Intesa Sanpaolo S.p.A.

Carlo Messina - CEO Stefano Del Punta - CFO

Azzurra Guelfi - Citi Jean-Francois Neuez - Goldman Sachs Marta Bastoni - Barclays Albert Cordara - Bank of America Merrill Lynch Andrea Filtri - Mediobanca Christian Carrese - Intermonte SIM Giovanni Razzoli - Equita SIM Andrea Vercellone - Exane Jaime Echenique - Santander GBM Delphine Lee - JPMorgan Domenico Santoro - Autonomous Research Johan de Mulder - Bernstein Luca Orsini - One Investments Adrian Cighi - RBC Capital Markets Muriel Perren - Citi

So, thank you very much. Good afternoon, ladies and gentlemen and welcome to our nine months results conference call.

This is Carlo Messina, Chief Executive; and I'm here with Stefano Del Punta, CFO; Marco Delfrate and Andrea Tamagnini, Investor Relations Officers. So, let me make a joke at the starting point of the presentation.

Today, a bank announced capital increase and is losing 10% in market. Another bank's announced a postponement of the targets of the business plan.

Intesa Sanpaolo announced the best results in the history of Intesa Sanpaolo and is losing 4%, probably really a crazy world in the financial environment. So, we just closed our best nine months since 2008 with a net income of €2.7 billion.

Our €2 billion dividend commitment for the full year envisaged in the business plan is well covered. So, €2 billion is the minimum amount of dividend that we will pay.

This has been our best nine months since 2007 in terms of operating margin, driven by the highest net fees and commission ever. We have also delivered the highest net income since 2008.

And I'm proud of the results our people have delivered. And I want to thank the entire Intesa Sanpaolo team for its hard work and strong performance.

The results show that our strong momentum continues. Intesa Sanpaolo is well positioned to achieve the targets set in the business plan and is able to deliver and overdeliver in the short term and accelerate when needed.

In particular, revenues are up 7% year on year, with commissions up 13%. Our sustained focus on cost allows us to produce, as already mentioned, the highest operating margin since 2007.

We delivered a 52% increase in pretax income. And our common equity ratio fully loaded improved to 13.4%.

So, we're probably the only one bank in Europe that is ready to pay cash to its shareholders and not to ask for cash to its shareholders. Let's now go through the presentation.

And at the end, I will be glad to take your questions. Slide number 2, as you can see on this slide, Intesa Sanpaolo is a first-class European bank.

And we continue to deliver market-leading growth in commissions and we remain best in class on cost-income. We're also among the top players in terms of growth in pretax income and capital strength.

Slide number 3, all our stakeholders benefit from our strong performance because, in this nine months, households and businesses received €34 billion on new medium-/long-term lending. Employees received €3.8 billion in salaries.

And all our excess capacity of 4,500 people has been redeployed into growth initiatives. The public sector received €2.2 billion in taxes.

And we delivered net income which is well above our €2 billion dividend commitment for this year. Slide number 4, our strong commitment to support Italian real economy is illustrated in this slide.

In the first nine months, we have granted €29 billion of new medium-/long-term lending to Italian households and companies. That is 50% more than last year.

In October, we reached €32 billion. In addition, since 2014, we have helped 22,500 companies to get back on track, turning €1.2 billion loans that were nonperforming into performing with an estimated positive impact on over 100,000 Italian households and on employment.

So, indeed, Intesa Sanpaolo will continue to be a primary accelerator for the growth of the real economy in Italy. Slide number 5, we all celebrate the extraordinary success of Expo 2015 with over 21 million visitors.

And Intesa Sanpaolo is very proud of having been the sole global banking partner. Let me just give you a few highlights.

More than 500 companies and startups, 3,000 in their value chain, presented their innovation products and services at our Pavilion. Over 350,000 withdrawals and deposits were executed through our branch and ATMs at Expo.

And over 2 million credit and debit card transactions were performed with Intesa Sanpaolo branded cards. As a result, our brand benefited from this unique exposure.

And we have been able to establish new corporate and institutional relationship which we will lever to continue exploiting business opportunities after Expo. Slide number 6, the nine months highlights.

Before we turn to the detail, here are the highlights for the first nine months of the year. Net income is the highest since 2008.

Pretax income is up 52% on a yearly basis. Commission income is the highest ever, resulting from our outstanding growth in wealth management.

It has been the best nine months since 2007 in terms of operating margin. Loan loss provisions decreased by 32%, coupled with the lowest NPL inflow since 2007.

In addition, Intesa Sanpaolo stands for the solidity of its balance sheet. And we have a low leverage at 6.9% and a fully loaded common equity tier one ratio which increased further to 13.4%.

Now, let's take a deep dive into our economic performance, slide number 8. The year-on-year comparison of the first nine months is extremely positive.

And the main drivers for our strong revenue growth have been 13% growth in commissions and 60% growth in insurance income, in addition, strong good profits on trading related not only to the good performance of Banca IMI and treasury, but also to the growth in customer-driven activity, on a yearly basis, plus 48%. Operating margin is up 13%.

Loan loss provisions are down 32%. Other charges include some €140 million provisions for the European resolution fund in the deposit guarantee scheme and some €170 million provisions due to the unfavorable changes in ForEx loan regulation in Croatia, partially offset by €208 million benefit arising from a claim.

So, this quarter, we had a positive extraordinary and a negative extraordinary that are more or less compensating. Net income is up 127% and stands at €2.7 billion.

Slide number 1 -- number 9, sorry, as you can see in this chart, compared to the same period last year, year to date, net income more than doubled. And in a context where rates are at all-time lows and for a retail bank like us, it's very important.

Our business model is proving to be resilient as demonstrated by the substantial growth in commission-driven income that more than offsets the decrease of net interest income. In addition, the credit environment has improved with cost of risk down to 92 basis points.

And there is, of course, significant potential for cost of risk to reduce in light of the improving macroeconomic outlook in Italy and a more-than-adequate coverage of Intesa Sanpaolo. So, let's turn to slide 10, where you can find our quarterly performance versus Q3 of last year.

The third quarter net income significantly beats last year's results -- so, you have to compare third quarter of this year with third quarter of last year because there is seasonality -- with a 49% increase, reaching €722 million, showing an acceleration in performance compared to business plan targets despite the unfavorable financial market conditions. In particular, the last quarter has been characterized by some relevant negative events, Chinese financial crisis, with the Shanghai Composite Index down by 40% between June and August; continued Greek crisis, when in July, the local referendum rejected international creditors' demand for austerity reforms.

