Good morning. This is the conference call operator. Welcome, and thank you for joining the Banco BPM Presentation of Nine Months 2021 Group Results and of the 2021-2024 Strategic Plan. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Roberto Peronaglio, IR Manager of Banco BPM. Please go ahead, sir.
Thank you very much, and good morning, ladies and gentlemen. Thanks a lot also for your attendance at this conference call, sir. Today we are going to present the Banco BPM Group's Q3 results and the new 2021-2024 strategic plan. We will start with a short presentation of the results, and then we'll immediately pass to the strategic plan. As usual, you can find the two presentations on our website in the Investor Relations section. At the end of the two presentations, there will be a Q&A section which is reserved to the financial analysts as usual. With the aim to give to everyone the opportunity to ask questions, we invite you to make a maximum of two answers, and in any case there will be at the end the opportunity to have a follow-up. Before leaving the floor to Mr.
Castagna, let me introducing our colleague on the stage. Starting to your left, we have Mr. Salvatore Poloni, our co-general manager and chief operation officer, Mr. Edoardo Ginevra, our CFO, Mr. Giuseppe Castagna, our CEO, that you already know. We have Mr. Carlo Bianchi, chief lending officer, and last but not least, Mr. Domenico De Angelis, co-general manager and chief commercial officer. Some of you told me that there is some problem with the audio, the streaming, the video streaming. We try to resolve this shortly, but you can listen the conference on the conference call number. Now, I leave the floor to Mr. Castagna. Thank you very much.
Hello. Good morning, everybody. Happy to be here with my top line in order to give first the presentation of our nine-month results and then a deeper presentation of our new strategic plan, 2021-2024. Of course, it's going to be quite a long journey through our past, but especially toward our future. We are very confident that the results we have been able to reach during these very complex five years of merger and restructuring and renovation of our bank will give everybody confidence to the reachable and the possibility to be very compliant also with the plan we are going to present today. Let's start with page five of the nine-month result. Just a moment because...
Wait a second.
Okay, we are not as usual. We are going to give a presentation on nine months, which would be condensed in very few slides due to length of our morning. There are many numbers in this first slide, but I think that all together give you the impression of what extraordinary work has been done by my colleagues. Core revenues are growing up to EUR 3.1 billion +10% year-on-year, with a quarterly level consistently above EUR 1 billion. A very robust NII plus 4.2%, strong growth in fees +15%, and a solid contribution from our product factory at EUR 145 million +35% year-on-year.
Also, pre-provision total revenues are up to EUR 3.4 billion, 10% more than last year, and pre-provision income are up to EUR 1.5 billion plus 20%. Cost control is still ongoing. As you know, we have normalizing the cost of last year, we have a small reduction. We will see then afterwards how the cost reacted to the pandemic. Cost income is down to 55% from 59% in the nine months 2020. We have a very good situation also in our asset quality. We are down to 5.9%, which means with the EBA definition being below the 5%, the famous threshold of 5%, we are down to 4.8%. NP ratio net are 3.2. Texas ratio 29%.
Default rate below 1%. The cost of risk, I know and I am looking at the presentation of my colleagues, we are still very prudent, provisioning, up-fronting, what is needed to contain the risk in the bank even though we have reached 5%. We are with a core cost of risk of 48 basis points, but a cost of risk which total is 83 basis points, like our guidance three months ago. Capital position is very solid, 13.3%. Let me just remember that we were at 13.3% at the end of 2020, facing a very strong headwind from 95 basis points.
In nine months, we have recovered all the 95 basis points and positioned our bank in this solid capital position with MDA buffer more than 450 basis points. The standpoint, as I mentioned before, we have been able to include in this position the headwinds for 2021. All in all, net income EUR 472 million in nine months, which again gives us a lot of confidence and boost to sustain not only the ambitious profitability for this year, but all the business plan for the next three years. A quick look at all the main figures of our bank. I won't go again on what I already said, but it's worth to notice net fees and commissions very strong in Q3, basically at the same level of Q2, leading to 15% on nine months.
Core revenues consistently above EUR 1 billion quarter by quarter, reaching EUR 3.1 billion in nine months. Again, total revenues consistently above EUR 1.1 billion, reaching EUR 3.4 billion in nine months. Operating cost under control, a small reduction Q-and-Q of EUR 16 million, with an increase on the stated number of 2020, which as you remember, had a lot of one-off thanks to the pandemic situation, and stated we have an increase of EUR 60 million. Pre-provision income is EUR 485 million vis-à-vis EUR 560 million in last quarter, and the same result, EUR 484 million, in the first quarter this year. All in all, EUR 1.5 billion of pre-provision income, which is 20% more than last year. Provision at the same level that we already mentioned before, EUR 673 million.
Let's just consider that the core provision for this year without up-fronting and without the massive increase of stage two methodology amount to below EUR 400 million of cost of risk for 2021. Profit before tax are consistently at level EUR 260 million quarter by quarter, leading to almost EUR 800 million of profit before tax for this year, which is 75% more than last year. After taxes, we have EUR 180 million of Q3 results and EUR 571 million of nine months. After systemic charge and mainly other costs related to fair value option, we are down to EUR 111 million in Q3, which is a very solid results above the first quarter results, and a total EUR 472 million, which adjusted is EUR 565 million. Going ahead, we have some detail about net interest income.
As you see, +4% on last year, -1% this quarter, still with a very solid performance from commercial bank and +EUR 5 million, a reduction due to the reduction of NPE, so the contribution was down EUR 2.6 million. A temporary decrease of the TLTRO interest income, which has been due, which is due to a different phasing on the TLTRO, and we will recover during the lifetime of TLTRO, this figure. Non-commercial banking, which includes, of course, the negative effect of the reinvestment of the liquidity coming from TLTRO, is down EUR 4 million. All in all, EUR 560 million versus EUR 522 million. Good to say that, notwithstanding the strong increase of state guarantee lending, our asset lend...
Our asset spread is still consistent at 177 basis points, so quite the same as for the entire 2021, and also the commercial spread still at 116 basis points. Fees and commissions, we already commented on the very strong result of this Q3, taking into account the seasonality, which normally has a downside for August. This time, we were able to compensate basically by increasing commercial fees versus advisory fees. As you see, EUR 475 million was the result, basically the same as the second quarter, plus 13.8% versus last year. In nine months, it's 15% growth. The composition is changing a bit. We have an increase of EUR 17 million in commercial banking fees, mainly due to the lending activity and to the payment services and trade finance activity.
Meanwhile, of course, we have a small reduction in advisory, especially driven by upfront. Meanwhile, the running fees were still very sound. On Q3, we have the three months, and you see that August was almost EUR 12 million below July and September, which were at a level 162, 163 million. As far as the investment product capability, placement to our clients, we are still maintaining a pace of EUR 1.5 billion per month, apart from August, in which we had EUR 1.1 billion, which in any case was a record for our bank. But we are still confident that we can keep this EUR 1.5 pace up to the end of the year. Operating cost, like for like +3%. On the normalized figures, we are below 0.2.
If we compare 2021 with 2019, before COVID, we are down almost 3% in overall cost. The Q3 is below Q2 for EUR 15 million-EUR 16 million, and the head count is down to 20,565 people, having left the bank, almost 1,000 people out of the 1,600 due for the early retirement scheme. Also the branch net was right-sized. We overcome the target of 200 branches given in our previous plan, and we have reached 300 more closures to the work already done during the first year. We have now 1,530 branches, almost 1,000 branches below the starting point of the merger. On page 10, we have some consideration about the volume growth.
As you see, on the left side, the core performing loans are stable quarter-on-quarter, with a growth of 3% year-on-year, which is the normal growth we have always experienced apart from 2020, in which we were able to grow more because of the state guarantee assistance. This is the pace that we envisage also for our bank for the next years. On the center, you see the growth of loans guaranteed by the state. It's plus 9% in the last quarter. Of course, it's an enormous increase in terms of year-on-year, because in September 2020, we were at the beginning of the state guarantee aid. So basically from zero, we have been growing to EUR 16 billion now.
The total level of this 16 billion, and the average level, considering that some of these guarantee are 100%, some 70%, 89%, is 86% of the total consideration. The moratoria is going still down. We have reduced from EUR 16.2 billion to EUR 4.2 billion. Very good news is that the default rate of the moratoria is below 1% versus 1.25% in June, three months ago. Still we have more than 70% of the remaining outstanding moratoria in our best rating classes. We are monitoring very attentive all the evolution. As you see, on the slide 16, you have all the details about moratoria, as well as on page 15, you will have the details about the evolution of the state guarantee loans.
Customer deposits, another good signal due to the effort of our people in the branch network. We were able to reduce 1.6% the growth we were experiencing in deposits from clients. As you remember, we have been growing almost EUR 15 billion during the pandemic. Now the effort to transform most of this deposit into assets under management is giving good results. As you see from the next box, the assets under management are growing quarter on quarter 1.2%, and on a yearly basis almost 10%. A very good figure also to look at the net inflows. We have reached EUR 2.5 billion on net inflows from customer deposits to assets under management. This is a figure which will be very important also as a reference for our business plan.
Liquidity and funding, very solid, of course, thanks also to TLTRO, which is at the maximum of EUR 37 billion. Italian GO is still down, EUR 2.3 billion in Q3, leveraging also on NFR, which of course has a good boost from this situation. Bond outstanding is only EUR 18 billion. We will see on the plan how small relative is the reduction year by year. On page 11, a quick look to a very important step that we have reached. You will remember that we started with 24% of NPE ratio. With this quarter, we have reached 5.9%, which will be 4.8% considering the EBA definition.
If we consider that we have front-loaded the amount needed to complete further disposal for an amount which goes from EUR 650 million to EUR 1 billion, even if we consider only EUR 650 million, the pro forma NPE ratio will go down to 5.3% and 4.3% if we consider the EBA definition. I think it's very important statement for our bank, which has been considered for many years as a big NPE ratio bank, and now we are finally eventually into the low NPE ratio bank. Cost of risk, again, some evidence. I understand again that some of my competitors are less prudent than we are, but we prefer to still continue to upfront and to be very cautious considering the potential increase of default rate in 2022 due to the end of moratoria.
We had the prudent approach upfronting again some consistent part of the cost of risk, increasing the 48 basis points-82 basis points. Last page on capital position, another very strong and satisfactory result. 13.3% end of 2020. We had to face the reduction due to the headwind, 95 basis points. As you see, in nine months, we have completely recovered the capital position of end 2020, which fully loaded is 13.3% again, thanks to the Q3 performance, of course, already considering the dividend and the AT1 coupon, and to the RWA and other asset changes on our balance sheet. The phase-in figure is 14.5%.
This leads to a capital buffer, MDA buffer, which is above 450 million fully phased and almost 600 basis points, sorry, not million, basis point, if you consider the phase-in. All in all, we confirm our target for 2021. Basically, we're a bit above the figure that we gave you last quarter. Again, we think doesn't change the global look of our results, which will still be very consistent with being above EUR 4.4 billion as total revenues, almost EUR 2.5 billion of operating costs and pre-provision EUR 1.9 billion.
Cost of risk, we confirm to be in line with the guidance we gave you, possibly exploiting this prudence in the coming year, with an EPS and a payout that we confirm EUR 0.35 and 40% with a solid capital buffer, which is already above our target of 13 and 350 basis points. Okay. I think this is, of course, in the following page. I'm sure you have all the details, the normal slides that we present every quarter. Again, maybe it's better to go straight to the strategic plan and to examine how this track record, very consistent, can bring to even better results in the coming year. Starting on page three, you see the agenda for the business plan.
We have a small examination of the current macro situation in which we consider that at least from an economic point of view, we can consider not only our country, but the Eurozone, I would say, out of the crisis. Meanwhile, we know that the pandemic is still to be overcome. In these days, we still have some possibility to see a fourth wave of the pandemic outbreak. In any case, we have been able to deal with this situation during this year and a half. We know that, of course, the vaccination will be the better possibility to contrast this new crisis. We will examine in depth the track record of the bank, and we will go to the numbers of our strategic plan.
