Intesa Sanpaolo S.p.A.

Good morning, ladies and gentlemen, and welcome to our today's conference call on our year-end results and our new 2022-2025 business plan. This is Carlo Messina, Chief Executive.

And I'm here with Stefano Del Punta, CFO; Marco Delfrate and Andrea Tamagnini, Investor Relations Officers. Before starting our presentation, let me briefly recap the main elements of our strategic journey, which is rooted in our past and 2020 and 2021 as crucial stepping stone towards the new business plan.

Over the last years, we have created a unique and resilient business model strongly focused on commissions and characterized by high efficiency and low risk. In particular, we have based our strategy on 3 pillars: revenue growth, becoming a European leader in wealth management and protection with distinctive fully owned product factors, efficiency with continuous cost reduction, simplifying our operating model and evolving from a branch-centric to an omnichannel bank.

And then derisking achieving a low risk profile also thanks to effective partnership, coupled with a solid capital position. This strategy has been enabled over time by strong investments in digital and our people.

But the acquisition of UBI has been fully consistent with our long-term strategy for 3 key reasons. It was a bank with a good commission income with upside potential for growth, it adds a sound asset quality and the use of badwill enable further acceleration of NPL deleveraging and the possibility to have integration charges for all the group.

It had an efficiency level that could take advantage of our scale and investments in digital. And last but not least, it was a bank with high-quality people who have been fully integrated in our organization.

Another important part of our strategy that I would like to underline relates to fintechs and technology. We have always been aware of the evolving needs and behaviors of our customers.

And we started to invest a long time ago in technology, creating our digital factory, our advanced analytics platform as well as Banca 5. Since that has now evolved into a fintech leader through our money participation with Enel.

Also, we have contributed to the growth of Nexi in payments, and we now enjoy a strong strategic alliance. We are aware of the risks coming from new fintech entrants, and we analyze our customer segment in detail.

We know which clients are potentially at risk because of their preferences. And then we identified 4 million clients that we will serve with our newly created digital bank, easy bank, that we are developing together with world-leading tech innovators.

The creation of Easybank enables Intesa Sanpaolo to evolve from incumbent to challenger and will make us resilient against fintech attackers is we will become a challenger bank ourselves, but with a much more complete product offer. And the other part of our business model, so the Wealth Management & Protection business model is not in a condition to be attacked by the fintech challenges.

With the new business plan, we are projecting the bank into the next 10 years taking to the next level, the strategic road map we started in past years, focusing on 4 key pillars: One, massive upfront derisking with our deleveraging basically already funded in the fourth quarter of 2021, with the ambition to become a 0 NPL bank or practically speaking, a Nordic bank ranking among the best in Europe in terms of NPL ratios and stock. Number two, structural cost reduction, strengthening our omnichannel propositions and becoming the leader in Europe for operational efficiency.

To do so, we will create our new digital bank, and we will continue to strongly invest in technology also through partnership with top fintechs and artificial intelligence players. Three, growth in commissions, driven by wealth management, protection and advisory, addressing all our individual clients' needs, while at the same time, becoming a reference partner for all our SME and corporate clients, helping them to fully leverage recovery plan opportunities.

Advisory will be a key area for value creation in our new plan, in addition to our strong Wealth Management & Protection capabilities. Number four, significant ESG commitment, further strengthening our current leadership in all main ESG rankings.

We will continue to support the community with particular attention to those categories most in need while reinforcing our net zero commitment. But our people will always be our main asset as well as the enabling factor for its future success.

We will invest in their talents, encourage diversity and inclusion and create a unique ecosystem of skills suite evolution -- to the evolution of the bank. The key point I want to make is this.

The new plan moves us into the future and creates the bank for the next 10 years. We are now taking to the next level of implementation, a strategy that is rooted in our past and this is at the core of our unique business model.

A strategy that we have consistently executed over the last 2 business plans. Strong value creation and distribution will continue to be our priority with growing cash dividends year by year.

Today, we are setting targets that we are confident we can achieve and we will evaluate year by year the possibility to exceed them, but the plan, believe me, is really conservative. I will now run quickly through our 2021 results that are, as I said, a key enabling factor for the new plan and adding the other enabling factors that was the UBI acquisition and the possibility to spend and to use €6 billion of gross income in order to reinforce profitability as we decided to do in 2020.

So adding this with the new provisions that we decided to take in the last quarter of this year, we are reaching €8 billion of gross income that we can devote for the sustainability of our results in the future. After the presentation of the 2021 results, I will present the new 4-year strategy targets and actions.

Now please turn to Slide 1. I'm very proud that even under stress from the pandemic and while successfully merging UBI Banca, we continued to achieve excellent results.

We delivered a net income of €4.2 billion, the best year since 2007, reaching €5.3 billion when excluding additional provisions to accelerate deleveraging. 2021 was the best year ever for revenues and operating margin.

Growth in customer financial assets added €90 billion to fuel our Wealth Management engine. Costs were down further.

Growing profitability and best-in-class efficiency were matched by solid capital position, a massive NPL deleveraging that led to the lowest ever NPL stock and ratios that are now among the best in Europe. Our resilience and solid capital position make Intesa Sanpaolo one of the best-positioned banks to pay high and sustainable dividends.

For 2021, we will pay €2.9 billion in cash dividends equal to a 70% payout ratio. This performance is even more remarkable when considering that we have built up huge buffers to reinforce the future sustainability of our results.

Please turn to Slide 2. This is the linkage between the 2021 and the new business plan.

We leveraged on Q4 profitability to take a series of managerial actions that allow us to enter the new business plan as an even stronger and more profitable bank. In the fourth quarter alone, we allocated €1.2 billion in additional provisions on NPL portfolios, enabling €8 billion in NPL disposals.

€170 million to further strengthen our insurance reserves and over €300 million to fund the additional 2,000 voluntary exit agreed in November with trade unions. Overall, in 2021, we allocated €2.2 billion out of pretax profit to pave the way for the new business plan.

Slide number 3. Net income has been structurally growing for 8 consecutive years, while paying €19 billion in cash dividends for the period 2014-2021.

And I want to thank all Intesa Sanpaolo people for the hard work in delivering these excellent results. And it is really impressive to look at these figures and the run rate of the growth of our net income.

In particular, in 2020, 2021, if we do not consider the additional provisions, we are already at €5 billion run rate in terms of net income generation. Slide number 4.

Shareholders are not the only ones to benefit from our performance. Intesa Sanpaolo has indeed contributed broadly to society and it is shown by our support to the real economy and our strong ESG focus.

Slide number 5. We immediately responded to COVID in the early days of the emergency and we will continue to do so.

Leveraging our digital skills and with many actions to care for our people support the real economy and ensure business continuity. Slide 6.

At the same time, we have consolidated our leadership around ESG and climate topics. You can go through the details in the next slides, but for the second time, let's go directly to Slide 11 for some color on the full year results.

In 2021, despite COVID and while merging UBI Banca and building up buffers for the future, we delivered excellent performance. Commissions reached a record high, growing over 9% compared to the previous year, more than offsetting the decline in net interest income.

The decrease in net interest income is due to financial components that were affected by a reduction in the size of the securities portfolio, which was a consequence of the integrated management of Intesa Sanpaolo and UBI portfolio and by NPL deleveraging. Net interest income was also affected by a strong increase in retail direct customer deposits, which impacts net interest income in the short term but fuels our Wealth Management engine in the coming years.

And in particular, in the last quarter, we had more than €20 billion increase in retail deposits. Profits on trading and insurance income were solid.

Revenues were up 2%, operating costs continue to decrease and operating margin increased over 5%, the best year ever. We have been very conservative in provisioning and booked more than €300 million to fund 2,000 voluntary exits and net income was €4.7 billion when excluding costs concerning the banking industry.

Slide 12. Fourth quarter operating performance was solid with record high quarterly commission.

