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Edited Transcript of BMPS.MI earnings conference call or presentation 6-Nov-19 11:00am GMT

Q3 2019 Banca Monte dei Paschi di Siena SpA Earnings Call

Siena Nov 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Banca Monte dei Paschi di Siena SpA earnings conference call or presentation Wednesday, November 6, 2019 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Andrea Rovellini

Banca Monte dei Paschi di Siena S.p.A. - CFO & Senior Deputy General Manager

* Marco Morelli

Banca Monte dei Paschi di Siena S.p.A. - CEO, GM & Director

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Conference Call Participants

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* Antonio Reale

Morgan Stanley, Research Division - Equity Analyst

* Axel Jeremias Finsterbusch

JP Morgan Chase & Co, Research Division - Research Analyst

* Giovanni Razzoli

Equita SIM S.p.A., Research Division - Financial Analyst

* Hugo Moniz Marques Da Cruz

Keefe, Bruyette & Woods Limited, Research Division - Analyst

* Luigi Tramontana

Banca Akros S.p.A., Research Division - Analyst

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Presentation

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Operator [1]

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Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the MPS Third Quarter 2019 Results Presentation. (Operator Instructions)

At this time, I would like to turn the conference over to Mr. Marco Morelli, Chief Executive Officer and General Manager of MPS. Please go ahead, sir.

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Marco Morelli, Banca Monte dei Paschi di Siena S.p.A. - CEO, GM & Director [2]

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Good morning, everybody, and thanks for attending our Q3 results presentation. Quick introductory remark, we said at the beginning of the year that 2019 would have been a much tougher environmental context and a much bigger challenge for a bank like Monte Dei Paschi. Numbers, which will be presented witnesses the fact that in spite of all of this, thousands of employees of Monte Dei Paschi, fruitfully managed to steer the wheel throughout a more difficult and complex environment. Starting with the key takeaways of the last 3 months. Page 2 of the presentation. I think there are key -- there are 4 key pillars in our performance; point one, revenues are resilient, notwithstanding a slower trajectory in terms of the macro related to households, investment, SMEs, investment and interest rates forecast for the current year in 2020. And that adds on the fact that GDP forecast for Italy in 2019 and 2020 are, as you all know, much smaller in absolute terms than initially forecasted at the beginning of the current year. We will take you through the gist of our top line and the different options and initiatives, we actually put in place in order to cope with a deteriorated environment. Solid and less volatile capital ratios, and that goes hand-in-hand with the liquidity performance. I think, as we said many times during quarters' presentations. Our [poster] is to preserve capital and liquidity to make sure the bank can, on the one hand, recover from a commercial standpoint and improve the growth of its loan book and the stabilization of its commercial funding. But on the other hand, we need to make sure that every kind of initiatives we put in place are a pretty much function of making sure that capital and liquidity is well preserved. The other key factor in our performance and possibly, the confirmation of the fact that the trajectory we are heading towards is the very right one is our performance on the NPE reduction. This is not only well on track, but we confirm what we announced back in August, when we presented half-year numbers that we're going to shoot for gross percentage of nonperforming in the region of 12.5% year-end 2019 against a number, which, as you might recall, was 12.9% year-end, 2021 according to the restructuring plan given to us by DG Comp and the ECB. So very good results, very good numbers, very good behavior, very huge improvement on the credit side overall.

Page 3, you have the key numbers upper left side of the page, EUR 262 million of pre-provision profit. And by the way, before we get into the numbers, I would like to stress that our net profit is -- it's substantially by EUR 207 million of extraordinary items for the first 9 months related to the restructuring plan commitments. And the same applies for the net income of the quarters, which is EUR 94 million hit by EUR 36 million of nonoperating extraordinary items.