In this presentation today, I will have the help of my CFO, which we go through after the number that I will present, the different business line in order to give you more detail about the means that we will use, the tools that we will use to reach our target. Out of the crisis, this is a scenario that almost all everybody convey with different level, of course, of optimism. We knew that in the last week and day that, for instance, the GDP for Italy is going up.
In any case, we have utilized the GDP of some weeks ago that had the provision of 6% for 2021, 4.2% for 2022, 2.5% in 2023, and 1.5% in 2024. This is a scenario that happens also if there is zero growth during the fourth quarter. It's of course a prudent scenario, and we think that most probably the outlook will be better. For Euribor, we have used a scenario which will still be more or less at the level we have today for 2022, then a small reduction in 2023, and a more consistent reduction always below zero with negative interest rate in 2024.
If you look at the forward rates, they show today that they are already positive starting from 2023. The global situation, we know that there is a recovery boosted both by the decisions made by the U.S. and the European politicians. We have bottlenecks in the transportation and in the commodity cost. This brings to an acceleration we have seen during last weekend, the focus on climate change and the new rules, and also at the Eurozone economy or Eurozone level, we have an expansion of EU macro, thanks to NextGenerationEU, which has been developed by each country, and also again, by the climate change action that are going on.
In Italy, the recovery is very good up to now, and we still have to see the effect of the PNRR implementation, coupled with almost the same level importance of the structural reform agenda that the government has started to implement. On page six, some words about the Italian PNRR, the once-in-a-lifetime occasion, not only for Italy, but also, of course, for the banking system to support this growth inside the NextGen EU plan. On the left, you see some figure that you already know, I think, about the mission and the investment that will be devoted by the public to this initiative. Basically, on digitalization innovation, almost EUR 50 billion. The green transition is almost EUR 70 billion. Infrastructure for mobility is more than EUR 30 billion. Healthcare, EUR 20 billion. Inclusion cohesion is EUR 30 billion.
Education and research, EUR 33 billion. The total funding is more than 125 billion under a time horizon 2021-2026. We expect a boost in bank lending to support and to enhance this investment, which will be in the region between EUR 150 billion-EUR 200 billion. As I was mentioning before, this will be coupled with a comprehensive reform program, which will be focused on public administration, justice, competitive environment, labor law, labor cost, and fiscal. The cumulative GDP impact starting from 2021, 0.5% from this plan, will reach 3.6% of increasing growth of our GDP. Let's have a look to what we have done before talking about the future during these years.
First of all, our position, you know that we have a very strong franchise in Italy. Basically, our loans are concentrated, 40%, more than 40% in Lombardy, and 70% in the four regions, which together represent more than 50% of the Italian GDP. They are, as you know, amongst the wealthiest and the more manufacturing regions of the entire eurozone. We have been investing on the increasing productivity and complementarity of our specialized bank into our business. We have bought in our wealth management bank, Banca Aletti, and in our investment bank, Banca Akros, now two of the primary names in the relevant field, which are starting to give good results and have in this new plan the opportunity and occasion to be even more fully integrated in our strategy.
As well as we are pushing on the digital capability of Webank, which as you know, is not anymore an independent bank, but is a brand that still represent the digital innovation of our bank and started not few years ago, but more than 20 years ago. Together with this very comfortable situation, we have now a very solid track record in terms not only of the de-risking and restructuring and network reorganization, but eventually also in terms of revenues, cost cutting, NPLs, so asset quality and capital strengthening. The best possible situation to start for a new ambitious plan.
Not forgetting the opportunity that we also will consider for our improvement, leveraging on our three important product factory, Agos, which as you know, is a leading national player, in which we have a stake of 39% together with Crédit Agricole. Anima, which is the top independent Italian asset management player, in which we are the major stakeholder with a stake of 20%. The two bancassurance joint venture, which, you know, nowadays represent 19% for BPM in BPM Vita and BPM Danni, and 35% in Vera, together with Covéa and Cattolica. As we will explain, and you already know, during the plan horizon will be completely incorporated by ourself and will became 100% part of our bank.
This is a strong opportunity to leverage on this product factory. On page nine, we have some small remind of what we have done already in terms of business plan compliance. In our first major plan, notwithstanding of course, we didn't know the bank well as we know now. We started from a very consistent EUR 31 billion of NPE stock. The target was to reach EUR 23 billion. These look like numbers that nowadays are impossible to bear. In fact, during the plan, we accelerated to reach in 2019 already EUR 10 billion of NPE with a reduction of EUR 20 billion. As we know now, we are down to EUR 6 billion. Gross NPE ratio, so it was 25%, the target was 17%, we reached 9%. Net NPE ratio 15%, the target 11%, we reached 5%.
As well as in the cost efficiency, we were beating the budget, the target number, the plan target number. The branches were due to be reduced to 2,100, and we were down to 1,700 branches. The staff was considered a reduction to 2,500 people, and we went over 3,000 people. The operating costs, which were EUR 3.1 billion, were considered to go down to EUR 2.9 billion. We managed to reduce in 2019 the costs to EUR 2.6 billion, almost EUR 500 million, which became over EUR 600 million in 2020, thanks to the peculiar situation of the pandemic. The same was with the capital position.
We were able to be at 13% above the target plan in 2019, as well as we overcome doubling the results we expected for the Texas ratio. The sole missing target were related to the total revenues. This was a big missing. We were EUR 1 billion below the target due to the different forecasts that we had on the plan. We imagined a new Euribor going up to 10 basis points positive. Meanwhile, Euribor went down to minus 40. Also the GDP, we imagined a GDP basically stable at 1%. The GDP went down from 1.7% to 0.3%. Notwithstanding that, the net income were very solid. We had a target of EUR 1.1 billion. We reached almost EUR 800 million.
We already had also for the first plan the possibility to beat mostly of the target, as well as we were able last year after a very difficult situation created by the pandemic crisis, but we react very promptly. Once we were ready, as you remember, to launch the new plan, we reacted very promptly to the new situation. We were able to change, basically to start to change our interaction with client from physical to digital.
We had the possibility to stress the cost efficiency with a reduction of further EUR 170 million in one year compared to the almost EUR 500 million made in the previous three years, with a stronger focus also on the agile work, ensuring, of course, safety and, anyway, not avoiding a commercial relationship between our client and our network. Last but not least, we will react very promptly to the moratoria and the state guarantee maneuver allowed by our government, and we were one of the best banks to react with a share on gross customer loans, which passed from 3% state guarantee to 15%.
not only we had the opportunity to sustain the strength and the liquidity of our client, but we have also bettered a lot our portfolio, increasing the share of state guarantee loans to 15% of our global portfolio. Also, the market share in this share of guarantee loans is above our normal market share, 9% versus 7%. also in terms of numbers, not only in 2020, but as I mentioned, as I showed to you with the Q3 presentation, we have a strong increase both in terms of balance sheet and profitability. We already mentioned this increase in loans, basically from EUR 91 billion before the crisis to EUR 100 billion as of September. The strong increase of deposit from EUR 88 billion to EUR 102 billion. The asset under management will grew EUR 5 billion since 2019.
Again, a very consistent growth in profitability, both at total revenues level, consistently above EUR 1.1 billion, with still a very prudent approach on cost of risk, notwithstanding the fast reduction of our NPE ratio. Also, the net profit from operation is now very, very consistent in the region of EUR 180 million. If we consider this number adjusted, so without the different situation that quarter by quarter can impact one-off on our results, we have, as you can see in the last three quarters, a result which is always above EUR 220 million, EUR 240 million, EUR 250 million. The asset quality, already we explained that we are below 5% with the EBA definition, 5.9% with the normal definition, and again, a very strong capital situation. Why we are confident for the future?
Because if we also compare the results that we have reached during 2021, and we compare them to the forecast we have done last year in terms of revenues generation, and I am sure you remember that the plan last year was considered very ambitious, in most of the figures we have reached already in 2021 the results we had, the objective, the target we had for 2023. We have a couple of examples in this slide 12. You see that investment product placement, we were at EUR 3.5 billion before the quarterly average before the COVID, EUR 3.2 billion during 2020. We grew to EUR 4.7 billion this year compared with a target of EUR 4.5 billion for 2023. Basically we are already there. More or less the same for net customer loan, which were envisaged to grow 3% year by year from 2020 to 2023.
We grew 4.6% starting from pre-COVID to nowadays. This situation allows us to say that we have built up a solid track record in terms of commercial efficiency, which leads us to the number of the plan. On page 14, we go immediately to a comparison between the old plan of March last year with the new plan, of course, extended one year because the new plan goes to 2024. As you can see, there is a growth in total revenues growing to EUR 4.6 billion. Operating costs are going down to EUR 2.4 billion. Gross NPE below 5%.
Cost of risk 48 basis points, which is exactly the cost of risk of this year already reached the core cost of risk of this year, which brings us to a net income above EUR 1 billion compared with EUR 770 million 2023 last plan and a return on tangible equity above 9% compared with 7% of the last plan. In terms of capital strength, we see that we are above 200 basis points, the previous target of last plan, almost 14.5 basis points compared to 12.5 basis points. The figure of 2023, which we will give you of the new plan, we will present 2023 and 2024 target compared with the old 2023 are almost at the same level, notwithstanding the pandemic we have experienced during these last 18 months. Some details, return on tangible equity, why we feel confident to grow from 5%-9%.
Basically, we have already performed a terrific growth in the first three years of the plan. We grew basically from zero to 6.5%. Then of course, the pandemic brought us down again to 3%. Now we are recovering, and thanks to the figure I already showed you, we think that we can still keep this pace of 2% increase year by year. Of course, we will explain the different tools we have at our disposition. Cost income going, of course, down thanks to the increase of revenues and the reduction of costs. We are already at 57% on a yearly basis, as we have seen before on Q3 2021, we are already 55%. We think we can go down to 53%, 2024.
The gross NPE ratio, there is not a big science in the further reduction. We have only considered, being already basically at 5% level, we have only considered a maintenance of our NPE. Basically to deal and to work out the inflow which each year will come in, basically we will deal with this inflow and we will work out numbers which we are very well used to do year by year since 2017. Of course, I cannot exclude that there will be further disposal, massive disposal, but we have not considered massive disposal for our plan, apart from the EUR 650 million that I mentioned during the Q3 presentation.
Common equity ratio, as you see, there is a robust growth up to 14.4%, thanks to the growth of profitability, but also to the lack of further headwinds that, as you see, during these nine months, amounted to 95 basis points. Some numbers on total revenues. We have given you the numbers starting from 2019, because basically it was the last year before COVID, so no impact from COVID. We already grew to EUR 4.3 billion. The target is EUR 4.6 billion. As you see, EUR 4.3 will be reached by 2023. Now we are EUR 4.4, but I remember that there is the TLTRO termination.
We saw with an impact on a reduction of NII of this aspect, the increase of almost EUR 300 million that you see from 2023 and 2024 is equally split amongst NII, net commissions, and net income from associate, which means basically the incorporation of the bancassurance deal. Is also in this respect something that is already very well considered and in our opinion has a prudent approach. All in all, we will have a growth of 2.4% in 2024, but the total revenues growth that we forecast starting from now is exactly the same pace that we had considered in the starting point in 2019.
Operating cost, also for this, the reduction of 1.3 considered from 2019 is exactly the same reduction we are foreseeing starting from now. As you know, this year we will be in the region of EUR 2.5 billion. We imagine to reduce to EUR 2.4 billion, thanks especially to the early retirement scheme, which has been already in place, but has not yet performed the full effect, which will be in 2022 and 2023. Cost of risk, we already told about our prudent approach. Net income, again, the results of all this, of course, generate an increase starting from 2019 of 10% CAGR year by year, and of course, starting from 2021, 25%. Let's have a look to the pre-provision income roadmap starting from 2019.