So, I asked my people not to exceed in working on profit from trading before -- because we reached in the nine months a significant amount of profit from tradings and so to postpone the possible disposal of capital gain on our government bond portfolio. These events negatively impacted the financial markets, so, the Chinese crisis and the Greek crisis.

The euro stock declined by 9% and the mid declined by 5% in Q3. Despite these unfavorable financial market conditions, we confirm our strong capability in delivering excellent performance.

Slide number 11, the real focus of all the analysts in the launch that I saw just before this call, in this slide, you can see that, on a quarterly basis, our net interest income decreased by around €65 million. This reduction is driven by two components.

The first is related to the reduction of market rates that impacts both short-term markdown and return on our investment portfolio. This also happened because Intesa Sanpaolo strategically decided to rebalance its treasury portfolio, reducing the weight of Italian government bonds in order to increase diversification.

So, if you look at the financial components, negative impact is deriving from an expiring 60,000 government bond and acquisition of 12,000 government bonds. So, it's a reduced market rate with a reduction of €4 billion of Italian government bonds, so leading to a concentration moving from 56% to 52% of the total government bond portfolio.

So, this is perfectly in line with what I consider safe for a bank like Intesa Sanpaolo. And so, in this quarter, I decided to ask for the final step in reduction in concentration to the Italian government bond.

The second point is related to a commercial strategy because, in this quarter, we decided to focus on attracting new clients through short-term deposits. In the quarter, we gathered more than €3 billion of new money from new clients in these deposits, short-term deposits.

They represent the fuel for our wealth management engine and are already being converted into asset management products since October. So, this is an additional confirmation that we manage our revenues in an integrated manner and not only trying to optimize the net interest margin.

And you will see next quarter the increase in commissions coming from this strategy of increasing clients and asset under management. This last point gives me the chance to highlight a very important upside of our business model because we actually have two wealth management engines.

One is already at full speed because it's coming from the integration of Fideuram and Intesa Sanpaolo Private Banking. But, the other one is represented by the wealthy clients managed by Banca dei Territori and has started to accelerated only in 2015 with significant room for improvement.

So, we're starting to manage also Banca dei Territori like Fideuram in order to increase assets under management. Slide number 12, business model becoming more commission driven.

So, in the past two years, the Bank has been focused on rebalancing the revenue mix towards fee-intensive business. And as you can see, we delivered very positive results.

Since 2012, the relative weight of commissions has increased from 30% to 41% of our operating income. Slide number 13, our performance in commission has consistently improved over time and recorded an all-time high in the past nine months.

As you can see, commission income increased by 13% on a yearly basis and by 80% on a quarterly basis versus 2014. Slide number 14, assets under management continue to grow in the first nine months, up 24% since year-end 2013, with €3.7 billion net inflow in Q3 in spite of adverse financial market conditions.

So, we had a negative performance effect and a positive net inflow of €3.7 billion. In the past 21 months, clients have switched €29 billion from assets under administration to assets under management.

Then we converted €21 billion of retail bonds into assets under management. And we had an increase of new inflow coming from new clients of €6 billion.

Let me also point out that, here, we're not including the €48 billion assets under management of Penghua, the seventh largest asset manager in mainland China, in which Intesa Sanpaolo has a stake of 49%. An upside potential could arise from an additional switch towards managed assets, leveraging on the increasing stock of direct deposits around €160 billion of our assets under administration and a relatively low market penetration of wealth management products in Italy, just for remembering that we have 21% penetration in mutual funds and 13% penetration in bancassurance products.

In any case, coming to slide 15, we're a European leader in asset management. In the first eight months of 2015, Intesa Sanpaolo recorded the second highest net inflow when compared with global asset managers across the whole European market.

We achieved this result as the leader in Italy, one of the largest wealth markets in the world which positions Intesa Sanpaolo as a natural European leader. As I told in different occasion, Italy is a tripoly country if you look at savings.

As a percentage of assets under management stock, our inflows are best in class compared to global competitors across Europe, so BlackRock, Deutsche Bank, Credit Suisse, UBS. We're number one.

And the same is if you compare a level of private banking performance, slide number 16, because you might remember that we -- when we presented our business plan, we claimed to be the number three private bank in the Eurozone and among the top 10 in Europe, also when considering the Swiss champions. So, leveraging on the successful integration of Fideuram and Intesa Sanpaolo Private Banking, we can proudly state that our private banking division is growing faster than the Swiss private banking specialists, both in terms of customer financial asset and revenues.

Let me also remark that we have an additional 20,000 -- €26 billion of customer financial assets throughout our second wealth management engine represented by the Banca dei Territori clients. Slide number 17, you can see that Intesa Sanpaolo has been able to deliver top-notch year-over-year growth in commission when compared to European peers.

Slide number 18, efficiency, we're best in class in efficiency. We're able to deliver cost reduction.

And so, we continue to be extremely focused on cost management. Pro-quota incentives to trigger growth have already been factored into personnel costs.

And this is the only reason for the increase in personnel costs. Slide number 19, so, we have best-in-class cost-income ratio, 46.5%.

Slide number 20, you see that we're number one also if you look at the cost-income comparison with the other peers. Slide number 21, very important point is the other engine for increasing in a significant way our results also during 2016 is the significant improvement in NPL inflows.

We continue to see this significant improvement down 24% on a yearly basis. And also, the month of October is continuing the improving trend in our net NPL inflow.

This is an impressive improvement despite the regulatory constraint enforced since 2014 which sets that forborne nonperforming loans can come back to performing loans only after one year of probation period. For Intesa Sanpaolo, this rule affects a potential average outflow up to €1 billion per quarter of forborne nonperforming loans that could eventually turn performing if proper conditions are met in the next four quarters.

Consistent with the improvement in NPL inflows, the lowest since 2007, we reduced provisions by 32%. But, at the same time, we kept NPL cash coverage stable at 47%.

Cost of risk is down to 92 basis points, still with a significant room for improvement. When compared to its European peers, Intesa Sanpaolo recorded a top-tier growth in pretax income.

In light of our best-in-class cost-income ratio and improved credit environment, Intesa Sanpaolo is very well positioned to capture future growth and continues to be an excellent delivery machine. Slide number 23, as you can see, once again, all our divisions have contributed in a positive way to the Group's result.