And as mentioned before, this enabled us to take significant managerial actions to prepare the bank for the new business plan and succeed in the future. In Q4, we fully provisioned €8 billion in NPL disposals, of which almost €5 billion to be executing in the coming month and still included in the NPL stock.

Slide 13. As you can see, 2021 was also our best ever year for commissions, again, impressive the dynamic of these commissions.

Slide 14. Customer financial assets grew by €90 billion on a yearly basis, of which €35 billion in Q3.

Net inflows into assets under management were positive by €17 billion in the 12 months. Short-term direct deposits saw a €27 billion increase, which will fuel our Wealth Management engine in the coming years.

Slide number 15. We were very effective at managing costs while investing for growth with administrative costs down almost 6% compared to last year.

On a like-for-like basis, administrative costs were down over 5% in each of the past 4 years, which translates into a €600 million cumulative production. Gross NPL decreased -- Slide 16, decreased €10.5 billion on a yearly basis and €7.8 billion.

When included, almost €5 billion in gross NPL disposal to be finalized in 2022, but already fully funded in Q4 and still included in the NPL stock. NPL ratios and stocks are now among the best in Europe.

Slide 17. Loan loss provisions were down almost 40% on a yearly basis and cost of risk stood at 25 basis points when excluding the additional provisions to accelerate NPL deleveraging.

Slide 18. In 2021, we recorded the lowest-ever gross NPL inflows and NPL coverage increased by 5 percentage points.

Slide 18. Fully loaded common equity Tier 1 ratio is 15.2%, including DTA absorption and the fully phased-in common equity Tier 1 ratio is 14%.

Slide 21. Over the past 4 years, we massively reduced NPL stock.

We strengthened our leading capital position while also acquiring UBI Banca, and we increased our share of revenues from commissions and insurance. Slide 22.

We are now far better equipped than our peers to capture growth opportunities, and we are ready to deliver on the new business plan. Slide 23.

For 2022, we have a positive outlook. We see increasing revenues coupled with the continued cost management that will drive operating margin growth.

And we expect a strong decline in cost of risk that will trigger further growth in pretax income. As a result, this year, we will achieve a net income above €5 billion, with a payout ratio of 70% so with the increasing cash dividends in comparison to 2021.

I have finished with the 2021 results. Now we can move to the new business plan presentation.

I want to stress that this is much more than a set of targets coming from a top-down process. Our people contributed to identifying the strategic priorities that will guide each and every one of us.

And as usual, we will deliver on our promises and all the people of the organization are fully committed to deliver the results of the business plan. So let's now turn to Slide 3.

As we have already said, we are an ongoing success story and we can move to Slide 4. Our main business plan targets are maintaining a very low NPL level, reducing costs despite strong investment in technology and growth, increasing revenues through commissions and insurance income and further strengthening our leading position in ESG.

In terms of financial targets, we will deliver a net income of €6.5 billion, coupled with a very solid capital position and a very low net NPL ratio and stock for all the business plan. Our priority remains strong and sustainable value creation and distribution with a total capital return of more than €22 billion, of which at least €19 billion in cash dividends growing year-by-year as we maintain a 70% dividend payout.

And then €3.4 billion through a buyback in 2022, subject to ECB and shareholder approvals. Any additional distribution will be evaluated year by year, considering our significant capital position much better than our target.

Slide number 5. Intesa Sanpaolo is a proven delivery machine, and this slide shows the excellent results of the past 2 business plan.

We realized massive derisking with more than €50 billion of NPL reduction, efficiency improvement with one of the best cost/income ratios in Europe and the creation of our unique resilient business model, with more than half our revenues from commissions and insurance income. Effective capital management with capital ratio always well above the estimated level and strong value creation and distribution to our shareholders with €19 billion in cash dividend.

As you can see in the next slide, net income has grown for 8 years in a row, achieving a €5 billion run rate. We can turn to Slide 7.

This is very important. All these achievements were possible, thanks to our people.

They remain our most important asset and are now fully committed to delivering the new business plan, a plan they were essential in developing. We are proud to say that our people are very satisfied with being part of Intesa Sanpaolo, showing a satisfaction level at almost 80%.

And 58,000 people have been involved in the process of preparing the new business plan. Slide number 8, our business plan formula.

The 4 pillars of our strategy are massive upfront derisking, achieving a best-in-class NPL ratio at 1% and slashing cost of risk to 40 basis points for all the business plan horizon. This is something like being a Nordic bank.

In terms also stock of net NPL, we will be in the range of €5 billion stock that is easily manageable in the period of the next business plan. Then we will realize structural cost reduction enabled by technology.

We do €2 billion cost savings and €5 billion of investments in technology and growth. Number three, growth in commissions driven by Wealth Management, Protection & Advisory, adding €100 billion to assets under management with almost 6% of revenues from fee-based business.

And then number four, significant ESG commitment with a €15 billion contribution to society and to support the green transition. Slide number 9.

Our strengths give us full confidence in delivering our business plan targets. Our high-quality loan portfolio, our strong proactive credit management and our partnership with leading NPL industrial players will enable us to maintain a best-in-class NPL ratio.

We have strong capabilities and a proven track record of cost reduction. And the combination of fully owned product factories, distinctive advisory networks and top-notch digital tools is a key factor in driving growth in commissions and assets under management.

And then we have a deep rooted commitment to social impact and we have a strong focus on climate and the green transition. Slide number 10.

This slide gives our forecast for Italian GDP that will be strongly supported by Italy's recovery plan. But I want to highlight that the business plan targets are based on conservative flat interest rate assumption.

And the plan is really conservative also on the cost sides and cost of risk side. Slide number 11.

This is probably the most important slide for the majority of you, and I want to go through the numbers. The business plan will allow Intesa Sanpaolo to achieve a net income of €6.5 billion in 2025.

And as already said, over the business plan horizon, we will return more than €22 billion, mainly in cash, of which more than €6.6 billion this year. For 2022, we will pay more than €3.5 billion in cash dividends and 20% more than the 2.9% for 2021.

Cash dividend distribution will increase year by year and any additional distribution will be evaluated year by year starting from 2023. I have to tell you that I do not consider conservative for a bank to take commitment to distribution of excess capital exceeding the short term and so the year in which you can make the possibility to have the right forecast and all the implication of the scenario embedded.

But I can tell you that we will have a capital position in significant access to the minimum target that we are setting that is the level of capital embedded in our risk profile, as you can see in Slide 12. We will continue to maintain a solid capital position and our fully phased-in common equity Tier 1 ratio will always remain above the minimum target level of 12% and well above this level.

As you can see in the next slide, we will maintain an excellent liquidity profile. But let me elaborate on the 12% level.

This is the level that is absolutely related with a significant buffers to our risk profile. In these figures, we have embedded all what we need to have also what we can consider necessary to manage the unexpected losses for the group.

And in particular, after the significant reduction of nonperforming loans that was the only point of weakness of Intesa Sanpaolo in comparison with other peers. Now if you have to consider NPL stock, Level 2 or Level 3 asset, we are by far the best banks in Europe.

Slide number 12 -- 13, sorry. We are looking at liquidity.

We are in a position of having an excellent liquidity profile as usual for Intesa Sanpaolo. Slide number 14.

To sum up, we are committed to delivering a strong increase in profitability and efficiency with a return on tangible equity of 14%. Let me remind you that we assumed a conservative flat interest rate scenario.

But an interest rate increase is a strong upside for us because for every 50 basis point rate rise, net interest income can increase by €1 billion. So these figures can be minimum €7 billion, if you consider just a slight increase of 50 basis points during the period of the plan.

Slide 15. Our business plan will not just strengthen the bank, but also create benefits for all stakeholders.

We will contribute more than €520 billion to the real economy over the next 40 years. Slide number 16.