We start again from 2019 in order to check what we have already done, the pace of growth we have already experienced, going forward to 2024. As you see, we have already had, starting from 2019, an increase of more than EUR 150 million. We think that to reach EUR 2.1 billion, we will go through a reduction of NII of EUR 20 million. Basically, there will be a sort of compensation between the lower contribution TLTRO, and on the other side, the advantage of having a robust increase in volumes, thanks also to the PNRR and the Euribor improvement that I showed before. Net commission will be EUR 200 million more. As I mentioned, we have been growing since 2020 almost at the same pace.
These fees come from the majority from management and advisory fees, EUR 150 million out of the EUR 60 million of improvement out of the commercial banking. Out of the EUR 150 million, the 85% will be related to the running component of the fee. It's the build up of an increasing asset under management coming from the inflow of client deposit, which will bring us to generate more fees and not an implementation of product investment, which will grow very, very slowly at a pace which is very much below the pace we have done during this year.
The discipline on cost, we already mentioned, we will bring more profitability for EUR 80 million if we look at the personnel, EUR 30 million for other general costs. Of course, we have also a very prudent approach on NFR. NFR in this last year gave us big satisfaction in terms of results. We, due to the new situation of the potential growth, economic growth, we don't think that there will be the same possibility to make such results. With a prudent approach, we reduce the contribution of EUR 185 million. This brings to EUR 2.1 billion, which is the result of 2024, which is an increase of below 4% on a CAGR 2021-2024. Customer volumes grew 3%.
As I mentioned, it's the same pace we have experienced up to now. The same, on the other side is going for deposit. We believe it's possible a reduction in deposit at the pace we are having, starting from last year. We have had, as I mentioned in the quarter, EUR 2 billion of reduction. We think we can have other EUR 4 billion of reduction of our total customer deposit, of course, switching into asset under management, in which we see the bigger growth of our volume, balance sheet, which grew from 64%-78%. Let's consider that, the global growth of EUR 14 billion, cumulative growth of EUR 14 billion, 2021-2024, is already at EUR 2.5 billion at September of this year. We have another EUR 12 billion to grow to complete our asset under management target.
The new lending is growing again at the same level we've experienced in a normal year, apart from the spike of 2020, which the state guarantee loans, of course, gave the opportunity to increase to more than EUR 27 billion. I try to accelerate a bit. I won't comment the asset quality. We've already talked about that. Common equity is the same. LCR and NSFR, of course, will have a more normal figure vis-à-vis the 200, more than 200 of LCR today due to the end of TLTRO. Finally, I would say there is the common equity tier one capital. We start from 13.3%.
We have 200 basis points of retaining earnings after dividend AT1 coupon, 20 basis points detailed in the next page of balance sheet capital management action, 100 basis points of loss of capital due to the volume growth and increase of value of our product factory, our participation, and 20 basis points from other components. All in all, we will have 14.4%. We gave you also an immediate outlook on 2025. As you know, Basel III has been postponed starting from 2025. Even though if we take into consideration the 80 basis points of impact that will be phased in eight years, we will go down to 13.6% if we consider the fully phased impact of Basel III.
Of course, this will be then recovered thanks to the deduction of the TA, which thanks to the results we are getting, are progressively not anymore a burden for our capital. Just two words about the 20 basis points of capital management action, because you know some of them, so I want to be precise. Consumer finance, we have a put option expiring in 2023 for Agos, for 10% of Agos. In this plan, we have considered not to exercise the put option because we don't want to renounce to the revenue generation of Agos. As you have seen, we don't have any problem in capital strengthening. So we consider to reduce 26 basis points not renewing the, not exercising the put option.
The bancassurance, of course, will have, thanks to the Danish Compromise, an impact of only 16 basis points, even though this 16 basis points will then afterwards recover thanks to some tailwinds coming from Basel III. The positive impact will come from the ProFamily run-off. You know that we have another 500 million of RWA in run-off. Real estate optimization, we have considered 700 more million of RWA reduction in our properties held. And finally, balance sheet action like synthetic securitization or cancellation of credit lines unutilized, which amount for more than 30 basis points. Let's consider that most of these will come immediately in the next quarter, thanks to some synthetic securitization we are launching during this quarter. A very quick, because I am really late, sorry for that.
Very quick look to our pillars to realize this strategy. Basically, what I will be talking is the new digital-driven service model, enhanced of course from the experience we had during the moratoria period, which enable a sustainable core business growth, fostered by the track record we have already experienced during these last nine months, and leveraging on the product factories. The three of them, they are growing. One of them, as you know, will become part of our group 100%, so there will be a big effect from this, product factory on our balance sheet. Very quickly, the digital transformation.
We have already spoken about the reduction of branch from almost 2,400 at the beginning of the merger to 1,400 right now. We will still be reducing the branch. We will see afterwards. More than the branch, we have reduced the transaction to the cash desk. This means that we have reduced the cash desk from almost 5,000 in 2017 to 2,500 right now. Now we have cash open only in the morning. This means the FTE equivalent is below 1,500 people. One-third compared, more than one-third, two-thirds reduction compared with the starting point. This, of course, has been allowed by the growth of the remote-based transaction, which grew from 70% to 83%.
Also, especially recently, the big increase that we are experiencing on a monthly basis of our app-based transactions, which are experiencing again a growth every quarter. Despite this number, we still feel that we have a lot of further potential value generation that can be created by a more diffuse digital approach in the relationship with our clients. Just some figures to give you the consistency of this strategy. In 2020, we were serving on a yearly basis only 25% of our retail clients. This means that one quarter of our clients bought one of our products in one year's time. Let's say that now we are already almost 28%, but the best performers are above 30, 33, 35%.
There is room to increase our productivity, and this will be fostered, of course, by digital approach. Again, we have some product which is sold at a lower level, so we have a penetration gap vis-à-vis the best performer in residential mortgages. We have a penetration of 11% vis-à-vis 14% of our best competitor. Health insurance, we have 2.2% only vis-à-vis 3% of the banking, the best banks. Also in SME activity, we have 26% of our client having our point of sale and the other bank reach 32%. There is room to improve this activity, of course, fostered by the reduction of branch-based transaction.
In this respect, starting from 2019, we have already registered a very encouraging reduction from 18 million per month of transactions to 10 million nowadays, and we envisage to reduce another 40% the branch-based transactions. We will leverage the possibility to increase this number through a stronger and a more sophisticated digital approach with three main levers. The first one, I would say in page 26, is the full digital and mobile-centric daily customer interaction. We have already reached, compared to 2019, an increase from 68% to 73% of our clients enrolled in digital transactions, 43% of which in mobile transactions. We envisage to reach more than 80% in 2024, but especially more than 70% in mobile. Mobile is a strong ammunition for our bank.
We have the best in class banking app, application. This comes from the customer reviews, including the challenger banks. We have all the opportunity to attract more clients to utilize mobile. As I mentioned before, we reached 83% of remote-based transaction. We aim to go above 90% and to reduce the branch-based operation to 6 million, down to 6 million. All this also through the change of attitude of our customer center assistance, which will be much more dedicated to outbound production rather than to inbound. More than almost 60% of our inbound transaction are dealt with an automatic system, which we will bring to 75%, leaving, of course, time and people to improve and to increase the outbound proposal to our clients.
The second layer is to empower, to have more people dedicated, both in the branch and in our digital branch, which will be the new customer center dedicated to client. As I mentioned before, we reduced from almost 5,000 in 2017 to 2,500 the number of cash desk. They are going down in 2024 to 1,600, with an equivalent FTE to below 1,000 people. You remember the number in 2017 was 5,000 people. Most of the people, of course, part of them will be a lower population of our employee. Part of them will be going through reskilling, upskilling, education in order to have more people dedicated to the commercial activity.
Also the customer center, as I mentioned before, they will be much more dedicated to the outbound and will be increased up to 200 FTE dedicated to commercial activities. The third level is the, I would say, the artificial intelligence and, the data mining, which will allow us to develop even more. You see that we have already activated 23 customer journey, which means a dedicated approach which substitute the normal campaigns, for each product. Already 23, starting from six in 2019, we aim to reach 50 customer journey, so, in doing so, covering, all our main products. The interaction with client, with you already, the active interaction to do the real sales that we have done through digital grew 6% to 36%.
Our aim is to reach 60% by 2024. This, of course, will be possible thanks to the full remotization of our product and service catalog by 2023. You see on the bottom of this slide the different product availability both for private and SME customer. Finally, this will allow us to dedicate more than 75% of our employees to commercial activity, to reduce the branch network furthermore to 1,300 branches, to increase retail sales driven by advanced analytics and start remotely to be completed either remotely on an omni-channel journey, more than 50% of our total sales. As you see, in 2019, this was only 8%, now is already 23%.
This will finally allow us to close the commercial gap I mentioned before, from 109 to 131 as index in the retail sales. Sorry for being a bit long about this explanation. Now I will leave the floor to Edoardo Ginevra, our CFO, which will bring you more in detail in the different client cluster.
Thanks, Giuseppe, and good morning, everyone. Let me now lead you through the second pillar of our business plan, which is the commercial growth. In this section, we describe the initiatives we are going to adopt in the new macroeconomic context and exploiting the opportunities from the digitalization, which was described under the first pillar, throughout our main business segments, which are family banking, wealth management, SMEs, corporate and investment banking. For each segment, I'm going to illustrate the main expected figures together with the main actions that we are planning to implement along a very simple philosophy. We are a commercial bank, and we think that a commercial bank must do what a commercial bank must do.
i.e., focus on, stay close to our clients, focus on commercial effectiveness, and generate possibly a positive trend in revenues on a risk-adjusted basis. First point, family banking. In each section here, you see, first slide with the main figures and then the actions. On family banking, the key balance sheet elements are represented by mortgages, which we see growing at 3.2% per year in 2021 to 2024. In terms of total revenues, we expect a growth of 19.2%. Why this 19.2%? Because this is measured as managerial data taking into account internal transfer rates.
As you see in the right part of this, page 31, on loans, the expectation is an increase of 1.3%. Here, we use index numbers. On deposits, the negative contribution given by the reinvestment of the collected fund at Euribor is reduced very significantly, from index number 100 to 48, -21.8%. Fees grow over 2.7%. Fees is a very diversified pocket of revenues, with part of the fees very dynamic strategic component growing, such as non-life bancassurance, consumer finance, digital payments. This dynamic component represents 44% of the total, more or less, whilst the other components are more static and not expected to grow over the plan horizon. The actions that will support these revenue targets are structured around three main areas. I don't go into the details.
I only mention the titles. Omnichannel approach to be fully deployed and exploited in this segment. The opportunities offered from synergies with our product factories. Finally, focus on specific opportunities also with an ESG angle. Main KPIs we look at are mortgages, where the yearly pace is expected to go up to EUR 4.6 billion in 2024. We used to be EUR 3.8 billion in 2019, EUR 4.3 billion in 2021. Consumer finance, which for which the growth is up to EUR 1.1 billion, as opposed to almost EUR 1 billion that we had in 2019 and EUR 100 million this year.
Second, and probably very, one of the most important areas, one of the most strategic for the success of this plan is for wealth management. Wealth management is, in wealth management, we expect growth in assets under management from 64, current level as of September, to EUR 79 billion end of 2024. This is equivalent to assets under management representing 70% as opposed to current 64% of total assets under management and assets under custody. Revenues driven by this increase will grow at 6.3%, additional commissions for EUR 163 million, which is basically mostly driven by the contribution of the increase in running fees. The logic is increasing assets under management, increasing running fees, and then increasing revenues.
In terms of the increase in asset under management, it's worth noting that up to now this year, we have generated EUR 4 billion of additional AUM from EUR 60 billion to EUR 64 billion. This is due to the contribution of 2.4 net inflows and 1.6 market effect. For the future years, net inflows are expected to continue in the positive growth trends to arrive to EUR 4.4 billion in 2024, with a market effect that prudently will maintain below EUR 1 billion year by year. 34, again, as in case of family banking, the key initiatives are grouped around the area of commercial tools, so CRM analytics, customer journeys, new service model based on web cooperation and advisory under the coordination of the investment center of Banca Aletti.
