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Edited Transcript of UBI.MI earnings conference call or presentation 8-May-20 1:00pm GMT

Q1 2020 Unione di Banche Italiane SpA Earnings Call

Bergamo May 10, 2020 (Thomson StreetEvents) -- Edited Transcript of Unione di Banche Italiane SpA earnings conference call or presentation Friday, May 8, 2020 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Victor Massiah

Unione di Banche Italiane S.p.A. - CEO, GM & Director

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Conference Call Participants

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* Adele Palama

UBS Investment Bank, Research Division - Equity Research Analyst of Italian Banks

* Andrea Vercellone

Exane BNP Paribas, Research Division - European Banks Analyst

* Anna Maria Benassi

Kepler Cheuvreux, Research Division - Head of Research, Italy

* Antonio Reale

Morgan Stanley, Research Division - Equity Analyst

* Christian Carrese

Intermonte SIM S.p.A., Research Division - Research Analyst

* Domenico Santoro

HSBC, Research Division - Analyst

* Giovanni Razzoli

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

* Hugo Moniz Marques Da Cruz

Keefe, Bruyette & Woods Limited, 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 UBI Banca Group consolidated results as of March 31, 2020 conference call. (Operator Instructions)

At this time, I would like to turn the conference over to Mr. Victor Massiah, Chief Executive Officer of UBI Banca. Please go ahead, sir.

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [2]

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Good afternoon to everybody. Thanks for attending the call. Sorry for the delay. We are quite over crowded at this time. We have almost double of our usual numbers and so we have to wait a little bit more. Second, communication. For whoever could not find our presentation, you can find it under ubibanca.com -- ubibanca.com/results. I repeat, ubibanca.com/results. Third, technical communication is a note before we start. As we have announced in our industrial plan, we have changed the measurement criteria for operational and investment real estate as a consequence for the sake of comparability, the impacts for all the 2019, 4 quarters, both from profit and loss and balance sheet, which have been restated. So for the sake of comparison, the previous quarters. I'm not talking about the one that I'm going to present, but the previous quarters' been restated because of the change in methodology in the measurement criteria.

Now we can finally start and thanks, in particular, to our Anglo-Saxon colleagues that are here with us, notwithstanding bank holidays. Complain Laura for that one. Okay. Ready, go.

Page 3. We have a solid start to 2020, allowing a strong intervention in the COVID-19 emergency. In terms of CET1, fully loaded, we are at 12.86%; MDA buffer is 361 bps in pure calculation or 459 bps in the hypothesis of full application of Article 1 of 4A of CRD5. Quite a significant buffer in terms of potential dividend distribution. Both CET1 and MDA buffer are higher than the business plan projection. CET1 was expected to be above 12.5% at the end of the planned MDA buffer, above 330 bps, even net of 2019 dividend, who -- which account for 26 basis points. So if I subtract to 12.86%, 26, it's still 12.60%, which is above 12.5%.

Total capital ratio is up to 17.05%, also following successful issuance of AT1 in January 2020. Sometimes, also to be lucky, the issuance in January, as we can see now was very well on time.

MREL requirements are largely exceeded -- quite significantly exceeded, and the leverage ratio is fully loaded, is at 5.87%. Both liquidity cover ratio and net stable funding ratio are significantly above 100, thanks to the strong issuance plan carried out in 2019. No worries at all if market were to close in 2020. We're not wishing that, of course. But just for you to know, we are, frankly, quite -- let's say, non-emotional in case of markets completely closed for 1 year. Liquid assets to up to EUR 36.8 billion, of which EUR 23.8 billion, unencumbered.

In terms of high-quality of loan book, high-quality performing loan book, only 2.7% is high risk, has been generating a low default rate, 1% annualized in first quarter. Surprisingly low, let me say. I will comment later. Low level of NPEs following workout and sales carried in 2019 and still consistent -- constantly decreasing. The NPE ratio today is 7.5% or if we consider pro forma, the currently -- the current sale of the SME bad loans of 6.7%. The new record, let me say, high recovery rate, 12.5% cash in plus back to performing of total NPEs, of which in terms of bad loan recovery rate, 7.1%.

Next page, Page 4. What have we done during the COVID-19? It was obviously particular, sensible for us to be able to very quickly transfer what had been decided to the territories. Even before the government initiatives that came very welcome later, we launched EUR 10 billion Rilancio Italia initiative on the 1st of April. We have an immediate application, in particular, that we accelerated after the -- what was called the government decrees. And where are we now? We have 40% of total EUR 25,000 up financing and with a 100% state guarantee as what we could read in the public number yesterday.

So we had 37,000 plus thousand application out of a total of system level of 93,000. We have been able to reach such a significant market share thanks to IT solutions and a company we have participation in, which is called SF, very grateful to them. Very good team mix. And thanks also to the Chairman of (inaudible) has recognized that we've been, by far, the bank that has best and fast delivered. Medium, large lending tickets with MCC guarantees, over EUR 25,000. We are working above 2 billion of applications. And they do have an average guarantee of 80%. And we have 130,000 moratorie out of total of over 1,600,000, which means also here, market share that is more than proportional to our natural market share.

Survey said on Page 5 that we have restated the results of the previous quarters. Still in terms of net profit, we have a profit that is significant growth, both from the previous quarter and on the first quarter of 2019.

On Page 6, we elaborate on the resilience of net interest income. We don't have to forget that we were coming from a year where we have issued a significant amount of funding that has allowed us to be so well-positioned in terms of MREL and very resilient in case of potential market closure. And the second effect was IFRS 9 contribution due to the fact that we have reduced by something like almost 30% our NPE ratio. Altogether, they had an impact, of course, year-on-year. But in terms of resilience of the commercial part of the story, team -- the commercial team is doing pretty well. And this obviously, is clearly demonstrated on the top part of the exhibit, on the top left, where you can see that in the previous quarter, we had EUR 374 million of net interest income coming from the commercial activity. They are now EUR 370 million, and -- which is stable considering the difference in the days.

Page 7, you can double check what I'm saying by having a look at the customer spread that is going up. As you may see on the bottom right -- excuse me, on the top right, from 175 customer spread, we are now at 177. Also in terms of new originations, as you may see, we had an acceleration in new volumes. This is coming with a lower level of commercial spread from 239 to 195, but this is due to a net TLTRO initiative. At the same time, still anyway above the 193 of reimbursements. So we are still doing reasonably well on that one.