Wealth management is our single largest contributor to pretax income, totaling €2.1 billion and growing by an excellent 38% year on year. Banca dei Territori recorded a 21% increase despite historically low interest rate.

Banca dei Territori represents the strong pillar of Group results, being the key distribution channel of wealth management product and is our real growth option for next year. Corporate and investment banking is, as usual, a strong profit generator, contributing with €1.5 billion, growing at 8% year on year.

Our international subsidiaries contributed more than €400 million, with a 21% increase in pretax income when excluding the provisions due to changes in ForEx loan regulation in Croatia. Slide number 25, in the first nine months, in addition to delivering the best economic performance since 2008, Intesa Sanpaolo further strengthened its balance sheet.

Fully loaded common equity ratio improved by 40% year on year to 13.4%. And we believe a strong capital base is a fundamental precondition for growth and success and represents a key source of competitive advantage for Intesa Sanpaolo.

As already mentioned, we continue to be best in class in leverage. And our leverage ratio is 6.9%.

Slide number 26, as you can see in this chart, our Basel 3 common equity ratio stands at a very favorable level versus other European banks. And we're not global SIFI.

So, as I told you, we're the only one that you can be sure will pay cash dividend in the future. Slide number 27, strong liquidity position confirmed.

Intesa Sanpaolo continues to enjoy a strong liquidity position with €116 billion of liquid assets and a €57 billion reserve of excess medium-/long-term liquidity. Our liquidity coverage ratio and net stable funding ratio are well above Basel 3 future requirements.

We have an excess of medium-term funding that is €57 billion. Slide number 28, this slide summarize the very strong results we achieved in the last nine months.

So, we can go to slide number 30 and making the comparison with our business plan targets, as you can see, the initiatives implemented as part of our 2017 business plan are already delivering very positive results. Indeed, our performance is well ahead of our targets on all indicators.

On slide 31, slide 32 and slide 33, you have all the initiatives of the business plan with the top load aboard of the implemented initiatives. If you go to slide 34, you have the real key factor of success of Intesa Sanpaolo.

That is our people. So, the contribution of all our people has been the key enabling factor in achieving these great results, allowing us to overdeliver on the business plan target.

Slide number 35, let me emphasize that the positive outlook for the macroeconomic environment represents further upside potential for future results and reinforces our confidence in the future. So, just to make it easy, in our provisions, you are not seeing the results of this improvement in the GDP in Italian condition.

You will see the improvement next year. So, we have a potential upside that is really significant coming from the macroeconomic environment.

And if you look, consumer and business confidence are both at historical peaks. Italian private consumption rose by 0.6% year over year in Q2 after years of stagnation, driven by an increase in disposable income of 1.1% after seven years of contraction.

Italian real estate transactions are experiencing a strong recovery in terms of transaction volumes, with further potential benefits from the reduction in property taxes announced by the government. This could be really an engine for the collateral of our nonperforming loans.

As a result, Italian GDP is on the rise, growing in line with other advanced economies after several years of decline. And the consensus forecasts see GDP growth speeding up from around 1% this year to 1.5% in 2016.

In addition, further potential could arise from the government reform agenda which is already triggering positive impacts on the economy and which include other reforms to be approved in the near future capable of raising GDP by almost 2 percentage points in five years. And this government has improved the reputation of Italy outside of Italy.

Slide number 36, just to recap, this is our best nine-month performance since 2008. In summary, we have delivered more than €2.7 billion net income, easily covering our 2015 dividend commitment.

We further improved the cost-income ratio which continues to be top tier in Europe. We recorded a significant reduction in loan loss provisions coupled with the lowest NPL inflow since 2007.

We're one of the strongest banks in terms of capital leverage. The business plan is progressing well.

And we're well ahead in delivering on our commitment. As a final remark, let me add two points.

One is that I use this quarter as the engine for results for next quarter and 2016. And second point, again, many of our peers are asking and will be asking for cash from their shareholders.

We're not. And we will instead continue to give them cash.

Let me also take the chance to thank again all our people who are working hard to deliver these results. Thank you for listening.

And I will now do my best to answer any questions you may have.

Azzurra from Citi. I have two questions.

One is on NII and the other one is on capital. On NII, clearly, I hear you when you said what are the challenge.

But, I'd like to have more of your impression on what -- how 2016 could develop because €IBOR clearly remained under pressure. Volume growth are not yet strong.

And competition on the asset side still seems quite strong in Italy. I know you have fee that are very strong.

And you have also upside from the provisioning and the asset quality getting better. But, do you see -- envisage potential pressure on NII ongoing for 2016?

The other question is on capital. You said that €2 billion is the minimum.

And then of course, you are going to return cash to shareholders and you're not going to ask for cash. And that is a clear advantage compared to peers.

But, is the €2 billion minimum like the base on which, if fourth quarter shows no disaster, market could be more optimistic about your return or do you fear that there could be some movement in the risk-weighted assets that can offset that? Thank you.

I will start from the second question because this is the -- a very important point for me, dividends. So, it is clear that we have a Board of Directors and especially a supervisory Board of Directors that approved the business plan and approved the payment of and the commitment of €2 billion and this is 2 years ago.

So, we have formal procedures in order to work and to deal with dividend commitment. Then there is another part of the story that is the net income that you are generating, the capital position of the Bank.

Capital position has improved because we have now 13.4% capital position with a significant excess of capital. And the other one is net income.

Net income is overdelivering in a significant way. Now, we're also in generation of net income, one of the best in class in Europe.

So, this means that the CEO of the Bank has his opinion that it is not the formal position of the Bank because formal position can become reality only after a Board resolution. My opinion is that I'm a CEO that love to pay dividends to its shareholders.

So, €2 billion in my mind is the minimum level of dividend that I can pay. In the call of the results of the first semester, I told that I had high degree of flexibility because I had €2 billion on net income in a semester.

Now, I have €2.7 billion in nine months. So, I have increased my degree of flexibility on dividend.

So, I cannot tell you on a formal way that I can pay extra dividend because I need to have a formal resolution of my Board of Directors. And I have to wait until the final results of 2015.

But, it is clear that the results are so good that we're in a very good position to be in line with the expectation of the market. So, that's the real position.

CEO is ready to pay extra dividend in accordance with the results of the last quarter. But, we need to have the formal Board resolution because the commitment is €2 billion.