On the other hand, strong focus on value-added solutions provided by bancassurance product factory and, which will be internalized, as we will see later on in 2024, and asset management, with collaboration with our partner, Anima, which we are shareholders. KPIs, AUMs, as mentioned in previous slide, up to EUR 4.4 billion. Currently, we have generated in nine months, EUR 2.4. Total investment product placements, here the growth is much, we will say is moderate compared to the 2021 level. We expect to close 2021 at, a little bit above EUR 17 billion. The target for 2024 is EUR 19.6 billion. Within asset wealth management, an important contribution expected from our specialized bank, Banca Aletti.
Banca Aletti, which performs private banking directly as a dedicated bank for high net worth individuals with 170 private bankers and volumes directly managed over EUR 17.4 billion. It also functions as the investment center for the whole of the group with 70 financial specialists dedicated and additional assets under management for almost EUR 15 billion. The levers for the further development of Banca Aletti are three again, new service model, better and empowered value proposition, and exploitation of synergies with the rest of the group, both with the corporate client segment, with Webank, with investment banking. KPIs, we expect to grow the total of indirect funding to EUR 18.3 billion as compared to the EUR 14.6 billion of 2019 and EUR 15.4 billion in 2021.
Assets under management within indirect funding to grow to EUR 14.3 billion, currently at EUR 11.3 billion and were EUR 10.5 billion in 2019. Fee income driven by the previous aggregates to grow from EUR 87 million in 2019 to EUR 100 million expected in end of this year, to EUR 123 million expected end of 2024. Now we turn the page to the B2B area, to SME and corporate. Here, it's worth pausing a little bit and observing that we are in a completely different context versus what we were used to before the crisis before the COVID-driven crisis. The context is a context of very heavy public interventions that are creating a vast amount of new and very interesting business opportunities.
We feel to be in a very favorable position to exploit these opportunities. First point, first example we mentioned in this page 36, is Superbonus and Ecobonus. This is a mechanism that creates an interesting forward-looking NII capacity. Why is that? We up to the end of September have already originated volumes for EUR 650 million, with total NII over the lifetime of these assets of EUR 58 million, progressively booked in our PNL over time according to the maturity of underlying assets. On top of this NII, one-off commissions that in this part of the year had amounted to EUR 5 million. The total that we expect to originate until 2023 is EUR 3.5 billion.
Proportionally, this means that the pocket of additional NII to be generated is EUR 365 million. This is the contribution that in part will flow into the plan, in part will be present in general in the future PNL of the group. Turning to the National Recovery and Resilience Plan, PNRR, this is an important game changer. We expect to play the role of reference lending partner for clients, customers interested to support with additional financing the activities that will be generated in the areas of in the missions of the plan.
At the same time, to be advisor, to have an advisory role, especially for the lowest end of the range, for small-sized or medium-sized SMEs, which will definitely need advisory services from banks to help to receive help in understanding the opportunities and investing in them. The impact of PNRR on volumes is around additional EUR 4 billion. This EUR 4 billion is a conservative potential estimated out of a maximum amount of EUR 8 billion of additional loans, and is consistent with the estimate of additional EUR 150 billion-EUR 200 billion at national market level that are to be originated under the domain of PNRR.
The growth rate of loans in PNRR with the additional amount originated using the PNRR mechanisms is expected to go from 1.8% before PNRR to 3.1% after the impact of PNRR. With this context in mind, let's have a look to SMEs. SMEs will be at the center of our investments, especially in the distribution model, as we will see in a second. In terms of volumes, we have 2.6% growth per year of volumes, similar trend as in the previous ones, in the previous years. 5% growth in revenues. This 5% growth, compounded annually, is the result of 1.8% growth in the margin of loans. Reduction in the negative margin on deposits of 31.4%.
Net fees and commission growth of 3.2%. Within SMEs, as well, we have an important contribution of the more strategic component. Here we mention upfront and aging fees, acquiring fees, and trade finance fees. These strategic components represent 37% of the total amount of net fees and commission. In terms of the actions in SMEs, we expect to invest significantly on the customer management models that is differentiated according to the needs of the clients, leveraging on relationship managers and specialists, and to go after and pursue additional attractive opportunities in dedicated value chains, in PNRR related financing and services, agrifood, and so on and so forth.
New loans to be originated, turning to KPIs, are at EUR 10.5 billion, compared to EUR 7.5 billion in 2019 and EUR 8.6 billion in 2021. Net fees and commissions, the strategic components of those that are expected to grow more significantly, are to reach EUR 338 million, as opposed to EUR 249 million in 2019 and EUR 271 million in 2021. The distribution model will evolve along the line of the opening of new business centers. These are expected to host 400 relationship managers and to be located in either our most penetrated or our traditional areas or also almost half of them in under-penetrated areas.
The idea is to create teams of dedicated specialists that currently work in the undifferentiated full traditional branches, 1.6 relationship managers per branch. In the future, they will be located and concentrated in a dedicated business center, on average, five relationship managers per business center. As I said before, almost half of these business centers will be located in areas which, for us, are under-penetrated but have a strong potential to grow further. Corporate investment banking is an area where we want to capitalize on an already prominent positive position that we have reached over the last few years since the merger. Growth in volumes is expected 4.1%.
Growth in revenues is 5.6%, driven by 2.2 on loans, reduction in negative margin of deposits, which here for corporate is 27.9. Net fees and commissions 3.3%. Within fees and commissions, the components that are to be considered as high value-added business will grow 7.3%. This is 60% of the total. The initiatives in corporate areas are around four main drivers. First is to identify pockets of business that embed higher value, such as structured finance, such as structured export financing. To seize the PNRR opportunity, of course, we discussed early on. To be on top of group synergies generated with Banca Akros and Banca Aletti.
Banca Akros for investment banking, we will see in a second, facilitating also access to international markets and capital markets, leveraging on Oaklins network that we acquired during this year. Finally, to adopt a more sophisticated analytical approach to the core business in order to optimize the revenue generation, taking into account expected risk, taking into account absorbed capital. KPIs, new loans to be originated around EUR 11 billion. We had reached EUR 10.1 billion in 2019. 2021 was a little bit lower, EUR 9 billion. But we have to bear in mind that in 2020, corporate segment originated EUR 13 billion, 13, owing to the opportunity, exploiting the opportunity of publicly guaranteed loans. Fees generated in high value-added business is EUR 213 million, was EUR 157 in 2019, EUR 172 expected this year.
Share of wallet, driven by the increase in volumes, will go up to 12%. It was 10.6% in 2019, 11.2%, current level. Akros within corporate & investment banking will be an important contributor. Akros is currently articulated on four business areas, generating core income in 2019, before the crisis, of EUR 147 million revenues and net profit of EUR 38 million. After the crisis, which reduced revenues and net profit, we expect these amounts to recover significantly, revenues above EUR 160 million, net profit above EUR 50 million. Initiatives that investment banking will capitalize on the network of Oaklins and on further M&A specialization, increasing significantly the share of investment banking over the total.
In brokerage, we'll continue to maintain the leadership position that Akros has already traditionally reached in this area, in this business area. In corporate investment banking, promoting innovation in product and services. In global market, enhancing trading and market making activities, financial engineering and hedging services. This concludes the section, or the second pillar, the section on the development of the commercial areas. I think that it's worth now looking at the third one, which for us is a clear source of value. I'm referring to our high value product factories. Clear source of value, sometimes not captured in full by our valuations by some of the market operators.
Bancassurance is the first one, which for us is a key game changer in the new plan, with the opportunity to internalize the whole value chain. Asset management, Anima, is a precious asset, which will further be appreciated, will benefit from the actions that we explained in our plan in the wealth management area. Finally, consumer credit, Agos, a profit machine we own 39%, allowing to diversify our business portfolio. Let's start with bancassurance. In bancassurance, page 44 explains the current situation. We own minority stakes in two partnerships, one with Cattolica Assicurazioni and the second with Covéa.
We have the option to internalize the full 100% of both partnerships for Cattolica during 2023, for Covéa from now to 2023. Actually, we have already started an internal project that has the objective to create all the conditions to really implement this internalization. The opportunities that can be exploited in this area are related to higher productivity, to increase productivity. We feel we can sell much more premiums, both in life and non-life, than the current volumes. We will see in a second the drivers. In terms of profitability, because higher scale and higher synergies will definitely improve all the P&L components.
In terms of capital, because of the opportunity created by the Danish Compromise, which allows to reduce very significantly, as explained in the previous section, the impact on CET1 ratio, the acquisitions in terms of operational model, while preserving all potential optionalities. Historically, bancassurance has not been an area where we had performed according to our potential. This explains why on page 45 you see that we rank below our peers, both in life and in non-life. After we fixed all the historical issues going back to previous partnerships we had before the merger, then migrations, then the issues experienced by our partner, Cattolica, during the crisis, we feel there is a lot of room to increase there, to perform better, to align ourselves to our partners.
Non-life is even a more exciting story, because in non-life, on top of our underperformance, you have to consider that it is a market. This is a market with a strong potential to grow and align to European levels, both in terms of total amount of premia that are sold to the various customers, and in terms of the penetration of bancassurance channel which within this market. This potential explains why in life we expect to go up to EUR 4 billion in terms of total premia. Bearing in mind this EUR 4 billion is to be compared with the EUR 19 billion we expect to have in terms of total placement in 2024 and out of the current EUR 17-point-something million that we will have this year.
We observe in the market some of our peers reach much more ambitious percentage than the one embedded in this plan out of the total placement capacity. In non-life, exploiting both the under-penetration that we have in specific products, health insurance, less than 3% of our current base uses non-life health insurance products, we expect to grow up to EUR 240 million premiums, as opposed to the current expected level for this year of EUR 180 million. This for bancassurance. Anima is a well-known success story, EUR 200 billion now of assets under management, the largest Italian independent asset management player. They recently published net results for nine months, 2021, EUR 176 million, which even with maybe some components that are specific for this year, still generate significant potential for the future.
Also bearing in mind the, what I mentioned before, the benefits that indirectly will arrive to this company, by our own expected development in assets under management. Of course, it's very well known we are the most, prominent shareholder of this company with almost 19%. Agos is the third-largest player in an Italian market, which is very interesting and recovering fast after, COVID crisis. As you see from, market data, reference date of first half of this year, solid economics generating a profit the first half of this year of EUR 149 million, of which of course we own 39%, ideally. In an area where we feel we can increase significantly our productivity by simply leveling, the differentiation in, sales effectiveness.
Here you see that the highest performing branches sell EUR 235 thousand per year per relationship manager. In consumer finance, the lowest performers are at EUR 82 thousand. To sum up in the story of this part, revenues, additional revenues, and both in terms of fee income, in terms of contribution to income from associates are shown on page 49. The plan expects, I repeat, to internalize bancassurance from 2024, from January 2024, which doesn't mean this is the actual date we will, at the end of the day, push. We can even do it before, as I said earlier, because in 2023, we will have the opportunity to arrive to 100%, both with Covéa partnership and with Cattolica partnership.
This internalization allows to increase income from associates from the expected level of almost EUR 150 million for this year to a final level of 270, out of which 125 is bancassurance. This 125 is for EUR 90 million expected level of contribution of the increase in the share from the current 35% or 19% to the final 100%. On top, we thought helpful here to summarize also the commissions that were included in the previous parts on family banking and on wealth management, but also are important to bear in mind because this contribution is definitely a pillar of the development of our plan. In this case, the increase is 8% per year from 590 expected at the end of this year to 740.
That's all for the third pillar, and now I leave the stage again to Giuseppe.