On Page 8, you may see that intense issuing activity is now positioning us in quite a relaxed situation. You may see that the expiring funding in year 2020, very marginal. And the institutional issuance that we have done, that we're talking about in terms of AT1, was pretty successful at a reasonable cost and is very precious today. No worries at all on the future expiring situation during the following years, as you may appreciate.

On Page 9, what is very good in this quarter is again, the growth in net fees and commission. Year-on-year, we have a very solid, almost 5%. And in terms of core, we are quite at peak. What I mean by core? Excluding upfront and performance fees. And this is the highest level ever, despite COVID-19, a strong impact in March. What a quarter would have been without the bloody COVID-19 in terms of fees. Because obviously, most of it was frozen and markets went down in March.

Assets under management placed in first quarter 2020 are stable versus fourth quarter, about EUR 3 billion versus EUR 2.3 billion in fourth quarter. Traditional banking-related commission plus 1.2% versus first quarter. And so quite a satisfying situation on the fee-based part of the story. I wouldn't see any particular worry in the first quarter. We will elaborate on the next quarters later.

Net of systemic charges, operating costs are down 1.7%, which -- versus first quarter 2019 and 3.6% versus fourth quarter. And let me say here that this has been reached, notwithstanding the impact of the new national labour contract. So my judgment, this one, that is again, a continuous, constant and consistent demonstration of the skills in terms of cost control that the company has.

On Page 11, we wanted to share with you -- this is just conceptual, but what have -- what has been happening. We have now 20,000 remote workstations. That means that we have a workstation ready for every single employee, remote one. We have -- anyway, even now if the -- even after some people have come back, we still have 5,600 employees on average, connecting in remote conference calls, videos every single day. During the crisis, all small business, corporate, premium and private relationship management were enabled to remote selling. We had also a 100% remote call center which -- what do I mean by that? Every single component of the call center was answering to calls by customers by their own private homes. And this, again, was quite a technological success.

Of course, the thinking for the future in terms of cost allocation, how will the cost allocation change? A lot of things to be elaborated. However, what we're doing now is, at the moment, to still stick to a significant component of remote working, notwithstanding the start of phase 2. And we will keep monitoring because we want to apply the lessons learned that we had, unfortunate to learn, but in every crisis, in every -- in a terrible -- even in a terrible crisis like this one, there is always something to learn and the opportunity to piggyback off.

On Page 12, it's very important to think together about the quality of credit. As I have already said, and I will restate, dimensions of banks is an important component. And definitely, a dimension of a bank is something as valuable as something that goes on the podium of the Olympics, of the banks. But it's not place #1. It's place #3. Place #1, this is we land in every single crisis has been quality of credit. We've seen big, small, medium banks going bankrupt or going anyway distressed, not because of the cost income, but much more because of the quality of credit. Second, in the new age, probably on the podium, the silver medal is the technology. And only the third place in the podium is the dimension, which again, is a podium. I'm not saying it is not interesting and dimension doesn't matter. But please, it's not #1. #1 is for your credit. And that's why we see -- we have dedicated some few exhibits from now in the presentation to the quality of credit. First of all, where is (inaudible) performing portfolio. It's probably -- it speaks ever of in terms of quality. We have only 2.7% of the performing portfolio that is classified high-risk in our way of measuring it, of which 2.7%, 85% is collateralized. So it's not a surprise if in the first quarter of 2020, we have 1% of default, notwithstanding that we are applying since July, the new definition of default, which has been a very good result. Okay. But these are percentages.

Let's see inflows from performing in absolute terms is on the back of the exhibit. We are, in this first quarter, at 200, 04 -- 204. It was 240 in the previous quarter. It was 273 in the first quarter where we applied the new definition of the fund. So as you may appreciate, even with the new definition of default, in absolute terms, gross inflows are going down. Is it going to stick to that? Obviously, COVID-19 will have its impact. But as you may say, when we were promising in the plan, we want to stick to that, a significant reduction in the cost of risk. Okay, we will absorb COVID-19 but the quality of the portfolio is very, very good.

Now let's go to the NPE part of the story. It's on the following page, Page 13. From the peak of the crisis -- or the previous crisis in September '15, where the gross NPE reached the 15.5%, which, by the way, was the lowest among the top 5 banks in Italy, and I'm saying all the top 5 banks in Italy, we were the lowest of the top 5. We have halved disposition pro forma to 6.7%, or any more than half, or any way halved if you see at the current one in March '20. In terms -- in absolute terms is a EUR 6.7 billion or EUR 5.9 billion, if we already pro forma included the sale of the SME portfolio.

On Page 14, there is something more that is, at the moment working, which is the recovery component on the NPEs. As you may appreciate, the recovery rate in terms of cash-in has been increasing in the first quarter 2020 compared to the first quarter 2019 but also back to performing, which is even, in a way, more important from a profit and loss point of view, has grown up to 3.4%. Altogether, this adds up to 12.5%, which has been, as you may appreciate, the best result in this period.

Let's go on Page 15. On an analyst basis, the first quarter has been 73 basis points, including higher provisioning on UTP loans in sectors more impacted by the COVID-19 emergency. I think a reasonable question from an analyst will be, why instead of going to the collective positioning, why did you go to the UTP? It's very simple. We have a high level performing portfolio, first. Second, as you may appreciate, on the bottom right of this exhibit, we have the second best coverage of the performing loans. After Unicredit, which, by the way, has increased significantly right in this quarter, posting everything on the performing part of the story, we decided that -- and by the way, all the action by the government in terms of guarantee is on the performing portfolio.