Cost of risk is 53 basis points and according to what we are seeing and the trajectory we had in the last 3 quarters, we confirm the guidance of 60, 65 bps area for the end of the year. Gross NPE ratio currently is currently stands at 14%. Target, as I mentioned, is slightly below 12.5% year-end '19. Core Tier 1 and total capital ratios, both transitional and fully loaded are higher than half-year now stands at 14.8% and 12.6%, respectively, for Core Tier 1 and 16.7% and 14.6% for the total capital. As I mentioned earlier, liquidity ratios are well above the requirement. And we kept on strengthening our capital balancing capacity in respect of the same period of last year and the beginning of the current year.

Page 4, a dive into the macro numbers of the key numbers of our balance sheet and top line of the P&L. The quarterly evolution of revenues and provision profit is pretty much in line with our expectations. And we do have a positive trend in wealth management. And for the first time -- and we will develop on that later. For the first time in a number of quarters, we inverted the trajectory and the signing of our commission line, which is now positive quarter-on-quarter and year-on-year. We did -- we had a reshuffle our govies portfolio, with a positive contribution to the P&L, and we continue the growth of our new mortgage flow whereas we have been more selective on the traditional corporate lending in order to preserve, as I mentioned earlier, a sort of good and stable risk profile and return -- adjusted return on capital employed. Current accounts and time deposits are, again, in line to our projections and in line to the numbers of the plan. At the same time, in spite of growing and consolidating direct funding. We are reducing the cost of commercial deposits and everything which is concerned to the traditional capital funding from the commercial standpoint.

Page 5, we are now in the live stage of the effort of strengthening one of the very key areas of success of the group Monte dei Paschi in terms of new products, new initiatives, new ideas. Page 5, you do have a picture of what we are currently doing vis-à-vis of our bancassurance business and partnership, mainly the partnership with AXA. We do believe this is a clear edge vis-à-vis of the market. We are rebranding and reskilling people in some of our key branches. With the idea of having a selected space, which is 100% devoted to everything which is related to the bancassurance business, same thing for coming back to the market with a very clear message in terms of things we would like to develop vis-à-vis of the core needs of our traditional client base. And numbers, again, do speak for themselves. We are growing our market share on everything which is related to the bancassurance business, both on life and on the P&C domain. This is going to be a key areas of investment for us going forward.

Page 6, a quick look at all the initiatives that we've been trying to implement not only to boost our top line, but also to make sure we do project a message in terms of innovation, which is not simply nice words, but pretty much something which is tangible. Officina MPS has now become a brand, and we will make it a sort of separate business unit focused on internal and external transformation. So in a way, a permanent start-up lab, which will allow us to sort of pick and choose ideas from entrepreneurs outside the domain of Monte dei Paschi, put them together with our people, in order to come up with not only ideas but practical initiatives that can be of help to the activity of our retail network. We did continues to grow according to the plan, both in terms of direct funding and new initiatives and also consolidating the pre-provision, and pretax operating profitability in line to the improvement of its business model. Page 7 is pretty much what happened in the last 3 months. As far as the NPE disposal reductions, we get to a gross NP numbers of EUR 14.5 billion gross, end of Q3, which is 13.9% if we do factor in the UTP disposals that we are currently finalizing for EUR 200 million overall. And the disposal of the bad loans of the portfolio related to our leasing business, which is an additional EUR 400 million. That would lead us to the 12.5% [area] numbers for year-end. This is a pretty oiled machine, which has been up and running now for 2 years. And to be very honest, when we started this exercise back at the beginning of 2017, in the midst of the negotiation of the restructuring plan with the European Commission. In the light of the fact that our starting base was 38% of gross NPE, i.e., close to EUR 40 billion in total, in a matter of slightly more than 2 years. I think the reduction, we managed to push through is possibly pretty much second to none in terms of absolute terms and numbers eventually achieved.

Page 8, a quick view on capital ratios and buffers over the 2019 SREP capital requirement. Here, you have the numbers also on a fully loaded basis, the improving trend is mainly due to the removal of a negative field for DTAs on part of redeemable goodwill improved for value reserves in our portfolio. And the RWA reduction related to the NPE disposal -- complete disposals completed in the quarter. We also continued to reduce our sensitivity to the portfolio in terms of credit spread, which is now down to EUR 1.7 million from 2.4 million per basis point we had back at the end of Q2 this year. I now pass to Andrea Rovellini, our CFO, for a breakdown into the key numbers of our P&L and balance sheet and then we're both available for questions.