Thank you. I will be even more quick. Sorry for being so long, but it's full of information to give to you. We don't have any more time because I want to have your question. I would go over basically the asset quality. I think you have a clear idea on page 51 of the situation we have reached now. We are below our old plan target. We have a pace of disposal and workout, which is already at the level we envisage for our new plan. The default estimated national level, of course, will have a lower impact on our bank. We have 96% of our loans in market where the default rate is below 1.5%. The geography will help a lot to keep this default rate lower with respect to this level.
Not talking about the many levers that we can use in terms of already utilized advanced data warehouse, strengthening of credit policies, early warning, monitoring, and system evolution, and the new approach to the NPE management, which is not only focused on massive disposal, but also on single names which are still going ahead. On the right side, you will see our default rate that we have calculated for our plan. Also in this case, very prudent approach. We think the most of the effect of the default rate 2022 is already incorporated in the cost of risk 2021. Nonetheless, we think with a prudent approach to keep the possibility for a spike in 2022, and then to be reduced to the current situation of 1%. Liquidity and funding, very sound.
By the plan horizon, we will reimburse the EUR 37.5 billion of TLTRO. Of course, most of them will be already in 2022 with the end of the Superbonus of 50%, of 50 basis points. We will end up the plan with a funding from ECB using ordinary funding from ECB expected in the region of EUR 9 billion. Of course, this will lead to reduction of ECB asset from held in ECB from EUR 28 billion to EUR 3 billion. Bond issuance, no need for getting more issuing. We have a forecast of EUR 2.4 billion of unsecured bonds to, as a difference, a net bond issuance of EUR 2.4 billion, considering of course, what we already have right now.
All in all, will be EUR 8 billion of unsecured bonds to issue in the next three and a half years. Securities portfolio, very comfortable. We are going down to 53% of the Italian government's share, and we envisage to go down to 50% by the end of the plan. Just a few words about the people strategy. We already know what we have already decided about the increase of the retirement scheme of 500 more people vis-à-vis the old plan. This brings, of course, a reduction in cost, which we will see better in the next page, but has been something like a bit less than EUR 300 million starting from the merger starting point. The branch going down to 1,300.
Of course, a lot of attention to our people. I would say a comprehensive and articulated people strategy, increasing smart working days. We have envisaged by 2024 to have almost 40% of our head office people working from home, which is the situation already in place now. Lots of wellbeing initiatives, increasing our dedication to wellbeing and volunteer initiatives. Of course, the well-deserved attention to the new generation of management that we have to build up, also thanks to the digital transformation we are undergoing. Last but not least, diversity and inclusion. We have a focused plan about the increasing women's presence in our management together with filling the gap in the gender compensation.
On page 58, just some words about the evolution of cost. We were EUR 1,700 million normalized cost in 2020. The natural growth vis-à-vis the plan would have brought the cost of personnel to EUR 1.8 billion . The impact of the managerial action, of course, most of them coming from the early retirement scheme, will bring down to below EUR 1.6 billion Our cost of personnel. Technology, of course, a lot of investment linked to the digital transformation, to the advanced analytics, to the transformation also of the bank, the operation of the bank to be slim and improved and, of course, absorb more time, less time. This needs a global investment for the plan horizon of EUR 650 million, of which EUR 250 million are dedicated to the digital.
Basically, the evolution of investment is growing from EUR 100 million in 2020 to EUR 170 million average from 2022 to 2024. Also in the cyber, we have a full set of investment already envisaged. Of course, the main aspect will be related to data protection, business continuity, and what we call react to attack. It becomes always almost impossible to avoid somebody to try to attack the bank. We are developing skill and technology in order to react very promptly to any intrusion into our system, and we are doing many experiments about the capability of the bank to react very promptly. The global investment in security-related aspect is cumulative EUR 45 million. A few words also in a chapter which is very, very important for us, which is the ESG integration. I think it's more readable also from you, so I will be through very quickly.
Basically, the aim is to go through the introduction and integration of ESG into all our pillars, so business, risk and credits, people strategy, environment, and community. We have already done a lot of works in terms of governance. We have each of our governance board and bodies in charge for different aspects of ESG, and this has already brought us to have, for instance, ESG targets integrated in our short-term and long-term intensive plan for the CEO and the top management, green social bond framework already published, improved ESG rating already obtained both from Standard Ethics, ISS, Sustainalytics, and we have been included also into the FTSE MIB ESG index by the stock exchange. This, of course, is a detailed action and targets both for business.
On page 63, you see our main targets linked to the share of new lending dedicated to green, low transition risk sector, above 65% of the cumulative loans during the Horizon plan, a dedicated, already started new product for green residential mortgages, the purchase of real estate and tax credits, of real estate tax credits, which Edoardo was mentioning before, which apart from giving us boost from profitability is, of course, also a support for environmental, Akros playing its role as a mandated bookrunner of ESG bonds and our increased investment shares of ESG bonds starting last year at 8% and growing up to 30%. Risk and credit, we have, of course, the integration of ESG policy into our credit policy.
We have the exclusion of our credit availability for sectors with high environmental risks, which in any case represent only 2% of our loans, but we will be in runoff in the next four years, as well as we will be dedicating new lending to fossil fuels related sectors linked only to transition projects for more than 80% of our new lending. Of course, we are in the process to signing the Net-Zero Banking Alliance, the TCFD, the Science Based Targets initiative. People strategy, basically I already told, explained before when we were talking about the dedicated work, smart working days and well-being days and welfare days dedicated to our people for projects in environment and sustainability. Last but not least, our engagement vis-à-vis the reduction CO2 emissions. We already are forecasting to reduce 20% by the plan horizon the total direct and indirect energy consumption.
We have already reached certified 100% of energy, electric energy coming from renewable sources, but we in any case are forecasting to reach the carbon neutrality over the plan horizon and to reduce 20% the indirect emission from commuters coming related to Scope 3. Community, needless to say, this is our DNA as a cooperative bank. We have already had a strong attention to all the initiative of our community linked to art, culture, charity, research, health, education, sport, young people. We will continue to do that with the main target that you see on the right sides, which are basically already in place and we will continue to foster over the plan horizon. Let me conclude very briefly with numbers. Of course, the plan is numbers. A quick recap about our target objectives.
There will be basically an increase from EUR 4.4 billion to EUR 4.6 billion in 2024. You will see also the target for 2023, close to 2024. The CAGR is only 2.4%, coming 3% from NII commission and 20% from associate, which means the value embedded into the integration of our bancassurance and the growth of our product factory. Operating costs down 1.1% to EUR 2.4 billion, almost reached by 2023. Pre-provision income up to EUR 2.1 billion. I already explained before the differences, where they come from, starting from EUR 1.9 billion of 2021 guidance.
With a loan loss provision of 48 basis points, we go to a net income of EUR 1.05 billion in 2024 and EUR 740 million in 2023. Cost income down to 53%. Return on tangible equity higher than 9%. Basically that's all. You will find some other figure. Let me just conclude, saying and thanking also all my colleagues for being part of, I would say, a unique, successful restructuring story, ready to start a new journey with a strengthened digital business model, which will allow us to increase effectiveness. We have, yes, ambitious target, but in our view, they are based on prudent estimates on key performance driver.
We feel that, taking into account the improvement done starting from 2019 to now, we are very credible with our track record in the growth of revenues and profitability. Thanks a lot for your attention, and we are ready for your question.
Well, thank you very much, everybody. Just, let me remind you that to give room to everybody, we ask to have only two question, and then if necessary, we can have a follow-up at the end. Thank you very much.
The first question is from Antonio Reale with Morgan Stanley. Please go ahead, sir.
Hi. Good morning, everyone. It's Antonio Reale from Morgan Stanley. A couple of questions from my side then. The first one on capital slash M&A, and secondly on core revenues. If I look at your slide 20, as part of your plan, you forecast to have a capital buffer over your MDA of 590 basis points by the end of the plan horizon, which is quite a bit higher than the buffer you have currently. That is the case even if I adjust for the 80 basis points from Basel IV, which expect later anyway. This is while paying a dividend payout of 40% through the plan.
On your estimates at least, you're building quite a large buffer, which is contrary to the message we're hearing from other banks that aim to lower equity to improve the ROTE. My question is, what do you intend to do with this capital buffer? How are you thinking about capital allocation going forward? Is it M&A aspirations? Are you keeping some for special distribution? You talk about 40% payouts, which is in line with what you pay now. How are you thinking about that? It's my first questions related to that. If you're planning to pursue M&A, you've been open about that possibility in the recent past.
Could you maybe share with us a bit more color with respect to you know conditions under which you'd be happy to consider M&A opportunities? Just I'm thinking perhaps to introduce some discipline and defend that large capital stack you forecast, and given the lessons perhaps from the Banco Popolare integration. That's my first question. Secondly, you've talked about growth in core revenues, NII and fees in both 2023 and 2024. I see on page 69 the EUR 3.9 billion and EUR 4.1 billion respectively. Could you share with us the split between these two, NII and fees? And more specifically, how much of the NII benefit you assume from higher interest rates for both 2023 and 2024?
We see that you have estimates for each year, but it would be great if you could share the contribution in EUR million that you incorporate in each year, so we have all the elements to assess the outlook in both scenarios. Thank you.
Thank you, Mr. Reale. Very quickly because there is a lot of other questions to answer. Yes, we are confident. We know that there is a very important capital buffer. Basically, most of it comes from the Basel III or IV postponement, so we didn't change our view of the dividend payment. Of course, we are. Because we have been used to reach the target, we of course will be very attentive to be in line with what the other competitors will do. Don't forget that of course we are coming out of a pandemic. Still these days we are talking about further effects. We are confident. We want to give you a plan which is reliable.
We think that with this buffer, and ending up, also even after Basel III to 13.5%, higher than 13.5%, there is a lot of room to be, more generous. Let's say that, for us, it's a very important and good starting point. M&A, I cannot give you very much color because, you know, I don't see, banks right now willing to do anything. That was the reason why we were, pushed to present, our plan standalone. We are very happy of being standalone right now because you have seen that we have an ambitious target, to reach. All the managerial team is confident. All our people is on board.
We are fully confident to reach our target standalone, but we are very attentive to any potential possibility to extract more value from a merger. I think that our track record in a very complicated merger stands for our capability to deliver value out of merger. Core revenues in fee. If there is no increase in the spread in the Euribor, basically, I think this is your question, we have lower interest rate, lower margin for EUR 130 million at the given situation as it is right now.
Okay. It sounds a bit low, but thank you.
Thank you.
The next question is from Andrea Vercellone with Exane BNP Paribas. Please go ahead.
Good morning. My two questions are on cost of risk and on costs. First on cost, because it's the easier one. It wasn't clear to me whether the new business plan embeds a further early retirement program on top of the one for 1,600 people or not. I think it doesn't, but I just would like you to confirm it. If it doesn't, can you give us some explanation as to how you plan to still have HR costs falling relative to today and to prior assumptions? On cost of risk, I'm asking because I strongly disagree with your assumption for 2023. My view is the cost of risk normalizes far sooner than then. You have 48 basis points in nine months 2021 underlying.
You normalize to this level in 2024. At the same time, you're telling us that the default rates you're currently experiencing on the moratoria are very low. You do not embed in the plan additional NPL sales on top of the EUR 650 million for Q4, which you have already covered. The share of loans guaranteed by the state is 16%, so you will have no loss basically on that. If you take out the retail mortgages, it's actually 22%. You give us the assumptions on default rates for 2022, 1.8%, so not very high. Then you normalize down to 1.2% already in 2023. Yet, you give us 58 basis points for 2023.
Why is that, since everything points to a much lower number, at least to me? Specifically for 2022, if the default rate indeed is in line with your assumption of 1.8%, and if indeed you do not sell additional NPLs, what do you expect the cost of risk to be in 2022? Thank you.