So our thinking is a little bit different. We say, what is much more jeopardized? It's the UTP part of the portfolio in the sectors that are more hit by the COVID-19. As an example, 2 reasons to make a simple example. So we went there to generate additional coverage. However, just to be very transparent, given the situation on the component of the different situations, the different banks in Italy, we are publishing the following on the bottom part of the exhibit. What is the percentage of gross NPEs that is secured? For UBI, 85%. All the other top 5 are there to be compared with. What is the real estate collateral cash plus coverage on total gross NPEs? Again, UBI, #1. So we're #1 on gross NPE secured. We're #1 in real estate collateral, plus cash coverage. And #2, because of the Unicredit move on the coverage of performing loans. We have a very, very high-quality performing loan portfolio. This is why we decided to concentrate on UTP, the additional, about EUR 50 million that we have decided to add on because of the COVID-19. I hope this covers the logic that we have applied in terms of cost of risk on credit quality.

On Page 16, we have published our CET1 fully loaded ratio. Let me remind you, even if I know I'm boring, that we do not publish anything that is not just pure CET1 ratio as it is written in the rules. So we do not add any DTA, any additional future event of any type. This is a pure 12.86%, which is 57 basis points above the previous one in December, and total one is 122 above 17.05%. We have -- I've already explained the MDA buffer. The total capital plus SNP, is 19.6%, which implies an important protection for holders of senior preferred bonds, quite a safe situation.

What were the impacts that justified the important increase in CET1? Of course, the dividend accrued. We obviously, hope to pay the dividend in October, but we will obviously follow the guidelines that ECB will generate and elaborate in fall. Change in real estate valuation criteria was 38 basis points, and it was so higher than what we promised in the business plan. OCI reserve was minus 25 basis points and impact of TRIM inspection. Net first quarter profit, positive contribution. But in this one, with also accruing the dividend for 2021. Again, we are accruing the dividend for 2021. Of course, on the total capital ratio from EUR 400 million in AT1. When I say dividend for 2021, I mean dividend produced in year 2020 and paid in May 2021.

Business outlook on Page 17. The COVID-19 emergency is a crisis that is different from others both because of how it originated and how it might develop, which makes any type of forecast complex. However, even in this crisis, the key factor is the quality of credit. In the face of this unprecedented crisis, swifter and more incisive measures were taken by domestic and international authorities to mitigate its impact.

These measures, recently implemented, should allow the bank to preserve its level of net interest income. So we see from now on net interest income, resilient. Weaker performance by the fee and commission components, relating to transactions, following the slowdown in the economy is expected. While the fee and commission component relating to asset under management will be affected by the crisis in the first part of the year, but nobody can sell -- can say what is going to be the second part of the year. It will depend on the performance of the market and today, see economy starting to rebound or the vacs for the virus coming out. Of course, we could see a bounce back by the market, but nobody knows.

Maximum efforts will continue to be made to contain operating expenses, although in a different manner, driven by smart working. As concerns loan losses, this will be higher than forecast for the first year under the business plan, although mitigated by the use of support initiatives included in the mentioned recent measures. The bank has already made greater provisions for unlikely-to-pay loans, as I was explained before, in those sectors more exposed to the crisis with an impact on the first quarter 2020 of about EUR 50 million, with an overall cost of credit of 73 basis points. And it will focus its attention during the year on these loans. Given the high-quality of performing loans, the level of high-risk performing loans fell farther in first quarter 2020 to 2.7%. The default rate is expected to remain low, and coverage for performing loans is among the highest for major Italian banks. The internal workout strategy for nonperforming loans is therefore, confirmed. On this part, let me thank again the outstanding team we do have with the new peak in the recovery rate.

From a balance sheet viewpoint, the UBI Group's capital position, its solid liquidity and its asset quality enables it to face this crisis with a reasonable level of confidence, as already occurred in previous crisis, and to generate profits on a continued basis to the benefit of all stakeholders, including dividends when authorized by the ECB.

Thank you for your attention, and I'm ready to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from Antonio Reale of Morgan Stanley.

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

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It's Antonio here from Morgan Stanley. I have 3 questions, please. The first one, we've seen a number of measures implemented by the government. You're normally very outspoken when it comes to provide feedback to the market. How effective do you see these current measures in Italy? And what opportunities and limitations do you see here for the banks? Also, any early issues, concerns, you can share from your conversations with SME and corporate clients? I mean, you've been at the epicenter of this. And also what usage do you expect going forward of both moratoria and government guarantee on your loan book? That's the first question.

The second question is if you -- I've heard your comments on provisions, but I'd like to ask a bit more in terms of assumptions for provision top-up, more than in the quarter for sort of the last part of the year, how you see cost of risk play out. Where do you see default rates go from the 1% level in the quarter? How do you see GDP trends in the next 3 years? Stage 2 migration? Any color you can provide here will be very helpful.

And the last question, you've been -- obviously, you've been very disciplined in the repricing of the loan book, and this is clear also this quarter. However, looking forward, how do you manage the demand for credit, which I guess, is clearly high? And at the same time, preserve margins and asset quality with the new managers that are available? I'm thinking about the government guarantees where you have some clear limitations in the repricing, but also, I'm thinking about TLTRO3, if you could talk us through the drivers and your thinking, perhaps also in terms of how much you intend to take up?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [3]

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Thank you. Measurement by the government. I think that, in general terms, all governments in the Western countries have more or less applied the same scheme. Less support, everybody in terms of the economy by giving guarantee, piggyback on leverage and use the banks to distribute this. It's a [very true] scheme, and in my opinion, it's very logic. It is very logic. Money comes from the government. Skills, in terms of credit delivery and credit transmission, is to -- in the hands of the banks. Of course, somebody would like -- everybody would like to have money for free. It's not disputable, but it's not always possible. And in particular, in Italy, where the debt -- unfortunately, the debt of the public administration is so high.

My opinion, so is that measured by the governments were logic. Their view is always in the details. It's not easy. We've been doing 40% of the 25,000, but of the remaining part of the banking system, it's not -- there is not a lack of will. There must be some thing that's more complex. Maybe we're lucky. Sometimes you're lucky. Sometimes you're a little bit more than lucky. But we are doing 40% on that one. So it's doable, anyway.

On -- but of course, an additional simplification and something also regarding the responsibility in case of bankrupt. So what is, I would call, a legal protection, given the special situation, in my opinion, would help banks to accelerate a little bit. But obviously, this is not -- I'm not the Prime Minister. I'm not a Minister of Justice. So my role is to transmit what it comes. So I stop here.