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Andrea Rovellini, Banca Monte dei Paschi di Siena S.p.A. - CFO & Senior Deputy General Manager [3]

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Thank you, Marco. I will concentrate on a few slides, which explain a little bit of the main changes that took place in the

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I will start from the net interest income, Page 11. Here, we have to say that the level of the net interest income was impacted by the persisting strong ratio that we have on the asset margin, so the average commercial lending rate decreased by 8 basis points quarter-on-quarter. We can say that our conditions now are in line with the market trend. But the rates on the new mortgage is slow that decreased by 36 basis points quarter-on-quarter, are lower than the rates on loans going to maturity. This is something that will continue. We are decreasing this kind of gap quarter-on-quarter, but we could have some more pressure also for the next quarter coming from the differences within the interest rates of the loans that are expiring with the interest rates of the new loans.

So the average volumes decreased EUR 1.4 billion in the quarter but here, we have the impact on -- of the sale of Monte Dei Paschi Belgio and also the reduction of the disposal -- for the disposal of the nonperforming. The nonperforming now that represent another reduction in terms of contribution to the interest margin now represent only 8% of the total interest income, so less volume, less amount but better quality on this side. We have the cost of commercial funding almost stable quarter-on-quarter. And this is notwithstanding the increase in the commercial direct funding since the beginning of the year. We have EUR 3 billion more if we compare the results at the end of September with the beginning of this year.

Another negative effect is that was expected is linked to the increased cost on wholesale funding due to the bond that we issued in the quarter. I'm referring to the Tier 2 and the EUR 1 billion senior that we place restarting our presence on the institutional market. Now we have also to say that we are suffering for the liquidity position that has increased a lot in order to face the coming maturity around the GDP. This is something that makes our -- quite inefficient our investments, but we need this kind of liquidity in order -- and we prepare all the liquidity in order to be able to reimburse the GDB at the maturity that we will have in the first quarter next year.

Good trend, so for this quarter, we have the first positive sign in terms of a growth for the net fee and commission, Page 11 -- Page 12. The net fee and commission are impacted by the typical seasonality but if we compare the results with the same amount, the same period of the last year, representing a growth. This is the result of the asset under management product. So the trend of the new placement, trend that is continuing also a positive that is continuing also in the last days. And then we have the positive contribution from the bancassurance business. Now the fee that we received from this business represent around 15% of the total amount of the fees, and then the net commission and the fees. Here, we have the results of all the activities that we put in place in the past. I know that to increase the productivity of our network. And we can say that this trend can continue also in the next quarter.

Speaking about the financial revenues, so apart the contribution from AXA to the dividend line, that is positive because it's positive at the trend of the performance of the joint venture. I wish to highlight that the results from trading that include in the quarter, EUR 90 million coming from a tactical management of the govies portfolio. And this, thanks to the positive market condition. We reduced and optimized the overall portfolio, decreasing the amount of the OCI component, increasing a little of the amortizing cost component. This has a very positive impact on trading. And also, we can say, a very limited impact on the net interest income for the future. [Strict]raises and cost control discipline continues to produce good results. So costs are down by 5% if we compare with the second quarter, 2% if we compare with the same quarter last year. Here, we have the full effect of the exit, we complete in the first part of the year. And also the consolidation of Monte Dei Paschi Belgio. Regarding the retirement plans. I will remind that considering all the exit complete in the first half. We have 2,500 people less, that have already left the group starting from the beginning of the refactoring plan. Another progress considering the target of the refactoring plan is on the branch closing. At the beginning of October, we closed 84 branches, and now we have reached 97% of the target of 600 branches closed from the beginning of the refactoring plan here, together with the target that we had on the NPE ratio. We -- I can say that we are 2 years in advance on this activity.