Entering into the formal order the plan. In 2021 and previous year, we significantly reduced NPLs increase and increased coverage.

Several elections will be put in place to further the risk. And as a result, we will have a net NPL ratio of 1% and the cost of risk of 40 basis points for all the business plan but starting from 2022.

So in 2022, we will be already at the run rate of this level. And this means that we have a significant opportunity to increase our net income.

And believe me, on cost of risk, we have been conservative. Slide number 17.

Just to give you the real position now of Intesa Sanpaolo, as I told you, on the only point of minor position in comparison with other peers. Now we can say that we are a leader also in NPL stock and NPL ratios in Europe.

So thanks to these actions, we will further improve the NPL ratio and reduce net NPL stock, which are already best-in-class among European peers moving into a Nordic bank approach. Slide 18.

We will continue to structurally reduce our cost base through a series of action such as the launch of a new digital bank, enabling a reduction of 1,500 branches in Italy. Operating cost will decrease by €2 billion without considering inflection and strong investment to support growth and by €300 million in absolute terms.

What is important is to consider that through the usage of the €6 billion of gross income that we decided to allocate in 2020 in order to reinforce sustainability. And the amount of cost that we decided to use in the fourth quarter of 2021, we have already completed the preparation of the bank to the new digital world also in terms of people working within the organization.

9,000 people will live on a voluntary basis, the organization and with the reduction of 1,500 branches, we can be considered now as the perfect bank for the new fintech and digital environment without asking our people to leave the organization but investing on their ability to be prepared to the new digital world with new possibility to give new jobs and new opportunity of work. I consider this as a very important step for our bank and is a demonstration of caring of our people and take care of the future of the people within the organization.

We made an analysis of the portfolio of clients that we can be attacked by the fintech players and at the end, we had the possibility. Looking at Slide 19, to work for a segregation of 4 million of ISP clients that are digital clients that decide not to use the branches also before the COVID impact with very limited revenues embedded in the relation with the bank.

The possibility to create a digital bank with the best players in fintech will allow us to reduce in a significant way the cost base because to serve these 4 million clients, we use a significant portion of the cost base of the group that we can now reduce in a significant way. And so let me say just a few words about our new digital Easy bank Intesa Sanpaolo for you bank, one of the most important initiative of our plan.

This bank, as I told you, will serve 4 million of our clients with an average age below 40. So 20 years lower than our other clients and simple financial needs.

We already do not use branches and are a natural target of fintech new entrants. As already said, easybank will make us resilient against the fintech threats and will allow our people to be sure to be in an environment that will not have any kind of threats coming from fintech.

We will protect and expand our retail franchise because this bank will offer a complete product offer while fintechs are much narrower so we can say that we are moving also into a challenger mindset. And we will serve these clients more efficiently, slashing yearly operating cost by €800 million.

So this is something that could be really transformational. And believe me, these figures are conservative.

In my expectation, we can exceed in a significant way the savings that we can realize through this initiatives. We work with the best-in-class player and in particular, we are working with Thought Machine in order to create a state-of-the-art technology for this bank.

Slide number 20. Revenues.

Our ambition for the top line comes from growth in Wealth Management Protection & Advisory without relying on interest rate increases. The 6 main initiatives on this slide, such as dedicated service model for our exclusive clients will lead to a revenue increase of €2 billion driven by commissions and insurance income, which are expected to grow an average 4% per year.

So commission and insurance income will reach 57% of our revenues. Slide number 21.

Thanks to the new business plan, we will further strengthen our unique resilient, low-risk, efficient and fee-driven business model. Slide number 22, ESG.

In the new plan, we will further strengthen our commitment to ESG as I will detail in a few minutes entering into the single actions. Allow me to add that at Intesa Sanpaolo, we believe that we can only grow and prosper by making a positive contribution to society and the world in which we live and operate.

Slide number 23. People are and remain our most valuable assets and we will continue to invest in them.

We will empower thousands of people through significant training and reskilling. The additional assess capacity of around 8,000 people coming from digitalization and simplification will be redeployed to business plan priorities.

And we will hire 4,600 people. In addition, with the next wave of working initiative, we are offering maximum flexibility to our people.

And we will dedicate strong attention to valuable talent people, training and boosting diversity and inclusion at all levels of our organization. Slide number 24.

In this slide, you can see the main P&L figures we are targeting for 2025. Revenues will reach almost €23 billion with additional upside from interest rate increase.

Operating costs are expected to be €10.6 billion, decreasing on average, almost 1% per year. Total loan loss provisions will be down to €1.9 billion.

As a result, net income will increase to €6.5 billion. In the next 2 slides, you can see the main balance sheet figures and positive contribution from all our business units.

We can now move to the next section where I will give you more detail on the 4 pillars of our business plan. Slide 29.

We are now entering into the massive upfront derisking, slashing cost of risk. We have already reached the best-in-class NPL ratios and stock.

And during the new business plan, NPL ratio will improve further through a strategy based on proactive management of high risk position and stage 2 loans. Strengthening of NPL management with further disposal of bad loans and UTP along with strategic partnership.

Acceleration of back to performing for going concern position and creation of a fast track plan for going concern position and the evolution of the active credit portfolio team and solutions. As you can see, the next slide, we will adopt a new credit decision model incorporating for instance, sector-specific data, climate ESG components and fully digital credit customer journeys.

But just let me add a point on the NPL stock and NPL stock of €5 billion for an organization of Intesa Sanpaolo is well below our gross income for each year. So in each year, we could be able to reduce to 0 the nonperforming loans, the net nonperforming loans.

So the risk embedded in nonperforming loans just using a portion of the future gross income for the organization. Slide number 30 you can see the new credit decisioning model.

And in Slide number 31, you can see the proactive management of other risk, and we will further improve the management of this risk by continuing to strengthen already best-in-class internal control systems, anti-financial crime processes and compliance. Risk management and cybersecurity will remain key for Intesa Sanpaolo.

Slide 32 is the end of this process of reducing risk and reinforcing the risk profile of the group. We were and we will be the leader in terms of capital on total illiquid assets, nonperforming loans, Level 2 and Level 3.

And by far, the leader in comparison to all the other peers. This means that we will need lower capital in order to face unexpected losses related to this kind of risks.

Now we can move in the second pillar of the cost, so structural cost reduction enabled by technology and let me repeat, technology is and will be fundamental for our group. So we rely on technology in order to reinforce our cost reduction, but also in order to reinforce our business model, resilient to fintech attacker and ready to enter into this world as a clear leader and winning player.

Slide 34. This structural cost reduction will be enabled by the technology and in particular, by ifybank, Intesa Sanpaolo for you bank.

The new digital bank will be characterized by a multicurrency, multi-country cloud-native technology platform. developed in partnership with leading fintech company, in particular, Thought Machine.

An enhanced digital proposition, including our app, one of the best in Europe, contact centers, ATMs and Mooney. Mooney means that we can also leverage on a very good partnership with one of the strongest players in Italy and in terms of ability to manage and the reputation.

End-to-end digital empowered by Intesa Sanpaolo artificial intelligence sales will reinforce our proposition. And then we will set up an artificial intelligence lab in Torino, hiring 50 Italian and international experts dedicated to develop a new data analysis methodology and advanced artificial intelligence solutions.

Slide number 35. This will be part of the new omnichannel service model.

and Intesa Sanpaolo for you bank will be an important part of our omnichannel model for the 4 million clients. Then the other 9 million clients will have the traditional network combining both branches and digital.

And we will continue to serve SME and retail client, but with more sophisticated financial needs, reinforcing the technology also of this portion of our clients. Slide number 36.

This new tech infrastructure will be progressively extended to the entire group. In the first wave, we will implement a new digital bank in Italy to serve our domestic mass market retail clients and we will develop a single international digital core banking front-end system.