What is the mood of the SMEs? It's very, very different. I mean, you don't have a general mood. You have people that cannot wait anymore to go back and restart and fight and go through the world, and export again. And obviously, I have also some people that, in these most hit components and industries, some of them, the marginal players, obviously, are desperate. There is a mix of feeling everywhere. My -- and on the psychologic mindset of the country we must help, we have to help. That's why we started with the initiative of Rilancio Italia. That's why we are continuously communicating that it's possible. I know, you may say it's soft. It's just psychological. But how many times in our life has psychology -- has counted a lot?

And so we are, at the same time, trying to support our customers, and I think we have demonstrated with all the statistics I presented to you. And at the same time, we are trying to be a little bit of a psychological help. Our network is calling the customers. It's calling. You answer, "what can I do for you?" which was not as obvious before. But today, it's normality. What can I do for you? In particular, in that given ratio, of course, but everywhere.

Moratoria. Moratoria is important to be managed, not the moratoria per se, but the step when the moratoria would be over. That will be a very important moment because we are -- we have all the tools in terms of possible medium-, long-term loans that can be used to manage the transition from moratoria to something that will give real hope to the players. And that moment is very important to be prepared ahead of schedule. And we're trying to do it, of course. We see that, that will be a critical one, and that will influence the real cost of risk. Because we feel good if we are doing our job in a reasonably good way, we will eliminate a lot of risk in that particular moment because it's the moratoria, the big number.

On that side, don't forget that we are talking about companies that were performing. We're not talking about companies that were in hell. Companies that were good, were performing and has been frozen like in a horror movie, in one second. And so they deserve to be helped as much as we can. It will be really one single moment when we will demonstrate or not demonstrate to be good or bad bankers.

So going to the trends of cost of risk. I -- honestly, it's very difficult to imagine the cost of risk, but I'm not at all imagining a crisis, a picture like the one that we've seen in the previous because one. Because the actions by the different government, by Europe, by the very much criticized Europe still are here, and they're coming. What is still missing is coming. So honestly, if in the previous crisis, I would have said more than 100, and because it was more than 100 certain times, I will say, now less than 100. Don't ask me more than that, but less than 100. I don't think it's going to be the same.

In terms of demand for credit, well, in a way, the demand for -- most of the demand for credit is coming through all the different tools that we published. So the moratorium was at least different but quite paradoxical demand for credit. The 662 is there, and we have already more than half of our EUR 10 million of credit that is in the pipeline in terms of demand, so then we'll see how much will be delivered. But we are working on that.

And in terms of NII, this will be very important because, of course, volumes will sustain the NII. While in the plan, you remember that when I presented the plan in the 17th of February, we were expecting a flattening -- very flat, flat volumes in terms of credit. If the economy comes back, the fact that we have to [throw] some lines through the moratoria, plus [to find] some cash -- additional cash will be needed, in my opinion, will mean that probably volumes will be a little bit higher, not lower, than what we expected in our plan. But don't forget in our plan, we were flattish.

TLTRO3 is now a big opportunity. I was most skeptical before. I honestly was skeptical, you remember that, but because I didn't have a new crisis in mind. Today, that the crisis is with us, I have to change idea. TLTRO3 is precious. Obviously, it's very important to manage not only the time you take, but the time to give it back. And I think we can say that because we have reimbursed TLTRO2 ahead of schedule. So we are going to use TLTRO3 in a way that will distribute to in time, not to have any type of peak. I don't want to see steps. I don't want to see steps in the moratoria. I don't want to see steps in the TLTRO3. I hope I answered your questions. Very long answer, sorry.

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Operator [4]

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The next question, sir, is from Christian Carrese of Intermonte.

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Christian Carrese, Intermonte SIM S.p.A., Research Division - Research Analyst [5]

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The first question is on spread. As you highlighted in the presentation, the customer spread went up. It would have gone up higher if TLTRO3 was not there. So I was wondering what would be the impact on customer spread due to the action undertaken by the government and the guarantee and TLTRO3? And what could be the litigation in terms of cost of risk?

On the asset quality, what decrease are you projecting in Italian GDP in 2020? And what do you think about the possibility to expand the government proposals also on OTT?

And finally, on capital, were done in the quarter. You increased by almost 60 basis points, the common equity Tier 1. I would expect some additional benefit from the new CRR rules. If you can give us a sort of guidance for the end of the year. And again, on dividend, if you can share with us your thoughts for 2020 and 2021.

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [6]

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Thank you. So obviously, we will have a special situation for the lending activity below 25,000. Below 25,000, what we call special cases. You know that we have been historically rigorous -- very, very severe in a way in our pricing during the last couple of years, but this is a special situation. And so it's something where we will not be aggressive at all. But even if there are a lot in terms of numbers, of course, by multiplying by a small number, it doesn't make a big bunch of the lending activity. So it's a beauty. In a way, it's a social (inaudible).

With that one exception, we will stick to a reasonably rigorous policy in terms of pricing. So you should not have at all any negative surprise on the customer spread. The TLTRO3, of course, could help us. And altogether, I think it's exactly -- together with the volume is exactly why I said, okay, we have to absorb in terms of negative percentage year-on-year, the fact that we compared with the best quarter of last year in terms of NII. But then, from now on, we see in absolute terms and in percentage, flattening to improving situation in NII.

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Christian Carrese, Intermonte SIM S.p.A., Research Division - Research Analyst [7]

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Is it maximum -- the maximum [capital] for TLTRO3?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [8]

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We have -- we shall take up to EUR 12.5 billion.

In terms of suggestion regarding the UTP, well, of course, that would be generous. But I think also that we have to have also -- it will be appropriate to have also some discipline. Maybe it would be, probably, not completely fair to have the same treatment for everybody. But obviously, today, no help for UTP. Maybe something in between, some tone of gray could be helpful. But listen, again, I do not pretend to be the minister of economy, so I stop here.

Capital. Capital, yes, you're right. I mean, the component of the guarantee and -- it's obviously going to help us.

I cannot make a forecast for what would be the percentage that will be transformed on any way. We'll grow in terms of government guarantee. But definitely, while I would never had -- has said that the 13 was part of -- the numbers starting with 13 was happening in 2020 during the presentation of the plan. Now I could honestly think that this is not undoable.