So the cost of risk remained stable in the area of 50 basis points with asset quality indicator almost in line with the second quarter, but greatly improvement if we compare with the last year. So default rate, 1.5%, danger rate 11.3%. We can confirm the guidance of a cost of credit between 60 and 65 basis points for the full year, a slight reduction in terms of coverage, but it is linked to the disposal activity.

Moving to slide 17, nonoperating items and taxes. We have to consider the composition of the nonoperating items so the contribution to the deposit guarantee scheme, the fees on the EBITDA, minimal and limited additional shares for the provision for the diamond claims. And here, it is important to underline that in this quarter, we have no contribution from DTA reassessment. But contribute positively to the net profit in the last -- in the first and the second quarter this year. Here, as we could say, prudential measure, and we didn't take in account any kind of reassessment for the DTA coming from tax losses. And this in order to take more count the possible variability of the taxable income related to the potential introduction of ACE, so the ACE scheme, the help formed the economic growth, that at the moment, is included in the draft of Italy's 2020 budget. And also, we can have a pressure on the future in the next taxable income for the worsening of the macroeconomic scenario. So not any kind of help in terms of sustained number of the net profit coming from reassessments of DTA. Moving to the other 2 important things that we can underline.

Slide 21, we have the reason -- the main reason of the increase of our CET1 ratio, so the capital ratio, the removal of the negative filter on DTA. Weight for 30 basis points. Then we have moving in the price of the OCI reserves, other 20 basis points and then the trend of risk weight and the other effects, such as the ratio that jumped up the CET1 ratio at the level of 14.8%. That is a strong level that allows us also to consider fully loaded results well above the requirement that we have with the European Central Bank.

I think that the last focus could be on the Italian govies portfolio, Page 23. In the third quarter, we exceedingly managed the govies portfolio. The overall portfolio was reduced by EUR 1 billion, mainly in the OCI component for the sale of government bond and we consider that the positive market condition in order to complete that. So capital gain, good and also a reduction of the credit spread sensitivity. From EUR 2.4 million from 1 basis point change in the BTP bond spread that we had at the end of June to the current level of EUR 1.7 million. So 50% less than the same amount that we had 1 year before. And this is a reduction that is important because we are also reducing the potential volatility on the capital due to the BTP-Bund spread movement.

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Marco Morelli, Banca Monte dei Paschi di Siena S.p.A. - CEO, GM & Director [4]

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Before we move to questions, I would like to stress again one valid point. As I mentioned, back 2 years ago, we are possibly one of the very few institutions which needs to move ahead according to very stringent commitments and a limited room to maneuver in terms of the way we can grow our business altogether. And at the same time, we need to make sure there is a revamping of our commercial efforts. 2 years from the beginning of the so-called restructuring plan, i.e., mid-2017. I think we overperformed on everything, which was and which is in our full control, namely the NPE stock reduction, the cost of risk reduction and asset quality altogether. Managing the operational cost base on a downwards -- substantial downward trajectory. As Andrea said, reaching the target of branches reduction and FTE reduction, 2 years in advance.

As I said, back 2 years ago, the full recovery and stabilization of a bank like Monte dei Paschi, would have taken years. And I do confirm it's a long journey. There is more to come. But thanks to thousands of people. And to what each of them did in the last 2 years, my humble opinion is that we are pretty much on the right track vis-à-vis of what we did have, as a message from our shareholders and regulators 2 years ago. Our net profit of Q3 is actually higher than Q2 and Q1. And Andrea mentioned that in this very quarter, we did not had any impact on the DTA -- related to the DTA reassessment. So an additional confirmation that, overall, we are on the right track. We're now ready to take questions.

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Questions and Answers

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Operator [1]

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This is the Chorus Call conference operator. (Operator Instructions). The first question is from the English conference with Antonio Reale, Morgan Stanley. .