But in the second wave, we will extend the tech infrastructure to other is individual client segments, and we will fully leverage partnerships with leading players to acquire new customers and expand the business in Italy and internationally including countries where we are not currently present. It's not the fact of the next year.

But after 2023, we will be ready to enter into something that could be an international growth, and money can help in this and also the partnership we then can help in this process for the international growth. Slide number 37, people.

We will hire 4,600 people and reskill 8,000 people. And over the next 4 years, we will significantly renew our workforce.

9,200 voluntary exit. But we will have, at the same time, 4,600 hires and then 8,000 people will be redeployed to digital branch, technology, digital data and analytics and priority initiatives.

So we will reinforce the digital network of the bank, we will create an organization that will be digital like the current distribution network. So we will have an area and digital branch digital ad.

And so we will have a structure that will be digital with people assuming a leadership position in this digital organization. Then we will reinforce technology will be the key part of success of our story with a significant number of people that will be high and possibility to have young people that could be skilled for this digital journey.

Then we will have a lot of priority initiatives related to the recovery plan related to the growth to the derisking to the ESG to the impact banking. So we will give our people opportunity to have new jobs and to work in real priority initiatives for the group.

And again, the most important part of the job for the CEO of this organization. So my most important target is to take care of my people.

Slide number 38. We will optimize our real estate presence and adopt innovative world space layouts to improve the well-being of our people and reduce the group carbon footprint.

We will also dispose and actively managed noncore real assets. Slide 39.

We will use advanced analytics to proactively manage costs and we will leverage a new digital negotiation factory to maximize efficiency with our suppliers. As you can see in this slide, we will also strengthen our core IT capabilities and increase efficiency through an end-to-end technological modernization of the bank.

On Slide 41, you can see examples of the leading tech players we are partnering with. Now we can move to Slide 43, entering into the revenue side.

Growth in commissions and insurance income, an important driver to boost commissions would be the dedicated service model for our exclusive clients. It is a segment that includes over 1 million after affluent clients in the Banca dei Territori division with over €80 billion in direct deposits and assets under management.

Our target is to switch almost €20 billion of this money into assets under management by the end of the plan. So this portion of the bank territory will be equivalent to a private bank within the Banca dei Territori.

So Slide number 44, we will give a new commercial organization for exclusive clients, with 470 dedicated advisory centers and over 4,000 relationship managers backed by sophisticated tools like [Valor and CMA], our advanced financial advisory service. Customer financial assets within [Valor and CMA] will double with a €100 million increase in revenues.

Slide number 45. For our exclusive and affluent clients, we will also leverage on a distinctive investment center within the Banca dei Territori division empowered by our fully owned product factories.

Slide 46, very important. It is important like the digital bank for the organization.

So like the -- our Inter Sanpaolo for you digital bank. Now the point is that we have €600 billion in customer financial assets on the platform leveraging on Alladin.

So we have also implemented in a unique and integrated way, Alladin, an advanced technology platform for end-to-end portfolio management solution. This will serve 4 million ISP clients with over €600 billion in customer financial assets, and we will leverage this platform to drive asset under management growth and the evidence of the first usage are really significant and important.

Slide number 47. Moving to private banking strategy.

As you can see in the next few slides, we will strengthen our leadership and increase assets under management by €54 billion and commissions by €400 million. Slide 48.

In this slide, you see how we intend to upgrade our private banking commercial proposition in Italy. We are a leader, but we have such a strong team that we can reinforce the position, and I'm pretty sure that we deliver very good results and extra delivery also in this field.

Slide 49, we will reference also the digital product offering and acquire clients through a new fully digital channel. At the same time, we will scale up the bank trading platform and offer top notch services to high-tech clients.

Slide number 50. Over the past years, we have consolidated our international wealth management position.

We are now targeting further selective growth through client acquisition and recruitment of private banking teams. As a result, international customer financial assets are expected to grow by €15 billion.

Slide 51. We will continue to strengthen our fully owned product factories, asset management, life insurance and property casualty insurance I want just to remember that one of the real point of strength of Intesa Sanpaolo is to be the 100% owner of product factory, especially in Wealth Management & Protection.

This is a distinctive situation Intesa Sanpaolo and this will remain also for the future. Slide 52.

In Asset Management, we will consolidate our position as a leading player in Europe through enhancement of the value proposition across different client segments international expansion and further strengthening of ESG and strong upgrade of digital. Slide 53.

In life insurance, we will consolidate our position in capital-light products, introduced dedicated offers for clients with excess liquidity and reinforce our ESG offer. Slide 54.

As far as property and casualty is concerned, the new caring program dedicated to seniors will bring a €100 million increase in revenues at group level. We will also widen our product offering for corporates.

This is very important, and we expect to triple our commercial lines gross written premiums by the end of the plan. end of the plan, we will reach 18% penetration on ISP clients.

Slide 55, we are also planning further growth in the payment business including leveraging on our strategic partnership, again, Nexi, Mooney with Enel and Banco are the key part of this job. Slide number 56.

In the new business plan, we target a 4.9% increase per year in commissions from corporate and top SMEs by extending corporate products and services to top SMEs and using also the significant effort that we will do to support the recovery plan. And Slide 57, we want to be a leading recovery plan partner for Italian corporates and we are planning over €400 billion in new medium, long-term lending to support the recovery plan.

So our commitment to be the real engine for growth for Italy, adding €400 billion to the amount, more than €400 million to the amount coming from next-generation EU. This is a commitment of Intesa Sanpaolo towards Italy.

And we think that we can accelerate the growth in this country, and we can be really a key pillar of the story for the next 4 years of Italy. Slide number 58.

With respect to our EMI Corporate Investment Banking division. We will improve our position as a global advisor for corporate clients through, for instance, boosting the originate to share business model, maximize cross-selling of value-added services.

This division is and will remain one of the key pillar for the Intesa Sanpaolo, generating a significant and sustainable net income part to our figures. Slide 59.

Looking at international, we will enhance our international product offering and we will offer a top-notch digital platform like the one-stop shop for the transaction banking business. Slide number 60.

Looking outside of Italy, we will also put in place several initiatives at our main European subsidiaries that will lead to a significant increase in revenues and better efficiency. This is -- the network that we have outside of Italy is a very important network in countries in which we are a leader with a significant number of people of Intesa Sanpaolo that are already working outside of Italy.

Slide number 61. We will reinforce the presence in the affluent and private banking segments and strengthened the bancassurance offer in this country.

We will also develop synergies with the corporate investment banking for the debt and hedging businesses and with Banca dei Territori to optimize coverage of Italian mid-corporates operating abroad. We will reshape our digital proposition, and we will further converge IT system towards a single platform.

Last, but certainly not least, in the next slide, you can see our growth option in China. Slide number 63.

Now we are entering into the ESG area of investments for the group. And starting from the unparalleled support to address social needs.

Intesa Sanpaolo, we continue to be the number 1 bank in the world for social impact. We are already a key player in the world in terms of social impact.

And we will provide about €500 million to support people in need, faster youth allocation, employability and assist the senior population. And we will build about 7,000 social housing units dedicated to young and senior people, 1 of the largest social housing programs in Italy.

Intesa Sanpaolo, will both invest in existing social real estate funds and create a new fund using insurance reserves and the bank's own reserves resources. Slide number 65, we will promote financial inclusion, and we will provide €25 billion in new lending for nonprofit entities.

Individuals unable to access credit through traditional financial channels and urban regeneration and vulnerable individuals. This will be a significant investment of our bank.

Slide number 66. As you can see, supporting culture remains key for us.

We are a leading player and we will remain a leading player, in particular, during represent a very important component of our cartera strategy, and we will are opening up a new merge and the center of excellence to promote photography and this will be part of the new galleries Italia also reinforcing our Milan exhibition space, Venetia and opening in Naples. Slide 67.

In this slide, you can have the details of our commitment to innovation, launching about 800 new projects during the business plan. Slide 68.