In terms of dividends, we already given the buffer that we do have on the chat -- on the CET1. We are ready to pay, if the authorities allow us. But again, we're very disciplined on that. We follow the authorities. If the guideline is for a green line, fine. If the green light is not coming to us, what should we do? We try to position.

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Christian Carrese, Intermonte SIM S.p.A., Research Division - Research Analyst [9]

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Well, do you see that also the government could ask banks to be more cautious on dividend due to the factor giving some guarantee on your...

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [10]

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No. No, I don't think -- as I was saying before, I can make a comment, but I'm not the minister of economy. At the same way, I think that banks are supervised by the ECB or by Bank of Italy, and this is the source of the guidelines. I think everybody should be responsible for its own part of this such already complex world.

Just to be precise, I received a comment by my team saying that in theoretical time -- theoretically, we could take up to EUR 25 billion of TLTRO. However, having said that, and having satisfied the technical needs of my team, I stick to the point that -- and a reasonable guideline for you is no more than EUR 12 billion, 12 point something. But it's an additional formation for you to know that we could reach EUR 25 billion.

Did I answer to your questions, all your questions?

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Christian Carrese, Intermonte SIM S.p.A., Research Division - Research Analyst [11]

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Yes.

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Operator [12]

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The next question is from Adele Palama of UBS.

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Adele Palama, UBS Investment Bank, Research Division - Equity Research Analyst of Italian Banks [13]

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A couple of questions from me. The first one is on fees. If you can give us the split between the upfront and the performance fees? And if you can give us some color on how the performance fees are charged? Then if -- looking on the NPL sales, if you can give us an update on the project?

And then I was wondering if you have seen any increase in the usage of the balance -- of balance sheet on committed credit lines, especially...

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [14]

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Adele, Adele, Adele, one second. Excuse me, to interrupt you. But the last one, I really could not understand. It's a very distant line. I took the first 2, fees and upfront component of the fees. NPL sale work progress update. But the third one, I could not get it. I'm sorry. I ask you to repeat.

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Adele Palama, UBS Investment Bank, Research Division - Equity Research Analyst of Italian Banks [15]

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Yes. So I was wondering if you had seen any increase in the usage of uncommitted and committed credit lines, especially before the launch of the state guarantee scheme? And if so, what's the estimated impact on RWA?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [16]

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On the first one, fees, the component of the upfront fee in this quarter was not special compared to the usual quarters that we do have. Of course, there was not a significant component of performance fees for obvious reasons. But there was nothing special in the first one. We usually cruise in the range among EUR 12 million to EUR 15 million, but we'll deliver you a more precise figure as soon as the team gets it to me.

In terms of the update on the NPV sale. As we have been saying in the press release, we estimate the finalization of this one to be completed by summer -- this summertime.

In terms of usage of uncommitted lines, something, but nothing that we can give you as a very special situation at all. I know it could sound a little bit surprising, but no, there is nothing. I was talking with my Chief Lending Officer a couple of hours before, and we were commenting that in this very unlikely situation, very unlucky, very, in a way, sad situation, there was something that was good, and it was how much liquidity was in the market and how much liquidity was in the companies right before the crisis. Let's not forget that we're all struggling with very low mark up on the line of credit because of such amount of liquidity. And this has helped in the first couple of months.

So that's why, in a way, it's so important now to go back to normality as soon as possible because we were lucky in a way. In the disgrace, we were lucky. Companies were full of liquidity. And obviously, this is not true for a single owner of a single retail store. But talking about the real big numbers, liquidity was really in the bank. And it cannot last forever, and that's why it's so important now to come back.

Did I miss any of your questions?

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Adele Palama, UBS Investment Bank, Research Division - Equity Research Analyst of Italian Banks [17]

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No. Can I ask for another one, on TLTRO?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [18]

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Please, Adele.

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Adele Palama, UBS Investment Bank, Research Division - Equity Research Analyst of Italian Banks [19]

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I would like to know how is accounting, the effect? I mean, is it accrued? It's back-loaded? The 1% cost TLTRO?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [20]

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So TLTRO, it was attractive. We are accruing the cost of TLTRO. No, because you remember that in the previous one, we would get -- we wanted to accrue the bonus at the end. This time, since it's become the standard to accrue month-by-month, we're doing the same.

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Operator [21]

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The next question is from Andrea Vercellone of Exane.

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [22]

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Andrea, excuse me, a second before you start, just not to have any type of misunderstanding. For the moment, we still don't have TLTRO3. So we will accrue but as per today, we don't have, already in the figures, the TLTRO3 factor. So this will be a positive in the future. It's not here today, not to have any misunderstanding. Excuse me, Andrea, if I wanted to -- I had to be more accurate on my answer. Please, Andrea.

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Andrea Vercellone, Exane BNP Paribas, Research Division - European Banks Analyst [23]

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No problem. So on Slide 4, I have a few questions on Slide 4. Any particular reason why you don't mention SACE? I just want to know if you have anything in processing on the SACE? Or there is any other reason why you don't mention it?

Also, on this slide, how do you marry your own skin, the relaunching target initiative with SACE, with the Deposit Guarantee Scheme? How do you decide we go for our own? We go with the loan with the guarantees? Is it up to the customer? I just wanted to have a bit of an idea as to what the strategy is there.

And finally, on cost of risk. I'm not interested in the guidance but only on a concept. And it refers to whether you believe that the peak in cost of risk is this year or next year? And within this, what leeway you have got, if you want to, to work from something that really should refer to next year when NPL formation will take place because NPL formation, it's unlikely to be material in 2020 given the moratoria? And as I said, I don't care about the level. I just want to see if you feel that 2020 is higher than 2021 or vice versa?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [24]

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Andrea, it's a very clever concept, and I see exactly what you mean. Let me comment on that. It will depend on the average of the set moment in the sense that many moratoria are expiring in September. So in a way, there is a border. You're asking a difficult question, not because the concept is unclear. The concept is very clear. But how are we going to manage the September, October set. If we are able to manage that set, in my opinion, not only, as you exactly are saying, you won't have any particular impact on 2020. But you're probably not going to have a huge impact even in 2021. Because you are -- at that time, if the company is very -- if they're doing a reasonably good effort, then probably they're going to be accrued medium, long-term loan with a state guarantee again.

