Half Year 2024 Banco BPM SpA Earnings Call (Italian) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Giovanni Razzoli - Deutsche Bank - Analyst : Good afternoon to everybody. Three questions very quick. The first one, if you can please elaborate again on the 30 basis points of positive regulatory impacts that you have recorded in this quarter. I think I missed your comments, which were referring to some new models applied on some areas. And then connected with that, if you can also provide an indication on the impact from Basel IV in 2025. My perception is that you have been extremely prudent so far with the regulator. So if you can also share with us the data. And the last question is what is the contribution in terms of yield of the replicating portfolio, which has been increased in terms of size in this quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 4:00PM, BAMI.MI - Half Year 2024 Banco BPM SpA Earnings Call (Italian)

Question: Giovanni Razzoli - Deutsche Bank - Analyst : Sorry, if I may, out of the EUR130 million, how much is the operational risk component if it's significant?

Question: Domenico Santoro - HSBC - Analyst : A couple of questions from my side. When I go back to your page 6 about the change in the NII sensitivity, the way this is written is that affects not only the NII but also the cost of certificates. So given that you're reducing here the sensitivity, I wonder how we play out on trading profit going forward. If we should still expect that line to be read by more than EUR100 million, which was, if I remember correctly, the guidance in the plan. You mentioned also some positive from the wine at the edge on the certificates in the second part of the year. So if you could also quantify if we have already an idea, because I guess, also this might be one of the reasons to upgrade the guidance. Then a curiosity from the -- about the upgrade of the guidance. Where does it come from? More from NII, fees, or you basically are probably more positive on the credit quality? And about the one-off that you are going to charge in the second part of the year related to the partial layoff, I was just wondering whether you can give us an update on the number in absolute terms.

Question: Domenico Santoro - HSBC - Analyst : The question was more the change in the guidance. Where does it come from? Better optimism -- more optimistic about NII fees or maybe credit quality. And if you could just quantify, I know that probably is too soon, how much could be the one-off, if I understood correctly on trading from hedging strategy expiring on the certificates in the second part of the year?

Question: Ignacio Ulargui - BNP Paribas Exane - Analyst : Thank you very much for the presentation and for taking my questions. I have two, if I may. I mean, the first one is a bit on getting your thoughts on how do you see lending growth evolving? I have made a comment about new lending accelerating. So I just wanted to get a bit of a sense of how do you see lending growth evolving from here? And also, I just wanted to understand a bit better, how should we think about organic capital generation going forward in the light of a very solid capital print, how do you see your capital evolving from here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 4:00PM, BAMI.MI - Half Year 2024 Banco BPM SpA Earnings Call (Italian)

Question: Ignacio Ulargui - BNP Paribas Exane - Analyst : Negative in the quarter. Sorry.

Question: Hugo Cruz - KBW - Analyst : I have really just one question. The new interim and what that means for the full year. So can you clarify what is the total payout that you assume for the full year?

Question: Hugo Cruz - KBW - Analyst : And the EUR67 million is on reported earnings, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 4:00PM, BAMI.MI - Half Year 2024 Banco BPM SpA Earnings Call (Italian)

Question: Andrea Lisi - Equita - Analyst : The first one is on the product factories, in particular, on the insurance business. We have seen an income from insurance business of EUR5 million in the first quarter, EUR10 million in the second quarter. But my feeling is that you are still below your expectation. So just wondering to understand how it is going on with the integration of the product factory? And when should we expect to be at the run rate at which is a level of run rate that should we expect from the insurance business? The second is if you can repeat your guidance for trading for the year, that was not too clear to me. And the other is just an indication on if you can provide us more color on the Stage 2 that if I'm not wrong, increased by kind of EUR1 million

Question: Andrea Lisi - Equita - Analyst : And on Stage 2, please? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 4:00PM, BAMI.MI - Half Year 2024 Banco BPM SpA Earnings Call (Italian)

Question: Pamela Zuluaga - Morgan Stanley - Analyst : I have a follow-up question on your comments around the contribution improvement that you're expecting from the new product factories. I know you already talked about insurance. But I was wondering if you could also please give us some color around the contributions you're expecting from the payments business. How soon can we see those increased contribution flowing through the P&L? And the second one is on capital. You said that you're willing to explore the optionality of excess capital after you booked Basel IV impacts. This quarter, you even presented a target for ROTE that is adjusted for the excess capital above a 13% target. So could we see that potential excess capital distribution as soon as next year? Is this what you're considering when you're saying that you will exceed the $4 billion cumulative target?