We are committed to net 0 and a member of all net 0 alliances. But on top of this, we have already reduced our own emissions by 60% since 2008, and we are committed to net 0 by 2030.

We commit to restoring natural capital with more than 100 million trees planted, and we have a strong focus on biodiversity. Slide number 69 very important.

We are one of the few -- very few banks targeting a significant reduction from high emitting sector, and we set these targets just 3 months after joining the next 0 banking alliance, demonstrating our strong focus on climate. Slide 70.

We will massively support the green transition with close to €90 billion in new lending during the plan. Slide 71.

By the end of this year, we will introduce a unique proprietary ESG scoring methodology based on a quantitative approach that will be fully integrated into the credit risk framework. As you can see on the next page, we also target a significant increase in ESG product penetration in asset management and insurance.

Then we can move to people. Slide 74.

This is -- and you know people are our most valuable asset, and we will invest heavily in their development. We will scale up the next wave working program to offer maximum flexibility and improve well-being 1/3 of working days will be worked remotely by our people who are not in the branches.

And we will focus on dedicated initiatives to promote diversity and inclusion with women representing 50% of new appointment of senior roles. Slide 75.

We will create the leading education player in Italy and increased training hours to €50 million, leveraging on innovative learning infrastructure, boosting new skills. So final remarks.

Slide 77. To sum up, our strategy for the next 4 years is based on the 4 pillars that I mentioned.

All pillar enabled by our people. So 0 NPL bank, we will be at 0 NPL bank.

We will realize structural or cost reduction, and we have been very conservative in setting the target. Growth in revenues driven by commission and insurance income, assuming flat interest rate.

So this will bring for sure, extra revenues during the period plan. Then a strong ESG and climate commitment.

Our plan translates into a net income of €60.5 billion. Slide 78.

In the business plan horizon, we will return more than €22 billion to shareholders, mainly through cash dividend. Cash dividend will grow year-by-year and then additional distribution will be evaluated starting from 2023.

Slide 79. In total, will deliver more than €520 billion to our stakeholders.

Slide number 80. We covered a lot of ground this morning, and thank you for your passion.

The strategy I outlined today is about taking the unique ISP model to the next level. I think it was very important to go into the details so that you can see clearly what makes us unique and how we will execute this strategy.

This is an industrial plan and not a financial plan. Year after year, we've demonstrated that we know how to deliver our objectives even when facing difficult global challenges with a number of contingency plan already prepared.

Our planning is prior execution is disciplined. This is what makes us a delivery machine, and we will remain a delivery machine.

At the core of this strategy is value creation and distribution guided by a strong sense of purpose to benefit all our stakeholders and society more broadly. Now I'm ready to take your questions, and we can enter into the question-and-answer session.

It's Antonio from Morgan Stanley. I actually have 3 questions.

One is a clarification, please. One on distribution, one on M&A and lastly, on the implications from rates.

So on my -- based on what you presented on my count, you can make €23 billion of total earnings between 2022 and 2025. And as you said, that's excluding the benefits coming from rates.

Are you committed to pay above €17.7 billion between dividends and buybacks if I look at the same time horizon, so starting from 22 to 25. That will be the €22 billion minus the portion that relates to last year.

If I've done things right, at least correct me if it's wrong. That's implying about 77% payout, which is good, but it's not too dissimilar from your original dividend policy, and it implies not much buybacks left besides what you've already announced.

Now either you've been extremely conservative or I'm striving to reconcile this. And how should we think about it, is my question.

How should we think about buybacks beyond what you already announced? My second question related to the first point on the capital.

It's clear you have access you've proven over the years to be able to pursue M&A opportunities in this kind of available. So I have to ask you what is your stance on M&A?

We've seen you've been growing via small bolt-ons outside of Italy. How do you view the pros and cons between transformational M&A deals compared to small bolt-on acquisitions.

And lastly, very simply on the -- how do you prepare a bank like Intesa to an increasing interest rate environment. You've guided for a €1 billion increase in NII for a 50 bps hike.

I know you don't include it in your estimates, but how should we think about the possible impact deriving from higher rates on other P&L line items, especially with a focus on feed. Thank you.

So I will try to give a short answer in order to allow other people to make questions. The 70% payout ratio is, in my view, the highest payout ratio in Europe within the banking sector.

I think that this is the right level, you can consider this as obviously a minimum. We have been really conservative as in all the portion of this business plan.

My expectation is that through the increase of net income, we will pay more -- much more than what we have considered in terms of cash dividends. But I think that it is safe to stay as the leader in terms of payout ratio but not increasing the payout ratio.

For sure, our expectation is to be in a position to increase net income during the next year and also exceeding the level that we have considered in the business plan. Looking at M&A, we are not considering any kind of M&A and excess capital will not be used in the next years to make M&A deal.

As -- when I described our approach on new digital bank on the value of branches of -- in my view, there's no value in making an acquisition of a bank that has a significant number of branches. The business model is mainly devoted to Wealth Management & Protection and Wealth Management & Protection and especially Wealth Management as a multiple in terms of price to book that are not in a condition to be ready to create value for our shareholders.

Then you have to add also a point. This is a conservative plan, but this is an industrial plan.

So the must remain committed to deliver the plan and all the organization has to be committed to deliver the organization because I'm really convinced that the revenue pool, the cost reduction that are embedded in this plan and the cost of risk embedded can be really exceeded only if I give all my attention and all my people give attention to deliver results. That is what I want to do.

And it is usual of Intesa Sanpaolo to overdeliver the target and they have a significant part of contingency plans that can allow us to perform in the best way. Looking at interest rate, there's a mathematical impact.

And also if you look at the history of the figures of Intesa Sanpaolo, the amount of markdown that we are losing due to the negative interest rate is absolutely massive quarter-by-quarter, the increase in terms of deposits and the reduction of Euribor has created condition to have a net interest income very low. We think that there could be -- in case of the increase of 50 basis points, we will not have significant impact on commissions on our other part of the economic figures of Intesa Sanpaolo.

In case of increase of 100 basis points, there could be some probably some reduction in terms of commissions because there could be probably some impact on the spread BTP wound depending on the kind of attitude on -- from the ECB. But again, it's something that in physiological trend cannot create any kind of threats to our figures.

So in my perception, we have only upside coming from an increasing interest rate.

So first of all, let me congratulate on the new plan that I think is very well structured, also a bit conservative maybe. And the share buyback, that is the first time you execute, I think this year is particularly enticing for an investor.

Get into my 2 questions. So the first one is, I mean, you assume minus 0.5% your Euribor stable in the plan.

But to be honest, this seems to be quite unrealistic. The market is now pricing Euribor 100 bps higher than today in the next 2 years, not in the next 4 that you have on the plan.

So getting to our €6.5 billion, can you help us to understand what the €6.5 billion will be if we have 100 bps higher Euribor than today, which again is something that the market is expecting in the next 2 years and the next 4. And the other point is, I think it may sense for me to see a negative cost evolution cost going down.

because you took a lot of integration charges after the UBI deal and also this year. But still the market has some concerns about the ability of banks to deliver on cost that is due to inflation.

So my question to you is what are -- do you have any contingency plan? So and so it can be very, very sure that the target that you have of course is the target that you're going to achieve.

So thank you, Alberto. If we look at the figures in terms of net income, our expectation is that in case of an increase of 100 basis points in terms of interest rate and having an impact on GDP that could be not significantly lower than what we have defined in our business plan assumption, we can exceed €8 billion of net income.

Looking at the evolution or the cost evolution -- I'm talking about 2025, obviously. Looking at the cost evolution, we have been really conservative especially in the definition of that portion of cost that has been the key part of success of Intesa Sanpaolo in the last year.