In terms of the project of EUR 10 billion, we launched that project before the government action. The COVID -- that project was born in 1st of April. Then, of course, why should I not piggyback, if I can, on the government guarantee? It's not that I don't want the government guarantee. Why should I not? But I won't pretend that we published that one before on the 1st of April. And that was because we thought it was key to give oxygen -- new oxygen to the companies that did not deserve to die at all. Then, we're using the government guarantee. And as I was saying before, it's -- there is a lot of work in the pipeline of loan 662, about EUR 5 billion, which obviously, if we are successful, a lot of that will be part of the EUR 10 billion project, why not? Some of them.

In terms of SACE, I asked Laura to cancel the SACE in the last version of the exhibit, it's still on the press release on Page 2. So it's my fault. I thought it was boring. However, no, we have an agreement with SACE, we're already processing that. No reason. I only thought that it was less interesting, and then you obviously hit immediately, that point. But I think Laura will give you a call just to say that she was right. Anyway, anyway...

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Andrea Vercellone, Exane BNP Paribas, Research Division - European Banks Analyst [25]

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She was because the amounts of SACE are potentially much bigger than those from the guarantee.

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [26]

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Yes, of course. But on the other side, you have to have companies asking for that, and it's more expensive. Don't forget that the SACE one is more expensive. So since human beings are rational, a very important amount EUR 225 million, some amount on the -- up to EUR 800 million, and still waiting for a significant demand for the most expensive one. And there, humans are still rational, even under the great crisis pressure. Anyway, we're working on some hundreds and hundreds of millions of such, anyway, in this time, if you are curious on that.

I answer to you in cost of risk, answered on the SACE one. I think I answered to all of yours, unless you have something missing there.

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Andrea Vercellone, Exane BNP Paribas, Research Division - European Banks Analyst [27]

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There was just one small point, which was on the cost of risk one. What degree of flexibility you have got to upfront future losses? And do you have an attitude to do so, i.e., other banks have implied that they put in 2020 as much as they can, regardless of whether they should?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [28]

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But if I -- we were debating exactly this part in the Board only 3 hours ago. But in a few -- with one exception, with one exception, and don't ask me to name, all the remaining part, we see reasonably proportional, given where you're starting front in terms of performing coverage, and in terms of where are you in terms of NPE gross ratio. I have no problem to share with you the relative situation of the different banks, if it's needed, but to anybody who wants to ask us, but I think there is very much consistency. Then, the choice of where to post it from an accounting point of view have been different.

Some have decided to put it on the coverage of the performing. We have quite a high level as we think that we have shown. And we thought it was more appropriate to post it where, at the moment, at least, the government support is not coming, which is UTP, and we think we're right. Then another company will say, they're right to profit. On the other one, I do not pretend to be right. We do what we think is right for us. So we're ready. But honestly, I would like -- I'm not saying exactly as a single name, by single name if it is the way it should be, but at least with some thinking regarding the single sectors. Of course, transportation, tourism results was something we immediately posted in the UTP. So we think -- we will try to be as accurate as possible. But no resistance to make additional coverage, if needed, of course.

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Operator [29]

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The next question is from Giovanni Razzoli of Equita.

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Giovanni Razzoli, Equita SIM S.p.A., Research Division - Financial Analyst [30]

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The first one, can you share with us what is the total amount of, in euro millions, of the loans in moratorie? I've seen you have shown the amount in terms of heads. I would like to know whether you can also, like all the other banks, share with us what is the amount in euro million under the government scheme, under the Decreto Cura Italia. That's my first question.

The second question, can you -- you said you have accrued the dividend in Q1. Can you share with us what is the amount that you are thinking of on a full year basis that is accrued in the Q1 results? I'm asking this because in the unlikely event that the ban to dividend payment is extended also in 2021 or beyond October, we may have an idea of the release in terms of capital.

The third question is your very interesting comments on what you see the impact of this macro situation on the asset quality. If I got your comments correctly, you don't see that much of an increase in default rates going forward, but what is going to be a crucial factor is going to the reclassification of the UTP into the NPL. So you believe this is going to be the critical factor because the government measures should, in a certain extent, mitigate the new flows of nonperforming loans? Is this understanding correct?

And the very last point, you have elaborated a bit on your business plan targets. You said that on 2022, there could be some slightly higher volumes. You've said that you don't expect a triple-digit cost of risk in 2020. So you have 46 basis points in 2022. So I understand this target should be confirmed also in this context. So I was wondering how shall we see at your 2022 targets? If my understanding is correct, you don't see that much of changes so far in these 2 KPIs going forward. I understand 2002 (sic) [2022] is so far, but not that far. I ask you this because yesterday, for example, Banca Popolare di Milano, Banco BPM, have said that they will revise their recently presented 2023 business plan.

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [31]

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Okay. In terms of moratorie, we are in the area of EUR 15 billion.

In terms of the vision on the quality of risk where UTP are crucial, yes. The answer is yes, you have very well had understood our point of view.

In terms of dividend, we never have communicated the dividend accrued during the year. But by the way, as per today, we are not communicating different from other reduction in dividend. We're not communicating different from other reduction in dividend.

Then, the last one is on the target of 2022, too early to say. But as we said before, that -- I'm saying it constantly, that everybody is saying, the fastest we come back to normality, the lowest the impact on the -- 2 years from now. But it's too early to say. I think the next quarter results would be a much better moment where we could debate about the future. Today is too early.

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Operator [32]

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The next question is from Hugo Cruz of KBW.

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Hugo Moniz Marques Da Cruz, Keefe, Bruyette & Woods Limited, Research Division - Analyst [33]

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Three questions. So on the cost of risk, I mean, can you at least say, still be a macro model update in Q2 numbers? And then if so, if there could be any guidance around sensitivities there?

Second, on the CET1 ratio, some banks have given guidance on some moving parts. SME supporting factor, intangibles. If there's anything else, if you could point out, that would be great.

And then third, apologies, but can you give a comment on the Intesa offer?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [34]

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No, I can't. The rules are pretty peculiar that during an offer, the -- until the offer is not official, which will be more or less on June, the buying -- the offerer can say everything, any time, every newspaper, every TV and the target must not comment until the offer is public. So sorry, you will hear only -- you will listen only to one side for another month. Be patient.