All the drivers that can allow extra payment of dividends are going in the right way, capital position, net income, but also sustainability of our results because cost-income of 46.5%, it is not something coming because we were lucky. It is coming from a sustainable operative trend.

Reduction in provision is sustainable. And the situation can only improve.

So, we're in a real position to say that we can work with a significant high degree of flexibility on the dividend policy. So, this is the other point which the market are really so interested.

I want just to repeat something that it is on each conference call. I do not manage and my people are not managing the Bank line by line because we're managing on revenue.

So, in different occasion, I told that there is a linkage between net interest margin and trading on provision. Now, we have in this quarter an extra provision -- sorry, extra revenues coming from one-off of €200 million.

So, I didn't need any kind of trading from profits. And so, you have only the impact coming from the concentration risk approach, deconcentration risk approach on government bond portfolio.

On the spread, as I told 20 minutes ago, we decided to have commercial stance in order to increase our short-term deposits. And in parallel, we increased also our market share in mortgages because we increased the market share in mortgages in Italy in nine months from 15% to 22%, having positive outflows coming from other banks in the so-called surrogate €1 billion.

So, we increased in a quarter the number of clients by 25,000 clients. So, I'm putting the condition to increase sustainable results coming from our banks already when all the other banks will enter into mergers or will enter into restructuring programs.

Other competitors will announce plan of reduction of people, reduction of branches, merging. I will be really to be aggressive in taking all the clients that will not be happy to enter into the very difficult situation of a merger of or of the restructuring plan.

So, coming back on this point, if you want to have a guidance on the net interest income, I can tell you that, if you look at the financial component of the net interest margin, I think that, more or less, we have renewed all the expiring bonds that had an higher yield with low yield. So, in my view, we're really close to the minimum level of the financial component of the net interest margin.

The concentration level is okay for me. And so, I'm happy now to have this level of Italian government bonds.

So, for 2016, probably next quarter, we can have another €10 million, €20 million, I don't know, in financial components. But, the -- on 2016, my view is that, on this component, we're now really close to the minimum level.

On the commercial side, apart from this commercial strategy to improve new clients devoted to increase commissions and so reducing by €10 million, €15 million net interest margin, but increasing by €50 million commissions and improving the sustainability of the results of the Group, my view is that the volume effects will be significant during 2016. So, I think that we will -- we're really close to an increase because, if the GDP will increase by 1.5% in 2016, there will be room for increase in volume.

And on the same time, we're really close to the minimum level, both on markdown and also on markup, because we decided to use also this lever to improve the mortgages side. And as I told you, mortgage is a strategic product for us because it's EVA positive.

So, you are concentrated on €10 million, €20 million of net interest margin. But, at the end, you have to see also the risk profile of the Group.

And now, our risk profile has improved during this quarter because we increased all the portion or portfolio that has generated a very low expected losses. And so, we will have condition to reduce provision.

This is the way in which we're managing Intesa Sanpaolo, not line by line and not on the expectation of the quarter by the analysts.

I had just two questions, please. The first one is on the quarter.

And as you said, the fact that you didn't need trading or -- and also the fact that you had already taken into account the pro-quota performance part of the compensation in your cost, my question is, should we expect a bit of a double quarter next quarter in terms of trading or just a normal run rate trading quarter? And secondly, should we expect the same seasonality in costs in the fourth quarter compared to the first nine months' run rate, as we had last year as a result of your remark on the pro-quota performance in compensation?

And my second question is on the capital level. You made a super interesting remark on the fact that you expect that many European peers will follow the path of Standard Chartered this morning and raise equity.

And I just wondered what makes you so confident to give this remark on a public conference call. And I just wanted to know what your insight is in terms of minimum capital level at the time when SRAP and all of these things are essentially a mystery for all of us from the outside.

So, like, that would be very interesting to share your views on that. What's your criteria now?

Thank you.

So, again, it starts from the second point because capital is something that I love to talk about. And the point of capital is only a way of looking at condition.

Today, there was the release of the charge for the global SIFI banks. So, if you look at the charge of global SIFI bank, you saw that there is a pressure of working on capital coming from the different composition of other peers in Europe.

And there is also the attitude of regulators to work on a capital position that has to be improved by all the other peers. So, I'm not -- I have not insight on this point.

There is only the observation. If you look at the common equity situation on all the other peers, you had the global SIFI buffer and the reasonable level of capital.

You are very close to the level that they have today. So, it is not -- you have not to be a very smart guy in order to understand that there could be a lot of pressure on the capital position of all the other and all the global SIFI competitors.

And Intesa Sanpaolo is in a unique position. We're not global SIFI.

We have excess of capital. We're delivering significant net income.

We can pay dividend in a significant amount. That's the story.

Second point, on the quarter, trading and cost seasonality, on trading, I cannot tell you what could be the level of trading because trading is depending on market conditions. So, I cannot be sure what could be market condition.

It is clear that we have some reserves in our Italian government bond portfolio. Then I will decide if to use it in this quarter or not because, depending on what I consider a significant potential for this quarter that is increase in commission during Q4 and I decide what amount of profit or from tradings can be used.

And I will also consider the opinion of the CFO and the Head of Investment Banking. So, we will see during the quarter.

But, what I can tell you that revenues will go up in next quarter in a significant way. The other point is the cost seasonality.

It is clear that we will have a seasonality in cost because it is typical in each year. It will depend on the amount of extra budget that we will deliver and we will see at the end.

But, it is sure that we will have seasonality.

Can I just ask a super-quick follow up on capital? Have you got an idea of what the change in risk-weighted assets you could expect from the new Basel proposals now that some of the banks have started to disclose their own impacts, in particular some of the Swiss and German?

On this point, you have to consider the Swiss and German as so very low level of risk-weighted assets on total assets. It is a point that can be really important for them.

In our case, our estimated are that -- our estimates are that this import -- this impact could not be so significant and will leave us with significant excess of capital.

I have three questions. First of all, can you share your thoughts on private banking and asset management acquisitions?

Second, during the conference -- the first part of the conference call, you mentioned that short-term deposits will be -- will help and will sustain fee generation from the next quarter, if you could give us a little bit of details on this. And third, could you give us a little bit of an update of what is happening in Croatia?

Thanks.

Croatia, I don't know what is happening in the sense that we decided to post all the maximum amount that it is possible on this new law. We think this new law is not constitutional.

And so, there is room to recover the amount. But, I have no insight.

And so, we have to wait what will happen in the country. In any case, we're on the safe position of having posted all the provisions in this quarter.