So the combination of exit of people on voluntary basis, reduction of branches, reduction of spaces and the ability not only to have a reduction of costs related to personnel costs, but also the ability to reduce administrative expenses related to this significant part portion of people leaving the organization. In the plan, we have not considered the dynamics that we had in the past for a conservative approach, but we have really significant possibility to exceed the targets starting from 2023 through this combination between exit people, reduction of branches and then reduction of administrative expenses and a reduction of space so IT cost and all other costs that are related.

These are something that can be considered as reserves. So if you want figures, we think to have a contingency plan minimum for €500 million, but this can be easily exceeded during period of the plan.

So just to reinforce the fact that we decided to create a plan that can have significant room to be exceeded in all the different items that we propose to the market.

My first question is on the buyback. If you could explain to us why we decided to pursue the buyback as opposed to an extra dividend when the stock is a onetime tangible book value valuation.

And the second is on some details on the 2025 targets. If you could give us the assumed NII impact from NPL sales, is it correct to assume that you are assuming the trading line to be in line with 2021 levels and what do you expect systemic charges to go from here into 2025?

These are not 2 questions. These are a number of questions within 2 questions, but I will answer these different items.

So the extra dividend, we decided to use an instrument that we have never used because we think that the market can consider a mix between -- if you look at the history of Intesa Sanpaolo in the future Intesa Sanpaolo, we can have more or less €3 billion cash dividends embedded. If you look at €3.4 billion of buyback is really a limited amount in comparison to the total cash dividend that we will pay.

The price to book is something that, from a financial point of view, could be price to tangible price to book, our price to book, our book is a real book. So we have not an amount of goodwill that is zero valuation.

So price to book for us is not price to tangible. We think to have enough room also looking to price to book.

But I think that as mix of instruments that can be -- this can be considered an instrument that can accelerate the perception of the market of Intesa Sanpaolo as a company that can use also different instruments. Looking at the target 2025, in terms of net interest income, we will have a reduction of nonperforming loans, that's for sure, because the total amount of reduction will bring us to have a reduction in the range between €100 million and €200 million.

My expectation is that this could be €100 million, but we will see at the end of the plan. But at the same time, in terms of volumes, we will have more the ability to compensate volumes of loans and portfolio, financial portfolio, we will have more the ability to come more than compensate this reduction in net interest income.

And in any case, the reduction in terms of provision is so important that if you look at the real -- what is real in this situation. So net interest income, less provisions, we will have a win-win proposition.

Looking at trading income -- more or less, we will remain on the same level of 2021 during the period of the plan, then depending on market condition, net interest income, attitudes of people within trading. The target for them is revenues, so not trading income but could be likely that this could remain.

And looking at the systemic charges in the last year, we will not have the deposit guarantee scheme charges. This is our expectation.

I just have 2 quick number questions. First of all, I just wanted to check your real number in '25, which is €369 billion.

So this seems to suggest you're growing quite a bit in terms of organic I'm just trying to understand because your plan is mainly fees and commission growth. So why is the organic order rate coming from?

And also how much of the regulatory impact does that actually include I assume this is excluding Basel IV, but it must include also the 60 basis points regulatory impacts, which I assume is within the guideline or is it anything else? So just some clarification around what's in that number if there is any mitigation or not?

And my second question is on your cost of risk target of around 40 basis points basis points. It doesn't seem to be quite consistent with the large NPL deleveraging that you have done and the 0 NPL policy.

So I would have expected a lower run rate. So if you could just elaborate on that.

So on the first question, if I understood correctly, then otherwise, please ask me another question on this point. The risk-weighted asset figures that we have in our presentation are already including the Basel IV impact -- and so including the 55 basis points impact related to Basel IV.

So without these figures, the number of risk-weighted assets could be lower. And there is no mitigation in terms of usage of DTA that will be something that, for sure, we will realize between 26 and 29 in an amount that will more than cover this spike in risk-weighted assets.

Our expectation is to have a very good capital position also in 2025 with a significant amount exceeding the target -- the minimum target that we decided to have also on Basel IV. Looking at cost of risk, the run rate of cost of risk is 30 basis points, not 40 basis points.

We decided to have 40 basis points because we decide also to maintain a buffer in case of need to make further disposal during the business plan in order to maintain a level of stock on nonperforming loans that could be below €5 billion and a net NPL ratio below 1%.

Well, you almost answered all my questions already. Just a little bit of a color on the way that we should think about further shareholders' remuneration in the future.

Because my understanding is that the plan is extremely conservative when it comes to loan loss provision. You have a number of contingency plans as well.

Capital could be better. So the decision should we assume that every year, based on what is in excess of 12, you will make a decision in the future.

And then on the back of this, I just wonder the spacing or the regulatory headwinds over the plan. So how much is it per year?

And whether the optimization of risk with the assets that would have any impact on revenues?

Okay. Looking at the different impact, the part related to regulatory could be concentrated in 2020 to with a minimum portion in 2023.

Optimization will continue, and we think that we can exceed what we have considered in the figures that we decided to share with the analysts and with investors. In terms of remuneration, this is a very important point.

And I understand that it is a key part of the evaluation of -- in the short term of our plan. But I want just to remember you that we decided to prepare an industrial plan.

So sorry to put emphasis on this point. You know that I'm a lover of paying dividends.

So I'm probably the CEO that did paid the most important part of dividend in the story of Intesa Sanpaolo and also probably in the European banking landscape. I think that this is a clear demonstration to the investors that as soon as we are able to deliver net income, have a strong capital position and the low risk profile, we can give significant dividends to the shareholders.

But the most important part of the story when you prepare a business plan is the industrial part of the story. So to create something that can prepare the bank for the next 10 years.

So we work on a number of actions, creating something that could be really a starting point for the future, so the zero NPL Bank, the new digital bank and the hedging to the fintech threats that we can have for the future, transforming into an opportunity, significant cost reduction, significant reduction of cost of risk. Then we decided to make an exercise that is the valuation of excess capital year-by-year.

I think that this is serious. I can give you figures, Jack, it could be dream.

It could be something that I cannot commit because in 2023, I can tell you the conditions are different. This is not in a position to be approved by the ECB, a lot of notes having caveats in a presentation.

I prefer to say what I am sure to deliver and taking commitment of what they can deliver. The cash dividend payout, increasing the amount in absolute terms of dividend, 70% is already the best in class.

And so there's no need to increase these level of payout, then making the analysis of excess capital, looking at 2022, we decided that it could be an excess capital that could be -- that we can give back to shareholders in an amount of €3.4 billion, maintaining significant reserve to making valuation in the future and ready to make approach without taking commitment. So I don't want to take commitment and bring you to make investments in Intesa Sanpaolo or something that is only a piece of paper commitment.

So that's not the style Intesa Sanpaolo, we used to be very serious in our approach. We deliver on our promises and our promise is really something that we want to maintain.

So if you want a dream, I can allow you to dream significant excess capital. The reality is that we have excess capital, and we will increase excess capital during the business plan, but this will bring us in a very positive situation to evaluate year-by-year what we can give our shareholder in access to the cash dividend payout.

Very clear. Sticking with the optimization, revenue neutral?

Or just...

Could be neutral because the majority is related to collateral guarantee and the schemes of the cure of risk-weighted assets. So should be substantially neutral.

And if there could be €50 million reduction during the period of the plan is already embedded in the figures .

Two questions from me. One is on the cost of risk.

Can you give us some indication of what is your default rate expectation? And if the target that you discussed like your 30 basis points underlying is excluding any impact from macro provisional reversal.

And the second is -- plan is clearly it's super clear. The strategy is super clear.

But I have a question on organic versus potential leveraging more on the wealth management operation. You have 100% of your factory.

They're very successful, very profitable. Why do you consider also potential leverage of this into a partnership similar to what other European players are doing in terms of as an option for additional growth.