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Antonio Reale, Morgan Stanley, Research Division - Equity Analyst [2]

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I've got 2 questions, please. The first one is on NII, which was clearly weaker in the quarter. And I understand this is largely due to the higher funding costs, but likely also due to the lower interest income, a call on the NPLs as well as perhaps lower carrytrade from the bond portfolio rotation. Could you quantify the moving parts here? And also maybe (inaudible) levers you have to recover margins going forward. The second question, if I look at your planned targets, clearly, the rate environment is very different than we all initially expected. And this will likely result in you not being able to meet your operating profit target. Which if I understand correctly, will result in some automatic triggers to contain the cost base further as part of the agreement with the European Commission. Now at the same time, you're doing a very good job reducing the stock of NPLs and both costs and NPL require capital to be reduced. So my question here is how much capital can you allocate to fund a reduction in both? And what sort of reduction can we expect in the cost base and NPLs for next year.

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Marco Morelli, Banca Monte dei Paschi di Siena S.p.A. - CEO, GM & Director [3]

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It's Marco Morelli here. Before I pass to Andrea. I think we need to be -- as a general commentary on the 2 questions, you just raised, we need to be extra careful in the way we allocate our excess capital between reduction of nonperforming and continuing along the same track we actually posted in the last 2 years. And to what extent, on the other hand, we do grow our risk-weighted assets in terms of additional credit flows. Again, this is something which needs to be evaluated on a quarterly basis and you do recall what we did in the last 4 months of 2018 in terms of managing our RWA in order to preserve capital ratio. So we do -- the approach we use is pretty much a function of balancing the 2 needs, which not necessarily go hand-in-hand. Andrea?

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Andrea Rovellini, Banca Monte dei Paschi di Siena S.p.A. - CFO & Senior Deputy General Manager [4]

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For the net interest income. So we can say that the stable impact that we have on the net interest income in the quarter, negative, if we compare the situation with the previous quarter is the cost coming from the institutional funding. So we have EUR 10 million per quarter that will continue also in the future. And then we have also a stable reduction coming from the reduction of the NPE. We have also a temporary negative impact that comes from the excess of liquidity that we generate in this period in order to face the reimbursement of the GDP. This could be considering EUR 8 million to EUR 10 million per quarter. The trend -- so if we compare the results of the previous is negative, but this part of less margin will remain stable for the future, and we will have the expiring of the penalties on the excess of liquidity. It is important to underline that at the moment, the cost of general funding that we have is above the average that we have on the market. So at the moment, we have 15 basis points additional costs on the commercial funding that we pay. And this is more a question of mix. So we have more corporate funding rather than in consideration with the average of -- in consideration of the average of the market. We had important progress in this field in the first part of the refactoring plan. Because the difference was around 30 basis points at the beginning of the plan. Now we have this gap, I think that this is the area that we can compensate in the future, the reduction of the level of the interest rates on the asset side. And this reduction could be -- could go ahead together with our liquidity position and the fact that at the moment, we can restart issuing a bond on the market on the institutional or the institutional area.

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Operator [5]

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The next question is from Luigi Tramontana with Banca Akros.

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Luigi Tramontana, Banca Akros S.p.A., Research Division - Analyst [6]

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The first 1 is again on the risking and capital we have read many rumors in the press regarding negotiations ongoing between the Italian government and the European Commission on a final and complete derisking of Banca Monte dei Paschi. So what is your view on that? What is your contribution to the negotiations? Would be helpful to know your ideas on this topic. And related to that, what could be the DTAs that potentially could be used to improve your capital position and which could be the conditions to obtain this additional capital. Second question is on your funding strategy. I've seen that on Page 30 you put some elements regarding this one. What are your thoughts regarding the TLTRO III? Do you think to refund the TLTRO 2? And what will be the benefit you estimate on your NII coming from deterring of the official rates?