Looking in private banking acquisition, there will not be any kind of acquisition because, as I show in the presentation, our private banking division is delivering better than all the other peers. And so, I have no need to make acquisition because I don't want to defocus my people from the very good job that they are doing.

So, no acquisition on the table. Term deposits, the term deposit is -- it is typical of the Fideuram of acting to make repos to new clients and then moving from repos to new clients to switching to assets under management.

We decided to use the same approach in Banca dei Territori using the short-term deposits. And so, the amount of this first move is between €3 billion and €4 billion.

This has proved to be a successful maneuver because, during October, we have already reached a switch from these term deposits into assets under management. And it is part of a strategy that can allow us to increase in a significant way commissions, again, because we will have now three levers.

One is the conversion of assets under administration that is remaining significant within the Group, is €160 billion, out of which €80 billion in my view are convertible into assets under management. The second point is the excess liquidity medium term that we have, €57 billion.

So, we can use expiring retail bonds in order to convert into assets under management. And this is the potential of the Group, number one and number two.

Now, we're adding number three. That is using new clients.

And we're attacking the market. We decided to move in order to make acquisition of clients from other banks.

And as I told you in the conference call, my view is that, as soon as other peers will enter into merger or will enter into restructuring progress or plan, it will be possible for us to exceed also these targets of increase. In this quarter, clients are up by 25,000 clients.

I have a few questions. The first one is in relation to the reduction of the Italian sovereign bond by €4 billion which if I understand correctly, penalize you on the top line.

You lost €40 million from financial income coming from treasury bonds. So, now, you have 52% of the overall sovereign portfolio which is Italian bonds which is well harmonized.

And I think that the background to this action is also to get in line with some requirement from the regulator [indiscernible]. We saw some interviews from top regulators in Europe that would like to see a more balanced composition in the bond portfolio.

So, the first question to you is, is this the final adjustment that we're seeing on Italian govis or there is more to come? And the second question which frankly left me a bit puzzled is, why effectively you are the only Italian bank so far in any meaningful way have rebalanced the -- its sovereign bond portfolio because, all in all, when I look at the Popolare is generally speaking 100% investment in Italian sovereign.

So, I just would like to have a comment from you on this point. The second one is you gave a very good explanation about NII and fees.

But, I would like to, if possible, to get some more color from you in terms of what you should expect next year. For instance, the fees have been growing very strongly this year on high single digit or double digit in some quarters.

So, it would be helpful if you'd give us a bit of an idea of what we should expect from this line next year and then again if the NII next year should be on a better footing that what we've been seeing so far. In terms of the commercial policy, also would like to -- you to elaborate a bit more.

So, you took €4 billion of new money from clients, offering attractive rates. And then you expect these clients to convert this money into assets under management which is one of the reason the NII has suffered this quarter.

For how long would you want to keep in place these policies? And I also would like to know if you can be a bit more specific on the cost in terms of the impact on the spread this quarter.

And on the same track, all the Italian domestic banks that we meet, they're all complaining about Intesa because, apparently, you are pushing prices down on lending. And you're acquiring new clients, both SMEs and retail clients and from the other guys.

So, if this is the case, however, I don't see the overall loan balance growing in the quarter. So, again, if you can give me a bit more color in terms of when are we seeing this loan growth finally taking shape.

And finally, the last point in connection to what one of my colleague was asking you before, i.e. the capital levels in Europe, you have in this quarter a leverage ratio of 6.9% which frankly is something not very common amongst a number of large European banks.

But, it seems to me that, so far, the attention of the European regulator has always been more with RWA ratio. Also, in some markets, people have started looking at leverage.

Is this attitude from the regulator going to change? Is leverage ratio going to be taken more into consideration in looking at large European banks or not?

So, I would like to have also your view on this point. Thank you.

So, a lot of points, so, if I can start from the pushing price down and the competition within the Italian landscape because, during the crisis, having in mind that a significant number of Italian banks were in a very difficult situation, we decided not to have any kind of competitive pressure on the other competitors in Italy. As soon as, starting from this year, a lot of banks are considered in a very good position, I decided to change the attitude of the Bank.

So, I decided to say, okay, we're the leader in the market and we can play the role of the leader in the market. So, we can move in creating sustainable results, not only having a potential within my bank, but also making acquisition of good clients.

So, we're not moving in a crazy way in pushing price down because, as I told in the previous answer, we're improving the asset quality. So, we're working on the portion of clients that is improving our risk profile, so in order to have EVA positive and improving the provision side.

So, I'm not making the killing move into the market. I'm making the smart move to have good clients, net interest margin probably with some pressure, but having provision down.

That is the way in which I want to manage the Bank. On the other side, the very important action we made is on mortgages because we think, to be the real retail and private banking leader in Europe, so, if you want to be a retail leader in Europe, you have to work on mortgages because it's the way in which you can attract clients with a very low risk profile.

And it is the way in which I acted and we decided to act in order to improve our market share, increasing debt from 15% to 22%. And we want to improve again this area of our portfolio.

So, the point of pricing could be something that could be considered as a negative from a portion of the Italian banking sector. But, in my view, this is the strategy that focuses on this special product, mortgages, I want to continue to tap.

On the other side, if you look at the term deposits, so, this area, we decided to use this instrument, paying an extra yield that would be in the range of 1%. And in order to attract clients, they can become premium, personal or private clients within our Bank.

This has proved to be a very good smart move because, in the month of October, we're already converting this amount. We can evaluate also to make another action within the end of this year.

But, we will see the real impact on this first move with this amount of term deposits. If we look at the expectation for net interest margin and fees for next year, if you look at fees, my expectation is to have a significant growth also next year.

So, I don't know if we can talk about double-digit growth because it is what we're working on in our budget. But, we have to complete the budget process.

But, the range is significant. And we're not talking about single-digit growth.

On net interest margin, as I told in the other question, my view is that, next year, we can have a good position also looking at net interest margin. So, probably I cannot tell you that we will grow in a significant way, but the probability to grow is higher than to reduce the net interest margin.

Looking at the government bond portfolio, so, we moved according to specific guidelines that we understood from the ECB. So, we think that these guidelines -- so, it is not an obligation.

It is guidelines. But, we think it is safe to move according to this guidance because, if you look at a possible impact coming from a stress test on our government bond portfolio, we're creating value for our shareholders, reducing the concentration, especially with this level of interest rate in the market.

