bank, they have to work on timing for recovery and on the fiscal treatment and these two points can have significant positive impact on also my portfolio of non-performing loans.

Thank you.

Thanks.

Yes. I just had a quick question on the division restatement on this quarter.

It seems the amount of loans allocated to the corporate center of those increase. So just wondering what is driven that and I know for this point generally what trend we should expect in terms of losses in the corporate center going forward?

In the corporate center, we have the Capital Light so the loan book is related with Capital Light. In this quarter, we have increased both in corporate division and also in Banca dei Territori compared to the end of the year but did the corporate center is mainly due to the Capital Light Bank.

Okay. Thank you.

And just in terms of what the trends you expect in the P&L in the corporate centers going forward?

Difficult to say, it will depend on the dynamic of the non-performing loans and as I told you, I hope that during 2015 we can have a clear benefit from the dynamic of this positive trend that we had in this quarter.

Okay, great. Thank you very much.

Hi, guys. This is Adrian Cighi from RBC.

Thanks for taking my questions. Two follow-up questions please one on fee income and one dividend.

The first one is on fee income so a fantastic performance on asset inflows and you highlight the mix towards equity imbalance hence which is of course very helpful for the fee income. One question on the pricing of our mutual funds, some countries in Europe talk about increasing pressure on mutual fund pricing especially on the end therefore by funds is that something you see in Italy.

And the second questions on dividend. I know you’ve recommitted to the 2 billion target from the business plan this year and I know it’s also very early in the year.

But you’re accruing dividends at 50% this quarter. Would you be happy at the end of the year with a 50% payout ratio and continuing to build capital despite having a surplus capital already based on the 9% required grid by the ECV?

Thank you.

My dividend policy is to have an amount and not a payout so my target is EUR2 billion. Then on the fee income I don’t see fee income pressure in Italy especially into Intesa Sanpaolo because we have a structural fee that is lower than our competitors in Italy so we have enough room to increase also on this points so I am not worried at all.

Very helpful. Thank you.

Thank you.

Thank you. One follow-up question with regards to the asset management.

So the question was asked whether you planned to IPO Fideuram or a combination of Fideuram and Intesa private bank. And you rightly mentioned you would only do that as an acquisition currency to make acquisition.

The question is that something that you are actually planning to do because there were rumors that you were trying to buy at the time here in the UK or the international business of - is that something that you see as part of your strategic plan to further increase the footprint so you become much more important asset management player in the Europe. Thank you.

So, the point on acquisition is that I would like to have an international acquisition so in reality would have been a perfect target because brand and reputation but at the end the disposal was only on the international activities and without the brand. So there was no interest from my side to have only the acquisition of volumes because in my strategy I need a brand if I want to top also the international market.

But in any case, if I have to consider a target, I will consider an international also having a good brand.

Okay. So, you are not considering an acquisition in Italy so...

The acquisition in Italy it is not something that can add value internal brand so at the end the possibility of expand international area it could not be related to acquisition in Italy but in any case if I can increase the work also with the Tripoli part of Italy and real economy I can consider but I have not on the table Italian acquisition.

Okay. Thank you very much indeed.

Thank you.

So, I think that this could be a really best quarter of the last five year for Intesa Sanpaolo so I am very proud of these results. And I thank you for your call and now we can have meeting in London in the next days.

So thank you very much.