Thank you, Mr. Vercellone. Of course, I hope you are right and I am wrong. But the prudent approach I have to have in order to give credible number pushed us to be maybe a bit too much prudent. I understand your point. Maybe a few months ago, we were not talking about this cost of risk. Nowadays, looks like everything is going down. Let's wait some months. We have done all our number out of the model that we have in our bank. Of course, I agree with you that it's impossible to have a cost of risk which won't be aligned to our competitor because, of course, being now almost everybody at below 5% level of NPL ratio, it's very difficult to see the stock to influence so much the cost of risk.
The difference is in the inflow. We are prepared to deal and to work out year by year all the new inflow. It's very much possible that this will cost us less, but in any case, I think it's only prudent, having such evidence of good results and taking some possibility also to compensate some of them to be, for a bank which was used up to 2020 to have more than 100 basis points of cost of risk and also this year, keeping the cost of risk to 80 basis points-90 basis points to reduce year by year the cost of risk. If you will be right, we will be only happy. Of course, there is a possibility that you are right.
I want to go on further explanation about 2022 because as you have for sure noticed that we have only given figure related to 2023 and 2024.
On costs?
It's a mix of the two. As you remember, we announced in our plan 1,100 people in our scheme. Later on, but before today, we announced that we would have increased to 1,600 the exit scheme, the early retirement scheme. Nowadays, the numbers are aligned with these new figures, 1,600. I don't know if you were already aligned to that or not. Basically, we have had an advantage of EUR 50 million in 2021 out of this exit scheme. We will have EUR 86 million in 2022, EUR 36 million in 2023, and finally, EUR 20 million in 2024.
This is the year-by-year reduction, which is envisaged by this retirement scheme and of course, the further exit, the natural exit of our personnel.
Thank you.
The next question is from Jean-Noël Pivet with Goldman Sachs. Please go ahead.
Hi, good morning. Actually my question relate to the previous questions. Just essentially, I just wanted to understand, in a sense, why you chose to have a 40% payout ratio through the horizon of your plan, knowing that the returns that you're targeting is, you know, it's a decent level of returns, which has possibility of building up capital and having an even bigger buffer. Because that 40% payout ratio, according to the new business plans of either local or European bank, is gonna be rather at the bottom end. I would understand when you had, in a sense, more NPLs and maybe some regulatory headwinds.
here, in a sense, I just wanted to know whether it's because you say payout like this and maybe you intend to do buybacks on top or anything different. This is something I'd like to understand what the rationale behind the payout ratio would be. And the second thing I wanted to ask on the HR cost again is you know when, for example, on slide 58, you're showing that the inertial growth of the HR cost is 100 out of 1,700 based in 2020, which itself didn't have many bonuses in there, if I remember well. That's just a bit more than 1% inflation a year.
I just wanted you to explain to us how you essentially back up the number for inflation, because it looks a little bit low also considering that you've done a lot of early retirement and arguably, you know, you no longer have those natural exits that keep the inflation of salaries down also. Thanks.
Thank you. Again, we come from a past which in our view is very, very successful, but still is a restructuring deal. Basically, if you see it, our payout up to now has never been 40%, unfortunately, because when we were prepared finally, eventually to pay 40%, there was the 2020 ban. Also this year, as you know, we had to deal in order to give recognition to our shareholders. Of course, our aim is to give more. Of course, we want to be at the same level of our competitors time by time. Let's say that we haven't yet gained the possibility to pay this kind of ratio. We will be more than happy to pay more.
As far as I see right now, we are still, even though with a good, a very much good capital ratio, we still are below many of our competitor. I see figure in the region of 14.5%-15% already now. Let's really wait and see year by year. We hope also to be better than what we have showed. Again, the minimum payout that we foresee is 40%.
You think minimum?
No, we calculate of course in the. I cannot calculate a minimum and a maximum in a business plan. Of course, this is what we have calculated. As for all business plan, this can be of course increased. We will give time by time all our situation in order to give you the possibility to understand what would be the real payout year by year. In the calculation for this plan, we have been using the 40%. As far as the global cost of personnel, basically, we have an increase in cost due to the contract renewed and to the, let's say, step of increasing cost. Meanwhile, the age of people is growing.
It's been reducing for the managerial action, for the service model, which of course is less costly. We have defined new rules about upgrade of position, transferred, sending people, all around the network and so on. The common situation between inertial growth and managerial action, together with the reduction embedded both in the early retirement and in the natural exit, will bring below EUR 1.6 billion in 2024.
Okay, thanks.
The next question is from Christian Carrese with Intermonte. Please go ahead.
Thank you for the presentation. I have one question on revenues, in particular on net interest income. Could you give us an idea of the lower contribution from TLTRO and financial portfolio in 2024 compared to 2020 or 2021? I was wondering, I see an important growth in terms of loans and in terms of assets under management. In terms of loans, I was wondering if there is any contingency plan if something goes wrong, as we saw with the COVID-19, in terms of cost efficiency. There are still some room to improve profitability, cost efficiency, if something goes wrong at top line level. Also net interest income, I saw some risk-weighted assets optimization in the quarter with risk-weighted asset density slightly down Q-o-Q.
What are your projections in the plan in terms of risk-weighted assets absorption? The second question, maybe the first one was more than one, but the second question is on, again, on shareholders remuneration. You set a dividend payout at 40%. The capital buffers are very high. Why don't you introduce a buyback scheme given the low valuation of Banco BPM in terms of price to tangible today? I think that it could be the best way to create value also for shareholders. There is a chance that you will introduce within the plan later on also a buyback. We saw other banks doing so. Thank you.
Thank you, Mr. Carrese. Let me start from that, which is very much linked to the previous question about, in any case, use our capital for our, in the interest of our shareholder. We are more than happy to consider all these possibility. We were willing to give you the potentiality of our capital strength and for our bank. As you know, the decision will be made not with the three year of anticipation, but I think that is important for you to know that we will reach that amount considering this kind of payback. Of course, we will be more than willing if the situation goes better.
You have raised a question in saying, what if something goes wrong in terms of macro, but on the other side, you say, "Why don't you consider buyback?" Of course, we have to consider everything. Not everything is needed to be considered with three years in advance. We basically hope that you have now all the figures to consider everything if it goes wrong or right. Of course, if it goes wrong, we have spoken up to now that of course, we are considering a strong increase in volumes also for loans. Of course, if this doesn't come because of the macro situation, I expect that there will be lower cost of credit.
I expect that there could be some action from the government, in a situation like the one that we have already experienced. We have, of course, in NFR, you have seen that you have reduced dramatically the contribution, which has never been the case during these years in Banco BPM, we have already performed better results. There is room, in many parts, of course, to compensate. Likewise, there was room, and this is important for you to consider, when last year we presented a strong plan in revenues, which eventually happened. Of course, with the pandemic, we reduced EUR 170 million, the cost, the global cost. We are already in a situation in which the tactical and the strategic action have to be complementary.
Sorry to answer this way, but I think the past of our bank shows you that we adapt every time the possibility to reduce or to increase what the market ask for. Not to talk, not to speak about the reduction in NPE. About the numeric question you made about contribution of Govies and TLTRO, 2021-2024. The contribution TLTRO should go down EUR 80 million in 2022, EUR 120 million in 2023, and EUR 60 million in 2024. Of course, that will be compensated by the volume and the effect of rates we mentioned before. The Govies, I would say that reduction in the interest would be in the region of EUR 140 million versus EUR 221 million.
Thank you. Very clear.
The next question is from Giovanni Razzoli with Deutsche Bank. Please go ahead.
Good morning to everybody. Two questions. The first one, you've mentioned that you expect to reduce by EUR 700 million the risk-weighted assets out of the real estate. I was wondering how you can elaborate a bit more on that. It seems to me that you can do even more in light of the, you know, digitalization and the reduction in the physical activities at the branch level that you made. If you can elaborate a bit more on that. The second question, I've appreciated a lot your ESG discussion, but I haven't seen any mention about the management incentives on achieving those targets, which in my view are the crucial element other than the payout ratio, buyback, whatever, to align investor interest with management interest.
Can you elaborate a bit more on your incentive on those targets? For example, are any bonuses deferred to 2024 targets, to 2023? Does the incentive scheme have an equity component, stock component, or is it just 100% based on cash? Thank you.
Thank you, Mr. Razzoli. Real estate, sorry, it was my fault not to mention that likewise in the previous plan, we are not talking about instrumental real estate assets. We are talking mostly about assets that come from the many banks we have merged during the years at offices, repossession and so on. So of course, for the branches, we are almost, if I told you that we are already at 1,430 branches, of course, there will be some room in reducing another 100 branches, but nothing to compare with the work already done on this aspect. For the other, again, is EUR 700 million out of, I think, EUR 1.5 billion-EUR 1.6 billion of other non-instrumental assets that we are foreseeing to dispose.
ESG, yes, I'm sorry. Again, on page 62, I think, we have shown that the target for management, long-term and short-term, the incentive are already aligned to the ESG target. You see on the upper box on the right side, ESG targets integrate in short-term and long-term incentive plans. Then for CEO and management. Then on page 65, we also say that one of our target is to have a waterfall of this target integrated also in the middle management and in our employee incentive.
Sorry, if I may follow up on this. I was referring not exactly to ESG targets, but to the business plan targets, so to the quick and dirty bottom line or, ROTE.
Yes, of course, as you know, we have a disalignment of one year because last year we had, I would say, to retire the plan we have presented, which of course was aligned to the incentive scheme of the management. Luckily enough, as you have seen, the 2023 target of this plan are in line basically with the old plan. This will align our incentive to the realization of the plan in 2023. Of course, we will brought ahead to 2024 the new long-term incentive in order to comply with the new figure or target of the business plan.
Thank you.
The next question is from Fabrizio Bernardi with Bestinver. Please go ahead.
Hi, everybody. I have a couple of questions. The first one is, thanks to Roberto, Arne, and Carmine for 110 pages of presentation and slides and press releases. Among these pages, I would choose page number 43, which I like very much. It's about product companies. I like the Pillar three of the strategic plan. You mentioned that you are focused on product companies, so namely Anima, Agos, and the joint ventures in bancassurance. It seems to me these are important assets that you would be willing to value precisely, especially in an M&A environment. In my opinion, if I look at your price to tangible equity of 0.35, and I deduct the potential value of these three companies, the franchise, the commercial value of the franchise is very low.
My question is about valuation conundrum between the value of the product companies and the value of the franchise. Secondly, I have a question on the last four years. I want to try to make a recap about your history. In the last four years, you sold some EUR billions of NPLs, twice the amount you originally planned, and you did not do any capital increase. You did not sell any stake in Agos, which is very dilutive in terms of capital. You postpone any deal in Agos. Actually, you increase your stake in Anima, which are important capital deductions. Now you are thinking about internalizing the majorities of the joint ventures in bancassurance. It seems to me you believe you are fairly comfortable in terms of capital.
I put my question together with the question before, and I ask you, the 40% payout is low. If I look at the backlog, and if I look at the forthcoming payout, 40% is low, especially thinking about a few of your core shareholders are very focused on the cash distribution. Overall, my question is basically why the stock is still trading at 0.35 the tangible despite this capital position and despite actually important stakes in very valuable companies?
First of all, thank you, Mr. Bernardi, for the appreciation of our consistent story of rebuilding up whatever we were obliged to renounce over the years because of the de-risking needs. You remember quite fairly that, I think there is no other bank who did this kind of de-risking without.
I do.
... asking money to shareholders or to stakeholders, let's say. We have been consistent in renouncing to some part of making some agreement already leveraging also during the difficult years on the strength of our product factory. If you consider we have done an agreement with Anima to buy the Aletti Gestielle stake, but in the same time, we increased from 15%-20% the stake in Anima. Basically, we cashed EUR 700 million to pay de-risking, but not reducing so much our the contribution annual in our network. We did the same with Agos, with a very good maneuver in which we cashed almost EUR 500 million for the put and extension of the agreement to 15 years. Now we are telling you that we are not utilizing any more the disposal.