And so, we decided to complete this action during this quarter because, this quarter, despite the opinion of some analysts, in my view, is a very good quarter. So, €700 million, more than €700 million of net income can allow us to say, if we have to make this move, we can do in this quarter.

And that's the story of the government bond. All the other -- we're in a position to make this recomposition of portfolio because we're very strong in revenues generation.

So, I don't care about €40 million of net interest income because I have significant revenues coming from other areas of my portfolio. So, I don't know if other Italian banks can be in the same position.

But, Intesa Sanpaolo is in the position of making this move. And for us, the opinion of the ECB is very important because we think that all the reputation of our bank -- and as I told in different occasion, we want to be one of the best in class in Europe -- is also to be compliant with the ECB expectation.

Looking at capital and the possible implication of leverage, I think that we -- you have to -- also to consider the real position of all the other European peers because, if on common equity it is clear that they are more or less close to the level that they have to maintain and so, all capital increase or reduction of dividends or leverage, the distance is really massive because, if you look at the concentration of the European banking system, it's more between 3% and 4% than close to 6%. So, probably there could be some need to have time in order to work on the leverage as one of the key driver of the regulation.

But, you have to ask to the ECB and not to me.

If I can just ask a quick follow up, you mentioned that you're budgeting a double-digit growth of fees next year which is great, obviously. I saw this quarter that commercial fees came up pretty strongly.

So, there wasn't the seasonality on asset management or was not. But, the commercial banking fees came up quite strongly.

So, when you are thinking about this double-digit growth, how should we split it out between what we expect of doing in bankings and in asset management?

So, I think that I gave you a good guidance. And please do not ask me to give the details of the different commissions, having in mind and remember, Alberto, that improving the mortgages area means to improve also the commercial activity and the commercial commissions that we can derive from the loan book.

But, on the 2016, we will elaborate on the next conference call for the final results of the year.

Can you give us your view on the balance between NII and provisions/NPLs in the QE environment? Do you expect write-backs NPLs?

And given the improvement in NPL flows, can we expect Q4 not to reflect the typical negative Q4 seasonality in 2015? Secondly, do you envisage any material impact for Intesa Sanpaolo from the changes in taxation proposed by the government?

Thank you

So, starting from the change in taxation, on this point, I'm not worried at all. We will do all the calculation when we will have the final version of the budget law.

So, until the timing, it is too early to make any kind of consideration. But, as I told you, I'm not worried at all on this point.

Looking at the seasonality in provisions, it is clear that a low seasonality can be considered this quarter. My evidence of the nonperforming loans generation, so, on the inflows, is that October is probably one of the best -- has been one of the best months in these last years.

So, looking and making a projection of October, it is difficult to say that we can have seasonality. But, it is difficult also to make the forecast for November and December.

So, let's wait for the final figures and having in mind that, in any case, what I consider very important I want you to focus on is the level of net income and, at that time, the amount of net dividend that I will decide to pay to the market.

And on the balance between NII and provisions.

Sorry, yes. The quantitative easing in my view is having a pressure on the margin.

So, it is true that, on NII, this could be something that can have a pressure on net interest margin. But, the improvement in provision is probably higher, much higher, than the reduction in net interest margin because, if you consider that all the Expo-related companies are in a very good shape, now, it's moving also the internal demand.

So, at the end, the balance is that, on EVA basis, so, that could be the executive summary on the point, we can have significant improvement coming from quantitative easing.

That's exactly what I was looking for. And can you foresee having write-backs next year or in the coming year from your NPL portfolio?

I hope so.

I have one question on the bailing mechanism that is going to be approved by year end. I was wondering if you can share with us your thoughts on the new mechanism and the potential impact of the rescue plan that is being put together for some of the struggling Italian banks that should be carried out by the guaranteed fund in 2015.

How much would the figure of €2 billion that has been discussed for the rescue of these banks will be shouldered by Intesa Sanpaolo? And if so, how will it be booked?

And just a clarification on the claim, on the positive one-off, you booked this quarter, referring to the claim. And finally, if you can share with us some thoughts on the SRAP, the last available indication from ECB in terms of SRAP for Intesa Sanpaolo.

For example, Mediobanca said that we're positively surprised by the indication of ECB for the SRAP. Thank you.

So, starting from SRAP, we received a draft letter from the ECB. We're not authorized to make any kind of disclosure.

But, I can tell you that we will remain with a significant, significant excess of capital if they confirm the draft they sent to us. So, I'm not worried at all.

Looking at the second point, the claim, the claim is a claim related to a controversial of Banca IMI in 10, more than 10 years ago. And that's all.

Third point, bailing mechanism, so, just to be clear, if you want to know about the €2 billion, the intervention of the Fondo Interbancario towards other banking crises, I can only tell you that there is no decision taken. And at the end, we're participating 20% at the Fondo Interbancario Di Tutela Dei Depositi.

So, we will wait for the decision of the Fondo Interbancario Di Tutela Dei Depositi. And in any case.

our participation to the Fondo is 20%. It is clear that we hope to use the amount of provision that we set against the deposit guarantee scheme year by year and using this amount to support any difficult situation for the Italian banks.

So, no additional impact through the P&L.

But, there is no formal decision from the Fondo Interbancario Di Tutela Dei Depositi. So, I cannot tell you that there is positive or negative.

We have to wait what will be the decision of the Fondo Interbancario Di Tutela Dei Depositi. And then we will see what happen.

My expectation is that the Fondo Interbancario Di Tutela Dei Depositi is well provisioned. And the amount that we're paying to the Fondo Interbancario Di Tutela Dei Depositi this year and in next years can be enough to pay this amount.

Then we have to see what is the real situation.

A couple of questions, you are adapting your business plan to a rate environment, especially on the deposits which is becoming more challenging via customer acquisition, with increase in the mortgages and the tactic of growing the deposits. I wonder, what are the actions that you can introduce in the next few quarters, other than the one that you have already implemented in order to compete in an environment where the deposit rates may become even more negative?

And the second question, I've seen a very strong new business generation in terms of new loans, €29 billion in the nine months. I wonder, what are the budget that you are discussing with the network for 2016, whether you still see grow in this figure for 2016?

Thank you.

So, on the new budget, I will tell to the market as soon as there is a conclusion of the budget process. In any case, it will be an increase of this amount.

Looking at the specific actions and the related business model, today, I make -- I'm making disclosure of significant actions. And so, I prefer first to deliver actions and then to talk about action.