Yes, Azzurra. The -- on cost of risk, the 30 basis points are, in my view, the run rate related to the net inflows that we will have during the business plan, the expectation is to have net inflows that can be higher than 2020 2021, but in line with 2020.

So that's the expectation that we have so not significant amount of new inflows. This will allow us to maintain due to the fact that on the stock side, we will not have to place further significant provision to maintain a 30 basis points.

But if you want to maintain and to be sure to maintain a net NPL ratio that could be below 1% and the stock that could be in the range of €5 billion net have considered it as a conservative so something like a backup within the cost of risk and other 10 basis points. There are no significant reversal during the business plan of generic reserve.

And in any case, our generic reserve remain and we remain significant also during the period of the plan. Looking at Wealth Management, you know that in the previous plan, we have considered the possibility to make agreement without the player acquisition, especially in assets under management, but also private banking is an area that could be theoretically of interest.

We think that as I told in the previous answer, the price embedded in these potential targets are not in a position to allow us to create value for our shareholders. And at the same time, the amount of conversion of -- from one side in the deposits and assets under administration side.

And in the other part of the store insurance, the increase in penetration request and need to have the maximum effort from the CEO, but also from the people that are in charge of this division. And I don't want to enter in something that can create not to be concentrating in delivering results of the plan because I think that this increase in commission and insurance is really achievable maintaining 100% of our factory, and this will be a part of the key pillar of the story.

My first question was just a broader one around the cost plan. If you look at the cost reduction number, I guess, it's a relatively smaller part of the 2025 profit targets.

But when you look at the material that you've -- and the plans that you've laid out today, I mean, it's a very -- it looks like a very material strategic undertaking. So my question is just in terms of the creation of the digital bank and the investment measures that you have in place.

Do you see that as kind of necessary investment simply to sort of stand still as it were from a competitive point of view? Or do you see this plan really putting further distance between yourself and other banks or indeed fintechs in terms of the competitive landscape.

I guess my question is, are you seeing this longer term as more of a revenue opportunity rather than simply just a cost story that's embedded in the current targets? My second question is just a quick follow-up on the Basel IV guidance.

I just wanted to check, does that include any assumed additional benefit from the Danish compromise in terms of the risk weightings attached to the insurance equity? Or is that something that could be an additional improvement?

Yes. In Basel IV, we are considering a benefit from Danish compromise.

So these figures are net of the benefit of Danish compromise. So 55 basis points and the risk-weighted assets that you have in the figures in which we gave all the balance sheet figures is including 55 basis points.

So net of the benefit coming from the Danish compromise. Looking at the cost reduction, the cost reduction is really something that -- so we decided to put the digital bank in the cost reduction because the first immediate results of working on a clear segregation of 4 million clients that are not using the branches is that you can reduce branches.

And at the same time, having 9,200 people leaving the organization, you can put together the exit of people, the reduction of branches and having a clear reduction of cost base. Then at the same time, you will have investments in the digital bank, but also the possibility to use this portion of the system that will be created, working with to machine as part of the future system of Intesa Sanpaolo, the increase in technology will allow us to reduce the cost base of IT that today are devoted to this portion of IT system.

So the project is included in the cost part of the story because the immediate impact is the cost. But what we want to do is also to use as a lever in order to increase revenues because through this digital bank and the reinforcement of the digital branches, we can create also occasion to have cross-selling with these clients that in the next 10 years can be the future of the bank, I told you that the age is below 40 years.

Also this could be really something that for the next years, 20 years. So Intesa Sanpaolo could be an important part of the story.

And also revenues, we think that we can have a significant increase. We have considered the €100 million increase.

But in reality, our expectation could be much higher if we are able to make the right job with these clients.

I have just 2 questions. One is on the tax rate.

It looks to be a tax rate at around 30% in 2025. I was wondering if it's a conservative assumption or not?

And on capital, taking into account digitalization, I would suppose higher capital generation from 2025 onwards. And I was wondering your target in terms of common equity Tier 1 at 12% minimum, what does it mean?

I understood the 70% payout. But according to my estimate, you should end up with a common equity, the run above 13%, something like that.

So you could have more than €3 billion additional capital that you could use to remunerate the shareholders. So I was wondering, are you going to use that capital to support future growth from 2025 onwards or there could be an option in which you will pay back to shareholders in the current business plan?

So thank you for your question. In terms of tax rate, it is 30%.

And so we have been conservative as in all the areas of the plan. So in our view, is a conservative figures for the tax rate during the period of the plan.

Capital. So let me put in this way.

So 12%, so above 12% is related to a buffer that we think to have with this capital above 12% considering the risk profile of the group. Risk profile that now is much better than 1 year ago.

So we have a substantial excess capital that is much higher than 1 year ago or 2 years ago. And it is substantial point of view, not from a numerical point of view, but a substantial point of view, much higher than all the competitors in the market because there will be no other players with such a minimum level of risk profile like Intesa Sanpaolo.

Then different story is the evolution of the common equity Tier 1 ratio during the period of the plan, considering 70% payout ratio and your estimates of being above 13% Basel IV in 2015 -- in 2025, sorry, is completely right. So it is right that we are in a position to exceed the 13% considering also the impact of Basel IV in 2025.

So we remain with an amount that is for sure above the 12% or the minimum 12% capital ratio. So that's part of the story of making evaluation year-by-year.

So again, I'm not taking a commitment of future deployment of capital, but figures are the one that you described.

A couple of questions for me. The first one is if you can remind us which is the amount of annualized gains in your securities portfolio?

And a sensitivity of their change to increase in interest rates? And the second one is just a clarification, if you can confirm that the shares occurred through buyback will be canceled.

Sorry, I didn't understand the second question. If you could repeat.

Yes. Sorry, if you can confirm that the shares are higher than through buyback will be canceled?

Yes, yes, will be canceled. Sorry, I didn't understood them.

I didn't understand. So they will be canceled for sure.

So the unrealized capital gains. So we have a significant amount of realized capital gain in our portfolio.

I don't want to give figures because I want to check in the next weeks what could be the dynamics of the spread BTP bond. But for sure, we have a significant amount of annualized capital gain, both in the bank sector and also in the insurance division.

This will be part of actions that we are doing also in the first part of the year. So working on capital gain.

You know that we decided to reduce the speed of trading during the last quarter of 2021. So in the beginning of 2022, if condition we remain the same.

We can have a good contribution from this line to the results of the group. But I don't want to give figures on the potential because I want to check the dynamics.

When we will have the conference call of the first quarter, I would be in a position, and we'll be clear that the situation looking at DCP and the dynamic of the spread BTP bond that will give you all the figures.

So 2 questions. One on NII, I think when the concern from investors that NII continues to decline sequentially.

So can you give guidance for 2022? And when do you expect to see the NII growing again?

And second, on fees, a big part of the story. But again, I think some concern from investors is around the amount of upfront fees and performance fees in the numbers.

I understood from the plan that the plan did not assume any performance fees. If you could confirm that and if you could talk about the development of upfront fees that you expect in the plan.

Okay. So if we look at our figures, net interest income in 2022, our expectation is if interest rate with even at minus 50 basis points in terms of Euribor.

Our expectation is to have flat net interest income. This will be the result of a potential reduction of the TLTRO contribution, then will depend on clearing what would be the real dynamic.

This would be more than compensated by the increase in our portfolio, financial portfolio some contribution from increasing volumes and then a reduction of cost of funding due to the fact that we will have €60 billion of medium-term bonds expiring during 2022, and we will replace only €6 billion of this wholesale funding. This will bring -- then there is a portion of this funding that is related to UBI.

And this will bring reduction in terms of cost of funding. So net-net, this can create conditions to have a flat net interest income.

Obviously, we will have a reduction, but I've already said from the nonperforming loans reduction that would bring negative, but we will compensate this in the action of volumes and this cost of fund -- the medium-term cost of funding. Looking at fees, during the business plan, we had a forecast of significant reduction of upfront fees.