The same was for bancassurance. We were able to cash more than EUR 800 million with the deal of Cattolica. Nowadays, I'm sure you have done your figures to understand how much we will save by buying back the stake, but even more important, how much multiple we can consider if you have in mind the growth in the bancassurance that we are experiencing. Edoardo was saying, I am showing page 49 again. It's true that we envisage a growth from 590 to 740, but let's go back. We were at 450 last year and 517 in 2019. There is an incredible growth that should bring value to our bank also in terms of stock price.
This is our strategy right now. We are trying to re-internalize all the value that was temporary put aside our perimeter. We think that this will bring to very good results. Up to now, we are year by year doing something very good and unfortunately, as you were mentioning, maybe, we have not yet reached the rewards, even though our stock in the last year was one of the best. Of course, we are not happy at all about the value of our stock. This is the reason why we have decided to present the stand-alone. We think there is enormous value in a good merger, but there is also enormous value in being concentrating on exploiting the best part of our bank and the regeneration we have had in the network of our bank.
Again, sorry for the payout that looks not satisfactory. I again stress that is the only thing basically we have not done yet to pay a proper payout up to now. We hope that we can immediately start doing that, and then possibly to be more consistent also in terms of reward for our stakeholders.
May I just interrupt to provide further information on previous question from Christian Carrese. On our securities portfolio, the delta, the reduction between 2021 and 2024 is in the order of EUR 80 million. What we provided earlier was the reduction between 2020 and 2024, just to avoid misunderstandings. Thanks.
The next question is from Azzurra Guelfi with Citi. Please go ahead, madam.
Hi, good morning. When I look at this plan, you have a credible starting point on cost and provision, given all your de-risking done, and probably the market has more question on the revenue. The plan seems to focus on improving the revenue quality and the sustainability of revenue over time. When I look at the NII, in the slide where you talk about the SMEs and corporate, you show an increase of the marginal lending between the starting point and the end of the plan. Can you explain a little bit what are the driver of that? Is it risking up a bit? It's a different mix? How much of it is linked to rate and how much is that it's action on your own customer base and products?
The second one is on fees. When I look at the mix of direct and indirect funding, that doesn't change too much, through the plan. You have an improvement in the asset under management. I'm just trying to understand, your fee growth in the wealth management, is it more a mix between asset under management and asset under custody and less on deposit transformation? If you can elaborate a little bit on that. Thank you.
Thanks. I'll try to elaborate on the question on loan growth. Definitely there is no risk-on in our strategy. We expect to be conservative in new lending policies, as we have been in the recent past. Actually, growth in volumes that we're expecting to achieve in the next few years are not so different from the recent experience, both in SMEs and in corporates. So the increase that we expect to have is in SME especially to penetrate further pockets of clients in areas which we have not served sufficiently up to now. In corporates to focus and concentrate more in the transactions that incorporate higher value added, either in terms of spreads or in terms of upfront commissions.
On fees, the key underlying driver is definitely the increase in assets under management. Assets under management drive an increase mostly of running fees. While upfront fees on assets under management, or in general, management or custody, new sales, are more or less proportional to the increase in volumes or placements from 17+ this year to 19+ end of the plan. Assets under custody remain more or less stable over the plan horizon. What drives the increase in assets under management is, of course, at least in part, the reduction in the excess deposits that we are currently having in our current accounts.
The next question is from Delphine Lee with JP Morgan. Please go ahead, madam.
Yes, good morning. I just have really three quick questions. The first of all on NII, thanks for providing the impact of rates and the securities portfolio. Can we also get the contribution of TLTRO? So how much is declining over the plan? My second question is on provisions. You used to have in your old plan up to 60 basis points of impact from calendar provisioning. I mean, I know this was Pillar two related item, but is that something which is embedded in your guidance on cost of risk? And is it why this is a little bit higher than the level you're running at at the moment? The last question is on AT 1.
I haven't seen anything in your business plan around this. Do you plan any issuances of AT1 or Tier 2 in your plan? Thank you very much.
Yeah. Tier 2, I think we provided the data, but just to recap, Tier 2 usage is currently around EUR 38 billion, and no major changes expected until the end of the subsidized period, end of this year. Sorry, June next year. These 38 billion are invested at negative rates on the margin at least. Roughly speaking, the reimbursement or the when the subsidy will no longer be present, we will lose the 50 basis points of subsidy on the 38 billion that we are currently having contribute 37.5, to be precise, that are currently contributing to our P&L. Meaning that, on average. That net-net, the reduction from TLTRO is below EUR 200 million, from as a difference between 2021 expected and 2024.
Concerning AT1, we will need to maintain our trend of growth in AT1 to keep filled the buffer so that over the plan, we will continue to have issuances, even if most of the gap has been filled by the issuances that we have implemented in the last three years. T2 is again maintenance following the growth in RWA, and generally speaking, optimizing the cost of our liabilities.
Let me add something about the cost of risk and calendar provisioning. As you know, we have up-fronted something about the disposal of other NPE. Of course, this will include also assets into calendar provisioning. Of course, over the time horizon, we have to consider the possibility to accelerate disposal first of the calendar provisioning more influenced assets. On top of that, of course, we have room into the capital buffer that you have seen if we have to consider some of the potential effects of the future calendar provisioning impact. As you know, this is split amongst the next four years consistently and comfortably into our common equity, but it's a few basis points.
Great. Thank you very much.
The next question is from Marco Nicolai with Jefferies. Please go ahead.
Hi. Thanks for taking my questions. I've got two, both on the insurance. Firstly, given that you can exercise one option from mid-2023 and the other even earlier, is it reasonable to assume that you will exercise them at the earliest opportunity? And if so, do you include any benefit of this in the EUR 740 million net income target for 2023? And secondly, given the full consolidation of the insurance business, I guess that you will have an insurance revenue line and the OpEx attached to the business in your P&L as opposed to a net EUR 125 million figure that you mentioned. Is this understanding correct? And if so, could you please provide some color on the gross revenue impact and what effect we will see on cost?
I'm just trying to appreciate the business diversification that this transaction will provide. Yeah, and then I had another one on the 40% payout ratio, too, but you know, given the where was the focus on the call, I think I'll spare you that. Thank you.
Thanks for the questions. Definitely, what we have adopted in the plan is a simplified scenario. Given that we have the option to internalize in 2023 the two Vera JVs, and until end of 2023, the BPM Vita JV, we conventionally assume that this internalization is finalized at the last date of 2023, so no additional contribution in 2023, and is then fully operational since January 2024. This is a conservative assumptions in a sense that we can, we have the option to either proceed more gradually for BPM Vita.
Theoretically, we can tomorrow send the notice for the exercise of the call to Covéa and then start the authorization the process, or proceed with the Vera at the earliest possible date, which is the first of July 2023. You're right, we have simplified the representation in terms of the contribution to the bottom line by using only the contribution to the bottom line of insurance net profit. Sorry, on this, I think that
The first point to notice is that we projected also the commissions. The net profit of the insurance part is already after deducting the commissions that are present in another line of our P&L within the commissions and fees and represented in the same page of the presentation 49. On the other hand, we definitely have assumed growth in revenues and synergies in the costs, even if at an earlier stage, those latter given that we will complete the integration in the assumption of the plan only early in 2024, adopting a conservative stance in general.
Thank you.
The next question is from Manuela Meroni with Intesa Sanpaolo. Please go ahead, madam.
Good morning. A couple of questions from my side. The first one on capital, what is the level of optimal capital for Banco BPM in your view, and how do you calculate it, so is it on the basis of a certain MDA buffer or is it a specific level of common equity Tier 1? The second question is on provisions. Could you please remind us the amount of overlay provisions for the macro scenario that you have accounted for in 2020? Do you plan to release at least part of these provisions anytime soon or in your business plan projections?
Thank you, Ms. Meroni. You know, it's difficult to say the optimized capital level, because during these years, if you would have been me asking in 2018, 2019, 2020, 2021, would have been always a different answer. As you know, on one side, the supervisory activity, on the other side, the attitude of our competitor, not only Italian, but international, give us some guidance about the level. What we feel, of course, is that MDA buffer above 350 is more than comfortable. Of course, we have to also to deal with the potential impact of the growth in this capital in order to understand better what can be immediately released to our shareholders or kept in order to reinforce the capital of our bank.
We are in a situation in which, up to a few months ago, we were in the middle of some potential merger situation. We want to eventually stay with a capital sound situation in order to be ready for whatever opportunity we could have. Again, of course, now we feel in a very comfortable situation, which by no means should be the one for all the plan horizon. Let's also have a look to our competitor, because normally we are seeing that they are in a Common Equity Tier 1, which is higher than ours. For the potential write back, yes, it's possible. Of course, changing scenario, macro are very, very important in terms of considering future write back of the provision we have done, especially in stage two.
As you know, we have strengthened our rules in order to be more prudent. A possible macro evolution with a good scenario could give us some consistent write back. I think Edoardo has also done some figure. These are? Okay. This, the 2020 scenario of course cost us EUR 130 million. Of course, whatever improvement we can see and we are already experiencing can give some write back.
Thank you.
The next question is from Domenico Santoro with HSBC. Please go ahead.
Hi, good morning. Thanks for taking my questions, and well done, I mean, for taking the courage and being the first to present the business plan. Our curiosity on the numbers. First of all, just to recap on the NII, the EUR 280 million that you will lose on the TLTRO and on the SO and bond portfolio. Can you give us an idea. You gave already some numbers, but, can you give us an idea how you intend to recover those at end 2024? Let's say if this number is 120% by a volume growth, 20% with interest rate hike, lower cost of funding, I assume, and there might be also a little bit from the MP as well.
Just to have an NII waterfall from here to 2024, that would be very useful. The second question is on the contribution of the bank levies in 2024. I wonder whether you are excluding the resolution fund from your numbers. Then just a suggestion, it will be very useful, you know, to get the answer to the question before on the loan loss provision for next year, 2022, given that you double your default rate on your portfolio. Even if not precise guidance, at least to understand what's the direction compared to 2021, pre or post-disposal, as you might like. Thank you very much.
Yes. Hi, good morning. Yes, the number is directionally correct, the effect on NII of TLTRO and securities portfolio. The levers that we have to recover this amount are mostly represented by better revenues, NII, in terms of NII from commercial banking, driven both by volumes and by rates. Savings, also bearing in mind that we expect some savings on institutional funding. That these components, at the end of the day, neutralize the negative impact that is attributed to TLTRO and bonds, and the bond portfolio, so that the net outcome is very close to zero, is negative, but very close to zero. Systemic charges, yes, that's correct. We have excluded in 2024 the resolution fund.
Again, it's really early nowadays to give you some guidance for 2022. But of course, we have already said. You can leverage what we have already said, that we are upfronting some cost of risk in order to dispose for next year. We are preparing, of course, very closely all the provisioning for the potential default of next year. We are very much prepared to face the situation, having in mind that we are still considering a default rate which is increasing vis-à-vis the current one.
Okay, thank you.
The next question is from Noemi Peruch with Mediobanca. Please go ahead.
Good morning, and thank you for taking my question. I have some follow-ups. The first one is on NII. So is the EUR 130 million, I think you mentioned, related to Euribor, related to 2023 or 2024? And then on the addendum, it's not very clear to me your strategy. Does your cost of risk target include some of the coverage increases? And, on the basis of that, did I understand correctly that the addendum would increase MDA only by a few basis points if applied throughout the plan? And then, on JVs, you mentioned indeed EUR 90 million additional net profit in 2024. And what part of it is driven by synergies?
Finally, just one question on equity stakes, if you're planning to sell some of them ahead of Basel IV. Thank you very much.
Thank you. So the first question, yes, I confirm that EUR 130 million is 2024. Of course, with the forecast we have shown in the first page of the presentation, you see that the major increase of Euribor is coming 2024. Cost of risk, of course, include part of the Addendum because we mentioned that we have up-fronted EUR 100 million to dispose. I said that we will, of course, dispose with a very close attention to calendar provisioning. It's very much possible that the majority of the disposal will include part of the Addendum. Of joint venture. So net profit of joint venture is mostly driven by the increase in our volumes in bancassurance.