It's from Exane actually. Just one clarification on fee income.

You had disclosed -- I don't remember if it was yourself or anyway IR -- had disclosed the amount of upfronting in H1 and it was 14%, upfronting on the placement on mutual funds and insurance products. Could you share with us the same percentage also for Q3?

Only this. Thank you.

In Q3, it's 15%, in Q3.

I just would like to ask you if you have floating areas on -- back in the table, given that there's some ongoing related IPOs going on in Europe. That's all.

Thank you.

Sorry, I didn't understand very well -- are you talking about the possible IPO of Eurizon or--?

Yes.

Okay. I don't want to make the IPO of my asset management company.

And I don't want to make the IPO of my private banking division because I think that we can exploit significant value without making any kind of floatation. And for the time being, we have such an excess of capital that making the floatation, the only results would be increasing again excess capital, reducing net income.

We're now devoted to increase the net income. And so, for the time being, I do not consider this move as a strategic move for Intesa Sanpaolo.

Just two questions on my side. First of all, on deferred tax assets, I was just wondering if you had any kind of color that you could give on the change that occurred with decree in July and the potential changes that we could see by year end maybe.

And the second question is just to come back on your government bond portfolio. So, you seem to be quite happy about the current concentration in Italian govis.

Just wondering, so, does that mean you're not concerned about the comments coming from Basel on potential limits, whether we're talking risk weightings or caps on total assets or equity or you don't think that's likely to happen, if you just can elaborate on this? Thank you.

It is clear that, on government bond portfolio, we decided to reduce the exposure not only because the yield is so low that we can reduce the amount of net interest margin, but also because there will be a pressure on this point. In my view, the pressure will be not so significant because, at the end, you have to move into the European Parliament in order to change the CRD IV.

And so, it is not something which a significant number of countries would be so happy to increase their cost of funding. And so, my view is that what we have done is enough to be in the safe position, considering what can happen in the future.

Then if there would be something different, we will move according and immediately because we want -- we don't want to lose time if there could be a problem. But, this amount of government bond in my view is completely in the safe position of the Bank, also according to my knowledge of what is the political evaluation on this point.

Looking at DTA, my view is that, with the new regulation allowing for the reduction in one year of the provisions, the point is no more on the table, so, not worried at all on this point.

Just a number of follow up on my side, on NII, you said before that you expect strong volumes going forward. And you might have sacrificed a little bit margin to get onboard more retail mortgages.

My question is on SMEs, how you see in this segment margin going on. You probably might probably take on both more riskier SMEs and this might have a positive impact on your average margins.

On the fess side, there was quite a decline in insurance, asset management and other distributional products at page 83 of the presentation. Can you give us a little bit of color what has gone wrong in the quarter because, actually, we don't have a lot of visibility here?

Is that recurring fees or upfront? Maybe if you could give us more color on the volumes, on the sales from next quarter representation, that would be great.

On these four bond loans that you mentioned, this €1 billion that you are not allowed to move to performing, where these are classified? Are these past due, in currently, just to get the potential benefit or release of provision?

On ERS, can you just give us color on how you expect this to impact on your tax rate in the future and whether you're expecting any one-off in Q4 from the impairment of DTA? And then on capital, again -- sorry about the long number of questions -- from your understanding and from your conversation with the regulator, how this is -- how is it going?

And is the regulator asking for any domestic SIFI buffer for you and whether you're also going to apply a certain management buffer going forward, given that, if my understanding is correct, the SRAP for you is not going to be more different from the one last year? Thank you.

So, starting from the NII, on SMEs, we decided to work but not to push in, in order to increase the market share. We increased market share with the more investment-grade like, in any case, the best part of the portfolio.

And so, with this client, we had a slight reduction in margin, but more than compensated by the reduction of the expected losses and so, in an EVA positive way. Looking at fees, I think that you can be aware that, in Italy, August is a month in which clients are on holiday.

So, I'm very surprised that a significant part of also Italian people asking question on the results on this quarter didn't consider that, if you are a relationship manager and you want to sell a product, you have to have a client. So, if in one month you have no clients, you cannot make any kind of distribution.

So, I think that these results are very good because are obtained in two months of work that are July and September. So, the point, it is really clear.

Have in mind, the forborne, the concentration is in Incalier. So, this is the area in which we have the much higher concentration of this amount of Incalier.

Looking at the ERS and tax rate, I have already answered this question, so, not worried at all on the implication of 2015. Calculation will be made at the end with the final version of the budget law.

For next year, we will see what will be the final taxation defined in the budget law. Looking at capital, the domestic SIFI buffer, we didn't receive any domestic SIFI buffer from our local regulator, but it is likely that, in the future, we will receive also a domestic SIFI buffer.

So, just as a follow up, considering this domestic buffer and also management buffer that you might want to have in the future and you're not a global SIFI, how should we look at capital? Can you give us any indication what is going to be your optimal level going forward?

I will wait for having the domestic buffer. And there, I will give the point.

But, it is clear that I will remain with a significant excess of capital, really significant excess of capital. So, I'm afraid, but there's no way to change this position of Intesa Sanpaolo.

You can move all the different items on the table. But, at the end, we will remain the strongest looking at capital.

A couple of questions, so on fee income, I know we have talked about it now repeatedly. But, in terms of, first, the assets under management, so, you said there was a €3.7 billion net inflow.

I was just wondering, how much of that is actually inflow from assets under administration? And how much of that is actually organic inflow that you have experienced in assets under management?

I think you mentioned something like €6 billion. I wasn't sure whether that just related to Q3 as an organic net inflow.

Secondly, on fee, have you experienced any pressure on margin? I know that you only worked two out of three months in the third quarter.

But, is there any pressure on margin that has been experienced, especially on the management fees? And then going to NII, my view there is that, of course, you have raised potentially the deposit rates to actually attract new business which we will then see the benefits of in Q4, in terms of more commission income.

But, would you also say that, in this particular case, what is -- exactly are your spreads on your corporate and your -- on your retail book and especially between the front book and the back book? And do you see that actually the spread and the difference between these spreads, do you see that actually becoming bigger?

And the third one is on deferred tax credits. In Spain, they have now come to an agreement with the European Commission to actually pay, like, 1.5% fee for the guarantee that the government gives on the deferred tax assets.

Is something like that in the making in Italy as well? And then a final question is on your capital light bank.