And in terms of performance fee, we will have another significant reduction of performance fees would be not 0 performance fees in the plan. That will be related to performance during the period of the plan, but the contribution will be reduced in a significant way.

First one is if you can expand a little bit on that comment you just made on the contribution from the financial portfolio to NII. I mean how you approach to build it up a treasury book from here, given yields are going up, et cetera, and how relevant that is within the net interest income in the plan.

Second question is in terms of the fee exposure to, say, 10% market fall and what is the natural contingency plan if market to stabilize at lower levels?

So on financial portfolios, we reduced in a significant way the portfolio during the last quarter of 2021. In 2021, the contribution of the Italian sovereign bonds was 40%.

So below the 50% level that we consider as appropriate for a bank like in Sanpaolo. And in terms of dimension, we reduced the dimension of the portfolio.

We are starting an increase of dimension in 2022 will not be such a significant increase. But we think that we can have a positive contribution in the coming from the financial portfolio in 2020 and maintaining more or less the same level during the business plan.

Looking at fees, the correlation with market dynamics. So for sure, we will have a portion that is property and casualties that we not have correlation with the dynamics of the market, insurance business will increase during the period of the plan.

The other portion, considering that the majority of the commission will come from the consulting services that we are doing for our clients, I think that we can continue to have a good performance in terms of fee income generation. Then we will have to see the market, obviously, in case of significant reduction of the market.

We can have a stop and go dynamics in terms of fee and commission. But this is not what we expect during the period of the plan.

I've got 2 questions. One is, if I look at the divisional targets, it looks like in private banking, you expect a significant revenues relative to the historical performance over the last couple of years of the business.

What is driving the optimism there? And could you also elaborate on potential further diversification into international AUMs there.

The second question would be on the product offer for affect clients that you're launching in the Banca dei Territori. Are you intending to offer only Intesa products?

Or would you also consider offering third-party products as you do, to some extent, in the private banking operation.

Sorry, are you referring to the exclusive segments in Banca dei Territori?

Yes, exactly.

Okay. Sorry.

So looking at the divisional targets, the Private Banking divisions will accelerate. We have a plan in which they are performing very well, and they can accelerate increasing the new money that we can receive from other banks from clients that are already clients of private banking divisions and they have money also placed with other banks in Italy.

This happened during 2020, 2021, we think that this can continue also during the period of the business plan, the approach of the division is to deliver results. We have the ability to attract also new financial advisers.

So we think that the private bank inhibition can deliver the target that we have considered in the plan. Looking at the international portion of the portfolio, we can continue the diversification and we can continue to make selective acquisition or the hiring of team of private banking coming from other entities.

Switzerland is the place in which we can have some opportunities reinforcing the operation that we have in that country. Looking at the exclusive segment that would be very important for us and we will make an investment, a significant investments.

The majority of the product would be the product of Intesa Sanpaolo, so region capital and Intesa Sanpaolo Vita products. But if clients want to have also third-party products we will give a possibility also to have a third-party product.

But typically, in this segment, the relationship manager prefer to work on our own products. It is clear that if working with the exclusive, we will really realize that these clients are private banking clients, we will enter into a third-party possibility to make acquisition of products.

The first one is on your SAP requirements that increased this year. Does this imply a lack of provisions.

If so, would this be addressed by your serves when you're saying you expect the cost to risk at 40 basis points, still higher than the gross cycle rate? And the second one is mainly a clarification.

I want to make sure that I understand what's included in your ROCE target in relation to the NII outlook. So you mentioned a negative impact of €100 million from deleveraging, if I'm correct.

You could see an additional negative impact of close to €200 million from current deal conditions expiring in the middle of this year. And you still have some investment risk for maturing securities portfolio.

But you anticipate a reduction in wholesale funding costs. Is all of this embedded in your ROCE guidance?

I'm sorry, can I ask you to repeat the first question? Because I'm not sure to have understood the first question.

So I can be in a position to give you the right answer.

Yes, of course your requirement increased this year. I was just -- I am wondering if this implies a lack of provisioning, insufficient provisioning.

Yes, yes, yes, okay. Okay.

Looking at the EP increase is an increase related to the calendar provisioning. And we decided to maintain the business plan reduction.

You know that the figures of the SREP are related to the figure of the last year. So not looking at the plan that we are delivering.

So in the plan, we have already embedded the disposal of nonperforming loans that created shortage in terms of theoretical shortage because it is only conventional one in terms of calendar provisions. So our expectation is that in the next year or the next 2 years, this can be reduced to 0 this extra charge, but we will reduce through actions.

So through disposal of nonperforming loans, just to be sure that from managerial point of view, not only from a conventional point of view, we will have 0 risk on nonperforming loans. Looking at net interest income, I can confirm with you that we will have negative from nonperforming loans disposal.

We will have a negative from TLTRO then phasing -- looking at the possible tier, but negative will have positive from cost of funding. We will have positive from volume loans, we will have positive from volume in terms of portfolio of financial instruments, and that's all.

If I may follow-up on that. Your you're facing maturities in the securities portfolio, the reinvestment that I was mentioning is if your reinvestment -- reinvesting at lower yields, would you not expect then to see a decrease in the contribution of that portfolio on NII.

No, it is all in asset swaps. So we will not have any kind of reduction in terms of contribution.

My 2 questions are on deferred tax assets and on interim dividends. On interim dividends for 2022, you have given us the amount, about €1.7 billion.

That is a little bit shy of 60% of what you -- of the minimum you plan to pay for 2022 being 70% of €5 billion. How should we think about interim dividends beyond 2022?

Shall we use a 50% split between interim and final also for the other years? Or do you have something else in mind?

The second question is on off balance sheet deferred tax assets for lawsuits carried forward coming from UBI. Now that you have a business plan approved, you are in a position to reassess those, I suppose.

So I'm just wondering whether they are -- the write-up on balance sheet is included in the plan horizon. And more specifically, if it's included in the 2022 net income target?

Thank you. UBI DTA are not included in the business plan are off balance sheet, then we will evaluate if there could be opportunity to have a capital gain, but are not included in the plan and not included in the figure of net income.

Looking at the interim dividend, for the time being, it could be fair your consideration of 50%. Then we will make further analysis during 2022.

But for the time being, I consider fair your approach.

Yes. Very quick question.

I think that one of the margin of conservatism that you have put in the plant is also on the lending growth, especially in light of the 1% plus growth in the GDP. So you're basically assuming a small multiplier of the loan vis-a-vis the GDP.

Would you agree on this? And what could be the sensitivity to a better scenario?

Yes, we decided to have also in this area, a conservative approach. We think that the possibility of spend the loan book could be an option.

But at the same time, I have to tell you that I'm really in -- more in favor of an asset-light model than a model in which loans can increase in a significant way. So an increase between 1% and 3% could be something they consider absolutely in line with our business model, increase much higher than this will depend really by a very good performance in terms of NPL, in terms of GDP growth for the future in our country.

And we will see what will be the reality and the real opportunity in the next years.

Just a clarification on asset management business. Your target in 2025, €574 billion.

How much is this evolution made of net new money and how much market performance? And still on this, could you disclose your assumption in terms of switch from asset under custody into asset under management over the plan?

The majority of the increase is due to net inflow. So the majority is coming from a conversion not only of assets under custody, but also retail deposits into asset under management.

But the majority of the growth -- the real majority is related to net inflows.

So thank you very much for the question. I think that I tried to give you the real position of the bank on some items.

What I want just to reaffirm is that our plan is an industrial plan is a plan that is devoted to create the bank for the next 10 years. And I think that you have not only to consider a financial plan we are taking commitment as a management team, and I'm pretty sure that we will over deliver on our promises because the plan is really conservative.

So thank you very much and we will have the occasion of discuss the first results in May in the presentation of our first quarter results. Thank you very much.