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Marco Morelli, Banca Monte dei Paschi di Siena S.p.A. - CEO, GM & Director [7]

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Marco Morelli. I'll tackle the first one and then I'll pass to Adrea. On the NPE reduction and the potential deal on a sort of massive, massive route of reduction let me say the following. Number one, we have a target, which was given to us by the European Commission and ECB mid-2017 of 12.9% year-end 2021. So in principle, we could stick to this kind of number and sale peacefully until the end of 2021 on the NPE reduction side. However, as we just said, we are getting to 12.5% year-end 2019. So again, in principle, we actually reached that very target 2 years in advance. Now there is a sort of very clear message by our regulators that in principle, Italian banks, Monte Dei Paschi is one of them, should try to get to something which is well below 10% in terms of gross NPE numbers. As we speak, we are slightly above peers average, including banks, which has a similar business model to ours. And as I said, in a number of conference calls, our aim is to try to speed up the process of reduction, irrespective of the formal target we were given 2 years ago. There is a link in terms of what we can do in a room, we have to play with our capital buffers. And this is why we started a few months ago, a sort of a deep dive into ways, which are not the ongoing operational routes that we have taken, which is having very nice results, alternative ways to go for a massive exercise. Going through a massive exercise clearly has a different implication, i.e., it's not a pure operational, financial, industrial exercise, which can be performed by the bank on its own. For the very reason that we do have a plan which has been approved by the European commission and commitments were, in formal terms, made and agreed upon by the treasury. This is why the discussion on a potential transaction coming to your question, and I apologize for the slightly long introduction, the discussion is currently held between comp and the Italian treasury. The view of the bank is very clear, and we did express that many times. The sooner, the bank manages to show that it gets back in line to peers and to a certain extent, to the sort of more actuation of the regulators, the better it is for the bank and for its shareholders altogether. And that is basically it. As I said, this is something which goes slightly beyond our own control. In terms of feasibility of something which is outside the ordinary course of business. Adrea?

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Andrea Rovellini, Banca Monte dei Paschi di Siena S.p.A. - CFO & Senior Deputy General Manager [8]

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Yes. TLTRO 3. So the net lending to be generated in the period from April '19 and March '21 in order to benefit from the maximum rate reduction on TLTRO 3 is estimated around EUR 1.3 billion. So it's something that is reachable for our company. And the benefit could be linked with the assets that we decide in the future to do to this kind of support we are estimating now to realize the first assets in the second operation that will take place in December. And this is something that, in any case, can also make have impact on the funding plan in terms of less use of secured instruments such as a covered bond or nonpayment repost. So we will have a positive effect but it depends on the total amount, we decided to receive from this kind of support.

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Operator [9]

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The next question is from Giovanni Razzoli with Equita.

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Giovanni Razzoli, Equita SIM S.p.A., Research Division - Financial Analyst [10]

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A couple of questions on my side. The first one is if Andrea can please clarify because, I didn't get the comment properly. You said that you have a couple of actions that should reduce the pressure on NII on the funding side. Is this correct? Your comment? And then related to this, you have reduced the BTP portfolio booking again, EUR 90 million, but on the same time, you do expect no major negative contribution on the NII. So I was wondering whether you can help me to understand the different moving parts here because I would have expected that the capital gain you booked on the BTPs reflect a quite significant contribution in terms of coupon to the NII. The second question, you have been very clear in committing to a 50, 55 basis point cost of risk on the full year 2019, can we assume more or less the same level or a slightly higher level for 2020, consistent with the slight deterioration of the macro environment. And the third question, is it correct to assume that in the first half 2020, there will be a risk-weighted asset inflation, you've already discussed in the previous conference call and if so, is the 3 -- around the EUR 3 billion increase confirmed. And the very last question. So it was this is my mistake, can you share with us when the -- and if the JV with AXA on the insurance business expire?