You have been able to deleverage a further €1.3 billion this quarter. And you have done it at a profit.

Now, my question is, is that actually the area where we would see a lot more profit coming in, in the future, especially with new bankruptcy procedures, real estate market improving and so on? Thank you.

Starting from the last one, yes, this is an area in which we think we can have improvement [indiscernible], especially coming from the new law. So, it is true that this could be really a surprise in terms of good results for the future.

Looking at the DTA, in Italy, the move of making the deduction of provision in one year time instead of in five, 10 year was negotiated between the Italian government and the commission. And so, in my view, this is equivalent of the move of the Spain government.

Looking at the total amount of assets under management, so, your first question, I was talking -- if you look from 2013 and then I will move into the quarter, but if you look at -- from 2013, we increased in term of net inflows our assets under management by €56 billion, €29 billion of which coming from a switch from assets under administration, €21 billion coming from a switch from retail bonds and €6 billion coming from new money. In this quarter, we had an increase of €4 billion, €2 billion coming from switch from assets under management and €2 billion coming from switch from retail bonds.

Looking at margin, on margin, we do not see on the assets under management any kind of pressure. So, we think that, on the commission side, we do not see any kind of pressure.

And on net interest margin, the amount of impact coming from competition or spread within the corporate client for us, it is not significant. The only reduction is coming from improvement in quality of credit.

Now, very much so, just a housekeeping question which has been probably asked already, just looking at the quarterly evolution of the [indiscernible] which is essentially net provisions which are up sequentially in the third quarter quite significantly, if you have any comment on that very line. I know you don't run the bank on a line-by-line basis, but we have to ask questions on a line-by-line basis.

No, but, this is very important because it is an extraordinary item, a one-off item that is related to the Croatian new regulation regarding the foreign, ForEx, exchange loans. So, it's €170 million.

And so, it is significant. And it is the reason why we have this amount.

This is compensated by the claim, the extraordinary one-off that we have in revenues for the amount of €210 million. But, it's clear that, in this case, line-by-line analysis is very important because there is a one-off and an extraordinary items.

I hope that this could be something that, after making this against the quarter in Croatia, asking for not being constitutional, the decision can be reduced in the future. But, for the time being, we decided to be in the very safe position, having in mind that, also, with this provision, we maintain a significant amount on net income and higher than €700 million.

Am I allowed a follow-up question on this Swiss franc -- on this business of loans linked to Swiss franc which funny enough are pretty popular, especially when you go east, for reasons which go beyond my imagination? If you exclude Croatia, are there any other geographies, including Italy, whereby you have a stock of mortgages linked to the Swiss franc?

I remember Hungary, for example, being almost the national port. I don't think you have anything in Hungary, but just as a reminder for us.

So, the only one is Hungary. And we have already paid a significant price for being there and for making this kind of transaction, having in mind that the Croatian one are related to mortgages in 2008.

So, there is a lot of concentration in the past years. No other countries with exposure to this risk.

And are these mortgages denominated in Swiss francs in Croatia only dated 2008 because, after that date, you as a bank have decided not to enter into this business?

Yes, that's right. We made it until 2008.

And then we decided not to use these kind of products more in the country.

I have one follow-up question on the cost of risk. I understand your reluctance on providing specific guidance for Q4.

But, in your business plan, you do talk about an 80 basis points guidance in terms of normalized level, yet you talk about improvement and potential tailwinds on that, given the improvement in the macro situation in Italy. What do you see the sort of new normalized level, if you will, either in 2016 or maybe 2017, if you feel comfortable with that timeline?

Thank you.

This is a good question. Please remember that we prepared the business plan having in mind that the real level according to our model could have been 70 basis points and then decided to add 10 basis points as a conservative buffer in order to have 80 basis points.

So, I hope that we can anticipate this point in 2016. But, this is one of the year of the real results of the budget process that we have in course because we need to have the opinion of the risk management, the credit department and also of the business units that are dealing with clients.

So, in reality, when we made an estimation of the cost of risk, we work until the relationship manager that has the position with the client. So, I'm optimistic, but I cannot give you figures for next year.

I would just have two questions related to the implementation of the bank recovery and resolution directive in Italy, if I may. Last quarter, you did not believe that the Italian government would implement a solution that was similar to that of Germany in the country which is in de facto making senior unsecured subordinated to other senior claims.

Now, since then, there has actually been a proposal in Italy to do the same, even if in a different format. So, my first question would be, does this have any impact on your plans and that is on retail and institutional senior issuance and perhaps also on subdebt if you want to buffer the senior unsecured debt that you have outstanding?

And the second question is, when do you expect the final law to be released in Italy? And do you see scope for this to change significantly versus what has been communicated so far?

Thank you.

Okay. So, when it goes to comparison with the German solution, let me stress that, also, the present proposal which has been carried forward by the government is not exactly the same because, as you know, the German solution was to make basically senior bonds subordinated toward the other senior liabilities.

The Italian version is slightly different -- it's quite different because, basically, it's created depositor preference for corporate clients. It means that there are a lot of other senior liabilities, like margins on derivatives or money market instruments which would remain part and parcel with the senior bonds.

So, I wouldn't say that also the present formula would be equivalent to the German one. And I would say that, even if that formula would be approved as it is, still, the Italian bonds cannot be considered as subordinated as it was the case in the German proposal.

We believe that there is some room for this formula to be approved in an amended version. Of course, it's not up to me to disclose any discussion on these points.

But, I think there is a probability that there will be an amended version which will be final approved. And the approval should come before year end because, in any case, from January 2016, we're entering in the bail-in world.

And so, all the countries must have approved the BRD before year end. So, we expect that to happen in the next weeks.

We don't see any impact on our business plan because, again, even in the present version, it's not making bonds subordinated, but also, we believe that that version will be amended. So, that's what I can say.

It's not making senior bonds subordinated. But, you're still now subordinated to the depositor.

That's what I was trying to understand. But, basically -- .

No, you're right. I don't want to say that is bond friendly in a sense.

That's why we're working hardly also with the Italian Banking Association to change and to amend in a way that is more in line with, let's say, future European evolution.

So, I want to thank you for your attention during this conference call. I want just to remind you our €2.7 billion net income and the ability for us to pay minimum dividend of €2 billion, 13.4% common equity tier one ratio, so, one of the strongest banks in Europe.

And just a final remark, I used the third quarter in order to create condition to create value during the fourth quarter and during 2016. So, see you in London and good evening.