Question: Fabrizio Bernardi - Intermonte - Analyst : You answered my question about shareholders' remuneration and potential dividends versus buyback. So my question would be changing and would be, if you may use the buffer of capital that is evident in the presentation today in order to make some, let's say, P&L kitchen dressing like porting someone, let's say NPEs, which are already low, or, let's say, one-off costs. The question would have been, why don't you do a buyback, because this is the question that we will be made to tomorrow because you made a top-up in terms of cash dividend for the interim payout. But I guess, I know already the answer. But in any case, if you could elaborate more on the fact that your free capital is growing and there is just -- not just, but there is a cash dividend distribution instead of a buyback.

Question: Adele Palama - UBS - Analyst : I have a couple of questions, please. One is on 2025. So if you can give us guidance on the evolution of the NII that you're expecting the fees and the cost of risk. And if you can give us also the assumption on rates that you are assuming? And then I have another question on the fee print on the running fees. I mean, the IOM has increased more than 1% quarter-on-quarter, but the margin compressed a little bit. So you have basically a lower running fees quarter-on-quarter. Do you expect a better evolution from the margin going forward? Can you give us a guidance on that? And then the last one, sorry, the sensitivity on capital of 100 basis point, BTP spread, changes spread. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 4:00PM, BAMI.MI - Half Year 2024 Banco BPM SpA Earnings Call (Italian)

Question: Delphine Lee - JPMorgan - Analyst : Just two quick ones. Just on -- to clarify on capital and your message on Basel IV. So your day 1 impact on 1st of January '25 is 80 basis points, or is it 130 basis points and then you have mitigation actions for the DTA, the OCI, et cetera, which basically will reduce that impact from 130 basis points towards 80 basis points for down the line?

Question: Delphine Lee - JPMorgan - Analyst : And then on my second question, which is going back to NII sensitivity. Do you mind just explaining the improvement to EUR200 million? What are the underlying assumptions that you're using on deposits pass-through? And if I remember your full year presentation, full year '23 presentation, I think the expectation is to reduce the sensitivity to rates and mitigate to reduce that to only EUR50 million to EUR70 million. Just wondering what kind of pace that -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2024 / 4:00PM, BAMI.MI - Half Year 2024 Banco BPM SpA Earnings Call (Italian)

Question: Delphine Lee - JPMorgan - Analyst : Great. And on the impact of your mitigation actions, I mean, how much should we expect in terms of how much it would reduce -- I mean, improve NII in the next year or so?

Question: Noemi Peruch - Mediobanca - Analyst : I have [two] questions. The first one is on provisions. So if you could --

Question: Noemi Peruch - Mediobanca - Analyst : Is it better now?

Question: Noemi Peruch - Mediobanca - Analyst : All right. So if you could give us some color on the usage of EUR70 million of overlays in the quarter? And the second one is how much of a support could synthetic securitization be to common equity post Basel? And how big could we benefit from the absorption tax loss carry-forward be by 2026?

Question: Noemi Peruch - Mediobanca - Analyst : Thank you. And on tax loss carry-forward?

Question: Noemi Peruch - Mediobanca - Analyst : And on tax loss carry-forward absorption by --

Question: Fabrizio Bernardi - Intermonte - Analyst : Sorry, very two quick questions. The first is, you presented the business plan in December, half of December. And it seems that now it's August. And you are already ahead of the targets at the end of the business plan. So apart from adjusting today the target for 2024 about EPS and DPS, I was wondering whether we may expect sooner or later to have an update -- a full update of the business plan? And then another more things about the capital gain regarding the digital payments, which I think should be booked in the third quarter, if I'm not mistaken. Should we expect this to go down to the bottom line in the full year, or maybe that -- maybe the usable part would be used in order to, let's say, make the next year easier? So in order to offset the cost or loan loss provision or make securitization, whatever it is?