On the supporting factor, yes, it's going to be a help, too, for the CET1. And please, don't forget that for us, there is a special one that is the salary-backed salaries, which is another one that not mainly do have, but we are a leader in this area, and this will be another help.

In terms of the models, the advanced model, we have already implied some scenarios. Then, of course, these scenarios are mobile and we -- they allow us to change idea in the future because I really don't think anyone could dare to say that this is something that is stable at the moment. We don't know enough, even how to take care of these unfortunate virus models, will come later. But we have tried to do something, of course.

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Operator [35]

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The next question is from Anna Benassi of Kepler.

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Anna Maria Benassi, Kepler Cheuvreux, Research Division - Head of Research, Italy [36]

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And my question relates to the customer behavior. This lockdown is teaching us a lot of things and to Italians, it's also teaching to use the online or go to the branch by appointment. This is a big revolution, I would say. Do you believe that in your -- your strategy, your plan also could change and improve in terms of closing more branches or also investing more on the online banking? Can you share with us a bit, your experience in these 2 months? And what you can do differently or more than you did in the past?

My other question is that last year, you anticipated provisions, in fact, to deliver the EUR 800 million NPL disposal. So we hear that still there is some demand. Other banks are talking about conversations with counterparts, but they are also talking about probably different prices. Are you more inclined to delay the decision on this transaction in order to see market evolution may be delayed to next year in a way that you can use the existing provision to tackle this unexpected situation? So what is a bit -- your time frame on that?

And on your business then. I hear what you say that 2022 maybe the cost of risk. Could there in fact be what you planned it to be, so 46 basis points? So higher from last year, and in between obviously, more or less could happen so you can jump up to 100 basis points this year and be starting coming down next year. But do you have any comments on the revenue side in the sense that you were planning more or less EUR 50 million lower NII, EUR 100 million higher fees and now not enough. So you're saying maybe NII will be better-than-expected because of volumes, TLTRO3 and what you said. But on fees, at least for now, the visibility is low and it's difficult to say. And in case, you believe that overall, the revenue part...

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [37]

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Anna, Anna, Anna, stop for a second. Give me first half, then let me take a cup of tea and I'll answer to the second half. It's already difficult. If there is -- the sound, unfortunately, is a little bit disturbed. And so allow me to answer to the first, and then I'll go back to you and we do this one more time. Sorry. I'm getting older. I cannot memorize all of that.

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Anna Maria Benassi, Kepler Cheuvreux, Research Division - Head of Research, Italy [38]

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Me too. It's difficult to follow the conference...

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [39]

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So allow me to recap. First of all, you were talking about, in general terms, how is the behavior of customers changing. And a lot of you just saying -- yes, and the bank, of course. Now just to relax a little bit, it's a Friday afternoon. When we prepared the plan, we had a 1-day session on how the bank could be, not 2022, but 2025, to imagine a vision of 2025 so we could then have a plan 2022, consistent, as a first step, over 2025. Then, we have seen 2025 happening to us 3 weeks after the presentation of the plan, literally. The bank has been, for weeks, completed remote. Even in the branches, it was very few people. Yes, the branches were open but very few people. Almost all 3 was aligned. And yes, there were some physical transactions, but very low physical -- the number of physical transactions. And all the customers, the customers are the same customers that today, talk about what do you use? Zoom or FaceTime or WhatsApp? Why don't we make a group on Skype? Or the decision of Skype or Skype professional, which one is better? or Teams. Let's go to Teams. So it's -- there has been a kind of forced education, at least, to the remote interaction. And this is here to stay. I have too close to me Elvio Sonnino, who is the Chief Operating Officer, is never named but is the person that every single quarter reduces the costs. So it's one of the most loved in the company, as you can imagine. And in this environment, he is saying to the people, please stay home. Just keep working by home. Because, of course, the middle management and management in the headquarters are obviously able to really deliver, even with sometimes higher productivity by home. And they feel safe, then they're happy to stay home, in a way. And we have different type of costs. I was laughing at him, but actually then he show me that the cost of a toner or the cost of a paper is significant where you're 20,000 people.

And so the whole behavior has been changing. Now I'm not saying that we will stick exactly to where the bank was in the middle of March. But let me say that we have learned a lot and customers have learned a lot. So in my opinion, Anna, the trend that we all imagined, nothing new, the bank going more and more remote in a way, is going to be accelerated. The lessons are here to remain. So they'll ask me now to make a particular mathematical forecast of that, but the trend is there. The 2025 is something that is happening. I'm not saying tomorrow, but 2022 will be our 2020 -- original 2025, at least, for UBI Banca. And by the way, all the remote work stations that we do have now in the house of everybody is there. They will remain there.

Then, in terms of behavior of the customers with several types of problems, this is less, less evident. The trend is much, much slower. So it's not that we're seeing a radical change in behavior, but it was only 2 months. It was hell, but it was 2 months. So on this side, I hope I answered to you.

What was the next one, Anna, please, and let's go one by one.

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Anna Maria Benassi, Kepler Cheuvreux, Research Division - Head of Research, Italy [40]

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Yes. So the next -- yes. So on the question, you are not willing to share what type of cost savings you can make on the one side. And how the mix of revenues with clients could change because of the virtual relationship, the smart working and -- too early to say?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [41]

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No. It's too early to say, and it could be even, in a way -- you could get paradox. For example, IW Bank has delivered very good results because of the huge volatility in the market and a lot of free base, based on the trading part of the story, which was not expected. So no, it's too early. Honestly, I don't think this was too special. I think it's a very good question, Anna, and it's a longer-term vision that, obviously, you, as very expert of the market, want to have. I share your point, but I, again, I would stress that, in my opinion, conference in August will be more, let's say, that we'll have enough data to try to make some hypotheses. Now it's too early. I don't think -- the data is too young.

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Anna Maria Benassi, Kepler Cheuvreux, Research Division - Head of Research, Italy [42]

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No. The second question is more that the [recovery] is about the extra provisioning you did last year to prepare for the EUR 800 million NPL transaction. So do you prefer to use that for the short-term need? Or you stick to the time table and the pricing you had in mind for that portfolio?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [43]

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As we said before, we made a -- we put a significant one. Obviously, we are keen to sell at the same price. Of course, Anna, you're asking something that I cannot answer because I have counterparts. So obviously, my answer is exactly the same price as it was before.