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Andrea Rovellini, Banca Monte dei Paschi di Siena S.p.A. - CFO & Senior Deputy General Manager [11]

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We can start from the trend of the net interest income linked to the disposal of the govies. If we consider the level of the interest income net, together with the disposal and the slight amount of bonds that we acquired, we are speaking about between EUR 10 million and EUR 15 million per year less in terms of net interest income. So we can say, negligible in terms of trend of the net income for the future. The -- I can reconfirm the fact that, in any case, the possible sustain -- a sustainable action in order to support the net interest margin can come from the reduction of the cost of funding on the commercial side, and this is something that we will take in consideration in the planning for the next year. Considering -- so the expiring of the joint venture with AXA, it is a 10-year agreement that was renewed 2 years ago. So we have 10 years and that will expire in 2027 and -- okay, there is a question before on TLTRO 3, we can say that, yes, we have the plan to use this facility within the upper -- the first part of this facility, starting from the second window that will took -- take place in December. I don't know if there are some other areas we didn't cover. Giovanni?

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Giovanni Razzoli, Equita SIM S.p.A., Research Division - Financial Analyst [12]

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Yes ...

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Andrea Rovellini, Banca Monte dei Paschi di Siena S.p.A. - CFO & Senior Deputy General Manager [13]

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If you -- excuse me, the risk-weighted -- risk-weighted assets inflection. Yes, we can confirm the fact that the risk-weighted assets could increase next year. For the updating of the internal models. And at the moment, we are estimating around EUR 4 billion more of risk-weighted assets. And this is the estimate that we considering with the level of our allowance at the end of next year, but now we have to consider also a possible modification of our loan book, but this is the amount that we will have to face in terms of capital reduction for the next year.

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Operator [14]

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The next question is from Axel Fins with JP Morgan.

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Axel Jeremias Finsterbusch, JP Morgan Chase & Co, Research Division - Research Analyst [15]

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So it's related to the NPL transfer that is being speculated in the press. You just mentioned that there is ongoing talks between the treasury and the DG Comp, is there any sort of timing for the finalization of these discussions that you could provide? How long is this going to take? That's my question.

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Marco Morelli, Banca Monte dei Paschi di Siena S.p.A. - CEO, GM & Director [16]

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I think this is a question, I'm not in a position to answer for the very reason that, as I mentioned, there is an ongoing discussion that has been going on for quite some time. So I'm hopeful that in a matter of 2 weeks, we might have more light in this respect.

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Axel Jeremias Finsterbusch, JP Morgan Chase & Co, Research Division - Research Analyst [17]

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Okay. So you said in a matter of weeks, right?

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Marco Morelli, Banca Monte dei Paschi di Siena S.p.A. - CEO, GM & Director [18]

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Yes, definitely.

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Operator [19]

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The next question is from Hugo Cruz with KBW.

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Hugo Moniz Marques Da Cruz, Keefe, Bruyette & Woods Limited, Research Division - Analyst [20]

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NII has a lot of moving parts. I mean, obviously, if you have the TLTRO benefit that could be very material. It depends on the size of the TLTRO. I mean, can you give us some idea what kind of NII you're aiming for next year? And then also on the cost of risk, you gave guidance, very helpful for this year. But I mean, could you give us guidance for next year as well.

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Marco Morelli, Banca Monte dei Paschi di Siena S.p.A. - CEO, GM & Director [21]

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No, at the moment we are not in the condition to define a possible trend for the next year. It is, in any case, sure that we will have on the net income, a negative sign, but we are -- it is too early in order to identify what percentage of this amount of revenues that we can lose for the full year. Also in terms of cost of risk at the moment, we decide not to provide any kind of guidance because we are concluding the planning cycle and I think that the guidance on this side will be present to the market when we approve the final results for the year.

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Operator [22]

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The next question is from the Italian conference call from Vincenzo Parrinello, Citibank. Excuse me, Mr. Parrinello has withdrawn his question. (Operator Instructions). Gentlemen, there are no more questions registered at this time.

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Marco Morelli, Banca Monte dei Paschi di Siena S.p.A. - CEO, GM & Director [23]

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Okay. If we can shed some light on everything we discussed, please feel free to write to us after this call. Thanks very much for attending, and we'll keep you posted on new developments on things we are currently looking at. Thanks a lot. Goodbye.