While the synergies in the first year after the internalization are very limited and will probably represent an additional potential to increase profitability after the final year of the time horizon. I didn't get the final question on equity stakes. If you can repeat, Noemi.
Sure. If you are planning to sell some of them ahead of Basel IV.
Well, of course.
We have the three strategic stakes that we have extensively commented in the presentation that for us remains strategic. That’s one issue. We have some minor other investments which for us might originate divestment opportunities. In general, we have already investigated the impact of Basel IV rules on our equity stake portfolio, and this impact is zero because all of the stakes that we have in mind are already deducted from the portfolio, so no additional increase. There is just one minor participation, Castelli Primedii, for which we expect a few tens of millions of RWA in 2024, but really not something worth considering.
Thank you. The next question is from Adele Palama with UBS. Please go ahead, madam.
Yes. Hi, thank you for the presentation. I have a very quick question. I know that you don't want to disclose a lot about 2022, but just looking at your bridge on the capital, I mean, you have 210 basis points of retained earnings after dividend 81 in the business plan horizon. Do they include the full dividend of 2022 as well? Because I'm asking this because if I do a reverse engineering and I try to understand what's the implied net income for 2022 from this bridge, if I only accrue the last quarter of dividend, I get basically to a net income for 2022 that is in line with the 2023.
If I instead put the full amount of dividend of 2021, then I get to a net income 2022 of around EUR 550 million. I mean, I want to understand if basically there is more upside risk than like 7%-8% of consensus versus consensus in 2022. How do you see the dilution of the key metrics, i.e., NII, fees, and cost of risk? I mean, I understand that you don't wanna give the guidance, but I mean, if you don't include the full payout in 2021, I mean, I want to understand if we should expect more upside than versus the current consensus. Thank you.
Yeah. My advice is to not pose too much trust in reverse engineering on numbers from the capital work. Having said this, I think that definitely the answer to your question is that in September, we have accounted for the accruing dividend that has matured up to end of September. The remaining part of the work starts with both the net profit and the dividend which will accrue in the final quarter of this year. We prefer not to give guidance on 2022 at this stage, so probably not worth commenting on 2022 consensus. I don't know, Giuseppe, if you want to add something.
No. I think that, again, this is a business plan. We have done the guidance which are full for 2023 and 2024. Of course, as we have done this year for 2021, we will give you guidance at the beginning of next year.
Okay. Thank you.
The next question is from Hugo Cruz with KBW. Please go ahead, sir.
Hi. Thank you for the time. I wanted to go a bit more on the, you know, the bancassurance option, a few questions. You can already exercise the Covéa option. Are you already planning to do it? Are you already in discussions with them? Because it seems to me if it's profitable to internalize these businesses, you would wanna do it as soon as possible. Second, on the Danish Compromise, you know, the difference between you and the other banks is that you have not owned these businesses for a long time. Do you have comfort from your discussions with the regulators that they will let you use the Danish Compromise? And third, I just wanted to understand a little bit more, you know, the contribution from the internalization and split that from the other businesses.
It'd be great if you could tell me how much is the expected contribution from Agos and Anima in 2024. Also, specifically on the bancassurance, is there any assumption of renegotiating the distribution fee that you book in fee income? Is there any contribution on the fee income side? You know, I expect extra costs from internalizing the business. Are those extra costs reflected in your associates estimate, or is it reflected in your OpEx estimate? If you could tell me how much of those extra costs are you expecting. Thank you.
Okay. Bancassurance, yes, we can already exercise. This means that we have a full set of agreement with our partner, Covéa, which knows that the company basically will end up being.
100% Banco BPM. That means that we have already in place a lot of projects that basically we are leading together with the people which are already working for BPM Vita, BPM Assicurazioni, which know very well that we are the potential shareholder of the company. We are hands-on, if this is the question you wanted to know. Danish Compromise, we are comfortable because we have no other example of a situation like ours, both in terms of volumes of bancassurance and in terms of percentage of ownership for which Danish Compromise has not been approved. We have a, let's say, reference which is very clear in the other examples, which are very much like ours.
Extra costs are already the value of the company that we have done into the associates is of course the final value, so excluding the cost. We cannot give you the split between Agos and Anima. You know that Anima is a listed company, so this is something maybe to understand better from them. We have done, of course, the bancassurance because is the object of the growth of our business plan. On the distribution fee, I don't know if you...
Distribution fee is the question related to bancassurance again. Excuse me, Ugo.
Yeah, I was just wondering, you know, there is parts of the profits get booked in the associates of the insurance business and parts will get booked in the branch, and you'll go through fee income. So I was just wondering if you assume any different economics for the branch network from internalizing the-
For bancassurance, it is basically a pass-through. You see the commission on the left part of this slide, and the net profit is after paying the commission. One is on a gross basis before tax, the other is on a net basis after tax. At the end of the day, we are simply, to answer your question, we are simply assuming to continue in the current regime, which is perfectly market, depends on the product. Of course, life very different from non-life, and within life and non-life, according to the specific products, for example, traditional as opposed to unit-linked. We have kept, for sake of simplicity, the assumption to preserve the current level of insurance commissions.
For insurance specifically, I tend to see it as a pass-through after the internalization, given that it's simply putting the pocket of money either in the subsidiary or in bank network. Extra cost of internalization are reflected in the business plan. They would not expect to have huge extra costs of internalization. Bearing in mind this was not mentioned probably too much in the presentation, but we have a platform. We don't start from zero. We have BPM Vita, which is 130 people working in insurance sector, fully independent, not relying on services heavily provided by our partner, Covéa. So this is a company which is totally self-standing and with scalable also. So with limited investments, we can host the additional volumes within the platform of BPM Vita.
Okay, thank you very much.
The next question is from Luigi Pedone with Equita. Please go ahead, sir.
Hi, good morning. Two questions from my side regarding the JV. The first one is regarding the risk. Which are, in your view, the main risks coming from the internalization of the JV, the insurance JV? Which are the main actions to close the gap with peers in bancassurance? The second one is regarding the impact. We have assumed the renewal of the Danish Compromise. If we, what will be the impact of the internalization of the JV starting from 2024 if we assume the final expiration of the Danish Compromise and the impact of the IFRS 17? Thank you.
Yes. Thanks. We have started the process exactly to address the risks you were correctly mentioning in your question. We believe that the most important one to bear in mind is regulatory execution risk. We are not an insurance, we are a bank. We are planning to create a bancassurance conglomerate, and this is something which requires to be very carefully planned before being executed. I mean, it's now end of 2021. We have until end of 2023 to complete in full the process and to arrive to internalization. Even if we aspire to complete it much sooner than end of 2023, and that's something that can be easily understandable, it's a fair amount of time to address properly all the risk and cover the basis.
Other risks, of course, are related directly to the technicality of insurance, actuarial risk, both in non-life and in life. The companies are well equipped to deal with them. After the capital increases in Vera Vita, the position of Vera Vita has always been very comfortable. From a financial perspective, so we don't expect this to generate, originate any backfire on the impact of the internalization, deposition. On the Danish, we, as Giuseppe said, have a clear aspiration to obtain the regime of the Danish Compromise because this has been recognized to all European cases that we know. It's basically proof to the regulator that you are able to manage an integrated form of financial conglomerate by properly integrating internal controls and operations.
The impact of the Danish Compromise for us should be all the conditions for a Danish Compromise should be addressed during this transitional period that I mentioned before. Without Danish, the impact on capital would be in the region, if I remember correctly, around 100 basis points. While the Danish that we have considered, the 15 basis points, is as reported in the presentation before the tailwinds of Basel IV. We don't expect any negative change in Basel IV. We expect only that the 370% risk weight becomes 250. Basically, for us, this is EUR 1.2 billion RWA, roughly speaking, of improvement after the application of the new regime of the Danish Compromise.
What expires, if I understand correctly, is the other Danish Compromise. There are two Danish Compromise. One is concerns majority stakes in insurance companies, and this does not expire. The other concerns minority stakes that are owned, historically owned by banking institutions in insurance companies and is not our case, of course.
Okay, thank you.
The next question is from Carlo Tommaselli with Société Générale. Please go ahead, sir.
Good morning. Thanks for a very detailed presentation and taking my questions. The first one is on slide 33. Would be helpful to have some sense on your assumptions in terms of AUM breakdown, say funds, bancassurance, managed accounts in 2024, please, as well as the net new money, EUR 4.4 billion, which is the landing point for 2024. Thank you for the detailed ESG quantitative targets. As far as the AUM is concerned, can you give us a bit of a sense of the ESG compliant AUM today and if there is any target for 2024? For slide 49, clearly, what I was about to ask about the granularity in terms of contribution to fee income from the JVs, just for Agos and for the combined bancassurance. After the...
Clearly, it is not possible at this stage. I would just ask if you could give us a bit of a sense of the 2023 contribution. A final question for me, if you could give us some color on the tax rate assumption over the plan horizon. Thank you.
Thank you, Mr. Tommaselli. I will start with your request for some breakdown of assets under management. I don't understand if you want to know about sales of investment products or stock. In any case, I will try to give you-
Both.
Both. Fantastic. Let's say that, 2021, we have a split of almost EUR 14 billion of funds and EUR 2.6 billion of bancassurance, which grow basically to 2024, EUR 14 billion of funds and EUR 4 billion of bancassurance in terms of sales. In terms of stock, we have a growth from—as far as funds are concerned, from EUR 45 billion to EUR 55 billion in funds. The vast majority of net inflow is conveyed into funds. Meanwhile, we'll have a bancassurance stock growing from EUR 15 billion to EUR 19 billion. As far as the second question, I think we mentioned that we are expecting to improve our share of ESG assets under management from 11% to above 20% in 2024.
The last one was the contribution of. Maybe Edoardo can answer.
Yeah. On the contribution, are you referring to 23 for the commissions?
Yes. Net fees, please.
Yeah. I have it here.
It's something a little bit below EUR 700 million. EUR 690, something like that. Contribution of the fees from the three product factories activities.
The tax rate assumption?
Tax rate assumption is 27%, bearing in mind that some components are tax-free, especially the net profit from associates.
Thank you.
The next question is a follow-up from Andrea Vercellone with Exane. Please go ahead, sir.
Thank you for taking the follow-up. Two questions, one on capital. In the 14.4% in 2024, have you factored in any additional headwinds of a regulatory nature in 2022, 2023, 2024, or there's none? In the old business plan, there were still 30 basis points, if I remember correctly. Maybe they're gone or they've already been absorbed, if you can clarify that. On the Basel IV impact of 80 basis points, is that pre or post the drop in risk-weighted assets related to the insurance operations? If it is pre, can you tell us the number post? One question which has nothing to do with the plan, but it's a big number.
Can you tell us, for 2022, what is the capital gain that you will book in the forward sales of EUR 2 billion of Tier 2 maturity bonds, which you have already closed? It was mentioned in the H1 interim results. Thank you.
Okay. Thank you, Mr. Vercellone. Yes, we have. Basically, there is no other material change in headwinds related. We also wrote down in page 20 negligible impact from regulatory headwinds over the plan horizon. The vast majority has been done. Some of them was anticipated. We don't have not even 30 basis points, but much lower. I think it's something between 5 basis points and 10 basis points. Capital gain on forward sales, I would say something in the region of EUR 95 million. Maybe Eduardo can answer.
Andrea, the 80 basis points is after the tailwind on the Danish Compromise, which accounts for, I say this a few minutes ago, EUR 1.2 billion, roughly speaking, over RWA or lower RWA because this is the impact of a transition between 370% and 250%.
Clear. Thank you.
Gentlemen, there are no more questions registered at this time.
Thank you, everybody, for being patient today with us. I hope that has been useful to know our most recent evolution, both for Q3 and for the plan. Hopefully, we will be in touch very soon for the one-off question. Thank you very much. Have a good day.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.