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Anna Maria Benassi, Kepler Cheuvreux, Research Division - Head of Research, Italy [44]

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Okay. And you are negotiating that? Mainly so you are actively negotiating that?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [45]

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But honestly, I don't think we are going to be hurt significantly by this market condition in terms of our expectation. We posted already a lot. And there could be something, of course, but I don't think -- to try to answer to you, is not going to be a game changer.

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Anna Maria Benassi, Kepler Cheuvreux, Research Division - Head of Research, Italy [46]

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Okay. And on the long term, my only question is because you put in the right that you believe at the end, the cost of risk in 2022 will be what you planned. So in medium-term, you remain confident on that? I just wanted to have an idea what we can -- how we can see overall your targets, some consider what I said, that you are expecting more fees and less NII, maybe things will be the opposite?

And on the cost side, I believe that you maybe, could do more because of the change of habits. So net-net, if you stick to your 2022 targets, for now, then to give you eventually them in August?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [47]

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It's a hypothesis. I think we could, again, answer to this one by the next call in August. But at the moment, I don't feel like I should redesign the plan. I mean, we can be hit in some areas. We can even improve on the other one. But we have -- don't forget that, as I told you before, we have a lot of hidden treasures that were in the plan that will help us to achieve what we wanted to achieve. And that's why, for the moment, we are not giving any message to retrench from the plan at all.

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Operator [48]

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The next question sir is from Domenico Santoro of HSBC.

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Domenico Santoro, HSBC, Research Division - Analyst [49]

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A couple of questions on my side. Maybe I'll go one by one. For the benefit of our model, can you -- I have in front of me the presentation, the page of the presentation with the phasing of the regulatory headwinds that you showed us when you presented the plan. I'm just wondering, given all the moving parts now in place, where are some of the regulatory headwinds that you expected for '20, 2020, are going to be put forward because of the regulatory moves? And if this 12.8%, 12.9% is a sort of a level that you can maintain over the course of the year?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [50]

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In terms of regulator, for everybody, not for us, in particular, regulators have been giving some additional oxygen in a way by postponing sign of activities given the particular situation. And let me thank the sensibility also of the regulators independently from the dialogue and the debate. The regulator was sensible, understanding in a special situation. But let me say also, at the same time, that we are not expecting any particular negative impact. Actually, as I was saying before, apart from other things, the SME support factor, the salary-backed new regulation, there have been anticipated in terms of impact will be, of help, of course. So as I was saying before, we're pretty confident to be on the upside, not to the downside trend on the CET1 for this year.

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Domenico Santoro, HSBC, Research Division - Analyst [51]

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All right. This is very clear. On your guidance that NII of Q1 is a base for the next quarter. So you would present -- you would preserve this level. I mean, your guidance, which kind of TLTRO3 tick up includes? I didn't get the answer before because, of course, I mean, the number, it might shrink significantly based on how much we take on top of what you have up to the EUR 25 billion.

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [52]

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Well, we have something -- don't forget that we have something to give back in terms of funding and it expires and something that we're going to use. As per today, my guideline is up to EUR 12 billion. And for the moment, will remain. We don't -- as I was telling before, I was completely hostile, in a way, to the last TLTRO3, I was wrong because then the crisis came, which we will use it. But my philosophy -- our philosophy, not to be addicted to TLTRO3 is still clear. We don't want to be addicted. We want to be on our own steps. And so we will be opportunistic but without becoming addicted. And that's why we give ourselves a limit for that. And anyway, as I was saying before, TLTRO3 is still not in our figures today.

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Domenico Santoro, HSBC, Research Division - Analyst [53]

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Right. So shall we assume that if you take more, that's going to be upside to NII then?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [54]

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No. Of course, if it substitutes -- no, if it is an upside, yes, if it is substituting some of the funding. It will be also in our skills to substitute some funding, or if we think could happen, if we see some growth in volumes in lending, then we will use it also for that growth, of course.

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Domenico Santoro, HSBC, Research Division - Analyst [55]

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All right. The other question that I have, sorry, if I didn't get -- sorry, if I lost the comments before, but sometimes the line, unfortunately, is bad because we all work from home. So I apologize if I repeat the question, you're going to, of course, repeat the answer. Just to understand this EUR 50 million COVID-related provision that you booked, and my understanding is that you use that to increase the coverage of UTP because UTP is the area which we need to monitor in a way.

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [56]

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Correct. Correct.

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Domenico Santoro, HSBC, Research Division - Analyst [57]

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All right. Shall we expect that, on top of this, over the coming quarters, also the update of the model, IFRS, and some more to part in terms of generic provision or that's it?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [58]

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No. As we said before, we are in pretty good shape in the generic provision as it is shown in the -- in our exhibit on Page 15. And then, we, of course, anyway, we will update continuously our models, and depending also on the evolution of the economic situation. And then, if needed, we will update. As for today, I don't see that. And then, we see.

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Domenico Santoro, HSBC, Research Division - Analyst [59]

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So can I ask you this point what's the GDP scenario, which is, at the moment, implied in your model?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [60]

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It's not very different from the average of the current model that have been published by the international institution. It's in that average.

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Domenico Santoro, HSBC, Research Division - Analyst [61]

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So that's a significant drop in 2020 for Italy and a V-shaped recovery in 2021? That's the one?

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [62]

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Yes, with maybe some -- we are more or less in line in terms of drop. We are a little bit more conservative surprise, surprise, on the way the country will bounce back. In our opinion, we'll bounce back a little bit slower than the average of the institutions, in ministry forecast.

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Operator [63]

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(Operator Instructions) Mr. Massiah, there are no questions registered, sir.

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Victor Massiah, Unione di Banche Italiane S.p.A. - CEO, GM & Director [64]

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Yes. Allow me to thank everybody for attending the question, in particular, during bank holiday. And wish you a beautiful weekend to everybody that can, actually, from home. All the best to all of you. Thank you.

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Operator [65]

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Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephone.